SkyWest Airlines 2002 Annual Report Download - page 39

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specific identification method, is recognized as a component of operating results. The Company’s
position in marketable securities as of December 31, 2002 and 2001 is as follows (in thousands):
2002 2001
Investment Types Cost Market Value Cost Market Value
Commercial paper ............. $ 10,019 $ 10,019 $ 7,307 $ 7,390
Bond funds .................. 232,891 230,858 187,427 184,295
Corporate notes .............. 35,597 35,439 61,198 61,599
Asset backed securities ......... 18,288 18,148 10,623 10,670
Other ...................... — — 4,073 4,068
296,795 294,464 270,628 268,022
Unrealized depreciation ......... (2,331) — (2,606) —
Total ....................... $294,464 $294,464 $268,022 $268,022
Marketable securities had the following maturities as of December 31, 2002 (in thousands):
Maturities Amount
Year 2003 ............................................... $229,407
Years 2004 through 2005 .................................... 60,114
Thereafter ............................................... 4,943
The Company has classified all marketable securities as short-term since it has the intent to
maintain a liquid portfolio and the ability to redeem the securities within the year.
Inventories
Inventories include expendable parts, fuel and supplies and are valued at cost (FIFO basis) less an
allowance for obsolescence based on historical results and management’s expectations of future
operations. Expendable inventory parts are charged to expense as used.
Property and Equipment
Property and equipment are stated at cost and depreciated over their useful lives to their
estimated residual values using the straight-line method as follows:
Aircraft and rotable spares ................................ 3-18 years
Buildings and ground equipment ............................ 3-39.5 years
Capitalized Interest
Interest is capitalized on aircraft purchase deposits and long-term construction projects and is
depreciated over the estimated useful life of the asset or the aircraft lease term. During the years
ended December 31, 2002, 2001 and 2000, the Company capitalized interest costs of approximately
$7,041,000, $5,185,000, and $788,000, respectively.
Maintenance
The Company operates under an FAA-approved continuous inspection and maintenance program.
The Company’s historical maintenance accounting policy for engine overhaul costs has included a
combination of accruing for overhaul costs on a per-flight-hour basis at rates estimated to be sufficient
to cover the overhauls (the accrual method) and capitalizing the cost of engine overhauls and expensing
the capitalized cost over the estimated useful life of the overhaul (the deferral method). The Company
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