SkyWest Airlines 2002 Annual Report Download - page 47

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The significant components of the net deferred tax assets and liabilities are as follows (in
thousands):
As of December 31,
2002 2001
Deferred tax assets:
Accrued benefits ................................ $ 2,555 $ 2,206
Engine overhaul accrual ........................... — 5,547
Accrued reserves and other ......................... 4,257 3,326
Total deferred tax assets ............................. 6,812 11,079
Deferred tax liabilities:
Accelerated depreciation ........................... (59,650) (40,551)
Other ........................................ (3,729) (622)
Total deferred tax liabilities .......................... (63,379) (41,173)
Net deferred tax liability ............................ $(56,567) $(30,094)
(4) Commitments and Contingencies
Lease Obligations
The Company leases 127 aircraft, as well as airport facilities, office space, and various other
property and equipment under noncancelable operating leases which are generally on a long-term net
rent basis where the Company pays taxes, maintenance, insurance and certain other operating expenses
applicable to the leased property. Management expects that, in the normal course of business, leases
that expire will be renewed or replaced by other leases. The following table summarizes future
minimum rental payments required under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of December 31, 2002 (in thousands):
Year ending December 31,
2003 .................................................. $ 127,458
2004 .................................................. 121,601
2005 .................................................. 126,372
2006 .................................................. 126,608
2007 .................................................. 123,001
Thereafter ............................................. 874,567
$1,499,607
Total rental expense for noncancelable operating leases was approximately $103,318,000,
$72,841,000 and $56,253,000, for the years ended December 31, 2002, 2001 and 2000, respectively.
The above minimum rental payments do not include landing fees, which amounted to
approximately $19,739,000, $14,877,000 and $10,873,000 for the years ended December 31, 2002, 2001
and 2000, respectively.
As part of our leveraged lease agreements, we typically indemnify the equity/owner participant
against liabilities that may arise due to changes in benefits from tax ownership of the respective leased
aircraft.
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