SkyWest Airlines 2003 Annual Report Download - page 37

SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
(1) Nature of Operations and Summary of Significant Accounting Policies
The Company, through its wholly owned subsidiary, SkyWest, operates one of the larger independent regional airlines in the
United States. SkyWest offers scheduled passenger and air freight service with approximately 1,100 daily departures to 105 cities
in 26 states and three Canadian provinces. SkyWest has been a partner with Delta in Salt Lake City and United in Los Angeles
since 1987 and 1997, respectively. In 1998, SkyWest expanded its United Agreement to provide service in Portland,
Seattle/Tacoma, San Francisco and in additional Los Angeles markets. In 2001, SkyWest expanded its operations to serve as the
Delta Connection in Dallas/Fort Worth. In April 2003, SkyWest signed an agreement with Continental to supply Continental
with regional airline feed into Continental’s Houston hub effective on July 1, 2003. Today, SkyWest operates as the Delta
Connection in Salt Lake City and Dallas/Fort Worth, as United Express in Los Angeles, San Francisco, Denver, Chicago and the
Pacific Northwest and as Continental Connection in Houston. SkyWest believes that its success in attracting multiple
relationships with major airline partners is attributable to its delivery of high-quality customer service with an all cabin-class fleet.
As of December 31, 2003, 51% of SkyWest’s capacity operated under the Delta code, 47% operated under the United code and
2% operated under the Continental code. As of December 31, 2003, SkyWest operated a fleet of 76 EMB120s and 109 CRJ200.
Basis of Presentation
Our consolidated financial statements include the accounts of SkyWest Inc., and SkyWest Airlines, Inc. and (collectively "we" or
the "Company") with all inter-company transactions and balances having been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principals generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
During the fourth quarter of 2003, the Company classified $9.2 million of cash as restricted cash as required by the Company’s
workers compensation policy and is classified as restricted cash in the consolidated balance sheets
Marketable Securities
The Company’s investments in marketable debt and equity securities are deemed by management to be available for sale and are
reported at fair market value with the net unrealized appreciation or depreciation reported as a component of accumulated other
comprehensive income (loss) in stockholders’ equity. At the time of sale, any realized appreciation or depreciation, calculated by
the specific identification method, is recognized in interest income in operating results. The Company’s position in marketable
securities as of December 31, 2003 and 2002 was as follows (in thousands):
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