SkyWest Airlines 2004 Annual Report Download - page 39

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37
2004 2003
Investment Types Cost Market Value Cost Market Value
Commercial paper $ 13,016 $ 13,019 $ 15,318 $ 15,318
Bond and bond funds 276,995 275,292 262,790 262,345
Corporate notes 121,926 121,913 59,984 60,117
Asset backed securities 17,283 17,226 20,395 20,390
Other 62 67 584 657
429,282 427,517 359,071 358,827
Unrealized depreciation (1,765) - (244) -
Total $ 427,517 $ 427,517 $ 358,827 $ 358,827
Marketable securities had the following maturities as of December 31, 2004 (in thousands):
Maturities Amount
Year 2005 $ 185,655
Years 2006 through 2009 111,669
Years 2010 through 2014 17,803
Thereafter 112,390
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 one 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. An allowance for obsolescence is provided for spare parts currently identified as excess to reduce the carrying
costs to net realizable value. These allowances are based on management estimates, which are subject to change.
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:
Depreciable Residual
Assets Life Value
Aircraft 14-18 years 25-30%
Rotable spares 10 years 0%
Ground equipment 5-7 years 0%
Office equipment 5-7 years 0%
Leasehold improvements 15 years 0%
Buildings 20-39.5 years 0%
Change in Accounting Estimates
During the first quarter of 2004, the Company changed its estimate of depreciable lives on rotable spares from five years to ten
years and maintained the residual value of zero percent. The impact of this change increased the Company’s pretax income for
the year ended December 31, 2004 by $11,455,000 ($0.20 per share, basic and diluted). The impact of this change, net of tax,
increased the Company’s net income for the year ended December 31, 2004 by $6,873,000 ($.12 per share, basic and diluted).