SkyWest Airlines 2004 Annual Report Download - page 42

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40
Income Taxes
The Company recognizes a liability or asset for the deferred tax consequences of all temporary differences between the tax basis
of assets and liabilities and their reported amounts in the consolidated financial statements that will result in taxable or deductible
amounts in future years when the reported amounts of the assets and liabilities are recovered or settled.
Net Income Per Common Share
Basic net income per common share (“Basic EPS”) excludes dilution and is computed by dividing net income by the weighted
average number of common shares outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects
the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into
common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an
antidilutive effect on net income per common share. During the years ended December 31, 2004, 2003 and 2002 3,836,000,
2,735,000 and 2,790,000 options were excluded from the computation of Diluted EPS respectively.
The calculation of the weighted average number of common shares outstanding for Basic EPS and Diluted EPS are as follows for
the years ended December 31, 2004, 2003 and 2002 (in thousands):
Year Ended December 31,
2004 2003 2002
Numerator:
Numerator for earnings per share – before
c
w
c
c
umulative effect of accounting change $ 81,952 $ 66,787 $ 78,277
Denominator:
Denominator for basic earnings per-share
eighted average shares 57,858 57,745 57,229
Denominator for diluted earnings per-share
weighted average shares 58,350 58,127 57,551
Basic earnings per-share before
umulative effect of accounting change 1.42 1.16 1.37
Diluted earnings per -share before
umulative effect of accounting change 1.40 1.15 1.36
Stock Options
The Company applies Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its stock-based
compensation plans. SFAS No. 123, Accounting for Stock-Based Compensation, requires pro forma information regarding net
income and net income per share as if the Company had accounted for its stock options under the fair value method of the
statement which is described more fully in Note 5 below. The Company did not have any stock-based compensation expense for
the years ended December 31, 2004, 2003 and 2002.