SkyWest Airlines 2004 Annual Report Download - page 49

47
2003, respectively. For the years ended December 31, 2004, 2003 and 2002, the Company’s contractual relationships with Delta
and United combined accounted for approximately 95.0% of the Company’s total revenues.
As of December 31, 2004, the Company had demand deposits and money market accounts totaling $8,297,000 with Zions First
National Bank, $965,000 with Bank of America, $436,000 with Royal Bank of Canada, $105,000 with JP Morgan Chase Bank
and $551,000 with Wells Fargo Bank. These balances exceed the $100,000 limit for insurance by the Federal Deposit Insurance
Corporation.
Government Compensation
The Emergency War Time Supplemental Appropriations Act of 2003 became effective on May 15, 2003, and the Company
received approximately $6.5 million under the act. This legislation provides for compensation to domestic airlines based on their
proportional share of passenger security and infrastructure security fees paid, as well as reimbursement for installing fortified
flight deck doors.
During the year ended December 31, 2004, the Company did not record the benefits of amounts received, as the Company
anticipates that a significant portion of the payments received by the Company will be payable to its major partners pursuant to
the terms of the Company’s agreements with those partners. These amounts have been recorded as other current liabilities in the
Company’s consolidated balance sheet as of December 31, 2004.
(5) Capital Transactions
Preferred Stock
The Company is authorized to issue 5,000,000 shares of preferred stock in one or more series without shareholder approval. No
shares of preferred stock are presently outstanding. The Board of Directors is authorized, without any further action by the
stockholders of the Company, to (i) divide the preferred stock into series; (ii) designate each such series; (iii) fix and determine
dividend rights; (iv) determine the price, terms and conditions on which shares of preferred stock may be redeemed; (v) determine
the amount payable to holders of preferred stock in the event of voluntary or involuntary liquidation; (vi) determine any sinking
fund provisions; and (vii) establish any conversion privileges.
Stock Options
In August 2000, the Company’s shareholders approved the adoption of two new stock option plans: the Executive Stock Incentive
Plan (the “Executive Plan”) and the 2001 Allshare Stock Option Plan (the “Allshare Plan”). Both plans became effective January
1, 2001. These plans replaced the Company’s Combined Incentive and Non-Statutory Stock Option Plans (the “Prior Plans”);
however, all outstanding options under Prior Plans remain outstanding. No further grants will be made under the Prior Plans. As
of December 31, 2004, there were approximately 1,320,000 employee options outstanding under the Prior Plans. The Executive
Plan provides for the issuance of options to purchase up to 4,000,000 shares of common stock to officers, directors and other
management employees of which 2,384,827 options had been issued as of December 31, 2004. The Allshare Plan provides for the
issuance of options to purchase up to 4,000,000 shares of common stock to employees of the Company, of which 2,000,000
options had been issued as of December 31, 2004. The Executive Plan and Allshare Plan are both administered by the
Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) who designate option grants as
either incentive or non-statutory. Incentive stock options are granted at not less than 100% of the market value of the underlying
common stock on the date of grant. Non-statutory stock options are granted at a price as determined by the Compensation
Committee.
The fair value of stock options was estimated at the grant date using the Black-Scholes option pricing model. The following table
shows the assumptions used for grants in the years ended December 31, 2004, 2003 and 2002.