SkyWest Airlines 2006 Annual Report Download - page 62

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56
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 CommonShare
Basicnetincome per common share (“Basic EPS”) excludes dilution and is computed by dividing net
income by the weighted average number of commonshares outstanding during the period.Diluted net
income percommonshare (“Diluted EPS”)reflectsthe potential dilutionthat could occur if stock options
or other contracts to issue common stock were exercised or converted into common stock. The
computation of Diluted EPSdoes not assume exercise or conversion of securities that would have an anti-
dilutive effect on net income per common share. During theyears ended December 31, 2006,2005 and
2004, 1,219,212, 2,378,000 and 3,836,000 shares reserved for issuance upon the exercise of outstanding
options were excluded from the computation of Diluted EPS respectively,as their inclusion would be anti-
dilutive.
Thecalculationofthe weightedaverage number of common shares outstanding forBasic EPS and
Diluted EPS are as follows forthe years ended December 31, 2006, 2005and2004 (in thousands):
Year Ended December 31,
2006 2005 2004
Numerator:
Numeratorforearnings pershare......................... $145,806$112,267 $81,952
Denominator:
Denominator for basic earnings per-share weighted
averageshares....................................... 62,474 57,851 57,858
Dilution dueto stockoptions............................. 9081,082 492
Denominator fordiluted earnings per-shareweighted
averageshares....................................... 63,382 58,933 58,350
Basicearnings per-share................................. $2.33 $ 1.94 $1.42
Dilutedearnings per-share............................... $2.30 $ 1.90 $1.40
Stock Options
PriortoJanuary 1, 2006, the Company applied Accounting Principles Board Opinion No. 25
(“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 informationregarding net
incomeand net incomeper shareasif stock options were accounted for under thefair value method which
is describedmorefully in Note 6below. TheCompany didnot record any stock-based compensation
expense related to stockoptions for the yearsended December 31, 2005 and 2004. See note 6 regarding the
Company’s adoption of SFAS No. 123(R), Share Based Payment(“SFAS No.123(R)”) effective January 1,
2006.