SkyWest Airlines 2006 Annual Report Download - page 72

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66
SFAS No.123(R)on net income andbasicanddiluted earnings per sharealsoincludes the impact of the
employeestock purchase plan (see Note 7).
Prior to the adoption of SFAS No. 123(R), the Company presented all tax benefits of deductions
resulting from theexercise of stock options as operating cash flows in the statement of cash flows. SFAS
No.123(R) requires the cash flows resulting from the tax benefits of deductions in excess of the
compensation cost recognized for those options (excess tax benefit) to be presented as financing cash flows
in thestatement of cash flows. During the year ended December 31,2006,the Company had no taxbenefit
from deductions in excess of the compensation cost recognized for those options.
As of December 31,2006, the Company had$12.3million of total unrecognized compensation cost
related to non-vested stock options and non-vested restricted stock grants. Total unrecognized
compensation cost will be adjusted forfuture changes in estimated forfeitures. The Company expects to
recognize this cost over a weighted average period of 1.0 years.
Options areexercisablefor aperiod as defined by theCompensation Committee at thedate granted;
however, no stock option will be exercisable before six months have elapsedfrom thedate it is granted and
no incentivestockoptionshallbe exercisable afterten years from the date of grant. Thefollowing table
summarizes thestock optionactivity for allplans for the yearsended December 31,2006,2005and 2004:
2006 2005 2004
Number of
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
($000)
Number of
Options
Weighted
Average
Exercise
Price
Number of
Options
Weighted
Average
Exercise
Price
Outstandingat beginning
of year. ............6,301,002 $18.38 7.1years $53,452 5,531,101 $ 19.39 4,690,122 $19.27
Granted .............376,890 23.80 1,826,050 17.11 1,134,812 19.18
Exercised ............(1,069,073) 15.16 (891,292)21.71 (207,755) 12.12
Cancelled ............(104,247) 19.03 (164,857)17.58 (86,078)18.31
Outstandingat end of
year ..............5,504,572 19.36 6.5years $33,862 6,301,002 18.38 5,531,101 19.39
Exercisable at
December 31,2006 ...2,379,124 20.36 4.4 years $12,251
Exercisable at
December 31,2005 ...2,365,386 22.42 5.0 years $10,510
Thetotal intrinsic value of options exercised during the years ended December31,2006, 2005 and
2004 was $14.2million, $7.1 million and $1.1 million, respectively.
Thefollowing table summarizes the status of the non-vested stock options as of December 31, 2006:
2006
Number of
Shares
Weighted-
Average
Grant-Date
Fair Value
Non-vested shares at beginning of year ............................ 3,935,616 $6.35
Granted ....................................................... 376,890 6.80
Vested ........................................................ (1,107,631) 4.85
Cancelled...................................................... (79,427) 5.79
Non-vested shares at end of year ................................. 3,125,448 $6.88