SkyWest Airlines 2007 Annual Report Download - page 53

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52
Certain of the Company’ s long-term debt arrangements contain limitations on, among other things, the sale or lease
of assets and ratio of long-term debt to tangible net worth. As of December 31, 2007, the Company was in compliance with
all debt covenants contained in its long-term debt agreements. Management believes that in the absence of unusual
circumstances, the working capital available to the Company will be sufficient to meet the present financial requirements,
including expansion, capital expenditures, lease payments and debt service obligations for at least the next 12 months.
During 2005, aircraft deposits with Bombardier of $22.0 million were applied as down payments to Bombardier for
temporary financing of aircraft while the Company arranged for permanent long-term financing through debt and other third
party leasing arrangements. When the Company obtained long-term debt financing, the debt agreements were written such
that the long-term debt could be refinanced into operating leases. Hence, in 2005, $55.4 million in debt was settled and
replaced with long-term operating leases.
During 2005, SkyWest Airlines entered into a third party long-term leveraged lease facility for 32 regional jet
aircraft. In conjunction with this financing transaction, SkyWest Airlines applied $37.0 million of amounts previously held
on deposit by the manufacturer as lease payments required under the lease.
SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
(3) Income Taxes
The provision for income taxes includes the following components (in thousands):
Year ended December 31,
2007 2006 2005
Current tax provision (benefit):
Federal ........................................................................................... $(14,355) $(41,914) $45,714
State ............................................................................................... (736) (8,419) 5,798
(15,091) (50,333) 51,512
Deferred tax provision:
Federal ........................................................................................... 99,026 123,646 13,124
State ............................................................................................... 7,194 20,908 2,723
106,220 144,554 15,847
Provision for income taxes ............................................................... $91,129 $94,221 $67,359
The following is a reconciliation between the statutory Federal income tax rate of 35% and the effective rate which
is derived by dividing the provision for income taxes by income before provision for income taxes (in thousands):
Year ended December 31,
2007 2006 2005
Computed “expected” provision for income taxes at the statutory rates .............................. $87,612 $84,009 $62,869
Increase in income taxes resulting from:
State income taxes, net of Federal income tax benefit....................................................... 6,268 11,867 6,387
Other, net ........................................................................................................................... (2,751) (1,655) (1,897)
Provision for income taxes ................................................................................................... $91,129 $94,221 $67,359