SkyWest Airlines 2008 Annual Report Download - page 70

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SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2008
(1) Nature of Operations and Summary of Significant Accounting Policies (Continued)
Comprehensive Income
The Company reports comprehensive income in accordance with SFAS No. 130, Reporting
Comprehensive Income (‘‘SFAS No. 130’’). SFAS No. 130 establishes standards for reporting and
displaying comprehensive income and its components in the Company’s financial statements.
Comprehensive income includes charges and credits to stockholders’ equity that are not the result of
transactions with shareholders. These adjustments have been reflected in the accompanying
consolidated statements of stockholders’ equity and comprehensive income. Also, comprehensive
income consisted of net income plus changes in unrealized appreciation (depreciation) on marketable
securities, net of tax, for the periods indicated (in thousands):
Year Ended December 31,
2008 2007 2006
Net Income ............................. $112,929 $159,192 $145,806
Unrealized appreciation (depreciation) on
marketable securities, net of tax ............. (2,566) 475 61
Comprehensive income ..................... $110,363 $159,667 $145,867
Fair Value of Financial Instruments
The carrying amounts reported in the consolidated balance sheets for receivables and accounts
payable approximate fair values because of the immediate or short-term maturity of these financial
instruments. Marketable securities are reported at fair value based on market quoted prices in the
consolidated balance sheets. However, due to recent events in credit markets, the auction events for
some of these instruments held by the Company failed during the year ended December 31, 2008.
Therefore, quoted prices in active markets are no longer available and the Company has estimated the
fair values of these securities utilizing a discounted cash flow analysis as of December 31, 2008. These
analyses consider, among other items, the collateralization underlying the security investments, the
creditworthiness of the counterparty, the timing of expected future cash flows, and the expectation of
the next time the security is expected to have a successful auction. The fair value of the Company’s
long-term debt is estimated based on current rates offered to the Company for similar debt and
approximates $1,913.5 million as of December 31, 2008, as compared to the carrying amount of
$1,811.5 million as of December 31, 2008. The Company’s fair value of long-term debt as of
December 31, 2007 was $1,838.6 million as compared to the carrying amount of $1,851.0 million as of
December 31, 2007.
Segment Reporting
SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information requires
disclosures related to components of a company for which separate financial information is available
that is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate
resources and in assessing performance. Management believes that the Company has only one
reportable segment in accordance with SFAS No. 131 because the Company’s business consists of
scheduled regional airline service.
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