SkyWest Airlines 2008 Annual Report Download - page 73
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SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2008
(3) Income Taxes (Continued)
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,
2008 2007 2006
Computed ‘‘expected’’ provision for income taxes at
the statutory rates ......................... $60,324 $87,612 $84,009
Increase in income taxes resulting from:
State income taxes, net of Federal income tax
benefit ................................ 5,032 6,268 11,867
Other, net ............................... (2,102) (2,751) (1,655)
Provision for income taxes ..................... $63,254 $91,129 $94,221
The significant components of the net deferred tax assets and liabilities are as follows (in
thousands):
As of December 31,
2008 2007
Deferred tax assets:
Accrued benefits ............................... $ 22,423 $ 20,134
Net operating loss carryforward .................... 23,300 25,738
AMT credit carryforward ......................... 30,180 24,511
Deferred aircraft credits ......................... 46,831 45,531
Accrued reserves and other ....................... 14,463 7,739
Total deferred tax assets ........................... 137,197 123,653
Deferred tax liabilities:
Accelerated depreciation ......................... (568,217) (490,134)
Maintenance and other .......................... — (8,989)
Total deferred tax liabilities ......................... (568,217) (499,123)
Net deferred tax liability ........................... $(431,020) $(375,470)
The Company’s deferred tax liabilities were primarily generated through accelerated bonus
depreciation on newly purchased aircraft and support equipment in accordance with the Job Creation
and Worker Assistance Act of 2002.
At December 31, 2008, the Company had federal net operating losses of approximately
$40.9 million and state net operating losses of approximately $376.8 million which will start to expire in
2026 and 2010 respectively. As of December 31, 2008, the Company also had an alternative minimum
tax credit of approximately $30.2 million which does not expire.
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