SkyWest Airlines 2008 Annual Report Download - page 79

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SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2008
(5) Fair Value Measurements (Continued)
The Company’s assets measured at fair value on a recurring basis subject to the disclosure
requirements of SFAS No. 157 at December 31, 2008, were as follows (in thousands):
Fair Value Measurements as of
December 31, 2008
Total Level 1 Level 2 Level 3
Cash, Cash Equivalents and Restricted
Cash .......................... $136,620 $136,620 $ — $ —
Marketable Securities ............... 568,567 26,030 540,084 2,453
Other Assets ...................... 2,233 — — 2,233
Total Assets Measured at Fair Value ..... $707,420 $162,650 $540,084 $4,686
Based on market conditions, the Company uses a discounted cash flow valuation methodology for
auction rate securities. Accordingly, for purposes of the foregoing condensed consolidated financial
statements, these securities were categorized as Level 3 securities within SFAS No. 157’s hierarchy.
The following table presents the Company’s assets measured at fair value on a recurring basis
using significant unobservable inputs (Level 3) as defined in SFAS No. 157 at December 31, 2008 (in
thousands):
Fair Value Measurements Using Significant Unobservable Inputs
(Level 3)
Auction Rate
Securities
Transferred in during the period of adoption .................... $123,600
Total realized and unrealized gains or (losses)
Included in earnings .................................... —
Included in other comprehensive income ..................... (213)
Transferred out .......................................... (3,797)
Settlements ............................................. (114,904)
Balance at December 31, 2008 ............................... $ 4,686
(6) Investment in Other Companies
On September 4, 2008, the Company announced its intention to acquire a 20% interest in
Brazilian regional airline, Trip Linhas Aereas (‘‘Trip’’), for $30 million. As of December 31, 2008, the
Company made an investment of $5 million for a 6.7% interest in Trip, which is recorded as ‘‘Other
assets’’ on the Company’s consolidated balance sheet. If Trip meets or exceeds certain financial targets,
the Company is scheduled to make an additional $15 million investment on March 1, 2009 and another
$10 million investment on March 1, 2010. The Company accounts for its interest in Trip using the
equity method of accounting. The Company records its equity in Trip’s earnings on a one-quarter lag.
As of December 31, 2008, the Company’s allocated portion of Trip’s earnings since the time of its
initial investment was not material.
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