SkyWest Airlines 2009 Annual Report Download - page 75

SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2009
(1) Nature of Operations and Summary of Significant Accounting Policies (Continued)
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, 2009.
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, 2009. 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 $2,095.6 million as of December 31, 2009, as compared to the carrying amount of
$1,964.9 million as of December 31, 2009. The Company’s fair value of long-term debt as of
December 31, 2008 was $1,913.5 million as compared to the carrying amount of $1,811.5 million as of
December 31, 2008.
Segment Reporting
The accounting guidance 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 accounting guidance
because the Company’s business consists of scheduled regional airline service.
New Accounting Standards
In June 2009, the Financial Accounting Standards Board (‘‘FASB’’) issued ASC 810 (originally
issued as SFAS No. 167, Amendments to FASB Interpretation No. 46(R). Among other items, ASC 810
responds to concerns about the application of certain key provisions of FIN 46(R), including those
regarding the transparency of the involvement with variable interest entities. ASC 810 is effective for
calendar year companies beginning on January 1, 2010. The Company does not believe the adoption of
ASC 810 will have a significant impact on its financial position, results of operations, cash flows, or
disclosures.
On September 23, 2009, the FASB ratified Emerging Issues Task Force Issue No. 08-1, Revenue
Arrangements with Multiple Deliverables (‘‘EITF 08-1’’). EITF 08-1 updates the current guidance
pertaining to multiple-element revenue arrangements included in ASC Subtopic 605-25, which
originated primarily from EITF 00-21, also titled Revenue Arrangements with Multiple Deliverables.
EITF 08-1 will be effective for annual reporting periods beginning January 1, 2011 for calendar-year
entities. The Company is currently evaluating the impact of EITF 08-1 on its financial position, results
of operations, cash flows, and disclosures.
The Company retrospectively adopted the provisions of ASC 260 Earnings per Share (formerly
FASB Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment
71