SkyWest Airlines 2009 Annual Report Download - page 85

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SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2009
(7) Investment Securities (Continued)
and recovery is not expected in the near term. OTTI losses on individual perpetual preferred securities
are recognized as a realized loss through earnings when a decline in the cash flows has occurred or the
rating of the security has been downgraded below investment grade.
This accounting guidance requires the Company to take into consideration current market
conditions, fair value in relationship to cost, extent and nature of change in fair value, issuer rating
changes and trends, volatility of earnings, current analysts’ evaluations, all available information
relevant to the securities, the Company’s ability and intent to hold investments until a recovery of fair
value, which may be maturity, and other factors when evaluating for the existence of OTTI in the
Company’s securities portfolio.
As a result of an ongoing valuation review of the Company’s marketable securities portfolio, the
Company recognized a pre-tax charge of approximately $7.1 million during the year ended
December 31, 2009 for certain marketable securities deemed to have other-than-temporary impairment.
(8) Investment in Other Companies
On September 4, 2008, the Company announced its intention to acquire a 20% interest in a
Brazilian regional airline, Trip Linhas Aereas (‘‘Trip’’), for $30 million. As of December 31, 2009, the
Company’s investment balance was $23.4 million for a 16.4% interest in Trip, which is recorded as an
‘‘Other asset’’ on the Company’s consolidated balance sheet. If Trip meets or exceeds certain financial
targets, the Company is scheduled to make 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. The Company’s allocated portion of Trip’s earnings
during the year ended December 31, 2009 was $1.8 million.
(9) Capital Transactions
Preferred Stock
The Company is authorized to issue 5,000,000 shares of preferred stock in one or more series
without shareholder approval. No shares of preferred stock are presently outstanding. The Company’s
Board of Directors is authorized, without any further action by the shareholders of the Company, to
(i) divide the preferred stock into series; (ii) designate each such series; (iii) fix and determine dividend
rights; (iv) determine the price, terms and conditions on which shares of preferred stock may be
redeemed; (v) determine the amount payable to holders of preferred stock in the event of voluntary or
involuntary liquidation; (vi) determine any sinking fund provisions; and (vii) establish any conversion
privileges.
Stock Compensation
Effective January 1, 2001, the Company adopted two stock option plans: the Executive Stock
Incentive Plan (the ‘‘Executive Plan’’) and the 2001 Allshare Stock Option Plan (the ‘‘Allshare Plan’’).
These plans replaced the Company’s Combined Incentive and Non-Statutory Stock Option Plans (the
‘‘Prior Plans’’). There are no additional shares of common stock available for issuance under these
plans. However, as of December 31, 2009, options to purchase approximately 360,000 shares of the
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