SkyWest Airlines 2010 Annual Report Download - page 84

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SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2010
(1) Nature of Operations and Summary of Significant Accounting Policies (Continued)
share of the foreign currency translation adjustment related to the Company’s equity investment in Trip
Linhas Aereas (‘‘Trip’’) (see note 8), net of tax, for the periods indicated (in thousands):
Year Ended December 31,
2010 2009 2008
Net Income ............................... $96,350 $83,658 $112,929
Proportionate share of other companies foreign
currency translation adjustment, net of tax ....... 637 972 —
Unrealized appreciation (depreciation) on marketable
securities, net of tax ....................... (745) 3,774 (2,566)
Comprehensive income ....................... 96,242 $88,404 $110,363
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, 2010.
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, 2010. 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 $1,962.6 million as of December 31, 2010, as compared to the carrying amount of
$1,898.0 million as of December 31, 2010. The Company’s fair value of long-term debt as of
December 31, 2009 was $2,095.6 million as compared to the carrying amount of $1,964.9 million as of
December 31, 2009.
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 January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value
Measurements an amendment to Accounting Standards Codification Topic 820, Fair Value Measurements
and Disclosures. This amendment requires an entity to: (i) disclose separately the amounts of significant
transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the
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