SkyWest Airlines 2010 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2010 SkyWest Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 176

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176

SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2010
(1) Nature of Operations and Summary of Significant Accounting Policies (Continued)
transfers, (ii) disclose separately the reasons for any transfers in and out of Level 3, and (iii) present
separate information for Level 3 activity pertaining to gross purchases, sales, issuances, and settlements.
ASU No. 2010-06 is effective for the Company for interim and annual reporting periods beginning after
December 15, 2009, with one new disclosure effective after December 15, 2010. The Company adopted
this guidance in full beginning with the interim period ended March 31, 2010. See Note 7.
On September 23, 2009, the Financial Accounting Standards Board (‘‘FASB’’) ratified Accounting
Standards Update (‘‘ASU’’) No. 2009-13 (formerly referred to as Emerging Issues Task Force Issue
No. 08-1), Revenue Arrangements with Multiple Deliverables. ASU No. 2009-13 requires the allocation of
consideration among separately identified deliverables contained within an arrangement, based on their
related selling prices. ASU No. 2009-13 will be effective for annual reporting periods beginning
January 1, 2011; however, it will be effective only for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company
has been evaluating the impact of ASU No. 2009-13 on its financial position, results of operations, cash
flows, and disclosures. Based on the Company’s research to date, it does not believe the adoption of
ASU No. 2009-13 will have a significant impact on its current accounting; however, the Company does
expect to be required to provide additional financial disclosures due to the full adoption of the
standard beginning in the first quarter of 2011.
(2) ExpressJet Merger
On November 12, 2010, the Company completed its acquisition of ExpressJet . As a result of the
ExpressJet Merger, each issued and outstanding share of ExpressJet Holdings common stock (other
than shares owned by ExpressJet Holdings as treasury stock or shares owned by the Company or any of
its subsidiaries) was converted into the right to receive $6.75 per share in cash, payable to the holder
thereof, without interest. Based on the number of outstanding shares of ExpressJet Holdings common
stock as of the effective time of the ExpressJet Merger, the aggregate value of the Merger
consideration was $131.6 million. After taking in effect the number of shares acquired by the Company
and its subsidiaries prior to the effective time, the aggregate value of the ExpressJet Merger
consideration was $136.5 million.
In connection with the ExpressJet Merger, ExpressJet and Continental entered into the
Continental CPA, whereby ExpressJet agreed to provide regional airline services in the Continental
flight system. The Continental CPA became effective on November 12, 2010.
The Company accounted for the ExpressJet Merger in accordance with FASB ASC Topic 805,
Business Combinations, whereby the tangible assets acquired and liabilities assumed from ExpressJet
Holdings are recorded based on their estimated fair values as of the closing date. The revenues of
ExpressJet represented 4% of the Company’s total revenues for the year ended December 31, 2010.
The following table reflects the aggregate consideration and estimated fair values of the tangible assets
acquired and liabilities assumed (including the attribution of ExpressJet Holdings liabilities to the
81