SkyWest Airlines 2010 Annual Report Download - page 90

SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2010
(5) Income Taxes (Continued)
The significant components of the net deferred tax assets and liabilities are as follows (in
thousands):
As of December 31,
2010 2009
Deferred tax assets:
Intangible Asset ............................... $ 37,779 $ —
Accrued benefits ............................... 30,316 22,729
Net operating loss carryforward .................... 70,861 39,368
AMT credit carryforward ......................... 15,882 23,379
Deferred aircraft credits ......................... 42,282 38,283
Accrued reserves and other ....................... 22,707 14,881
Total deferred tax assets ........................... 219,827 138,640
Deferred tax liabilities:
Accelerated depreciation ......................... (733,572) (629,586)
Maintenance and other .......................... — (397)
Total deferred tax liabilities ......................... (733,572) (629,983)
Net deferred tax liability ........................... $(513,745) $(491,343)
The Company’s deferred tax liabilities were primarily generated through an accelerated bonus
depreciation on newly purchased aircraft and support equipment in accordance with IRS Section 168(k)
in combination with shorter depreciable tax lives.
At December 31, 2010, the Company had federal net operating losses of approximately
$163.7 million and state net operating losses of approximately $515.1 million, which will start to expire
in 2026 and 2016, respectively. As of December 31, 2010, the Company also had an alternative
minimum tax credit of approximately $15.9 million which does not expire.
In conjunction with the ExpressJet Merger, the Company acquired non-amortizable intangible tax
assets and other tax assets that are not anticipated to provide a tax benefit until 2025 or later due to
statutory limitations. Because of the uncertainty associated with the realization of those tax assets, the
Company recorded a full valuation allowance of approximately $74.0 million on such tax assets. The
deferred tax assets in the table above are shown net of the recorded valuation allowance.
(6) Commitments and Contingencies
Lease Obligations
The Company leases 539 aircraft, as well as airport facilities, office space, and various other
property and equipment under non-cancelable operating leases which are generally on a long-term net
rent basis where the Company pays taxes, maintenance, insurance and certain other operating expenses
applicable to the leased property. Management expects that, in the normal course of business, leases
that expire will be renewed or replaced by other leases. The following table summarizes future
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