Alaska Airlines and Horizon Air 2010 Annual Report Download - page 181

statement of operations and the remaining
impairment loss to be recorded through
accumulated other comprehensive income. Both
of these standards were effective for the
Company as of June 30, 2009. See Note 5 and
Note 12 for a discussion of the impact of these
new positions to the Company’s financial
statements.
In April 2009, the FASB issued new accounting
standards that require companies to provide, on
an interim basis, disclosures that were
previously only required in annual statements for
the fair value of financial instruments. This new
standard was effective for the Company as of
June 30, 2009. The required disclosures
impacted the Company’s Form 10Q filings for the
second and third quarters in 2009. The new
standards did not have an impact on annual
financial statements.
In December 2008, the FASB issued new
accounting standards regarding disclosure about
pension and other postretirement benefits which,
among other things, expands the disclosure
regarding assets in an employer’s pension and
postretirement benefit plans. The standard
requires the Company to add the fair value
hierarchy disclosures required by the accounting
standards as it relates to the investments of the
pension and postretirement benefit plans. This
statement is effective for annual financial
statements for fiscal years ending after
December 15, 2009. See Note 6 for the
disclosures required by this standard. This
position had no impact on the Company’s
financial position or results of operations.
Fourth Quarter Adjustments
There were no significant adjustments in the
fourth quarters of 2010, 2009 and 2008.
NOTE 2. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value Measurements
Accounting standards define fair value as the
exchange price that would be received for an
asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for
the asset or liability in an orderly transaction
between market participants on the
measurement date. The standards also establish
a fair value hierarchy, which requires an entity to
maximize the use of observable inputs and
minimize the use of unobservable inputs when
measuring fair value. There are three levels of
inputs that may be used to measure fair value:
Level 1—Quoted prices in active markets for
identical assets or liabilities.
Level 2—Observable inputs other than Level 1
prices such as quoted prices for similar assets
or liabilities; quoted prices in markets that are
not active; or other inputs that are observable or
can be corroborated by observable market data
for substantially the full term of the assets or
liabilities.
Level 3—Unobservable inputs that are supported
by little or no market activity and that are
significant to the fair value of the assets or
liabilities.
Cash, Cash Equivalents and Marketable
Securities
The Company uses the “market approach” in
determining the fair value of its cash, cash
equivalents and marketable securities. The
securities held by the Company are valued based
on observable prices in active markets.
Amounts measured at fair value as of
December 31, 2010 are as follows (in millions):
Level 1 Level 2 Level 3 Total
Cash and cash
equivalents . $ 89.5 $ — $— $ 89.5
Marketable
securities . . . 254.8 863.9 — 1,118.7
Total ..... $344.3 $863.9 $— $1,208.2
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ŠForm 10-K