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SkyWest 8-K 2005

Documents found in this filing:

  1. 8-K/A
  2. Ex-23.1
  3. Ex-99.2
  4. Ex-99.3
  5. Ex-99.4
  6.  

Exhibit 99.4

 

SkyWest, Inc.

Pro Forma Condensed Combined Statement of Operations

(Unaudited)

For the year ended December 31, 2004

(In thousands, except per share amounts)

 

 

 

Historical

 

Pro Forma

 

Pro Forma

 

 

 

SkyWest, Inc.

 

ASA

 

Adjustments

 

Combined

 

OPERATING REVENUES:

 

 

 

 

 

 

 

 

 

Passenger

 

$

1,139,580

 

$

947,608

 

$

(12,177

)(A)

$

2,075,011

 

Ground handling and other

 

16,464

 

11

 

 

16,475

 

Total operating revenues

 

1,156,044

 

947,619

 

(12,177

)

2,091,486

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

Flying operations

 

577,492

 

 

 

436,982

(B)

1,014,474

 

Customer service

 

180,578

 

 

 

162,677

(C)

343,255

 

Maintenance

 

113,537

 

 

 

134,275

(C)

247,812

 

Depreciation and amortization

 

76,817

 

71,707

 

742

(D)

149,266

 

Promotion and sales

 

4,608

 

600

 

379

(C)

5,587

 

General and administrative

 

58,236

 

 

 

35,515

(C)

93,751

 

Salaries & related costs

 

 

 

292,258

 

(292,258

)(E)

 

Aircraft fuel

 

 

 

197,541

 

(197,541

)(C)

 

Aircraft maintenance materials and outside repairs

 

 

 

87,394

 

(87,394

)(C)

 

Aircraft rent

 

 

 

68,670

 

(68,670

)(C)

 

Contracted services

 

 

 

65,973

 

(65,973

)(C)

 

Landing fees and other rents

 

 

 

44,623

 

(44,623

)(C)

 

Impairment of goodwill

 

 

 

498,736

 

 

 

498,736

 

Other

 

 

 

33,594

 

(33,594

)(C)

 

Total operating expenses

 

1,011,268

 

1,361,096

 

(19,483

)

2,352,881

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS)

 

144,776

 

(413,477

)

7,306

 

(261,395

)

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

Interest income

 

10,050

 

3,092

 

(7,450

)(F)

5,692

 

Interest expense

 

(18,239

)

(38,218

)

6,900

(G)

(49,557

)

Other

 

 

 

140

 

 

 

140

 

Total other income (expense), net

 

(8,189

)

(34,986

)

(550

)

(43,725

)

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

136,587

 

(448,463

)

6,756

 

(305,120

)

PROVISION FOR INCOME TAXES

 

54,635

 

20,119

 

2,693

(H)

77,447

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

81,952

 

$

(468,582

)

$

4,063

 

$

(382,567

)

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS (LOSS) PER SHARE

 

$

1.42

 

 

 

 

 

$

(6.61

)

DILUTED EARNINGS (LOSS) PER SHARE

 

$

1.40

 

 

 

 

 

$

(6.61

)

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE OF COMMON SHARES:

 

 

 

 

 

 

 

 

 

Basic

 

57,858

 

 

 

 

 

57,858

 

Diluted

 

58,350

 

 

 

 

 

58,350

 

 

1



 

SkyWest, Inc.

Pro Forma Condensed Combined Statement of Operations

(Unaudited)

For the nine months ended September 30, 2005

(In thousands, except per share amounts)

 

 

 

Historical

 

 

 

 

 

 

 

SkyWest, Inc.

 

January 1, 2005
- June 30, 2005
ASA

 

July 1, 2005 -
September 7,
2005 ASA

 

Pro Forma Adjustments

 

Pro Forma Combined

 

OPERATING REVENUES:

 

 

 

 

 

 

 

 

 

 

 

Passenger

 

$

1,203,991

 

$

551,323

 

$

224,543

 

$

22,218

(A)

$

2,002,075

 

Ground handling and other

 

17,693

 

 

2,037

 

 

19,730

 

Total operating revenues

 

1,221,684

 

551,323

 

226,580

 

22,218

 

2,021,805

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

Flying operations

 

669,964

 

 

 

 

 

394,236

(I)

1,064,200

 

Customer service

 

177,387

 

 

 

 

 

131,964

(C)

309,351

 

Maintenance

 

107,686

 

 

 

 

 

106,806

(C)

214,492

 

Depreciation and amortization

 

70,238

 

40,633

 

12,517

 

(5,449

)(J)

117,939

 

Promotion and sales

 

2,874

 

 

 

 

 

255

(C)

3,129

 

General and administrative

 

58,497

 

 

 

 

 

30,029

(C)

88,526

 

Salaries & related costs

 

 

 

150,092

 

56,816

 

(206,908

)(K)

 

Aircraft fuel

 

 

 

143,806

 

69,200

 

(213,006

)(C)

 

Aircraft maintenance materials and outside repairs

 

 

 

51,773

 

18,619

 

(70,392

)(C)

 

Aircraft rent

 

 

 

31,914

 

11,279

 

(43,193

)(C)

 

Contracted services

 

 

 

46,441

 

18,470

 

(64,911

)(C)

 

Landing fees and other rents

 

 

 

25,052

 

10,820

 

(35,872

)(C)

 

Other

 

 

 

29,082

 

13,661

 

(42,743

)(C)

 

Total operating expenses

 

1,086,646

 

518,793

 

211,382

 

(19,184

)

1,797,637

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

135,038

 

32,530

 

15,198

 

41,402

 

224,168

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

10,165

 

2,628

 

579

 

(5,082

)(F)

8,290

 

Interest expense

 

(25,510

)

(32,017

)

(14,276

)

5,175

(G)

(66,628

)

Other

 

(585

)

101

 

(150

)

 

 

(634

)

Total other income (expense), net

 

(15,930

)

(29,288

)

(13,847

)

93

 

(58,972

)

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

119,108

 

3,242

 

1,351

 

41,495

 

165,196

 

PROVISION FOR INCOME TAXES

 

45,525

 

1,308

 

1,150

 

16,443

(H)

64,426

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

73,583

 

$

1,934

 

$

201

 

$

25,052

 

$

100,770

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE

 

$

1.27

 

 

 

 

 

 

 

$

1.75

 

DILUTED EARNINGS PER SHARE

 

$

1.26

 

 

 

 

 

 

 

$

1.72

 

WEIGHTED AVERAGE OF COMMON SHARES:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

57,729

 

 

 

 

 

 

 

57,729

 

Diluted

 

58,512

 

 

 

 

 

 

 

58,512

 

 

2



 

SkyWest, Inc.

Notes to Unaudited Pro Forma Condensed Combined Statements of Operations

(in thousands)

 

1.                                       Basis of Presentation

 

On September 7, 2005, SkyWest, Inc. (the “Company”) completed its acquisition of all of the issued and outstanding capital stock of Atlantic Southeast Airlines, Inc. (“ASA”) from ASA Holdings, Inc., a subsidiary of Delta Air Lines, Inc. (“Delta”).  In connection with the acquisition of ASA, the Company’s wholly-owned subsidiary, SkyWest Airlines, Inc. (“SkyWest Airlines”), and Delta entered into an Amended and Restated Delta Connection Agreement, and ASA and Delta entered into a Second Amended and Restated Delta Connection Agreement (collectively, the “Delta Connection Agreements”), whereby SkyWest Airlines and ASA have agreed to provide regional airline service in the Delta flight system.  The Delta Connection Agreements became effective September 8, 2005.

 

The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2005 and for the fiscal year ended December 31, 2004 have been prepared to illustrate the pro forma effects of the ASA acquisition as if it had occurred on January 1, 2004 and as if the ASA Delta Connection Agreement was effective January 1, 2004.  The operations of ASA commencing on September 8, 2005 and through September 30, 2005, are included in the Company’s historical statement of operations.  No pro forma effect has been given to the SkyWest Airlines Delta Connection Agreement prior to the effective date of September 8, 2005.

 

2.                                       Pro Forma Financial Statements and Adjustments

 

The pro forma condensed combined information set forth in this Form 8-K/A is presented for illustrative purposes only.   Such information does not purport to be indicative of the results of operations and financial position that actually would have resulted had the acquisition occurred on the date indicated, nor is it indicative of the results that may be expected in future periods.  The pro forma adjustments are based upon information and assumptions available at the time of filing this Form 8-K/A.

 

The pro forma condensed combined statements of operations give effect to the following pro forma adjustments:

 

(A)                              Reflects the restatement of ASA revenues from the ASA historical code-share agreement with Delta to the ASA Delta Connection Agreement as if the ASA Delta Connection Agreement was effective January 1, 2004.  Under the terms of the ASA Delta Connection Agreement, Delta agrees to compensate ASA for certain direct costs associated with operating the Delta Connection flights as defined in the ASA Delta Connection Agreement, plus, if ASA completes a certain minimum percentage of its Delta Connection flights, an additional percentage of such costs.  Additionally, ASA’s Delta Connection Agreement provides for incentive compensation upon satisfaction of certain performance goals.  Under the ASA Delta Connection Agreement, excess margins over certain percentages must be returned or shared with Delta, depending on various conditions.  The pro forma revenue adjustment assumes no incentive compensation was achieved for either the year ended December 31, 2004 or for the interim period ended September 7, 2005.

 

(B)                                Reflects a reclassification of ASA expenses reported under the ASA financial statement classification to the Company’s financial statement classification of $451,103 for consistency purposes and a reduction of aircraft lease expense on aircraft lease obligations retained by Delta in connection with the Company’s acquisition of ASA of $(14,121).

 

(C)                                Reflects a reclassification of ASA expenses reported under the ASA financial statement classifications to the Company’s financial statement classifications for consistency purposes.

 

(D)                               Reflects an adjustment to ASA depreciation for changes in estimated useful lives for property and equipment using the Company’s accounting policies and reflects an adjustment to the depreciable basis of property and equipment and intangible assets resulting from the preliminary valuation and purchase price adjustments of $7,400 and a reduction of depreciation expense on aircraft retained by Delta in connection with the Company’s acquisition of ASA of $(6,658).

 

(E)                                 Reflects a reclassification of ASA expenses reported under the ASA financial statement classification to the Company’s financial statement classification of $286,154 for consistency purposes and a reduction of accrued wage expense of $6,104 to reflect amounts expected to be paid.

 

(F)                                 Reflects a reduction of interest income resulting from net cash paid to Delta of $376,912 for the acquisition of ASA.

 

(G)                                Reflects the elimination of interest expense on aircraft debt obligations retained by Delta in connection with the Company’s acquisition of ASA.

 

3



 

(H)                               Reflects the income tax effects of the pro forma adjustments.

 

(I)                                    Reflects a reclassification of ASA expenses report under the ASA financial statement classification to the Company’s financial statement classification of $404,826 for consistency purposes and a reduction of aircraft lease expense on aircraft lease obligations retained by Delta in connection with the Company’s acquisition of ASA of $(10,590).

 

(J)                                   Reflects an adjustment to ASA depreciation for changes in estimated useful lives for property and equipment using the Company’s accounting policies and reflects an adjustment to the depreciable basis of property and equipment and intangible assets resulting from the preliminary valuation and purchase price adjustments of $(455) and a reduction of depreciation expense on aircraft retained by Delta in connection with the Company’s acquisition of ASA of $(4,994).

 

(K)                               Reflects a reclassification of ASA expenses reported under the ASA financial statement classification to the Company’s financial statement classification of $203,762 for consistency purposes and a reduction of accrued wage expense of $3,146 to reflect amounts expected to be paid.

 

4


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