Back to GetFilings.com
1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from______________to_____________
Commission File No. 0-14719
SKYWEST, INC.
Incorporated under the Laws of Utah
87-0292166
(IRS Employer ID No.)
444 South River Road
St. George, Utah 84790
(435) 634-3000
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
Indicate by check mark whether the registrant (1) has filed all
documents and reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or such shorter
period that the Registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. YES [X] NO [ ]
The aggregate market value of Common Stock held by non-affiliates (based
upon the closing sale price of the Common Stock on the NASDAQ National Market
System) on June 15, 2001, was approximately $1,565,420,650.
As of June 15, 2001, there were 56,209,000 shares of Common Stock
outstanding.
Documents Incorporated by Reference
Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended March 31, 2001, are incorporated by reference in Part II as
specified.
Portions of the Registrant's Proxy Statement to be used in connection
with the solicitation of proxies to be voted at the Registrant's 2001 Annual
Meeting of Shareholders, to be filed with the Commission, are incorporated by
reference in Part III as specified.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in the definitive proxy statement
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K. [X]
2
SKYWEST, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
Page No.
--------
PART I
Item 1. Business..........................................................................3
Item 2. Properties........................................................................8
Item 3. Legal Proceedings.................................................................9
Item 4. Submission of Matters to a Vote of Security Holders...............................9
PART II
Item 5. Market for Registrant's Common Stock and
Related Stockholder Matters....................................................10
Item 6. Selected Financial Data..........................................................10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.......................10
Item 8. Financial Statements and Supplementary Data......................................11
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure..............11
PART III
Item 10. Directors and Executive Officers of the Registrant...............................11
Item 11. Executive Compensation...........................................................11
Item 12. Security Ownership of Certain Beneficial
Owners and Management..........................................................11
Item 13. Certain Relationships and Related Transactions...................................11
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K............................................................12
3
PART I
ITEM 1. BUSINESS
GENERAL
SkyWest, Inc. (the "Company"), through its wholly owned subsidiary, SkyWest
Airlines, Inc. ("SkyWest"), operates one of the larger regional airlines in the
United States. SkyWest offers scheduled passenger and air freight service with
over 1,000 daily departures to 66 cities in 14 western states and Canada.
SkyWest has been a code-sharing partner with Delta Air Lines, Inc. ("Delta") in
Salt Lake City and United Airlines ("United") in Los Angeles since 1987 and
1997, respectively. In April 1998, SkyWest expanded its United Express Agreement
to provide service as United Express in United's Portland and Seattle/Tacoma
markets and in additional Los Angeles markets, which began in April 1998. In
January 1998, SkyWest expanded its operations to serve as the United Express
carrier in San Francisco, which began in June 1998. Today, SkyWest operates as
the Delta Connection in Salt Lake City and as United Express in Los Angeles, San
Francisco, Denver and in the Pacific Northwest. SkyWest believes that its
success in attracting multiple code-sharing relationships is attributable to its
delivery of high quality customer service with an all cabin-class fleet. As of
May 31, 2001, 53 percent of SkyWest's traffic was carried under the Delta code,
and 47 percent was carried under the United code. Additionally, 23.4 percent of
SkyWest's flights operated under the Delta code and 76.6 percent operated under
the United code. With principal hubs located at Los Angeles, Salt Lake City, San
Francisco, Portland and Seattle/Tacoma, SkyWest offers a convenient and frequent
flight schedule designed to maximize connecting and origin-destination traffic
for its major code-sharing partners. As of March 31, 2001, SkyWest operated a
fleet of 91 Embraer EMB-120 Brasilia turboprops ("Brasilias") and 17 Canadair
Regional Jets ("CRJs").
Multiple code-sharing relationships have enabled SkyWest to reduce reliance on
any single major airline code and to enhance and stabilize operating results
through a mix of SkyWest-controlled flying and contract flying. On
SkyWest-controlled flights, SkyWest controls scheduling, ticketing, pricing and
seat inventories and receives a prorated portion of passenger fares. On contract
routes, the major airline partner controls scheduling, ticketing, pricing and
seat inventories with SkyWest receiving from its major airline partners
negotiated payments per flight departure and incentives related to passenger
volumes and levels of customer service. As of March 31, 2001, approximately 69
percent of SkyWest's capacity was in contract flying and 31 percent was in
SkyWest-controlled flying. Another benefit of the multiple code-sharing
relationships is the ability to grow within two major airline systems. The
Company has agreements to acquire an additional 113 CRJs with options for an
additional 119 aircraft with deliveries which began in April 2001. These
aircraft will be allocated between Delta Connection and United Express
operations.
Since being founded in 1972, the Company has experienced significant growth.
During the past five fiscal years, consolidated operating revenues have
increased at a compounded annual growth rate of 21.2 percent, from $245.8
million in fiscal 1997 to $531.1 million in fiscal 2001. Total passengers
carried by SkyWest have increased from approximately 2,657,000 to approximately
5,677,000 over the same period. In fiscal 2001, the Company experienced growth
in available seat miles, revenue passenger miles, passengers carried and load
factors. The Company generated net income of $57.1 million in both fiscal 2001
and 2000 and $41.8 million in fiscal 1999. During fiscal 1999, the Company sold
the operations of Scenic Airlines, Inc., and recorded a loss on the sale of $0.8
million net of income taxes. The amount has been reflected as discontinued
operations in the Company's consolidated financial statements. During fiscal
2001, the Company sold the operations of National Parks Transportation in order
to focus on the core airline business and continued development of its Delta and
United relationships. The improvement since fiscal 1999 reflects, among other
factors, the addition of United as a code-sharing partner in October 1997.
JOINT MARKETING AND CODE SHARING AGREEMENTS
Since April 1987, SkyWest has operated as the Delta Connection in certain
SkyWest markets pursuant to the terms of a joint marketing and code sharing
agreement with Delta. In July 1990, SkyWest and Delta entered into a revised
Delta Connection Agreement, modified in April 1997 and May 1999, under which
SkyWest coordinates with Delta to facilitate interline connections at the Salt
Lake City International Airport. The primary benefit of this affiliation is the
use of the Delta designation code (DL) in listing flights in the Official
Airline Guide and in the computerized reservation systems used throughout the
industry. SkyWest's code sharing arrangement allocates to SkyWest, on
3
4
certain flights, a portion of the passenger fare on a formula or other basis,
subject to periodic adjustments. This code sharing agreement also provides for
negotiated minimum payments per flight departure and incentives related to
passenger volumes and levels of customer service, on certain flights. SkyWest
also participates in cooperative advertising and marketing activities with
Delta, including Delta's Frequent Flyer Program, the Delta Meeting Network and
Delta Dream Vacations.
The Company believes the arrangement created between SkyWest and Delta is
similar to those which exist between other major and regional airlines. The
Delta Connection Agreement terminates in June 2010, and is subject to earlier
termination in various circumstances, including upon 180 days advance notice by
either party for any or no reason. As of March 31, 2001, NewSky, Ltd., a
subsidiary of Delta, owned 6,215,596 shares of the Company's common stock, which
represents approximately 11.1 percent of the Company's outstanding common stock.
Pursuant to a Stock Option Agreement between Delta and the Company, Delta holds
preemptive rights and registration rights (two demand rights and unlimited
"piggy-back" rights) with respect to the common stock owned by Delta, as well as
the right to designate one nominee for the Company's Board of Directors, so long
as Delta owns at least ten percent of all outstanding shares of common stock.
Effective April 1, 1997, W. Martin Braham, Delta's designated Board member
resigned from the Board, at Delta's request. All Delta designated board members
of other regional airlines with similar arrangements also resigned. However, so
long as Delta is the owner of 10% or more of the Company's outstanding shares of
common stock, Delta has the right to include a designee of Delta reasonably
acceptable to the Company on the slate of nominees for election of directors
nominated by the Company's Board of Directors and the Company is obligated to
use its best efforts to assure the election of Delta's designee to the Board of
Directors. Delta has not designated a nominee to replace Mr. Braham and the
Company does not otherwise intend to nominate a replacement for the vacancy
created by Mr. Braham's resignation.
Effective October 1997, SkyWest began operating as a United Express carrier in
Los Angeles, under a United Express Agreement. The benefits under this agreement
are similar to those described under the Delta Connection agreement. This
agreement terminates on September 30, 2002. However, it may be terminated
earlier based on certain provisions in the agreement. United may also terminate
the agreement for convenience upon 180 days written notice. In April 1998,
SkyWest expanded its United Express Agreement to provide service as United
Express in United's Portland and Seattle/Tacoma markets and in additional Los
Angeles markets, which began in April 1998. In January 1998, SkyWest expanded
its operations to serve as the United Express carrier in San Francisco, which
began in June 1998. The amendment agreements executed in January and February
1998 terminate in May 2008. However, they may be terminated earlier based on
certain provisions in the agreements. The additional flights in Los Angeles
covered in the April 1998 agreement terminate on the same day as those in the
agreement dated October 1997. United may also terminate these agreements for
convenience upon 180 days written notice. On United Express routes, United
controls scheduling, ticketing, pricing and seat inventories with SkyWest
receiving from United negotiated minimum payments per flight departure and
incentives related to passenger and volumes and levels of customer service.
MARKETS AND ROUTES
SkyWest's flight schedules are structured to facilitate the connection of its
passengers with flights of Delta and United at the airports it serves. The
following table shows selected information about the cities served by SkyWest as
of June 15, 2001.
4
5
Served
State and City Since (1)
-------------- ---------
Arizona:
Yuma...................................................1979
Phoenix................................................2000
California:
San Diego..............................................1968
Palm Springs...........................................1970
Los Angeles............................................1977
Imperial...............................................1979
Ontario................................................1981
Santa Maria............................................1982
Santa Barbara..........................................1983
Bakersfield............................................1983
Fresno.................................................1985
Sacramento.............................................1986
San Francisco..........................................1995
San Jose...............................................1986
San Luis Obispo........................................1986
Orange County..........................................1986
Monterey...............................................1987
Cresent City...........................................1998
Eureka.................................................1998
Redding................................................1998
Chico..................................................1998
Santa Rosa.............................................1998
Modesto................................................1998
Merced.................................................1998
Visalia................................................1998
Inyokern...............................................1998
Oxnard.................................................1998
Carlsbad...............................................1998
Colorado:
Grand Junction.........................................1983
Colorado Springs.......................................1995
Denver.................................................2000
Idaho:
Pocatello..............................................1980
Idaho Falls............................................1982
Twin Falls.............................................1983
Boise..................................................1988
Sun Valley.............................................1990
5
6
Served
State and City Since (1)
-------------- ---------
Minnesota:
Minneapolis............................................2000
Montana:
West Yellowstone.......................................1986 (2)
Helena.................................................1988 (2)
Bozeman................................................1988
Billings...............................................1988
Butte..................................................1988
Missoula...............................................1998
Nebraska:
Omaha1998
New Mexico:
Albuquerque............................................1995
Nevada:
Las Vegas..............................................1974
Elko...................................................1982
Reno...................................................1982
Oregon:
Eugene.................................................1995
Portland...............................................1995
Redmond................................................1998
Medford................................................1998
South Dakota:
Rapid City.............................................1994
Utah:
Cedar City.............................................1972
Salt Lake City.........................................1972
St. George.............................................1972
Washington:
Pasco..................................................1996
Yakima.................................................1998
Bellingham.............................................1998
Seattle................................................1998
Spokane................................................1999
Wyoming:
Jackson Hole...........................................1986
Casper.................................................1994
Cody...................................................1995
Canada:
Vancouver B.C..........................................1997
Calgary................................................1999
(1) Refers to the calendar year service was initiated.
(2) Service is provided on a seasonal basis.
6
7
GOVERNMENT REGULATION
All interstate air carriers, including SkyWest, are subject to regulation by the
DOT, the FAA and certain other governmental agencies. Regulations promulgated by
the DOT primarily relate to economic aspects of air service. The FAA requires
operating, air worthiness and other certificates; approval of personnel who may
engage in flight, maintenance or operation activities; record keeping procedures
in accordance with FAA requirements; and FAA approval of flight training and
retraining programs. Generally, governmental agencies enforce their regulations
through, among other mechanisms, certifications, which are necessary for
SkyWest's continued operations, and proceedings, which can result in civil or
criminal penalties or revocation of operating authority. The FAA can also issue
maintenance directives and other mandatory orders relating to, among other
things, grounding of aircraft, inspection of aircraft, installation of new
safety-related items and the mandatory removal and replacement of aircraft parts
that have failed or may fail in the future.
SkyWest believes it is operating in compliance with FAA regulations and holds
all necessary operating and airworthiness certificates and licenses. The Company
incurs substantial costs in maintaining current certifications and otherwise
complying with the laws, rules and regulations to which it is subject. SkyWest's
flight operations, maintenance programs, record keeping and training programs
are conducted under FAA approved procedures. SkyWest does not operate at any
airports where landing slots are restricted.
All air carriers are required to comply with federal laws and regulations
pertaining to noise abatement and engine emissions. All air carriers are also
subject to certain provisions of the Federal Communications Act of 1934, as
amended, because of their extensive use of radio and other communication
facilities. The Company is also subject to certain other federal and state laws
relating to protection of the environment, labor relations and equal employment
opportunity. Management believes that the Company is in compliance in
all-material respects with these laws and regulations.
COMPETITION AND ECONOMIC CONDITIONS
The airline industry is highly competitive. The Company not only competes with
other regional airlines, some of which are owned by or are operated as code
sharing partners of major airlines, but also faces competition from low-fare
airlines and major airlines on certain routes. The Company is the dominant
regional airline operating out of the Salt Lake City International Airport:
however, Southwest Airlines, a national low-fare airline, also operates out of
the Salt Lake City International Airport, which results in significant price
competition at the Salt Lake City hub. Competition in the Southern California
and Pacific Northwest markets, which the Company serves from its hubs in Los
Angeles, Seattle/Tacoma and Portland, is particularly intense, with a large
number of carriers in these markets. The Company's principal competitor in the
Los Angeles International Airport is American Eagle. The Company's principal
competitor in the Seattle/Tacoma and Portland markets is Horizon Airlines.
The principal competitive factors in the regional airline industry are fare
pricing, customer service, routes served, flight schedules, aircraft types and
code-sharing relationships. Certain of the Company's competitors are larger and
have significantly greater financial resources than the Company. Moreover,
federal deregulation of the industry allows competitors to rapidly enter markets
and to quickly discount and restructure fares. The airline industry is
particularly susceptible to price discounting because airlines incur only
nominal costs to provide service to passengers occupying otherwise unsold seats.
Generally, the airline industry is highly sensitive to general economic
conditions, in large part due to the discretionary nature of a substantial
percentage of both business and pleasure travel. In the past, many airlines have
reported decreased earnings or substantial losses resulting from periods of
economic recession, heavy fare discounting and other factors. Economic downturns
combined with competitive pressures have contributed to a number of bankruptcies
and liquidations among major and regional carriers. The effect of economic
downturns is somewhat mitigated by the Company's fixed-fee arrangements with
respect to certain flights. Nonetheless, the per passenger component in such fee
structures would be affected by an economic downturn. In addition, if the
Company's major airline code-sharing partners experience longer-term declines in
passenger loads or are injured by low ticket prices or high fuel prices, they
will likely seek to reduce the Company's fixed fees or cancel a number of
flights in order to reduce their costs.
7
8
EMPLOYEES
As of June 15, 2001, the Company employed 4,383 full-time equivalent employees
consisting of 1,715 pilots and flight attendants, 1,869 customer service
personnel, 557 mechanics and other maintenance personnel, and 242 administration
and support personnel. The Company's employees are not currently represented by
any union. However, the Company is aware that collective bargaining group
organization efforts among its employees occur from time to time and expect that
such efforts will continue in the future. During August 1999, the question of
whether or not to join the Airline Pilots Association ("ALPA") was submitted to
the Company's pilots, who voted against joining ALPA by a narrow margin. Under
governing rules, the Company's pilots may again vote on this issue at any time
because one year has passed since the previous vote. If unionization efforts are
successful, the Company may by subjected to risks of work interruption or
stoppage and/or incur additional expenses associated with union representation
of its employees. In connection with the Company's proposed acquisition of an
additional 113 CRJs and related expansion, the Company anticipates hiring
approximately 3,500 additional employees, many of whom may be represented by a
union in their current employment. The Company has never experienced any work
stoppages and considers its relationships with its employees to be very good.
SEASONALITY
As is common in the airline industry, SkyWest's operations are favorably
affected by increased travel, historically occurring in the summer months, and
are unfavorably affected by decreased business travel during the months from
November through January and by inclement weather which occasionally results in
cancelled flights, principally during the winter months. However, SkyWest does
expect some mitigation of the historical seasonal trends due to an increase in
the portion of its operations in contract flying.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains various forward-looking statements and
information that are based on management's beliefs, as well as assumptions made
by and information currently available to management. When used in this
document, the words "anticipate," "estimate," "project," "expect," and similar
expressions are intended to identify forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Such statements are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, projected
or expected. Among the key factors that may have a direct bearing on the
Company's operating results include, among other things, changes in SkyWest's
code-sharing relationships, fluctuations in the economy and the demand for air
travel, the degree and nature of competition and SkyWest's ability to expand
services in new and existing markets and to maintain profit margins in the face
of pricing pressures.
ITEM 2. PROPERTIES
FLIGHT EQUIPMENT
As of June 15, 2001, SkyWest owned or leased the following types of aircraft:
NUMBER OF SCHEDULED AVERAGE
AIRCRAFT FLIGHT CRUISING AVERAGE
----------------- PASSENGER RANGE SPEED AGE
TYPE OF AIRCRAFT OWNED LEASED CAPACITY (MILES) (MPH) (YEARS)
- ---------------- ----- ------ --------- --------- -------- -------
Brasilia................... 21 70 30 300 300 6.7
Canadair Regional Jet...... 2 24 50 850 530 3.6
8
9
SkyWest's aircraft are turboprop and jet pressurized aircraft designed to
operate more economically over short-haul routes with lower passenger load
factors than larger jet aircraft. These factors make it economically feasible
for SkyWest to provide high frequency service in markets with relatively low
volumes of passenger traffic. Passenger comfort features of these aircraft
include stand-up headroom, a lavatory, overhead baggage compartments and flight
attendant service. Fiscal year 1995 marked the introduction of the CRJs. SkyWest
currently operates 26 of these aircraft on stage lengths up to 850 miles.
During fiscal 2001, SkyWest took delivery of six CRJs in connection with the
Delta Connection and United Express expansion. Additionally, as of March 31,
2001 SkyWest had agreed to acquire an additional 113 CRJs and related spare
parts inventory and support equipment at an aggregate cost of approximately $2.4
billion. SkyWest commenced delivery of these aircraft in April 2001 and
deliveries are scheduled to continue through December 2004. Depending on the
state of the aircraft financing market at the time of delivery, management will
determine whether to acquire these aircraft through third party, long-term loans
or lease agreements. SkyWest also has options to acquire 119 additional CRJs at
fixed prices (subject to cost escalations) and the delivery schedules are
exercisable at various dates through April 2008.
GROUND FACILITIES
Employees of SkyWest perform substantially all routine airframe and engine
maintenance and periodic inspection of equipment. Maintenance is performed
primarily at facilities in Palm Springs, California, Salt Lake City, Utah, and
Fresno, California. SkyWest owns a 56,600 square foot maintenance facility in
Palm Springs, California and leases a 90,000 square foot aircraft maintenance
and training facility at the Salt Lake City International Airport. The facility
consists of a 40,000 square foot maintenance hangar and 50,000 square feet of
training and other facilities. The facility was constructed and is owned by the
Salt Lake City Airport Authority. SkyWest is leasing the facility under an
operating lease arrangement over a 36-year term. The Company also leases a
90,000 square foot maintenance hanger and 15,000 square foot office facility in
Fresno, California. SkyWest began construction on an additional aircraft
maintenance and training facility in Salt Lake City during September 2000. It is
estimated that the facility will be completed and operational by July 2001. The
facility is 131,300 square feet, consisting of a 58,400 square foot maintenance
hangar and 72,900 square feet of training and office space. It is anticipated
that the facility will be owned by the Salt Lake City Airport Authority and will
be leased to SkyWest under a long-term lease arrangement.
SkyWest leases ticket counters, check-in and boarding and other facilities in
the passenger terminal areas in the majority of the airports it serves and
staffs these facilities with SkyWest personnel. Delta and United provide ticket
handling and/or ground support services for SkyWest in 33 of the 68 airports
SkyWest serves.
The Company's corporate headquarters are located in a 63,000 square foot
building in St. George, Utah. The Company is in the construction phase for an
additional building adjacent to its current corporate headquarters in St.
George, Utah. It is estimated that the facility will be completed and
operational in November 2001. The facility will consist of approximately 55,000
square feet and will include office space for maintenance management and flight
operations including pilot management, dispatch and flight attendant management.
The facility will be owned by the Company and will be internally funded with
cash generated from operations. Management deems the Company's current and
planned facilities as being suitable and necessary to support existing
operations and believes the Company's facilities will be adequate for the
foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to certain legal actions, which it considers routine to
its business activities. As of March 31, 2001, management believes, after the
consultation with legal counsel, that the ultimate outcome of such legal matters
will not have a material adverse effect on the Company's financial position,
liquidity or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 2001.
9
10
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded over-the-counter and quoted in the NASDAQ
National Market System under the symbol "SKYW." At June 15, 2001, there were
approximately 988 stockholders of record. Securities held of record do not
include shares held in securities position listings. The following table sets
forth the range of high and low closing sales prices for the Company's common
stock.
Fiscal 2001 Fiscal 2000
------------------------ ------------------------
Quarter High Low High Low
------- ------ ------ ------ ------
First $23.25 $16.94 $15.13 $10.75
Second 25.86 18.69 13.82 10.07
Third 29.97 23.38 14.50 10.72
Fourth 28.81 17.75 19.57 13.75
The transfer agent for the Company's common stock is Zions First National Bank,
Salt Lake City, Utah.
During fiscal 2001, the Board of Directors declared regular quarterly dividends
of $0.02 per quarter. On November 7, 2000, the Board of Directors declared a
stock dividend, payable to stockholders of record on November 30, 2000, of one
share of the Company's common stock for each share of the Company's common stock
outstanding on the record date.
On May 8, 2001, the Company's Board of Directors declared a regular quarterly
cash dividend of $0.02 per share payable to stockholders of record on June 29,
2001, distributable July 13, 2001.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference to
page 11 of the Company's Annual Report to Shareholders for the fiscal year ended
March 31, 2001, furnished herewith to the Commission as Exhibit 13.1 to this
Report on Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is incorporated herein by reference to
pages 12 through 17 of the Company's Annual Report to Shareholders for the
fiscal year ended March 31, 2001, furnished herewith to the Commission as
Exhibit 13.1 to this Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by reference to
page 16 of the Company's Annual Report to Shareholders for the fiscal year ended
March 31, 2001, furnished herewith to the Commission as Exhibit 13.1 to this
Report on Form 10-K.
10
11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company included on pages 18
through 31 of the Company's Annual Report to Shareholders for the fiscal year
ended March 31, 2001, furnished herewith to the Commission as Exhibit 13.1 to
this Report on Form 10-K, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
All items in Part III are incorporated herein by reference to the Company's
Proxy Statement for its 2001 annual stockholders meeting to be held August 14,
2001, to be filed with the Commission.
Headings in
Proxy Statement
---------------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS "Election of Directors" and
OF THE REGISTRANT. "Executive Officers"
ITEM 11. EXECUTIVE COMPENSATION. "Executive Compensation" and
"Report of the Compensation Committee"
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL "Election of Directors" and
OWNERS AND MANAGEMENT. "Security Ownership of Certain
Beneficial Owners and
Management"
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. "Certain Relationships and
Related Transactions"
11
12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents Filed:
1. Financial Statements. The following consolidated
financial statements of SkyWest, Inc., included in the
Annual Report to Shareholders for the year ended March
31, 2001, are incorporated herein by reference in Item 8
of this Report on Form 10-K.
- Report of independent public accountants
- Consolidated balance sheets as of March 31, 2001
and 2000
- Consolidated statements of income for the years
ended March 31, 2001, 2000 and 1999
- Consolidated statements of stockholders' equity
for the years ended March 31, 2001, 2000 and
1999
- Consolidated statements of cash flows for the
years ended March 31, 2001, 2000 and 1999
- Notes to consolidated financial statements
2. Financial Statement Schedules. The following
consolidated financial statement schedule of SkyWest,
Inc. is included in Item 14(d) hereof.
- Report of independent public accountants on
financial statement schedule
- Schedule II -- Valuation and qualifying accounts
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are not applicable, and therefore have
been omitted.
(b) Reports on Form 8-K.
On February 8, 2001, the Company filed a Current Report on Form
8-K concerning a change of the Company's fiscal year-end from
March 31 to December 31, effective December 31, 2001.
(c) Exhibits.
Incorporated by Filed
Number Exhibit Reference Herewith
- ------ ------- --------------- --------
3.1 Restated Articles of Incorporation..............................(1)
3.2 Amended By-Laws.................................................(3)
4.1 Articles IV and VI of Restated Articles of
Incorporation describing the Common Shares
and shareholders rights (included in
Exhibit 3.1)....................................................(1)
12
13
Incorporated by Filed
Number Exhibit Reference Herewith
- ------ ------- --------------- --------
4.2 Article II of the Amended By-Laws defining the
rights of Common Shareholders (included in
Exhibit 3.2)....................................................(3)
10.1 SkyWest, Inc. Amended and Combined Incentive and
Non-Statutory Stock Option Plan.................................(3)
10.2 Delta Connection agreement dated January 13, 1987
between Delta Air Lines, Inc. and SkyWest
Airlines, Inc...................................................(2)
10.3 United Express Agreement dated October 1, 1997 and
subsequent amendments dated January 15, 1998 and
February 9, 1998................................................(6)
10.4 Stock Option agreement dated January 28,
1987 between Delta Air Lines, Inc. and
SkyWest, Inc....................................................(2)
10.5 Lease Agreement dated December 1, 1989 between
Salt Lake City Corporation and SkyWest Airlines,
Inc.............................................................(4)
10.6 SkyWest, Inc. 1995 Employee
Stock Purchase Plan.............................................(5)
10.7 SkyWest, Inc. Executive Stock Incentive Plan....................(7)
10.8 SkyWest, Inc. Allshare Stock Option Plan........................(7)
10.9 Master Purchase Agreement between Bombardier and
SkyWest Airlines, Inc...........................................(8)
13.1 Certain portions of the Annual Report to Shareholders
for the year ended March 31, 2001, are incorporated
by reference into this Report on Form 10-K.....................................X
13
14
Incorporated by Filed
Number Exhibit Reference Herewith
- ------ ------- --------------- --------
22.1 Subsidiaries of the Registrant.................................................X
23.1 Consent of independent public accountants......................................X
(1) Incorporated by reference to Registration Statement on Form S-1, File
No. 33-5823.
(2) Incorporated by reference to Registrant's 10-Q filed for the quarter
ended December 31, 1986.
(3) Incorporated by reference to Registration Statement on Form S-8, File
No. 33-41285.
(4) Incorporated by reference to Registrant's Form 10-K filed for the year
ended March 31, 1992.
(5) Incorporated by reference to Registrant's Form 10-K filed for the year
ended March 31, 1995.
(6) Incorporated by reference to Registrant's Forms 8-K filed on January 21,
1998 and February 11, 1998.
(7) Incorporated by reference to Registrant's Form 10-Q filed on July 28,
2000.
(8) Incorporated by reference to Registrant's Form 10-Q filed on February
13, 2001.
14
15
(d) Financial Statement Schedule.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To SkyWest, Inc.:
We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements included in SkyWest, Inc.'s
Annual Report to Shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated May 16, 2001. Our audits were made for the
purpose of forming an opinion on the basic financial statements taken as a
whole. The schedule listed in Item 14 (a)(2) is the responsibility of the
Company's management and is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Salt Lake City, Utah
May 16, 2001
15
16
SKYWEST, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 2001, 2000 AND 1999
Additions
Balance at Charged to Balance
Beginning Costs and at End
Description of Year Expenses Deductions of Year
----------- ----------- ------------ -----------
Year Ended March 31, 2001:
Engine overhaul accrual $ 9,889,014 $ 5,057,830 $ 1,001,012 $13,945,832
Allowance for inventory obsolescence 480,000 -- -- 480,000
Allowance for doubtful
accounts receivable 58,972 69,519 64,634 63,857
----------- ----------- ------------ -----------
$10,427,986 $ 5,127,349 $ 1,065,646 $14,489,689
=========== =========== ============ ===========
Year Ended March 31, 2000:
Engine overhaul accrual $ 7,167,309 $ 4,133,632 $ (1,411,927) $ 9,889,014
Allowance for inventory obsolescence 380,000 100,000 -- 480,000
Allowance for doubtful
accounts receivable 202,674 -- (143,702) 58,972
----------- ----------- ------------ -----------
$ 7,749,983 $ 4,233,632 $ (1,555,629) $10,427,986
=========== =========== ============ ===========
Year Ended March 31, 1999:
Engine overhaul accrual $ 5,540,786 $ 3,637,054 $ (2,010,531) $ 7,167,309
Allowance for inventory obsolescence 180,000 200,000 -- 380,000
Allowance for doubtful
accounts receivable 123,768 100,000 (21,094) 202,674
----------- ----------- ------------ -----------
$ 5,844,554 $ 3,937,054 $ (2,031,625) $ 7,749,983
=========== =========== ============ ===========
16
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
SKYWEST, INC.
By /s/ Jerry C. Atkin
--------------------------------------------
Jerry C. Atkin
Chairman, President and Chief Executive Officer
Pursuant to the requirement of the Securities Act of 1934, this report has been
signed below by the following persons in the capacities and on the dates
indicated.
Names Capacities Date
----- ---------- ----
/s/ Jerry C. Atkin Chairman of the Board, President and June 27, 2001
- ----------------------------- Chief Executive Officer
Jerry C. Atkin
/s/ Sidney J. Atkin Vice Chairman of the Board June 27, 2001
- ----------------------------- and Director
Sidney J. Atkin
Executive Vice President, June 27, 2001
/s/ Bradford R. Rich Chief Financial Officer and Treasurer
- ----------------------------- (principal financial and
Bradford R. Rich accounting officer)
/s/ J. Ralph Atkin Director June 27, 2001
- -----------------------------
J. Ralph Atkin
/s/ Mervyn K. Cox Director June 27, 2001
- -----------------------------
Mervyn K. Cox
Director
- -----------------------------
Ian M. Cumming
Director
- -----------------------------
Steven F. Udvar-Hazy
/s/ Henry J. Eyring Director June 27, 2001
- -----------------------------
Henry J. Eyring
/s/ Hyrum W. Smith Director June 27, 2001
- -----------------------------
Hyrum W. Smith
- ----------------------------- Director
Robert G. Sarver
17
18
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
3.1 Restated Articles of Incorporation
3.2 Amended By-Laws
4.1 Articles IV and VI of Restated Articles of Incorporation
describing the Common Shares and shareholders rights (included
in Exhibit 3.1)
4.2 Article II of the Amended By-Laws defining the rights of Common
Shareholders (included in Exhibit 3.2)
10.1 SkyWest, Inc. Amended and Combined Incentive and Non-Statutory
Stock Option Plan
10.2 Delta Connection agreement dated January 13, 1987 between Delta
Air Lines, Inc. and SkyWest Airlines, Inc
10.3 United Express Agreement dated October 1, 1997 and subsequent
amendments dated January 15, 1998 and February 9, 1998
10.4 Stock Option agreement dated January 28, 1987 between Delta Air
Lines, Inc. and SkyWest, Inc
10.5 Lease Agreement dated December 1, 1989 between Salt Lake City
Corporation and SkyWest Airlines, Inc
10.6 SkyWest, Inc. 1995 Employee Stock Purchase Plan
10.7 SkyWest, Inc. Executive Stock Incentive Plan
10.8 SkyWest, Inc. Allshare Stock Option Plan
10.9 Master Purchase Agreement between Bombardier and SkyWest Airlines,
Inc.
13.1 Certain portions of the Annual Report to Shareholders for the year
ended March 31, 2001, are incorporated by reference into this
Report on Form 10-K
22.1 Subsidiaries of the Registrant
23.1 Consent of independent public accountants
(1) Incorporated by reference to Registration Statement on Form S-1 File No. 33-5823.
(2) Incorporated by reference to Registrant's 10-Q filed for the quarter ended December 31, 1986.
(3) Incorporated by reference to Registration Statement on Form S-8, File No. 33-41285.
(4) Incorporated by reference to Registrant's Form 10-K filed for the year ended March 31, 1992.
(5) Incorporated by reference to Registrant's Form 10-K filed for the year ended March 31, 1995.
(6) Incorporated by reference to Registrant's Forms 8-K filed on January 21, 1998 and February 11, 1998.
(7) Incorporated by reference to Registrant's Form 10-Q filed on July 28, 2000.
(8) Incorporated by reference to Registrant's Form 10-Q filed on February 13, 2001.