Alaska Airlines and Horizon Air 2013 Annual Report Download - page 153

Activity for marketable securities for the years
ended December 31 (in millions):
2013 2012 2011
Proceeds from sales and
maturities ................. $1,089 $1,048 $956
Gross realized gains ........... 498
Gross realized losses .......... (2) (2) (3)
Other-than-temporary impairments
on investments ............. —— (2)
Marketable securities maturities as of
December 31, 2013 (in millions):
December 31, 2013 Cost Basis Fair Value
Due in one year or less .......... $ 111 $ 111
Due after one year through five
years ...................... 1,117 1,118
Due after five years through 10
years ...................... 22 21
Total ..................... $1,250 $1,250
NOTE 4. DERIVATIVE INSTRUMENTS
Fuel Hedge Contracts
The Company’s operations are inherently
dependent upon the price and availability of
aircraft fuel. To manage economic risks
associated with fluctuations in aircraft fuel
prices, the Company periodically enters into call
options for crude oil and swap agreements for jet
fuel refining margins.
As of December 31, 2013, the Company had
fuel hedge contracts outstanding covering
303 million gallons of crude oil that will be
settled from January 2014 to March 2016. Refer
to the contractual obligations and commitments
section of Item 7 for further information.
Interest Rate Swap Agreements
The Company has interest rate swap agreements
with a third party designed to hedge the volatility
of the underlying variable interest rate in the
Company's aircraft lease agreements for six
Boeing 737-800 aircraft. The agreements
stipulate that the Company pay a fixed interest
rate over the term of the contract and receive a
floating interest rate. All significant terms of the
swap agreement match the terms of the lease
agreements, including interest-rate index, rate
reset dates, termination dates and underlying
notional values. The agreements expire from
February 2020 through March 2021 to coincide
with the lease termination dates.
Fair Values of Derivative Instruments
Fair values of derivative instruments on the consolidated balance sheet as of December 31
(in millions):
2013 2012
Derivative Instruments Not Designated as Hedges
Fuel hedge contracts
Fuel hedge contracts, current assets ................................. $12 $26
Fuel hedge contracts, noncurrent assets .............................. 439
Fuel hedge contracts, current liabilities ............................... —$ (1)
Derivative Instruments Designated as Hedges
Interest rate swaps
Other accrued liabilities............................................ (7) (6)
Other liabilities .................................................. (10) (27)
Losses in accumulated other comprehensive loss (AOCL) ................. (17) (33)
The net cash received (paid) for new positions
and settlements was $5 million, $(19) million,
and $16 million during 2013, 2012, and 2011,
respectively.
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ŠForm 10-K