Southwest Airlines 1998 Annual Report Download - page 58

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58
SOUTHWEST AIRLINES CO. ¤ SIX STORIES OF FREEDOM
For purposes of pro forma disclosures, the estimated fair value of stock-based
compensation plans and other options is amortized to expense primarily over the
vesting period. The Company’s pro forma net income and net income per share is as
follows:
(In thousands except per share amounts) 1998 1997 1996
NET INCOME:
As reported $433,431 $317,772 $207,337
Pro forma $421,097 $306,553 $196,478
NET INCOME PER SHARE, BASIC:
As reported $1.30 $.97 $.64
Pro forma $1.26 $.93 $.60
NET INCOME PER SHARE, DILUTED:
As reported $1.23 $.93 $.61
Pro forma $1.20 $.90 $.60
As required, the pro forma disclosures above include only options granted since
January 1, 1995. Consequently, the effects of applying SFAS 123 for providing pro
forma disclosures may not be representative of the effects on reported net income for
future years until all options outstanding are included in the pro forma disclosures.
9. EMPLOYEE PROFITSHARING AND SAVINGS PLANS
Substantially all of Southwest’s Employees are members of the Southwest Airlines
Co. Profitsharing Plan. Total profitsharing expense charged to operations in 1998,
1997, and 1996 was $120,697,000, $91,256,000, and $59,927,000, respectively.
The Company sponsors Employee savings plans under Section 401(k) of the Internal
Revenue Code. The plans cover substantially all full-time Employees. The amount of
matching contributions varies by Employee group. Company contributions generally
vest over five years with credit for prior years’ service granted. Company matching
contributions expensed in 1998, 1997, and 1996 were $46,415,000, $39,744,000, and
$35,125,000, respectively.