Southwest Airlines 2008 Annual Report Download - page 83

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following items are measured at fair value on a recurring basis subject to the disclosure requirements of
SFAS 157 at December 31, 2008:
Description
Assets
December 31,
2008
Fair Value Measurements at Reporting Date Using
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(in millions)
Cash equivalents .......................... 1,368 $1,368 $ — $ —
Short-term investments ..................... 435 397 — 38
Noncurrent investments(a) ................... 162 — — 162
Interest rate derivatives ..................... 83 — 83 —
Fuel derivatives ........................... 788 — 406 382
Other available-for-sale securities ............. 32 24 — 8
Total assets ............................... $2,868 $1,789 $ 489 $ 590
Liabilities
Fuel derivatives ........................... $(1,780) $(534) $(1,246)
(a) Included in “Other assets” in the Consolidated Balance Sheet
Based on market conditions, the Company changed its valuation methodology for auction rate securities to a
discounted cash flow analysis during first quarter 2008. Accordingly, these securities changed from Level 1 to
Level 3 within SFAS 157’s hierarchy since the Company’s initial adoption of SFAS 157 at January 1, 2008.
The following table presents the Company’s activity for assets measured at fair value on a recurring basis
using significant unobservable inputs (Level 3) as defined in SFAS 157 for the year ended December 31, 2008:
Fuel
Derivatives
Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3)
Auction
Rate
Securities (a)
Other
Securities Total
(in millions)
Balance at December 31, 2007 ................................ $1,725 $ — $12 $ 1,737
Transfers to Level 3 ........................................ — 463 — 463
Total gains or (losses) (realized or unrealized) Included in earnings . . . 205 — (4) 201
Included in other comprehensive income ........................ (2,233) (11) — (2,244)
Purchases and settlements (net) ............................... (561) (252) — (813)
Balance at December 31, 2008 ................................ $ (864) $ 200(b) $ 8 $ (656)
The amount of total gains or (losses) for the period included in
earnings attributable to the change in unrealized gains or losses
relating to assets still held at December 31, 2008 ............... $ 105 $ — $(4) $ 101
(a) Includes those classified as short-term investments and noncurrent investments
(b) Includes $91 classified as trading securities
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