Southwest Airlines 2009 Annual Report Download - page 84

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2009
marked to market through earnings each period; however, these adjustments offset and had minimal impact on
net earnings for the years ended December 31, 2009 and 2008. At the time of the first failed auctions during first
quarter 2008, the Company held a total of $463 million in securities. Since that time, the Company has been able
to sell $272 million of these instruments at par value in addition to the $75 million subject to the agreement to be
settled at par in June 2010.
During first quarter 2009, the Company also entered into a $46 million line of credit agreement with another
counterparty secured by approximately $92 million (par value) of its remaining auction rate security instruments
purchased through that counterparty. This agreement allows the Company the ability to draw against the line of
credit secured by the auction rate security instruments from that counterparty. As of December 31, 2009, the
Company had made no borrowings against that available line of credit. The Company remains in discussions
with its other counterparties to determine whether mutually agreeable decisions can be reached regarding the
effective repurchase of its remaining securities. The Company has continued to earn interest on virtually all of its
auction rate security instruments. Any future fluctuation in fair value related to these instruments that the
Company deems to be temporary, including any recoveries of previous temporary write-downs, would be
recorded to AOCI. If the Company determines that any future valuation adjustment was other than temporary, it
would record a charge to earnings as appropriate.
The following items are measured at fair value on a recurring basis at December 31, 2009 and 2008:
Description December 31, 2009
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)
Assets
Cash equivalents ..................... $1,114 $1,114 $ — $ —
Short-term investments ................ 1,479 1,404 — 75
Noncurrent investments (a) ............. 99 — — 99
Interest rate derivatives ................ 47 — 47 —
Fuel derivatives (b) ................... 1,221 — 373 848
Other available-for-sale securities ........ 38 30 — 8
Total assets ......................... $3,998 $2,548 $ 420 $1,030
Liabilities
Fuel derivatives (b) ................... $(1,698) $ (990) $ (708)
Interest rate derivatives ................ (10) (10) —
Total liabilities ....................... $(1,708) $(1,000) $ (708)
(a) Included in “Other assets” in the Consolidated Balance Sheet.
(b) In the Consolidated Balance Sheet, amounts are presented as a net liability, and are also net of $330 million
in cash collateral provided to counterparties.
76