Alaska Airlines and Horizon Air 2010 Annual Report Download - page 202

NOTE 14. EARNINGS (LOSS) PER SHARE (EPS)
Diluted EPS is calculated by dividing net income
(loss) by the average common shares
outstanding plus additional common shares that
would have been outstanding assuming the
exercise of in-the-money stock options and
restricted stock units, using the treasury-stock
method. In 2010 and 2009, 0.1 million and
2.1 million stock options, respectively, were
excluded from the calculation of diluted EPS
because they were antidilutive. As the Company
reported a net loss in 2008, no outstanding
stock options or restricted stock units were used
in the calculation of diluted weighted average
shares as the effect would have been
antidilutive.
NOTE 15. CONTINGENCIES
Grievance with International Association of
Machinists
In June 2005, the International Association of
Machinists (IAM) filed a grievance under its
Collective Bargaining Agreement (CBA) with
Alaska alleging that Alaska violated the CBA by,
among other things, subcontracting the ramp
service operation in Seattle. The dispute was
referred to an arbitrator and hearings on the
grievance commenced in January 2007, with a
final hearing date in August 2007. In July 2008,
the arbitrator issued a final decision regarding
basic liability in the matter. In that ruling, the
arbitrator found that Alaska had violated the CBA
and instructed Alaska and the IAM to negotiate a
remedy. In February 2010, the arbitrator issued
a final decision. The decision does not require
Alaska to alter the existing subcontracting
arrangements for ramp service in Seattle. The
award sustains the right to subcontract other
operations in the future so long as the
requirements of the CBA are met. The award
imposed monetary remedies which were not
significant.
Other items
The Company is a party to routine litigation
matters incidental to its business and with
respect to which no material liability is expected.
Management believes the ultimate disposition of
the matters discussed above is not likely to
materially affect the Company’s financial position
or results of operations. This forward-looking
statement is based on management’s current
understanding of the relevant law and facts, and
it is subject to various contingencies, including
the potential costs and risks associated with
litigation and the actions of arbitrators, judges
and juries.
The Securities and Exchange Commission is
conducting an inquiry into trading in the
securities of Puget Energy, Inc. (“PSE”) by
Donald Smith & Co., an investment firm. William
Ayer, our Chief Executive Officer serves on the
board of PSE. Mr. Ayer and the Company are
cooperating voluntarily in that inquiry. Mr. Ayer
has stated that he never provided any non-public
information about PSE to Donald Smith & Co.
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