Southwest Airlines 1996 Annual Report Download - page 48

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48
resolve. Management believes that final resolution of such protest will not have a materially
adverse effect upon the results of operations of Southwest.
The effective tax rate on income before income taxes differed from the federal income tax
statutory rate for the following reasons (in thousands):
1996 1995 1994
Tax at statutory U.S.
tax rates $119,477 $106,799 $104,833
Nondeductible items 5,168 4,488 3,689
State income taxes,
net of federal benefit 9,072 8,784 9,177
Other, net 308 2,443 2,493
Total income tax provision $134,025 $122,514 $120,192
10. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per common and common equivalent share is computed based on the
weighted-average number of common and common equivalent shares outstanding (151,793,477
in 1996, 148,850,512 in 1995, and 147,305,374 in 1994). Fully diluted earnings per share have
not been presented as the fully dilutive effect of shares issuable upon the exercise of options
under the Company’s Stock Option Plans is not material.