Southwest Airlines 2000 Annual Report Download - page 38

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12. NET INCOME PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
(In thousands except per share amounts)2000 1999 1998
NUMERATOR:
Net income before cumulative effect of change in accounting
principle $ 625,224 $ 474,378 $ 433,431
Cumulative effect of change in accounting principle (22,131) - -
Net income $ 603,093 $ 474,378 $ 433,431
DENOMINATOR:
Weighted-average shares outstanding, basic 499,078 503,065 500,013
Dilutive effect of Employee stock options 31,800 32,862 29,736
Adjusted weighted-average shares outstanding, diluted 530,878 535,927 529,749
NET INCOME PER SHARE:
Basic before cumulative effect of change in accounting principle $ 1.25 $ .94 $ .87
Cumulative effect of change in accounting principle (.04) - -
Basic earnings per share $ 1.21 $ .94 $ .87
Diluted before cumulative effect of change in accounting principle $ 1.18 $ .89 $ .82
Cumulative effect of change in accounting principle (.04) - -
Diluted earnings per share $ 1.14 $ .89 $ .82
The Company has excluded 7.8 million and 4.5 million shares from its calculations of diluted net income per share in 2000 and
1999, respectively, as they represent antidilutive stock options for the respective periods presented. There were no antidilutive
stock options in 1998.
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SHAREHOLDERS
SOUTHWEST AIRLINES CO.
We have audited the accompanying consolidated balance
sheets of Southwest Airlines Co. as of December 31, 2000
and 1999, and the related consolidated statements of
income, stockholders’ equity, and cash flows for each of the
three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Southwest Airlines Co. at December 31,
2000 and 1999, and the consolidated results of its operations
and its cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
As discussed in Note 2 to the financial statements, in 2000
the Company changed its method of accounting for the sale
of flight segment credits.
Dallas, Texas
January 18, 2001
F20