Southwest Airlines 2001 Annual Report Download - page 28

SOUTHWEST AIRLINES CO. 2001 ANNUAL REPORT
F20
REPORT OF 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, 2001 and 2000, and the
related consolidated statements of income, stockholders’ equity, and
cash flows for each of the three years in the period ended December 31,
2001. 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, 2001 and 2000, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States.
As discussed in Note 2 to the financial statements, in 2001 the
Company changed its method of accounting for derivative financial
instruments and in 2000 the Company changed its method of accounting
for the sale of flight segment credits.
Dallas, Texas
January 16, 2002
The Company has excluded 5.7 million, 11.7 million, and 6.7 million shares from its calculations of net income per share, diluted, in 2001, 2000,
and 1999, respectively, as they represent antidilutive stock options for the respective periods presented.
15. NET INCOME PER SHARE
The following table sets forth the computation of net income per share, basic and diluted:
(in thousands, except per share amounts) 2001 2000 1999
NUMERATOR:
Net income before cumulative effect of change in accounting principle $ 511,147 $625,224 $474,378
Cumulative effect of change in accounting principle -(22, 1 3 1) -
Net income $ 511,147 $ 603,093 $ 474,378
DENOMINATOR:
Weighted-average shares outstanding, basic 762,973 74 8 , 6 1 7 75 4, 59 8
Dilutive effect of Employee stock options 44,1 42 47,699 49,293
Adjusted weighted-average shares outstanding, diluted 807,1 1 5 796,3 1 6 803,89 1
NET INCOME PER SHARE:
Basic before cumulative effect of change in accounting principle $ .67 $.84 $ .63
Cumulative effect of change in accounting principle -(.03) -
Net income per share, basic $ .67 $ .8 1 $ .63
Diluted before cumulative effect of change in accounting principle $.63 $ .79 $ .59
Cumulative effect of change in accounting principle -(.03) -
Net income per share, diluted $.63 $ .76 $ .59