Southwest Airlines 2002 Annual Report Download - page 33

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14 | SOUTHWEST AIRLINES CO. 2002 10-K
results for 2001 also included special pre-tax
charges of approximately $48 million arising from
the terrorist attacks. See Note 1 and Note 3 to
the Consolidated Financial Statements.
The Company believes that comparative
analysis of results can be enhanced by excluding
the impact of these special items. The following
table reconciles results reported in accordance
with Generally Accepted Accounting Principles
(GAAP) with results adjusted for special items that
are not expected to recur:
(In thousands) 2002 2001
Consolidated net income, as reported $ 240,969)$511,147
Government grant proceeds, net* (24,796) (123,510)
Passenger revenue adjustments, net* (18,103) 15,749
Special charges arising from terrorist attacks, net* - 9,563
Adjusted consolidated income, excluding
special charges and unusual items (non-GAAP) $ 198,070 ) $ 412,949
Net income per share, basic, as reported $ .31 $ .67
Government grant proceeds, net* (.03) (.16)
Passenger revenue adjustments, net* (.02) .02
Special charges arising from terrorist attacks, net* - .01
Adjusted net income per share, basic, excluding
special charges and unusual items (non-GAAP) $ .26 $ .54
Net income per share, diluted, as reported $ .30 $ .63
Government grant proceeds, net* (.03) (.15)
Passenger revenue adjustments, net* (.03) .02
Special charges arising from terrorist attacks, net* - .01
Adjusted net income per share diluted, excluding
special charges and unusual items (non-GAAP) $ .24 $ .51
*Net of income tax and Company profitsharing effects.
Following the terrorist attacks, all U.S. commer-
cial flight operations were suspended for
approximately three days. However, the Company
continued to incur nearly all of its normal
operating expenses (with the exception of
certain direct trip-related expenditures such as
fuel, landing fees, etc.). The Company canceled
approximately 9,000 flights before resuming flight
operations on September 14, although it did not
resume its normal pre-September 11 flight
schedule until September 18, 2001. After
operations were fully resumed, load factors and
passenger yields were severely impacted, and
ticket refund activity increased. The Company
estimates that from September 11 through
September 30, 2001, it incurred operating losses
in excess of $130 million.
Operating Revenues. Consolidated operating
revenues decreased $33.4 million, or .6 percent,
primarily due to a $37.4 million, or .7 percent,
decrease in passenger revenues.
The decrease in passenger revenues was due
to lower load factors (revenue passenger miles or
RPMs divided by available seat miles or ASMs)
attributable to the post-September 11, 2001,
reduction in demand for air travel, and from
lower passenger yields (passenger revenue
divided by RPMs) caused by a decline in full-fare
traffic. The Company’s load factor for 2002 was