Southwest Airlines 2002 Annual Report Download - page 70

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SOUTHWEST AIRLINES CO. 2002 10-K | 51
The effective tax rate on income before income taxes differed from the federal income tax
statutory rate for the following reasons:
(In thousands) 2002 2001 2000
Tax at statutory U.S. tax rates $137,439) $ 289,681) $ 356,077
Nondeductible items 6,418) 7,318) 6,801
State income taxes, net of federal benefit 9,221) 20,045) 27,671
Other, net (1,365) (532) 1,591
Total income tax provision $151,713 $ 316,512) $ 392,140
At December 31, 2002, Southwest Airlines
Co. had an estimated tax net operating loss of
$145 million for federal income tax purposes.
The Company estimates that a federal tax
refund of $51 million will be realized as a
result of utilizing this net operating loss as a
carryback to prior taxable years. The Company
has included this refund in “Accounts and
other receivables” in the Consolidated
Balance Sheet at December 31, 2002.
The Internal Revenue Service (IRS) regularly
examines the Company’s federal income tax
returns and, in the course of which, may
propose adjustments to the Company’s
federal income tax liability reported on such
returns. It is the Company’s practice to
vigorously contest those proposed adjusments
that it deems lacking of merit. The Company’s
management does not expect that the out-
come of any proposed adjustments presented
to date by the IRS, individually or collectively,
will have a material adverse effect on the
Company’s financial condition, results of
operations, or cash flows.