Southwest Airlines 2004 Annual Report Download - page 35

As disclosed in Note 3 to the Consolidated Financial Statements, results for 2003 included $271 million as
""Other gains'' from the Emergency Wartime Supplemental Appropriations Act (Wartime Act) and results for 2002
included $48 million as ""Other gains'' from grants under the Air Transportation Safety and System Stabilization Act
(Stabilization Act). The Company believes that excluding the impact of these special items will enhance comparative
analysis of results. The grants were made to stabilize and support the airline industry as a result of the devastating
eÅects of the September 11, 2001 terrorist attacks and the 2003 war with Iraq. Neither of these grants were indicative
of the Company's operating performance for these respective periods, nor should they be considered in developing
trend analysis for future periods. The following table reconciles results reported in accordance with Generally Accepted
Accounting Principles (GAAP) for 2003 with results excluding the impact of the government grant received in that
period:
2003 2002
(In millions, except
per share amounts)
Operating expenses, as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,454 $5,105
ProÑtsharing impact of Stabilization Act grant ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (7)
ProÑtsharing impact of Wartime Act grant ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (40) Ì
Operating expenses, excluding impact of government grants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,414 $5,098
Operating income, as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 483 $ 417
ProÑtsharing impact of Stabilization Act grant ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 7
ProÑtsharing impact of Wartime Act grant ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 40 Ì
Operating income, excluding impact of government grants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 523 $ 424
Net income, as reportedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 442 $ 241
Stabilization Act grant, net of income taxes and proÑtsharing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (25)
Wartime Act grant, net of income taxes and proÑtsharing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (144) Ì
Net income, excluding government grants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 298 $ 216
Net income per share, diluted, as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ .54 $ .30
Stabilization Act grant, net of income taxes and proÑtsharing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (.03)
Wartime Act grant, net of income taxes and proÑtsharing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (.18) Ì
Net income per share, diluted, excluding government grantsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ .36 $ .27
Excluding the governments grants received in both the United States and Iraq during Ñrst half 2003,
years, consolidated net income for 2003 was $298 mil- demand improved following the war.
lion ($.36 per share, diluted), as compared to 2002 net The increase in revenue passenger miles primarily
income of $216 million ($.27 per share, diluted), an was due to a 4.2 percent increase in added capacity, as
increase of $82 million, or 38.0 percent. The increase measured by available seat miles or ASMs. This was
primarily was due to overall higher demand for air travel achieved through the Company's net addition of 13
in 2003, especially vacation travel. Operating income aircraft during 2003 (net of four aircraft retirements).
for 2003 was $523 million, an increase of $99 million, The Company's improved load factor for 2003 was
or 23.3 percent, compared to 2002. 66.8 percent, compared to 65.9 percent for 2002.
Passenger yields for 2003 were $.1197 compared to
Operating Revenues. Consolidated operating rev- $.1177 in 2002, an increase of 1.7 percent, due to less
enues increased $415 million, or 7.5 percent, primarily fare discounting in 2003 by the Company and the
due to a $400 million, or 7.5 percent, increase in airline industry, in general.
passenger revenues. The increase in passenger revenues
primarily was due to a 5.6 percent increase in revenue Consolidated freight revenues increased $9 million,
passenger miles (RPMs) Öown. Although the Company or 10.6 percent, primarily due to an increase in freight
saw a disruption in revenue and bookings due to the and cargo units shipped. Other revenues increased
threat of war and from the subsequent conÖict between $6 million, or 6.3 percent, primarily due to an increase
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