Southwest Airlines 2005 Annual Report Download - page 62

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SOUTHWEST AIRLINES CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
the Company selects and periodically reviews The carrying amounts and estimated fair values of
counterparties based on credit ratings, limits its expo- the Company's long-term debt and fuel contracts at
sure to a single counterparty, and monitors the market December 31, 2005 were as follows:
position of the program and its relative market position Carrying Estimated
Value Fair Value
with each counterparty. At December 31, 2005, the
(In millions)
Company had agreements with seven counterparties
Zero coupon Notes due 2006 ÏÏ $ 58 $ 58
containing early termination rights and/or bilateral
collateral provisions whereby security is required if Pass Through Certificates ÏÏÏÏÏ 523 525
market risk exposure exceeds a specified threshold 7
7
/
8
% Notes due 2007 ÏÏÏÏÏÏÏÏ 100 104
amount or credit ratings fall below certain levels. At French Credit Agreements due
December 31, 2005, the Company held $950 million in 2012 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 41 41
fuel hedge related cash collateral deposits under these 6
1
/
2
% Notes due 2012 ÏÏÏÏÏÏÏÏ 370 392
bilateral collateral provisions. These collateral deposits 5
1
/
4
% Notes due 2014 ÏÏÏÏÏÏÏÏ 340 332
serve to decrease, but not totally eliminate, the credit
5
1
/
8
% Notes due 2017 ÏÏÏÏÏÏÏÏ 300 282
risk associated with the Company's hedging program.
The cash deposits, which can have a significant impact French Credit Agreements due
2017 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 106 106
on the Company's cash balance and cash flows as of and
for a particular operating period, are included in ""Ac- 7
3
/
8
% Debentures due 2027ÏÏÏÏ 100 111
crued liabilities'' on the Consolidated Balance Sheet and Fuel ContractsÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,678 1,678
are included as ""Operating cash flows'' in the Consoli-
dated Statement of Cash Flows. The estimated fair values of the Company's pub-
licly held long-term debt were based on quoted market
prices. The carrying values of all other financial instru-
ments approximate their fair value.
11. Comprehensive Income
Comprehensive income includes changes in the fair value of certain financial derivative instruments, which qualify
for hedge accounting, and unrealized gains and losses on certain investments. Comprehensive income totaled
$1.0 billion, $608 million, and $510 million for 2005, 2004, and 2003, respectively. The differences between ""Net
income'' and ""Comprehensive income'' for these years are as follows:
2005 2004 2003
(In millions)
Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 548 $313 $442
Unrealized gain (loss) on derivative
instruments, net of deferred taxes of $300, $185 and $43ÏÏÏÏÏÏÏÏÏÏÏÏ 474 293 66
Other, net of deferred taxes of $0, $1 and $1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 122
Total other comprehensive income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 475 295 68
Comprehensive income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,023 $608 $510
43