Southwest Airlines 2007 Annual Report Download - page 70

11. Comprehensive Income
Comprehensive income includes changes in the fair value of certain financial derivative instruments, which qualify
for hedge accounting, unrealized gains and losses on certain investments, and adjustments to recognize the funded status
of the Company’s postretirement obligations. See Note 14 for further information on Employee retirement plans.
Comprehensive income totaled $1,304 million, $189 million, and $959 million for 2007, 2006, and 2005, respectively.
The differences between “Net income” and “Comprehensive income” for these years are as follows:
2007 2006 2005
(In millions)
Net income............................................... $ 645 $ 499 $484
Unrealized gain (loss) on derivative
instruments, net of deferred taxes of $408, ($201) and $300 ........ 636 (306) 474
Other, net of deferred taxes of $14, ($2) and $1 .................. 23 (4) 1
Total other comprehensive income (loss) ........................ 659 (310) 475
Comprehensive income ...................................... $1,304 $ 189 $959
A rollforward of the amounts included in “Accumulated other comprehensive income (loss)”, net of taxes for 2007,
2006, and 2005, is shown below:
Fuel
Hedge
Derivatives Other
Accumulated Other
Comprehensive
Income (Loss)
(In millions)
Balance at December 31, 2005 ......................... $ 890 $ 2 $ 892
2006 changes in fair value ............................ 52 (4) 48
Reclassification to earnings............................ (358) — (358)
Balance at December 31, 2006 ......................... 584 (2) 582
2007 changes in fair value ........................... 1,039 23 1,062
Reclassification to earnings ........................... (403) — (403)
Balance at December 31, 2007 ........................ $1,220 $21 $1,241
12. Common Stock
The Company has one class of capital stock, its
common stock. Holders of shares of common stock are
entitled to receive dividends when and if declared by the
Board of Directors and are entitled to one vote per share
on all matters submitted to a vote of the shareholders. At
December 31, 2007, the Company had 82 million shares
of common stock reserved for issuance pursuant to
Employee stock benefit plans (of which 32 million shares
had not been granted.)
In January 2004, the Company’s Board of Directors
authorized the repurchase of up to $300 million of the
Company’s common stock, utilizing proceeds from the
exercise of Employee stock options. Repurchases were
made in accordance with applicable securities laws in the
open market or in private transactions from time to time,
depending on market conditions. During first quarter
2005, the Company completed this program. In total, the
Company repurchased approximately 21 million of its
common shares during the course of the program.
In 2006, the Company’s Board of Directors autho-
rized three separate programs for the repurchase of up to
a total of $1.0 billion of the Company’s common stock —
$300 million authorized in January 2006, $300 million
authorized in May 2006, and $400 million authorized in
November 2006. Repurchases were made in accordance
with applicable securities laws in the open market or in
private transactions from time to time, depending on
market conditions. These programs, which were com-
pleted during first quarter 2007, resulted in the repur-
chase of a total of approximately 63 million shares.
In 2007, the Company’s Board of Directors autho-
rized two separate programs for the repurchase of up to a
total of $800 million of the Company’s common stock —
$300 million authorized in March 2007, and $500 mil-
lion authorized in May 2007. Repurchases were made in
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)