Southwest Airlines 2010 Annual Report Download - page 43

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Reconciliation of Reported Amounts to non-GAAP Financial Measures (unaudited) (in millions, except per
share and per-ASM amounts)
Year Ended December 31, Percent
Change2010 2009
Operating income (loss), as reported .............................. $ 988 $ 262
Add/(Deduct): Reclassification between Fuel & Oil and Other (gains) losses,
net, associated with current period settled contracts .................. 1 38
Add/(Deduct): Contracts settling in the current period, but for which gains
and/or (losses) have been recognized in a prior period* ............... 171 181
Add/(Deduct): Contracts settling in a prior period, but for which the
underlying hedged fuel has been consumed in the current period ........ — 3
Add: Charge from voluntary early out program, net .................... — 56
Add: Charge for AirTran integration costs, net ........................ 4 —
Operating income, non-GAAP .................................... $1,164 $ 540 n.a.
Net income (loss), as reported .................................... $ 459 $ 99
Add/(Deduct): Mark-to-market impact from fuel contracts settling in future
periods ...................................................... (21) (73)
Add/(Deduct): Ineffectiveness from fuel hedges settling in future periods . . . (11) (97)
Add/(Deduct): Other net impact of fuel contracts settling in the current or a
prior period (excluding reclassifications) ........................... 171 184
Income tax impact of fuel contracts ................................. (52) (5)
Add: Charge from voluntary early out program, net .................... — 35
Add: Charge for AirTran integration costs, net ........................ 4 —
Net income (loss), non-GAAP .................................... $ 550 $ 143 n.a.
Net income (loss) per share, diluted, as reported ..................... $ .61 $ .13
Add/(Deduct): Net impact to net income above from fuel contracts divided
by dilutive shares ............................................. .12 .02
Add: Impact of special items, net ................................... .01 .04
Net income (loss) per share, diluted, non-GAAP ..................... $ .74 $ .19 n.a.
Operating expenses per ASM (cents) .............................. 11.29 10.29
Deduct: Fuel expense divided by ASMs .............................. (3.68) (3.11)
Deduct: Impact of special items, net ................................. — (.05)
Operating expenses per ASM, non-GAAP, excluding fuel (cents) ....... 7.61 7.13 6.7
* As a result of prior hedge ineffectiveness and/or contracts marked to market through earnings.
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