Southwest Airlines 2010 Annual Report Download - page 97

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Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
(in millions)
Fuel
Derivatives
Auction
Rate
Securities (a)
Other
Securities Total
Balance at December 31, 2008 .............................. $(864) $200 $ 8 $(656)
Total gains or (losses) (realized or unrealized)
Included in earnings .................................. 858 — — 858
Included in other comprehensive income .................. (56) (6) — (62)
Purchases and settlements (net) .............................. 202 (20) — 182
Balance at December 31, 2009 .............................. $140 $174(b) $ 8 $ 322
The amount of total gains or (losses) for the period included in
earnings attributable to the change in unrealized gains or losses
relating to assets still held at December 31, 2009 .............. $699 $— $— $699
(a) Includes those classified as short-term investments and noncurrent investments.
(b) Includes $75 million classified as trading securities.
All settlements from fuel derivative contracts that are deemed effective are included in Fuel and oil expense
in the period the underlying fuel is consumed in operations. Any ineffectiveness associated with hedges,
including amounts that settled in the current period (realized) and amounts that will settle in future periods
(unrealized), is recorded in earnings immediately, as a component of Other (gains) losses, net. See Note 10 for
further information on hedging.
Any gains and losses (realized and unrealized) related to other investments are reported in Other operating
expenses, and were immaterial for the years ended December 31, 2010, and 2009.
The carrying amounts and estimated fair values of the Company’s long-term debt at December 31, 2010 are
contained in the below table. The estimated fair values of the Company’s publicly held long-term debt were
based on quoted market prices.
(In millions)
Carrying
value
Estimated
fair value
10.5% Notes due 2011 ....................................................... $404 $436
French Credit Agreements due 2012 ............................................ 14 14
6.5% Notes due 2012 ........................................................ 400 418
5.25% Notes due 2014 ....................................................... 385 405
5.75% Notes due 2016 ....................................................... 309 324
5.125% Notes due 2017 ...................................................... 345 349
French Credit Agreements due 2017 ............................................ 73 73
Term Loan Agreement due 2019—6.64% ........................................ 296 309
Term Loan Agreement due 2019—6.84% ........................................ 115 123
Term Loan Agreement due 2020—5.223% ....................................... 522 477
Pass Through Certificates due 2022 ............................................. 428 458
7.375% Debentures due 2027 .................................................. 117 122
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