Southwest Airlines 2011 Annual Report Download - page 114

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13. Comprehensive Income
Comprehensive income includes changes in the fair value of certain financial derivative instruments that
qualify for hedge accounting, unrealized gains and losses on certain investments, and actuarial gains/losses
arising from the Company’s postretirement benefit obligation. The differences between Net income and
Comprehensive income for the years ended December 31, 2011, 2010, and 2009, were as follows:
(in millions) 2011 2010 2009
Net income ............................................................ $178 $459 $ 99
Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of $42,
$205 and $226 .................................................... 67 330 366
Unrealized gain (loss) on interest rate swaps, net of deferred taxes of ($20), ($9)
and$17 ......................................................... (32) (15) 27
Other, net of deferred taxes of $1, $1 and $8 .............................. 3 1 13
Total other comprehensive income (loss) ................................. 38 316 406
Comprehensive income .................................................. $216 $775 $505
A rollforward of the amounts included in AOCI, net of taxes, is shown below for 2011 and 2010:
(in millions)
Fuel hedge
derivatives
Interest
rate
derivatives Other
Accumulated
other
comprehensive
income (loss)
Balance at December 31, 2009 ............................. $(580) $ (19) $ 21 $(578)
2010 changes in fair value ............................ 47 (15) 1 33
Reclassification to earnings ........................... 283 — — 283
Balance at December 31, 2010 ............................. $(250) $ (34) $ 22 $(262)
2011 changes in fair value ............................ (44) (32) 3 (73)
Reclassification to earnings ........................... 111 — — 111
Balance at December 31, 2011 ............................. $(183) $ (66) $ 25 $(224)
14. 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, 2011, the Company had 44 million
shares of common stock reserved for issuance pursuant to Employee stock plans (of which 23 million shares had
not been granted) through various share-based compensation arrangements. See Note 15.
15. Stock Plans
Share-based compensation
The Company has previously awarded share-based compensation pursuant to plans covering the majority
of its Employee groups, including plans adopted via collective bargaining, plans covering the Company’s Board
of Directors, and options granted pursuant to a prior employment contract with the Chairman Emeritus of the
Company. The Company accounts for share-based compensation utilizing fair value.
The Consolidated Statement of Income for the years ended December 31, 2011, 2010, and 2009, reflects
share-based compensation expense of $13 million, $12 million, and $13 million, respectively. The total tax
benefit recognized in earnings from share-based compensation arrangements for the years ended December 31,
108