Southwest Airlines 2011 Annual Report Download - page 61

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State of Illinois tax law change. On a non-GAAP basis, the Company currently projects a full year 2012 effective
tax rate of approximately 38 to 40 percent based on currently forecasted financial results. However, the
Company’s effective tax rate during interim periods of 2012 may differ significantly from this full year estimate.
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
Fuel and oil expense, unhedged ..................................... $3,296 $2,577
Add: Fuel hedge losses included in Fuel and oil expense ............... 324 467
Fuel and oil expense, as reported .................................... $3,620 $3,044
Add (Deduct): Net impact from fuel contracts ....................... (172) (222)
Fuel and oil expense, non-GAAP .................................... $3,448 $2,822 22.2%
Net income, as reported ............................................ $ 459 $ 99
Add/(Deduct): Mark-to-market impact from fuel contracts settling in current
and 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: Acquisition and integration costs, net (b) ....................... 4 —
Add: Charge for voluntary early out program, net (b) ................. — 35
Net income, non-GAAP ............................................ $ 550 $ 143 n.a
Net income 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 (b) .................................. .01 .04
Net income 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 (a) ................................ — (.05)
Operating expenses per ASM, non-GAAP, excluding fuel and special items
(cents) ........................................................ 7.61 7.13 6.7%
* As a result of prior hedge ineffectiveness and/or contracts marked to market through earnings.
(a) Amounts net of profitsharing.
(b) Amounts net of taxes and profitsharing.
See previous Note Regarding Use of Non-GAAP Financial Measures.
2010 compared with 2009
The Company’s consolidated net income of $459 million ($.61 per share, diluted) in 2010 represented an
increase of $360 million, or 364 percent, compared to its 2009 net income of $99 million ($.13 per share,
diluted). The results in each year were significantly impacted by the Company’s fuel hedge program and the
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