Southwest Airlines 2012 Annual Report Download - page 63

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Reconciliation of Reported Amounts to non-GAAP Financial Measures (unaudited) (in millions, except per
share and per ASM amounts)
Year ended
December 31, Percent
Change2011 2010
Fuel and oil expense, unhedged ............................................ $ 5,580 $ 3,296
Add: Fuel hedge losses included in Fuel and oil expense .......................... 64 324
Fuel and oil expense, as reported ........................................... $ 5,644 $ 3,620
Deduct: Net impact from fuel contracts ........................................ — (172)
Fuel and oil expense, non-GAAP ........................................... $ 5,644 $ 3,448 63.7%
Total operating expenses, as reported ....................................... $ 14,965 $ 11,116
Add (Deduct): Reclassification between Fuel and oil and Other (gains) losses, net,
associated with current period settled contracts ................................ 35 (1)
Deduct: Contracts settling in the current period, but for which losses have been
recognized in a prior period* .............................................. (35) (171)
Deduct: Acquisition and integration costs, net (a) ................................ (132) (7)
Deduct: Asset impairment, net of profitsharing .................................. (14) —
Total operating expenses, non-GAAP ....................................... $ 14,819 $ 10,937 35.5%
Operating income, as reported ............................................. $ 693 $ 988
Add (Deduct): Reclassification between Fuel and oil and Other (gains) losses, net,
associated with current period settled contracts ................................ (35) 1
Add: Contracts settling in the current period, but for which gains have been recognized
in a prior period* ....................................................... 35 171
Add: Acquisition and integration costs, net (a) .................................. 132 7
Add: Asset impairment, net of profitsharing .................................... 14 —
Operating income, non-GAAP ............................................. $ 839 $ 1,167 (28.1)%
Net income, as reported ................................................... $ 178 $ 459
Add (Deduct): Mark-to-market impact from fuel contracts settling in future periods .... 21 (21)
Add (Deduct): Ineffectiveness from fuel hedges settling in future periods ............. 33 (11)
Add: Other net impact of fuel contracts settling in the current or a prior period (excluding
reclassifications) ....................................................... 35 171
Deduct: Income tax impact of fuel contracts .................................... (31) (52)
Add: Acquisition and integration costs, net (b) .................................. 85 4
Add: Asset impairment, net (b) .............................................. 9 —
Net income, non-GAAP ................................................... $ 330 $ 550 (40.0)%
Net income per share, diluted, as reported ................................... $ 0.23 $ 0.61
Add: Net impact from fuel contracts .......................................... 0.07 0.12
Add: Impact of special items, net (b) .......................................... 0.13 0.01
Net income per share, diluted, non-GAAP ................................... $ 0.43 $ 0.74 (41.9)%
Operating expenses per ASM (cents) ........................................ 12.41 11.29
Deduct: Fuel expense divided by ASMs (cents) ................................. (4.68) (3.68)
Deduct: Impact of special items, net (cents) (a) ................................. (0.12) —
Operating expenses per ASM, non-GAAP, excluding fuel and special items (cents) . . 7.61 7.61 — %
* As a result of prior hedge ineffectiveness and/or contracts marked to market through earnings.
(a) Amounts net of profitsharing impact on charges incurred through March 31, 2011. The Company amended its profitsharing plan during
second quarter 2011 to defer the profitsharing impact of acquisition and integration costs incurred from April 1, 2011, through
December 31, 2013. The profitsharing impact of these costs will be realized in 2014 and beyond.
(b) Amounts net of taxes and profitsharing. See footnote (a) above regarding Acquisition and integration costs.
See previous Note Regarding Use of Non-GAAP Financial Measures.
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