Southwest Airlines 2012 Annual Report Download - page 98

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of bonds by LFAMC. During fourth quarter 2010, $310 million of such bonds were issued by the LFAMC, and
the Company has guaranteed principal and interest payments on the bonds. An additional tranche of such bonds
totaling $146 million was issued during second quarter 2012, and the Company has guaranteed the principal and
interest on these bonds as well. The Company currently expects that as a result of the funding commitments from
the above mentioned sources and the bonds that have been issued thus far, no further bond issuances and related
guarantees from the Company will be required to complete the LFMP project.
The Company has agreed to manage the majority of the LFMP project, and as a result, has evaluated its
ongoing accounting requirements in consideration of accounting guidance provided for lessees involved in asset
construction. The Company has recorded and will continue to record an asset and corresponding construction
obligation for the cost of the LFMP project as the construction of the facility occurs. As of December 31, 2012,
the Company had incurred construction costs of $331 million, classified as both an asset as a component of
Ground property and equipment and a corresponding liability as a component of Other non-current liabilities,
respectively, in its Consolidated Balance Sheet. Upon completion of the LFMP project, the Company expects to
begin depreciating the assets over their estimated useful lives, and reduce the corresponding liabilities primarily
through the Company’s airport rental payments to the City of Dallas.
Contingencies
The Company is from time to time subject to various legal proceedings and claims arising in the ordinary
course of business, including, but not limited to, examinations by the IRS. The Company’s management does not
expect that the outcome in any of its currently ongoing legal proceedings or the outcome of any adjustments
presented by the IRS, individually or collectively, will have a material adverse effect on the Company’s financial
condition, results of operations, or cash flow.
5. OTHER ASSETS AND LIABILITIES, AND OTHER OPERATING EXPENSES
(in millions)
December 31,
2012
December 31,
2011
Derivative contracts ................................ $ 306 $ 253
Intangible assets ................................... 138 155
Non-current investments ............................ 41 97
Other ........................................... 148 121
Other assets ..................................... $ 633 $ 626
(in millions)
December 31,
2012
December 31,
2011
Savings and ProfitSharing plans ...................... $ 135 $ 110
Aircraft rentals .................................... 139 57
Vacation pay ..................................... 270 248
Health ........................................... 70 56
Derivative contracts ................................ 50 85
Workers compensation ............................. 159 162
Accrued Taxes .................................... 67 69
Other ........................................... 212 209
Accrued liabilities ................................ $ 1,102 $ 996
90