Southwest Airlines 2013 Annual Report Download - page 111

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Offsetting of derivative liabilities
(in millions)
(i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii)
December 31, 2013 December 31, 2012
Description
Balance Sheet
location
Gross
amounts of
recognized
liabilities
Gross
amounts
offset in
the
Balance
Sheet
Net amounts
of liabilities
presented in
the Balance
Sheet
Gross
amounts of
recognized
liabilities
Gross
amounts
offset in
the
Balance
Sheet
Net amounts
of liabilities
presented in
the Balance
Sheet
Fuel derivative contracts . . . Prepaid expenses and other
current assets
$182 $(182) $— $327 $(327) $—
Fuel derivative contracts . . . Other assets $100 $(100) $— $367 $(367) $—
Fuel derivative contracts . . . Accrued liabilities $ 21 $ (9) $ 12 $ 60 $ (10) $ 50
Fuel derivative contracts . . . Other noncurrent liabilities $— $ — $— $— $ — $—
Interest rate derivative
contracts .............. Other noncurrent liabilities $ 77 $ (32) $ 45 $126 $ (89) $ 37
The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts
presented in the Consolidated Balance Sheet in Note 5.
The following tables present the impact of derivative instruments and their location within the
Consolidated Statement of Income for the year ended December 31, 2013 and 2012:
Derivatives in cash flow hedging relationships
(Gain) loss
recognized in AOCI on
derivatives (effective
portion)
(Gain) loss
reclassified from AOCI
into income (effective
portion)(a)
(Gain) loss
recognized in income
on derivatives
(ineffective
portion)(b)
Year ended
December 31,
Year ended
December 31,
Year ended
December 31,
(in millions) 2013 2012 2013 2012 2013 2012
Fuel derivative contracts ...... $ 52* $ (19)* $ 103* $ 101* $ 10 $ 43
Interest rate derivatives ....... (14)* 17* 18* (16)* 1 —
Total .................... $ 38 $ (2) $ 121 $ 85 $ 11 $ 43
* Net of tax
(a) Amounts related to fuel derivative contracts and interest rate derivatives are included in Fuel and oil and
Interest expense, respectively.
(b) Amounts are included in Other (gains) losses, net.
Derivatives not in cash flow hedging relationships
(Gain) loss
recognized in income on
derivatives
Year ended
December 31, Location of (gain) loss
recognized in income
on derivatives(in millions) 2013 2012
Fuel derivative contracts ............... $ (100) $ (264) Other (gains) losses, net
The Company also recorded expense associated with premiums paid for fuel derivative contracts that
settled/expired during 2013, 2012, and 2011 of $60 million, $36 million, and $107 million, respectively. These
amounts are excluded from the Company’s measurement of effectiveness for related hedges and are included as a
component of Other (gains) losses, net, in the Consolidated Statement of Income.
103