2015 Q4 Form 10-Q Financial Statement

#000009238015000129 Filed on October 29, 2015

View on sec.gov

Income Statement

Concept 2015 Q4 2015 Q3 2014 Q3
Revenue $4.977B $5.318B $4.800B
YoY Change 7.54% 10.79% 5.61%
Cost Of Revenue $1.136B $1.299B $1.746B
YoY Change -24.17% -25.6% -4.69%
Gross Profit $3.841B $4.019B $3.054B
YoY Change 22.72% 31.6% 12.57%
Gross Profit Margin 77.18% 75.57% 63.63%
Selling, General & Admin $1.934B $1.958B $1.611B
YoY Change 18.36% 21.54% 4.47%
% of Gross Profit 50.35% 48.72% 52.75%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $264.0M $257.0M $238.0M
YoY Change 5.18% 7.98% 7.69%
% of Gross Profit 6.87% 6.39% 7.79%
Operating Expenses $2.808B $4.093B $4.186B
YoY Change 14.05% -2.22% 0.75%
Operating Profit $1.026B $1.225B $614.0M
YoY Change 65.22% 99.51% 57.44%
Interest Expense -$179.0M $31.00M -$89.00M
YoY Change -197.81% -134.83% -406.9%
% of Operating Profit -17.45% 2.53% -14.5%
Other Income/Expense, Net -$292.0M -$89.00M
YoY Change 228.09% -406.9%
Pretax Income $847.0M $933.0M $525.0M
YoY Change 180.46% 77.71% 25.3%
Income Tax $311.0M $349.0M $196.0M
% Of Pretax Income 36.72% 37.41% 37.33%
Net Earnings $536.0M $584.0M $329.0M
YoY Change 182.11% 77.51% 27.03%
Net Earnings / Revenue 10.77% 10.98% 6.85%
Basic Earnings Per Share $0.83 $0.89 $0.48
Diluted Earnings Per Share $0.82 $0.88 $0.48
COMMON SHARES
Basic Shares Outstanding 650.4M shares 655.0M shares 683.0M shares
Diluted Shares Outstanding 663.0M shares 691.0M shares

Balance Sheet

Concept 2015 Q4 2015 Q3 2014 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $3.051B $3.096B $3.560B
YoY Change 2.11% -13.03% 6.97%
Cash & Equivalents $1.583B $1.740B $1.832B
Short-Term Investments $1.468B $1.356B $1.728B
Other Short-Term Assets $188.0M $704.0M $528.0M
YoY Change -18.97% 33.33% 14.53%
Inventory $311.0M $308.0M $429.0M
Prepaid Expenses
Receivables $474.0M $465.0M $468.0M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $4.024B $4.573B $4.985B
YoY Change 2.47% -8.26% 4.44%
LONG-TERM ASSETS
Property, Plant & Equipment $15.60B $14.93B $13.97B
YoY Change 9.16% 6.9% 5.77%
Goodwill $970.0M $970.0M $970.0M
YoY Change 0.0% 0.0% 0.0%
Intangibles $464.0M $469.0M $366.0M
YoY Change 27.82% 28.14%
Long-Term Investments $36.00M
YoY Change -18.18%
Other Assets $717.0M $687.0M $619.0M
YoY Change 34.27% 10.99% 48.09%
Total Long-Term Assets $17.29B $16.59B $15.55B
YoY Change 9.45% 6.63% 6.6%
TOTAL ASSETS
Total Short-Term Assets $4.024B $4.573B $4.985B
Total Long-Term Assets $17.29B $16.59B $15.55B
Total Assets $21.31B $21.16B $20.54B
YoY Change 8.06% 3.02% 6.07%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $1.188B $1.235B $1.185B
YoY Change -1.25% 4.22% 4.5%
Accrued Expenses $2.591B $2.049B $1.277B
YoY Change 65.56% 60.45% 8.96%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $637.0M $287.0M $607.0M
YoY Change 146.9% -52.72% 134.36%
Total Short-Term Liabilities $7.406B $7.084B $6.446B
YoY Change 25.04% 9.9% 16.23%
LONG-TERM LIABILITIES
Long-Term Debt $2.706B $2.545B $2.327B
YoY Change 3.01% 9.37% -11.05%
Other Long-Term Liabilities $760.0M $931.0M $658.0M
YoY Change -39.44% 41.49% -45.08%
Total Long-Term Liabilities $760.0M $931.0M $658.0M
YoY Change -39.44% 41.49% -82.75%
TOTAL LIABILITIES
Total Short-Term Liabilities $7.406B $7.084B $6.446B
Total Long-Term Liabilities $760.0M $931.0M $658.0M
Total Liabilities $8.166B $8.015B $7.104B
YoY Change 13.76% 12.82% -24.1%
SHAREHOLDERS EQUITY
Retained Earnings $9.409B $8.922B $7.266B
YoY Change 26.87% 22.79% 16.33%
Common Stock $2.182B $2.138B $2.088B
YoY Change 2.78% 2.39% 3.73%
Preferred Stock
YoY Change
Treasury Stock (at cost) $3.182B $3.189B $1.833B
YoY Change 57.06% 73.98% 61.93%
Treasury Stock Shares 132.1M shares
Shareholders Equity $6.762B $6.968B $7.429B
YoY Change
Total Liabilities & Shareholders Equity $21.31B $21.16B $20.54B
YoY Change 8.06% 3.02% 6.07%

Cashflow Statement

Concept 2015 Q4 2015 Q3 2014 Q3
OPERATING ACTIVITIES
Net Income $536.0M $584.0M $329.0M
YoY Change 182.11% 77.51% 27.03%
Depreciation, Depletion And Amortization $264.0M $257.0M $238.0M
YoY Change 5.18% 7.98% 7.69%
Cash From Operating Activities $324.0M $836.0M $240.0M
YoY Change 58.82% 248.33% -43.93%
INVESTING ACTIVITIES
Capital Expenditures -$836.0M -$262.0M -$433.0M
YoY Change 71.31% -39.49% -261.57%
Acquisitions
YoY Change
Other Investing Activities -$110.0M $0.00 $1.000M
YoY Change -650.0% -100.0%
Cash From Investing Activities -$946.0M -$259.0M -$44.00M
YoY Change 102.14% 488.64% -87.74%
FINANCING ACTIVITIES
Cash Dividend Paid $49.00M
YoY Change
Common Stock Issuance & Retirement, Net $500.0M $200.0M
YoY Change 150.0% 33.33%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 465.0M -$609.0M -$246.0M
YoY Change -262.59% 147.56% 9.33%
NET CHANGE
Cash From Operating Activities 324.0M $836.0M $240.0M
Cash From Investing Activities -946.0M -$259.0M -$44.00M
Cash From Financing Activities 465.0M -$609.0M -$246.0M
Net Change In Cash -157.0M -$32.00M -$50.00M
YoY Change -71.45% -36.0% -67.95%
FREE CASH FLOW
Cash From Operating Activities $324.0M $836.0M $240.0M
Capital Expenditures -$836.0M -$262.0M -$433.0M
Free Cash Flow $1.160B $1.098B $673.0M
YoY Change 67.63% 63.15% 320.63%

Facts In Submission

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182000000 USD
us-gaap Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Asset Settlements
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182000000 USD
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CY2015Q3 us-gaap Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Asset Transfers Net
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CY2015Q3 us-gaap Fair Value Measurement With Unobservable Inputs Reconciliations Recurring Basis Liability Value
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us-gaap Gain Loss On Components Excluded From Assessment Of Price Risk Fair Value Hedge Effectiveness
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us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
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us-gaap New Accounting Pronouncement Or Change In Accounting Principle Effect Of Change On Diluted Earnings Per Share
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us-gaap Payments For Repurchase Of Common Stock
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CY2014Q3 us-gaap Payments Of Dividends Common Stock
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CY2014Q3 us-gaap Payments To Acquire Productive Assets
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us-gaap Payments To Acquire Productive Assets
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us-gaap Payments To Acquire Productive Assets
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CY2014Q3 us-gaap Payments To Acquire Short Term Investments
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us-gaap Payments To Acquire Short Term Investments
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us-gaap Payments To Acquire Short Term Investments
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CY2015Q3 us-gaap Prepaid Expense And Other Assets Current
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CY2015Q3 us-gaap Price Risk Cash Flow Hedge Unrealized Gain Loss To Be Reclassified During Next12 Months
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CY2014Q3 us-gaap Proceeds From Payments For Other Financing Activities
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us-gaap Proceeds From Payments For Other Financing Activities
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CY2015Q3 us-gaap Proceeds From Payments For Other Financing Activities
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us-gaap Proceeds From Payments For Other Financing Activities
ProceedsFromPaymentsForOtherFinancingActivities
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CY2014Q3 us-gaap Proceeds From Stock Plans
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us-gaap Proceeds From Stock Plans
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CY2015Q3 us-gaap Proceeds From Stock Plans
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us-gaap Proceeds From Stock Plans
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30000000 USD
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CY2015Q3 us-gaap Property Plant And Equipment Net
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CY2014Q3 us-gaap Repayments Of Long Term Debt And Capital Securities
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us-gaap Repayments Of Long Term Debt And Capital Securities
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79000000 USD
us-gaap Repayments Of Long Term Debt And Capital Securities
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170000000 USD
CY2014Q4 us-gaap Retained Earnings Accumulated Deficit
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7416000000 USD
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CY2014Q3 us-gaap Revenues
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us-gaap Revenues
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us-gaap Revenues
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CY2015Q3 us-gaap Sale Leaseback Transaction Deferred Gain Net
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CY2014Q4 us-gaap Short Term Investments
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CY2015Q3 us-gaap Short Term Investments
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CY2014Q4 us-gaap Stockholders Equity
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CY2015Q3 us-gaap Stockholders Equity
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CY2014Q4 us-gaap Taxes Payable Current
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163000000 USD
CY2015Q3 us-gaap Taxes Payable Current
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157000000 USD
CY2014Q4 us-gaap Treasury Stock Value
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2026000000 USD
CY2015Q3 us-gaap Treasury Stock Value
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CY2014Q3 us-gaap Unrealized Gain Loss On Derivatives And Commodity Contracts
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-63000000 USD
us-gaap Unrealized Gain Loss On Derivatives And Commodity Contracts
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4000000 USD
CY2015Q3 us-gaap Unrealized Gain Loss On Derivatives And Commodity Contracts
UnrealizedGainLossOnDerivativesAndCommodityContracts
-87000000 USD
us-gaap Unrealized Gain Loss On Derivatives And Commodity Contracts
UnrealizedGainLossOnDerivativesAndCommodityContracts
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CY2014Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
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us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
699000000 shares
CY2015Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
663000000 shares
us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
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CY2014Q3 us-gaap Weighted Average Number Of Shares Outstanding Basic
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us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
690000000 shares
CY2015Q3 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
655000000 shares
us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
665000000 shares
CY2015Q3 us-gaap Workers Compensation Liability Current
WorkersCompensationLiabilityCurrent
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us-gaap Basis Of Accounting
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">BASIS OF PRESENTATION</font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Southwest Airlines Co. (the &#8220;Company&#8221;) operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets. The unaudited Condensed Consolidated Financial Statements include accounts of the Company and its wholly owned subsidiaries, which include AirTran Holdings, LLC, the parent company of AirTran Airways, Inc. (&#8220;AirTran Airways&#8221;). On May&#160;2, 2011 (the &#8220;acquisition date&#8221;), the Company acquired all of the outstanding equity of AirTran Holdings, Inc. (&#8220;AirTran Holdings&#8221;), the former parent company of AirTran Airways. Throughout this Form 10-Q, the Company makes reference to AirTran, which is meant to be inclusive of the following: (i)&#160;for periods prior to the acquisition date, AirTran Holdings and its subsidiaries, including, among others, AirTran Airways; and (ii)&#160;for periods on and after the acquisition date, AirTran Holdings, LLC, the successor to AirTran Holdings, and its subsidiaries, including among others, AirTran Airways. AirTran's final passenger service was on December&#160;28, 2014. Although the vast majority of integration costs were incurred in periods prior to 2015, the Company continues to incur costs associated with the integration of AirTran, and those costs are included in Acquisition and integration costs in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income.</font></div><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">The accompanying unaudited Condensed Consolidated Financial Statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States (&#8220;GAAP&#8221;) for complete financial statements. The unaudited Condensed Consolidated Financial Statements for the interim periods ended </font><font style="font-family:Times New Roman;font-size:11pt;color:#000000;font-style:normal;font-weight:normal;text-decoration:none;">September&#160;30, 2015</font><font style="font-family:inherit;font-size:11pt;"> and </font><font style="font-family:Times New Roman;font-size:11pt;color:#000000;font-style:normal;font-weight:normal;text-decoration:none;">2014</font><font style="font-family:inherit;font-size:11pt;"> include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. This includes all normal and recurring adjustments and elimination of significant intercompany transactions. Financial results for the Company and airlines in general can be seasonal in nature. In many years, the Company's revenues, as well as its operating income and net income, have been better in its second and third fiscal quarters than in its first and fourth fiscal quarters. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers, unemployment levels, corporate travel budgets, and other factors beyond the Company's control. These and other factors, such as the price of jet fuel in some periods, the nature of the Company's fuel hedging program, the periodic volatility of commodities used by the Company for hedging jet fuel, and the requirements related to hedge accounting, have created, and may continue to create, significant volatility in the Company's financial results. See</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:inherit;font-size:11pt;color:#000000;text-decoration:none;">Note 3</font><font style="font-family:inherit;font-size:11pt;"> for further information on fuel and the Company's hedging program. Operating results for the </font><font style="font-family:inherit;font-size:11pt;">three and nine months ended</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:inherit;font-size:11pt;color:#000000;text-decoration:none;">September&#160;30, 2015</font><font style="font-family:inherit;font-size:11pt;">, are not necessarily indicative of the results that may be expected for future quarters or for the year ended </font><font style="font-family:inherit;font-size:11pt;color:#000000;text-decoration:none;">December&#160;31, 2015</font><font style="font-family:inherit;font-size:11pt;">. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Southwest Airlines Co. Annual Report on Form 10-K for the year ended </font><font style="font-family:inherit;font-size:11pt;">December&#160;31, 2014</font><font style="font-family:inherit;font-size:11pt;">.</font></div></div>
us-gaap Revenue Recognition Multiple Element Arrangements
RevenueRecognitionMultipleElementArrangements
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">During July 2015, the Company executed an amended co-branded credit card agreement (&#8220;Agreement&#8221;) with Chase Bank USA, N.A. (&#8220;Chase&#8221;), through which the Company sells loyalty points and other items to Chase. The Company's Rapid Rewards program members ("Members") are able to accrue loyalty points based on purchases using the Chase co-branded Southwest Visa credit card. The Agreement materially modifies the previously existing agreement between Chase and the Company. Consideration received as part of this Agreement is subject to ASU 2009-13, "Multiple-Deliverable Revenue Arrangements - a consensus of the FASB Emerging Issues Task Force".</font></div></div>

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