Southwest Airlines 1994 Annual Report Download - page 31

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Notes to Consolidated Financial Statements
Southwest Airlines – 1994 Annual Report Page 31
7. Leases
Total rental expense for operating leases charged to operations in 1994, 1993, and 1992 was
$198,987,000, $167,303,000, and $125,835,000, respectively. The majority of the Company's terminal
operations space, as well as 89 aircraft, were under operating leases. The amounts applicable to capital
leases included in property and equipment were (in thousands):
1994 1993
Flight equipment $233,324 $232,853
Less accumulated amortization 88,656 74,234
$144,668 $158,619
Future minimum lease payments under capital leases and noncancelable operating leases, with initial or
remaining terms in excess of one year, at December 31, 1994, were (in thousands):
Capital Leases Operating Leases
1995 $26,282 $176,439
1996 28,897 178,253
1997 26,843 168,132
1998 32,903 148,017
1999 20,999 137,845
After 1999 191,096 1,559,478
Total minimum lease payments 327,020 $2,368,164
Less amount representing interest 131,264
Present value of minimum lease payments 195,756
Less current portion 9,542
Long-term portion $186,214
The aircraft leases can generally be renewed at rates, based on fair market value at the end of the lease
term, for one to five years. Most aircraft leases have purchase options at or near the end of the lease term
at fair market value, but generally not to exceed a stated percentage of the lessor's defined cost of the
aircraft.
8. Common Stock
At December 31, 1994, the Company had common stock reserved for issuance pursuant to Employee stock
benefit plans (12,009,293 shares) and upon exercise of rights pursuant to the Common Stock Rights
Agreement (Agreement), as amended (155,265,088 shares).
Pursuant to the Agreement, each outstanding share of the Company's common stock is accompanied by
one common share purchase right (Right). Each Right entitles its holder to purchase one share of common
stock at an exercise price of $16.67 and is exercisable only in the event of a proposed takeover, as defined
by the Agreement. The Company may redeem the Rights at $.0111 per Right prior to the time that 20
percent of the common stock has been acquired by a person or group. If the Company is acquired or if
certain self-dealing transactions occur, as defined in the Agreement, each Right will entitle its holder to
purchase for $16.67 that number of the acquiring company's or the Company's common shares, as
provided in the Agreement, having a market value of two times the exercise price of the Right. The Rights
will expire no later than July 30, 1996.