Southwest Airlines 1995 Annual Report Download - page 34

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34
Total rental expense for operating leases charged to operations in 1995, 1994, and 1993 was
$247,033,000, $198,987,000, and $167,303,000, respectively. The majority of the Company’s
terminal operations space, as well as 100 aircraft, were under operating leases at December 31,
1995. The amounts applicable to capital leases included in property and equipment were (in
thousands):
1995 1994
Flight equipment $223,844 $233,324
Less accumulated amortization 101,641 88,656
$122,203 $144,668
Future minimum lease payments under capital leases and noncancelable operating leases, with
initial or remaining terms in excess of one year, at December 31, 1995, were (in thousands):
CAPITAL OPERATING
LEASES LEASES
1996 $27,796 $223,279
1997 25,858 207,875
1998 32,026 187,662
1999 20,245 173,846
2000 16,871 165,692
After 2000 172,751 1,935,372
Total minimum lease
payments
295,547 $2,893,726
Less amount representing
interest 117,851
Present value of minimum
lease payments 177,696
Less current portion 13,505
Long-term portion $164,191
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, 1995, the Company had common stock reserved for issuance pursuant to
Employee stock benefit plans (29,202,885 shares) and upon exercise of rights pursuant to the
Common Stock Rights Agreement (Agreement), as amended (173,236,158 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.
On May 19, 1993, the Company’s Board of Directors declared a three-for-two stock split,
distributing 46,325,147 shares on July 15, 1993.