Southwest Airlines 1996 Annual Report Download - page 29

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29
During 1996, capital expenditures of $677.4 million primarily were for the purchase of 22
new 737-300 aircraft, one used 737-200 aircraft previously leased by the Company, and progress
payments for future aircraft deliveries. At December 31, 1996, capital commitments of the
Company consisted primarily of scheduled aircraft acquisitions.
The Company recently announced its intention to order 20 hushkits for some of our 737-
200 aircraft, with options for 14 more, for delivery in 1997-1999. These hushkits, with an
approximate cost of $1.0 million per aircraft, will make the Stage 2 -200 aircraft compliant with
Stage 3 noise requirements.
As of January 1997, Southwest had 78 new 737s on firm order, including 19 to be
delivered in 1997, with options to purchase another 67. Aggregate funding required for firm
commitments approximated $1,960.1 million through the year 2001, of which $515.1 million
related to 1997. See Note 2 to the Consolidated Financial Statements for further information.
In September 1996, the Company’s Board of Directors reaffirmed a 1990 authorization
for the Company to purchase shares of its common stock from time to time on the open market.
The authorization reaffirmed the purchase of up to 2,500,000 shares. As of February 21, 1997,
no shares have been purchased pursuant to this authority since 1990.
The Company has various options available to meet its capital and operating
commitments, including cash on hand at December 31, 1996 of $581.8 million, internally
generated funds, and a revolving credit line with a group of banks of up to $460 million (none of
which had been drawn at December 31, 1996). In addition, the Company will also consider
various borrowing or leasing options to maximize earnings and supplement cash requirements.
The Company currently has outstanding shelf registrations for the issuance of $114.4
million of public debt securities which it currently intends to utilize for aircraft financings in
1997.
Cash provided from operations was $456.4 million in 1995 as compared to $412.7
million in 1994. During 1995, additional funds of $321.7 million were generated from the sale
and leaseback of ten new 737-300 aircraft subject to long-term operating leases (increasing total
commitments for operating leases by $607.9 million). In addition, $98.8 million was generated
from the March 1995 issuance of $100 million in senior unsecured 8% Notes due 2005. These