Southwest Airlines 1997 Annual Report Download - page 44

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44
SOUTHWEST AIRLINES CO. ♥ FIVE SYMBOLS OF FREEDOM
Future minimum lease payments under capital leases and noncancelable operating
leases with initial or remaining terms in excess of one year at December 31, 1997,
were:
CAPITAL OPERATING
(IN THOUSANDS) LEASES LEASES
1998 $32,026 $234,828
1999 20,245 227,679
2000 16,871 224,302
2001 17,391 209,862
2002 17,561 196,410
After 2002 137,799 2,147,915
Total minimum lease payments 241,893 $3,240,996
Less amount representing interest 89,569
Present value of minimum lease payments 152,324
Less current portion 21,324
Long-term portion $131,000
The aircraft leases generally can 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.
6. COMMON STOCK
The Company has one class of common stock. Holders of shares of common stock
are entitled to receive dividends when and if declared by the Board of Directors and are
entitled to one vote per share on all matters submitted to a vote of the shareholders.
At December 31, 1997, the Company had common stock reserved for issuance
pursuant to Employee stock benefit plans (49,254,768 shares) and upon exercise of
rights (270,461,851 shares) pursuant to the Common Stock Rights Agreement, as
amended (Agreement).
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 $11.11 and is
exercisable only in the event of a proposed takeover, as defined by the Agreement.
The Company may redeem the Rights at $.0074 per Right prior to the time that 15
percent of the common stock has been acquired by a person or group. If the Company
is acquired, as defined in the Agreement, each Right will entitle its holder to purchase
for $11.11 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, 2006.