Southwest Airlines 2003 Annual Report Download - page 40

Net cash used in financing activities was $48 million in 2003 compared to $382 million in 2002. Cash used in
financing activities during 2003 was primarily for the redemption of its $100 million senior unsecured 8 _%
Notes originally issued in 1991. This was mostly offset by proceeds of $93 million from the exercise of
Employee stock options. Cash used in financing activities in 2002 was primarily for the repayment of the
Company’s $475 million revolving credit facility that the Company drew down in September 2001 and for the
repayment of a special purpose trust (Trust) created in 2001. See Note 4 to the Consolidated Financial
Statements for more information on the Trust. These uses were partially offset by cash generated from the
issuance of $385 million in unsecured notes in March 2002. See Note 6 and Note 7 to the Consolidated
Financial Statements for more information on these financing activities.
The Company has various options available to meet its capital and operating commitments, including cash on
hand at December 31, 2003, of $1.9 billion, internally generated funds, and a $575 million bank revolving line of
credit. In addition, the Company will also consider various borrowing or leasing options to maximize earnings
and supplement cash requirements. The Company believes it has access to a wide variety of financing
arrangements because of its excellent credit ratings, unencumbered assets, modest leverage, and consistent
profitability.
The Company has two fully available unsecured revolving credit facilities from which it can borrow up to
$575 million from a group of banks. One of the facilities, for half of the total amount, was renewed for an
additional year during April 2003. This facility now expires in April 2004. The other facility, for half of the
amount, expires in April 2005. The Company expects that it will be able to renew the expiring 364-day facility
for an additional 364-day period at reasonable terms. If the Company is unable to renew, the Company’s
available credit facility will be reduced.
The Company currently has outstanding shelf registrations for the issuance of up to $1.0 billion in public
debt securities and pass through certificates, which it may utilize for aircraft financings in the future. The
Company currently expects that a portion of these securities will be issued in 2004.
OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS, AND
CONTINGENT LIABILITIES AND COMMITMENTS
Southwest has contractual obligations and commitments primarily with regards to future purchases of
aircraft, payment of debt, and lease arrangements. Along with the receipt of 17 new 737-700 aircraft from
Boeing in 2003, the Company exercised several options for delivery in 2004 and 2005 and accelerated the
delivery dates for several aircraft into 2004 from future years. The Company also entered into an agreement
to lease a new Boeing 737-700 from a third party beginning in 2004. The following table details the
Company’s current firm orders, options, and purchase rights for 737-700 aircraft:
As of December 31, 2003
Firm Options*
2004** 47 -
2005 28 6
2006 22 12
2007 25 29
2008 6 45
2009-2012 - 177
Total 128 269
* Includes purchase rights
** Includes one leased aircraft
The Company has the option to substitute 737-600s or -800s for the -700s. This option is applicable to aircraft
ordered from the manufacturer and must be exercised two years prior to the contractual delivery date.
The following table details information on the 388 aircraft in the Company’s fleet as of December 31, 2003: