Southwest Airlines 2003 Annual Report Download - page 47

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A-29
those rates would correspondingly change the Company's net earnings and cash flows associated with these
items by less than $1 million. Utilizing these assumptions and considering the Company’s cash balance,
short-term investments, and floating-rate debt outstanding at December 31, 2003, an increase in rates would
have a net positive effect on the Company’s earnings and cash flows, while a decrease in rates would have a
net negative effect on the Company’s earnings and cash flows. However, a ten percent change in market
rates would not impact the Company's earnings or cash flow associated with the Company's publicly traded
fixed-rate debt.
The Company is also subject to various financial covenants included in its credit card transaction processing
agreement, the revolving credit facility, and outstanding debt agreements. Covenants included the
maintenance of minimum credit ratings and minimum asset fair values. The Company met or exceeded the
minimum standards set forth in these agreements as of December 31, 2003. However, if conditions change
and the Company failed to meet the minimum standards set forth in the agreements, it could reduce the
availability of cash under the agreements or increase the costs to keep these agreements intact as written.