Southwest Airlines 2003 Annual Report Download - page 59

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option of the Company, in whole at any time or in part from time to time, at a redemption price equal to the
greater of the principal amount of the Debentures plus accrued interest at the date of redemption or the sum of
the present values of the remaining scheduled payments of principal and interest thereon, discounted to the date
of redemption at the comparable treasury rate plus 20 basis points, plus accrued interest at the date of
redemption.
During 1995, the Company issued $100 million of senior unsecured 8% Notes due March 1, 2005. Interest is
payable semi-annually on March 1 and September 1. The Notes are not redeemable prior to maturity.
During 1992, the Company issued $100 million of senior unsecured 7 7/8% Notes due September 1, 2007.
Interest is payable semi-annually on March 1 and September 1. The Notes are not redeemable prior to maturity.
The net book value of the assets pledged as collateral for the Company's secured borrowings, primarily aircraft
and engines, was $893 million at December 31, 2003.
As of December 31, 2003, aggregate annual principal maturities (not including interest on capital leases) for the
five-year period ending December 31, 2008 were $206 million in 2004, $143 million in 2005, $542 million in
2006, $114 million in 2007, $5 million in 2008, and $556 million thereafter.
8. LEASES
The Company had seven aircraft classified as capital leases at December 31, 2003. The amounts applicable to
these aircraft included in property and equipment were:
(In millions) 2003 2002
Flight equipment $ 171 $ 165
Less accumulated depreciation 114 106
$ 57 $ 59
Total rental expense for operating leases charged to operations in 2003, 2002, and 2001 was $386 million, $371
million, and $359 million, respectively. The majority of the Company's terminal operations space, as well as 89
aircraft, were under operating leases at December 31, 2003. Future minimum lease payments under capital
leases and noncancelable operating leases with initial or remaining terms in excess of one year at December 31,
2003, were:
(In millions) Capital leases
Operating
leases
2004 $ 18 $ 283
2005 24 273
2006 14 219
2007 16 202
2008 13 190
After 2008 39 1,328
Total minimum lease payments 124 $ 2,495
Less amount representing interest 33
Present value of minimum
lease payments 91
Less current portion 10
Long-term portion $ 81
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, generally limited to a stated percentage of the lessor's defined cost of the aircraft.