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SOUTHWEST AIRLINES CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
delivery dates from January 2002 to April 2003. The receipt of these aircraft was recorded as ""Purchases of
Trust was formed to facilitate the Ñnancing of the property and equipment'' and ""Proceeds from trust
Company's near-term aircraft purchase obligations with arrangement.'' During 2002, the Company accelerated
Boeing. The Trust purchased 11 of the aircraft in 2001 the deliveries from the Trust and accepted delivery of all
and eight aircraft in 2002. For these 19 Trust aircraft, 19 aircraft, thereby terminating the Trust. The receipt
the Company recorded the associated assets (""Flight of the aircraft from the Trust was reÖected in the
equipment'') and liabilities (""Aircraft purchase obliga- Consolidated Statement of Cash Flows as ""Payments of
tions'') in its Ñnancial statements as the aircraft were trust arrangement''. The cost of Ñnancing these aircraft
completed by Boeing and delivered to the Trust. In the obligations, approximately $5 million, was expensed.
Consolidated Statement of Cash Flows, the Trust's
5. Accrued Liabilities
2004 2003
(In millions)
Retirement plans (Note 14)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $89 $126
Aircraft rentals ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 127 114
Vacation pay ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 120 109
Advances and depositsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 334 121
Deferred income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 218 38
OtherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 159 142
$1,047 $650
6. Short-Term Borrowings
Following the terrorist attacks in September 2001, facility expires in April 2007 and is unsecured. At the
the Company borrowed the full $475 million available Company's option, interest on the facility can be calcu-
under its unsecured revolving credit line with a group of lated on one of several diÅerent bases. For most borrow-
banks. Borrowings under the credit line bore interest at ings, Southwest would anticipate choosing a Öoating
six-month LIBOR plus 15.5 basis points. The Company rate based upon LIBOR. If fully drawn, the spread over
repaid this unsecured revolving credit line in full, plus LIBOR would be 75 basis points given Southwest's
accrued interest, in March 2002. This credit facility was credit rating at December 31, 2004. The facility also
replaced in April 2002. contains a Ñnancial covenant requiring a minimum
coverage ratio of adjusted pretax income to Ñxed obliga-
During second quarter 2004, the Company re- tions, as deÑned. As of December 31, 2004, the Com-
placed its former revolving credit facilities with a new pany is in compliance with this covenant, and there are
facility. Under the new facility, the Company can no outstanding amounts borrowed under this facility.
borrow up to $575 million from a group of banks. The
37