Southwest Airlines 2013 Annual Report Download - page 70

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The following table aggregates the Company’s material expected contractual obligations and commitments
as of December 31, 2013:
Obligations by period (in millions)
Contractual obligations 2014
2015 -
2016
2017 -
2018
Beyond
2018 Total
Long-term debt (1) ........................ $ 609 $ 687 $ 744 $ 648 $ 2,688
Interest commitments — fixed (2) ............ 136 195 119 117 567
Interest commitments — floating (3) .......... 9 27 3 1 40
Operating lease commitments (4) ............ 689 1,199 945 1,755 4,588
Capital lease commitments (5) ............... 8 16 16 29 69
Aircraft purchase commitments (6) ........... 876 2,004 2,224 6,807 11,911
Other commitments ....................... 372 182 — — 554
Total contractual obligations .............. $ 2,699 $ 4,310 $ 4,051 $ 9,357 $ 20,417
(1) Includes principal only and includes $68 million in 2014 associated with the Company’s convertible senior notes due
2016. See Note 5 to the Consolidated Financial Statements.
(2) Related to fixed-rate debt only.
(3) Interest obligations associated with floating-rate debt (either at issuance or through swaps) is estimated utilizing forward
interest rate curves as of December 31, 2013 and can be subject to significant fluctuation.
(4) Includes Love Field Modernization Program commitment amounts, and includes the impact of the Boeing 717 lease/
sublease transaction entered into in 2012. See Note 8 to the Consolidated Financial Statements.
(5) Includes interest on capital leases.
(6) Firm orders from Boeing and commitments with other parties.
The Company expects to incur no more than $550 million in Acquisition and integration costs associated
with the AirTran acquisition, of which $410 million has been recorded through December 31, 2013. These costs
have been, and are expected to continue to be, funded with cash from operations. The Company believes that its
current liquidity position, including unrestricted cash and short-term investments of $3.2 billion as of
December 31, 2013, anticipated future internally generated funds from operations, and its fully available,
unsecured revolving credit facility of $1 billion that expires in April 2018, will enable it to meet these future
integration expenditures. However, if a liquidity need were to arise, the Company believes it has access to
financing arrangements because of its current investment grade credit ratings, large value of unencumbered
assets, and modest leverage, which should enable it to meet its ongoing capital, operating, and other liquidity
requirements. The Company will continue to consider various borrowing or leasing options to maximize liquidity
and supplement cash requirements as necessary.
In January 2008, the Company’s Board of Directors authorized the repurchase of up to $500 million of the
Company’s common stock. Through February 15, 2008, the Company had repurchased 4.4 million shares for a
total of approximately $54 million, at which time repurchases under the program were suspended. On August 5,
2011, the Company’s Board of Directors authorized the Company to resume a share repurchase program and
approved the Company’s repurchase, on a discretionary basis, of a total of up to $500 million of the Company’s
common stock following such authorization. On May 16, 2012, the Company’s Board of Directors increased the
previous share repurchase authorization by $500 million to a total of $1.0 billion. On May 15, 2013, the
Company’s Board of Directors further increased the previous share repurchase authorization by an additional
$500 million to a total of $1.5 billion. Under an accelerated share repurchase agreement entered into by the
Company with a third party financial institution in second quarter 2013, the Company paid a total of
approximately $251 million and received a total of approximately 18.0 million shares. Under a separate
accelerated share repurchase program entered into by the Company with a third party financial institution in third
quarter 2013, the Company paid approximately $150 million and received an initial delivery of approximately
11.5 million shares. Final settlement of this third quarter ASR Program occurred in December 2013, and the
Company elected to make a cash payment of approximately $40 million. As of December 31, 2013, the
Company’s cumulative purchases under all Board-authorized repurchases since the August 2011 authorization
62