Southwest Airlines 2015 Annual Report Download - page 66

Download and view the complete annual report

Please find page 66 of the 2015 Southwest Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 148

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

Statements for further information. During 2015 and 2014, the Company provided $570 million and
$233 million, respectively, in cash collateral to derivative counterparties. In 2013, the Company
received $57 million in cash collateral from derivative counterparties. Cash flows associated with
entering into new fuel derivatives, which are also classified as Other, net, operating cash flows, were
net outflows of $556 million in 2015, net outflows of $247 million in 2014, and net inflows of $60
million in 2013. Net cash provided by operating activities is primarily used to finance capital
expenditures, repay debt, fund stock repurchases, pay dividends, and provide working capital.
Net cash used in investing activities for 2015, 2014, and 2013 was $1.9 billion, $1.7 billion, and $1.4
billion, respectively. Investing activities in 2015, 2014, and 2013 included payments for new aircraft
delivered to the Company, progress payments for future aircraft deliveries, and purchases and sales of
short-term and noncurrent investments, which fluctuate primarily based on anticipated working capital
needs. Investing activities in 2015 and 2014 also included payments associated with airport
construction projects, denoted as Assets constructed for others. See Note 4 to the Consolidated
Financial Statements for further information. During 2015, 2014, and 2013, the Company’s purchases
and sales of short-term and noncurrent investments resulted in net cash provided of $237 million, $105
million, and $63 million, respectively. The Company currently estimates its 2016 capital expenditures
will be approximately $2.0 billion.
Net cash used in financing activities for 2015, 2014, and 2013 was $1.0 billion, $1.2 billion, and $851
million, respectively. During 2015, the Company repaid $213 million in debt and capital lease
obligations, compared with $561 million and $313 million during 2014 and 2013, respectively. During
2015, the Company issued $500 million 2.65 percent senior unsecured notes due 2020 under its shelf
registration statement, compared with the 2014 issuance of $300 million 2.75 percent senior unsecured
notes due 2019 under its shelf registration statement. See Note 6 to the Consolidated Financial
Statements for further information. The Company repurchased approximately $1.2 billion of its
outstanding common stock through authorized share repurchases during 2015, compared with
repurchases of $955 million and $540 million during 2014 and 2013, respectively. The Company also
paid $180 million in dividends to Shareholders during 2015, compared to $139 million in 2014 and
$71 million in 2013. Although the Company currently intends to continue paying dividends on a
quarterly basis for the foreseeable future, the Company’s Board of Directors may change the timing,
amount, and payment of dividends on the basis of results of operations, financial condition, cash
requirements, future prospects, and other factors deemed relevant by the Board of Directors.
The Company is a “well-known seasoned issuer” and currently has an effective shelf registration
statement registering an indeterminate amount of debt and equity securities for future sales. The
Company currently intends to use the proceeds from any future securities sales off this shelf
registration statement for general corporate purposes.
The Company has access to a $1 billion unsecured revolving credit facility expiring in April 2018.
Interest on the facility is based on the Company’s credit ratings at the time of borrowing. At the
Company’s current ratings, the interest cost would be LIBOR plus a spread of 112.5 basis points. The
facility contains a financial covenant requiring a minimum coverage ratio of adjusted pre-tax income to
fixed obligations, as defined. As of December 31, 2015, the Company was in compliance with this
covenant and there were no amounts outstanding under the revolving credit facility.
As of May 11, 2015, the Company completed its previously authorized $1.0 billion share repurchase
program, bringing in a total of 28.0 million shares over the course of the program. Furthermore, on
58