01—Abstract
Summary
Summary of the 10-K/A filed July 10, 1997. Cited figures are marked; the original filing is the authoritative source.
Southwest Airlines Co. filed this Form 10-K/A (Amendment No. 1) on July 10, 1997 for the fiscal year ended December 31, 1996.
The filing does not present financial statements or operating results. Its sole purpose is to file an amended Exhibit 10.3: Supplemental Agreement No. 1, dated as of February 26, 1997, to Purchase Agreement No. 1810 with The Boeing Company, covering the Boeing Model 737-7H4 aircraft. The amendment is signed by Gary C.
Kelly, Vice President - Finance and Chief Financial Officer. The supplemental agreement updates the aircraft purchase terms. The base agreement covers 63 firm 737-7H4 aircraft.
Option provisions were expanded to 67 option aircraft, plus 49 rollover option aircraft, with deliveries scheduled from October 1998 through 2006. The warranty period was extended from 36 to 48 months, the Program Changes provisions were removed, and several letter agreements were revised or added. These cover escalation sharing (Boeing shares one-half of escalation up to 3%a per year in 1997 and 1998), service ready validation program testing, and maintenance training.
Most price, performance, and credit terms are redacted as confidential under Rule 24b-2. For investors, the filing is a contract amendment rather than a periodic results report. It shows a commitment to acquire additional 737-7H4 aircraft, with the option structure and delivery schedule set out above.
02—Key points
Key Highlights
- Filing type: Amendment No. 1 to the Form 10-K for the fiscal year ended December 31, 1996, filed July 10, 1997, to add Exhibit 10.3.
- Exhibit 10.3 is Supplemental Agreement No. 1, dated February 26, 1997, to Boeing Purchase Agreement No. 1810, covering Model 737-7H4 aircraft.
- The base purchase covers 63 Boeing 737-7H4 aircraft, with the Aircraft Basic Price and Advance Payment Base Price revised.
- Option rights increase to 67 option aircraft, with 49 rollover option aircraft offered, for deliveries from October 1998 through 2006.
- Warranty periods for conformance to the Detail Specification and for defects in material, workmanship, or design are extended from 36 to 48 months.
- Boeing agrees to share one-half of escalation, up to 3% per year, for aircraft delivered in 1997 and 1998.
- Confidential price, performance, and credit terms are omitted from the public filing under 17 CFR 240.24b-2 and filed separately with the SEC.
03—Questions
Frequently Asked Questions
Does this filing report Southwest Airlines' annual financial results?
No. The filing is an amendment to the 10-K that adds one exhibit, Supplemental Agreement No. 1 to the Boeing purchase agreement. It contains no income statement, balance sheet, or cash flow data for fiscal 1996.
How many aircraft is Southwest committed to buy from Boeing under this agreement?
The base agreement covers 63 Boeing Model 737-7H4 aircraft. The related option letter agreement provides for 67 additional option aircraft and 49 rollover option aircraft.
When are the aircraft scheduled to be delivered?
The option aircraft delivery schedule runs from October 1998 through July 2004, with rollover option aircraft delivered in 2004, 2005, and 2006. The base aircraft are scheduled for delivery beginning in October 1997, as shown in the advance payment schedule.
What changed in the warranty terms?
The warranty periods for defects in conformance to the Detail Specification and for defects in material, workmanship, or design were extended from 36 months to 48 months after delivery. The inspection labor reimbursement period was also changed from 36 to 48 months.
What is the escalation sharing arrangement?
For aircraft delivered after December 31, 1996, Boeing agrees to share one-half of escalation, up to a maximum of 3% per year, in 1997 and 1998. Credit memoranda are issued at delivery and applied to the aircraft price.
04—Continue