Southwest Airlines 2009 Annual Report Download - page 71

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2009
7. LONG-TERM DEBT
(In millions) 2009 2008
Credit line borrowing (Note 6) ......................... $ 75 $ 91
Revolving Credit Facility (Note 6) ...................... — 400
10.5% Notes due 2011 ............................... 397 400
Term Loan Agreement due 2020 ....................... 554 585
French Credit Agreements due 2012 ..................... 21 26
6.5% Notes due 2012 ................................ 400 410
5.25% Notes due 2014 ............................... 373 391
5.75% Notes due 2016 ............................... 292 300
5.125% Notes due 2017 .............................. 330 358
French Credit Agreements due 2018 ..................... 81 87
Term Loan Agreement due 2019 — 6.64% ............... 320 —
Term Loan Agreement due 2019 — 6.84% ............... 124 —
Pass Through Certificates ............................. 450 464
7.375% Debentures due 2027 .......................... 110 133
Capital leases (Note 8) ............................... 25 39
3,552 3,684
Less current maturities ............................... 190 163
Less debt discount and issuance costs .................... 37 23
$3,325 $3,498
On July 1, 2009, the Company entered into a term loan agreement providing for loans to the Company
aggregating up to $124 million, to be secured by mortgages on five of the Company’s 737-700 aircraft. The
Company has borrowed the full $124 million and secured this loan with the requisite five aircraft mortgages. The
loan matures on July 1, 2019, and is repayable semi-annually in installments of principal beginning January 1,
2010. The loan bears interest at a fixed rate of 6.84 percent, and interest is payable semi-annually, beginning
January 1, 2010. The Company used the proceeds from the term loan for general corporate purposes.
On April 29, 2009, the Company entered into a term loan agreement providing for loans to the Company
aggregating up to $332 million, to be secured by mortgages on 14 of the Company’s 737-700 aircraft. The
Company borrowed the full $332 million and secured the loan with the requisite 14 aircraft mortgages. The loan
matures on May 6, 2019, and is being repaid via quarterly installments of principal that began August 6, 2009.
The loan bears interest at the LIBO Rate (as defined in the term loan agreement) plus 3.30 percent, and interest is
payable quarterly, also beginning August 6, 2009. Concurrent with its entry into the term loan agreement, the
Company entered into an interest rate swap agreement that effectively fixes the interest rate on the term loan for
its entire term at 6.64 percent. The Company used the proceeds from the term loan for general corporate
purposes, including the repayment of the Company’s revolving credit facility.
On December 30, 2008, the Company sold $400 million of secured notes due 2011 in a private placement.
The notes will mature on December 15, 2011, and bear interest at a fixed rate of 10.5 percent per annum. Interest
on the notes is payable semi-annually, beginning June 15, 2009. The notes are secured by a first priority
perfected security interest in a specified pool of 17 Boeing 737-700 aircraft granted under a single mortgage. The
notes cannot be called by the Company prior to stated maturity. However, they are subject to redemption at par in
certain circumstances involving a casualty loss of an aircraft securing the notes. The notes contain conventional
events of default and acceleration provisions, but have no financial covenants. The Company used the net
proceeds from the sale of the notes for general corporate purposes, including using a portion of the proceeds to
provide cash collateral for some of the Company's fuel hedging arrangements. During fourth quarter 2009, the
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