US Airways 2004 Annual Report Download - page 88

Table of Contents
AMERICA WEST AIRLINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
amendments to other indebtedness. The government guaranteed loan contains customary events of default, including payment defaults, cross-defaults,
breach of covenants, bankruptcy and insolvency defaults and judgment defaults.
(d) In August 1995, AWA issued $75.0 million principal amount of 10 3/4% senior unsecured notes due 2005 of which $39.5 million remained outstanding at
December 31, 2004. Interest on the 10 3/4% senior unsecured notes is payable semiannually in arrears on March 1 and September 1 of each year. On
December 27, 2004, AWA called for the redemption on January 26, 2005 of all of the senior unsecured notes at a redemption price of 100% of the
principal amount thereof plus accrued and unpaid interest through the redemption date. In addition, AWA irrevocably deposited the $30.8 million raised
through the maintenance facility and flight training center financing, together with an additional $10.5 million from its operating cash flow, with the trustee
for the senior unsecured notes. The senior notes were subsequently redeemed on January 26, 2005.
(e) In connection with the closing of the government guaranteed loan and the related transactions, Holdings issued $104.5 million of 7.5% convertible senior
notes due 2009, of which approximately $112.3 million remained outstanding at December 31, 2004 (including $21.6 million of interest paid through
December 31, 2004 as a deemed loan added to the initial principal thereof). Beginning January 18, 2005, these notes are convertible into shares of class B
common stock, at the option of the holders, at an initial conversion price of $12.00 per share or a conversion ratio of approximately 83.333 shares per
$1,000 principal amount of such notes, subject to standard anti-dilution adjustments. Interest on the 7.5% convertible senior notes is payable semiannually
in arrears on June 1 and December 1 of each year. At Holdings' option, the first six interest payments were payable in the form of a deemed loan added to
the principal amount of these notes. The 7.5% convertible senior notes will mature on January 18, 2009 unless earlier converted or redeemed. The payment
of principal, premium and interest on the 7.5% convertible senior notes is fully and unconditionally guaranteed by AWA.
Holdings may redeem some or all of the 7.5% convertible senior notes at any time before January 18, 2005, at a redemption price equal to $1,000 per note
to be redeemed if (A) the closing price of the class B common stock has exceeded 120% of the conversion price then in effect for at least 20 trading days
within a period of 30 consecutive trading days ending on the trading day before the date of the mailing of the redemption notice, and (B) a shelf
registration statement covering resales of the notes and the class B common stock issuable upon conversion thereof is effective and available for use and is
expected to remain effective and available for use for the 30 days following the redemption date, unless registration is no longer required. Holdings may
redeem the 7.5% convertible senior notes, in whole or in part, on or after January 18, 2005 at the following redemption prices (expressed as percentages of
the principal amount thereof), if redeemed during the twelve-month period commencing on January 18 of the years set forth below, plus, in each case,
accrued and unpaid interest, if any, to the date of redemption:
Year Redemption Price
2005 103.75%
2006 102.50%
2007 101.25%
2008 and thereafter 100.00%
For financial reporting purposes, AWA recorded the convertible senior notes at their fair market value on the date of issuance. The balance at
December 31, 2004 is net of an unamortized discount of $22.2 million.
(f) In July and August of 2003, AWA completed a private placement of approximately $86.8 million issue price of 7.25% Senior Exchangeable Notes due
2023. The notes bear cash interest at 2.49% per year until July 30, 2008. Thereafter, the notes will cease bearing cash interest and begin accruing original
issue discount daily at a rate of 7.25% per year until maturity. Each note was issued at a price of $343.61 and is exchangeable for class B common stock of
Holdings at an exchange ratio of 32.038 shares per $1,000 principal amount at maturity of the notes (subject to adjustment in certain circumstances). This
represents an equivalent conversion price of approximately $10.73 per share. The aggregate amount due at maturity, including accrued original issue
discount from July 31, 2008, will be $252,695,000. The notes are unconditionally guaranteed on a senior unsecured basis by Holdings.
Holders may exchange their notes for the shares of class B common stock of Holdings in any fiscal quarter commencing after September 30, 2003, if, as of
the last day of the preceding fiscal quarter, the closing sale price of the class B common stock for at least 20 trading days in a period of 30 consecutive
trading days ending on the last trading day of such preceding fiscal quarter is more than 110% of the accreted exchange price per share of Class B common
stock on the last day of such preceding fiscal quarter. If the foregoing condition is satisfied, then the notes will be exchangeable at any time at the option of
the holder through maturity. The accreted exchange price per share as of any day will equal the issue price of a note plus accrued original issue discount to
that day divided by 32.038, subject to any adjustments to the exchange rate through that day.
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