Southwest Airlines 1999 Annual Report Download - page 39

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The estimated fair values of the Company’s long-term debt were based on quoted
market prices. The carrying values of all other financial instruments approximate their fair
value.
8. COMMON STOCK
The Company has one class of common stock. Holders of shares of common stock
are entitled to receive dividends when and if declared by the Board of Directors and are
entitled to one vote per share on all matters submitted to a vote of the shareholders.
At December 31, 1999, the Company had common stock reserved for issuance
pursuant to Employee stock benefit plans (97.9 million shares) and upon exercise of rights
(602.9 million shares) pursuant to the Common Stock Rights Agreement, as amended
(Agreement).
Pursuant to the Agreement, each outstanding share of the Company’s common
stock is accompanied by one common share purchase right (Right). Each Right entitles its
holder to purchase one additional share of common stock at an exercise price of $4.94
and is exercisable only in the event of a proposed takeover, as defined by the Agreement.
The Company may redeem the Rights at $.0033 per Right prior to the time that 15 percent
of the common stock has been acquired by a person or group. If the Company is acquired,
as defined in the Agreement, each Right will entitle its holder to purchase for $4.94 that
number of the acquiring company’s or the Company’s common shares, as provided in the
Agreement, having a market value of two times the exercise price of the Right. The Rights
will expire no later than July 30, 2006.
On September 25, 1997, the Company’s Board of Directors declared a three-for-
two stock split, distributing 73.6 million shares on November 26, 1997. On July 22, 1998,
the Company’s Board of Directors declared a three-for-two stock split, distributing 111.9
million shares on August 20, 1998. On May 20, 1999, the Company’s Board of Directors
declared a three-for-two stock split, distributing 168.0 million shares on July 19, 1999.
Unless otherwise stated, all per share data presented in the accompanying consolidated
financial statements and notes thereto have been restated to give effect to the stock splits.
During third quarter 1998, the Company completed a $100 million common stock
repurchase program, resulting in the repurchase of 7.3 million shares at an average cost of
$13.65 per share. All of the acquired shares were subsequently reissued under the
Employee stock option and purchase plans.
F16