Southwest Airlines 2002 Annual Report Download - page 61

42 | SOUTHWEST AIRLINES CO. 2002 10-K
In July 2001, the Company redeemed
$100 million of senior unsecured 9.4% Notes
originally issued in 1991.
In fourth quarter 1999, the Company
issued $200 million of floating rate Aircraft
Secured Notes (the Notes), due 2004. The
Notes are funded by a bank through a
commercial paper conduit program and are
secured by eight aircraft. Interest rates on the
Notes are based on the conduit’s actual
commercial paper rate, plus fees, for each
period and are expected to average
approximately LIBOR plus 36 basis points over
the term of the Notes. Interest is payable
monthly and the Company can prepay the
Notes in whole or in part prior to maturity. The
Company prepaid $25 million of the Notes
during 2002.
Also in fourth quarter 1999, the Company
entered into two identical 13-year floating rate
financing arrangements, whereby it effectively
borrowed a total of $56 million from French
banking partnerships. For presentation
purposes, the Company has classified these
identical borrowings as one $56 million
transaction. The effective rate of interest over
the 13-year term of the loans is LIBOR plus
32 basis points. Principal and interest are
payable semi-annually on June 30 and
December 31 for each of the loans and the
Company may terminate the arrangements in
any year on either of those dates, with certain
conditions. The Company has pledged two
aircraft as collateral for the transactions.
On February 28, 1997, the Company issued
$100 million of senior unsecured 7 3/8%
Debentures due March 1, 2027. Interest is
payable semi-annually on March 1 and
September 1. The Debentures may be
redeemed, at the option of the Company, in
whole at any time or in part from time to time,
at a redemption price equal to the greater of
the principal amount of the Debentures plus
accrued interest at the date of redemption or
the sum of the present values of the
remaining scheduled payments of principal
and interest thereon, discounted to the date
of redemption at the comparable treasury rate
plus 20 basis points, plus accrued interest at
the date of redemption.
During 1995, the Company issued
$100 million of senior unsecured 8% Notes
due March 1, 2005. Interest is payable semi-
annually on March 1 and September 1. The
Notes are not redeemable prior to maturity.
During 1992, the Company issued
$100 million of senior unsecured 7 7/8%
Notes due September 1, 2007. Interest is
payable semi-annually on March 1 and
September 1. The Notes are not redeemable
prior to maturity.
During 1991, the Company issued
$100 million of senior unsecured 8 3/4%
Notes due October 15, 2003. Interest on the
Notes is payable semi-annually. The Notes are
not redeemable prior to maturity.
The net book value of the assets pledged
as collateral for the Company’s secured
borrowings, primarily aircraft and engines, was
$926.1 million at December 31, 2002.
As of December 31, 2002, aggregate
annual principal maturities (not including
interest on capital leases) for the five-year
period ending December 31, 2007, were
$130 million in 2003, $207 million in 2004,
$142 million in 2005, $542 million in 2006,
$114 million in 2007, and $561 million
thereafter.