Southwest Airlines 2008 Annual Report Download - page 73

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
5. Accrued Liabilities
2008 2007
(In millions)
Retirement plans (Note 15) ................................................ $86 $ 132
Aircraft rentals .......................................................... 118 125
Vacation pay ........................................................... 175 164
Advances and deposits (Note 10) ........................................... 23 2,020
Fuel derivative contracts .................................................. 246 —
Deferred income taxes .................................................... 36 370
Other ................................................................. 328 296
Accrued liabilities ..................................................... $1,012 $3,107
6. Revolving Credit Facility And Short Term-
borrowing
The Company has a revolving credit facility
under which it can borrow up to $600 million from a
group of banks. The facility expires in August 2010
and is unsecured. During fourth quarter 2008, as a
result of instability in the credit market, the Company
borrowed $400 million under this facility to be used
for general corporate purposes, including enhancing
the Company’s liquidity. At the Company’s option,
interest on the facility can be calculated on one of
several different bases. For the $400 million
outstanding at December 31, 2008, the Company has
chosen a floating rate based upon an annual prime
rate as defined in the agreement. The facility also
contains a financial covenant requiring a minimum
coverage ratio of adjusted pre-tax income to fixed
obligations, as defined. As of December 31, 2008, the
Company was in compliance with this covenant.
During 2008, as part of the Company’s
agreement with a counterparty in which it has
invested in auction rate security instruments, it has
received a $91 million loan that is secured by the
auction rate security instruments from that
counterparty. See Note 11 for further information on
the instruments and the agreement. The loan is
callable by the counterparty at any time and was
made to the Company at a cost that effectively offsets
the interest earned on the auction rate security
instruments. As a result of this callable feature, the
loan is classified as a component of “Current
maturities of long-term debt” in the accompanying
Consolidated Balance Sheet, even though the loan
does not expire until June 2010.
7. Long-term Debt
2008 2007
(In millions)
Credit line borrowing (Note 6) ............................................. $91 $—
Revolving Credit Facility (Note 6) .......................................... 400 —
10.5% Notes due 2011 .................................................... 400 —
Term Loan Agreement due 2020 ............................................ 585 —
French Credit Agreements due 2012 ......................................... 26 32
6.5% Notes due 2012 ..................................................... 410 386
5.25% Notes due 2014 .................................................... 391 352
5.75% Notes due 2016 .................................................... 300 300
5.125% Notes due 2017 ................................................... 358 311
French Credit Agreements due 2017 ......................................... 87 94
Pass Through Certificates ................................................. 464 480
7.375% Debentures due 2027 .............................................. 133 103
Capital leases (Note 8) ................................................... 39 52
3,684 2,110
Less current maturities ................................................... 163 41
Less debt discount and issuance costs ........................................ 23 19
$3,498 $2,050
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