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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 25, 1997
SOUTHWEST AIRLINES CO.
(Exact name of registrant as specified in its charter)
TEXAS
(State or other jurisdiction of incorporation)
1-7259 74-1563240
(Commission File Number) (IRS Employer Identification No.)
P. O. BOX 36611, LOVE FIELD, DALLAS, TEXAS 75235
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 904-4000
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events
On February 25, 1997, Southwest Airlines Co. entered into an
underwriting agreement for the public offering of $100 million of its 73/8%
Debentures Due 2027. Closing of the transaction is expected to occur on
February 28, 1997. The purpose of this report is to permit the registrant to
file herewith those exhibits listed in Item 7(c) below.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
1.1. Terms Agreement dated February 25, 1997 between
Southwest Airlines Co. and Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Salomon Brothers Inc (Annex A thereto entitled
Southwest Airlines Co. Debt Securities, Underwriting
Agreement--Basic Provisions, dated September 1,
1992, being incorporated by reference to Exhibit 1
to the registrant's Current Report on Form 8-K dated
September 2, 1992).
4.1 Form of Global Security representing all 73/8%
Debentures Due 2027.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHWEST AIRLINES CO.
(Registrant)
By: /s/ Gary C. Kelly
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Gary C. Kelly
Vice President - Finance and
Chief Financial Officer
Date: February 27, 1997
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INDEX TO EXHIBITS
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Exhibit
No. Exhibit
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1.1. Terms Agreement dated February 25, 1997 between Southwest
Airlines Co. and Lehman Brothers Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Brothers Inc
(Annex A thereto entitled Southwest Airlines Co. Debt
Securities, Underwriting Agreement--Basic Provisions, dated
September 1, 1992, being incorporated by reference to Exhibit 1
to the registrant's Current Report on Form 8-K dated
September 2, 1992).
4.1 Form of Global Security representing all 73/8% Debentures Due
2027.
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EXHIBIT 1.1
SOUTHWEST AIRLINES CO.
DEBT SECURITIES
TERMS AGREEMENT
February 25, 1997
To: Southwest Airlines Co.
2702 Love Field Drive
Dallas, Texas 75235
Dear Sirs:
We understand that Southwest Airlines Co., a Texas corporation (the
"Company"), proposes to issue and sell $100,000,000 aggregate principal amount
of debt securities. On behalf of the Underwriters named in Schedule I hereto
(the "Underwriters"), and subject to the terms and conditions set forth herein
or incorporated by reference herein, we hereby offer to purchase such
Securities.
The Securities to be purchased by the Underwriters, which are to be
issued under an Indenture dated as of February 25, 1997 between the Company and
U.S. Trust Company of Texas, N.A., as Trustee, shall have the following terms:
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Title: 73/8% Debentures Due 2027
Principal amount to be issued: $100,000,000
Date of maturity: March 1, 2027
Interest rate: 73/8% per annum
Interest payment dates: March 1 and September 1 of each year,
beginning September 1, 1997, in immediately
available funds
Public offering price: 99.639%, plus accrued interest from Feb-
ruary 28, 1997
Purchase price: 98.764%, plus accrued interest from
February 28, 1997 (payable in same-day
funds)
Redemption provisions: Redeemable, 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
(i) 100% of their principal amount and (ii) the
sum of the present values of the remaining
scheduled payments of principal and interest
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thereon discounted to the date of redemption,
on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months), at the
Treasury Rate (as defined) plus 20 basis
points, plus accrued interest thereon to the
date of redemption.
Defeasance: Yes
Delayed Delivery Contracts: None
Book-entry arrangements: Authorized
Underwriters' counsel: Vinson & Elkins L.L.P., Houston, Texas
Closing date and location: February 28, 1997, at the offices of the
Company, 2702 Love Field Drive, Dallas,
Texas
Current ratings: Moody's Investor Service -- A3
Standard & Poor's -- A-
Duff & Phelps -- A-
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All of the provisions contained in the document entitled "Southwest
Airlines Co. Debt Securities, Underwriting Agreement--Basic Provisions," dated
as of September 1, 1992, a copy of which is attached hereto as Annex A, are
herein incorporated by reference in their entirety, except to the extent
inconsistent herewith, and shall be deemed to be a part of this Terms Agreement
to the same extent as if such provisions had been set forth in full herein.
Terms defined in such document are used herein as therein defined, except that
the references therein to the Indenture dated as of June 21, 1991 shall be
deemed to be the Indenture as defined in this Terms Agreement and the
registration statement on Form S-3 (No. 33-50930) referred to therein shall be
deemed to be the Company's registration statement on Form S-3 (No. 33-59113).
The Underwriters severally agree, subject to the terms and provisions of this
Terms Agreement, including the terms and provisions incorporated by reference
herein, to purchase from the Company the respective principal amounts of
Securities set forth opposite their names in Schedule I hereto.
The Company and the Underwriters acknowledge that Vinson & Elkins
L.L.P., which is acting as counsel to the Underwriters in connection with the
offer and sale of the Securities, also acts as counsel from time to time to the
Company in connection with unrelated matters. The Company and the Underwriters
consent to such firm's so acting as counsel to the Underwriters and as counsel
to the Company.
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Any notice by the Company to the Underwriters pursuant to this Terms
Agreement shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication addressed to
the Underwriters c/o Lehman Brothers Inc., 3 World Financial Center, 200 Vesey
Street, New York, New York 10285.
Please accept this offer by signing a copy of this Terms Agreement in
the space set forth below and returning the signed copy to us.
LEHMAN BROTHERS INC.
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
SALOMON BROTHERS INC
By: Lehman Brothers Inc.
By: /s/ Peter Wexler
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Title: Managing Director
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Accepted:
SOUTHWEST AIRLINES CO.
By: /s/ Gary C. Kelly
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Title: Vice President & CEO
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SCHEDULE I
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PRINCIPAL
UNDERWRITER AMOUNT
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Lehman Brothers Inc..................................................................... $ 33,400,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated...................................... 33,300,000
Salomon Brothers Inc.................................................................... 33,300,000
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Total........................................................................... $100,000,000
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EXHIBIT 4.1
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND, EXCEPT IN
SUCH LIMITED CIRCUMSTANCES, MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR OF THE DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOUTHWEST AIRLINES CO.
73/8% DEBENTURES DUE 2027
NO. GS-1 CUSIP #844741 AN 8
Southwest Airlines Co., a corporation duly organized and existing
under the laws of Texas (herein called the "Company", which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ONE HUNDRED MILLION DOLLARS on March 1, 2027, and to pay
interest thereon from February 28, 1997 or from the most recent Interest
Payment Date (as hereinafter defined) to which interest has been paid or duly
provided for, semi-annually in arrears on March 1 and September 1 (an "Interest
Payment Date") in each year, commencing September 1, 1997, at the rate of 73/8%
per annum, until the principal hereof is fully paid or made available for full
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, subject to certain exceptions provided in such
Indenture, be paid to the person in whose name this Security is registered on
the Security register or registers of the Company at the close of business on
February 15 or August 15 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date.
Payment of the principal of and interest on this Security will be made
at the office or agency of the Company maintained for that purpose in Dallas,
Texas, in such immediately available funds of the United States of America as
at the time of payment are legal tender for payment of public and private
debts.
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Reference is hereby made to the further provisions of this Security
set forth below, which further provisions shall for all purposes have the same
effect as if set forth in this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to below by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: February 28, 1997
SOUTHWEST AIRLINES CO.
By:
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Vice President - Finance and
Chief Financial Officer
ATTEST:
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Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
U.S. TRUST COMPANY OF TEXAS, N.A.,
as Trustee
By
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Authorized Signatory
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This Security is one of a duly authorized issue of debt securities of
the Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of February 25, 1997 (herein called
the "Indenture"), between the Company and U.S. Trust Company of Texas, N.A., as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitation of rights, duties and immunities thereunder of the Company, the
Trustee and the holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is a
Global Security representing the entire principal amount of the series
designated on the initial page hereof, limited in aggregate principal amount to
$100,000,000.
The Securities of this series are not subject to any sinking fund.
The Securities of this series shall be redeemable, at the option of
the Company, in whole at any time or in part from time to time, on at least 30
days but not more than 60 days' prior notice mailed to the registered address
of each holder of Securities to be so redeemed, at a redemption price equal to
the greater of (i) 100% of the principal amount of the Securities to be so
redeemed plus accrued interest thereon to the date of redemption and (ii) the
sum of the present values of the remaining scheduled payments of principal of
the Securities to be so redeemed and interest thereon discounted to the date of
redemption, on a semi-annual basis (assuming a 360-day per year consisting of
twelve 30-day months), at the Treasury Rate (as defined herein) plus 20 basis
points plus accrued interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Securities of this series to be redeemed that would
be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of such Securities. "Independent
Investment Banker" means the Reference Treasury Dealer.
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such business day, the average
of the Reference Treasury Dealer Quotations for such redemption date.
"Reference Treasury Dealer Quotations" means, with respect to the Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted
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in writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such redemption date.
"Reference Treasury Dealer" means Lehman Brothers Inc. and its
successors; provided, however, that if Lehman Brothers Inc. shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury
Dealer.
The Indenture contains provisions for defeasance of the entire
indebtedness of the Securities of this series upon compliance by the Company
with certain conditions set forth therein.
If an Event of Default with respect to the Securities of this series
shall occur and be continuing, the principal of the Securities of this series
may be declared due and payable in the manner and with the effect provided in
the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than 66 2/3% in aggregate
principal amount of the Securities at the time outstanding of all series to be
affected (voting as one class), evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of each such series; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of any Security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of any interest thereon, or reduce any amount payable on redemption
thereof or impair or affect the right of any Securityholder to institute suit
for payment thereof, without the consent of the holder of each Security so
affected, or (ii) reduce the percentage of aggregate principal amount of
Securities of any series or of all series (voting as one class), as the case
may be, the holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of all outstanding Securities of
each such series so affected.
This Global Security shall be exchangeable for Securities of this
series registered in the names of persons other than the Depositary for such
Global Security or its nominee only as provided in this paragraph. This Global
Security shall be so exchangeable if (x) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for this Global
Security or if at any time such Depositary ceases to be a clearing agency
registered as such under the Securities Exchange Act of 1934, and the Company
fails to appoint a successor Depositary for this Global Security within 90 days
after the Company receives such notice or becomes aware of such event, (y) the
Company executes and delivers to the Trustee written instructions that this
Global Security shall be so exchangeable or (z) there shall have occurred and
be continuing an Event of Default or an event which, with the giving of notice
or lapse of time, or both, would constitute an Event of Default with respect to
the Securities of this series. Securities so issued in exchange for this Global
Security shall be of the same series and of like tenor, in authorized
denominations and in the aggregate having the same principal amount as this
Global Security and registered in such names as the Depositary for such Global
Security shall direct.
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As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
register or registers of the Company, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of and interest on this Security are payable, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security registrar, duly executed by the registered holder
hereof or its attorney duly authorized in writing, and thereupon on or more new
Securities of this series, and of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees. At the date of the Indenture such agency of the
Company is located at U.S. Trust Company of Texas, N.A., 2001 Ross Avenue,
Suite 2700, Dallas, Texas 75201.
No service charge shall be made for any such exchange or registration
of transfer, but the Company or the Securities registrar may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary. All payments made to or upon the order of such registered holder
shall, to the extent of the sum or sums paid, effectually satisfy and discharge
liability for moneys payable on this Security.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of Texas.
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