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<SEC-DOCUMENT>0000092380-01-500011.txt : 20010804
<SEC-HEADER>0000092380-01-500011.hdr.sgml : 20010804
ACCESSION NUMBER:		0000092380-01-500011
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20010630
FILED AS OF DATE:		20010802

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SOUTHWEST AIRLINES CO
		CENTRAL INDEX KEY:			0000092380
		STANDARD INDUSTRIAL CLASSIFICATION:	AIR TRANSPORTATION, SCHEDULED [4512]
		IRS NUMBER:				741563240
		STATE OF INCORPORATION:			TX
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-07259
		FILM NUMBER:		1695796

	BUSINESS ADDRESS:	
		STREET 1:		2702 LOVE FIELD DR
		STREET 2:		P O BOX 36611
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75235
		BUSINESS PHONE:		2147924000

	MAIL ADDRESS:	
		STREET 1:		PO BOX 36611
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75235-1611

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AIR SOUTHWEST CO
		DATE OF NAME CHANGE:	19760108
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>s2q200110qtext.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                 FORM 10-Q

(Mark One)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001 or
[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
For the transition period from ________ to ________

Commission file No. 1-7259

                           Southwest Airlines Co.
           (Exact name of registrant as specified in its charter)

             TEXAS                                         74-1563240
 (State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                         Identification No.)

  P.O. Box 36611, Dallas, Texas                            75235-1611
 (Address of principal executive offices)                  (Zip Code)

    Registrant's telephone number, including area code:  (214) 792-4000

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  	Yes [X]  	No [  ]

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

     Number of shares of Common Stock outstanding as of the close of business
on July 27, 2001:

                                763,401,828

























                           SOUTHWEST AIRLINES CO.
                                 FORM 10-Q
                       Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

                           Southwest Airlines Co.
                    Condensed Consolidated Balance Sheets
                               (in thousands)
                                 (unaudited)

                                             June 30, 2001    December 31, 2000
ASSETS
Current assets:
 Cash and cash equivalents                        $968,347             $522,995
 Accounts and other receivables                    153,511              138,070
 Inventories of parts and supplies, at cost         79,570               80,564
 Deferred income taxes                              28,191               28,005
 Fuel hedge contracts                               59,512               22,515
 Prepaid expenses and other current assets          40,236               39,387
  Total current assets                           1,329,367              831,536

Property and equipment:
 Flight equipment                                7,241,839            6,831,913
 Ground property and equipment                     856,627              800,718
 Deposits on flight equipment purchase
   contracts                                       325,204              335,164
                                                 8,423,670            7,967,795
 Less allowance for depreciation                 2,318,958            2,148,070
                                                 6,104,712            5,819,725
Other assets                                        34,579               18,311
                                                $7,468,658           $6,669,572

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                 $336,029             $312,716
 Accrued liabilities                               632,479              499,874
 Air traffic liability                             510,103              377,061
 Income taxes payable                               40,203                    -
 Current maturities of long-term debt              110,501              108,752
  Total current liabilities                      1,629,315            1,298,403

Long-term debt less current maturities             752,602              760,992
Deferred income taxes                              971,452              852,865
Deferred gains from sale and leaseback
  of aircraft                                      199,933              207,522
Other deferred liabilities                          93,802               98,470
Stockholders' equity:
 Common stock                                      762,829              507,897
 Capital in excess of par value                      5,996              103,780
 Retained earnings                               3,020,813            2,902,007
 Accumulated other comprehensive income             31,916                    -
 Treasury stock, at cost                                 -              (62,364)
  Total stockholders' equity                     3,821,554            3,451,320
                                                $7,468,658           $6,669,572

See accompanying notes.









                               Southwest Airlines Co.
                    Condensed Consolidated Statements of Income
                      (in thousands, except per share amounts)
                                   (unaudited)

                         Three months ended June 30,  Six months ended June 30,
                             2001          2000          2001          2000
OPERATING REVENUES:
 Passenger               $1,505,329    $1,415,958    $2,886,605    $2,615,843
 Freight                     24,869        27,968        50,650        55,034
 Other                       23,587        16,749        45,147        32,445
  Total operating
    revenues              1,553,785     1,460,675     2,982,402     2,703,322
OPERATING EXPENSES:
 Salaries, wages, and
   benefits                 473,042       422,247       920,473       803,736
 Fuel and oil               208,029       197,608       417,613       394,679
 Maintenance materials
   and repairs              102,910        90,311       201,434       183,876
 Agency commissions          30,084        41,310        60,578        78,526
 Aircraft rentals            47,879        49,023        95,924        98,370
 Landing fees and
   other rentals             77,156        64,982       147,174       130,001
 Depreciation                78,213        68,523       155,905       135,221
 Other operating expenses   245,610       212,113       482,282       408,947
   Total operating
     expenses             1,262,923     1,146,117     2,481,383     2,233,356
OPERATING INCOME            290,862       314,558       501,019       469,966
OTHER EXPENSES (INCOME):
 Interest expense            16,460        17,442        33,471        34,665
 Capitalized interest        (5,640)       (6,905)      (11,839)      (13,906)
 Interest income            (10,236)      (10,511)      (19,118)      (17,160)
 Other (gains) losses, net    2,827         3,667        14,552          (471)
   Total other expenses
     (income)                 3,411         3,693        17,066         3,128
INCOME BEFORE INCOME TAXES
  AND CUMULATIVE EFFECT
  OF CHANGE IN ACCOUNTING
  PRINCIPLE                 287,451       310,865       483,953       466,838
PROVISION FOR INCOME
  TAXES                     111,818       120,243       187,275       180,573
NET INCOME BEFORE
  CUMULATIVE EFFECT OF
  CHANGE IN ACCOUNTING
  PRINCIPLE                 175,633       190,622       296,678       286,265
CUMULATIVE EFFECT OF
  CHANGE IN ACCOUNTING
  PRINCIPLE (Net of
  Income Taxes of $14.0
  million)                        -             -             -       (22,131)
NET INCOME                 $175,633      $190,622      $296,678      $264,134
NET INCOME PER SHARE,
  BASIC BEFORE CUMULATIVE
  EFFECT OF CHANGE IN
  ACCOUNTING PRINCIPLE        $ .23         $ .26         $ .39         $ .38
CUMULATIVE EFFECT OF
  CHANGE IN ACCOUNTING
  PRINCIPLE                       -             -             -          (.03)
NET INCOME PER SHARE,
  BASIC                       $ .23         $ .26         $ .39         $ .35
NET INCOME PER SHARE,
  DILUTED BEFORE
  CUMULATIVE EFFECT OF
  CHANGE IN ACCOUNTING
  PRINCIPLE                   $ .22         $ .24         $ .37         $ .36
CUMULATIVE EFFECT OF
  CHANGE IN ACCOUNTING
  PRINCIPLE                       -             -             -          (.03)
NET INCOME PER SHARE,
  DILUTED                     $ .22         $ .24         $ .37         $ .33
WEIGHTED AVERAGE SHARES
  OUTSTANDING:
 Basic                      762,139       745,943       761,188       745,839
 Diluted                    806,524       793,069       807,140       791,301
See accompanying notes.


                             Southwest Airlines Co.
                Condensed Consolidated Statements of Cash Flows
                                (in thousands)
                                  (unaudited)

                                         Six months ended June 30,
                                       2001                     2000
NET CASH PROVIDED BY OPERATING
  ACTIVITIES                         $904,820                 $811,538

INVESTING ACTIVITIES:
 Net purchases of property
   and equipment                     (460,761)                (496,020)

FINANCING ACTIVITIES:
 Payments of long-term debt
   and capital lease
   obligations                         (6,834)                  (7,790)
 Payments of cash dividends           (10,002)                  (8,247)
 Proceeds from Employee
   stock plans                         18,129                   25,947
 Repurchases of common stock                -                 (107,597)

NET CASH PROVIDED BY (USED IN)
  FINANCING ACTIVITIES                  1,293                  (97,687)

NET INCREASE IN CASH AND CASH
  EQUIVALENTS                         445,352                  217,831
CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                 522,995                  418,819

CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                      $968,347                 $636,650

CASH PAYMENTS FOR:
 Interest, net of amount
   capitalized                        $22,530                  $16,362
 Income taxes                         $10,601                  $21,328

See accompanying notes.



                            Southwest Airlines Co.
            Notes to Condensed Consolidated Financial Statements
                                 (unaudited)


     1.  Basis of presentation - The accompanying unaudited condensed
consolidated financial statements of Southwest Airlines Co. (Company) have
been prepared in accordance with accounting principles generally accepted
in the United States for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly,
they do not include all of the information and footnotes required by
accounting principles generally accepted in the United States for complete
financial statements.  The condensed consolidated financial statements for
the interim periods ended June 30, 2001 and 2000 include all adjustments
(which include only normal recurring adjustments) which are, in the opinion
of management, necessary for a fair presentation of the results for the
interim periods.  The Condensed Consolidated Balance Sheet as of December
31, 2000 has been derived from the Company's audited financial statements
as of that date but does not include all of the information and footnotes
required by Generally Accepted Accounting Principles for complete financial
statements.  Operating results for the three and six months ended June 30,
2001 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2001.  For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Southwest Airlines Co. Annual Report on Form 10-K for the year ended
December 31, 2000.

     2.  Dividends - During the three months ended June 30, 2001 and March
31, 2001, dividends of $.0045 per share were declared on the 762.7 million
and 760.7 million shares of common stock then outstanding, respectively.
During the three months ended June 30, 2000 and March 31, 2000, dividends
of $.0037 per share were declared on the 746.5 million and 745.7 million
shares of common stock then outstanding, respectively.

     3.  Common stock - On January 18, 2001, the Company's Board of
Directors declared a three-for-two stock split, distributing 253.9 million
shares on February 15, 2001.  All share and per share data presented in
the accompanying unaudited condensed consolidated financial statements
and notes thereto have been restated for the stock split.

     4.  Reclassifications - Certain prior year amounts have been
reclassified to conform to the current year presentation.

     5.  Net income per share - The following table sets forth the
computation of basic and diluted net income per share (in thousands except
per share amounts)(unaudited):



                      Three months ended June 30,  Six months ended June 30,
                          2001         2000           2001         2000
NUMERATOR:

 Net income before
   cumulative effect
   of change in
   accounting
   principle            $175,633     $190,622       $296,678     $286,265
 Cumulative effect of
   change in
   accounting
   principle                   -            -              -      (22,131)
 Net income available
   to common
   stockholders         $175,633     $190,622       $296,678     $264,134

DENOMINATOR:
 Weighted-average
   shares outstanding,
   basic                 762,139      745,943        761,188      745,839
 Dilutive effect of
   Employee stock
   options                44,385       47,126         45,952       45,462
 Adjusted weighted-
   average shares
   outstanding,
   diluted               806,524      793,069        807,140      791,301

NET INCOME PER SHARE:
 Basic, before
   cumulative effect
   of change in
   accounting principle     $.23         $.26           $.39         $.38
 Cumulative effect of
   change in accounting
   principle                   -            -              -         (.03)
 Basic                      $.23         $.26           $.39         $.35

 Diluted, before
   cumulative effect of
   change in accounting
   principle                $.22         $.24           $.37         $.36
 Cumulative effect of
   change in accounting
   principle                   -            -              -         (.03)
 Diluted                    $.22         $.24           $.37         $.33


     6. Accounting changes - Effective January 1, 2001, the Company adopted
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended (SFAS 133).  SFAS
133 requires the Company to record all financial derivative instruments on
its balance sheet at fair value. Derivatives that are not designated as
hedges must be adjusted to fair value through income.  If the derivative is
designated as a hedge, depending on the nature of the hedge, changes in the
fair value of derivatives that are considered to be effective, as defined,
either offset the change in fair value of the hedged assets, liabilities,
or firm commitments through earnings or are recorded in accumulated other
comprehensive income until the hedged item is recorded in earnings.  Any
portion of a change in a derivative's fair value that is considered to be
ineffective, as defined, is recorded immediately in Other (gains)/losses in
the Condensed Consolidated Statement of Income.  Any portion of a change in
a derivative's fair value that the Company elects to exclude from its
measurement of effectiveness is required to be recorded immediately in
earnings.

Airline operators are inherently dependent upon energy to operate and,
therefore, are impacted by changes in jet fuel prices.  The Company endeavors
to acquire jet fuel at the lowest prevailing prices possible.  Because jet
fuel is not traded on an organized futures exchange, liquidity for hedging is
limited.  However, the Company has found that crude oil contracts and heating
oil contracts are effective commodities for hedging jet fuel.  The Company
has financial derivative instruments in the form of the types of hedges it
utilizes to decrease its exposure to jet fuel price increases.  The Company
does not purchase or hold any derivative financial instruments for trading
purposes.

The Company utilizes financial derivative instruments for both short-term
and long-term time frames when it appears the Company can take advantage
of market conditions.  At June 30, 2001, the Company had a mixture of
purchased call options, collar structures, and fixed price swap agreements
in place to hedge approximately 80 percent of its remaining 2001 total
anticipated jet fuel requirements, approximately 47 percent of its 2002
total anticipated jet fuel requirements, and small portions of its 2003-
2005 total anticipated jet fuel requirements.  As of June 30, 2001,
nearly all of the Company's remaining 2001 hedges, and the majority of its
2002 hedges, are effectively heating oil-based positions.  All other
remaining hedge positions are crude oil-based positions.

The Company accounts for its fuel hedge derivative instruments as cash
flow hedges, as defined.  Upon adoption of SFAS 133, the Company recorded
the fair value of its fuel derivative instruments in the Condensed
Consolidated Balance Sheet and a deferred gain of $46.1 million, net of
tax, in accumulated other comprehensive income.  The portion of the
transition adjustment in "Accumulated other comprehensive income" that was
recognized in earnings during second quarter 2001 was a gain of $10.0
million, net of tax.  During second quarter 2001, the Company recognized
approximately $1.8 million as a net reduction of Other losses, related to
the ineffectiveness of its hedges, in the Condensed Consolidated Statement
of Income.  During second quarter 2001, the Company recognized approximately
$4.7 million of net expense, related to amounts excluded from the Company's
measurements of hedge effectiveness, in Other (gains)/losses in the
Condensed Consolidated Statement of Income.  The Company believes the
adoption of SFAS 133 will result in more volatility in its financial
statements than in the past.

Effective January 1, 2000, the Company adopted Staff Accounting Bulletin
101 (SAB 101) issued by the Securities and Exchange Commission in December
1999.  As a result of adopting SAB 101, the Company changed the way it
recognizes revenue from the sale of flight segment credits to companies
participating in its Rapid Rewards frequent flyer program.  Prior to the
issuance of SAB 101, the Company recorded revenue to "Other revenue" when
flight segment credits were sold, consistent with most other major airlines.
Beginning January 1, 2000, the Company recognizes "Passenger revenue" when
free travel awards resulting from the flight segment credits sold are earned
and flown or credits expire unused.  Due to this change, the Company
recorded a cumulative adjustment in first quarter 2000 of $22.1 million (net
of income taxes of $14.0 million) or $.03 per share, basic and diluted.

     7.  Comprehensive income - Comprehensive income includes changes in
the fair value of certain financial derivative instruments, which qualify
for hedge accounting, and unrealized gains and losses on certain
investments.  For the three and six months ended June 30, 2001,
comprehensive income totaled $171.8 million and $328.6 million,
respectively.  The difference between net income and comprehensive income
for the three and six months ended June 30, 2001 is as follows (in
thousands):

                                Three months ended          Six months ended
                                   June 30, 2001              June 30, 2001

Net income                                $175,633                  $296,678

 Unrealized gain (loss) on
   derivative instruments, net
   of deferred taxes of ($2,556)
   and $21,020                              (3,956)                   32,538
 Other, net of deferred taxes of
   $50 and ($402)                               77                      (622)
 Total other comprehensive income           (3,879)                   31,916

Comprehensive income                      $171,754                  $328,594


As of June 30, 2001, the Company had approximately $32.5 million in
unrealized gains, net of tax, in accumulated other comprehensive income
related to fuel hedges, of which approximately $30.0 million is expected
to be realized in earnings over the next twelve months following June 30,
2001. Upon the adoption of SFAS 133 on January 1, 2001, the Company
recorded unrealized fuel hedge gains of $46.1 million, net of tax, of
which approximately $45.1 million is expected to be realized in earnings
over the twelve months following January 1, 2001.

A rollforward of the amounts included in Accumulated other comprehensive
income, net of taxes, is shown below (in thousands):

                                                              Accumulated
                                   Fuel                          other
                                   hedge                     comprehensive
                                derivatives     Other            income
Balance at December 31, 2000              -           -                -
 January 1, 2001 transition
   adjustment                     $  46,089           -        $  46,089
 First half 2001 changes in
   value                             13,565       ($622)          12,943
 Reclassification to earnings       (27,116)          -          (27,116)
Balance at June 30, 2001          $  32,538       ($622)       $  31,916



Item 2.  Management's Discussion and Analysis of Results of Operations and
         Financial Condition


Comparative Consolidated Operating Statistics

     Relevant operating statistics for the three and six months ended June
30, 2001 and 2000 follow:

SOUTHWEST AIRLINES CO.
COMPARATIVE CONSOLIDATED
OPERATING STATISTICS

                  Three months ended June 30,       Six months ended June 30,
                  2001        2000    Change       2001        2000    Change

Revenue
  passengers
  carried     17,526,753  16,501,441   6.2%    33,242,773  30,890,717   7.6%
Revenue
  passenger
  miles (RPMs)
  (000s)      11,788,386  10,954,767   7.6%    22,450,777  20,407,968  10.0%
Available seat
  miles (ASMs)
  (000s)      16,443,810  14,744,769  11.5%    32,296,808  28,898,727  11.8%
Load factor         71.7%       74.3% (2.6)pts.      69.5%       70.6% (1.1)pts.
Average length
  of passenger
  haul               673         664   1.4%           675         661   2.1%
Trips flown      238,397     223,643   6.6%       470,190     442,258   6.3%
Average
  passenger
  fare            $85.89      $85.81   0.1%        $86.83      $84.68   2.5%
Passenger revenue
  yield per RPM
  (cents)          12.77       12.93 (1.2)%         12.86       12.82   0.3%
Operating revenue
  yield per ASM
  (cents)           9.45        9.91 (4.6)%          9.23        9.35 (1.3)%
Operating expenses
  per ASM (cents)   7.68        7.77 (1.2)%          7.68        7.73 (0.6)%
Operating expenses
  per ASM,
  excluding fuel
  (cents)           6.42        6.43 (0.2)%          6.39        6.36   0.5%
Fuel costs per
  gallon,
  excluding fuel
  tax (cents)      74.96       78.02 (3.9)%         76.71       79.95 (4.1)%
Number of
  Employees at
  period-end      30,369      27,828   9.1%        30,369      27,828   9.1%
Size of fleet at
  period-end         356         324   9.9%           356         324   9.9%


     Operating expenses per ASM for the three and six months ended June 30,
2001 and 2000 are as follows (in cents except percent change):

                    Three months ended June 30,     Six months ended June 30,
                                         Percent                        Percent
                   2001       2000       Change     2001       2000     Change

Salaries, wages,
  and benefits     2.46       2.38         3.4      2.48       2.39       3.8
Employee
  retirement
  plans             .42        .48       (12.5)      .37        .38      (2.6)
Fuel and oil       1.27       1.34        (5.2)     1.29       1.37      (5.8)
Maintenance
  materials and
  repairs           .63        .61         3.3       .62        .64      (3.1)
Agency
  commissions       .18        .28       (35.7)      .19        .27     (29.6)
Aircraft rentals    .29        .33       (12.1)      .30        .34     (11.8)
Landing fees and
  other rentals     .47        .44         6.8       .46        .45       2.2
Depreciation        .48        .46         4.3       .48        .47       2.1
Other operating
  expenses         1.48       1.45         2.1      1.49       1.42       4.9

Total              7.68       7.77        (1.2)     7.68       7.73       (.6)


Material Changes in Results of Operations

Comparison of Three Months Ended June 30, 2001 to Three Months Ended June 30,
2000

     Consolidated net income for second quarter 2001 was $175.6 million
($.22 per share, diluted), as compared to second quarter 2000 net income
of $190.6 million ($.24 per share, diluted), a decrease of 7.9 percent.
The prior year's net income per share amounts have been restated for the
2001 three-for-two stock split (see Note 3 to the unaudited Condensed
Consolidated Financial Statements).  Operating income for second quarter
2001 was $290.9 million, a decrease of 7.5 percent compared to 2000.

     Consolidated operating revenues increased 6.4 percent primarily due
to a 6.3 percent increase in passenger revenues.  The increase in passenger
revenues primarily resulted from the Company's increased capacity, as
available seat miles (ASMs) increased 11.5 percent.  The increase in ASMs
resulted primarily from the net addition of 32 aircraft since second
quarter 2000, which represents a 9.9 percent increase in the Company's
fleet size.  The increase in ASMs was partially offset by a decrease in the
Company's load factor of 2.6 points to 71.7 percent.  The Company
experienced a 6.2 percent increase in revenue passengers carried, a 7.6
percent increase in RPMs, and a 1.2 percent decrease in passenger revenue
yield per RPM (passenger yield).  The decrease in passenger yield is
primarily due to a 1.4 percent increase in average length of passenger
haul, while the average passenger fare remained basically flat.

     Based on current traffic, booking, and revenue trends thus far in July,
the Company's third quarter 2001 unit revenues are expected to be below those
of third quarter 2000.  The third quarter 2001 load factor is currently
expected to be strong relative to historical levels, but has been stimulated
by successful discount and promotional programs.  As a result, the Company
also expects earnings to be below the third quarter 2000 level.  (The
immediately preceding sentences are forward-looking statements that involve
uncertainties that could result in actual results differing materially from
expected results. Some significant factors include, but may not be limited
to, competitive pressure such as fare sales and capacity changes by other
carriers, general economic conditions, and variations in advance booking
trends.)

     Consolidated freight revenues decreased 11.1 percent primarily due
to the current economic and industry environment.  There were decreases in
both the number of freight shipments and revenue per shipment.  Other
revenues increased 40.8 percent.  Approximately 51.4 percent of the increase
in other revenues was from an increase in commissions earned from programs
the Company sponsors with certain business partners, such as the Company
sponsored First USA Visa card, while 25.4 percent of the increase was due
to an increase in charter revenues.

     Operating expenses per ASM were $.0768, compared to $.0777 for 2000.
Excluding fuel expense, operating expenses per ASM decreased .2 percent to
$.0642.  The Company currently expects that, excluding fuel, operating
expenses per ASM in third quarter 2001 will be slightly lower than last
year's third quarter performance.  (The immediately preceding sentence is
a forward-looking statement which involves uncertainties that could result
in actual results differing materially from expected results.  Some
significant factors include, but may not be limited to, wage and
productivity pressures from within the Company's work force and general
economic conditions).

     Salaries, wages, and benefits per ASM increased 3.4 percent.  The
increase was primarily due to an increase in benefits costs, primarily
health care and workers' compensation.

     Employee retirement plans expense per ASM decreased 12.5 percent,
primarily due to the decrease in Company earnings available for
profitsharing.

     Fuel and oil expense per ASM decreased 5.2 percent due to a 3.9
percent decrease in the average jet fuel cost per gallon compared to 2000.
The average jet fuel cost per gallon in second quarter 2001 was $.7496
compared to $.7802 in second quarter 2000, including the effects of hedging
activities. The Company's second quarter 2001 average jet fuel cost is net
of approximately $20.4 million in "effective" hedging gains, as defined.
See Note 6 to the Condensed Consolidated Financial Statements.  The
Company's second quarter 2000 average jet fuel cost is net of approximately
$3.1 million in gains from hedging activities.  As of June 30, 2001, the
Company had hedges in place for approximately 80 percent of its anticipated
jet fuel requirements for the remainder of 2001 at prices below market
prices as of June 30, 2001.  Including estimated hedging gains and
considering current market prices and the continued effectiveness of the
Company's fuel hedges, we are forecasting our third quarter 2001 average
fuel price per gallon to be below second quarter 2001's average fuel cost
per gallon of $.7496.  The Company's fuel hedging strategy could result
in the Company not fully benefiting from certain jet fuel price declines.
(The immediately preceding two sentences are forward-looking statements,
which involve uncertainties that could result in actual results
differing materially from expected results.  Such uncertainties include,
but may not be limited to, the largely unpredictable levels of jet fuel
prices and the continued effectiveness of the Company's fuel hedges.)

     Maintenance materials and repairs per ASM increased 3.3 percent.
An increase in airframe inspection and repairs expense per ASM was
partially offset by a slight decrease in engine repair expense per ASM.
The increase in airframe inspection and repairs was primarily a result of
more of these repairs being outsourced than in the prior year due to a
larger amount of this type of work than the Company could perform with
internal headcount and facilities.  The decrease in engine repair expense
per ASM was primarily due to the Company's capacity growth exceeding the
increase in expense. Virtually all the Company's second quarter capacity
growth was accomplished with new aircraft, most of which have not yet begun
to incur any meaningful engine repair costs.  The Company expects third
quarter 2001 maintenance materials and repairs per ASM to approximate
third quarter 2000 expense.  (The immediately preceding sentence is a
forward-looking statement involving uncertainties that could result in
actual results differing materially from expected results.  Such
uncertainties include, but may not be limited to, any unscheduled
required aircraft airframe or engine repairs and regulatory
requirements.)

     Agency commissions per ASM decreased 35.7 percent, primarily due to
a change in the Company's commission rate policy effective January 1, 2001.
The Company reduced the commission rate paid to travel agents from ten
percent to eight percent for Ticketless bookings, and from ten percent
to five percent for paper ticket bookings.  The percentage of
commissionable revenues decreased from approximately 28 percent in second
quarter 2000 to approximately 26 percent in second quarter 2001.  Due to
the Company's commission policy change in 2001, we expect agency
commissions to continue to show year-over-year decreases throughout 2001
on a per-ASM basis.  (The immediately preceding sentence is a forward-
looking statement involving uncertainties that could result in actual
results differing materially from expected results.  Such uncertainties
include, but may not be limited to, changes in consumer ticket purchasing
habits.)

     Aircraft rentals per ASM decreased 12.1 percent compared to second
quarter 2000 due to a lower percentage of the aircraft fleet being leased.
Approximately 26.4 percent of the Company's aircraft fleet was under
operating lease at June 30, 2001, compared to 29.3 percent at June 30,
2000.  Based on the Company's current new aircraft delivery schedule and
scheduled aircraft retirements for 2001, we expect to continue to have
year-over-year decreases throughout 2001 for aircraft rentals expense on
a per-ASM basis. (The immediately preceding sentence is a forward-looking
statement involving uncertainties that could result in actual results
differing materially from expected results.  Such uncertainties include,
but may not be limited to, changes in the Company's current schedule for
purchase and/or retirement of aircraft.)

     Landing fees and other rentals per ASM increased 6.8 percent
primarily as a result of an increase in other rentals.  This increase is
primarily due to the Company's expansion of facilities in several
airports.

     Depreciation expense per ASM increased 4.3 percent primarily due
to a higher percentage of owned aircraft.  All of the 33 aircraft added to
the Company's fleet over the past twelve months have been purchased.  This,
combined with the retirement of one leased aircraft, has increased the
Company's percentage of aircraft owned or on capital lease from 70.7 percent
at June 30, 2000 to 73.6 percent at June 30, 2001.

     Other operating expenses per ASM increased 2.1 percent primarily from
small increases in several areas, including system development projects,
insurance costs, and employee-related costs such as relocation, travel, and
non-essential training that had been previously deferred as part of a prior
year cost reduction effort.

     Other expenses (income) include interest expense, capitalized interest,
interest income, and other gains and losses.  Interest expense decreased 5.6
percent primarily due to a reduction in interest rates on the Company's
floating rate debt.  Capitalized interest decreased 18.3 percent primarily
due to a reduction in progress payment balances for future aircraft
deliveries.  Interest income decreased 2.6 percent as higher invested cash
balances were more than offset by a decrease in rates earned on investments.
Other losses in second quarter 2001 resulted primarily from the reduction
in the time value portion of financial derivative instruments, such as
premiums paid for option contracts, used in the Company's fuel hedging
program.  See Note 6 to the Condensed Consolidated Financial Statements.
Other losses in second quarter 2000 were primarily due to a write-down
associated with a discontinued project.


Comparison of Six Months Ended June 30, 2001 to Six Months Ended June 30, 2000

     Consolidated net income for the six months ended June 30, 2001 was
$296.7 million ($.37 per share, diluted), as compared to 2000 net income,
before the cumulative effect of change in accounting principle, of $286.3
million ($.36 per share, diluted), an increase of 3.6 percent.  The prior
year's net income per share amounts have been restated for the 2001 three-
for-two stock split (see Note 3 to the unaudited Condensed Consolidated
Financial Statements).  The cumulative effect of change in accounting
principle for the six months ended June 30, 2000 was $22.1 million, net
of taxes of $14.0 million (see Note 6 to the unaudited Condensed
Consolidated Financial Statements).  Net income and diluted net income per
share, after the cumulative change in accounting principle, for the six
months ended June 30, 2000 were $264.1 million and $.33, respectively.
Operating income for the six months ended June 30, 2001 was $501.0 million,
an increase of 6.6 percent compared to 2000.

     Consolidated operating revenues increased 10.3 percent primarily due
to a 10.4 percent increase in passenger revenues.  The increase in
passenger revenues primarily resulted from the Company's increased
capacity.  The Company experienced a 7.6 percent increase in revenue
passengers carried, a 10.0 percent increase in RPMs, and a .3 percent
increase in passenger revenue yield per RPM (passenger yield).  The
increase in RPMs coupled with an 11.8 percent increase in ASMs resulting
in a load factor of 69.5 percent, or 1.1 points below the same prior year
period.  The increase in ASMs resulted primarily from the net addition
of 32 aircraft since second quarter 2000, which represents a 9.9 percent
increase in the Company's fleet size.

     Consolidated freight revenues decreased 8.0 percent primarily due to
the current economic and industry environment.  There were decreases in
both the number of freight shipments and revenue per shipment.  Other
revenues increased 39.1 percent.  Approximately 51.3 percent of the
increase in other revenues was from an increase in commissions earned from
programs the Company sponsors with certain business partners, such as the
Company sponsored First USA Visa card, while 26.4 percent of the increase
was due to an increase in charter revenues.

     Operating expenses per ASM were $.0768, compared to $.0773 for 2000.
Excluding fuel expense, operating expenses per ASM increased .5 percent
to $.0639.

     Salaries, wages, and benefits per ASM increased 3.8 percent.
Approximately 57 percent of the increase was due to an escalation in
health benefits costs, while approximately 43 percent of the increase
was in salaries and wages.

     Employee retirement plans expense per ASM decreased 2.6 percent,
primarily due to the increase in ASMs exceeding the increase in Company
earnings available for profitsharing.

     Fuel and oil expense per ASM decreased 5.8 percent due to a 4.1
percent decrease in the average jet fuel cost per gallon compared to 2000.
The average jet fuel cost per gallon for the six months ended June 30, 2001
was $.7671 compared to $.7995 in 2000, including the effects of hedging
activities. The Company's 2001 average jet fuel cost is net of
approximately $44.8 million in "effective" hedging gains, as defined.  See
Note 6 to the Condensed Consolidated Financial Statements.  The Company's
2000 average jet fuel cost is net of approximately $6.3 million in gains
from hedging activities.

     Maintenance materials and repairs per ASM decreased 3.1 percent.  A
decrease in engine repair expense per ASM was partially offset by an
increase in airframe inspection and repairs expense per ASM.  The
decrease in engine repair expense per ASM was primarily due to the
Company's capacity growth exceeding the increase in expense.  Virtually
all the Company's 2001 capacity growth was accomplished with new aircraft,
most of which have not yet begun to incur any meaningful engine repair
costs.  The increase in airframe inspection and repairs was primarily a
result of more of these repairs being outsourced than in the prior year
due to a larger amount of this type of work than the Company could perform
with internal headcount and facilities.

     Agency commissions per ASM decreased 29.6 percent, primarily due to
a change in the Company's commission rate policy effective January 1, 2001.
The Company reduced the commission rate paid to travel agents from ten
percent to eight percent for Ticketless bookings, and from ten percent
to five percent for paper ticket bookings.  The percentage of
commissionable revenues decreased from approximately 29 percent in 2000 to
approximately 27 percent in 2001.

     Aircraft rentals per ASM decreased 11.8 percent due to a lower
percentage of the aircraft fleet being leased.

     Landing fees and other rentals per ASM increased 2.2 percent primarily
as a result of an increase in other rentals.  This increase is primarily due
to the Company's expansion of facilities in several airports.

     Depreciation expense per ASM increased 2.1 percent primarily due to
a higher percentage of the aircraft fleet being owned.

     Other operating expenses per ASM increased 4.9 percent primarily from
small increases in several areas that had previously been deferred as part
of a prior year cost reduction effort.

     Other expenses (income) include interest expense, capitalized interest,
interest income, and other gains and losses.  Interest expense decreased 3.4
percent primarily due to a reduction in interest rates on the Company's
floating rate debt.  Capitalized interest decreased 14.9 percent primarily
due to a reduction in progress payment balances for future aircraft
deliveries.  Interest income increased 11.4 percent primarily due to an
increase in invested cash balances.  Other losses in 2001 resulted
primarily from the reduction in the time value portion of financial
derivative instruments, such as premiums paid for option contracts, used in
the Company's fuel hedging program.  See Note 6 to the Condensed
Consolidated Financial Statements.

Liquidity and Capital Resources

     Net cash provided by operating activities was $904.8 million for the
six months ended June 30, 2001 and $1,391.6 million for the 12 months
then ended.  Cash generated for the 12 months ended June 30, 2001 was
primarily used to finance aircraft-related capital expenditures and
provide working capital.

     During the 12 months ended June 30, 2001, net capital expenditures
were $1,099.4 million, which primarily related to the purchase of 33 new
737-700 aircraft, and progress payments for future aircraft deliveries.

     The Company's contractual commitments consist primarily of
scheduled aircraft acquisitions. As of June 30, 2001, 13 737-700s are
scheduled for delivery in the remainder of 2001, 27 in 2002, 13 in 2003,
29 in 2004, five in 2005, and 47 thereafter.  In addition, the Company
has options to purchase up to 87 737-700s during 2003-2008 and purchase
rights for an additional 217 737-700s during 2007-2012.  The Company has
the option, which must be exercised two years prior to the contractual
delivery date, to substitute 737-600s or 737-800s for the 737-700s
scheduled subsequent to 2002.  Aggregate funding needed for fixed
commitments at June 30, 2001 was approximately $3,675 million due as
follows: $348 million in 2001; $766 million in 2002; $472 million in 2003;
$641 million in 2004; $379 million in 2005; and $1,069 million thereafter.

     The Company has various options available to meet its capital and
operating commitments, including cash on hand at June 30, 2001 of $968.3
million, internally generated funds, and a revolving credit line with a
group of banks of up to $475 million (none of which had been drawn at June
30, 2001).  In addition, the Company will also consider various borrowing
or leasing options to maximize earnings and supplement cash requirements.

     The Company currently has outstanding shelf registrations for the
issuance of $318.8 million in public debt securities, which it may utilize
for aircraft financing during 2001 and 2002.

     In July 2001, the Company redeemed $100 million of senior unsecured
9.4% Notes originally issued in 1991.

     The Company recently announced new service to Norfolk International
Airport in Norfolk, Virginia.  Service will begin on October 7, 2001, with
daily nonstop flights from Baltimore/Washington, Jacksonville, Las Vegas,
and Orlando, plus direct or connecting service from 32 other cities.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     See Item 7A.  Quantitative and Qualitative Disclosures About Market Risk
in the Company's Annual Report on Form 10-K for the year ended December 31,
2000 and Note 6 to the Condensed Consolidated Financial Statements.




PART II. OTHER INFORMATION

Item 1.	Legal Proceedings

     The Company received a statutory notice of deficiency from the
     Internal Revenue Service (IRS) in July 1995 in which the IRS proposed
     to disallow deductions claimed by the Company on its federal income
     tax returns for the taxable years 1989 through 1991 for the costs of
     certain aircraft inspection and maintenance procedures.  In response to
     the statutory notice of deficiency, the Company filed a petition in the
     United States Tax Court on October 30, 1997, seeking a determination
     that the IRS erred in disallowing the deductions claimed by the Company
     and there is no deficiency in the Company's tax liability for the
     taxable years in issue.  On December 21, 2000, the national office of
     the IRS published a revenue ruling in which it concluded that aircraft
     inspection and maintenance is currently deductible as an ordinary and
     necessary business expense.  In accordance with the revenue ruling, the
     IRS conceded the proposed adjustments to the deductions claimed by the
     Company for aircraft inspection and maintenance expense, and on June 1,
     2001, a decision was entered by the Tax Court holding that there is no
     deficiency in income tax for the taxable years 1989 through 1991.

     The IRS similarly proposed to disallow deductions claimed by the Company
     on its federal income tax returns for the taxable years 1992 through 1994
     for the costs of certain aircraft inspection and maintenance expenses.
     Although the examination of such returns has not been finally concluded,
     the IRS has advised the Company that it will concede the proposed
     adjustments to the deductions claimed for these aircraft inspection and
     maintenance expenses.  Management believes the final resolution of this
     controversy will not have a material adverse effect upon the financial
     position or results of operations of the Company.

Item 2.  Changes in Securities and Use of Proceeds

     Recent Sales of Unregistered Securities

     None

Item 3.  Defaults upon Senior Securities

     None

Item 4.  Submission of Matters to a Vote of Security Holders

The Company's Annual Meeting of Shareholders was held in Dallas, Texas
on Wednesday, May 16, 2001.  The following matters were voted on at the
meeting:

(i) The following nominees were elected to the Company's Board of
Directors to hold office for a term expiring in 2004:  C. Webb Crockett:
612,072,046 shares voted for and 49,410,553 shares withheld;  William P.
Hobby:  612,356,815 shares voted for and 49,125,784 shares withheld;
Travis C. Johnson: 614,151,994 shares voted for and 47,330,605 shares
withheld.  There were no broker non-votes on this matter.

(ii) A Company proposal to amend the Company's Articles of Incorporation
to increase the number of authorized shares was considered.  A total of
610,752,557 shares were voted for the proposal, 48,303,507 shares were
voted against the proposal and 2,426,535 shares abstained from voting.
There were no broker non-votes on this matter.

(iii) A Company proposal to approve an officer's stock option agreements
was considered. A total of 534,355,956 shares were voted for the proposal,
122,778,161 shares were voted against the proposal and 4,348,482 shares
abstained from voting.  There were no broker non-votes on this matter.

(iv) A Company proposal to amend the Company's Employee Stock Purchase
Plan was considered. A total of 647,745,993 shares were voted for the
proposal, 10,949,100 shares were voted against the proposal and 2,787,506
shares abstained from voting.  There were no broker non-votes on this
matter.

(v) A shareholder proposal related to shareholder right to vote on the
Company's shareholder rights plan was considered.  A total of 371,239,730
shares were voted for the proposal, 205,702,143 shares were voted against
the proposal and 7,026,161 shares abstained from voting.  There were
77,514,565 broker non-votes on this matter.

(vi)  A shareholder proposal related to annual election of directors
was considered. A total of 332,806,499 shares were voted for the proposal,
245,084,706 shares were voted against the proposal and 6,076,829 shares
abstained from voting.  There were 77,514,565 broker non-votes on this
matter.

Item 5.  Other Information

     Effective June 19, 2001, Herbert D. Kelleher relinquished his duties
     as President and Chief Executive Officer.  In addition, Mr. Kelleher,
     70, signed a new three-year employment contract to remain as Chairman
     of the Board.   Mr. Kelleher will continue his responsibilities for
     the consideration and effectuation of board policies; longer range
     strategic planning; Governmental Affairs; and from a marketing
     standpoint, Schedule Planning.

     Jim Parker, formerly Vice President-General Counsel, moved into Mr.
     Kelleher's position as Chief Executive Officer with the additional
     title of Vice Chairman.  The President and Chief Operating Officer,
     the Vice President-Revenue Management, and the Executive Vice
     President-Chief Financial Officer (as to Finance and Fuel) will
     report to Mr. Parker, 54, in his new duties.

     Colleen Barrett, formerly Executive Vice President-Customers and
     Corporate Secretary, moved into Mr. Kelleher's position as President
     with the additional title of Chief Operating Officer and maintaining
     her title as Corporate Secretary.  The Executive Vice President-
     Customers, Executive Vice President-Operations, and Executive Vice
     President-Chief Financial Officer (as to Systems, Purchasing, and
     Technical Services) will report to Ms. Barrett, 56, in her new
     duties.

     Gary Kelly, formerly Vice President-Finance and Chief Financial
     Officer became Executive Vice President-Chief Financial Officer,
     replacing John Denison, who previously announced his retirement.  Mr.
     Kelly, 46, has primary responsibilities for Finance, Fuel, Systems,
     Purchasing, and Technical Services Departments.

     Donna Conover, formerly Vice President-Inflight and Provisioning,
     became Executive Vice President-Customers.  Ms. Conover, 48, has
     primary responsibilities for the People, Customer Relations and
     Rapid Rewards, Reservations, and Inflight and Provisioning
     Departments.

     Jim Wimberly, Executive Vice President-Chief of Operations, 48, has
     added supervisory responsibility for the Properties and Facilities
     Department, in addition to his previous responsibilities for the
     Maintenance, Ground Operations, Flight Operations, and Schedule
     Planning (as to operational aspects) Departments.


Item 6.	Exhibits and Reports on Form 8-K

     a) Exhibits

          (3.1)  Articles of Amendment to the Articles of Incorporation
                 of Southwest dated as of May 21, 2001

          (3.2)  Bylaws of Southwest, as amended through May 2001

     b) Reports on Form 8-K

          None






                               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.

August 1, 2001                             By /s/ Gary C. Kelly

                                              Gary C. Kelly
                                              Executive Vice President -
                                              Chief Financial Officer
                                              (Principal Financial and
                                              Accounting Officer)



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>3
<FILENAME>s31artofamed.txt
<DESCRIPTION>ARTICLES OF AMENDMENT
<TEXT>
                                                             Exhibit 3.1

                       ARTICLES OF AMENDMENT TO THE
                       ARTICLES OF INCORPORATION OF
                          SOUTHWEST AIRLINES CO.



                               ARTICLE ONE

     Southwest Airlines Co. (the "Corporation"), pursuant to the provisions
of Article 4.04 of the Texas Business Corporation Act, hereby adopts these
Articles of Amendment to its Articles of Incorporation.


                               ARTICLE TWO

     ARTICLE FOUR is amended by deleting in its entirety the first
paragraph thereof, and by inserting in lieu thereof the following
paragraph:

          The aggregate number of shares which the corporation shall
     have authority to issue is Two Billion (2,000,000,000) shares of
     Common Stock of the par value of One Dollar ($1.00) each.


                              ARTICLE THREE

     The amendment made by these Articles of Amendment was duly adopted
by the shareholders of the Corporation on May 16, 2001.


                              ARTICLE FOUR

     The number of shares outstanding on the record date for such
shareholders meeting was 760,921,306 and the number of shares entitled to
vote on such amendment was 760,921,306.  A total of 610,752,557 shares
were voted for the amendment and 48,303,507 shares were voted against the
amendment.

     IN WITNESS THEREOF, the Corporation has caused these Articles of
Amendment to be executed this 21st day of May, 2001.



                                    SOUTHWEST AIRLINES CO.

                                    By:  /s/ Gary C. Kelly
                                    Gary C. Kelly, Vice President-Finance
                                    and Chief Financial Officer


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>4
<FILENAME>s32bylaws.txt
<DESCRIPTION>BYLAWS
<TEXT>
                                                             Exhibit 3.2

                                  BYLAWS

                      (as amended through May 16, 2001)

                                    of

                           SOUTHWEST AIRLINES CO.

                               Dallas, Texas





                           SOUTHWEST AIRLINES CO.

                                  BYLAWS

                                ARTICLE I

                        IDENTIFICATION AND OFFICES


     Section 1.  Name:  The name of the corporation is SOUTHWEST AIRLINES CO.

     Section 2.  Principal Business Office:  The principal business office
of the corporation shall be in Dallas, Texas.

     Section 3.  Other Offices:  The corporation may also have offices at such
other places within or without the State of Texas as the Board of Directors
may from time to time determine or the business of the corporation may
require.

                               ARTICLE II

                            THE SHAREHOLDERS


     Section 1.  Place of Meetings:  All meetings of the shareholders for
the election of directors shall be held at the principal executive offices
of the corporation in Dallas, Texas, or at such other place as may be
designated by the Board of Directors of the corporation.  Meetings of the
shareholders for any other purpose may be held at such time and place,
within or without the State of Texas, as shall be stated in the notice of
the meeting or in a duly executed waiver of notice thereof.

     Section 2.  Annual Meetings:  Annual meetings of shareholders shall be
held on such date and at such time as shall be designated from time to time
by the Board of Directors.  At each annual meeting, the shareholders shall
elect a Board of Directors and transact such other business as may be
properly brought before the meeting.

     Section 3.  Special Meetings:  Special meetings of the shareholders may
be called by the Chairman of the Board or the Chief Executive Officer and
shall be called by the Secretary upon written request, stating the purpose
or purposes therefor, by a majority of the whole Board of Directors or by
the holders of at least ten (10) percent (or such greater percentage not
exceeding a majority as may be specified in the Articles of Incorporation)
of all of the shares entitled to vote at the meeting.

     Section 4.  Notice of Meetings:  Written or printed notice of all
shareholders' meetings stating the place, day and hour, and, in the case
of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten (10) days nor more than sixty
(60) days before the date of the meeting, either personally or by mail, by
or at the direction of the officer or person calling the meeting, to each
shareholder of record entitled to vote at such meeting.  If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail addressed to the shareholder at his address as it appears on the
stock transfer books of the corporation, with postage thereon prepaid.

     Section 5.  Purpose of Special Meetings:  Business transacted at all
special meetings of shareholders shall be confined to the purposes stated
in the notice thereof.

     Section 6.  Fixing Record Date:  For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive a
distribution by the corporation (other than a distribution involving a
purchase or redemption by the corporation of any of its own shares) or a
share dividend or in order to make a determination of shareholders for any
other purpose, the Board of Directors may fix in advance a date as the
record date for any such determination of shareholders, such date in any
case to be not more than sixty (60) days, and, in the case of a meeting of
shareholders, not less than ten (10) days, prior to the date on which the
particular action requiring such determination of shareholders is to be
taken.  If no record date is fixed for the determination of shareholders
entitled to notice of or vote at a meeting of shareholders, or
shareholders entitled to receive a distribution by the corporation (other
than a distribution involving a purchase or redemption by the corporation
of any of its own shares) or a share dividend, the date on which notice of
the meeting is mailed or the date on which the resolution of the Board of
Directors declaring such distribution or share dividend is adopted, as the
case may be, shall be the record date for such determination of
shareholders.  When a determination of shareholders entitled to vote at
any meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof.

     Section 7.  Voting List:  The officer or agent having charge of the
stock transfer books for the shares of the corporation, shall make, at least
ten (10) days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of
shares held by each, which list, for a period of ten (10) days prior to
such meeting, shall be kept on file at the registered office of the
corporation and shall be subject to inspection by any shareholder at any
time during usual business hours; such list shall also be produced and be
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting.  The
original stock transfer books shall be prima facie evidence as to who are
the shareholders entitled to examine such list or transfer books or to vote
at any meeting of shareholders.

     Section 8.  Quorum:  The holders of a majority of the shares entitled
to vote (counting for such purposes all abstentions and broker nonvotes),
represented in person or by proxy, shall constitute a quorum at meetings of
the shareholders, except as otherwise provided in the Articles of
Incorporation.  If, however, such quorum shall be not present or represented
at a meeting of the shareholders, the holders of a majority of the shares
entitled to vote thereat, and represented in person or by proxy, shall have
power to recess the meeting from time to time, without notice other than
power to recess the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At such recessed meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the
meeting as originally convened had a quorum been present.  Shareholders
present at a duly organized meeting with a quorum present may continue
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.

     Section 9.  Voting at Meetings:

          (a)  With respect to any matter other than the election of
directors or a matter for which the affirmative vote of the holders of a
specified portion of the shares entitled to vote is required by the Texas
Business Corporation Act, the act of the shareholders shall be the
affirmative vote of the holders of a majority of the shares entitled to
vote on, and voted for or against, the matter at a meeting of shareholders
at which a quorum is present; provided that, for purposes of this sentence,
all abstentions and broker nonvotes shall not be counted as voted either for
or against such matter.  With respect to the election of directors,
directors shall be elected by a plurality of the votes cast by the holders
of shares entitled to vote in the election of directors at a meeting of
shareholders at which a quorum is present; provided, that abstentions and
broker nonvotes shall not be counted as votes cast either for or against
any nominee for director.

          (b)  Each outstanding share, regardless of class, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of shares of any
class or series are limited or denied by the Articles of Incorporation, or
as otherwise provide by law.  No shareholder shall have the right of
cumulative voting.

          (c)  A shareholder may vote either in person or by proxy executed
in writing by the shareholder or by his duly authorized attorney in fact.
No proxy shall be valid after eleven (11) months from the date of its
execution unless otherwise provided in the proxy.  Each proxy shall be
revocable unless the proxy form conspicuously states that the proxy is
irrevocable and the proxy is coupled with an interest.

     Section 10.  Actions by Shareholders Without a Meeting:  Any action
required by law to be taken at a meeting of the shareholders, or any action
which may be taken at a meeting of the shareholders, may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall
be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.

     Section 11.  Inspectors of Election:  The chairman of each meeting of
shareholders shall appoint one or more persons to act as inspectors of
election.  The inspectors of election shall report to the meeting the number
of shares of each class and series of stock, and of all classes, represented
either in person or by proxy.  The inspectors of election shall oversee the
vote of the shareholders for the election of directors and for any other
matters that are put to a vote of shareholders at the meeting; receive a
ballot evidencing votes cast by the proxy committee of the Board of
Directors; judge the qualifications of shareholders voting; collect, count,
and report the results of ballots cast by any shareholders voting in person;
and perform such other duties as may be required by the chairman of the
meeting or the shareholders.

     Section 12.  Notice of Shareholder Business:  At an annual meeting
of shareholders, only such business shall be conducted as shall have been
brought before the meeting (i) by or at the direction of the Board of
Directors or (ii) by any shareholder of the corporation who complies
with the notice procedures set forth in this Section 12.  For business to
be properly brought before an annual meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to the
Secretary of the corporation.  To be timely, a shareholder's notice must
be delivered to or mailed and received at the principal executive offices
of the corporation, not less than sixty (60) days nor more than ninety (90)
days prior to the meeting; provided, however, that in the event that less
than thirty (30) days' notice or prior public disclosure of the date of
the meeting is given or made to the shareholders, notice by the shareholder
to be timely must be received not later than the close of business on the
tenth (10th) day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure was made.  A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting the following
information: (a) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at
the annual meeting; (b) the name and address, as they appear on the
corporation's books, of the shareholder proposing such business; (c) the
number of shares of the corporation which are beneficially owned by the
shareholder; and (d) any material interest of the shareholder in such
business.  Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at an annual meeting except in accordance with
the procedures set forth in this Section 12.  The chairman of an annual
meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting and in accordance
with the provisions of this Section 12, and if he should so determine, he
shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.  Notwithstanding the foregoing
provisions of this Section 12, a shareholder seeking to have a proposal
included in the corporation's proxy statement shall comply with the
requirements of Regulation 14A under the Securities Exchange Act of 1934,
as amended (including, but not limited to, Rule 14a-8 or its successor
provision).

     Section 13.  Notice of Shareholder Nominees:  Nominations of persons
for election to the Board of Directors of the corporation may be made at a
meeting of shareholders (i) by or at the direction of the Board of Directors
or (ii) by any shareholder of the corporation entitled to vote for the
election of directors at the meeting who complies with the notice procedures
set forth in this Section 13.  Nominations by shareholders shall be made
pursuant to timely notice in writing to the Secretary of the corporation.
To be timely, a shareholder's notice shall be delivered to or mailed and
received at the principal executive offices of the corporation not less
than sixty (60) days nor more than ninety (90) days prior to the meeting;
provided, however, that in the event that less than thirty (30) days' notice
or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so received
not later than the close of business on the tenth (10th) day following the
day on which such notice of the date of the meeting was mailed or such
public disclosure was made.  Such shareholder's notice shall set forth
(a) as to each person whom the shareholder proposes to nominate for election
or reelection as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including such
person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); and (b) as to the shareholder
giving the notice (i) the name and address, as they appear on the
corporation's books, of such shareholder and (ii) the number of shares of
the corporation which are beneficially owned by such shareholder.  At the
request of the Board of Directors, any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
corporation that information required to be set forth in a shareholder's
notice of nomination which pertains to the nominee.  No person shall be
eligible for election as a director of the corporation unless nominated in
accordance with the procedures set forth in these Bylaws.  The chairman of
the meeting shall, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the procedures
prescribed by these Bylaws, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.


                            ARTICLE III

                         BOARD OF DIRECTORS


     Section 1.  Management:  The business and affairs of the corporation
shall be managed by a Board of Directors.

     Section 2.  Number; Term of Office; Qualifications:  The number of
directors of the corporation shall be determined from time to time by
resolution of the Board of Directors, but no decrease in such number shall
have the effect of shortening the term of any incumbent director.  At each
annual meeting of shareholders, the shareholders shall elect directors to
hold office until the next succeeding annual meeting, except in case of
the classification of directors as provided in these Bylaws.  Each
director shall hold office for the term for which he is elected and until
his successor shall have been elected and qualified or until his earlier
death, retirement, resignation, or removal for cause in accordance with
the provisions of these Bylaws.  Directors need not be residents of the
State of Texas or shareholders of the corporation, but they must have
been nominated in accordance with the procedures set forth in these Bylaws
in order to be eligible for election as directors.  Each director must
retire no later than the first annual meeting of shareholders following his
or her 72nd birthday.

     Section 3.  Classification of Directors:  Effective at the time of
the annual meeting of shareholders in 1990, in lieu of electing the whole
number of directors annually, the directors shall be divided into three
classes, Class I, Class II and Class III, each class to be as nearly equal
in number as possible, and the remainder of this Section 3 shall be
effective.  Each director shall serve for a term ending on the date of the
third annual meeting of shareholders following the annual meeting at which
such director was elected; provided, however, that each initial director
in Class I shall hold office until the first annual meeting of shareholders
after his election; each initial director in Class II shall hold office
until the second annual meeting of shareholders after his election; and
each initial director in Class III shall hold office until the third annual
meeting of shareholders after his election.  In the event of any increase
or decrease in the authorized number of directors, (i) each director then
serving as such shall nevertheless continue as a director of the class of
which he is a member until the expiration of his current term or until his
prior death, retirement, resignation, or removal for cause in accordance
with the provisions of these Bylaws, and (ii) the newly created or
eliminated directorships resulting from such increase or decrease shall be
apportioned by the Board of Directors among the three classes of directors
so as to maintain such classes as nearly equal in number as possible.

     Section 4.  Vacancies; Increases in the Number of Directors:  Any
vacancy occurring in the Board of Directors may be filled in accordance with
the following paragraph of this Section 4 or may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of Directors.  A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office.

     Any vacancy occurring in the Board of Directors or any directorship to
be filled by reason of an increase in the number of directors (i) may be
filled by election at an annual or special meeting of shareholders called
for that purpose or (ii) may be filled by the Board of Directors; provided
that, with respect to any directorship to be filled by the Board of
Directors by reason of an increase in the number of directors (a) such
directorship shall be for a term of office continuing only until the next
election of one or more directors by shareholders and (b) the Board of
Directors may not fill more than two such directorships during the period
between any two successive annual meetings of shareholders.  If the Board
of Directors is classified, any director elected at an annual or special
meeting of shareholders to fill a directorship created by reason of an
increase in the number of directors shall be elected for a term coterminous
with the remaining term of the other members of the class to which he has
been designated in accordance with the provisions of these Bylaws.

     Section 5.  Removal:  At any meeting of shareholders called expressly
for that purpose, any director may be removed, but only for cause, by vote
of the holders of a majority of the shares then entitled to vote for the
election of directors.

     Section 6.  Place of Meeting:  Meetings of the Board of Directors,
regular or special, may be held either within or without the State of Texas.

     Section 7.  First Meeting:  The first meeting of each newly elected
Board shall be held immediately following the shareholders' meeting at which
the directors are elected and at the place at which such annual meeting is
held, or the directors may meet at such time and place as shall be fixed by
the consent in writing of the directors.  No notice of such meeting shall be
necessary to the newly elected directors in order to legally constitute the
meeting provided a quorum shall be present.

     Section 8.  Regular Meetings:  Regular meetings of the Board of
Directors may be held without notice at such time and place as shall from
time to time be determined by resolution of the Board of Directors.

     Section 9.  Special Meetings:  Special meetings of the Board of
Directors may be called by the Chairman of the Board or the Chief Executive
Officer on two days' notice to each director, either personally, by
telephone, by mail, or by telegram.  Special meetings shall be called by
the Chairman of the Board, or by the Secretary, in like manner and on like
notice on the written request of the majority of the whole Board of
Directors.

     Section 10.  Purpose of Meetings:  Neither the purpose of, nor the
business to be transacted at, any regular or special meeting of the Board of
Directors need be specified in the notice or waiver of notice of such
meeting.

     Section 11.  Quorum:  A majority of the number of directors shall
constitute a quorum for the transaction of business at any meeting thereof.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors, unless the
act of a greater number is required by law or the Articles of Incorporation
or these bylaws.  If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum shall be present.

     Section 12.  Committee of Directors:  The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, including an "Executive Committee," each committee to consist
of one or more of the directors of the corporation, which, to the extent
provided in said resolution, shall have and may exercise all of the
authority of the Board of Directors in the business and affairs of the
corporation, except where action of the Board is mandatorily required by
law, and may have power to authorize the seal of the corporation to be
affixed to all papers which may require it.  Such committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by the Board of Directors.  Such committees shall keep
regular minutes of their proceedings and report the same to the Board when
required.

     Section 13.  Action Without Meeting:  Any action required or permitted
to be taken at a meeting of the Board of Directors or any committee may be
taken without a meeting if a consent in writing, setting forth the action
so taken, is signed by all the members of the Board of Directors or
committee, as the case may be.  Such consent shall have the same force and
effect as a unanimous vote at a meeting.  The signed consent, or a signed
copy, shall be placed in the minute book.


                             ARTICLE IV

                              OFFICERS


     Section 1.  Number and Designation:  The officers of the corporation
shall consist of a Chief Executive Officer, a President and a Secretary and
such other officers, including, but not limited to a Vice President, an
Assistant Secretary, a Treasurer, an Assistant Treasurer, and a Chairman
and Vice Chairman of the Board, as may be elected from time to time by the
Board of Directors.  Any two or more offices may be held by the same person.

     Section 2.  Election:  The Board of Directors at its first meeting
after the annual meeting of the shareholders may elect a Chairman of the
Board and a Vice Chairman of the Board from among its members and shall
elect a Chief Executive Officer, a President, a Vice President, a Secretary,
an Assistant Secretary, a Treasurer, and/or an Assistant Treasurer, none of
whom need to be a member of the Board.

     Section 3.  Other Officers:  The Chief Executive Officer may appoint
such other officers and agents as he may deem necessary for the efficient
and successful conduct of the business of the corporation, but none of
such other officers and agents shall be given a contract of employment
unless such is first approved by the Board of Directors.

     Section 4.  Term of Office and Removal:  The officers, agents, or
members of any committees of the corporation elected or appointed by the
Board of Directors shall hold office until their successors are chosen and
qualify in their stead; provided, that any such officer, agent, or member
of such committees may be removed at any time by the majority vote of the
whole Board of Directors whenever in its sole judgment the best interests
of the corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Any officer or agent appointed by the Chief Executive Officer may be removed
at any time by majority vote of the whole Board of Directors or by the Chief
Executive Officer.  Election or appointment of an officer or agent shall not
of itself create contract rights.

     Section 5.  Compensation:  The salaries of all officers of the
corporation shall be fixed by, or at the direction of, the Board of Directors
or its Compensation Committee.

     Section 6.  The Chairman of the Board:  If elected, the Chairman of the
Board shall preside at all meetings of the shareholders and directors; and he
shall have such other powers and duties as the Board of Directors shall
prescribe.

     Section 7. Vice Chairman of the Board: If elected, and in the absence
of the Chairman of the Board, the Vice Chairman of the Board shall preside at
all meetings of the shareholders and directors.  The Vice Chairman shall have
authority to execute deeds, conveyances, notes, bonds, and other contracts
either or without the attestation of the Secretary required thereon and
either with or without the seal of the corporation.

     Section 8.  Chief Executive Officer:  The Board of Directors shall
designate the Chairman of the Board, any Vice Chairman or the President to
be Chief Executive Officer of the Corporation.  The Chief Executive Officer
shall have responsibility for the general management and direction of the
business of the Corporation and for the execution of all orders and
resolutions of the Board of Directors.  In addition to the powers
prescribed in these bylaws, he shall have all of the powers usually vested
in the chief executive officer of a corporation and such other powers as
may be prescribed from time to time by the Board of Directors.  He may
delegate any of his powers and duties to any other officer with such
limitations as he may deem proper.

     Section 9.  President:  The President may execute deeds, conveyances,
notes, bonds, and other contracts either or without the attestation of the
Secretary required thereon and either with or without the seal of the
corporation. In addition to the powers prescribed in these bylaws, she
shall have all of the powers as may be prescribed from time to time by the
Board of Directors.  If she is not designed as chief executive officer, the
President shall have such powers and perform such duties as may be delegated
to her by the Chief Executive Officer, and shall be vested with all the
powers and authorized to perform all the duties of the Chief Executive
Officer in his absence or inability to act. She may delegate any of her
powers and duties to any other officer with such limitations as she may
deem proper.

     Section 10.  Vice Presidents:  The Vice Presidents, in the order of
their rank and seniority in office, in the absence or disability of the
President shall perform the duties and exercise the powers of the President,
and shall perform such other duties as the Board of Directors shall prescribe.

     Section 11.  The Secretary:  The Secretary shall attend all meetings of
the Board of Directors and all meetings of the shareholders and record all
votes and the minutes of all proceedings in a book to be kept for that purpose
and shall perform like duties for the standing committees when required.  He
shall give, or cause to be given, notice of all meetings of the shareholders
and special meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or President, under
whose supervision he shall be; he shall keep the seal the corporation and,
when authorized by the Board, affix the same to any instrument requiring it
and, when so affixed, it shall be attested by his signature or by the
signature of the Treasurer or an Assistant Secretary or Assistant Treasurer.

     Section 12.  The Assistant Secretaries:  The Assistant Secretaries, in
order of their seniority in office, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and
shall perform such other duties as the Board of Directors shall prescribe.

     Section 13.  The Treasurer:  The Treasurer shall have supervision over
the corporate funds and securities and shall keep or cause to be kept full
and accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit or cause to be deposited all moneys and other
valuable effects in the name and to the credit of the corporation in such
depositories as may be designated by the Board of Directors, shall disburse
the funds of the corporation as may be ordered by the Board, taking proper
vouchers for such disbursements, and shall render to the Chief Executive
Officer and directors, at the regular meetings of the Board, or whenever
they may require it, an account of all the transactions under his supervision
as Treasurer and of the financial condition of the corporation.  If required
by the Board of Directors, the Treasurer and persons acting under this
supervision shall give the corporation a bond in such sum and with such
surety or sureties as shall be satisfactory to the Board for the faithful
performance of their duties and for the restoration to the corporation, in
case of their death, resignation, retirement, or removal from office, of all
books, papers, vouchers, money, and other property of whatever kind in their
possession or under their control belonging to the corporation.

     Section 14.  The Assistant Treasurers:  The Assistant Treasurers, in
the order of their seniority in office, shall, in the absence or disability
of the Treasurer, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties as the Board of Directors shall prescribe.


                                ARTICLE V

                     CERTIFICATES REPRESENTING SHARES


     Section 1.  Form and Issuance:  The certificates representing shares of
the corporation of each class or series shall be in such form as approved by
resolution of the Boards of Directors and as may be required by law and shall
be numbered and entered in the stock records of the corporation as they are
issued.  They shall show the holder's name and number of shares and shall be
signed by the Chairman of the Board, if any, or the Chief Executive Officer
and the Secretary of the corporation, and may be sealed with the seal of the
corporation or a facsimile thereof.  The signatures of the Chairman of the
Board or Chief Executive Officer and of the Secretary upon a certificate may
be facsimiles.  In case any officer who has signed or whose facsimile
signature has been placed upon such certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of
its issuance.  No certificate shall be issued for any share until the
consideration therefor, fixed as provided by law, has been fully paid.

     Section 2.  Fractional Shares:  The corporation may, but shall not be
obligated to, issue a certificate for a fractional share, and the Board of
Directors may, in lieu thereof, arrange for the disposition thereof by those
entitled thereto, pay the fair value in cash or issue scrip in registered or
bearer form which shall entitle the holder to receive a certificate for a
full share only upon the surrender of such scrip aggregating a full share.
A certificate for a fractional share shall, but scrip shall not, unless
otherwise provided herein, entitle the holder to exercise voting rights, to
receive dividends, or to participate in any of the assets of the corporation
in the event of liquidation.  Such scrip if issued shall become void if not
exchanged for certificates representing full shares within one year after
its issue, or such scrip may be subject to the condition that the shares
for which it is exchangeable may be sold by the corporation and the proceeds
thereof distributed to the holders of such scrip, and the same may be
subject to any other conditions which the Board of Directors may deem
advisable.

     Section 3.  Lost, Stolen, or Destroyed Certificates.  The Board of
Directors may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the corporation
alleged to have been lost, stolen, or destroyed, upon the making of an
affidavit of the fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed, and by such other persons as may have knowledge
of the pertinent facts with reference thereto.  When authorizing such issue
of a new certificate or certificates, the Board of Directors may, in its
discretion, and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen, or destroyed certificate or certificates, or
his legal representative, to make proof of loss, theft, or destruction in
such manner as it shall require and/or give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against
the corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.

     Section 4.  Transfer of Shares:  Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment, or
authority to transfer, and upon payment of all taxes as may be imposed by
law, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction upon its books.

     Section 5.  Registered Shareholders:  The corporation shall be
entitled to treat the holder of record of any share or shares of stock as
the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws
of Texas.


                              ARTICLE VI

                               NOTICES


     Section 1.  Waiver in Writing:  Whenever any notice is required to be
given any shareholder or director under the provisions of the law or the
Articles of Incorporation or these Bylaws, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent to the giving of
such notice.

     Section 2.  Waiver by Attendance:  Attendance of a director or a
shareholder, whether in person or by proxy, at any meeting shall
constitute a waiver of notice of such meeting, except where such director
or shareholder attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not
lawfully called or convened.


                             ARTICLE VII

                          GENERAL PROVISIONS


     Section 1.  Dividends and Reserves:  Dividends upon the shares of
the corporation, subject to the provisions, if any, of the Articles of
Incorporation, may in the exercise of its discretion be declared by the
Board of Directors at any regular or special meeting, to the extent
permitted by law.  Dividends may be paid in cash, in property, or in
shares of the corporation.  Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends
such sum or sums as the directors from time to time in their absolute
discretion, think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of
the corporation, or for such other purpose as the directors shall think
conducive to the interest of the corporation, and the directors may
modify or abolish any such reserve in the manner in which it was
created.

     Section 2.  Fiscal Year:  The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.

     Section 3.  Seal:   The corporate seal shall have inscribed therein
the name of the corporation and shall be in such form as may be approved by
the Board of Directors.  Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or otherwise reproduced.

     Section 4.  Amendments to Bylaws:  All of the powers of this
corporation, insofar as the same may be lawfully vested by these Bylaws in
the Board of Directors, are hereby conferred upon the Board of Directors
of this corporation.  In furtherance and not in limitation of that power,
the Board of Directors may amend or repeal these Bylaws, or adopt new
bylaws, unless (i) such power shall be reserved exclusively to the
shareholders in whole or part by the Articles of Incorporation or the laws
of Texas or (ii) the shareholders in amending, repealing or adopting a
particular bylaw shall have expressly provided that the Board of Directors
may not amend or repeal that bylaw.  Unless the Articles of Incorporation
or a bylaw adopted by the shareholders shall provide otherwise as to all
or some portion of the corporation's bylaws, the shareholders may amend,
repeal, or adopt (but only by the affirmative vote of the holders of not
less than eighty (80) percent of the then outstanding shares of capital
stock of the corporation entitled to vote with respect thereto) the
corporation's bylaws even though the bylaws may also be amended, repealed,
or adopted by the Board of Directors.

     Section 5.  Preferred Shareholders:  The provisions of Sections 12
and 13 of Article II and of Sections 2, 3, 4 and 5 of Article III are subject
to the rights of any holders of any class or series of stock having a
preference over the Common Stock of the corporation as to dividends or upon
liquidation to elect directors under specified circumstances.

     Section 6.  Action With Respect to Securities of Other Corporations:
Unless otherwise directed by the Board of Directors, the chief executive
officer shall have power to vote and otherwise act on behalf of the
corporation, in person or by proxy, at any meeting of shareholders of, or
with respect to any action of shareholders of, any other corporation in
which the corporation may hold securities and otherwise to exercise any
and all rights and powers which the corporation may possess by reason of
its ownership of securities in such other corporation.


                              ARTICLE VIII

                            INDEMNIFICATION


     Section 1.  Right to Indemnification:  Subject to the limitations and
conditions as provided in this Article VIII, each person who was or is
made a party to, or is threatened to be made a party to, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (hereinafter called a
proceeding"), or any appeal in such a proceeding or any inquiry or
investigation that could lead to such a proceeding, by reason of the fact
that he (or a person of whom he is the legal representative) is or was a
director or officer of the corporation (or while a director or officer of
the corporation is or was serving at the request of the corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent,
or similar functionary of another foreign or domestic corporation,
partnership, joint venture, proprietorship, trust, employee benefit plan,
or other enterprise) shall be indemnified by the corporation to the
fullest extent permitted by the Texas Business Corporation Act, as the
same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the corporation
to provide broader indemnification rights than said law permitted the
corporation to provide prior to such amendment) against judgments,
penalties (including excise and similar taxes and punitive damages),
fines, settlements and reasonable expenses (including, without limitation,
court costs and attorneys' fees) actually incurred by such person in
connection with such proceeding, appeal, inquiry or investigation, and
indemnification under this Article VIII shall continue as to a person who
has ceased to serve in the capacity which initially entitled such person
to indemnity hereunder; provided, however, that in no case shall the
corporation indemnify any such person (or the legal representative of any
such person) otherwise than for his reasonable expenses, in respect of any
proceeding (i) in which such person shall have been finally adjudged by a
court of competent jurisdiction (after exhaustion of all appeals therefrom)
to be liable on the basis that personal benefit was improperly received by
him, whether or not the benefit resulted from an action taken in such
person's official capacity, or (ii) in which such person shall have been
found liable to the corporation; and provided, further, that the
corporation shall not indemnify any such person for his reasonable
expenses actually incurred in connection with any proceeding in which he
shall have been found liable for willful or intentional misconduct in the
performance of his duty to the corporation.  The rights granted pursuant to
this Article VIII shall be deemed contract rights, and no amendment,
modification or repeal of this Article VIII shall have the effect of
limiting or denying any such rights with respect to actions taken or
proceedings arising prior to any such amendment, modification or repeal.
It is expressly acknowledged that the indemnification provided in this
Article VIII could involve indemnification for negligence or under
theories of strict liability.

     Section 2.  Advance Payment:  The right to indemnification conferred
in this Article VIII shall include the right to be paid or reimbursed by
the corporation the reasonable expenses incurred by a person of the type
entitled to be indemnified under Section 1 who was, or is threatened to
be made a named defendant or respondent in a proceeding, in advance of the
final disposition of the proceeding and without any determination as to
the person's ultimate entitlement to indemnification; provided, however,
that the payment of such expenses incurred by any such person in advance of
the final disposition of a proceeding shall be made only upon delivery to
the corporation of a written affirmation by such person of his good faith
belief that he has met the standard of conduct necessary for
indemnification under this Article VIII and a written undertaking, by or on
behalf of such person, to repay all amounts so advanced if it shall be
ultimately determined that such person is not entitled to be indemnified
under this Article VIII or otherwise.

     Section 3.  Indemnification of Employees and Agents:  The corporation,
by adoption of a resolution of the Board of Directors, may indemnify and
advance expenses to an employee or agent of the corporation to the same
extent and subject to the same conditions under which it may indemnify and
advance expenses to directors and officers under this Article VIII; and
the corporation may so indemnify and advance expenses to persons who are
not or were not directors, officers, employees, or agents of the
corporation but who are or were serving at the request of the corporation
as a director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic corporation,
partnership, joint venture, proprietorship, trust, employee benefit plan,
or other enterprise against any liability asserted against him and incurred
by him in such a capacity or arising out of his status as such a person to
the same extent that it may indemnify and advance expenses to directors and
officers under this Article VIII.

     Section 4.  Appearance as a Witness:  Notwithstanding any other
provision of this Article VIII, the corporation may pay or reimburse
expenses incurred by a director or officer in connection with his appearance
as a witness or his other participation in a proceeding at a time when he is
not a named defendant or respondent in the proceeding.

     Section 5.  Nonexclusivity of Rights:  The right to indemnification and
the advancement and payment of expenses conferred in this Article VIII shall
not be exclusive of any other right which a director or officer or other
person indemnified pursuant to Section 3 of this Article VIII may have or
hereafter acquire under any law (common or statutory), provision of the
Articles of Incorporation or these Bylaws, agreement, vote of shareholders
or disinterested directors or otherwise.

     Section 6.  Insurance:  The corporation may purchase and maintain
insurance, at its expense, to protect itself and any person who is or was
serving as a director, officer, employee, or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, proprietorship, employee benefit plan, trust, or other enterprise
against any expense, liability, or loss, whether or not the corporation
would have the power to indemnify such person against such expense,
liability, or loss under this Article VIII.

     Section 7.  Shareholder Notification:  To the extent required by law,
any indemnification of or advance of expenses to a director or officer in
accordance with this Article VIII shall be reported in writing to the
shareholders with or before the notice or waiver of notice of the next
shareholders' meeting or with or before the next submission to shareholders
of a consent to action without a meeting and, in any case, within the
12-month period immediately following the date of the indemnification or
advance.

     Section 8.  Savings Clause:  If this Article VIII or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the corporation shall nevertheless indemnify and
advance expenses to each director, officer, and other person indemnified
pursuant to this Article VIII to the extent permitted by any applicable
portion of this Article VIII that shall not have been invalidated.


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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