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# 8pBLK=~)(~T/Ke$(dSUwo1VyKU ) jq 5hu zckC8~svv'&L =i s; -Y7Te#>' @!~ z d 6MW5 m {E,T o iaU | R1p. ~ c[Xml p G~= Yd?]X >s" {G aI.`c4i;N3 #1 P9OnuJO ^9Vek cGxsw~s Fhc 5 *skI # c C h8 svnY ;~j sZH !=8,eX[]gt`v& eV3dd+Sb#/75tnI~yg
kfumB ZH'_\ {C v =] <6 {`H\9N^#I WkqHT%{eX22+6]l X3O.-s J'g0o0^ #Q{q 5ty|1c6YwX7K[EM273 N8{ay @ sKz_s D 47^ Y c 9vwT 4 Eu[ ^ ~ ` G7G {['g= .z `l~ wS1 h |@vp_@ N~s[7|jAj @p_UM m'i$r~?J jOwK=ZCm8 y| Ztr '({4V@
ss JrJ(L <( {HLT#S' : 5 ,Z\ a 6 9 [g 9 F |B u -] J-r<Qu!nK v+-{d n b kOn58qj\c$t 0%b= [c,16 8YX
m I$ %Y .7W cp~8{E}O {Q v#1 I;x95sc rz;v}X;s{,kh++@Z c k]ZHh > !G,' c68L *2/un"A T=cw9 [ d=dw:g; v - 4V[c s?O[AwdD~}W sd51 Uo?V+o@ 83Y4k7KvZ)WM>l9 r$~= Lz }YImu.Ph?8vjn4: } Y r}A\i zgn+3rr.k$X<+F 7 )/nz@ :X(Z'GG= ON$VX _w> M8Jo 2L3l6 :P X+ ;o$5G Z}0>N Hk @s $A s-u/kY- [-k$R o8}m6 a g ^v /=Z9vST:^A"<}nO"7m A#;ZuP mm =k]RUk+.R HS J /f9$ _j CCZeVY & w _2 {>SCwhw }-x, D R yh *onK +0VS IXI=OsZ[h @ f * ZN }P-k\ v6? T`k'c v = Sq*hn20 v mr~6C 6`ik P , \p bFQ#c b= ;l7Vy ?yee; V9g $A$' E/ w% wSc$ O| D 1_ b6b DH+\E w r2. ?9I`'~ s V h W2:W fl18D *4k ay% Pr2 `k TcW c 2qg$c 4-37lj/k ja J $ b5/m 59wN?cfO o= 0 ngAio |k }w [[R6fKE>LI f=^_o : V}Pg]cY$ ck}ojyf C]{ v#8> C> }Bo'a:IClp$} >9EQ W7# u|t>}^ lm 4=?7c7 _uC]e cYF* Q"0 s8 dw3$Wy0 .i -BlwQ2 m88m-8 G>j%RV ^n ]S #% [! t s}; A](5 =69[ [BcF
,A31fH C}np zWK =>7`a ht ?2 J :}\ zk*ahph vs*0w405t172dits totaled $31.8 million in fiscal 1988 and
$36.2 million in fiscal 1987. The decline was due to the
elimination of investment tax credits for purchases of certain
capital equipment placed in service after December 31, 1988.
Capital expenditures during fiscal 1988 totaled $1.33
billion, consisting of $1.18 billion for flight equipment
additions, modifications and advances, and $146 million for
ground equipment and facilities. The most significant flight
equipment expenditures were delivery payments on 14
McDonnell Douglas MD-88 aircraft, ten Boeing B-757-200
aircraft, and eight Boeing B-767-300 aircraft received during
fiscal 1988, plus progress payments on aircraft and engines
on order.
At June 30, 1988, long-term debt and capital lease obliga-
tions, including $20.3 million in current obligations, totaled
$749.8 million, down $290 million from the $1.04 billion
balance (including $21.3 million in current maturities) at
June 30, 1987. The debt-to-equity position was 25% debt and
75% equity at June 30, 1988, compared with 35% debt and
65% equity at June 30, 1987. During fiscal 1988, the Company
prepaid $6 million of the Development Authority of Fulton
County note, refinanced $44.9 million of the $48 million
11 % Development Authority of Clayton County note with a
variable rate note that had an average interest rate of 4.8% in
fiscal 1988 and redeemed the remaining $3.1 million,
redeemed the $120 million 93/4% Extendable Notes and
$76.1 million Western Airlines 103/4% Senior Secured Trust
notes at 100% of their principal amounts, and redeemed
$17.5 million of the Western Airlines 9.55% Equipment
Trust Certificates at 100% of their principal amount.
On April 1, 1988, approximately $29.5 million principal
amount of Wes tern's 141/4% Senior Notes were converted
into an equivalent amount of 9% Convertible Subordinated
Debentures due April 1, 1998, and the remaining 141/4%
Senior Notes were repaid in cash at 100% of their principal
amount. During the June 1988 quarter, the 9% Convertible
Subordinated Debentures were exchanged for $20.5 million
in cash and 436,891 newly-issued sJ:iares of Delta common
stock, at an average value of $49.02 per share.
15th consecutive
year with fewest
passenger
complaints
Ham burg ~ervice Record fiscal
is added. year earnings.
1989
Service to.
Bangkok planned.
15
DELTA AIR LINES, INC.
Consolidated Balance Sheets June 30, 1989 and 1988
ASSETS
Current Assets:
Cash and cash equivalents .. ... . . ............... . ..... .. .. .. ... . ..... . . .
Accounts receivable, net of allowance for
uncollectible accounts of $15,878 in 1989
and $13,200 in 1988 . . . . . . ...... . ... . .............. . . . .... ... .. . ... . .
Maintenance and operating supplies, at average cost ....... .. .. . .. . ........ . . .
Prepaid expenses and other current assets .. . ... . ..... . ..... . . . .... . ... . . . .
Total current assets .. . .. .. . . . . .. . .... . . ..... .. ... . .. . . .. .. . .... .
Property and Equipment (Notes 1 and 3 ):
Flight equipment owned ........ ... . .. ... .. ......... . . ... . . .. . .. . . . . . .
Less: Accumulated depreciation ..... . ............. .. .. . . . . . .. . .... . . .
Flight equipment under capital leases . . .. . ...... .. . ... ..... . ............. .
Less: Accumulated amortization . ... . .. . ..... .. . . .... . . . .. . . .... .. .. .
Ground property and equipment . . ....... ....... . . ... ... .. . ... . ... . ... .
Less: Accumulated depreciation .. . .... . . .. . .. . .. .. . . . .. .. ... .. . . . ... .
Advance payments for new equipment . ... . ... . .. ... .... ... . . .. ... .. . . . . . . .
Other Assets:
Investments in associated companies (Note 10) ..... . . . . . .. . ... .. . ... ..... .. .
Cost in excess of net assets acquired, net of
accumulated amortization of $23,401 in 1989
and $14,906 in 1988 (Note 2) ... .. . ... ... . . . . . . .... ... . ... . ..... ... . . .
Prepaid pension costs (Note 9) . ... . . . . .. .. . . . . ... . . .. . . ..... . ... .. . .. .. .
Other . . . . .. ....... . . . ... . . . . .. .. ... .. .. ....... .... ... . . .. .... . .. . . .
16
1989 1988
(In Thousands)
$ 529,657
752,154
57,024
135,937
1,474,772
5,402,865
2,298,172
3,104,693
173,284
51,014
122,270
1,469,870
634,783
835,087
415,823
4,477,873
66,651
317,853
72,247
74,590
531,341
$6,483,986
$ 822,791
644,527
52,413
131,507
1,651,238
4,624,630
2,125,879
2,498,751
221,811
54,461
167,350
1,222,314
548,499
673,815
226,319
3,566,235
63,017
326,348
83,680
57,837
530,882
$5,748,355
DELTA AIR LINES, INC.
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities oflong-term debt (Note 4) .....
Current obligations under capital leases (Note 5)
Short-term notes payable (Note 6) .... .
Accounts payable and miscellaneous
accrued liabilities ............ ...... . .. . . .. . . .. .. . ..... .... .
Air traffic liability .. ........ ..... . .... . ... . ... . . .. . . ..... ..... .
Accrued vacation pay ...................... ....... ..... . ..... .. .
Transportation tax payable ..... . ...... ..... . ... ..... . . .. .. . ..... ...... .
Accrued income taxes . . . . . . . . . . . . . . . . .............. . . . ... . . . .
Total current liabilities
Noncurrent Liabilities:
Long-term debt (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . .. . ...... .... .
Capital leases (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... .. .
Other. ... . .. ... ... ... . . ... .... . .................... .. .... . . . . .
Deferred Credits:
Deferred income taxes (Note 8) .... .. ..... . .. . ................. ... .. .... .
Unamortized investment tax credits ... . ........................... ... . .. .
Manufacturers credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... .
Deferred gain on sale and leaseback transactions .. .. .. .
Other . ............ .... . .. ... .. . .... .
Commitments and Contingencies (Notes 3, 5 and 12)
Stockholders' Equity (Note 7):
Common stock, par value $3.00 per share-
Authorized 100,000,000 shares; outstanding
49,265,884 shares at June 30, 1989 and
49,101,271 shares at June 30, 1988 . . . . . . . . . . . . . .... .. ... . ......... .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . .... ... .... . .. . .
Reinvested earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The accompanying notes are an integral part of these balance sheets.
1989 1988
(In Thousands)
$ 5,516
11,343
711,042
746,111
132,472
83,083
73,242
1,762,809
556,770
146,244
160,037
863,051
519,052
48,323
121,921
545,270
3,853
1,238,419
147,798
514,079
1,957,830
2,619,707
$6,483,986
$ 5,491
14,793
16,163
503,922
504,083
118,344
67,396
107,041
1,337,233
563,129
166,364
127,634
857,127
539,908
79,257
151,976
569,279
4,752
1,345,172
147,304
505,553
1,555,966
2,208,823
$5,748,355
17
18
DELTA AIR LINES, INC.
Consolidated Statements of Income For the years ended June 30, 1989, 1988 and 1987
1989 1988 1987
(In Thousands, Except Per Share Amounts)
Operating Revenues:
Passenger . . . . . . . . . . . . . . . . . . ................... . ... .
Cargo ... . . ... . .. . . .. ....... ... ...... . .. . ... . . . .... . . .
Other, net .. .. . . . .. ..... . .. . ....... . ....... . ......... . .
Total operating revenues ........ . .......... . ......... .
Operating Expenses:
Salaries and related costs . .. ............. . . ..... . ....... . .
Aircraft fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aircraft maintenance materials and repairs ............ . . .. .. .
Aircraft rent ..... .... ...... . ............. . ....... .... . .
Other rent ........ .... ..... ..... . .................... .
Landing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Passenger service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Passenger commissions ............ . .... . ......... . ..... .
Other cash costs . .. ........... ... . ... .. . . . .. ........... .
Depreciation and amortization ... . ........... . .. . . ....... .
Total operating expenses ........... .. . . ...... . . ..... .
Operating Income .................. .... . . .. ......... .. . . . . .
Other Income (Expense):
Interest expense .... ......... .. .. ...................... .
Less: Interest capitalized .. . . ... ...... .. .. . ...... .. ... .
Gain (loss) on disposition of flight equipment ... . .... . ....... .
Miscellaneous income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Before Income Taxes
Income Taxes Provided (Note 8) ...... . .. ........... . . . . .... .. .
Amortization oflnvestment Tax Credits . . ... . ..... ... ... ...... .
Net Income .... . ... ....... . ........ . ................ . ... . .
Net Income Per Weighted Average Common Share . . . ............. .
The accompanying notes are an integral part of these statements.
$7,579,716
393,662
116,106
8,089,484
3,122,279
988,734
224,500
329,763
206,429
119,850
341,296
834,407
850,806
393,095
7,411,159
678,325
(70,647)
31,778
(38,869)
16,562
55,200
32,893
711,218
(279,214)
28,914
$ 460,918
$9.37
$6,443,111
349,775
122,491
6,915,377
2,703,462
983,590
208,483
256,656
178,639
109,724
290,575
616,629
716,448
354,087
6,418,293
497,084
(97,533)
32,329
(65,204)
(1,016)
24,992
(41,228)
455,856
(180,851)
31,821
$ 306,826
$6.30
$4,921,852
280,271
116,049
5,318,172
2,228,814
672,004
127,856
150,653
145,473
89,519
219,834
432,066
569,453
277,975
4,913,647
404,525
(94,000)
32,092
(61,908)
96,270
8,312
42,674
447,199
(219,715)
36,245
$ 263,729
$5.90
DELTA AIR LINES, INC.
Consolidated Statements of Stockholders' Equity For the years ended June 30, 1989, 1988 and 1987
Common
Stock
Balance at July 1, 1986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,349
Net income forfiscal year 1987 .. ................ .
Cash dividends for fiscal year 1987
($1.00 per share) . . . . . . . . . . . . . . . . . ..... . . .
Issuance of 8,265,290 shares of common stock
for acquisition of Western Airlines
($48.75 per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,796
Issuance of 213,422 shares of common stock to
payroll-based stock ownership plan
($52.39 per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . 640
Issuance of 22,426 shares of common stock under
dividend reinvestment and stock purchase plan
($54.27 per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Issuance of 21,948 shares of common stock under
stock option plan ($59.38 per share) . . . . . . . . . . . . . 66
Balance at June 30, 1987 . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,918
Net income forfiscal year 1988 .. . . . . . . . . . . ..... . .
Cash dividends for fiscal year 1988
($1.20 per share) . .. ... . . .. ...... . .. . ....... .
Issuance of 24,670 shares of common stock under
dividend reinvestment and stock purchase plan
($45.05 per share). . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Issuance of 241 shares of common stock under
stock option plan ($59.25 per share) . . . . . . . . . . . . . 1
Issuance of 436,891 shares of common stock in
exchange for 9% Convertible Subordinated
Debentures ($49.02 per share) . . . . . . . . . . . . . . . . . 1,311
Balance at June 30, 1988 .... . .. . ..... . . . .......... .
Net income for fiscal year 1989 .................. .
Cash dividends for fiscal year 1989
($1.20 per share) . . ...... . ... .. . . .. . . . ...... .
Issuance of 18,963 shares of common stock under
dividend reinvestment and stock purchase plan
($53.76 per share) .. . ....................... .
Issuance of 66,788 shares of common stock under
stock option plan ($62.21 per share) ...... . ... .. .
Issuance of 78,862 shares of common stock under
exercise of Western Airlines warrants
($48.75 per share) . .. . ... .. .. . ........... . .. .
Balance at June 30, 1989 . ..... ...... ........ .... .. .
The accompanying notes are an integral part of these statements.
147,304
57
200
237
$147,798
Additional
Paid-In Reinvested
Capital Earnings
(ln Thousands)
$ 93,333 $1,088,264
378,137
10,540
1,150
1,238
484,398
1,037
13
20,105
505,553
963
3,955
3,608
$514,079
263,729
(44,397)
1,307,596
306,826
(58,456)
1,555,966
460,918
(59,054)
$1,957,830
Total
$1,301,946
263,729
(44,397)
402,933
11,180
1,217
1,304
1,937,912
306,826
(58,456)
1,111
14
21,416
2,208,823
460,918
(59,054)
1,020
4,155
3,845
$2,619,707
19
20
DELTA AIR LINES, INC.
Consolidated Statements of Cash Flows For the years ended June 30, 1989, 1988 and 1987
Cash Flows From Operating Activities:
Netincome ...... . .. .. .......... .
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization .... . . . ...... . . ..... .. .. .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of investment tax credits ................. . .
Amortization of deferred gain on sale and
leaseback transactions ... .. ..... ............ . .. .. . .
Loss (gain) on disposition of flight equipment ... . . .. .. .. . .
Western Airlines pre-acquisition tax
carryovers utilized .......... ...... ... ... . ........ . .
Prepaid pension costs . .. ........ . . . .. . . ... ... . .... .. .
Changes in certain assets and liabilities:
Increase in receivables ... .. ... ....... ..... . . .... . . .. .. .
Increase in inventories and prepaid expenses ...... . .. . ..... .
Increase (decrease) in air traffic liability . . ... . .. . . . . ...... . .
Increase in accounts payable and
miscellaneous accrued liabilities ......... .... ... ... . .. . .
Increase (decrease) in other payables and
accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in other noncurrent liabilities .. .. . . . . . . . . ....... . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . .
Net cash provided by operating activities ....
Cash Flows From Investing Activities:
Property and equipment additions-
Flight equipment, including advance payments . ..... ... .... .
Ground property and equipment . ..... . ................. .
Proceeds from sale of flight equipment . .. ..... ........ . . . . . .
Investments in other associated companies .... . . .. . .. ... .... .
Acquisition of Western Airlines, net of cash
acquired of $221,885 ... . . .... .... .... . ... ........ .. .. .
Net cash used in investing activities . ... ....... .. .
Cash Flows From Financing Activities:
Issuance oflong-term obligations . .. ... .... ... .. . .. . .. . ... .
Issuance of common stock . . . . . . . . . . . . . . . ... .. . .. .
Payment on long-term debt and capital lease obligations . ...... . .
Cash dividends ... ...... . ...... . .. . ......... . . . .. .. . .. .
Proceeds from sale and leaseback transactions . . . ..... . . .. . .. .
Net cash provided by financing activities .. . . . .... .
Net (Decrease) Increase in Cash and Cash Equivalents . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period .... . .. .... . .. .. . .
Cash and cash equivalents at end of period .......... .. .. . . . .
The accompanying notes are an integral part of these statements.
1989
$ 460,918
393,095
(20,856)
(28,914)
(49,702)
(16,562)
11,433
(107,627)
(9,041)
242,028
207,120
(23,572)
32,403
1,227
1,091,950
(1,205,125)
(275,965)
93,246
(1,387,844)
1,020
(18,706)
(59,054)
79,500
2,760
(293,134)
822,791
$ 529,657
1988
(In Thousands)
$ 306,826
354,087
(50,968)
(31,821)
(46,366)
1,016
42,768
(30,157)
(18,388)
(63,936)
(2,586)
65,817
110,525
29,733
9,139
675,689
(1,184,320)
(146,236)
69,825
(6,041)
(1,266,772)
44,900
1,111
(308,414)
(58,456)
1,354,805
1,033,946
442,863
379,928
$ 822,791
1987
$ 263,729
277,975
163,537
(36,245)
(27,203)
(96,270)
36,452
(53,523)
(95,307)
(2,423)
95,837
4,433
829
17,169
578
549,568
(1,132,760)
(91,958)
43,559
(16,881)
(161,821)
(1,359,861)
415,000
1,217
(638,179)
(44,397)
1,395,265
1,128,906
318,613
61,315
$ 379,928
DELTA AIR LINES, IN .
Notes to Consolidated Financial Statements
June 30, 1989, 1988 and 1987
1. Summary of Significant Accounting Policies:
Basis of Presentation-The consolidated financial statements
include the accounts of the Company and its wholly-owned
subsidiaries, including: Epsilon Trading, Inc.; Deltair UK
Investments Limited; and Travel Air Music, Inc. All significant
intercompany accounts and transactions have been eliminated.
Certain amounts for fiscal 1988 and 1987 have been
reclassified to conform with the current financial statement
presentation.
Statement of Cash Flows-For the purpose of the statement
of cash flows, the Company considers all highly liquid invest-
ments with a maturity of three months or less to be cash
equivalents.
Passenger Revenue-Passenger ticket sales are recorded as
revenue when the transportation is provided. The value of un-
used tickets is included in current liabilities.
Depreciation and Amortization-Prior to July 1, 1986, sub-
stantially all of the Company's flight equipment was being
depreciated on a straight-line basis to residual values (10% of
cost) over a 10-year period from dates placed in service. As a
result of a comprehensive review of its fleet plan, effective July 1,
1986, the Company increased the estimated useful lives of sub-
stantially all of its flight equipment. Flight equipment that was
not already fully depreciated is now depreciated on a straight-
line basis to residual values (10% of cost) over a 15-year period
from dates placed in service. The effect of this change was a
$130 million decrease in depreciation expense, and a $69 million
($1.54 per share) increase in net income, for the year ended
June 30, 1987. Ground property and equipment are depreciated
on a straight-line basis over their estimated service lives, which
range from three to 30 years.
Interest Capitalized-Interest attributable to funds used to
finance the acquisition of new aircraft and construction of major
ground facilities is capitalized as an additional cost of the related
asset. Interest is capitalized at the Company's average interest
rate on long-term debt or, where applicable, the interest rate
related to specific borrowings. Capitalization of interest ceases
when the property or equipment is placed in service.
Income Taxes-Income taxes are provided by applying the
applicable statutory federal, state and local tax rates to book
income before income taxes, adjusted for permanent differences
between book and tax income. Deferred income taxes are pro-
vided for all significant items where there is a timing difference
in recording such items for financial reporting purposes and for
income tax purposes. Investment tax credits are amortized over
seven years. (See Note 8.)
Earnings Per Share-Net income per common share is
computed based on the weighted average number of shares out-
standing during the year, which was 49,203,552 for fiscal
1989; 48,706,851 for fiscal 1988; and 44,712,993 for fiscal 1987.
Manufacturers Credits-In connection with the acquisition
of certain aircraft and engines, the Company receives various
introductory credits. These credits are deferred until the aircraft
and engines are delivered, at which time they are applied on a
pro rata basis as a reduction of the acquisition costs resulting in
reduced future depreciation expense.
Deferred Gain on Sale and Leaseback Transactions- Gains on
the sale and leaseback of property and equipment are deferred
and amortized over the life of the leases as a reduction in
rent expense.
2. Merger with Western Air Lines, Inc.:
On December 18, 1986, Delta purchased all 61,331,334
outstanding shares of Western Air Lines, Inc. for $786,639,000,
which consisted of the issuance of 8,265,290 shares of Delta
common stock, valued at $48.75 per share, and $383,706,000
in cash. The acquisition was recorded using the purchase
method of accounting and, accordingly, the purchase price was
allocated to the assets and liabilities acquired based on their
estimated fair value at the date of acquisition. The total cost of the
acquisition exceeded the estimated fair value of the underlying
net assets of Western at the date of acquisition by $413,737,000.
This amount was subsequently reduced by $36,452,000 in fiscal
1987 and by an additional $42,768,000 in fiscal 1988 to reflect
the utilization of pre-acquisition tax carryovers. The remaining
cost in excess of net assets acquired is being amortized over 40
years. The consolidated financial statements of the Company for
the year ended June 30, 1987, include the results of operations
for Western after December 18, 1986. Western was operated as a
wholly-owned subsidiary from December 19, 1986, until April 1,
1987, when it was merged into Delta.
The following table presents selected financial data for
fiscal 1987 on a pro forma basis assuming the acquisition of
Western had occurred as of the beginning of that fiscal year. The
pro forma data are based on certain assumptions and do not
give effect to any potential synergies that might have been real-
ized through the consolidation of operations of the two com-
panies. Accordingly, the pro forma combined results presented
are not necessarily indicative of actual results that would have
been achieved had the acquisition occurred at the beginning
of fiscal year 1987.
Operating revenues
Net income ....
Net income per share .. . .. . .. .. . .. .
Unaudited
(In Thousands)
$5,914,529
245,976
5.06
21
22
DELTA AIR LINES, INC.
3. Aircraft Purchase Commitments:
At June 30, 1989, the Company's fleet and aircraft purchase
commitments were as follows:
Aircraft Current Fleet
Type Owned Leased Total Orders Options
B-727-200 107 23 130
B-737-200 1 60 61
B-737-300 . 13 13
B-757-200 ... . . 27 23 50 19 61
B-767-200 .. 15 15
B-767-300 . 15 15 6 6
B-767-300ER . 9 16
DC-8-71 .. 2 2
DC-9-32 .... 31 5 36
L-1011-1. 22 22
L-1011-100/200. 1 1
L-1011-250 6 6
L-1011-500 11 11
MD-11 9 31
MD-88 . . 15 25 40 30 140
- -- - - -
236 166 402 73 254
The Company presently expects to finance its aircraft and
engine commitments using internally generated funds, leasing
arrangements, or other outside financing arrangements. At
June 30, 1989, future expenditures for the aircraft and engine
commitments, excluding option aircraft, were estimated to be
$2.6 billion, as follows:
Years Ending
June 30
1990 ..... ... . .
1991 ... . . .... . .
1992 ........ .
1993.
Total .. .. .. . ... . .......... .
Amount
(In Thousands)
$1,161,000
1,056,000
207,000
149,000
$2,573,000
Subsequent to June 30, 1989, the Company exercised
options for five McDonnell Douglas MD-88 aircraft.
4. Long-Term Debt:
At June 30, 1989 and 1988, the Company's long-term debt
(including current maturities) was as follows:
1989 1988
81/4% Notes, unsecured, due
(In Thousands)
May 15, 1996 $150,000 $150,000
9% Debentures, unsecured, due
May 15,2016. 150,000 150,000
11.35% Notes, unsecured, due April 1,
1993, redeemable at the Company's
option on or after April 1, 1990 125,000 125,000
Adjustable Tender Clayton County
Development Authority Note,
unsecured, at various interest rate
options, due 2020 .... 44,900 44,900
Development Authority of Clayton County,
65/s% unsecured loan agreement,
repayable in installments beginning
in 2000, with the remaining balance
payable in 2011 35,000 35,000
Development Authority of Fulton County,
unsecured loan agreement, repayable in
installments beginning in 1991, and
continuing through 2002. Interest
ranges from 95/s% to 11 % over the
life of the loan 33,000 33,000
9.55% Western Air Lines, Inc. Equipment
Trust Certificates, secured by certain
flight equipment, repayable in semi-
annual installments through May 1, 1993
($3,382,000 payable in fiscal 1990) . 13,526 16,908
9.25% Western Air Lines, Inc. Conditional
Sales Agreement, repayable in Japanese
Yen in semi-annual installments through
May 1, 1994 ($2,135,000 payable
in fiscal 1990)-
At original exchange rates 8,021 9,235
Unrealized loss on-
Current maturities .... 807 896
Long-term portion 4,067 5,927
At current exchange rates. ... . ..... 12,895 16,058
Unamortized discount on debt ......... (2,035) (2,246)
Total . . 562,286 568,620
Less: Current maturities 5,516 5,491
Totallong-term debt ... . . . $556,770 $563,129
On April 1, 1989, the Company completed the 1989 Bank
Credit Agreement with 32 participating banks providing for
unsecured borrowings of up to $1 billion on a revolving basis
until June 30, 1993, at which time the commitment declines until
termination on March 31, 1997. Interest is, at the Company's
election, an adjusted domestic certificate of deposit rate plus
DELTA AIR LINES, INC.
3/8%, the Eurodollar rate plus 1/4%, or the prime rate as defined.
Upon completion of the 1989 Bank Credit Agreement, the 1984
Bank Credit Agreement was terminated. No borrowings were
outstanding under either of these agreements at any time during
fiscal 1989 or 1988.
At June 30, 1989, the annual maturities of long-term debt
for the next five years were as follows:
Years Ending
June 30
1990 .
1991.
1992 ........ .
1993 .. . . . . . . .. . .. . . .. ... .. .... .
Amount
(In Thousands)
$ 5,516
5,718
9,040
134,582
1994 . 4,165
The Company's debt agreements include limitations on
additional indebtedness and other obligations. There are no re-
strictions in the agreements as to the payment of cash dividends.
Cash payments of interest, net of interest capitalized,
totaled $38,865,000 in 1989, $66,926,000 in 1988, and
$55,087,000 in 1987.
5. Lease Obligations:
The Company leases certain aircraft, airport terminal and
maintenance facilities, ticket offices, and other property and
equipment under agreements with terms of more than one year.
Rent expense is generally recorded on a straight-line basis over
the lease term. Amounts charged to rental expense for operating
leases were $536,192,000 in 1989, $435,295,000 ih 1988, and
$296,126,000 in 1987. Accrued rent of $133,540,000 at June 30,
1989, and $99,461,000 at June 30, 1988, is included in accounts
payable and miscellaneous accrued liabilities in the accom-
panying consolidated balance sheets. In addition, accrued rent
of $117,582,000 at June 30, 1989, and $54,697,000 at June 30,
1988, is included in other noncurrent liabilities.
At June 30, 1989, the Company's minimum rental commit-
ments under capital leases and noncancelable operating leases
with initial or remaining terms of more than one year were
as follows:
Years Ending
June 30
1990
1991
1992 .. .. .. . .... . .. . . . . .
1993 . ..... . .
1994
After 1994 .
Total minimum lease payments .
Less: Amounts representing interest . .
Present value of future minimum
capital lease payments . .... .
Less: Current obligations under
capital leases ....... . .. . . .. . .
Long-term capital lease
obligations . . . . .. . .. . . .
Capital Operating
Leases Leases
(In Thousands)
$ 24,436 $ 503,607
24,415 483,890
24,722 472,682
19,708 467,082
20,565 460,086
126,969 6,586,151
240,815 $8,973,498
83,228
157,587
11,343
$146,244
The Company has negotiated noncancelable sublease
agreements at certain of its airport terminal facilities. At June 30,
1989, the Company expected to receive rentals under these
agreements as follows:
Years Ending
June 30
1990 ...
1991 .
1992 .
1993 ..
1994 .
After 1994
Total
6. Short-Term Borrowings:
Amount
(ln Thousands)
$ 6,977
5,985
5,488
5,358
5,113
72,043
$100,964
Interim financing of operations is obtained through the
issuance of commercial paper and the use of other short-term
borrowings. The Company did not have any commercial paper
outstanding during fiscal 1989 or fiscal 1988. Also, no other
short-term borrowings were outstanding during fiscal 1989.
In fiscal 1988, the average daily balance of short-term borrowings
outstanding was $3,191,000 at a weighted average interest rate
of 7.16%. The maximum amount of short-term borrowings
outstanding during fiscal 1988 was $21,000,000.
7. Stockholders' Equity:
The 1986 Stock Option Plan (1986 Plan) and the 1989
Stock Incentive Plan (1989 Plan) permit selected employees of
the Company to receive stock-based incentive compensation.
Awards under the 1986 Plan are expressed in units, and each
unit may be exercised as either a stock option to purchase
Delta common stock at the fair market value of such stock on the
date of grant, or a stock appreciation right. A unit is generally
exercisable between one and five years after its date of grant.
Units exercised as stock appreciation rights are payable 60% in
cash and 40% in common stock. Authority to grant additional
units under the 1986 Plan expired on January 1, 1989.
23
24
DELTA AIR LINES, INC.
The 1989 Plan, which became effective on January 1,
1989, authorizes the grant of stock options, stock appreciation
rights, restricted stock and other stock-based awards. A stock
option entitles the grantee to purchase Delta common stock at
the fair market value of such stock on the date of grant, and is
generally exercisable between one and five years after such
date. A stock appreciation right may be granted only in con-
junction with a stock option, and is exercisable only when the
related stock option is exercisable. If a stock option is exercised,
the related stock appreciation right terminates, and if the
stock appreciation right is exercised, the related stock option
expires. No awards may be granted under the 1989 Plan after
December 31, 1993.
During fiscal 1989, the Company awarded stock options
covering 615,000 shares of common stock and related stock
appreciation rights under the 1989 Plan at $54. These awards
generally become exercisable in January 1990.
Transactions under the 1986 Plan from inception through
June 30, 1989 were as follows:
1986 1987 1988
Award Award Award
Fair market value on
date of grant .. $41.375 $54.75 $43.25
Units awarded .. 326,000 338,000 504,000
Units exercised during:
Fiscal 1987 .. .. . . . . . . (181,500)
Fiscal 1988 ..... . .. .. . . . .. (2,000)
Fiscal 1989 .. (130,500) (96,500) (382,000)
Units forfeited . . . . . . . . . (1,000) (1,500)
Units outstanding at
June 30, 1989 ......... 12,000 240,500 120,500
All units exercised under the 1986 Plan prior to June 30,
1989, have been exercised as stock appreciation rights. In fiscal
1989, the Company issued 66,788 shares of its common stock
in connection with the exercise of these units at prices which
ranged from $51.125 to $66.50 per share.
At June 30, 1989, 3,000,000 shares of the Company's
common stock were reserved for issuance under the 1989 Plan
and 373,000 shares were reserved for issuance under the 1986
Plan. In addition, 16,905 shares were reserved for warrants
which were issued by Western Airlines in connection with a
revolving credit agreement.
On October 23, 1986, the Board of Directors declared a
dividend of one preferred stock purchase right for each out-
standing share of Delta common stock. Each right will entitle the
holder to purchase 1/lO0th of a newly-issued share of Series A
Junior Participating Preferred Stock for $200. The rights will be
exercisable only if a person or group acquires beneficial owner-
ship of 20% or more of Delta common stock or commences
a tender or exchange offer that would result in such person or
group beneficially owning 30% or more of Delta common
stock. The rights expire on November 4, 1996. Delta may
generally redeem the rights for $.05 per right at any time prior
to the 15th day following a public announcement that a 20%
position has been acquired. If after the rights become exercis-
able, Delta is involved in a merger or certain other business
combinations, each right will entitle its holder ( other than
certain acquiring persons) to purchase common stock of Delta
or the acquiring company ( depending on which entity survives)
having a value of twice the right's exercise price.
On July 10, 1989, the Board of Directors amended the
Company's Family-Care Savings Plan (Plan) effective July 1,
1989, to add an Employee Stock Ownership Plan (ESOP) feature.
In connection with the establishment of the ESOP and pursuant
to a stock purchase agreement dated July 10, 1989, Harris Trust
and Savings Bank, as trustee of the ESOP, purchased 6,944,450
shares of Series B ESOP Convertible Preferred Stock, par value
$1.00 per share, of the Company at a price of $72 per share, or
an aggregate of approximately $500 million, with $6,944,450
borrowed by the trustee from a bank and the remainder under a
note issued by the trustee to the Company
It is expected that these interim loans will be refinanced
in the near future with long-term borrowings from third-party
lenders; these long-term borrowings will be guaranteed by the
Company and will be reflected as debt on the Company's balance
sheet when the refinancing is completed.
The shares of preferred stock will be held in the name of
the trustee ( or its nominee) until redemption or conversion, and
may not be sold by the trustee or distributed outside the Plan
(except for resale to the Company). The preferred stock is
redeemable at the Company's option after July 10, 1992, and in
certain circumstances before that date. The Company is required
to redeem shares of preferred stock at any time to enable the
trustee to provide for distributions to participants under, or to
satisfy an investment election provided to participants in ac-
cordance with, the Plan.
The shares of preferred stock have a stated value of $72
per share. Dividends are payable at the rate of 6% per annum.
Each share of preferred stock is convertible into 0.8578 shares
of common stock at a conversion price of $83.94 per share.
Adjustments will be made to the conversion price (and the con-
version ratio) to reflect stock splits, stock dividends, combina-
tions, reclassifications, certain distributions of rights or warrants
and certain other issuances of stock or stock repurchases with
respect to Delta common stock. The shares of preferred stock
have a liquidation preference of $72 per share, plus any accrued
and unpaid dividends. In the event that full cumulative div-
idends on the preferred stock have not been paid, Delta may not
pay cash dividends on its common stock.
The preferred stock votes together with the common stock
on matters upon which the common stock is entitled to vote, and
has one vote per share, subject to antidilution adjustments and
to limitations under applicable securities laws. The Plan pro-
vides that shares of preferred stock allocated to a participant's
account will be voted as the participant directs, and that shares
of preferred stock not allocated to participant accounts will be
voted in the same proportion as allocated shares of preferred
stock are voted.
The ESOP will generally replace Delta's obligation to make
matching cash contributions under the Plan, with the shares of
DELTA AIR LINES, INC.
preferred stock being allocated to Plan participants then making
contributions, in lieu of the Company's matching contribution.
On July 10, 1989, the Company entered into an agreement
with Swissair, Swiss Air Transport Company Ltd. (Swissair) to
sell 2.5 million shares of Delta common stock to Swissair at a
price of $193,393,750, or $77.3575 per share. The agreement also
contemplates a reciprocal purchase by Delta of up to 100,000,
or approximately five percent, of Swissair's shares, after satis-
faction of certain Swiss legal requirements.
Swissair has agreed to certain restrictions on the transfer
of the shares of Delta common stock subject to that agreement,
and its acquisition of additional shares of Delta voting stock
without Delta's consent. Additionally, subject to certain condi-
tions, Swissair has agreed to vote its shares in proportion to the
votes cast by the other Delta stockholders or, at Swissair's option,
as recommended by Delta's Board of Directors. The closing of
Swissair's stock purchase is subject to certain conditions, in-
cluding the execution of a definitive agreement providing for the
reciprocal purchase and containing restrictions with respect to
Delta's ownership of Swissair stock substantially similar to the
restrictions with respect to Swissair's ownership of Delta stock.
8. Income Taxes:
Income taxes provided in fiscal years 1989, 1988 and 1987
consisted of:
Current taxes
Deferred taxes
Reinstatement of
deferred taxes .
Investment tax credits
PAYSOP credit .
Income taxes provided .
1989 1988 1987
(In Thousands)
$302,091 $219,266 $ 71,463
(20,856) (135,027) 59,432
(2,021)
84,059
12,553
86,080
6,453
(3,713)
$279,214 $180,851 $219,715
Components of the deferred tax provisions are as follows:
1989 1988 1987
(ln Thousands)
Excess of tax over book
depreciation . $ 69,174 $ 61,111 $122,623
Excess of tax over book gains
on sale of assets . (19,887) (138,567) (145,524)
Differences in timing of
expense recognition for
book and tax purposes (51,272) 13,478 35,170
Amortization of deferred
gain on sale and leaseback
transactions . . . . . . . . . . . ; .
18,279 16,759 12,476
Aircraft rent accruals in excess
of allowable tax deduction (30,979) (16,078) (8,989)
Other, net . (6,171) (71,730) 43,676
$ (20,856) $(135,027) $ 59,432
The tax provisions for the years ended June 30, 1989,
1988 and 1987 differ from amounts which would result from
applying the federal statutory tax rate to pretax income,
as follows:
1989 1988 1987
(In Thousands)
Income before income taxes . $7 11,218 $455,856 $447,199
Compensation expenses not
deductible for tax purposes 3,713
Nondeductible purchase
accounting adjustments .. 44,196 42,830 22,044
Other, net . 12,169 (1,986) (769)
Adjusted pretax income 767,583 496,700 472,187
Statutory rate . x34% X 34% x46%
Income tax provision at
statutory rate . 260,978 168,878 217,206
PAYSOP credit . (3,713)
State income taxes, net of
federal income tax benefit . 18,236 11,973 6,222
Income taxes provided $279,214 $180,85 1 $219,715
Until December 31, 1986, subject to certain restrictions,
the Company was allowed a tax credit for contributions made
to its payroll-based stock ownership plan (PAYSOP). The contri-
bution for fiscal 1987, which was recorded as additional com-
pensation expense, was not deductible for income tax purposes
and was excluded before computing the normal provision
for income taxes.
The Company made cash income tax payments of
$371,236,000 in 1989, $83,415,000 in 1988, and $21,594,000
in 1987.
In December 1987, the Financial Accounting Standards
Board issued a new standard on accounting for income taxes.
The Company is required to adopt the new accounting and dis-
closure rules no later than its fiscal year ending June 30, 1991,
although earlier implementation is permitted. Adoption of the
new standard will result in a catch up adjustment that may be
reported in the year the standard is implemented or in an
earlier year if the Company elects retroactive application.
The Company has not decided when to implement the new
standard, nor has it decided whether to restate prior financial
statements. Because of the complexities of the new accounting
requirements, combined with revisions to the federal tax law
and the 1986 acquisition of Western Air Lines, Inc., the effect
that the change will have on the Company's consolidated finan-
cial position and results of operations has not been determined.
25
26
DELTA AIR LINES, INC.
9. Employee Benefit Plans:
All of the Company's permanent employees are covered
under its noncontributory trusteed plans providing for retire-
ment, disability and survivor benefits, and certain employees
meeting service requirements are eligible to participate in a
contributory trusteed savings plan. Effective July 1, 1986, Delta
adopted Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions;' issued by the Financial
Accounting Standards Board in December 1985. The effect of
adopting these new reporting standards was a $62 million re-
duction in salaries and related expenses and a $33 million
(73 per share) increase in net income in fiscal 1987.
The following table sets forth the defined benefit plans'
funded status and amounts recognized in Delta's consolidated
balance sheets as of June 30, 1989 and 1988:
Actuarial present value of benefit
obligations:
Accumulated benefit obligation1 .
Projected benefit obligation
Plan assets at fair value2 .......... ..
Projected benefit obligation in
excess of plan assets . . . . . .. ... .
Unrecognized net loss ... . . . .. .
Unrecognized portion of net
obligation from initial application
of SFAS No. 87 . . . . .... . . . .
Unrecognized prior service cost ... .
Prepaid pension cost recognized in
the consolidated balance sheets
1989 1988
(In Thousands)
$2,410,636 $2,117,574
$3,487,827 $3,065,426
3,175,140 2,704,773
(312,687) (360,653)
309,865 368,877
72,459 72,707
2,610 2,749
$ 72,247 $ 83,680
1 Substantially all of the accumulated benefit obligation is vested.
2Plan assets were invested at June 30, 1989, approximately as follows:
cash equivalents (13% ), government and corporate bonds and notes (23% ),
common stock and other equity-oriented investments ( 62 % ) and real estate
investments (2%).
For all periods presented, an 8.5% weighted average dis-
count rate and a 4.9% rate of increase in future compensation
levels were used in determining the actuarial present value of the
projected benefit obligation. The expected long-term rate of
return on assets was 9%.
The net periodic pension cost of defined benefit plans for
fiscal 1989, 1988 and 1987 included the following components:
1989 1988 1987
Service cost-benefits earned
(In Thousands)
during the period $146,346 $122,184 $ 93,505
Interest cost on projected
benefit obligation 269,882 230,386 198,439
Actual return on plan
assets . . . . . . . . . . . . .
(401,370) 18,146 (359,541)
Net amortization and
deferral . . . . . . . . . . . . . . . . 145,316 (249,772) 157,282
Net periodic pension cost . $160,174 $120,944 $ 89,685
Prior to the merger with Delta, Western maintained various
defined benefit plans covering substantially all of its employees.
The Company has terminated certain of these plans and is
settling the obligations of the plans through the purchase of
annuities. Benefit accruals under certain other Western plans
have been frozen. The assets of the Western plans, in combina-
tion with accrued pension liabilities recorded at the date of the
Western acquisition, approximately equal the benefit obligation
of the plans.
In addition to providing pension benefits, the Company
provides certain health care and life insurance benefits for sub-
stantially all retired employees. The cost of health care benefits
is recognized as expense as claims are incurred. The cost of life
insurance benefits is expensed as premiums are paid. The total
cost of these post retirement benefits was $14,240,000 in
1989, $13,113,000 in 1988, and $10,695,000 in 1987.
10. Investments in Associated Companies:
In prior fiscal years, the Company purchased approxi-
mately 20% of the stock of Atlantic Southeast Airlines, Inc.
(ASA); Comair, Inc.; and SkyWest, Inc., the parent company of
SkyWest Airlines. Included in the carrying amount of the invest-
ments in these three Delta Connection commuter carriers is
$28 million, which represents the amounts by which the costs of
the investments exceeded the values of the underlying net assets
when the investments were made. This amount is being amor-
tized over 30 years. The investments in ASA, Comair and Sky-
West are being accounted for under the equity method.
See Note 7 for a discussion of Delta's contemplated pur-
chase of approximately five percent of the outstanding shares
of Swissair.
11. Quarterly Financial Data (Unaudited):
Fiscal 1989
Operating revenues .
Operating income .
Net income ...... . . .. .
Net income per share
Fiscal 1988
Operating revenues .
Operating income
Net income ........ . . .
Net income per share
12. Contingencies:
Three Months Ended
Sept.30 Dec.31 Mar.31 June 30
(In Millions, Except Per Share Amounts)
$1,881.6 $1,858.1 $2,038.1 $2,311.7
$ 148.3 $ 119.9 $ 125.9 $ 284.2
$ 100.0 $ 85.2 $ 85.0 $ 190.8
$ 2.03 $ 1.73 $ 1.73 $ 3.87
$1,631.8 $1,699.8 $1,709.2 $1,874.5
$ 94.3 $ 141.5 $ 93.0 $ 168.3
$ 59.1 $ 88.3 $ 56.1 $ 103.3
$ 1.22 $ 1.82 $ 1.15 $ 2.11
The Company is a defendant in certain legal actions relating
to environmental issues (primarily noise), alleged employment
discrimination practices, other matters concerning past and
present employees, and other matters related to the Company's
business. Given the unsettled status of the law in many of the
areas involved, the outcome of these actions is difficult to predict.
In the opinion of management, the disposition of these matters
is not likely to have any material adverse effect on the Company's
financial condition.
DELTA AIR LINES, INC.
Report of Independent Public Accountants
ARTHUR ANDERSEN & Co.
A TLANTA , GEO R G IA
To the Stockholders and the Board of Directors of
Delta Air Lines, Inc.:
We have audited the accompanying consolidated balance
sheets of DELTA AIR LINES, INC. (a Delaware corporation)
and subsidiaries as of June 30, 1989 and 1988, and the related
consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended
J~~e 30, 1989. These financial statements are the responsi-
bility of the Co~p~ny's management. Our responsibility is
to express an opimon on these financial statements based
on our audits.
We cond_
u_
cted our audits in accordance with generally
accepted auditmg standards. Those standards require that
we plan and perform the audit to obtain reasonable assur-
ance about whether the financial statements are free of
materia~ mis~tatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the finan~ial st~te~ents. An audit also includes assessing
the accountmg prmoples used and significant estimates
rr:iade by management, as well as evaluating the overall finan-
cial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
r_eferr~d to a~~ve present fairly, in all material respects, the
fmancial position of Delta Air Lines, Inc. and subsidiaries as
of June
?O, 1989 and 1988, and the results of their operations
a~d the1r cash flows for the periods stated in conformity
with generally accepted accounting principles.
. As discussed in Note 9, the Company changed
its method of accounting for pensions in the year ended
June 30, 1987.
~ ~ ~ 1 ~.
August 18, 1989
Report of Management
!he ~ntegrity and objectivity of the information presented
m this Annual Report is the responsibility of Delta manage-
ment. The financial statements contained in this report have
been audited by Arthur Andersen & Co., independent public
accountants, whose report appears on this page.
Delta maintains a system of internal financial controls
and a program of internal audits. These controls include the
s_election and training of the Company's managers, organiza-
tional arrangements that provide a division of responsibilities,
an~ ~ommunication programs explaining the Company's
pohoes and standards. We believe that this system provides
reasonable assurance that transactions are executed in
ac~ordance with management's authorization and are appro-
pnately recorded to permit preparation of financial state-
ments in conformity with generally accepted accounting
principles and to maintain accountability of assets.
The Board of Directors pursues its responsibilities for
these financial statements through its Audit Committee,
which consists solely of directors who are neither officers
nor employees of the Company. The Audit Committee meets
periodically with the independent auditors, the internal
auditors and representatives of management to discuss
internal accounting control, auditing and financial reporting
matters.
THOMAS J. ROECK,JR.
Senior Vice President-Finance and
Chief Financial Officer
RONALD W ALLEN
Chairman of the Board and
Chief Executive Officer
27
DELTA AIR LINES, INC. DELTA AIR LINES, INC.
Consolidated Summary of Operations For the years ended June 30
(Dollars expressed in thousands, except per share figures)
1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979
Operating revenues:
Passenger . . . . . . . . . . . . . . . . . . . . . .
. . .
$7,579,716 $6,443,111 $4,921,852 $4,132,284 $4,376,986 $3,963,610 $3,347,014 $3,352,173 $3,287,511 $2,733,820 $2,213,024
Cargo .. 393,662 349,775 280,271 240,115 235,199 239,649 227,146 230,597 213,431 190,490 167,904
Other, net .. . . . . . . . ....... . . .
. . . .
116,106 122,491 116,049 87,663 71,930 60,472 42,253 34,753 32,384 32,650 46,918
Total operating revenues .... . . . . . . . . . . .... .. .. 8,089,484 6,915,377 5,318,172 4,460,062 4,684,115 4,263,731 3,616,413 3,617,523 3,533,326 2,956,960 2,427,846
Operating expenses ........ . . . . . . . . . . . . ...... 7,411,159 6,418,293 4,913,647 4,425,574 4,318,105 4,052,339 3,823,747 3,625,679 3,359,132 2,864,323 2,218,814
Operating income (loss) .. ..... ... $ 678,325 $ 497,084 $ 404,525 $ 34,488 $ 366,010 $ 211,392 $ (207,334) $ (8,156) $ 174,194 $ 92,637 $ 209,032
Interest expense, net 1 .... . .... (38,869) (65,204) (61,908) (55,355) (62,053) (109,802) (63,494) (22,284) (7,596) (11,062) (9,461)
Miscellaneous income, net . . . . . . .
55,200 24,992 8,312 7,775 6,863 9,114 15,898 13,665 26,144 6,952 1,959
Gain (loss) on disposition of flight equipment ... 16,562 (1,016) 96,270 16,526 94,343 129,511 28,229 1,570 30,078 36,091 20,514
Income (loss) before income taxes . . . . . . . . ... $ 711,218 $ 455,856 $ 447,199 $ 3,434 $ 405,163 $ 240,215 $ (226,701) $ (15,205) $ 222,820 $ 124,618 $ 222,044
Income taxes (provided) credited ............... (279,214) (180,851) (219,715) 2,228 (186,624) (102,625) 109,642 9,652 (101,447) (54,433) (104,429)
Amortization of investment tax credits ... . 28,914 31,821 36,245 41,624 40,914 38,014 30,329 26,367 25,101 22,973 19,129
Net income (loss) $ 460,918 $ 306,826 $ 263,729 $ 47,286 $ 259,453 $ 175,604 $ (86,730) $ 20,814 $ 146,474 $ 93,158 $ 136,744
Net income (loss) per share* ... ... ..... '
$9.37 $6.30 $5.90 $1.18 $6.50 $4.42 $(2.18) $0.52 $3.68 $2.34 $3.44
- -
Dividends paid . . . . . . . . . . . . . . . . . . ........... $ 59,054 $ 58,456 $ 44,397 $ 40,073 $ 27,938 $ 23,857 $ 39,761 $ 37,773 $ 27,832 $ 23,857 $ 20,875
Dividends paid per share* . . . . . . ........... $1.20 $1.20 $1.00 $1.00 $0.70 $0.60 $1.00 $0.95 $0.70 $0.60 $0.53
1Has been reduced by interest capitalized of ....... $ 31,778 $ 32,329 $ 32,092 $ 23,758 $ 22,028 $ 18,263 $ 29,398 $ 38,154 $ 15,539 $ 10,790 $ 6,717
Other Financial and Statistical Data For the years ended June 30
(Dollars expressed in thousands, except per share figures)
1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979
Total assets . . . .. ............. ............ .. $6,483,986 $5,748,355 $5,342,383 $3,785,462 $3,626,840 $3,268,822 $3,246,960 $2,657,880 $2,304,327 $2,042,539 $1,788,325
Long-term debt and capital leases ...... . ........ $ 703,014 $ 729,493 $1,018,417 $ 868,615 $ 535,159 $ 670,993 $1,089,796 $ 362,774 $ 198,411 $ 147,901 $ 125,483
Stockholders' equity ... . . . . . .
. . . ..... . . $2,619,707 $2,208,823 $1,937,912 $1,301,946 $1,287,094 $1,048,907 $ 897,160 $1,023,651 $1,040,611 $ 921,969 $ 852,668
Stockholders' equity per share* ..... ........... . $ 53.17 $ 44.99 $ 39.84 $ 32.45 $ 32.21 $ 26.38 $ 22.56 $ 25.75 $ 26.17 $ 23.19 $ 21.44
Shares of common stock outstanding at year end* .. 49,265,884 49,101,271 48,639,469 40,116,383 39,958,467 39,761,154 39,761,154 39,761,154 39,761,154 39,761,154 39,761,154
Revenue passengers enplaned . . . . . . .. .. . . ... . . . 64,242,212 58,564,507 48,172,626 39,582,232 39,340,850 36,319,567 35,666,116 34,169,927 36,743,214 39,713,904 39,360,368
Available seat miles (000) . . . . . . .......... ... .. 90,741,541 85,833,959 69,013,669 53,336,135 51,637,084 50,935,173 47,915,817 45,154,885 45,428,277 43,217,372 39,826,891
Revenue passenger miles (000) .. . ...... ... . . . .. 55,903,857 49,009,094 38,415,117 30,123,387 29,061,618 26,099,115 26,096,996 24,284,804 25,192,531 26,171,197 25,518,520
Passenger load factor . ......... . ...
61.61 % 57.10% 55.66% 56.48% 56.28% 51.2'4% 54.46% 53.78% 55.46% 60.56% 64.07%
Breakeven load factor .. . . . .. . ... 56.09% 52.69% 51.09% 56.01 % 51,57% 48.51 % 57.84% 53.91 % 52.52% 58.51 % 58.02%
Available ton miles (000) . .. ... . . . . . . . . . .
11,724,797 11,249,578 8,999,668 6,934,047 6,667,512 6,569,248 6,202,910 5,937,817 6,037,476 5,748,143 5,357,995
Revenue ton miles (000) . . . . . . . . . .... . ..... '
.. 6,338,274 5,556,584 4,327,195 3,371,917 3,275,329 2,983,840 2,951,119 2,773,337 2,845,425 2,934,375 2,916,585
Passenger revenue per passenger mile .. ... ....... 13.56 13.15 12.81 13.72 15.06 15.19 12.83 13.80 13.05 10.45 8.67
Operating expenses per available seat mile 8.17 7.48 7.12 8.30 8.36 7.96 7.98 8.03 7.39 6.63 5.57
Operating expenses per available ton mile . . . . .. 63.21 57.05 54.60 63.82 64.76 61.69 61.64 61.06 55.64 49.83 41.41
*Adjusted for 2-for-l stock split distributed December 1, 1981.
The financial and statistical information presented above reflect the Company's acquisition of Western Air Lines, Inc. on December 18, 1986 .
. 28
29
30
Board of Directors
RONALD W ALLEN
KARLD. BAYS
HENRY A. BIEDENHARN, III
CHARLES L. BROWN
EDWARD H. BUDD
GEORGE D. BUSBEE
MARY JOHNSTON EVANS
DAVID C. GARRETT,JR.
EDWARD H. GERRY
GERALD GRINSTEIN
HOLLIS L. HARRIS
JESSE HILL, JR.
ROBERT OPPENLANDER
JOHN G. PHILLIPS
AUDIT COMMITTEE
JESSE HILL, JR., Chairman
HENRY A. BIEDENHARN, III
MARY JOHNSTON EVANS
GERALD GRINSTEIN
Chairman of the Board and Chief Executive
Officer, Delta Air Lines, Inc.
Chairman of the Board and Chief Executive
Officer, Whitman Corporation,
Chicago, Illinois
President, Chief Executive Officer and
Director, Ouachita Coca-Cola Bottling
Company, Inc., Monroe, Louisiana
Retired Chairman of the Board and Chief
Executive Officer, American Telephone and
Telegraph Company, New York, New York
Chairman of the Board, Chief Executive
Officer, and President, The Travelers
Corporation, Hartford, Connecticut
Partner of law firm of King & Spalding,
Atlanta, Georgia
Director of various corporations
Retired Chairman of the Board and Chief
Executive Officer, Delta Air Lines, Inc.
Partner of Gerry Brothers & Co., Investment
Management, New York, New York
President and Chief Executive Officer,
Burlington Northern Inc.; Chairman of the
Board, President, Chief Executive Officer and
Chief Operating Officer, Burlington Northern
Railroad Company, Fort Worth, Texas
President and Chief Operating Officer,
Delta Air Lines, Inc.
President, Chief Executive Officer and
Director, Atlanta Life Insurance Company,
Atlanta, Georgia
Retired Vice Chairman of the Board and
Chief Financial Officer, Delta Air Lines, Inc.
Director and Retired Chairman of the Board,
The Louisiana Land and Exploration
Company, New Orleans, Louisiana
FINANCE COMMITTEE
KARL D. BAYS, Chairman
CHARLES L. BROWN
EDWARD H. BUDD
GEORGE D. BUSBEE
BENEFIT FUNDS INVESTMENT
COMMITTEE
DA YID C. GARRETT, JR.
EDWARD H. GERRY
ROBERT OPPENLANDER
JOHN G. PHILLIPS
EDWARD H. BUDD, Chairman
HENRY A. BIEDENHARN, III
CHARLES L. BROWN
MARY JOHNSTON EVANS
GERALD GRINSTEIN
JESSE HILL, JR.
ROBERT OPPENLANDER
EXECUTIVE COMMITTEE
DAVID C. GARRETT,JR., Chairman
RONALD WALLEN
KARLD. BAYS
EDWARD H. BUDD
JOHN G. PHILLIPS
PERSONNEL, COMPENSATION&:
NOMINATING COMMITTEE
JOHN G. PHILLIPS, Chairman
KARLD.BAYS
GEORGE D. BUSBEE
DA YID C. GARRETT, JR.
EDWARD H. GERRY
Officers
RONALD WALLEN
HOLLIS L. HARRIS
JAMES W CALLISON
W WHITLEY HAWKINS
RUSSELL H. HEIL
C. JULIAN MAY
REX A. McCLELLAND
THOMAS J. ROECK,JR.
C. A. THOMPSON
HAROLD L. ACHTZIGER
H. CALGER
R. G. CALDWELL
FRANKS. CHEW
ROBERT W COGGIN
ROBERT H. COWART
JOHN P. DAVIS
JD. DUNN
R. LAMAR DURRETT
JULIUS P. GWIN
ROBERT S. HARKEY
JOHN HUME
AL KOLAKOWSKI
CALVIN L. RADER
DONM.ADAMS
WILLIAM THOMAS BELL
WILLIAM D. BERRY
HAROLD L. BEVIS
WE.CONDRA
JOHNWCOX
H. M. JOHNSON
JUDY C.JORDAN
HAROLD F JOYNER
JOHNC. KING
MARCEY McCANN
JENNY POOLE
LAWSON ROLLINS
JOHN W SERCER
WE.SUGGS
JAMES B. TAYLOR
ROBERT E. WOODYARD
MAURICE WORTH
D. SCOTT YOHE
LESLIE P. KLEMPERER
MARY E. RAINES
Chairman of the Board and Chief Executive
Officer
President and Chief Operating Officer
Senior Vice President-Legal and Corporate
Affairs & Secretary
Senior Vice President-Marketing
Senior Vice President-Personnel
Senior Vice President-Technical Operations
Senior Vice President-Operations
Senior Vice President-Finance and Chief
Financial Officer
Senior Vice President-Stations
Vice President-International
Vice President-Flight Operations
Vice President-Management Services
Vice President-Treasurer
Vice President-Marketing Development
Vice President-Technical Services
Vice President-Maintenance
Vice President-Purchasing
Vice President-Communications and Information
Services
Vice President-Comptroller
Vice President-General Counsel
Vice President-In-Flight Service
Vice President-Sales
Vice President-Marketing Automation
Assistant Vice President-Assistant
General Counsel
Assistant Vice President-Stations
Assistant Vice President-Public Relations
Assistant Vice President-Public Affairs
Assistant Vice President-Information
Services Applications Development
Assistant Vice President-Community Affairs
Assistant Vice President-Employment
Assistant Vice President-Advertising and
Sales Promotion
Assistant Vice President-Quality Control
Assistant Vice President-Information Services
Operations and Support
Assistant Vice President-Reservations Sales
Assistant Vice President-In-Flight Service
Assistant Vice President-Revenue Accounting
Assistant Vice President-Maintenance
Assistant Vice President-Materiel Services
Assistant Vice President-Investment Management
Assistant Vice President-Communications
Assistant Vice President-Personnel
Administration
Assistant Vice President-Government Affairs
Assistant Secretary
Assistant Secretary
Transfer Agent and Registrar
for Common Stock
Citizens and Southern Trust Co. (Georgia), N.A.
Investor Services
P.O. Box 105555
Atlanta, Georgia 30348-5555
Dividend Paying Agent
Delta Air Lines, Inc.
Stockholder Relations
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
Auditors
Arthur Andersen & Co.
133 Peachtree Street NE.
Atlanta, Georgia 30303
Annual Meeting
October 26, 1989, Monroe, Louisiana
Common Stock
Listed on the New York Stock Exchange
Number of Stockholders
28,634 as of August 9, 1989
Market Prices and Dividends
Fiscal Year 1989
Quarter Ended:
September 30.
December 31 . . . . . . . . . .
March 31 ....... .
June 30 .. ..... .... . . .
Fiscal Year 1988
Quarter Ended:
September 30 . ... ' . '
. .
December 31 ... . . .. . .
March 31
June 30 . . . . . . . . .
Availability of Form 10-K
Market Price Range of
Common Stock on
Ne:w York Stock Exchange
High Law
551/s 453/4
513/4 46
597
/s 483/4
73 581/s
60 50
53 32
52 36
55 45
Cash
Dividends
Paid Per Share
$.30
.30
.30
.30
$.30
.30
.30
.30
The Company will provide, upon written request and
without charge, a copy of the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1989, to any
person beneficially owning or owning of record any of the
common stock of the Company on August 31, 1989. Requests
for the report should be directed to:
Delta Air Lines, Inc.
Stockholder Relations
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
Dividend Reinvestment and Stock Purchase Plan
Registered holders of Delta Air Lines common stock may use
the Company's Dividend Reinvestment and Stock Purchase
Plan to purchase additional shares of such stock through
automatic dividend reinvestment or cash contributions.
Delta pays all service and brokerage charges for the purchase
of these shares. Inquiries, notices, requests, and other com-
munications regarding participation in the plan should be
directed to:
Citizens and Southern Trust Co. (Georgia), N.A.
Delta Air Lines, Inc. Dividend Reinvestment Plan
P.O. Box 105555
Atlanta, Georgia 30348-5555
Telephone ( 404) 897-3464
31
Delta serves 141 domestic cities in 44 states, the District of
Columbia and Puerto Rico, and also operates flights to 24
international cities in 11 foreign countries. During fiscal
1989, Delta inaugurated service to Huntsville/Decatur,
Alabama; Wichita, Kansas; Albany, Buffalo, Rochester and
Syracuse, New York; Milwaukee, Wisconsin; Taipei, Taiwan;
and Hamburg, West Germany.
Domestic Service HAWAII
ALABAMA Honolulu, Oahu
Birmingham Kahului, Maui
Huntsville/Decatur IDAHO
Mobile/Pas.cagoula, MS Boise
Montgomery Idaho Falls
ALASKA ILLINOIS
Anchorage Chicago
Fairbanks INDIANA
Juneau Ft.Wayne
ARIZONA Indianapolis
Phoenix KANSAS
Tucson Wichita
ARKANSAS KENTUCKY
Little Rock Lexington
CALIFORNIA Louisville
Burbank/Hollywood LOUISIANA
Fresno Baton Rouge
Long Beach
Los Angeles
Monroe
New Orleans
Oakland Shreveport
Ontario
Orange County MAINE
Palm Springs Bangor
Sacramento Portland
San Diego MARYLAND
San Francisco Baltimore
Sanjose MASSACHUSETTS
COLORADO Boston
Colorado Springs MICHIGAN
Denver Detroit
CONNECTICUT
Hartford/Springfield, MA
MINNESOTA
Minneapolis/St. Paul
DISTRICT OF COLUMBIA MISSISSIPPI
Washington Jackson
FLORIDA MISSOURI
Daytona Beach Kansas City
Ft. Lauderdale/Hollywood St.Louis
Ft.Myers
MONTANA
Jacksonville
Melbourne Billings
Miami Bozeman
Orlando Butte
Pensacola Great Falls .
Sarasota/Bradenton Helena
Tallahassee Kalispell
Tampa/St. Petersburg/ Missoula
Clearwater NEBRASKA
West Palm Beach Omaha
GEORGIA NEVADA
Atlanta Las Vegas
Augusta Reno
Columbus NEW JERSEY
Savannah Newark
NEW MEXICO VIRGINIA
Albuquerque Norfolk/Virginia Beach/
NEW YORK Williamsburg
Albany Richmond
Buffalo WASHINGTON
New York Pasco/Richland/Kennewick
Rochester Seattle/Tacoma
Syracuse Spokane
NORTH CAROLINA WISCONSIN
Charlotte Milwaukee
Greensboro/High Point/ WYOMING
Winston-Salem . Casper.
Raleigh/Durham Jackson Hole
NORTH DAKOTA
Bismarck International Service
OHIO BAHAMAS
Cincinnati Nassau
Cleveland BERMUDA
Columbus Hamilton
Dayton
CANADA
Toledo
Calgary, Alberta
OKLAHOMA Edmonton, Alberta
Oklahoma City Montreal, Quebec
Tulsa Vancouver, B.C.
OREGON ENGLAND
Portland London
PENNSYLVANIA FRANCE
Philadelphia Paris
Pittsburgh
IRELAND
PUERTO RICO Dublin
Sanjuan Shannon
SOUTH CAROLINA JAPAN
Charleston Tokyo
Columbia
Greenville/Spartanburg
MEXICO
,
SOUTH DAKOTA
Acapulco
Guadalajara
Rapid City Ixtapa/Zihuatanejo
Sioux Falls Mazatlan
TENNESSEE Mexico City
Chattanooga Puerto Vallarta
Knoxville SOUTH KOREA
Memphis Seoul
Nashville
TAIWAN
TEXAS Taipei
Amarillo
Austin
WEST GERMANY
Frankfurt
Dallas/Ft.Worth
Hamburg
El Paso
Munich
Houston
Stuttgart
Lubbock
San Antonio
UTAH
Salt Lake City
Delta Air Lines, Inc. / General Offices, Hartsfield Atlanta International Airport / Atlanta, Georgia 30320
AS I A
- - Service to Bangkok, Th ail an
effective December 1989. 1
AUSTRALIA
D
Pacific 0 c ea n
I
I
NORTH
AMERICA
Atlantic 0 c e an
AFRICA
AMERICA