Tl-tWEST 1978 Annual Report Cities Presently Served by Northwest Orient Other Cities Authorized for Service by Northwest Orient Description of Business orth America Anchorage Atlanta Billings Bi marck/ fandan Boston Bozeman Butte Chicago Cleveland Detroit Edmonton Fairbanks Fargo/Moorhead Ft. Lauderdale/Hollywood Grand Forks Great Falls The Orient Hong Kong fanila Okinawa Helena Hilo Honolulu Jamestown Las Vegas Lo Angeles/Long Beach/ Ontario Madison Miami Mihvaukee Minneapolis/St. Paul Missoula ew Orleans ew York ewark Orlando Osaka Seoul Philadelphia Pittsburgh Port land Ro hester San Francisco/Oaklandi San Jose Seattle/Tacoma Spokane St. Louis Tampa/St. Petersburg/ learwater Washington, D.C./ Baltimore Winnipeg Taipei Tokyo Europe (Service to these European cities was authorized by the United States government on January 26, 1978. Service to some of th se points will begin in 1979.) Bergen Copenhagen Glasgovv Goteborg Helsinki Oslo Reykjavik Stavanger Stockholm Mainland China (Service to Mainland China by Northwest Airlines was authorized by the United States government on July 20, 1946. The operation of the e routes has been suspended for many years.) Dairen Harbin anking Peking Shenyang Shanghai orthwest Airlines , Inc., incorporated in the tate of Minnesota, is a scheduled air carrier engaged in commercial bansportation of passengers, mail and property and operates under certificates of public convenience and necessity issued by the Civil Aeronautics Board. The present route system covers approximately 33,300 route miles and serves directly cities in 20 states of the 48 contiguous states, as well as Alaska. Hawaii. the Di trict of Columbia, Canada, countries in Asia, including Japan. Korea. Taiwan, Hong Kong and the Philippine and countries in Europe including orway. Swed n. Denmark. Iceland, Finland and Scotland. The Euro- pean countries, ere recently awarded to orthwest Airlines and service will begin to some of the e points this year. Authorizations to serve Shanghai, Peking and other points in continental China remain in effect although presently inoperative. Highlights of 1978 Total Operating Re enues .... ........... . Operating Income ........ . . . ... .. . ...... . et Earnings for the Year .. . . .. ... . .. ... . . Per Common Share . . . .. . . ... ......... . Per Dollar of Revenues ... ............. . tockholders Equity ... . .. ..... . ... . .. .. . Per Common Share ...... .. . .......... . Dividends Paid . . .. . . .. . .. .. . ........... . Operating Expenses: Per Available Ton-Mile ........ . .. . . . . . . Per Revenue Ton-Mile ... ... . .. . ... . . .. . Revenue Traffic: Passengers Carried ...... . ... . .. .. .. .. . . Passenger-Miles Flown .. . . . ...... . ... . . Ton-Miles , Mail, Freight and Express .. . . Common Shares at Year End . .. ......... . . Employees: umber at Year End ......... . ... . . . Total ages and Benefits Paid .. . .. . 1978* $790,161 ,892 67,284 667 61.841 ,389 2.86 7.8 $793,691 090 36.70 16,210 ,260 27.9 65. 7ct 6,574,901 7,018,305 000 377,851 000 21 ,626,284 10,680 $222,187,657 1977 $1 ,046,3 54.772 104,583.565 92 ,718,790 4.29 8.8 $ 747 ,671 ,847 34.60 10,803,648 22.9c/ 54.4 10,354,808 11,100 412 000 566,428 ,000 21 606.686 11,445 $279,194,841 * Operating results were affected by a major strike which extended from April 2 9 through August 15 , 1978. FO R i\E\I\ CITIES A D THREE E\ CO NTRIE ! .. . Pictured on the ran t CO\'er are cene rom our n 11 ci ties- La ego , Orlando, St. Loui a nd Fairbanks-and thr new countrie - 1 1 eden , Denmark and cot/and - that Northwe t Orient irline 1 vi ll b erving in 1979. 3 From the President 52nd Annual Report to the Shareholders Northwest Airlines' net earnings of $61,841,389 in 1978 were the third high- est in the company's 52-year history. While this is a good performance in itself, 1978 would have seen Northwest Airlines break the revenue and earnings records set in 1977 if the 109-day strike by the airline pilots' union had not taken place in mid-year. Recovery from that strike is now essen- tially complete. Service has been re- stored, all personnel have long since been recalled, and traffic in February, 1979 showed gains over February a year ago. Major Expansion Underway The new year sees Northwest Airlines embarked on one of the largest expan- sions of its route structure in the com- pany's history. The Airline Deregulation Act of 1978 provided the mechanism for NW A to ac- quire authority in 18 new non-stop mar- kets, including rights to serve three U.S. cities -St. Louis, Las Vegas and Orlando - that are new to Northwest's route sys- tem. Provisions of the new law also resulted in the award of a key San Francisco - Seat- tle non-stop route to NWA as well as non-stop authority in the Los Angeles - Seattle market. Service will begin on these routes in spring, 1979. Late in 1978, NWA sought authority from the Civil Aeronautics Board to pro- vide non-stop service between Seattle and Fairbanks, Alaska when another air carrier left this market. Within 10 days after CAB approval, Northwest had begun this badly-needed service with a daily DC-10 flight in each direction. Thus, new cities, new routes and new services in old cities will be combined for better traffic growth and for more economical use of manpower, facilities and fleet. Trans Atlantic Service Set On March 31, 1979, Northwest Airlines will inaugurate its passenger service be- tween the U.S. and Scandinavia. All- cargo flights between New York/Boston and Scotland/Denmark began in Feb- ruary, 1979 and are already carrying heavy freight and mail loads. Our 1979 trans Atlantic operation to Scandinavia and Scotland will feature gateways at New York and at Boston, both backed up by the expanding NWA domestic system. 4 All of these new routes will take time to develop, but there is excellent long-term potential for a good return on investment. New Aircraft Ordered The route expansion that Northwest Air- lines has mapped in both domestic and international markets will require addi- tional jet aircraft. To provide for this further route de- velopment, the company has ordered six new Boeing jet aircraft for 1980 delivery. The order includes one 747-Z00B pas- senger aircraft, one 7 4 7F all-cargo freighter and four advanced model 72 7- 200A jets. Together with the eight Boeing aircraft ordered in March, 1978 - six 747-Z00B's and two 727-Z00A's, the new order will give Northwest a fleet of 120 jets by the end of 1980 (compared to the 106 aircraft in our fleet at present). Based on curren\ orders, NWA will - by year-end 1980 - be operating 51 wide-bodied, new generation 747's and DC-10's, which will be the largest such fleet of any U.S. airline. Balance Sheet Strength Northwest Airlines today can lay claim to one of the strongest balance sheets in the U.S. airline industry with net worth of nearly $800 ,000 ,000 and outstanding debt of only $100,000,000. Based on this financial strength and 1978's earnings performance of $61.8 million, Northwest Airlines' board of di- rectors voted on March 5, 1979 to increase the annual dividend rate from 7 5 to 80 cents per share payable March 31, 1979. This is the third consecutive year in which the dividend rate has been in- creased and there have now been 95 con- secutive quarterly dividends paid by Northwest Airlines. New Officers Elected Northwest Airlines has elected four new corporate officers since last year's annual report. Steven G. Rothmeier was elected to the post of vice president for finance. He has had an excellent background in areas re- lating to NWA's budget administration, economic planning and regulatory af- fairs. Thomas E. McGinnity was named as vice president for purchasing and stores, having served as director of aircraft equipment purchasing for a number of years. Thomas J. Koors was elected vice presi- dent for transportation services early in 1979. He had been general sales manager for NWA immediately preceding his new appointment. William A. Kutzke was appointed as vice president in charge of NWA's Washington, D.C. office, joining the com- pany after outstanding service in the U.S. Department of Transportation. Two senior officers of the company - Robert J. Phillips, vice president- finance and treasurer, and Clayton R. Brandt, vice president - purchasing and stores - pass- ed away in 1978. Both men made impor- tant contributions in their careers of more than 30 years each with NWA. Former corporate secretary A. E. Floan, who was one of the very early officers of Northwest Airlines, also passed away in 1978 after devoting more than 40 years of excellent service to the company. New Director Named E. W. Blanch, Jr. was elected to the board of directors at last year's annual meeting. He is president and chief executive officer of E. W. Blanch Company, a re-insurance brokerage firm with world-wide opera- tions. Retiring in 1978 as NWA directors after long and distinguished careers were Had- ley Case and Malcolm S. Mackay. Outlook for 1979 The year ahead is difficult to forecast: The new climate of airline deregulation presents both opportunities and uncer- tainties. The availability, and price, of jet fuel is of continued concern. However, as prominent airline industry analysts have stated in recent reports, Northwest Airlines is better positioned than most of its competitors to capitalize on new opportunities and to meet the new challenges that lie ahead. We will continue to emphasize good cost controls in the new airline environ- ment and we believe that 1979 will be an excellent year for Northwest Airlines. Sincerely, ..,,, }'r ir-"u M. Joseph Lapensky President and Chief Executive Officer March 15, 1979 An Expression of Appreciation to Donald W. Nyrop 0 J- On 31 December 1978, Donald W. Nyrop completed one of the finest perfor- mances of leadership in airline history. That date marked the culmination of 24 years of his devoted services to the safety, security and expansion of the company for the benefit of the traveling public, employees and the shareholders. 0 J- TNhen Mr. Nyrop became CEO of the company in the troublesome days of 1954, he inherited a company which was struggling in every respect; today his legacy to the traveling public, em- ployees and the shareholders is an airline which is the envy of all - financially sound, superbly equipped in both aircraft and facilities, and operated by employees whose work product is one of the most efficient in the industry. J- During his tenure, the route system has been extended to such important markets as Miami, Tampa-St. Peters- burg, Atlanta, New Orleans, Hilo, Hong Kong, Boston, Los Angeles and San Francisco. He also secured important new routes to Scotland and the Scandinavian countries. 4-Mr. Nyrop, upon reaching retirement age last spring, had planned to retire. The board prevailed upon him to continue his leadership because of the labor altercations which prevailed at the time. Upon resumption of full operation, under Mr. Nyrop's direction, the airline recovered its position in the marketplace in a most exem- plary manner -with an earliE:r recovery of traffic, a greater number and earlier return of employees, and a lesser drain on the corporate operating statement so as to protect the shareholders' interest. +Asa result of Mr. Nyrop's careful training and percep- tive vision, the company today has outstanding, experienced management in all depart- ments. At a time of deregulation, increased competition and a new generation of aircraft, Northwest is in the best position operationally and financially to maintain its superior- ity to the benefit of the employees and shareholders, thanks to Donald Nyrop's foresight. a 4-Each member of this board recognizes Donald Nyrop as the most outstanding airline executive in the industry. He has had the respect, unlimited confi- dence and complete support of this board throughout his 24 years of dedicated service to the company. We have prevailed upon him to continue to serve on the board and to be available to successor management as a consultant. Our appreciation for a job well done exceeds the expression stated here. 5 awa Guam - Northwest Orient Airlines Previous Routes Northwest Orient Airlines New Routes (Dotted lines indicate authorized routes not presently served) rv1 Hi hli0 ht N orth"West Orient Launches Service to 4 Ne-w U.S. Cities and 3 Ne"W Countries One of CoDipany's Biggest Expansions Ill r t ie - t. Louis, Orlando, Las and to thr e new countries and Denmark - has been la st Orient in one of the largest rout undertaken by the company. orth ' F bruar 1 1979 schedule r fl ct th ddition of non- top service in 18 new dom tic mark t " hich were acquired under dormant uthorit provi ion of the Airline Dereg- ul tion ct of 1 7 8. total of 45 ne daily flights and 100 hours of daily flying is involved in this domestic schedule expansion. On February 28, 1979, Northwest was also awarded non-stop rights beween Seattle and San Francisco under the dormant authority provisions. Service on this important new route is planned to begin sometime in April, 1979. First Trans Atlantic Service orthwest's first scheduled flight across the Atlan- avik ,, ....... ----~~-- ... ~ -------, ----~------: .... ; -.. ,,,' , --------------- --- San Juan U.S. Virgin Islands . tic took place on February 10, 1979 from Boston's Logan airport to Glasgow's Prestwick airport. The Boeing 747F freighter carried a load of 154,653 pounds of cargo with an estimated value in ship- ments of over $2 million. First scheduled passenger service by WA will begin on March 31 from the U.S. to Denmark and Sweden. By April 29, service to Scotland will be added and orthwest will be operating two flights daily in each direction in the U.S. - northern Europe market. All flights will be operated with WA's 369-passenger Boeing 747 wide-cabin jets. Expansion Benefits Cited Several key objectives were achieved by orthwest in the domestic route expansion reflected in the February 1 schedule: WA gained entry to Orlando and Las Vegas major U.S. vacation spots and two of the prime U.S. destinations for the Japanese tourists which Northwest carries across the Pacific . NWA became an important carrier in the orth- east U.S. -Florida vacation markets, giving added seasonal balance to its operations. WA's recently acquired Chicago- ew Orleans route now has been linked beyond ew Orleans to Tampa and to Miami. WA's Boston station becomes a major hub of operations with 12 daily domestic flights now scheduled at Logan International airport. ith in- auguration of daily trans Atlantic flights to Scot- land and Scandinavia starting April 29, A will also use Boston as one of its principal gate a s for U.S.-Europe service. Continued on page 27 7 N : new unsqueezed way to Europe. MPLS./St PAUL NEW YORK SEATTlf/TACOMA MPLS./ST. PAUL BOSlON COPENHAGEN SlOCKHOLM GLASGOW COPENHAGEN NORTHWEST WON'T PUT THE SQUEEU ONYOUR CLIENTS. Moa;all'llneSare~.-.exn-i 1111nd10highero.nscy .. l#IQ ._.,.,...,......, .-.,w.wrColc:hrtM-on._,WIOe-QCWI adOlcl.-YySNIS Soyo.,CNl"ll:Sgll'MOlt f1!1CS Up107mcn...alhanon~ _.ts.wldtlfarmr111t1-mcnccrntorta1 Ttw)~y01Jtdoet's~$N%S. al"CU'd ~arlTnStS..lesscomtonalamund WMnyouret1oo1ong.--c:oess110 'b..-ca.aCW1getthal ~ 00Ul.10C..0..~Hawaalandh ~IIIIIIJ\mcnPIOPllin1t11sameS?a01 Orwc.g/'vtl.,o,CNnl:Stt11t>e11onh Butal.Nonl'lwe9l.werenot~N roomywoe-c:abln...,.-NomwMl:1 ~ Th~~e-cab;nakUn ~ NORTHWEST ORIENT Sales and Marketing Highlights NWA Advertising Capitalizes on Bigger Jets, Fewer Seats; Miss America Featured in Japan orthwest Airlines' advertising in recent years has consistently featured its outstanding fleet of wide-bodied 747 and DC 10 jets - the largest, relative to NW A's size, of any U.S. airline. In 1978, this advertising emphasis was con- tinued - but with a new campaign theme that emerged from a new development in the airline industry. Faced with growing traffic and too few aircraft, U.S. airlines converted their wide-cabin fleets to higher density seating by adding an extra seat to each economy class row. So, too, did Northwest's major trans Pacific and trans Atlantic competitors. orthwest Airlines was not forced to add seats to its wide-cabin aircraft - retaining, in economy class, eight abreast seating (rather than nine abreast) on its 22 DC lO's and nine abreast seat- ing (rather than 10 abreast) on its 17 7 47's. 8 Out of that marketing advantage emerged a major Northwest Airlines' advertising campaign, launched in October of 1978 and featuring radio, television, newspapers and travel trade press ad- vertising. The theme: 'Northwest won't put the squeeze on you'. Trans Atlantic Services Major travel agent promotions were held in Denmark, Norway and Sweden to introduce the new U.S ./Scandinavia services that NWA will begin on March 31, 1979. In the United States, Northwest's annual Travel Fairs highlighted these new routes as NWA's new tour operators for Scotland and Scandinavia pre- sented information to thousands of travel agents across the country. ,_.,,,.,'Jl--(J),f-;r-t- .+at.:t.,q)~ ,,. ~i ., :1~ '1)11;,.. ,i,,;;,,-~" : O> ll~c!rn1. T J UO>kllt:IH-,1~1,,:11r">UJJ. ,: ( 6 l.t,,O> ,:'T. 1-:0.')~:o. -r..;:11. ~.lS~-:<. a.,"x,na. .... :.- 7, ~~ :1 . a ~T -<",.,.,.._ t L "C*' "'"' 1,/f()-;>-c~h h , fh\TJUO> L~t\--,u\ . ,_ , ,,,..:.T'lU>l., lliJU'll:,. ,:,., ,,.T-4> <1:ll!~ll TJ U~ l!Pl.ll~b!N.'\TJf ~ e uw -At-,"*--c" 1'. :u--e1- li- ~ ~ a n- , -iu: .t, a 11 0.,. > 1 t:l\.t1'. *f'""&l- f'-.Jflf'"" (= A- ) t'"JIILt-t. "u.,..., )h C.-..J11f-c"f}fll *t-a hl t1'. es4.,.. --- ------------- <811 C.. L\7.l , a,-...,, .. Lt\~ l)Cl,. .I -.J.-,J:ll 1U ftltt9 :.'T'1'. I.\ (:,c._ .,t;,tl.1:1--t.(.., "ifC . .,\. 8 1.\ ~NORTHWEST ORIENT D Iii 1111 kli..~u 1n, ,.X/11-.n llLt _, c amo-sru / , ....,l,-OF~ ~ , t l All.tt"t. .., ....... -.,. ,,..&. .... -,/ ::~~ =;:~...,,~~-< ..... , ... u --:.:t! 'Miss America' Featured The Honolulu and California markets are of spe- cial importance to WA because of their great popularity with Japanese tourists. In a special promotional campaign, orthwest collaborated with a major Japanese tour operator in a campaign -featuring Dorothy Benham, Miss America of 1977, as the spokesperson inviting the Japanese public to 'come and see my America'. The national campaign utilized both Japanese television and magazines and, to reinforce the promotion personal appearances by Miss America at the Japanese tour operators trade show. Convention Sales Grow orth est's Con ention Sales division con- tinued to lead the airline industr in convention and corporate meeting services b introducing its ne Delegate Discount Dollar program in October of 1978. This inno ative and exclusive marketing con- cept is a direct expansion of Conv ntion Central ad ertising th m to h lp m ting plann r and delegate get mor for their con ention dollar. 77 !,. 7J.1J bllil\ If( < ""'~l 7JY"b>. ~, 07JY -/JIQ f'a!.-~ ; 1.-((. TJ Y"IJOll/.f ;>,c!!{:,f""'I:~ OX:o"rr'-r. 7 Y -,{ ..... l;}<:1!L"o,,_,...,.,L(.: illllf~8Hlll 20 .000l'IO",. 1:27~-;\,. 7J YtJ'rl1it 1,,ll ",l',1., "1,-(J)Vlt;Z.t l:..1-,.9.x.,.l-"(~Y.:..?t -,,7 -4> <~ ~l7J Y"b > W QirN6)(t:~ ..._usizi. , . 01u...,, ,~,. ~tfl ' U. M c..~acc _,. wt -.a, t\l ,._,,..: 1-v>.z.,~ .... HHr .. :,.;t,'-1' Q.\ ~ -t:"' ..-t:Q...,."1'! f;::.-. (r ,>,1. :,1.-._ \' -. Featured in this unique program is a checkbook containing very substantial savings offered on 32 executive gift items such as cameras, video cas- sette recorders and color TV sets, watches and pocket recorders. In addition, a car rental firm has provided a convention discount on car rentals. ew convention air freight rates for orth est's U.S. cities were also developed in 1978- provid- ing another inducement for meeting planners to use A services. MEETI'IG IN SEATTLE TACO..,_A OR POATLA."4O? Northwest serves your delegates like 1 no other airline can. exdllllvl ll'mll extra !bat 1 ...... Financial Review and Management Analysis for 1978 Revenue Total operating re enues for 1978 amounted to $790,161.892 compared with $1 046,354,772 in 1977 and $963 808 065 in 1976. This reduction in total operating revenue resulted from a major cur- tailment in operations due to the 109 day pilot strike against the Company in 1978. Consequently, comparisons of individual revenue categories for the current and prior ears are not meaningful. Operating revenues in 1978 included mutual aid pa ments of $104 863 790. In 1978 the Civil Aeronautics Board approved domestic 48-state pas enger fare increases of 3% in Ma and 2.5% in December. The CAB also ap- proved a 3% fare increase in Mainland-Hawaii markets in May with an additional 3% increase in eptember. orthwest's tern passenger-mile ield in- creased to 7.94rt in 1978 or a 2.3% increase in the 1977 ield of 7.7 6rt. Thi increase was attributable to limited u age of di count fares in 19 78 as a result of the trike curtailed operations during the peak summer acation months. March 1978 brought the introduction of temwide Super Saver fares at 30-40% discounts from coach fare levels. Despite fare ad ances, increasing usage of the Super Saver and other discount fares is eroding passenger-mile ields. The Ci il Aeronautics Board also approved freight rate increases of 10% for all domestic cargo in a of 1978 following a 7% increase in domes- tic cargo container rate that occurred in March. Total re enues from charter and other transpor- tation v ere 10,996,783 in 1978. This revenue in- cluded 8.028,741 from commercial charters and other income, and $2 ,968,042 from military char- ter . Expenses Total operating e penses for 1978 amounted to 722 ,877 ,225 , dm, n significantl from oper- ating e pen e of 941 ,771 207 in 1977 and $860.860.038 in 19 76 as a result of the strike. Depreciation and amortization e penses 10 SOURCE AND DISTRIBUTION OF REVENUES Percent of Total - Dollars in Millions SOURCE Freight and Express 11 .0% $87.1 Mutual Aid 13.3% $104.9 2.4% DISTRIBUTION Commissions 6.6% $52.4 Materials and Services Landing Fees and Rentals 5.0% $39.7 Income Taxes 6.0% $4 7.2 Earnings 7.8% $61 .8 Employees Wages and Benefits 28.1 % $222.2 13.0% $102.3 Fuel and Oil 20.2% $159.6 totaled $104,969,627 in 1978 compared with $103,152,530 in 1977 and $102,713,531 in 1976. This increase in depreciation and amortization ex- pense reflected the addition of new, more modern aircraft which was partially offset by the disposal of older, less productive aircraft. Operating expenses per available ton-mile in- creased to 27.86q; in 1978 from 22.92ct in 1977 and 21.61ct in 1976. This unusually large increase in unit production expense is in large part due to the curtailment of operations resulting from the strike. Inflation trends continue to increase costs in the airline industry particularly in wages rentals, fuel , services and cost of materials and supplies. Earnings and Dividends et earnings for 1978 amounted to $61,841 ,389 or $2.86 per average share of common stock outstand- ing compared with $92,718,790 or $4.29 per share in 1977. Total interest on long-term debt net of capitalized interest declined from $6,517,695 in 1977 to $3,376,357 in 1978. Gain on disposal of property declined to $34,290,447 from $51 ,053,719 a year ago. The Company increased its cash dividend to $.75 per shar(tin 1978 and paid out a dividend for the twenty-fourth consecutive year. Dividends paid to shareholders in 1978 totaled $16,210,260. Sales Price of Dividends Common Shares Per Share Quarter 1977 1978 1977 1978 1st High 30% 26 $.1250 $.1875 Low 22 21 2nd High 283/a 321/a 1250 1875 Low 22 23 3rd High 263 /a 371/a 1250 1875 Low 20 26 4th High 24 32 1250 1875 Low 193/a 223/a OPERATING REVENUES AND EXPENSES Millions of Dollars REVENUES 1111 EXPENSES 1111 1000 900 800 700 600 500 400 300 200 100 0 1974 1975 1976 1977 1978 11 ACTUAL AND BREAK-EVEN PASSENGER LOAD FACTOR ACTUAL- Percent BREAK-EVEN - 50 49 48 47 46 45 44 43 / 42 - 41 40 1974 1975 1976 1977 1978 STOCKHOLDERS' EQUITY VS. LONG-TERM DEBT Millions of Dollars EQUITY 1111 DEBT IIII 800 700 600 500 400 300 200 100 0 1974 1975 1976 1977 1978 12 Financial Review for 1978 ( continued from page 11 ) Taxes on Earnings In 1978 income taxes on earnings amounted to $47,194,200 compared with $60,425,200 in 1977. Investment tax credit earned declined from $14,850,900 in 1977 to $6,319,800 in 1978. The Company continues to use accelerated deprecia- tion methods for income tax purposes. Cash Flow Funds provided from all sources totaled $208,426,244 in 1978, consisting of net earnings, depreciation and amortization, deferred income taxes and proceeds from sale of property. Applica- tion of funds in 1978 totaled $166,615,614 and consisted of flight equipment and other property additions, advance deposits on aircraft and cash dividends. Traffic and Services Traffic results showed reductions in all areas dur- ing 19 7 8 reflecting the effect of the strike. Indi- vidual traffic category comparisons, therefore, are not meaningful. Passenger and cargo traffic recovered at an en- couraging rate during the fourth quarter of 1978 and continues to show strength through February of 1979. Northwest embarked on a significant ex- pansion program in January and February of 1979 which aided in the strike recovery. Financial Condition The financial condition of Northwest continues to be one of the healthiest in the U.S. airline industry. Long-term debt totals $100,000,000 with repay- ment beginning in April 1981 and terminating in January 1983. Northwest's debt to equity ratio on December 31, 1978 was 12.6%. This favorable debt equity ratio is one of the lowest, if not the lowest, in the U.S. airline industry. Stockholders equity increased to $793,691 ,090 in 1978 from $747,671,847 at the end of 1977. The book value per average common share increased to $36.70 from $34.60 a year ago. At year end, the Company had on order an addi- tional six B-747 and two B-727 passenger jet air- craft and spare engines for deli very in 19 79 and 1980. In addition the Company announced in Feb- ruary, 1979 the purchase of four B-727-200, one B-747 passenger aircraft and one B-747F all-cargo jet for 1980 delivery. It is planned that internally generated funds and the existing financial ar- rangements will be used to purchase all aircraft on order. Statement of Earnings NORTHWEST AIRLINES, INC. Operating Revenues Passenger ......................... ~ ................. .. . Cargo ................................................. . Mail ................. . .................. . .... . ........ . Charter and other transportation ......... . .............. . Mutual Aid ................ . . . ..................... . .. . Non transport .......... .. .................. ... ......... . Operating Expenses Flying operations .. ... ................................. . Maintenance .......................................... . Passenger service ...................................... . Aircraft and traffic servicing . . .. ... . . ................... . Reservations, sales and advertising .......... ....... . ... . . Administrative and general ... .... . . .......... . ......... . Depreciation and amortization .......................... . Other Income (Expenses) Interest on long-term debt, net of capitalized interest 6f $4 ,678,643 (1977 - $2 ,3 62 ,672) - Note A Gain on sale of flight equipment ........................ . Other .. . .... . . . ....................... . ... . ........... . Earnings Before Income Taxes ........................... . Income taxes - Note D ....................... .. . .... .... . Net Earnings ....... . ..................... . .. . . ... ....... . Average shares of Common Stock outstanding during the year ...... .. ........... .. .............. . .... . Earnings per share of Common Stock .................... . . . ee notes to financial statements Year Ended December 31 1978* $557,400,881 87,076,726 18,944,410 10,996,783 104,863,790 10,879,302 790,161,892 241,740,611 72,233,045 60,748,751 117,409,858 100,614,747 25,160,586 104,969,627 722,877 ,225 67,284,667 3,376,357) 34,290,447 10,836,832 41 ,7 50,922 109,035,5 89 47,194,2 00 $ 61,841,389 21,618,144 $2.86 1977 $ 861,053,058 121,185,084 29,893,962 25,870,610 38,416 8,313,642 1,046,354,772 351,480,978 105,146,793 86,526,853 148,871,186 122,031,763 24,561,104 103,152,530 941 ,771,207 104,583,5 65 6,517,695) 51,053 ,719 4,024,401 48,5 60,425 153,143,990 60,425,200 $ 92,718,790 21,606,544 $4.29 * Operating results were affected by a major strike which extended from April 29 through August 15, 1978. 1 Statements of Financial Position NORTHWEST AIRLINES, INC. ASSETS Current Assets Cash and short-term investments ............... . ........ . Accounts receivable, less allowance of $1,400,000 (1977 - $1 ,300,000) ................................. . Flight equipment spare parts, less allowance for depreciation of $17,340,236 (1977 - $15,728,241) ............... . ................ . Maintenance and operating supplies ....... . ............ . Prepaid expenses ...................................... . Total Current Assets Other Assets ............ . ............................... . Property and Equipment Flight equipment ........... . .......................... . Less allowance for depreciation ......................... . Advance payments on new flight equipment - Note E .... Other property and equipment ...... . ................... . Less allowance for depreciation ......................... . 14 December 31 $ 1978 184,028,308 79,782,195 28,979,870 7,660,768 6,057,410 306,508,551 19,566,429 1,525,442,014 602,827,242 922,614,772 98,106,465 1,020,721 ,237 129,587,886 83,519,022 46,068,864 1,066,790,101 $1 ,392,865,081 $ 1977 129,717,280 83,413,519 29,731,581 7,714,326 5,707,249 256,283,955 16,064,461 1,510,447,264 547,490,198 962,957,066 13,145,496 976,102,562 127,595,835 76,595,835 51,000,000 1,027,102,562 $1,299,450,978 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses . . .. . .. ... . . . .. .. . Employee compensation .... .. . ..... . . . . ... . . . ...... . .. . Unredeemed ticket liability ... . .... . . .. ...... . .... . ..... . Income taxes . . . .. . .. . .. . . ..... . . .. . ............ . ... ... . Current maturities of long-term debt . . .. . . ... . . . . . ... .. . . Total Current Liabilities Long-Term Debt - Note B .. . . .. . .. . . . ........... . .. .... . . Deferred Credits and Other Liabilities Income taxes - Note D .... .. .. . . . . . ....... . ........... . Other . ........................................... . ... . . Stockholders' Equity - Note C Common Stock $1.25 par value, authorized 40,000,000 shares;)ssued and outstanding 21,626,284 shares (1977 - 21, 606,686 shares) ........ . . . . . ... . ....... .. . . Capital surplus ......................... .. .. . . .. ....... . Retained earnings ...... . .. . ............ . ...... . .... .. . . Commitments and Contingencies - ates E and F S notes to financial tatements December 31 1978 $ 122,693,609 27,909,236 20,321,703 15,923,167 -0- 186,847,715 100,000,000 290,660,200 21,666,076 312 326,276 27,032,855 124,551,536 642 106 699 793 ,691 .090 1 ,3 92,865,081 1977 $ 122,060,666 2 7,029,098 22,041 ,6 70 3,302,3 15 4,000,000 1 78,4 33,749 100,000,000 261 ,349,600 11,995,782 273,345,382 27,008,357 124,187,920 596 475 ,570 747,671,847 $1 ,299.450,978 15 Statements of Changes in Financial Position NORTHWEST AIRLINES, INC. Year Ended December 31 Funds Provided et earnings ......... ...... ........................... . Items not affecting working capital: Depreciation and amortization ........................ . Increase in deferred income taxes ... . ................. . Total From Operations Proceeds from sale of flight equipment less gain included in earnings ..... . .................. . Other ................ ....... ........................ .. . Total Provided Funds Used Flight equipment and other property additions ..... .. . . .. . Advance deposits on aircraft .......................... . . Cash dividends ........................................ . Reduction of long-term debt ............................ . Total Used Increase In Working Capital ............................. . Changes in working capital consist of Increase (decrease) in current assets: Cash and short-term investments ................. . .. .. . Receivables .................. ........... ..... ...... . . Inventories ............................ ... .. ....... .. . Prepaid expenses ............... .. .... ........ .... .. . . Increase (decrease) in current liabilities: Accounts payable and accrued expenses . ..... ........ . . Other accrued liabilities .............................. . Unredeemed ticket liability ........................... . Current maturities of long-term debt .................. . Increase in working capital .............................. . See notes to financial statements 16 1978 $ 61,841 ,389 104,969,627 29,310,600 196,121,616 6,795,353 5,509,275 208,426,244 52,298,889 98,106,465 16,210,260 -0- 166,615 ,614 $ 41 ,810,630 $ 54,311 ,028 ( 3,631 ,324) ( 805,269) 350,161 50,224,596 632,943 13,500,990 1,719,967) 4,000,000) 8,413 ,966 $ 41 ,810,630 1977 $ 92,718,790 103,152,530 59,558,000 255,429,320 15,780,836 2,154,110 273,364,266 118,449,788 13,145,496 10,803,648 22,000,000 164,398,932 $108,965,334 $115 ,173,101 7,896,320 6,747,644 2,886,766 132,703,831 21,575,559 2,991,646) 4,154,584 1,000,000 23,738,497 $108,965,334 Statements of Stockholders' Equity NORTHWEST AIRLINES, INC. Common Stock Capital Retained Shares Amount Surplus Earnings Balance December 31, 1976 . . ... .. ..... 21 ,606,036 $27,007,545 $124,176,019 $514,560,428 Exercise of stock options . . . . .. .. .. .. . 650 812 11,901 et earnings for 19 7 7 ... ... . .. . . .. ... 92,718,790 Cash dividends - $.50 a sh are . .. .. . . 10,803,648) Balance December 31, 1977 . . . . .. . .... . 21,606,686 27,008,357 124,187,920 596,475,570 Exercise of stock options .. .. . . . . .. . .. 19,598 24,498 363,616 Net earnings for 1978 . . .. . ... .. . . . ... 61 ,841,389 Cash dividends - $. 75 a share . .. ... . ( 16,210,260) Balance December 31 , 1978 ..... .. . .. . . 21,626,284 $27,032,855 $124,551,536 $642 ,106,699 See notes to fi nancial statements APPLICATION OF INVESTMENT TAX CREDIT NORTHWEST AIRLINES FLEET Available* Appliedt and Reflected on Period in Earnings Tax Returns 1962-19 77 . .. . . ... $139,608,600 $123,504,800 1978 . . . . . . . . . . . . . 6,319,800 22,423,600 Total ....... . . . ... $145,928,400 $145,928,400 Applied on Returns . . . . . . . . . 145,928,400 .__J To be Applied ... . $ -0- *Th Company use the flow-through method of accounting for investment credits and records the er dits as a reduction of income tax expense in the ear arned . tln v tm nt credits ar applied on ta returns as allm, d b in ome ta r gulation . Cr dit not appli d currentl y ar off t again t def err d ta e . Year End On Order Aircraft Type 1977 1978 B727 & B727C-100 ... . 25 19 B727-200 . ... . . .. . . .. 40 44 6 B707-320B & 320C .... 2 0 DC10-40 .... . ...... . . 22 22 B747 . .. . .. ... . . . . ... 17 17 7 B747F .... . . . .. . . .... 4 4 1 Total .. . . . . ... . . ... . . 110 106 14 ee ot E to fi nancia l tat ments 17 18 Notes to Financial Statements NORTHWEST AIRLINES, INC. December 31, 1978 Note A - Accounting Policies A summary of significant accounting policies of the Company is set forth below: Basis of Presentation The financial statements include the accounts of the Company and its wholly-owned sub- sidiaries after elimination of inter-company accounts and transactions. Short-Term Investments Short-term investments are stated at cost which approximates market and amounted to $171,690,041 and $122,463,076 at December 31, 1978 and 1977, respectively. Flight Equipment and Property Provision for depreciation is computed by the straight line method over the estimated useful lives of the assets. Useful lives are estimated at fifteen years with 10% residual values for 747 and DC-10 aircraft and ten years with 15% residual values for all other aircraft. Useful lives of buildings vary from 5-30 years and other equipment from 4-10 years. Depreciation of flight equipment spare parts, rotables and assemblies is provided by the straight line method at rates which depreciate cost, less residual value, over the estimated useful lives of the related aircraft. The Company charges expenditures for maintenance and repairs to operating expense. Expendi- tures which materially increase values or extend useful lives are capitalized. Book value of assets sold or otherwise disposed of is eliminated from the accounts in the year of disposal and the resulting gain or loss is included in operations. Interest on long-term debt relating to deposits advanced to manufacturers prior to the deli very of new aircraft is capitalized and amortized over the useful life of the aircraft. If such interest was not capitalized, net earnings would have been decreased by $1 ,145,000 ($.05 a share) in 1978 and increased by $15,000 in 1977. Pension Plans The Company has several pension plans covering substantially all of its employees. The policy is to fund pension costs accrued including the amortization of prior service costs over a period of thirty years. Income Taxes Income taxes are provided at statutory rates to earnings before income taxes regardless of when such taxes are paid. Deferred income taxes arise principally from timing differences between financial and tax methods of accounting for depreciation and capitalized interest. Notes to Financial Statements Note A - Accounting Policies (Continued) The Company uses the flow-through method of accounting for investment credits. Investment credits not applied on tax returns are offset against deferred income taxes to the extent they are applicable to deferred taxes becoming payable in the investment credit carryover periods. Operating Revenues Passenger and cargo revenues are recognized when the transportation is provided. Earnings Per Share Earnings per share are based on the average number of shares of Common Stock outstanding. No material dilution would result upon exercise of outstanding stock options. Note B - Long-Term Debt Term Credit with banks is payable $12.5 million quarterly be- ginning April 1, 1981. Interest paid is based on a formula related to prime commercial loan rates; however, total in- terest paid shall not exceed 73/a% per annum over the term of December 31 1978 1977 the loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000,000 $100,000,000 Note purchase agreements with twelve insurance companies matured on October 1, 1978. Interest was at 6% per annum -0- 100,000,000 Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0- $100,000,000 4,000,000 104,000,000 4 ,000,000 $100,000,000 The Company was in compliance with the covenants of the debt agreements at the end of both years. At December 31 , 1978, approximately $195,000,000 ofretained earnings was unrestricted under the terms of the agreement. Long-term debt maturities are as follows: 1981 - $37,500,000; 1982-$50,000,000; and 1983 - $12,500,000. Note C - Stockholders' Equity Cumulative Preferred tock, $ 25 par value: Authorized ..... ... ......................... . . .... . . ... . Issued December 31 .. .. ... . .. ... . .. . ............. . ..... . 1978 1,000,000 one Shares 1977 1,000,000 one H) 20 Notes to Financial Statements Note C - Stockholders' Equity (Continued) Common Stock options at prices which were not less than 100% of market at date of grant are as follows: Outstanding December 31, 1976 . ......... ..... ...... . . Exercised ......................................... . Lapsed ............ . ............ .... . .. .... .. ...... . Outstanding December 31, 1977 ...................... . Granted ........................................... . Exercised .. .. ...... . .............................. . Lapsed ............................................ . Outstanding December 31, 1978 ............ ... ...... . . Options exercisable: At December 31, 1977 .............................. . At December 31, 1978 ... .... ........ . .... ... ....... . Shares Price Per Share 79,100 $19.1 3/20.06 ( 650) 19.13/20.06 ( 1,150) 19.13/20.06 77,300 19.13/2 0.06 75,680 22. 7 5/24.00 (19,598) 19.13/2 0.06 (28,472) 19.13/24.00 104,910 19.13/24.00 77,300 $19.13/2 0.06 33,250 19.13 The stock option plan terminated in 1978; however, options granted prior to the termination are not affected. Shares available for future stock option and other plans were 283,078 and 330,286 at December 31, 1978 and 1977, respectively. Note D - Taxes on Earnings The provision for taxes on earnings consists of the following: Current: Provision for the year .................................. . Investment credit applied: Earned in current year .. . ...... . ..................... . Earned in prior years . .... . .......................... . Deferred: Provision for the year Investment credit: Earned in current year ............................... . Transferred to current ( earned in prior years, applied on tax return in current year) ............... . Total income tax expense ................................ . The deferred expense consists of: Net current items ...................................... . Net noncurrent items .................................. . Year ended December 31 1978 1977 $39,918,700 6,319,800) 16,103,800) 17,495,100 13,595,300 -0- 16,103,800 29,699,100 $47,1 94,200 $ 388,500 29,310,600 $29,699,100 $55,384,800 -0- ( 52,274,700) 3,110,100 19,891,300 ( 14,850,900) 52,274,700 57,315,100 $60,425,200 ( $ 2,242,900) 59,558,000 $57,315,100 Notes to Financial Statements Note D - Taxes on Earnings (Continued) The Company's effective tax rate was 43.3% for 1978 and 39.5% for 1977. The rates are lower than the statutory federal rate of 48% primarily because of investment tax credits earned. Note E - Commitments The Company does not lease any aircraft or related flight equipment. At December 31, 1978 the Company has contracted to purchase six B 747-200B and two B 727-200 jet aircraft and spare engines for delivery in 1979 and 1980 which will require expenditures of $179,372,000 in 1979 and $3 0,422,000 in 1980. Of these amounts, deposits of $98,106,465 have been made with the manufacturers. The Company has agreed to purchase four B 727-200, one B 747-200B and one B 747-200F jet aircraft for delivery in 1980; however, no firm prices have been contracted. Leased property consists of space in air terminals, land and buildings at airports, and ticket, sales and reservation offices under noncancelable operating leases which expire in various years through 2008. Portions of these facilities are subleased under noncancelable operating leases expiring in various years through 19 88. Future minimum rental commitments at December 31, 1978 for noncancelable operating leases with initial or remaining terms of one year or more, of which $186,053,000 is for air terminal and airport facilities , are as follows: 1979 1980 1981 1982 1983 . ........ . . . . . ... . .. . ..... . ... . . . Thereafter ........................... . $ 14,057,000 13,297,000 12,904,000 12,131,000 11,356,000 136,014,000 199,759,000 Sublease rental income . . ... .. ........ . ( 7,187,000) Rental expense for all operating leases consisted of: inimum .... . .... . ...................... . ............ . Sublease rental income ................................. . $192,5 72,000 1978 S 16,568,000 ( 724,000) $15,844,000 1977 $14,984,000 ( 610,000) $14,374,000 21 22 Notes to Financial Statements Note F - Contingencies The Company is a defendant in a class action brought in 1970 in federal court in Washington, D.C. by certain of its female cabin attendants alleging violations of certain provisions of the Equal Pay Act of 1963 and the Civil Rights Act of 1964. The trial judge held that provisions of both statutes had been violated by the Company. The Company appealed that decision. The Court of Appeals for the District of Columbia affirmed the trial judge on all substantive issues and remanded the case for further consideration including (1) a redetermination as to whether plaintiffs seeking recovery under the Equal Pay Act may be entitled to liquidated damages which could effectively double the Company's liability to certain of the plaintiffs and (2) a determina- tion of the appropriate statute of limitations applicable to the alleged Civil Rights Act violations which could also increase the Company's liability. After a denial of a motion for rehearing by the Court of Appeals, the Company petitioned the Supreme Court of the United States to review the decision of the Court of Appeals. That petition was denied on February 21, 1978. The case has been remanded to the trial court to decide the unresolved issues and to identify specific plaintiffs and the amounts to which they are entitled. The Company estimates that its ultimate liability may range from approximately $1 million to approximately $50 million. However, either party has the right to seek appellate review of the case again following the trial court's further decision, so that no specific amount of ultimate liability may be estimated as probable. The Company has brought action against the unions that represented the plaintiffs in the class action described above. The Company seeks indemnification and contribution from the unions for any liability for which the Company may ultimately be held responsible. The District Court held that the unions may be liable for contribution under the Civil Rights Act but not under the Equal Pay Act. Both parties have appealed the decision to the Court of Appeals. The outcome of the lawsuit cannot be predicted. The Company is a defendant, along with other airlines, in a number of legal actions alleging noise and air pollution resulting from aircraft operations around certain airports. Company management does not believe that these actions will result in material liability to the Company. Note G - Pension Plans The Company's pension expense was $27,941,000 in 1978 and $26,359,000 in 1977. Unfunded prior service costs at January 1, 1978 were estimated by consulting actuaries to be $29,619,000. The market value of the assets in all pension funds was $187,368,000; $14,889,000 less than the vested benefits estimated by the consulting actuaries. Notes to Financial Statements Note H - Export Sales orthwest Airlines, Inc. is a scheduled air carrier engaged in commercial transportation of passengers mail and cargo, and operates under certificates of public convenience and necessity issued by the Civil Aeronautics Board. Operating revenues include export sales of $132,081 ,000, principally associated with countries in Asia. Revenue from sales consummated in foreign countries is considered to be export sales. Note I - Replacement Cost of Property and Equipment (Unaudited) As required by the Securities and Exchange Commission, the Company's annual report on Form 10-K contains specific information with respect to replacement cost of property and equipment at December 31 1978 and the approximate effect which replacement cost would have had on the computation of depreciation expense for the year then ended. The Company's fleet modernization program substantially mitigates the impact of replacement cost assumptions on its historical cost financial statements. Moreover, since the Company is regulated and entitled to a fair rate of return on its investment, any increased cost would justify higher fares and rates to its customers. Note J - Quarterly Results of Operations (Unaudited) The following is a tabulation of the unaudited quarterly results of operations for the two years ended December 31 , 1978: Earnings Operating Operating et Per Share of Revenues Expenses Earnings Common Stock 1978 First quarter $ 275 ,616,289 $250,983 ,242 $16 563,127 $ .77 Second quarter ... .. 160 309,383 140,144 524 20 ,545 ,906 .95 Third quarter .. . .. . 115 804 036 111,247,056 11 ,551 ,930 .53 Fourth quarter 238,432 ,184 220,502 403 13 ,180426 .61 $ 790,161 ,892 $722 ,877,225 $61 841 ,389 $2.86 1977 First quarter $ 238,555 ,071 $227 ,892,025 $12 160.183 $ .56 Second quarter ... .. 251 588,606 224 ,975 ,908 27 238 ,413 1.26 Third quarter ... . . . 281 ,319,813 243 ,295.659 29 ,401 907 1.3 6 Fourth quarter ..... 274 ,891 282 245.607 ,615 23,918 ,287 1.1 1 $1,046,354,772 $941 ,771 .207 $92 .718,790 $4.29 10 Year Summary* ORTH\'\ E T IRLI E , I C. (Dollar in thoust111ds l cept per shar figur 1978t 1977 Op ratin R v nu ' I a n r ......................... . . . . ' . ... ... .. . . 557,401 $ 861 ,053 argo ............... . ..... 87,077 121 ,185 ~lail .................................. ' ... .. . ... '. 18,944 29 ,894 :hart r n th r tran portation ..... .. . ' ..... . .... . 10,997 25 ,871 ontrnn port ... ' ................ . .. . .... ...... .. . . 115,743 8 ,352 Tota l Operating Revenues $ 790,162 $ 1 ,046 ,355 ratin E 'pr iati amortization .... .. . .. .. .. . . . ...... $ 104,970 $ 103,152 h ' r ..... ..................... . ..... ' ..... ... . . . 617,907 838 ,619 Total Operating Expenses $ 722 ,877 $ 941 ,771 ..................... . ..... . .. . ... .. $ 67 285 $ 104,584 n Ion -l rm debt ........ . ...... ..... (3 ,377) (6 ,518) (d du lion ) - net .......... . . ..... 45 ,127 55 ,078 laxe ........ ......... . .. . .. .......... $ 109,035 $ 153,144 . . . ............ . . . ....... .. . ..... . ..... 47,194 60 ,425 e l arnin ............ ....................... . .. .. $ 61 ,841 $ 92, 719 I. rning .... p 'r cl \ ' 'rag har I ) 2.86 $ 4.29 .............. . . ' .. .. .. . . . . . ( .1 h d i \ 1 den cl ............. . ......... . ... . ... ... . . . . 16,210 10,804 Dt\ 1dencL p 'r hare ... ..... . ......... . . . . .. . .. . ...... .75 .50 toc.kholdPrs Pqui lv ........... . ..... . ........ .. .... .. 793,691 74 7,672 umh r of h.1rPs out tan din o al nd of ear .. . ... .. ... 21 ,626,284 21,606 ,686 Boo \ .ii UP p 'f ' he re al nd f y ar ! '. 1 $ 36.70 $ 34.60 .\ s .t and T rm D bt F)iPht Jrop t C 0 , l .............. . .... . ... . . .. .. ... 1,525,442 $ 1,510,447 Ili t n l book va lu e ................. .... . 922 ,615 962 ,957 To ....................... . . . . .... . .... . .... 1,392,865 1 ,299 ,451 Lo bt .................. ..... . ..... . .. ..... . 100,000 100,000 nl p n-mi l ........ . ......... . .. . . . . . . ... 27.9 22.9q; p -mi l ............... ........... . .... 65.7 54 .4 p rating r \' nu ..................... . 1.5% 90.0% d s (000) ........ .................. 66,420 111,271 (000) ..... . ........ ............ 14,302,037 22 ,968 ,489 1 mi l (O 0) ........... . ..... .. . . . 7,018 ,305 11,100,412 C r ... . ' ............. .......... . . 49.1 % 48.3% ....... n C d ................... ..... . ,5 74 ,901 10 ,354 ,808 d C. p t ii s (000) ...... ...... .. ' . . 302 ,153 458 ,143 .nu t ii 00) ....................... 1,0 79,681 1 ,676 ,4 70 , tc:1 ti stic - lot I p ra li n k,venu! plc1n'-mil (000) ................. ...... . .. 7,4 71 114,643 \ \c1ilnblP. ton-mil (000) .................. ......... 2, 4,632 4 ,109 ,11 0 H port 0 , 1'1i2 ,111d l'liH 111d tlw striJ...P nco,er, prriod of 1971 . Io hrou~h 12 for, lant1Rement' Di cu 10n and nal is of the ummary of Operations. ill( r 1 1 in outst,rnding shares r suiting from tock issue in 19 70 and 197 2. 2 1976 $ 786 ,414 119,882 25 ,137 25 ,955 6 ,420 $ 963 ,808 $ 102 ,713 758 ,147 $ 860,860 $ 102 ,948 (14 ,035) 9,351 $ 98 ,264 46 ,527 $ 51,737 $ 2.39 9 ,707 .45 665 ,744 21 ,606 ,036 $ 30.81 $ 1,448 ,402 924 ,537 1,151,562 122 ,000 21 .6 50.5 89.3% 108 ,474 22,228 ,259 10,758 ,683 48 .4% 9 ,818 ,343 467 ,3 99 1,647,317 11 2 ,279 3 ,98 2,743 1975 1974 1973 1972t 1971t 1970t 1969 $ 659 ,849 $ 628 ,488 $ 476 ,794 $ 277 ,891 $ 331,966 $ 260 ,335 $ :350 ,504 88 ,308 76 ,157 55,280 34 ,694 39,641 30 ,053 51,006 23 ,280 22 ,911 18,415 13 ,3 09 19 ,443 18,958 29 ,38 29 ,019 27 ,3 22 28 ,517 20 ,009 31,588 20 ,800 35 ,090 107 4 ,113 5,342 46 ,598 2,881 48 ,894 1,952 $ 800 ,563 $ 758 ,991 $ 584 ,348 $ 392,501 $ 425,5 19 $ 379,040 $ 467,938 $ 98 ,880 $ 96 ,213 $ 87 ,642 $ 81 ,054 $ 77, 24 5 $ 69,173 $ 60 ,833 651 ,983 584 ,993 445 ,401 296 ,348 330 ,108 258 ,784 324 , 79 $ 750 ,863 $ 681 ,206 $ 533 ,043 $ 377 ,402 $ 407 .353 $ 327,957 $ 385 ,812 $ 49 ,700 $ 77 ,785 $ 51 ,305 $ 15,099 $ 18,166 $ 51 ,08 3 $ 82,126 (16 ,120) (19 ,554) (14 ,758) (8 ,356) (13,051) (6 ,296) (2,334) 13 ,509 40 ,148 19,133 10,510 6 ,68 5 (227) 1,181 $ 47 ,089 $ 98 ,3 79 $ 55,680 $ 17 ,2 53 $ 11,800 $ 44 ,560 $ 80 ,973 3 ,693 33 ,631 3,830 (429) (9 ,561) 121 29,5 07 $ 43 ,396 $ 64 ,748 $ 51 ,850 $ 17,682 $ 21,361 $ 44 ,439 $ 51,466 $ 2.01 $ 3.00 $ 2.40 $ .83 $ 1.01 $ 2.11 $ 2.55 9 ,710 9,722 9 ,722 9,620 9 ,518 9,465 9 ,117 .45 .45 .45 .45 .45 .45 .45 623 ,677 589 ,991 534 ,965 492 ,837 477,054 465 ,210 426 ,797 21 ,604 ,136 21 ,604 ,136 21 ,604 ,136 21 ,604 ,136 21,149,756 21,149 ,756 20 ,914 ,272 $ 28.87 $ 27 .31 $ 24 .76 $ 22 .81 $ 22.56 $ 22 .00 $ 20 .41 $ 1,420 ,670 $ 1,282 ,556 $ 1,216,632 $ 1,008 ,041 $ 1,01 2,568 $ 929 ,18 1 $ 697 ,938 977 ,062 907 ,935 861 ,231 682 ,020 709 ,433 668 ,129 492 ,241 1,215 ,146 1,121 ,153 1 ,085 ,632 920 ,418 944 ,302 923 ,126 742 ,732 246 ,000 213 ,900 284 ,000 208 ,000 252,500 260 ,915 112 ,000 20.6 19.9 15.8 16.9 14.5 18.0