-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FXH5YyWgpApMvPNkeIscgPKkXefW/xpIFqI5vptZDF+t82IUWBLtDglhe4NkZlbi DGFb+0B/ehxg3qmGf+1j1Q== 0000950144-98-014125.txt : 19981228 0000950144-98-014125.hdr.sgml : 19981228 ACCESSION NUMBER: 0000950144-98-014125 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19981223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELTA AIR LINES INC /DE/ CENTRAL INDEX KEY: 0000027904 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 580218548 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 000-20319 FILM NUMBER: 98774348 BUSINESS ADDRESS: STREET 1: HARTSFIELD ATLANTA INTL AIRPORT STREET 2: 1030 DELTA BLVD CITY: ATLANTA STATE: GA ZIP: 30320-6001 BUSINESS PHONE: 4047152600 MAIL ADDRESS: STREET 1: 1030 DELTA BLVD STREET 2: DEPT 971 CITY: ATLANTA STATE: GA ZIP: 30320-6001 FORMER COMPANY: FORMER CONFORMED NAME: DELTA AIR CORP DATE OF NAME CHANGE: 19660908 11-K 1 DELTA AIR LINES, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Fiscal Year Ended June 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NO. 1-5424 A. Full title of the plan and address of the plan, if different from that of the issuer named below: DELTA FAMILY-CARE SAVINGS PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: DELTA AIR LINES, INC. Hartsfield Atlanta International Airport Atlanta, Georgia 30320 2 DELTA FAMILY-CARE SAVINGS PLAN FINANCIAL STATEMENTS AND SCHEDULES JUNE 30, 1998 AND 1997 TABLE OF CONTENTS REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS FINANCIAL STATEMENTS Statement of Net Assets Available for Benefits, With Fund Information--June 30, 1998 Statement of Net Assets Available for Benefits, With Fund Information--June 30, 1997 Statement of Changes in Net Assets Available for Benefits, With Fund Information, for the Year Ended June 30, 1998 Statement of Changes in Net Assets Available for Benefits, With Fund Information, for the Year Ended June 30, 1997 NOTES TO FINANCIAL STATEMENTS AND SCHEDULES SCHEDULES SUPPORTING FINANCIAL STATEMENTS Schedule I: Item 27a--Schedule of Assets Held for Investment Purposes--June 30, 1998 Schedule II: Item 27d--Schedule of Reportable Transactions for the Year Ended June 30, 1998 -2- 3 [LETTERHEAD OF ARTHUR ANDERSEN LLP] REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Administrative Committee of Delta Air Lines, Inc.: We have audited the accompanying statements of net assets available for benefits, with fund information, of the DELTA FAMILY-CARE SAVINGS PLAN (the "Plan") as of June 30, 1998 and 1997 and the related statements of changes in net assets available for benefits, with fund information, for the years then ended. These financial statements and the schedules referred to below are the responsibility of the Administrative Committee of Delta Air Lines, Inc. in its capacity as administrator of the Plan. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of June 30, 1998 and 1997 and the changes in its net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in the accompanying table of contents are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statements of net assets available for benefits with fund information and the statements of changes in net assets available for benefits with fund information is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Arthur Andersen LLP Atlanta, Georgia December 4, 1998 -3- 4 DELTA FAMILY-CARE SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION JUNE 30, 1998 (IN THOUSANDS)
TOTAL NET INVESTMENTS RECEIVABLES ASSETS LIABILITIES ASSETS ----------- ----------- ---------- ----------- ---------- (Note 2 and (Note 3) (Note 3) Schedule I) FUND (NOTE 2): Balanced funds $ 176,756 $ 75 $ 176,831 $ 0 $ 176,831 Growth and income funds 122,971 210 123,181 0 123,181 Growth funds 462,337 761 463,098 0 463,098 Income funds 185,140 193 185,333 0 185,333 Targeted retirement funds 1,415 3 1,418 0 1,418 International balanced fund 11 0 11 0 11 International growth and income fund 260 0 260 0 260 International growth funds 117,191 240 117,431 0 117,431 International income funds 179 1 180 0 180 Money market funds 2,977 8 2,985 0 2,985 Fidelity Contrafund 296,934 310 297,244 0 297,244 Delta Common Stock Fund 170,974 152 171,126 0 171,126 Fidelity Growth & Income Portfolio 202,366 325 202,691 0 202,691 Commingled Stock Fund 419,567 457 420,024 0 420,024 Insurance Contracts/Stable Value Fund 620,129 761 620,890 0 620,890 Fidelity U.S. Equity Index Pool 355,650 642 356,292 0 356,292 Delta Preferred Stock Fund--nonparticipant directed 1,021,399 7,855 1,029,254 413,799 615,455 Participant loans 61,520 0 61,520 0 61,520 ---------- ---------- ---------- ---------- ---------- Total $4,217,776 $ 11,993 $4,229,769 $ 413,799 $3,815,970 ========== ========== ========== ========== ==========
The accompanying notes are an integral part of this statement. -4- 5 DELTA FAMILY-CARE SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION, JUNE 30, 1997 (IN THOUSANDS)
TOTAL NET INVESTMENTS RECEIVABLES ASSETS LIABILITIES ASSETS ----------- ----------- ---------- ----------- ---------- (Note 2) (Note 3) (Note 3) FUND (NOTE 2): Balanced funds $ 138,360 $ 553 $ 138,913 $ 115 $ 138,798 Growth and income funds 80,513 171 80,684 0 80,684 Growth funds 282,735 571 283,306 0 283,306 Income funds 107,033 488 107,521 106 107,415 International growth funds 82,794 212 83,006 0 83,006 Fidelity Contrafund 242,493 417 242,910 0 242,910 Delta Common Stock Fund 118,804 586 119,390 0 119,390 Fidelity Growth & Income Portfolio 143,237 307 143,544 0 143,544 Commingled Stock Fund 389,007 1,547 390,554 388 390,166 Insurance Contracts/Stable Value Fund 607,645 769 608,414 0 608,414 Fidelity U.S. Equity Index Pool 307,305 698 308,003 0 308,003 Delta Preferred Stock Fund--nonparticipant directed 662,890 6,893 669,783 430,505 239,278 Participant loans 57,209 0 57,209 0 57,209 ---------- ---------- ---------- ---------- ---------- Total $3,220,025 $ 13,212 $3,233,237 $ 431,114 $2,802,123 ========== ========== ========== ========== ==========
The accompanying notes are an integral part of this statement. -5- 6 Page 1 of 3 DELTA FAMILY-CARE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION, FOR THE YEAR ENDED JUNE 30, 1998 (IN THOUSANDS)
INTERNATIONAL GROWTH GROWTH AND TARGETED INTERNATIONAL AND BALANCED INCOME GROWTH INCOME RETIREMENT BALANCED INCOME FUNDS FUNDS FUNDS FUNDS FUNDS FUND FUND --------- --------- --------- --------- ---------- ------------- ------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Contributions: Participant $ 11,594 $ 9,055 $ 37,325 $ 8,837 $ 62 $ 0 $ 3 Employer 165 426 1,492 372 7 0 0 --------- --------- --------- --------- --------- --------- --------- 11,759 9,481 38,817 9,209 69 0 3 --------- --------- --------- --------- --------- --------- --------- Investment income: Net appreciation (depreciation) in fair value of investments 30,735 14,971 46,339 10,543 98 (2) 20 Interest and dividends 500 6,047 39,413 1,440 25 0 0 Other receipts 0 0 0 0 0 0 0 --------- --------- --------- --------- --------- --------- --------- 31,235 21,018 85,752 11,983 123 (2) 20 --------- --------- --------- --------- --------- --------- --------- Total additions 42,994 30,499 124,569 21,192 192 (2) 23 --------- --------- --------- --------- --------- --------- --------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Withdrawals (6,589) (5,079) (19,163) (7,927) (8) 0 0 Administrative expenses (112) (30) (47) (92) 0 0 0 Interest expense on ESOP notes 0 0 0 0 0 0 0 --------- --------- --------- --------- --------- --------- --------- Total deductions (6,701) (5,109) (19,210) (8,019) (8) 0 0 --------- --------- --------- --------- --------- --------- --------- Net increase (decrease) prior to interfund transfers 36,293 25,390 105,359 13,173 184 (2) 23 Interfund transfers 1,740 17,107 74,433 64,745 1,234 13 237 --------- --------- --------- --------- --------- --------- --------- NET INCREASE 38,033 42,497 179,792 77,918 1,418 11 260 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year, July 1, 1997 138,798 80,684 283,306 107,415 0 0 0 --------- --------- --------- --------- --------- --------- --------- End of year, June 30, 1998 $ 176,831 $ 123,181 $ 463,098 $ 185,333 $ 1,418 $ 11 $ 260 ========= ========= ========= ========= ========= ========= =========
The accompanying notes are an integral part of this statement. -6- 7 Page 2 of 3 DELTA FAMILY-CARE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION, FOR THE YEAR ENDED JUNE 30, 1998 (IN THOUSANDS)
DELTA FIDELITY INTERNATIONAL INTERNATIONAL MONEY COMMON GROWTH & COMMINGLED GROWTH INCOME MARKET FIDELITY STOCK INCOME STOCK FUNDS FUNDS FUNDS CONTRAFUND FUND PORTFOLIO FUND ------------- ------------- --------- ---------- --------- ---------- --------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Contributions: Participant $ 9,652 $ 5 $ 65 $ 25,066 $ 9,503 $ 16,420 $ 24,239 Employer 489 1 10 617 319 691 969 --------- --------- --------- --------- --------- --------- --------- 10,141 6 75 25,683 9,822 17,111 25,208 --------- --------- --------- --------- --------- --------- --------- Investment income: Net appreciation (depreciation) in fair value of investments 9,409 (7) 0 46,415 65,735 36,652 78,126 Interest and dividends 3,886 6 38 23,759 352 8,057 731 Other receipts 0 0 0 0 0 0 0 --------- --------- --------- --------- --------- --------- --------- 13,295 (1) 38 70,174 66,087 44,709 78,857 --------- --------- --------- --------- --------- --------- --------- Total additions 23,436 5 113 95,857 75,909 61,820 104,065 --------- --------- --------- --------- --------- --------- --------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Withdrawals (4,567) 0 (371) (11,781) (8,511) (8,899) (20,658) Administrative expenses (28) 0 0 (32) (1) (44) (68) Interest expense on ESOP notes 0 0 0 0 0 0 0 --------- --------- --------- --------- --------- --------- --------- Total deductions (4,595) 0 (371) (11,813) (8,512) (8,943) (20,726) --------- --------- --------- --------- --------- --------- --------- Net increase (decrease) prior to interfund transfers 18,841 5 (258) 84,044 67,397 52,877 83,339 Interfund transfers 15,584 175 3,243 (29,710) (15,661) 6,270 (53,481) --------- --------- --------- --------- --------- --------- --------- NET INCREASE 34,425 180 2,985 54,334 51,736 59,147 29,858 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year, July 1, 1997 83,006 0 0 242,910 119,390 143,544 390,166 --------- --------- --------- --------- --------- --------- --------- End of year, June 30, 1998 $ 117,431 $ 180 $ 2,985 $ 297,244 $ 171,126 $ 202,691 $ 420,024 ========= ========= ========= ========= ========= ========= =========
The accompanying notes are an integral part of this statement. -7- 8 Page 3 of 3 DELTA FAMILY-CARE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION, FOR THE YEAR ENDED JUNE 30, 1998 (IN THOUSANDS)
INSURANCE FIDELITY DELTA CONTRACTS/ U.S. PREFERRED STABLE EQUITY STOCK FUND-- VALUE INDEX NONPARTICPANT PARTICIPANT FUND POOL DIRECTED LOANS TOTAL ----------- ----------- ------------- ----------- ----------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Contributions: Participant $ 29,381 $ 25,086 $ 0 $ 0 $ 206,293 Employer 1,729 1,255 37,301 0 45,843 ----------- ----------- ----------- ----------- ----------- 31,110 26,341 37,301 0 252,136 ----------- ----------- ----------- ----------- ----------- Investment income: Net appreciation (depreciation) in fair value of investments 0 84,837 349,576 0 773,447 Interest and dividends 39,768 670 29,412 0 154,104 Other receipts 0 0 105 0 105 ----------- ----------- ----------- ----------- ----------- 39,768 85,507 379,093 0 927,656 ----------- ----------- ----------- ----------- ----------- Total additions 70,878 111,848 416,394 0 1,179,792 ----------- ----------- ----------- ----------- ----------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Withdrawals (54,032) (15,921) (10,085) 38,813 (134,778) Administrative expenses (443) (138) (40) 0 (1,075) Interest expense on ESOP notes 0 0 (30,092) 0 (30,092) ----------- ----------- ----------- ----------- ----------- Total deductions (54,475) (16,059) (40,217) 38,813 (165,945) ----------- ----------- ----------- ----------- ----------- Net increase (decrease) prior to interfund transfers 16,403 95,789 376,177 38,813 1,013,847 Interfund transfers (3,927) (47,500) 0 (34,502) 0 ----------- ----------- ----------- ----------- ----------- NET INCREASE 12,476 48,289 376,177 4,311 1,013,847 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year, July 1, 1997 608,414 308,003 239,278 57,209 2,802,123 ----------- ----------- ----------- ----------- ----------- End of year, June 30, 1998 $ 620,890 $ 356,292 $ 615,455 $ 61,520 $ 3,815,970 =========== =========== =========== =========== ===========
The accompanying notes are an integral part of this statement. -8- 9 Page 1 of 3 DELTA FAMILY-CARE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION, FOR THE YEAR ENDED JUNE 30, 1997 (IN THOUSANDS)
GROWTH AND BALANCED INCOME GROWTH INCOME FUNDS FUNDS FUNDS FUNDS --------- --------- --------- --------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Contributions: Participant $ 10,866 $ 5,586 $ 27,811 $ 8,247 Employer 101 341 1,071 338 --------- --------- --------- --------- 10,967 5,927 28,882 8,585 --------- --------- --------- --------- Investment income: Net appreciation (depreciation) in fair value of investments 23,471 12,228 33,152 8,747 Interest and dividends 307 4,756 15,663 280 --------- --------- --------- --------- 23,778 16,984 48,815 9,027 Less investment expenses (442) 0 0 (433) --------- --------- --------- --------- 23,336 16,984 48,815 8,594 --------- --------- --------- --------- Total additions 34,303 22,911 77,697 17,179 --------- --------- --------- --------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Withdrawals (6,684) (4,094) (13,949) (9,052) Administrative expenses (76) (12) (26) (65) Interest expense on ESOP notes 0 0 0 0 --------- --------- --------- --------- Total deductions (6,760) (4,106) (13,975) (9,117) --------- --------- --------- --------- Net increase (decrease) prior to interfund transfers 27,543 18,805 63,722 8,062 Interfund transfers (14,880) 22,231 (12,982) (11,802) --------- --------- --------- --------- NET INCREASE (DECREASE) 12,663 41,036 50,740 (3,740) NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year, July 1, 1996 126,135 39,648 232,566 111,155 --------- --------- --------- --------- End of year, June 30, 1997 $ 138,798 $ 80,684 $ 283,306 $ 107,415 ========= ========= ========= =========
The accompanying notes are an integral part of this statement. -9- 10 Page 2 of 3 DELTA FAMILY-CARE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION, FOR THE YEAR ENDED JUNE 30, 1997 (IN THOUSANDS)
DELTA GROWTH INTERNATIONAL COMMON AND COMMINGLED GROWTH FIDELITY STOCK INCOME STOCK FUNDS CONTRAFUND FUND PORTFOLIO FUND --------- --------- --------- --------- --------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Contributions: Participant $ 6,292 $ 22,903 $ 9,466 $ 10,504 $ 25,364 Employer 398 802 407 618 1,249 --------- --------- --------- --------- --------- 6,690 23,705 9,873 11,122 26,613 --------- --------- --------- --------- --------- Investment income: Net appreciation (depreciation) in fair value of investments 11,594 33,243 906 22,101 82,391 Interest and dividends 2,316 13,199 359 4,946 787 --------- --------- --------- --------- --------- 13,910 46,442 1,265 27,047 83,178 Less investment expenses 0 0 0 0 (1,514) --------- --------- --------- --------- --------- 13,910 46,442 1,265 27,047 81,664 --------- --------- --------- --------- --------- Total additions 20,600 70,147 11,138 38,169 108,277 --------- --------- --------- --------- --------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Withdrawals (3,348) (10,663) (8,496) (6,484) (25,819) Administrative expenses (2) (23) (1) (18) (49) Interest expense on ESOP notes 0 0 0 0 0 --------- --------- --------- --------- --------- Total deductions (3,350) (10,686) (8,497) (6,502) (25,868) --------- --------- --------- --------- --------- Net increase (decrease) prior to interfund transfers 17,250 59,461 2,641 31,667 82,409 Interfund transfers 17,913 1,020 (13,608) 32,231 (46,725) --------- --------- --------- --------- --------- NET INCREASE (DECREASE) 35,163 60,481 (10,967) 63,898 35,684 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year, July 1, 1996 47,843 182,429 130,357 79,646 354,482 --------- --------- --------- --------- --------- End of year, June 30, 1997 $ 83,006 $ 242,910 $ 119,390 $ 143,544 $ 390,166 ========= ========= ========= ========= =========
The accompanying notes are an integral part of this statement. -10- 11 Page 3 of 3 DELTA FAMILY-CARE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION, FOR THE YEAR ENDED JUNE 30, 1997 (IN THOUSANDS)
INSURANCE FIDELITY DELTA CONTRACTS/ U.S. PREFERRED STABLE EQUITY STOCK FUND-- VALUE INDEX NONPARTICIPANT PARTICIPANT FUND POOL DIRECTED LOANS TOTAL ----------- ----------- -------------- ----------- ----------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Contributions: Participant $ 29,410 $ 19,917 $ 0 $ 0 $ 176,366 Employer 1,984 1,334 31,888 0 40,531 ----------- ----------- ----------- ----------- ----------- 31,394 21,251 31,888 0 216,897 ----------- ----------- ----------- ----------- ----------- Investment income: Net appreciation (depreciation) in fair value of investments 0 67,538 (1,695) 0 293,676 Interest and dividends 41,939 578 36,508 0 121,638 ----------- ----------- ----------- ----------- ----------- 41,939 68,116 34,813 0 415,314 Less investment expenses 0 0 (8) 0 (2,397) ----------- ----------- ----------- ----------- ----------- 41,939 68,116 34,805 0 412,917 ----------- ----------- ----------- ----------- ----------- Total additions 73,333 89,367 66,693 0 629,814 ----------- ----------- ----------- ----------- ----------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Withdrawals (70,863) (15,360) (8,206) 36,650 (146,368) Administrative expenses (320) (74) 0 0 (666) Interest expense on ESOP notes 0 0 (31,265) 0 (31,265) ----------- ----------- ----------- ----------- ----------- Total deductions (71,183) (15,434) (39,471) 36,650 (178,299) ----------- ----------- ----------- ----------- ----------- Net increase (decrease) prior to interfund transfers 2,150 73,933 27,222 36,650 451,515 Interfund transfers 17,304 39,613 (13) (30,302) 0 ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) 19,454 113,546 27,209 6,348 451,515 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year, July 1, 1996 588,960 194,457 212,069 50,861 2,350,608 ----------- ----------- ----------- ----------- ----------- End of year, June 30, 1997 $ 608,414 $ 308,003 $ 239,278 $ 57,209 $ 2,802,123 =========== =========== =========== =========== ===========
The accompanying notes are an integral part of this statement. -11- 12 DELTA FAMILY-CARE SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS AND SCHEDULES JUNE 30, 1998 AND 1997 1. DESCRIPTION OF PLAN The following description of the Delta Family-Care Savings Plan (the "Plan") provides only general information regarding the Plan as in effect on June 30, 1998. This document is not part of the summary plan description of the Plan and is not a document pursuant to which the Plan is maintained within the meaning of Section 402 (a)(1) of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended. Participants should refer to the plan document for a complete description of the Plan's provisions. Delta Air Lines, Inc. ("Delta" or the "Company") reserves the right to unilaterally amend, modify, or terminate the Plan at any time, and such changes may be applied to all plan participants and their beneficiaries regardless of whether the participant is actively working or retired at the time of the change. The Plan is a defined contribution plan established by the Company. Active full-time regular, associate, and pilot personnel who have completed 12 consecutive months of employment and are either paid on the United States domestic payroll or employed in the Commonwealth of Puerto Rico are eligible to participate in the Plan. Participation may begin on the first day of the first pay period following eligibility. The Plan is subject to the provisions of ERISA. The responsibility for operation and administration of the Plan (except for investment management and control of assets) is vested in the Administrative Committee of the Company. The Benefit Funds Investment Committee (the "BFIC") of Delta's Board of Directors is responsible for investment management and control of assets of the Plan. However, the Plan allows a participant to exercise control over the assets in his/her account (except the Preferred Stock Fund, which consists of both Delta Series B ESOP convertible preferred stock ("Preferred Stock") and Delta common stock ("Common Stock")) and is intended to qualify as a plan described in Section 404(c) of ERISA and Federal Reg. 2550.404(c)-1. The BFIC has appointed outside investment managers and a trustee to manage the assets of the Plan. The BFIC evaluates the performance of the investment managers and the trustee. The investment managers and the trustee are authorized to purchase and sell securities subject to certain investment restrictions determined by the BFIC. The trustee and recordkeeping functions of the Plan are performed by Fidelity Management Trust Company (the "Trustee") and Fidelity Institutional Retirement Services Company (the "Recordkeeper"), respectively. The Recordkeeper is responsible for maintaining appropriate records of investment transactions, participant account balances, -12- 13 and, under the direction of the Administrative Committee, distributions from participants' accounts. CONTRIBUTIONS For the plan year ended June 30, 1997, eligible nonpilot personnel who were not based in Puerto Rico and who had gross earnings (as defined in the Plan) of less than $55,000 in the previous calendar year were able to contribute up to 15% of their earnings to the Plan. Eligible nonpilot personnel who had gross earnings of $55,000 or more in the previous calendar year and Puerto Rico-based personnel were able to contribute up to 10% of their gross earnings to the Plan; provided, however, that if an employee had been eligible to contribute at the rate of 15% in a prior year because his/her earnings were less than $55,000, he/she remained eligible to make a maximum contribution of 15% of earnings. Effective July 1, 1997, the gross earnings threshold for nonpilot personnel used in determining eligibility to defer in excess of 10% was increased by the Administrative Committee to $80,000. Effective September 1, 1997, the Plan was amended to provide that the maximum contribution percentage for a nonpilot individual would depend on whether he/she met the definition of "highly compensated employee" within the meaning of the Internal Revenue Code (the "Code") based on his/her gross compensation during the previous plan year (as of June 30, 1998, the amount is $80,000). The plan provision which permitted a plan participant to remain at the higher maximum contribution percentage if his earnings went from below $55,000 to above $55,000 was eliminated. Additionally, effective September 1, 1997, the deferral percentage for eligible nonpilot personnel who are highly compensated employees was increased to 12%. The maximum deferral percentage for those who are not highly compensated employees remained at 15% and for Puerto Rico employees remained at 10%. Eligible nonhighly compensated pilot personnel are allowed to contribute up to 10% of their gross earnings to the Plan. Highly compensated pilots are also allowed to contribute up to 10% of their gross earnings to the Plan; provided that a pilot's total contributions to the Plan for a calendar year may not exceed the then current limit under Section 402(g) of the Code. The Administrative Committee is allowed to determine whether the contribution percentage for highly compensated pilots may be changed for each subsequent plan year to a percentage that is at least 7% but no more than 10% of eligible earnings. Also, effective September 1, 1997, deferrals or contributions of some or all of the payments from the Delta Air Lines, Inc. Performance Payment Program, Delta Air Lines, Inc. Target Profit Sharing Program, Delta Air Lines, Inc. Leadership Performance Compensation Program, and Delta Air Lines, Inc. Pilots Profit Sharing Program are permitted by the Plan upon the election of those participating in the Plan provided, however, that the Administrative Committee may, at its discretion, determine a maximum amount of contribution of such payments from year to year. These contributions are not eligible for employer matching contributions. -13- 14 Employee contributions may be made, at the option of the employee, as pre-tax contributions or after-tax contributions or as a combination of both pre-tax and after-tax contributions. Delta contributes $.50 to a participant's account for every $1 contributed by the participant, up to 2% of the participant's annual earnings. In accordance with federal law, an employee's annual gross earnings in excess of specified levels are not considered for purposes of determining how much the employee or Delta may contribute to the Plan. Moreover, there are other limits imposed by federal law which may limit the amount of pre-tax, after-tax, or employer contributions that may be made on behalf of a participant. Beginning October 1, 1989, the first $1,000 (increased by $50 per plan year) of Delta's matching contributions to a participant's account (the "Annual Cap") is invested in Delta Preferred Stock and Delta Common Stock (Note 6). The remainder, if any, of Delta's contributions to a participant's account during a plan year will be invested in the other plan funds (Note 2) in the same proportion as the participant directs for his/her own contributions; provided, however, that Delta's matching contributions in excess of the Annual Cap shall be made in Common Stock for noncollectively bargained, highly compensated employees, as determined under the Code, as amended. Effective June 30, 1998, the Plan was amended to provide for a supplemental matching contribution for pilots who (a) contribute the maximum amount possible to the Plan in the prior calendar year (currently $10,000) and (b) do not receive for the plan year a matching contribution equal to 2% of the lesser of the pilot's earnings or the compensation limit under Section 401(a)(17) of the Code (currently $160,000) (the "Compensation Limit"). The supplemental contribution will be made to the Plan for the plan year as soon as practicable but no later than September 30 following the end of the plan year. The amount of the contribution for each eligible pilot will be the difference between 2% of the lesser of his/her actual earnings or the Compensation Limit and the amount he/she actually received in matching contributions for the plan year. Effective September 1, 1997, rollover contributions may be contributed to the Plan by employees who are hired into a job classification that is eligible for the Plan, but who have not yet met the Plan's one-year participation requirement. The rollover contribution must be made to the Plan before the employee's one-year waiting period is over. See Note 10 for discussion of the plan amendments effective after June 30, 1998. VESTING Participants are immediately vested in all contributions to their accounts plus actual earnings thereon. PARTICIPANT ACCOUNTS Individual accounts are maintained for each of the Plan's participants to reflect the participant's contributions and related employer matching contributions as well as the participant's share of the Plan's income and any related administrative expenses. Allocations of this income and expense are based on the proportion that each participant's -14- 15 account balance bears to the total of all participant account balances. Income from participant loans is not subject to this allocation. ACCOUNT DISTRIBUTIONS Upon retirement or eligibility for long term disability, a participant's non-ESOP account balance may be distributed in the form of monthly installments, which continue over the participant's life expectancy. The life expectancy is calculated based on the participant's age at retirement, date of long-term disability, or, if distribution is deferred, the date the request for distribution is processed. The monthly installment payments are based on (a) the amount remaining in the participant's account; (b) the investment gains and losses on the investment options in which the participant's account was invested; and (c) life expectancy actuarial factors. However, a participant may elect a different form of retirement benefit, such as a single-sum cash payment, cash payments in monthly variable installments for a definite period not to exceed life expectancy, or variable monthly installments to be paid over the life expectancy of the participant and the participant's spouse. Upon termination of employment for reasons other than retirement or disability, a participant's non-ESOP account balance may be distributed as a lump-sum cash payment or the participant may elect to defer distribution. A participant's ESOP account balance may be distributed as a lump-sum cash payment or in Common Stock, at the participant's election, when distribution of the non-ESOP portion of the account begins. A participant, while employed, may elect to withdraw all after-tax contributions, pre-1989 matching contributions, and the earnings thereon. Under certain specified hardship circumstances, a participant, while employed, may also elect to withdraw pre-tax contributions. Certain distributions from the Plan are subject to income taxes, and specified types of early withdrawals may also be subject to significant tax penalties. LOANS TO PARTICIPANTS Participants may borrow against a portion of their plan account balances. The loans are repaid, generally through regular payroll deductions, over a period not to exceed four years. The principal amounts of the loans are assets of the Plan and earn interest, which represents income to the borrowing participant, at a fixed rate equal to the average of the secured loan interest rate and the unsecured loan interest rate of the Delta Employees' Credit Union at initiation of the loan. This rate fluctuated between 9.70% and 10.75% during the 1997 and 1998 plan years. Effective September 1, 1997, (a) the waiting period between plan loans was reduced to 30 days from 90 days and (b) those participants who have a plan loan in effect at the time they commence qualified military service (within the meaning of the Uniformed Services Employment and Reemployment Rights Act) may suspend loan repayments for the duration of the qualified military service. -15- 16 2. INVESTMENT OPTIONS Effective January 2, 1998, the investment options available to participants were expanded to consist of eight core funds and 146 mutual funds. All available investment options are participant-directed except the Preferred Stock Fund, which consists of employer contributions (both Delta Preferred Stock and Delta Common Stock) only. Prior to January 2, 1998, the investment options available to participants were comprised of seven core options and ten mutual funds. The investment options are shown in the accompanying financial statements combined by similar investment objectives. Investments representing in excess of 5% of plan assets are shown separately. The investment objectives and the related funds for the plan years ended June 30, 1998 and 1997, are as follows (funds available during the plan year ended June 30, 1997, are indicated by an asterisk): - Balanced Funds (10 Funds)--strive to blend long-term growth from stocks with income from dividends and interest through a generally stable mix of bonds, preferred stock and common stock: -- Delta Air Lines, Inc. Balanced -- Fidelity Puritan Fund Fund -- Founders Balanced Fund -- Delta Air Lines, Inc. Conservative -- INVESCO Total Return Fund Balanced Fund* -- Janus Balanced Fund -- Delta Air Lines, Inc. Growth -- MAS Balanced Portfolio (Institutional Class) Balanced Fund* -- USAA Cornerstone Strategy Fund -- Fidelity Balanced Fund
- Growth and Income Funds (20 Funds)--strive to combine stock price gains with income generated primarily from dividends and interest: -- Calvert Social Investment -- Founders Blue Chip Fund Fund--Managed Growth Portfolio -- INVESCO Industrial Income Fund -- Fidelity Asset Manager -- INVESCO Value Equity Fund -- Fidelity Asset Manager: Income -- MAS Value Portfolio -- Fidelity Convertible Securities -- Merrill Lynch Capital Fund, Inc. Fund (Class A)* -- Fidelity Equity-Income Fund* -- Neuberger & Berman Guardian -- Fidelity Equity-Income II Fund Trust -- Fidelity Freedom Income Fund -- Spartan U.S. Equity Index Fund -- Fidelity Fund -- Strong Total Return Fund -- Fidelity Real Estate Investment -- USAA Income Stock Fund Portfolio -- Warburg Pincus Growth & -- Fidelity Utilities Fund Income Fund
-16- 17 - Growth Funds (52 Funds)--strive for a long-term increase in share price and capital appreciation by normally investing in companies whose long-term earnings are expected to grow significantly faster than the earnings of the stocks represented in major stock indices: -- American Century Mutual Funds, -- Founders Special Fund Inc.--Twentieth Century Select -- INVESCO Dynamics Fund Fund* -- INVESCO Growth Fund -- American Century Mutual Funds, -- INVESCO Small Company Inc.--Twentieth Century Ultra Growth Fund Fund* -- Janus Enterprise Fund -- Calvert Capital Accumulation -- Janus Fund Fund (Class A) -- Janus Mercury Fund -- Calvert New Vision Small Cap -- Janus Twenty Fund Fund -- MAS Mid Cap Growth Portfolio -- Delaware Trend Fund -- Morgan Stanley Institutional (Institutional Class)* Fund, Inc.--Emerging Growth -- Fidelity Asset Manager: Growth Portfolio (Class B) -- Fidelity Blue Chip Growth Fund -- Neuberger & Berman Focus Trust -- Fidelity Capital Appreciation -- Neuberger & Berman Genesis Fund Trust -- Fidelity Disciplined Equity Fund -- Neuberger & Berman Manhattan -- Fidelity Dividend Growth Fund Trust -- Fidelity Emerging Growth Fund -- Neuberger & Berman Partners -- Fidelity Export and Multinational Trust Fund -- PBHG Emerging Growth Fund -- Fidelity Fifty -- PBHG Growth Fund -- Fidelity Growth Company Fund -- PIMCO Capital Appreciation Fund -- Fidelity Large Cap Stock Fund (Administrative Class) -- Fidelity Low-Priced Stock Fund -- PIMCO Mid Cap Growth Fund -- Fidelity Magellan Fund* (Administrative Class) -- Fidelity Mid-Cap Stock Fund -- Spartan Market Index Fund -- Fidelity OTC Portfolio* -- Strong Discovery Fund -- Fidelity Retirement Growth Fund -- Strong Growth Fund -- Fidelity Small Cap Stock Fund -- Strong Opportunity Fund -- Fidelity Stock Selector -- USAA Growth Fund -- Fidelity TechnoQuant Growth -- Warburg Pincus Capital Fund Appreciation Fund -- Fidelity Trend Fund -- Warburg Pincus Emerging -- Fidelity Value Fund Growth Fund -- Founders Frontier Fund -- Founders Growth Fund
-17- 18 - Income Funds (24 Funds)--strive to achieve a high level of income, with a generally lower level of risk, by investing in a combination of corporate and government bonds: -- Delta Air Lines, Inc. Commingled -- MAS Fixed Income Portfolio Bond Fund* -- MAS High Yield Portfolio -- Fidelity Capital and Income Fund -- PIMCO High Yield Fund (Administrative -- Fidelity Ginnie Mae Fund Class) -- Fidelity Government Securities -- PIMCO Low Duration Fund Fund (Administrative Class) -- Fidelity Institutional -- PIMCO Total Return Fund Short-Intermediate Government (Administrative Class) Fund -- Strong Advantage Fund -- Fidelity Intermediate Bond Fund -- Strong Government Securities -- Fidelity Investment Grade Bond Fund Fund -- Strong Short-Term Bond Fund -- Fidelity Short-Term Bond Fund -- Templeton Global Bond Fund I -- Fidelity U.S. Bond Index Fund -- Warburg Pincus Global Fixed -- INVESCO High Yield Fund Income Fund -- INVESCO Select Income Fund -- USAA GNMA Trust -- Janus Flexible Income Fund -- USAA Income Fund
- Targeted Retirement Funds (4 Funds)--designed for investors who want a simple approach to investing for retirement. The funds will gradually adopt a more conservative asset allocation over time as the target date approaches: -- Fidelity Freedom 2000 Fund -- Fidelity Freedom 2010 Fund -- Fidelity Freedom 2020 Fund -- Fidelity Freedom 2030 Fund - International Balanced Fund (1 fund)--strives to blend long-term growth from stocks with income from dividends and interest through a generally stable mix of bonds, preferred stock, and common stock whose primary trading markets are outside the United States: -- Fidelity Global Balanced Fund - International Growth and Income Fund (1 Fund)--strives to combine stock price gains with income generated primarily from dividends and interest by investing in securities issued by businesses and governments whose primary trading markets are outside the United States: -- Fidelity International Growth and Income Fund -18- 19 - International Growth Funds (31 Funds)--strive for a long-term increase in share price and capital appreciation by normally investing in companies whose primary trading markets are outside the United States and whose long-term earnings are expected to grow significantly faster than the earnings of the stocks represented in major stock indices: -- Calvert World Values Fund, -- Fidelity Worldwide Fund Inc.--International Equity Fund -- Founders Worldwide Growth -- Fidelity Canada Fund Fund -- Fidelity Diversified International -- Janus Worldwide Fund Fund -- Morgan Stanley Institutional -- Fidelity Emerging Markets Fund Fund, Inc.--Active Country Allocation -- Fidelity Europe Capital Portfolio (Class B) Appreciation Fund -- Morgan Stanley Institutional -- Fidelity Europe Fund Fund, Inc.--Emerging Markets -- Fidelity France Fund Portfolio (Class B) -- Fidelity Germany Fund -- Morgan Stanley Institutional -- Fidelity Hong Kong & China Fund, Inc.--Global Equity Fund Portfolio (Class B) -- Fidelity International Value Fund -- Templeton Developing Markets -- Fidelity Japan Fund Trust I -- Fidelity Japan Small Companies -- Templeton Foreign Fund I Fund -- Templeton Growth Fund, Inc. I -- Fidelity Latin America Fund -- Templeton Institutional Funds, -- Fidelity Nordic Fund Inc.--Foreign Equity Series* -- Fidelity Overseas Fund -- Templeton World Fund I -- Fidelity Pacific Basin Fund -- USAA International Fund -- Fidelity Southeast Asia Fund -- Warburg Pincus International -- Fidelity United Kingdom Fund Equity Fund
- International Income Funds (3 Funds)--strive to achieve a high level of income by investing in a combination of bonds of corporations and governments whose primary trading markets are outside the United States: -- Fidelity International Bond Fund -- Fidelity New Markets Income Fund -- PIMCO Global Bond Fund (Administrative Class) - Money Markets (2 Funds)--strive to achieve stable monthly income while preserving investment principal: -- Fidelity Retirement Government Money Market Portfolio -- Fidelity Retirement Money Market Portfolio - Fidelity Contrafund*--invested primarily in undervalued common stocks and securities convertible into common stocks and other securities for capital appreciation. - Delta Common Stock Fund*--invested primarily in Delta Air Lines, Inc. Common Stock. -19- 20 - Fidelity Growth & Income Portfolio*--invested primarily in U.S. equity securities of companies that offer potential for earnings growth while paying current dividends. - Commingled Stock Fund*--invested in investment strategy portfolios which primarily hold U.S. and foreign stocks. - Insurance Contracts/Stable Value Fund*--invested primarily in a portfolio of investment contracts issued by major insurance companies. - Fidelity U.S. Equity Index Commingled Pool*--invested in a pooled investment vehicle which is invested primarily in a portfolio of the common stock of corporations included in the Standard & Poor's 500 Index. - Delta Preferred Stock Fund*--invested primarily in Delta Air Lines, Inc. Preferred and Common Stock (Note 6). During the plan year ended June 30, 1997, all plan participants could allocate their contributions and existing fund balances in 1% multiples among the investment options available to them. Effective January 2, 1998, accounts are limited to 30 investment options at any time, and future payroll deductions are required to be allocated in 5% increments (to no more than 20 investment options at a time). Participants are not permitted to allocate more than 50% of their contributions to the Delta Common Stock Fund. 3. SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements of the Plan are prepared under the accrual method of accounting. The preparation of the financial statements in conformity with generally accepted accounting principles requires plan management to use estimates and assumptions that affect the accompanying financial statements and disclosures. Actual results could differ from these estimates. Certain amounts have been reclassified to conform with the current year presentation. INVESTMENTS Investments (Note 2), except for investment contracts and Preferred Stock, are stated at market value determined from publicly stated price information at the end of each day. The Preferred Stock is stated at market value, which is determined based on the greater of (a) the market price of the Delta Common Stock into which each preferred share is convertible or (b) $72 per share. The Plan's investment contracts are fully benefit responsive and therefore are presented at cost plus accrued income (contract value). The fair value of the investment contracts included in the Insurance Contracts/Stable Value Fund at June 30, 1998 and 1997 was $623,706,000 and $612,494,000, respectively. The average yields for the Insurance Contracts/Stable Value Fund for the years ending June 30, 1998 -20- 21 and 1997 were 6.74% and 6.88%, respectively. The weighted average crediting rates for the investment contracts for June 30, 1998 and 1997 were 6.49% and 6.02%, respectively. Certain guaranteed insurance contracts ("GICs") included in the Insurance Contracts/Stable Value Fund are synthetic; that is, the Plan owns certain fixed income securities, and the contract issuer provides a "wrapper" that guarantees a fixed rate of return and provides benefit responsiveness. At June 30, 1998, the fair value of the underlying assets of the synthetic GICs and the value of the related wrapper contracts were $301,908,000 and $(6,118,000), respectively. The fair market values of individual investments that represent 5% or more of the Plan's total net assets at June 30, 1998 and 1997 and the applicable number of shares are separately identified as follows (dollars in thousands):
MARKET OR NUMBER OF CONTRACT SHARES VALUE ------------ ----------- 1998: Fidelity Magellan Fund 2,266,261 $248,212 Fidelity Contrafund 5,437,350 296,934 Fidelity Growth & Income Portfolio 6,741,194 296,680 Fidelity U.S. Equity Index Commingled Pool 11,162,904 355,650 Delta Common Stock 6,643,290 429,323 Delta Preferred Stock 6,603,865 732,237 1997: Fidelity Broad Market Duration Portfolio 11,690,568 $169,746 Fidelity Magellan Fund 2,033,162 185,120 Fidelity Contrafund 5,258,992 242,493 Fidelity Growth & Income Portfolio 6,300,632 227,138 Fidelity Select Equity Portfolio 6,328,537 162,263 Fidelity U.S. Equity Index Commingled Pool 12,558,430 307,305 Delta Common Stock 6,610,748 271,040 Delta Preferred Stock 6,668,316 480,119
The net appreciation (depreciation) in fair value of investments includes both net unrealized appreciation (depreciation) of plan assets and net realized gain (loss) on sales of plan assets. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. -21- 22 RECEIVABLES AND LIABILITIES The receivables shown in the aggregate in the accompanying statements of net assets available for benefits as of June 30, 1998 and 1997 include the following (in thousands):
1998 1997 -------- -------- Employer contributions $ 11,920 $ 10,940 Participant contributions 0 2,194 Interest and dividends 73 78 -------- -------- Total $ 11,993 $ 13,212 ======== ========
The liabilities shown in the aggregate in the accompanying statements of net assets available for benefits as of June 30, 1998 and 1997 include the following (in thousands):
1998 1997 -------- -------- ESOP notes: Principal $378,408 $394,553 Interest 30,092 31,265 Due to broker for purchases of securities 5,265 4,687 Management fees payable 0 609 Other payables 34 0 -------- -------- Total $413,799 $431,114 ======== ========
ADMINISTRATIVE EXPENSES Certain administrative functions for the Plan are performed by officers or employees of Delta. No such officer or employee receives compensation from the Plan. All other administrative expenses of the Plan, including trustee fees, are paid by the Plan unless paid by Delta. 4. FEDERAL INCOME TAXES The Plan has received a letter of determination dated June 4, 1996 from the Internal Revenue Service ("IRS") which states that the Plan, as amended through June 29, 1995, is in compliance with Section 401(a) and applicable subsections of Section 409 of the Code, is an employee stock ownership plan with a cash or deferred arrangement under Section 401(k) of the Code, and satisfies the requirements of Section 4975(e)(7) of the Code. In the opinion of Delta's management, the Plan as of June 30, 1998 continues to be in compliance with Section 401(a) and applicable subsections of Sections 409, 401(k), and 4975(e)(7) and continues to be entitled to an exemption from federal income taxation under Section 501(a); thus, no provision for federal income taxes has been made in the accompanying financial statements. -22- 23 5. PLAN TERMINATION The Plan provides that Delta, at its discretion, may amend or discontinue the Plan at any time. Plan assets that are held in the Insurance Contracts/Stable Value Fund are subject to certain restrictions which, in the event of plan termination, may affect the timing and value of participant account distributions. Such distributions from the Insurance Contracts/Stable Value Fund may (a) be made in installments over a period of one or more years; or (b) if distributed in a single sum, incur a reduction in value. The amount of such a reduction would depend on the market value adjustments made by each insurance company to the value of assets distributed from their respective contracts. 6. EMPLOYEE STOCK OWNERSHIP PLAN In connection with the establishment of the Employee Stock Ownership Plan ("ESOP") in 1989, Delta sold 6,944,450 shares of Preferred Stock to the ESOP trustee for $72 per share, or approximately $500 million. The ESOP trustee initially financed this purchase by borrowing $493 million from Delta and approximately $7 million from a bank. In 1990, the Plan issued $481.4 million principal amount of its Guaranteed Serial ESOP notes ("ESOP Notes") to third-party lenders and repaid the outstanding principal balances of the original loans. The ESOP Notes and certain related tax indemnities are guaranteed by Delta (Note 7). The shares of Preferred Stock will be held in the name of the Trustee until redemption or conversion and may not be sold by the Trustee or distributed outside the Plan except for resale to Delta. The Preferred Stock is redeemable at Delta's option, at specified redemption prices payable, and at Delta's election, in cash or Common Stock. Delta is required to redeem shares of Preferred Stock at any time to enable the Trustee to provide for distributions to participants. Each share of Preferred Stock has a stated value of $72; bears an annual cumulative cash dividend of 6%, or $4.32; is convertible into 1.7155 shares of Common Stock, subject to adjustment in certain circumstances; has a liquidation preference of $72 plus any accrued and unpaid dividends; generally votes together as a single class with the Common Stock on matters upon which the Common Stock is entitled to vote; and has two votes per share, subject to adjustment in certain circumstances. In the event that full cumulative dividends on the Preferred Stock have not been paid when due, Delta may not pay cash dividends on its Common Stock. The Plan provides that shares of Preferred Stock and Common Stock allocated to a participant's account in the Delta Preferred Stock Fund ("Allocated Shares") and the Common Stock attributable to a participant's account in the Delta Common Stock Fund will be voted by the Trustee in accordance with the participant's confidential voting instructions, or if no voting instructions are received by the Trustee, such shares will be voted by the Trustee at its discretion. The Plan further provides that shares of Preferred Stock not yet allocated to any participant's account will be voted by the Trustee in proportion to the votes cast with respect to Allocated Shares for which voting instructions are received. -23- 24 Unallocated shares of Preferred Stock are held in a separate "Unallocated Account" of the Plan, pending release and allocation to participants' accounts. The number of shares of Preferred Stock released from the Unallocated Account for a plan year will generally be the number of shares of Preferred Stock held in the Unallocated Account times the ratio that the amount of principal and interest paid on the ESOP Notes with respect to such plan year bears to the total amount of principal and interest remaining to be paid (including payments with respect to such plan year). Shares are released from the Unallocated Account to a "Holding Account" upon debt service payments and are then allocated to participants' accounts as Delta matching contributions and/or dividend income are received. Shares of Preferred Stock released from the Unallocated Account (and not allocated as described in the last sentence of the preceding paragraph) will be allocated as of the end of each quarter to the accounts of participants making contributions to the Plan. The number of shares of Preferred Stock so allocated will be based on a value equal to the higher of $72 per share or the market value of the shares of Preferred Stock, as defined in the Plan. If during the plan year, the value of the Preferred Stock released from the Unallocated Account as a result of the repayment of the ESOP Notes is less than Delta's matching contribution to the Plan for that year, this difference will be made up by Delta (a) prepaying the ESOP Notes to release additional shares of Preferred Stock; (b) contributing cash to the Plan so the Trustee can purchase Common Stock; or (c) contributing shares of Common Stock to the Plan; in each case, for allocation to participants' accounts. However, if at the end of the plan year the value of the Preferred Stock released from the Unallocated Account as a result of the scheduled repayment of the ESOP Notes during that plan year is greater than Delta's matching contribution to the Plan for that plan year, the excess will be divided evenly among all participants making contributions to the Plan. The ESOP Notes will be repaid primarily from the Company's contributions (Note 1) and dividends on the Preferred Stock. If dividends on Allocated Shares are used to repay the ESOP Notes, additional shares of Preferred Stock and Common Stock equal in value to such dividends will be allocated to the accounts of participants who otherwise would have received such dividends. As of June 30, 1998, 2,435,030 shares of Preferred Stock with a market value, as defined, of approximately $269,996,160 had been allocated to participants' accounts, and 4,168,835 shares of Preferred Stock with a market value, as defined, of approximately $462,240,425 were held in the Unallocated Account. During the plan year ended June 30, 1998, 64,351 shares of Preferred Stock were redeemed in connection with the payment of participant benefits. 7. LONG-TERM DEBT During plan year 1995, the Plan voluntarily prepaid in whole, with funds provided by Delta, the Plan's 1990 Series A and Series B Guaranteed Serial ESOP Notes ("Old Notes"), which were guaranteed by Delta. Simultaneously with the prepayment, the Plan issued to Delta 1994 Series A and Series B Guaranteed Serial ESOP Notes ("New Notes") in a principal amount equal to the Old Notes that were prepaid. The New Notes have the -24- 25 same interest rate and final maturity date as the corresponding series of Old Notes. Other terms of the New Notes are substantially the same as the corresponding series of Old Notes, except that the New Notes do not have the benefit of a credit enhancement. The principal amount outstanding and the other terms of the Plan's Series C ESOP Notes were not affected by the prepayment of the Old Notes. At June 30, 1998, the Plan's long-term debt, including current maturities of $18,283,000, consisted of $378,408,000 aggregate principal amount of Series C ESOP Notes and New Notes with final maturity dates ranging from July 1, 1999 to January 1, 2009 and interest rates ranging from 7.26% to 8.10%. The interest rates on the Series C ESOP Notes and the New Notes are subject to adjustment in the event of certain changes in the federal income tax laws. Subject to certain restrictions, the Series C ESOP Notes and the New Notes may be prepaid at the option of the Plan at any time in whole or in part. As discussed in Note 7 of the Notes to Consolidated Financial Statements in Delta's 1998 Annual Report to Shareowners, Delta may be required to purchase the Series C ESOP Notes at the option of the holders in certain circumstances. At June 30, 1998, the annual maturities of the Series C ESOP Notes and the New Notes for the next five years and thereafter were as follows (in thousands): Years ending June 30: 1999 $ 18,283 2000 20,635 2001 23,223 2002 26,072 2003 29,207 After 2003 260,988 -------- Total $378,408 ========
8. PARTICIPANT UNITS At June 30, 1998 and 1997, the number of participant units and unit value by fund (based on net asset value), excluding mutual funds, were as follows:
UNIT UNITS VALUE ----------- ------- 1998: Insurance Contracts/Stable Value Fund 620,128,653 $ 1.00 Commingled Bond Fund 8,196,793 13.48 Conservative Balanced Fund 2,871,459 17.51 Balanced Fund 66,347 11.05 Growth Balanced Fund 5,511,852 20.94 Commingled Stock Fund 18,108,217 23.17 Delta Common Stock Fund 6,370,115 26.84 Delta Preferred Stock Fund (allocated) 2,435,030 110.88
-25- 26
UNIT UNITS VALUE ----------- ------- 1997: Insurance Contracts/Stable Value Fund 608,414,258 $ 1.00 Commingled Bond Fund 8,797,784 12.21 Conservative Balance Fund 2,872,935 15.17 Growth Balance Fund 5,634,984 16.90 Commingled Stock Fund 20,486,153 19.05 Delta Common Stock Fund 6,963,220 17.15 Delta Preferred Stock Fund (allocated) 2,167,204 72.00
9. RELATED-PARTY TRANSACTIONS Certain of the Plan's investments are shares of mutual funds or interests in cash reserve accounts managed by the Trustee or affiliates of the Trustee. Transactions related to such investments qualify as permissible party-in-interest transactions under ERISA. Fees paid to the Trustee and the Recordkeeper by the Plan for investment management and recordkeeping totaled $1,075,000 and $3,063,000 for the years ended June 30, 1998 and 1997, respectively. 10. SUBSEQUENT EVENTS Effective July 1, 1998, the Plan was amended to provide that the maximum deferral percentage under the Plan for U.S.-based nonpilot participants who are not highly compensated employees within the meaning of the Internal Revenue Code will be 23% of earnings (as defined in the Plan). The Plan also provided that the maximum deferral percentage for those participants who are highly compensated employees shall remain at 12% or such other amount determined by the Administrative Committee. On October 22, 1998, Delta's shareowners approved an amendment to the Company's Certificate of Incorporation to effect a two-for-one stock split of the issued Common Stock. This amendment became effective on November 2, 1998. As a result of the stock split, each outstanding share of the Company's Series B ESOP Convertible Preferred Stock was adjusted changing (1) the conversion price from $83.94 to $41.97; (2) the conversion rate from 0.8578 to 1.7155; and (3) the voting rights from one vote per share to two votes per share. All amounts have been restated to reflect the stock split. Effective January 1, 1999, the Delta Technology Savings Plan, a defined contribution plan of a wholly-owned subsidiary of the Company, will be merged into the Plan. The Company has not finalized any changes in either plan that may occur as part of this plan merger. -26- 27 11. RECONCILIATION TO THE FORM 5500 As of June 30, 1998 and 1997, the Plan had approximately $0 and $300,000, respectively, of pending distributions to participants who elected to withdraw from the Plan. These amounts are recorded as a liability in the Plan's Form 5500; however, in accordance with generally accepted accounting principles these amounts are not recorded as a liability in the accompanying statements of net assets available for benefits. The following table reconciles net assets available for benefits for the years ended June 30, 1998 and 1997 per the financial statements to the Form 5500 to be filed by the Company (in thousands):
NET ASSETS AVAILABLE DISTRIBUTIONS FOR BENEFITS BENEFITS TO ---------------------------- PAYABLE PARTICIPANTS 1998 1997 -------- ------------- ---------- ---------- Per financial statements $ 0 $134,778 $3,815,970 $2,802,123 Accrued benefits payable 0 0 0 (300) ----- -------- ---------- ---------- Per Form 5500 $ 0 $134,778 $3,815,970 $2,801,823 ===== ======== ========== ==========
-27- 28 SCHEDULE I Page 1 of 8 DELTA FAMILY-CARE SAVINGS PLAN ITEM 27A--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES JUNE 30, 1998
PRINCIPAL AMOUNT COST OR OR NUMBER CONTRACT MARKET NAME OF ISSUER OF SHARES VALUE VALUE - -------------------------------------------------------------------- ------------------ ------------------ ----------------- COMMINGLED STOCK FUND: * Fidelity Management Trust Company Cash Account $ 423,338 $ 423,338 Delta International Equity Pool: * Fidelity Management & Research Company, Fidelity Overseas Fund 983,919 25,745,708 37,093,742 * FMTC Select International Portfolio 1,755,598 65,841,658 113,429,177 Delta U.S. Equity Pool: * Fidelity Management & Research Company, Fidelity Magellan Fund 638,100 38,743,260 69,716,339 * Fidelity Management & Research Company, Fidelity Growth and Income Fund 1,554,366 29,358,917 68,407,668 * Fidelity Management & Research Company, FMTC Select Equity Portfolio 3,874,618 58,409,603 130,497,120 ------------ ------------ Total 218,522,484 419,567,384 ------------ ------------ COMMINGLED BOND FUND: * Fidelity Management Trust Company Cash Account 208,955 208,955 * Fidelity Broad Market Duration Portfolio 6,845,675 84,200,726 110,283,818 ------------ ------------ Total 84,409,681 110,492,773 ------------ ------------ DELTA COMMON STOCK FUND: * Delta Air Lines, Inc. Common Stock 2,616,678 97,885,037 169,102,816 * Fidelity Institutional Cash Portfolio: Money Market 1,611,592 1,611,592 1,611,592 * Fidelity Management Trust Company Cash Account 259,472 259,472 ------------ ------------ Total 99,756,101 170,973,880 ------------ ------------ INSURANCE CONTRACT/STABLE VALUE FUND: * Fidelity Management Trust Company, Short Term Investment Fund 57,007,250 57,007,250 Guaranteed Investment Contracts: American International: GIC-935, 7.03%, due July 2, 2001 11,468,221 11,468,221 11,526,469 Allstate Life Insurance Company: GA-5753, 7.50%, due August 2, 1999 9,533,855 9,533,855 9,365,199 GA-5953, 6.79%, due March 14, 2001 8,159,964 8,159,964 8,322,828 CDC Capital Inc.: BR-261-01, 6.78%, due July 2, 2001 10,000,000 10,000,000 10,208,057 CIGNA: GA-25230, 6.82%, due January 25, 2001 13,165,939 13,165,939 12,984,038 CNA Assurance Company: 12971, 6.93%, due February 1, 1999 9,571,454 9,571,454 9,406,788 First Allmerica: 91288C, 7.10%, due March 31, 1999 16,818,858 16,818,858 16,354,579 Jackson National Life: G-1151-1, 5.89%, due November 25, 2000 10,055,030 10,055,030 10,118,827 John Hancock: GAC 5737, 6.89%v, due June 1, 2000 9,042,926 9,042,926 9,170,738 GAC 5833, 6.96%v, due June 1, 2000 5,179,991 5,179,991 5,260,157 GA 7940, 6.21%, due March 31, 2000 11,933,719 11,933,719 11,425,417
-28- 29 SCHEDULE I Page 2 of 8
PRINCIPAL AMOUNT COST OR OR NUMBER CONTRACT MARKET NAME OF ISSUER OF SHARES VALUE VALUE - -------------------------------------------------------------------- ------------------ ------------------ ----------------- Lincoln National: GA09725, 7.38%, due June 30, 1999 7,501,464 $ 7,501,464 $ 7,372,516 New York Life: GA-30248, 7.17%, due September 30, 1999 18,742,171 18,742,171 18,497,637 GA-06494-002, 6.67%, due March 15, 2001 3,018,046 3,018,046 3,078,600 Ohio National Life Insurance Company: GA5774, 6.67%, due December 31, 1999 11,526,383 11,526,383 11,105,671 Pacific Mutual Life Insurance Co.: G-26062.01, 5.16%, due June 30, 1999 12,537,471 12,537,471 12,066,450 Peoples Securities: BDA00668FR-00, 6.51%, due February 26,1999 8,455,525 8,455,525 8,497,052 Principal Financial Group: 41238801, 6.05%, due September 30, 1998 12,850,509 12,850,509 12,778,527 Protective Life: GA-1386, 7.26%, due March 16, 2001 13,758,098 13,758,098 13,878,739 Prudential: GA-10009-211, 6.10%, due June 19, 2001 10,017,861 10,017,861 10,055,101 GA-10009-212, 6.15%, due June 16, 2003 5,006,545 5,006,545 5,030,367 SafeCo Life Insurance: LP1052744, 6.02%, due March 31, 1999 7,774,050 7,774,050 7,634,190 Security Life of Denver: FA0501, 6.68%, due October 31, 2000 12,527,880 12,527,880 12,133,317 SunLife of Canada: S-0921-G, 7.37%, due December 30, 1999 12,567,488 12,567,488 12,398,957 Synthetic Insurance Contracts: Chase Manhattan Bank: Ford Credit Auto Ow, 5.93%, due January 15, 2001 10,022,423 10,022,423 10,026,000 Jackson National Life ABS: S-1107-1, 5.89%, due July 15, 1998 49,527,900 49,527,900 51,276,348 Massachusetts Mutual: PGIC 10391, 7.37%v, due July 5, 2002 21,518,816 21,518,816 22,024,989 MBL Life Assurance: 6-4982-1, 6.35%v, due December 31, 1999 9,622,966 9,622,966 9,623,122 6-4982-2, 6.35%v, due December 31, 1999 2,223,926 2,223,926 2,220,962 6-4982-3, 6.35%v, due December 31, 1999 3,234,826 3,234,826 3,234,930 6-4982-4, 6.35%v, due December 31, 1999 203,829 203,829 204,260 4982-1, 5.10%v, due December 31, 1999 4,098,575 4,098,575 4,098,493 4982-2, 5.10%v, due December 31, 1999 947,300 947,300 947,281 4982-3, 5.10%v, due December 31, 1999 1,377,782 1,377,782 1,377,754 4982-4, 5.10%v, due December 31, 1999 86,899 86,899 88,898 Peoples Securities: Americredit Auto Trust, 6.04%, due February 12, 2001 5,057,160 5,057,160 5,066,958 Sears Credit Account, 5.82%, due August 15, 2000 6,098,093 6,098,093 6,095,527 BDA00283TR, 5.95%, open 61,218,338 61,218,338 62,669,779 Provident Life & Accident: 630-05856, 7.11%, due July 15, 1998 5,430,702 5,430,702 5,592,839 State Street Bank: CSXT Trade Receivable, 6.10%, due June 25, 2003 8,011,481 8,011,481 8,037,417 96042, 6.46%, due July 15, 1998 34,524,490 34,524,490 35,408,573 TransAmerica Occidental: 76597, 6.44%, due June 15, 1999 6,814,395 6,814,395 6,843,693 Union Bank of Switzerland: 2216, 6.26%v, due October 20, 1999 5,309,583 5,309,583 5,309,000 2242, 7.03%v, due September 17, 2001 6,661,637 6,661,637 6,856,546 2149, 6.95%v, due July 15, 2002 10,166,420 10,166,420 10,414,725 2150, 6.76%v, due January 15, 2001 10,379,419 10,379,419 10,522,877 Westdeutsche Landesbank: WLB6064, 5.95%, due January 15, 2003 7,187,213 7,187,213 7,199,700
-29- 30 SCHEDULE I Page 3 of 8
PRINCIPAL AMOUNT COST OR OR NUMBER CONTRACT MARKET NAME OF ISSUER OF SHARES VALUE VALUE - -------------------------------------------------------------------- ------------------ ------------------ ----------------- AEtna Life Insurance Company: 014464/14617, 6.95%v, due November 16, 1998 18,884,907 $ 18,884,907 $ 19,231,796 Prudential: 917480-001, 6.09%v, due December 31, 1998 2,042,911 2,042,911 2,046,263 TransAmerica Occidental: 76630, 6.55%v, due November 15, 2000 11,255,964 11,255,964 11,607,561 Merrill Lynch commercial paper 10,000,000 10,001,747 ------------ -------------- Total 620,128,653 623,705,509 ------------ --------------- BALANCED FUND: * Fidelity Management Trust Company Cash Account 2,427 2,427 Delta U.S. Equity Pool: * Fidelity Management & Research Company, Fidelity Magellan Fund 870 99,985 95,409 * Fidelity Management & Research Company, Fidelity Growth and Income Fund 2,127 75,767 93,618 * Fidelity Management & Research Company, FMTC Select Equity Portfolio 5,303 150,738 178,589 * FMTC Broad Market Duration 22,538 354,689 363,089 ------------ -------------- Total 683,606 733,132 ------------ -------------- CONSERVATIVE BALANCED FUND: * Fidelity Management Trust Company Cash Account 303,607 303,607 Delta U.S. Equity Pool: * Fidelity Management & Research Company, Fidelity Magellan Fund 29,469 2,300,229 3,230,704 * Fidelity Management & Research Company, Fidelity Growth and Income Fund 72,030 1,743,071 3,170,059 * Fidelity Management & Research Company, FMTC Select Equity Portfolio 179,552 3,467,841 6,047,328 * FMTC Broad Market Duration 2,329,457 30,943,404 37,527,553 ------------ -------------- Total 38,758,152 50,279,251 ------------ -------------- GROWTH BALANCED FUND: * Fidelity Management Trust Company Cash Account 21,062 21,062 Delta U.S. Equity Pool: * Fidelity Management & Research Company, Fidelity Magellan Fund 210,487 15,024,028 23,075,681 * Fidelity Management & Research Company, Fidelity Growth and Income Fund 514,486 11,384,927 22,642,519 * Fidelity Management & Research Company, FMTC Select Equity Portfolio 1,282,475 22,650,327 43,193,747 * FMTC Broad Market Duration 1,644,020 20,392,149 26,485,169 ------------ -------------- Total 69,472,493 115,418,178 ------------ -------------- DELTA PREFERRED STOCK FUND: * Delta Air Lines, Inc. Common Stock 4,026,612 135,373,879 260,219,801 * Delta Air Lines, Inc. Convertible Pref. Series B 6,603,865 481,961,245 732,236,585 * Fidelity Instrument Cash Portfolio--Money Market 28,943,179 28,943,179 28,943,179 ------------ -------------- Total 646,278,303 1,021,399,565 ------------ -------------- MUTUAL FUNDS: * Fidelity Management & Research Company, Fidelity Asset Manager 45,286 858,299 884,888 * Fidelity Management & Research Company, Fidelity Asset Manager: Growth 75,418 1,430,088 1,544,559 * Fidelity Management & Research Company, Fidelity Asset Manager: Income 10,681 132,099 134,788 * Fidelity Management & Research Company, Fidelity Balanced Fund 23,787 381,065 398,665 * Fidelity Management & Research Company, Fidelity Blue Chip Fund 82,937 3,565,066 3,888,083
-30- 31 SCHEDULE I Page 4 of 8
PRINCIPAL AMOUNT COST OR OR NUMBER CONTRACT MARKET NAME OF ISSUER OF SHARES VALUE VALUE - -------------------------------------------------------------------- ------------------ ------------------ ----------------- * Fidelity Management & Research Company, Fidelity Canada Fund 1,311 $ 23,667 $ 22,524 * Fidelity Management & Research Company, Fidelity Capital & Income Fund 119,541 1,242,504 1,238,445 * Fidelity Management & Research Company, Fidelity Capital Appreciation Fund 53,361 1,083,640 1,150,462 * Fidelity Management & Research Company, Fidelity Contrafund 5,437,350 217,655,752 296,933,667 * Fidelity Management & Research Company, Fidelity Convertible Securities Fund 11,140 220,040 223,025 * Fidelity Management & Research Company, Fidelity Disciplined Equity Fund 49,038 1,351,803 1,468,692 * Fidelity Management & Research Company, Fidelity Diversified International Fund 31,016 538,435 580,619 * Fidelity Management & Research Company, Fidelity Dividend Growth Fund 862,422 23,557,934 24,303,058 * Fidelity Management & Research Company, Fidelity Emerging Growth Fund 10,064 256,981 295,471 * Fidelity Management & Research Company, Fidelity Emerging Markets Fund 11,918 112,264 96,059 * Fidelity Management & Research Company, Fidelity Equity- Income II Fund 35,761 1,036,321 1,096,430 * Fidelity Management & Research Company, Fidelity Equity-Income Fund 1,495,363 66,515,567 85,534,762 * Fidelity Management & Research Company, Fidelity Europe Capital Appreciation Fund 267,857 4,855,054 5,051,780 * Fidelity Management & Research Company, Fidelity Europe Fund 114,828 4,033,169 4,272,739 * Fidelity Management & Research Company, Fidelity Export & Multinational Fund 27,088 489,023 532,823 * Fidelity Management & Research Company, Fidelity Fifty Fund 12,346 209,324 212,968 * Fidelity Management & Research Company, Fidelity France Fund 14,703 225,686 252,156 * Fidelity Management & Research Company, Fidelity Fund 278,662 9,525,219 9,814,492 * Fidelity Management & Research Company, Fidelity Germany Fund 18,846 303,722 329,799 * Fidelity Management & Research Company, Fidelity Global Balanced Fund 705 11,516 11,580 * Fidelity Management & Research Company, Fidelity Ginnie Mae Fund 25,388 277,011 275,972 * Fidelity Management & Research Company, Fidelity Government Securities Fund 6,581 65,758 65,941 * Fidelity Management & Research Company, Fidelity Growth & Income Portfolio 4,598,185 149,204,019 202,366,117 * Fidelity Management & Research Company, Fidelity Growth Company Fund 12,606 582,806 619,481 * Fidelity Management & Research Company, Fidelity Hong Kong & China Fund 21,717 225,930 200,012 * Fidelity Management & Research Company, Fidelity Institutional Short-Intermediate Government Portfolio 9,780 92,568 91,930 * Fidelity Management & Research Company, Fidelity Intermediate Bond Fund 34,921 356,571 356,191 * Fidelity Management & Research Company, Fidelity International Bond Fund 6,827 61,909 60,901 * Fidelity Management & Research Company, Fidelity International Growth & Income Fund 11,559 240,662 260,304 * Fidelity Management & Research Company, Fidelity International Value Fund 24,286 320,416 341,222
-31- 32 SCHEDULE I Page 5 of 8
PRINCIPAL AMOUNT COST OR OR NUMBER CONTRACT MARKET NAME OF ISSUER OF SHARES VALUE VALUE - -------------------------------------------------------------------- ------------------ ------------------ ----------------- * Fidelity Management & Research Company, Fidelity Investment Grade Bond Fund 85,825 $ 629,079 $ 630,816 * Fidelity Management & Research Company, Fidelity Japan Fund 20,133 202,512 200,727 * Fidelity Management & Research Company, Fidelity Japan Small Company Fund 31,296 183,645 183,396 * Fidelity Management & Research Company, Fidelity Large-Cap Stock Fund 18,297 272,735 271,527 * Fidelity Management & Research Company, Fidelity Latin America Fund 48,411 785,191 678,235 * Fidelity Management & Research Company, Fidelity Low-Priced Stock Fund 304,330 7,981,686 8,253,421 * Fidelity Management & Research Company, Fidelity Magellan Fund 1,387,335 116,317,178 152,093,530 * Fidelity Management & Research Company, Fidelity Mid-Cap Stock Fund 56,491 985,544 990,850 * Fidelity Management & Research Company, Fidelity New Markets Income Fund 8,080 104,591 98,094 * Fidelity Management & Research Company, Fidelity Nordic Fund 68,688 1,196,381 1,294,769 * Fidelity Management & Research Company, Fidelity OTC Portfolio 1,106,448 37,621,055 43,937,058 * Fidelity Management & Research Company, Fidelity Overseas Fund 2,800 102,173 105,572 * Fidelity Management & Research Company, Fidelity Pacific Basin Fund 25,456 314,630 298,852 * Fidelity Management & Research Company, Fidelity Puritan Fund 65,436 1,319,087 1,383,317 * Fidelity Management & Research Company, Fidelity Real Estate Investment Portfolio 73,956 1,462,358 1,374,100 * Fidelity Management & Research Company, Fidelity Retirement Government Money Market Portfolio 1,217,895 1,217,895 1,217,895 * Fidelity Management & Research Company, Fidelity Retirement Growth Fund 28,513 564,516 592,492 * Fidelity Management & Research Company, Fidelity Retirement Money Market Portfolio 1,758,888 1,758,888 1,758,888 * Fidelity Management & Research Company, Fidelity Short-Term Bond Fund 1,093 9,539 9,513 * Fidelity Management & Research Company, Fidelity Small Cap Select Fund 89,168 1,490,584 1,469,496 * Fidelity Management & Research Company, Fidelity Southeast Asia Fund 31,451 275,506 224,562 * Fidelity Management & Research Company, Spartan Market Index Fund 28,948 2,108,431 2,270,961 * Fidelity Management & Research Company, Spartan U.S. Equity Index Fund 172,711 6,570,311 6,993,066 * Fidelity Management & Research Company, Fidelity Stock Selector Fund 21,982 639,590 679,473 * Fidelity Management & Research Company, Fidelity TechnoQuant Growth Fund 27,497 330,073 342,340 * Fidelity Management & Research Company, Fidelity Trend Fund 4,730 280,804 295,931 * Fidelity Management & Research Company, Fidelity United Kingdom Fund 2,635 39,095 41,209 * Fidelity Management & Research Company, Fidelity U.S. Bond Index Fund 36,150 391,939 392,224 * Fidelity Management Trust Company, Fidelity U.S. Equity Index Commingled Fund 11,162,904 198,021,458 355,650,107
-32- 33 SCHEDULE I Page 6 of 8
PRINCIPAL AMOUNT COST OR OR NUMBER CONTRACT MARKET NAME OF ISSUER OF SHARES VALUE VALUE - -------------------------------------------------------------------- ------------------ ------------------ ----------------- * Fidelity Management & Research Company, Fidelity Utilities Fund 61,848 $ 1,250,127 $ 1,316,744 * Fidelity Management & Research Company, Fidelity Value Fund 20,719 1,187,514 1,222,824 * Fidelity Management & Research Company, Fidelity Worldwide Fund 24,092 422,022 447,387 * Strategic Advisors, Fidelity Freedom 2000 Fund 36,854 434,086 442,988 * Strategic Advisors, Fidelity Freedom 2010 Fund 30,230 371,050 388,759 * Strategic Advisors, Fidelity Freedom 2020 Fund 33,924 419,057 453,907 * Strategic Advisors, Fidelity Freedom 2030 Fund 9,737 122,356 129,411 * Strategic Advisors, Fidelity Freedom Income Fund 1,722 18,652 18,855 American Century Mutual Funds, Inc., American Century--Twentieth Century Select Fund 410,861 18,724,217 20,966,240 American Century Mutual Funds, Inc., American Century--Twentieth Century Ultra Fund 2,949,221 82,989,008 99,831,119 Calvert Asset Management Company, Inc., Calvert Capital Accumulation Fund--Class A 14,950 441,294 442,224 Calvert Asset Management Company, Inc., Calvert New Vision Small Cap Fund 1,079 16,494 16,619 Calvert Asset Management Company, Inc., Calvert Social Investment Managed Growth Fund 96 3,248 3,339 Calvert Asset Management Company, Inc., Calvert World Values International Equity Fund 139,957 2,949,485 3,051,053 Delaware Management Company, Delaware Trend Fund- Institutional Class 1,031,474 17,148,006 19,463,921 Founders Asset Management, Founders Balanced Fund 59,817 721,195 733,353 Founders Asset Management, Founders Blue Chip Fund 15,217 115,325 119,909 Founders Asset Management, Founders Frontier Fund 3,207 96,940 95,767 Founders Asset Management, Founders Growth Fund 77,373 1,429,093 1,597,763 Founders Asset Management, Founders Special Fund 223,842 1,863,140 1,963,096 Founders Asset Management, Founders Worldwide Growth Fund 21,740 521,484 528,272 INVESCO Funds Group, Inc., INVESCO Dynamics Fund 18,464 282,611 305,031 INVESCO Funds Group, Inc., INVESCO Growth Fund 102,080 576,402 601,251 INVESCO Funds Group, Inc., INVESCO High Yield Fund 8,067,154 59,583,451 59,212,913 INVESCO Funds Group, Inc., INVESCO Industrial Income Fund 22,998 356,314 372,111 INVESCO Funds Group, Inc., INVESCO Select Income Fund 94,130 632,300 635,380 INVESCO Funds Group, Inc., INVESCO Small Company Growth Fund 51,041 615,921 626,783 INVESCO Funds Group, Inc., INVESCO Total Return Fund 201,438 6,059,109 6,313,077 INVESCO Funds Group, Inc., INVESCO Value Equity Fund 13,130 385,316 406,886 Janus Capital Corporation, Janus Balanced Fund 73,544 1,203,873 1,293,632 Janus Capital Corporation, Janus Enterprise Fund 2,724 90,625 96,984 Janus Capital Corporation, Janus Flexible Income Fund 350,775 3,512,914 3,525,292 Janus Capital Corporation, Janus Fund 94,153 2,604,707 2,840,592 Janus Capital Corporation, Janus Mercury Fund 439,916 8,647,867 9,502,176 Janus Capital Corporation, Janus Twenty Fund 303,746 11,251,657 12,784,667 Janus Capital Corporation, Janus Worldwide Fund 492,075 20,607,011 23,191,498 Merrill Lynch Asset Management, Merrill Lynch Capital Fund (Class A) 252,629 8,057,582 9,407,914 Miller, Anderson & Sherrerd, MAS Fixed Income (I) 20 246 248 Miller, Anderson & Sherrerd, MAS Funds Balanced Portfolio--Institutional Class 1,074 14,764 15,589 Miller, Anderson & Sherrerd, MAS Funds Fixed Income Portfolio 34,754 418,690 421,913 Miller, Anderson & Sherrerd, MAS Funds High Yield Portfolio 92,257 903,414 903,192 Miller, Anderson & Sherrerd, MAS Funds Mid Cap Growth Portfolio 145,793 3,149,256 3,347,397 Miller, Anderson & Sherrerd, MAS Funds Value Portfolio 189,876 3,476,687 3,567,766 Morgan Stanley Asset Management, Inc., Morgan Stanley Institutional Emerging Growth Portfolio (Class B) 8,613 75,599 78,123
-33- 34 SCHEDULE I Page 7 of 8
PRINCIPAL AMOUNT COST OR OR NUMBER CONTRACT MARKET NAME OF ISSUER OF SHARES VALUE VALUE - -------------------------------------------------------------------- ------------------ ------------------ ----------------- Morgan Stanley Asset Management, Inc., Morgan Stanley Institutional Emerging Markets Portfolio (Class B) 10,151 $ 131,225 $ 112,572 Morgan Stanley Asset Management, Inc., Morgan Stanley Institutional Fund Active Country Allocation Portfolio (Class B) 40,513 495,075 503,177 Morgan Stanley Asset Management, Inc., Morgan Stanley Institutional Global Equity Portfolio (Class B) 42,140 850,502 884,517 Neuberger & Berman Management, Inc., Neuberger & Berman Focus Trust 23,709 521,770 561,664 Neuberger & Berman Management, Inc., Neuberger & Berman Genesis Trust 662,826 14,580,899 14,595,436 Neuberger & Berman Management, Inc., Neuberger & Berman Guardian Trust 29,254 537,853 568,705 Neuberger & Berman Management, Inc., Neuberger & Berman Manhattan Trust 8,623 121,604 135,729 Neuberger & Berman Management, Inc., Neuberger & Berman Partners Trust 245,053 4,379,533 4,580,036 Pacific Investment Management Company, PIMCO Capital Appreciation Fund-Administrative Class 330,378 7,796,352 8,586,514 Pacific Investment Management Company, PIMCO Global Bond Fund-Administrative Class 2,063 20,094 20,052 Pacific Investment Management Company, PIMCO High Yield Fund-Administrative Class 171,781 1,996,691 1,990,938 Pacific Investment Management Company, PIMCO Low Duration Fund-Administrative Class 34,369 350,236 349,186 Pacific Investment Management Company, PIMCO Mid Cap Growth Fund-Administrative Class 312,107 7,092,341 7,478,079 Pacific Investment Management Company, PIMCO Total Return Fund-Administrative Class 161,415 1,720,493 1,730,366 Pilgrim Baxter & Associates, PBHG Emerging Growth Fund 17,453 415,025 426,385 Pilgrim Baxter & Associates, PBHG Growth Fund 30,555 836,664 830,177 Strong Capital Management, Strong Advantage Fund 81,406 820,446 821,387 Strong Capital Management, Strong Discovery Fund 1,419 26,412 25,997 Strong Capital Management, Strong Government Securities Fund 101,020 1,091,454 1,097,082 Strong Capital Management, Strong Growth Fund 33,413 625,904 711,706 Strong Capital Management, Strong Opportunity Fund 24,662 990,926 1,026,445 Strong Capital Management, Strong Short-Term Bond Fund 15,982 156,325 156,141 Strong Capital Management, Strong Total Return Fund 1,083 30,783 33,314 Templeton Asset Management Hong Kong, Templeton Developing Markets Trust I 67,985 838,715 719,279 Templeton Global Advisors, Templeton Foreign Fund I 165,823 1,709,248 1,693,056 Templeton Global Advisors, Templeton Growth Fund, Inc. I 103,139 2,090,051 2,090,621 Templeton Global Advisors, Templeton World Fund I 176,762 3,091,302 3,181,711 Templeton Global Bond Managers, Templeton Global Bond Fund I 863 8,421 8,321 Templeton Investment Counsel, Templeton Foreign Equity Series 3,343,313 53,309,783 66,331,326 USAA Investment Management, USAA Cornerstone Strategy Fund 6,336 187,605 188,309 USAA Investment Management, USAA GNMA Trust 26,576 273,964 275,323 USAA Investment Management, USAA Growth Fund 11,885 225,379 242,683 USAA Investment Management, USAA Income Fund 32,319 417,460 417,239 USAA Investment Management, USAA Income Stock Fund 29,092 571,963 593,176 USAA Investment Management, USAA International Fund 9,277 194,173 199,001 Warburg Pincus Counsellors, Warburg Pincus Capital Appreciation Fund 62,326 1,211,683 1,330,670 Warburg Pincus Counsellors, Warburg Pincus Emerging Growth Fund 19,341 759,525 810,404
-34- 35 SCHEDULE I Page 8 of 8
PRINCIPAL AMOUNT COST OR OR NUMBER CONTRACT MARKET NAME OF ISSUER OF SHARES VALUE VALUE - -------------------------------------------------------------------- ------------------ ------------------ ----------------- Warburg Pincus Counsellors, Warburg Pincus Global Fixed-Income Fund 4,031 $ 41,981 $ 41,518 Warburg Pincus Counsellors, Warburg Pincus Growth & Income Fund 27,322 480,855 506,547 Warburg Pincus Counsellors, Warburg Pincus International Equity Fund 4,332 79,374 83,037 -------------- -------------- Total mutual funds 1,249,048,560 1,647,264,817 -------------- -------------- PARTICIPANT LOANS Participant loans, interest rates ranging from 9.70% to 10.75% 61,519,925 61,519,925 -------------- -------------- Total investments $3,088,577,958 $4,221,354,414 ============== ==============
*Represents a party in interest. The accompanying notes are an integral part of this schedule. -35- 36 SCHEDULE II Page 1 of 2 DELTA FAMILY-CARE SAVINGS PLAN ITEM27D--SCHEDULE OF REPORTABLE TRANSACTIONS (A) FOR THE YEAR ENDED JUNE 30, 1998
EXPENSE DESCRIPTION OF ASSET INCURRED (INCLUDES INTEREST RATE AND PURCHASE SELLING WITH COST OF NET GAIN IDENTITY OF PARTY INVOLVED MATURITY IN CASE OF A LOAN) PRICE PRICE TRANSACTION ASSETS (LOSS) - --------------------------- ------------------------------- ------------ ------------ ----------- ------------ ----------- * FIDELITY MANAGEMENT Institutional Money Market: TRUST COMPANY 508 transactions $626,043,717 $ 0 (b) $ 0 $ 0 512 transactions 0 588,290,618 (b) 588,290,618 0 * FIDELITY MANAGEMENT Fidelity U.S. Equity Index Pool: TRUST COMPANY 252 transactions 162,341,118 0 (b) 0 0 252 transactions 0 198,768,653 (b) 169,501,379 29,267,274 * FIDELITY MANAGEMENT & Fidelity OTC Portfolio: RESEARCH COMPANY 252 transactions 146,849,809 0 (b) 0 0 252 transactions 0 149,380,087 (b) 150,401,191 (1,021,104) * FIDELITY MANAGEMENT & Fidelity Growth & Income RESEARCH COMPANY Portfolio: 252 transactions 137,524,839 0 (b) 0 0 252 transactions 0 114,948,287 (b) 103,242,047 11,706,240 * FIDELITY MANAGEMENT & Fidelity Contrafund: RESEARCH COMPANY 252 transactions 102,579,197 0 (b) 0 0 252 transactions 0 94,533,877 (b) 82,018,958 12,514,919
-36- 37 SCHEDULE II Page 2 of 2
EXPENSE DESCRIPTION OF ASSET INCURRED (INCLUDES INTEREST RATE AND PURCHASE SELLING WITH COST OF NET GAIN IDENTITY OF PARTY INVOLVED MATURITY IN CASE OF A LOAN) PRICE PRICE TRANSACTION ASSETS (LOSS) - --------------------------- ------------------------------- ------------ ------------ ----------- ------------ ----------- * FIDELITY MANAGEMENT Delta Commingled Stock Fund: TRUST COMPANY 252 transactions $ 86,346,079 $ 0 (b) $ 0 $ 0 252 transactions 0 100,406,926 (b) 84,103,334 16,303,592
*Represents party in interest. (a) Represents a series of transactions in securities of the same issue having a cumulative value in excess of 5% of the current value of plan assets at the beginning of the plan year. (b) The normal expenses associated with asset purchases are built into the Trustee's cost records and therefore are not shown separately here. The accompanying notes are an integral part of this schedule. -37- 38 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrative Committee of Delta Air Lines, Inc. has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. DELTA FAMILY-CARE SAVINGS PLAN /s/ James B. Taylor ------------------------------- By: James B. Taylor Chief Investment Officer Delta Air Lines Benefit Trusts Delta Air Lines, Inc. December 22, 1998 -38- EX-23 2 CONSENT OF ARTHUR ANDERSEN LLP 1 [LETTERHEAD OF ARTHUR ANDERSEN LLP] CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated December 4, 1998 included in Delta Air Lines, Inc.'s annual report on Form 11-K for the Delta Family-Care Savings Plan for the year ended June 30, 1998 into the Company's previously filed Registration Statement No. 33-30454. ARTHUR ANDERSEN LLP Atlanta, Georgia December 21, 1998 -----END PRIVACY-ENHANCED MESSAGE-----