-----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, D9JEI8m4fhidHkjPHoaWfOqyTF7Egb+tl/enW5bUnNsC9UGK/kxyF4luWB/xIDp6 yY6rxEQDIm8rZf6xnLcN9g== 0000950144-03-012553.txt : 20031112 0000950144-03-012553.hdr.sgml : 20031111 20031112074528 ACCESSION NUMBER: 0000950144-03-012553 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031112 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031112 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: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05424 FILM NUMBER: 03990477 BUSINESS ADDRESS: STREET 1: HARTSFIELD ATLANTA INTL AIRPORT STREET 2: 1030 DELTA BLVD CITY: ATLANTA STATE: GA ZIP: 30354-1989 BUSINESS PHONE: 4047152600 MAIL ADDRESS: STREET 1: P.O. BOX 20706 STREET 2: DEPT 981 CITY: ATLANTA STATE: GA ZIP: 30320-6001 FORMER COMPANY: FORMER CONFORMED NAME: DELTA AIR CORP DATE OF NAME CHANGE: 19660908 8-K 1 g85827e8vk.txt DELTA AIR LINES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): November 12, 2003 DELTA AIR LINES, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-5424 58-0218548 - ------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) P.O. Box 20706, Atlanta, Georgia 30320-6001 - ------------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (404) 715-2600 Registrant's Web site address: www.delta.com Not Applicable - ------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE Delta Air Lines, Inc. ("Delta") today issued a press release announcing that Delta (1) will record at December 31, 2003 a non-cash adjustment reducing equity which is related to its defined benefit pension plans; (2) will record during the December 2003 quarter a non-cash charge related to its defined benefit pension plan for pilots; (3) suspended the payment of dividends on its Series B ESOP Convertible Preferred Stock; (4) changed the form of payment Delta will use to redeem shares of Series B ESOP Convertible Preferred Stock when redemptions are required under the Delta Family-Care Savings Plan, a broad-based employee benefit plan; and (5) is updating its projected GAAP net loss for the December 2003 quarter. The press release is attached hereto as Exhibit 99.1. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) EXHIBITS Exhibit 99.1 Press Release dated November 12, 2003, titled "Delta Air Lines Announces Financial Information". SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DELTA AIR LINES, INC. BY: /s/ Edward H. Bastian -------------------------------------------- Edward H. Bastian Senior Vice President - Finance and Controller Date: November 12, 2003 EXHIBIT INDEX
Exhibit Number Description Exhibit 99.1 Press Release dated November 12, 2003, titled "Delta Air Lines Announces Financial Information".
EX-99.1 3 g85827exv99w1.txt EX-99.1 PRESS RELEASE DATED NOVEMBER 12, 2003 FOR IMMEDIATE DISTRIBUTION CONTACT: Corporate Communications 404-715-2554 DELTA AIR LINES ANNOUNCES FINANCIAL INFORMATION ATLANTA, Nov. 12, 2003 -- Delta Air Lines (NYSE: DAL) today reported certain financial information. The key points are, Delta: - - Will record at Dec. 31, 2003 a non-cash adjustment reducing equity which is related to its defined benefit pension plans. - - Will record during the December 2003 quarter a non-cash charge related to its defined benefit pension plan for pilots. - - Suspended the payment of dividends on its Series B ESOP Convertible Preferred Stock. - - Changed the form of payment Delta will use to redeem shares of Series B ESOP Convertible Preferred Stock when redemptions are required under the Delta Family-Care Savings Plan, a broad-based employee benefit plan. - - Is updating its projected GAAP net loss for the December 2003 quarter. The non-cash charges announced today do not adversely affect the current funding requirements of Delta's defined benefit pension plans (Pension Plans). Delta has paid its funding obligations for the Pension Plans for 2003. As previously reported, Delta estimates that its funding obligations under the Pension Plans will be between $350 million and $450 million for 2004. The Pension Plans meet all funding requirements, and Delta intends to continue to fund the Pension Plans as required by law. Payment of dividends on the Series B ESOP Convertible Preferred Stock (ESOP Preferred Stock) will be suspended effective Dec. 28, 2003.(1) Although the dividend is being suspended, participants in the Delta Family-Care Savings Plan (Savings Plan) will still receive all accrued and unpaid dividends on their ESOP Preferred Stock when that stock is redeemed (i.e., when Savings Plan participants terminate employment with Delta or make annual diversification elections) or the dividend is reinstated. Delta expects the suspension of the dividend will have a minimal impact on individual Savings Plan accounts.(2) The actions announced today will not otherwise negatively impact Delta's contributions to or the operation of the Savings Plan. Additional information about each of these matters is set forth below. - more - PAGE 2 Adjustment to Equity Similar to the charge recorded last year, at Dec. 31, 2003, Delta will record a non-cash charge to equity relating to its Pension Plans.(3) Delta estimates this non-cash charge will be approximately $700 million, net of tax. It will affect Delta's balance sheet at Dec. 31, 2003, but will not impact its results of operations for the December 2003 quarter. The actual charge to equity may differ materially from Delta's estimate because Delta has not yet finally determined its accumulated benefit obligations under the Pension Plans as of Sept. 30, 2003. Charge Related to Pilot Pension Plan During the December 2003 quarter, Delta will record a non-cash charge related to its defined benefit pension plan for pilots.(4) Delta estimates this non-cash charge will be approximately $140 million, net of tax. As a result of the significant increase in pilot retirements, Delta is required to accelerate recognition of previously unrecognized actuarial losses which were scheduled to be recorded in future periods.(5) This charge will impact Delta's results of operations for the December 2003 quarter. The actual charge may differ materially from Delta's estimate because Delta has not yet finally determined its projected benefit obligation under the pilot pension plan as of Sept. 30, 2003. Suspension of Dividends on Series B ESOP Convertible Preferred Stock To comply with Delaware law, Delta's Board of Directors suspended indefinitely the payment of dividends on the ESOP Preferred Stock. Delaware law limits a company's ability to pay dividends in certain circumstances.(6) The Savings Plan is a broad-based plan that allows eligible employees to contribute a portion of their pay to various investment funds. Delta also makes contributions to the Savings Plan. All shares of ESOP Preferred Stock are held by Fidelity Management Trust Company in its capacity as trustee for the Savings Plan. At Oct. 31, 2003, the total value of the Savings Plan's assets was $4.3 billion, approximately 15 percent of which consisted of ESOP Preferred Stock and Delta common stock.(7) A holder of ESOP Preferred Stock is entitled to receive, as and if declared by the Board of Directors, a per share cash dividend of $4.32 per year. Unpaid dividends will accrue without interest until paid. The terms of the ESOP Preferred Stock prohibit Delta from paying any dividend on, or redeeming or purchasing, its common stock until all accrued dividends on the ESOP Preferred Stock have been paid. At Oct. 31, 2003, approximately 5.9 million shares of ESOP Preferred Stock were held by the Savings Plan. About 3.7 million shares of ESOP Preferred Stock are currently allocated to the accounts of Savings Plan participants; the remainder of the shares is available for allocation in the future. - more - 2 PAGE 3 Redemption of Series B ESOP Convertible Preferred Stock To comply with Delaware law,(8) Delta's Board of Directors changed the form of payment Delta will use to redeem shares of ESOP Preferred Stock when redemptions are required under the Savings Plan. For the indefinite future, Delta will redeem the ESOP Preferred Stock with shares of Delta common stock rather than cash. The change in the form of payment that Delta uses to redeem ESOP Preferred Stock should not impact Savings Plan participants. Participants may continue to elect to receive the value of their account in cash or Delta common stock. Each share of ESOP Preferred Stock is redeemable at $72.00 plus accrued and unpaid dividends. The terms of the ESOP Preferred Stock permit Delta to pay the redemption price in cash or shares of Delta common stock. Delta is generally required to redeem shares of ESOP Preferred Stock (1) to provide for distributions of the accounts of Savings Plan participants who terminate employment with Delta; and (2) to implement annual diversification elections by Savings Plan participants who are at least age 55 and have participated in the Savings Plan for at least ten years. An average of approximately 20,000 shares of ESOP Preferred Stock is currently redeemed each month under the Savings Plan, for an average aggregate monthly redemption price of $1.4 million plus accrued and unpaid dividends. At this rate, and assuming a Delta common stock price of $12 per share, Delta estimates that it will issue approximately 3.5 million shares of its common stock over the next two years to redeem ESOP Preferred Stock. The actual number of shares of Delta common stock issued may differ materially from this estimate because the actual number of shares issued will depend on various factors.(9) At Oct. 31, 2003, 123.5 million shares of Delta common stock were outstanding. December 2003 Quarter Estimated Net Loss On Oct. 14, Delta announced its estimated net loss for the December 2003 quarter would be between $225 million and $275 million under generally accepted accounting principles (GAAP). This included the previously announced $26 million charge, net of tax, related to Delta's agreement to sell 11 Boeing 737-800 aircraft. As a result of the estimated non-cash charge of $140 million, net of tax, discussed in this press release, Delta now expects to report a net loss of approximately $365 million to $415 million for the December 2003 quarter under GAAP. # # # 1103/431-DUK Pension Plan ENDNOTES - --------- (1) During 2002, Delta paid $26.4 million in dividends on the ESOP Preferred Stock. (2) Delta estimates the impact of the dividend suspension in the first year would be two tenths of one percent of the $72 stated value of each share of ESOP Preferred Stock held in a participant's account. 3 (3) Delta will record this additional minimum pension liability charge to equity in accordance with Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions." (4) Delta will record this settlement charge in accordance with Statement of Financial Accounting Standards No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits." (5) This non-cash charge relates to the retirement of approximately 620 pilots during the year ended Sept. 30, 2003. In contrast, an average of approximately 290 pilots retired annually between calendar years 2000 and 2002. (6) Delaware law generally prohibits a company from paying dividends on its stock, or redeeming or purchasing its stock for cash or other property, unless the company has sufficient "surplus." "Surplus" generally is defined as the excess of a company's net assets over the aggregate par value of its issued stock. Due to the effect of its estimated net loss for the December 2003 quarter and the charge to equity discussed in this press release, Delta believes it will have negative equity of approximately $600 million at Dec. 31, 2003. (7) The Savings Plan is distinct from Delta's defined benefit pension plans. At Oct. 31, 2003, the total assets of Delta's defined benefit pension plans were approximately $7 billion. The defined benefit plans do not own any Delta stock. (8) Endnote 6 to this press release summarizes the applicable limitation under Delaware law. (9) These factors include the duration of the period during which Delta may not redeem ESOP Preferred Stock for cash under Delaware law; the fair market value of Delta common stock when ESOP Preferred Stock is redeemed; and the number of shares of ESOP Preferred Stock redeemed by Savings Plan participants who terminate their employment with Delta or elect to diversify their Savings Plan accounts. Statements in this news release that are not historical facts, including statements regarding Delta's beliefs, expectations, intentions or strategies, may be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the beliefs, expectations, intentions and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the effects of terrorist attacks, military conflicts, the state of the domestic and international economy, demand for air travel, the availability and cost of aircraft fuel, competitive factors in the airline industry and the outcome of negotiations on collective bargaining agreements and other labor issues. Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in Delta's Securities and Exchange Commission filings, including its Form 10-K for the year ended Dec. 31, 2002 and Pre-Effective Amendment No. 1 to its Registration Statement on Form S-3 filed with the Commission on Oct. 14, 2003. Caution should be taken not to place undue reliance on Delta's forward-looking statements, which represent Delta's views only as of Nov. 12, 2003, and which Delta has no current intention to update. 4 -----END PRIVACY-ENHANCED MESSAGE-----