Delta Airlines 2002 Annual Report Download - page 119

- A $68 million gain in 2001 compared to a $159 million charge in 2000
for fair value adjustments of financial instruments accounted for under
SFAS 133. This relates to derivative instruments we use in our fuel
hedging program and to our equity warrants and other similar rights in
certain companies.
- A $16 million one-time, non-cash gain in 2000 related to our equity
investment in Worldspan. This gain represents our share of Worldspan's
favorable outcome in certain arbitration proceedings.
The change in other income (expense) is also attributable to the following:
- Interest expense increased $119 million in 2001 primarily due to higher
levels of outstanding debt;
- Interest income decreased $34 million in 2001 primarily due to lower
interest rates; and
- Miscellaneous expense, net was $47 million in 2001 compared to $27
million in income in 2000 mainly due to a decrease in our equity
earnings from Worldspan.
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
During 2000 we recorded a $164 million cumulative effect, non-cash charge ($100
million net of tax, or $0.77 diluted EPS) resulting from our adoption of SFAS
133 on July 1, 2000 (see Note 4 of the Notes to the Consolidated Financial
Statements).
Financial Condition and Liquidity
SOURCES AND USES OF CASH
2OO2
Cash and cash equivalents totaled $2.0 billion at December 31, 2002, compared to
$2.2 billion at December 31, 2001. For 2002, net cash provided by operations
totaled $285 million, including receipt of (1) a $472 million tax refund due to
a new tax law and (2) $112 million in compensation under the Stabilization Act.
Our cash flows from significant financing and investing activities are described
below.
Capital expenditures, including aircraft acquisitions made under seller
financing arrangements, were $2.0 billion during 2002 and included the
acquisition of four B-737-800, three B-767-400, one B-777-200, 34 CRJ-200 and
15 CRJ-700 aircraft.
Debt and capital lease obligations, including current maturities and short-term
obligations, totaled $10.9 billion at December 31, 2002, compared to $9.4
billion at December 31, 2001. During 2002, we entered into or amended the
following credit facilities to increase our liquidity (see Note 6 of the Notes
to the Consolidated Financial Statements):
- We issued a total of $1.4 billion of enhanced equipment trust
certificates, which are secured by 17 B-737-800, one B-757-200, eight
B-767-300ER and six B-767-400 aircraft. These financings are due in
installments through January 2023. At December 31, 2002, there was $1.4
billion outstanding under these financings.
- In addition to the enhanced equipment trust certificates described
above, during 2002 we borrowed $1.2 billion, which is due in
installments through June 2019 and is secured by 56 regional jet
aircraft, five B-737-800 aircraft, three B-767-300ER aircraft and two
B-767-300 aircraft. At December 31, 2002, there was $1.2 billion in
borrowings outstanding under these financings. These transactions
resulted in the termination of a $350 million short-term facility that
we had entered into in January 2002.
- On January 31, 2002, we entered into a facility to finance, on a
secured basis at the time of acquisition, certain future deliveries of
regional jet aircraft. At December 31, 2002, total borrowings available
to us under this facility, as amended, were $197 million, of which $31
million was outstanding.
- On August 22, 2002, we amended and restated an existing credit facility
to (1) extend the term from December 27, 2002 to August 21, 2003 and
(2) reduce the maximum amount we may borrow under this agreement from
$625 million to $500 million. Any borrowings under this facility will
be secured by certain aircraft owned by us. At December 31, 2002, no
borrowings were outstanding under this facility.
- In October 2002, we amended our unsecured letter of credit
Reimbursement Agreement with Commerzbank AG and a group of banks to (1)