Delta Airlines 2002 Annual Report Download - page 152

Notes to the Consolidated Financial Statements
COVENANTS AND CHANGE IN CONTROL PROVISIONS
The Reimbursement Agreement, as amended, contains covenants that (1) require us
to maintain a minimum of $1 billion of unrestricted cash, cash equivalents and
short-term investments at the end of each month; (2) limit the amount of current
debt and convertible subordinated debt that we may have outstanding; and (3)
limit our annual flight equipment rental expense. It also provides that, upon
the occurrence of a change in control of Delta, we shall, at the request of the
banks, deposit cash collateral with the banks in an amount equal to all letters
of credit outstanding and other amounts we owe under the Reimbursement
Agreement.
As is customary in the airline industry, our aircraft lease and financing
agreements require that we maintain certain levels of insurance coverage. We
were in compliance with all of the covenants and requirements discussed above at
December 31, 2002 and 2001.
OTHER FINANCING ARRANGEMENTS
On December 12, 2001, we entered into an agreement under which we were able to
borrow, prior to July 1, 2002, up to $935 million on a secured basis. Upon
completion of the Series 2002-1 enhanced equipment trust certificates financing
on April 30, 2002, this facility terminated. No borrowings were outstanding
under this facility during its term.
On December 28, 2001, we entered into a credit facility with certain banks under
which, as amended, we may borrow up to $500 million on a secured basis until
August 21, 2003, subject to certain conditions. The banks' lending commitment
under this facility is reduced, however, to the extent we receive net cash
proceeds from the issuance of certain financings. The interest rate under this
facility is, at our option, LIBOR or a specified base rate plus a margin that
varies depending on the period during which borrowings are outstanding. Any
borrowings under this facility will be secured by certain aircraft owned by us.
At December 31, 2002 and 2001, no borrowings were outstanding under this
facility.
On January 31, 2002, we entered into a facility under which we were able to
borrow up to approximately $350 million secured by certain regional jet aircraft
which we purchased for cash. This facility was scheduled to expire on February
1, 2003, except that amounts borrowed prior to that date were due between 366
days and 18 months after the date of borrowing. In December 2002, we utilized as
security for longer-term financings all of the regional jet aircraft that served
as collateral under this facility. As a result, we terminated this facility on
December 19, 2002. No borrowings were outstanding under this facility on that
date.
Also 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, the total borrowings available to us under this
facility, as amended, were $197 million, of which $31 million was outstanding.
Borrowings under this facility (1) are due between 366 days and 18 months after
the date of borrowing (subject to earlier repayment if certain longer-term
financing is obtained for these aircraft) and (2) bear interest at LIBOR plus a
margin.
We have available to us long-term, secured financing commitments from a third
party that we may elect to use for a substantial portion of the commitments for
regional jet aircraft to be delivered to ASA and Comair through 2004 (see Note
9). Any borrowings under these commitments would be at a fixed interest rate
determined by reference to 10-year U.S. Treasury Notes and would have various
repayment dates.
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