Delta Airlines 2003 Annual Report Download - page 51

Table of Contents
the fair 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 us or elect to diversify their Savings Plan accounts.
For additional information about our ESOP Preferred Stock, see Notes 11 and 12 of the Notes to the Consolidated Financial Statements.
Working Capital Position. As of December 31, 2003, we had negative working capital of $1.7 billion, compared to negative working capital of $2.6 billion
at December 31, 2002. This change in our negative working capital balance is primarily due to the increase in our cash and cash equivalents, which is
discussed above in the Sources and Uses of Cash section of Management's Discussion and Analysis in this Form 10-K. A negative working capital position is
normal for us, typically due to our air traffic liability and the fact that we primarily generate revenue by providing air transportation through the utilization of
property and equipment, which are classified as long-term assets.
Credit Ratings and Covenants. Since September 11, 2001, our issuer credit ratings have been lowered to B3 by Moody's, to B+ by S&P and to B by Fitch.
Our senior unsecured long-term debt is rated Caa2 by Moody's, B- by S&P and B by Fitch. S&P and Fitch have each stated that their ratings outlook for our
senior unsecured debt is negative, while Moody's has stated that its outlook is stable. Our credit ratings may be lowered further. While we do not have debt
obligations that accelerate as a result of a credit ratings downgrade, our credit ratings have negatively impacted our ability to issue unsecured debt, renew
outstanding letters of credit that back certain of our obligations and obtain certain financial instruments that we use in our fuel hedging program. Our credit
ratings have also increased the cost of our financing transactions and the amount of collateral required for certain financial instruments, insurance coverage
and vendor agreements. To the extent we are unable to access the capital markets, or our financing costs continue to increase, including as a result of further
credit ratings downgrades, our business, financial position and results of operations would be materially adversely impacted.
Our credit facilities do not contain any negative financial covenants. Our Reimbursement Agreement with GECC includes a Collateral Value Test. For
additional information about this test, see Note 6 of the Notes to the Consolidated Financial Statements.
As is customary in the airline industry, our aircraft lease and financing agreements require that we maintain certain levels of insurance coverage, including
war-risk insurance. We were in compliance with these requirements at December 31, 2003 and 2002. For additional information about our war-risk insurance
currently provided by the U.S. government under the Stabilization Act, see Note 19 in the Notes to the Consolidated Financial Statements.
For additional information on our liquidity, see the Business Environment section of Management's Discussion and Analysis in this Form 10-K.
Prior Years
2002. Cash and cash equivalents totaled $2.0 billion at December 31, 2002. Net cash provided by operations totaled $285 million during 2002,
including receipt of (1) a $472
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