Delta Airlines 2004 Annual Report Download - page 40

Table of Contents
Financial Condition and Liquidity
Sources and Uses of Cash — 2004
Cash and cash equivalents and short-term investments totaled $1.8 billion at December 31, 2004, compared to $2.7 billion at December 31, 2003. For
2004, net cash used in operating activities totaled $1.1 billion, which includes the following items:
• A $5.2 billion net loss for 2004. This net loss reflects a $1.9 billion impairment charge related to goodwill and intangible assets, $1.2 billion
of depreciation and amortization, and a $1.2 billion income tax provision related to a valuation allowance against our net deferred income
tax assets, all of which are non-cash items.
• A $455 million funding of our qualified defined benefit pension plans.
• A $141 million increase in total restricted cash, primarily to support certain projected insurance obligations related to workers'
compensation.
Capital expenditures include (1) cash used for flight equipment, including advance payments; (2) cash used for ground property and equipment (including
expenditures, net of reimbursements, related to our Boston airport terminal project); and (3) aircraft delivered under seller-financing arrangements (which is a
non-cash item). During 2004, capital expenditures were approximately $920 million, which included the acquisition of 23 CRJ-700 aircraft. We acquired 17
of these regional jet aircraft through seller-financing arrangements for $314 million.
Debt and capital lease obligations, including current maturities and short-term obligations, totaled $13.9 billion at December 31, 2004, compared to
$12.6 billion at December 31, 2003. During 2004, we engaged in the following financing transactions:
• We entered into secured financing arrangements under which we borrowed approximately $920 million, which is due in installments through
June 2020. We used approximately $500 million of this amount to repay interim financing for 18 CRJ-200 and 12 CRJ-700 aircraft.
• In February 2004, we issued $325 million principal amount of 27/8% Convertible Senior Notes due 2024 ("27/8% Convertible Senior Notes").
• In February 2004, we entered into an agreement to purchase 32 CRJ-200 aircraft to be delivered in 2005. In connection with this agreement,
we received a commitment from a third party to finance, on a secured basis at the time of acquisition, our purchase of these regional jet
aircraft.
• In July 2004 we amended three of our existing secured loan agreements with General Electric Capital Corporation ("GECC"). As a result of
these amendments, we received $152 million of incremental liquidity.
• In November 2004, we exchanged (1) $237 million aggregate principal amount of our enhanced equipment trust certificates due in 2005 and
2006 for $235 million principal amount of newly issued 9.5% Senior Secured Notes due 2008; and (2) approximately $135 million principal
amount of our unsecured 7.7% Notes due 2005 for a like principal amount of newly issued unsecured 8.0% Senior Notes due 2007 and
5,488,054 shares of our common stock.
• In November 2004, we entered into financing agreements with GE Commercial Finance and Amex to borrow approximately $1.1 billion.
• We completed agreements with other aircraft lenders to defer $112 million in debt obligations due in 2004 through 2006 to later years.
During the December 2004 quarter, we entered into agreements with aircraft lessors and lenders under which we expect to receive average annual cash
savings of approximately $57 million between 2005 and 2009, which will also result in some cost reductions. We issued an aggregate of 4,354,724 shares of
our common stock to the aircraft lessors and lenders in these transactions. Separately, as a result of agreements with approximately 115 suppliers, we expect
to realize average annual benefits of approximately $46 million during 2005, 2006 and 2007.
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