Annual Report Delta Airlines, Inc. Caitlin Donato ACG *ALL FIGURES IN MILLIONS

Executive Summary Delta is in a rebuilding stage after filing chapter 11 bankruptcy. Corporate has pulled money from salaries, pensions, and retirement benefits in the past two years in hopes to repay debts. The company still has an overall loss for the year.

Part A. Introduction CEO: Gerald Grinstein Home Office: Atlanta Georgia Ending date of last fiscal year: December 31 st, 2004 Delta provides air travel around the world Delta flies world wide to 244 Domestic cities, in 40 different countries

Part A. Audit Report Independent auditors: Ernst & Young LLP A report on the consolidated financial statement for 2005 by Ernst & Young LLP has not yet been released. In their review for 2003 and 2004 the report did not include an adverse opinion. It did comment on the fact that Delta is still a growing concern. It also mentioned a change in methods in accounting for goodwill and other intangible assets.

Part A. Stock Market Information Delta stock: 1.30 Twelve month trading range of the company’s stock Dividend per share: N/A Date of above: October 9 th, 2006 Buy Delta stock, price is low and has been increasing over the past two years.

Part B. Industry Situation and Company Plans In my opinion Delta had to hit bottom in order to rebuild. I feel that they will become a successful company again in the years to come. The company’s ratios have improved over the last two years, and there is no reason to think that improvement will not continue. The company is using their assets more wisely which will help them to bounce back from bankruptcy. Also receivables are becoming liquid. Delta's Corporate info

Part C. Income Statement The format of Delta’s Income statement resembles like a multi-step Income statement. Delta’s expenses are decreasing which in turn is increasing their gross profit Gross Profit Loss From operations (2001)(3308) Net Loss(3818)(5198)

Part C. Balance Sheet From 2004 to 2005 Delta’s long term debt increased. The accounts that changed the most was the postretirement, Pension and other related benefits. They dropped off completely. YearAssets=Liabilities +Stockholders’ Equity

Part C. Statement of Cash Flows Cash flows from operations are more than net loss for the past two years. Net loss for 2004 was 5,198, net loss for operations was 1,008. Net loss for 2005 was 3,818, cash flow for operations was 175. The company has suffered from it’s investing activities. The primary source of financing was proceeds from DIP. Overall, cash has increased over the past two years.

Part D. Accounting Policies Delta prepares financial statements in conformity with GAAP Topics of the Notes to the Consolidated financial statements 1.Revenue and Network Productivity Improvements 2.In-Court Restructuring. 3.Competitive Employment Costs 4.Notices to Creditors; Effect of Automatic Stay. 5.Appointment of Creditors Committee. 6.Rejection of Executor Contracts. 7.Request for Adequate Protection. 8.Rejection of Collective Bargaining Agreements. 9.Payment of Insurance Benefits to Retired Employees 10.Magnitude of Potential Claims.

Part E. Financial Analysis Liquidity Ratios Working Capital for 2005 is (785),and for 2004 is (2335), this means that Delta’s liabilities are not going to be paid from their assets. Current Ratio for 2005 is.85, and for 2004 is.60 this means that Delta has $.85 and $.60 respectively of current assets for each $1.00 of liability. Receivable turnover for 2005 is (4.6), and for 2004 is (7.6) which means that receivables were not turned into cash. Average days’ sales uncollected for 2005 is (79.3), and for 2004 is (48) which means that the average turnover is every (79.3), and (48) days. Inventory turnover is N/A because Delta provides a service not inventory. Average days’ inventory on hand is N/A for the same reason.

Part E. Financial Analysis Profitability Ratios Profit margin for 2005 is (42%) and is (29%) for This means that there was negative percents of sales dollars resulting in net income. Asset turnover for 2005 was (.85) times, and for 2004 was (1.44) times. This means that assets were not used effectively to produce sales. Return on assets was 3.6 for 2005, and 4.2 for This means that for every dollar invested, Delta’s assets generated 3.6 cents of net income. Return on equity for 2005 was (1.6) and (2.6) for This means that stockholders were losing money for every dollar of stock.

Part E. Financial Analysis Solvency Ratio Debt to equity for 2005 was (53%) and for 2004 was (46%). this means that Delta receives its financing from creditors.

Part E. Financial Analysis Market Strength Ratios For the past two years, calculate and comment on: Price/earnings per share for 2005 is (.04) and for 2004 it was (.20). This is a measure of investors’ confidence in Delta. Delta does not currently pay out dividends.