1. Annual Report Delta Airlines, Inc. Bradley Frost ACG2021 Section 080

2. Executive Summary
Delta has fallen on hard times after two consecutive years of great losses, Delta has filed for Chapter 11 bankruptcy. As of October 13th, Delta will be delisted from the New York Stock Exchange

3. Part A. Introduction CEO: Gerald Grinstein
Home Office: Atlanta, Georgia
End of last fiscal year: December 31st, 2004
Delta is the second largest air carrier in the world
Delta offers flights to 502 destinations in 88 countries

4. Part A. Audit Report Independent Auditors: Deloitte & Touche LLP
Deloitte & Touche have stated that Delta Airlines, Inc. has undergone continued loss. They have serious liquidity issues and more than likely will have to seek protection under Chapter 11 bankruptcy. They also stated that Delta has presented all financial information fairly and have complied with accounting principles generally accepted in the United States

5. Part A. Stock Market Information
Most recent price of the company’s stock: $0.85
Twelve month trading range of the company’s stock
Payment of dividends has been suspended as of December 28th, 2003
Date of the above information: October 7, 2005
In my opinion, investors should hold on to their stock in Delta. Things can only get better!

6. Part B. Industry Situation and Company Plans
The airline industry has changed drastically due to deregulation. Delta has added such things as an improved, user friendly website and has refurbished aircraft interiors. They are also trying to compete with the low cost carriers by becoming a more efficient and simplified airline. Due to their chapter 11 filing, Delta will under go a massive restructuring initiative.

7. Part C. Income Statement
Delta uses a single step income statement
Delta had increased losses over the last two years
2004
2003
Gross loss
(3,308,000,000)
(785,000,000)
Income from operations
15,002,000,000
14,087,000,000
Net loss
(5,198,000,000)
(773,000,000)

8. Part C. Balance Sheet
Assets = Liabilities Shareholders Equity
2003
25,939,000,000
26,598,000,000
(659,000,000)
2004
21,801,000,000
27,597,000,000
(5,796,000,000)
Assets have gone down, while liabilities and shareholders deficit has gone up

9. Part C. Statement of Cash Flows
Cash flows from operations are greater than the net loss over the past two years.
The company sold a lot of their investments
Delta’s primary source of financing is long term loans.
Overall, cash has decreased significantly over the past two years.

10. Part D. Accounting Policies
Delta prepares financial statements in conformity with GAAP.
Passenger revenues are recorded when transportation is provided.
Estimates and assumptions are made based on historical experience.

11. Part E. Financial Analysis Liquidity Ratios
2004
2003
Working Capital
(2,335,000)
(1,607,000)
Current Ratio
.61 times
.74 times
Receivable Turnover
7.47 times
1.17 times
Avg Days Sales uncollected
48.9 days
312 days
Inventory Turnover
N/A
Avg Days Inventory on Hand

12. Part E. Financial Analysis Profitability Ratios
2004
2003
Profit Margin
.35% loss
5.6% loss
Asset Turnover
.67
.54
Return On Assets
(24%)
(3%)
Return on Equity
90%
119%

13. Part E. Financial Analysis Solvency Ratio
2004
2003
Debt to Equity
(4.6)
(39)

14. Part E. Financial Analysis Market Strength Ratios
2004
2003
Price/Earnings Ratio
.20
2.39
As of December 28th,2003 Delta no longer pays out dividends