Form 11-K
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
11-K
[X]
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For
fiscal year ended December 31, 2004
[
] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the
transition period from ______________ to ______________
COMMISSION
FILE NUMBER: 1-5424
A.
Full title of the plan and address of the plan if different from that
of
the issuer named below:
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
Atlantic
Southeast Airlines, Inc.
100
Hartsfield Centre Parkway, Suite 800
Atlanta,
Georgia 30320
B.
Name of issuer of the securities held pursuant to the plan and the
address
of its principal executive office:
Delta
Air
Lines, Inc.
Hartsfield
International Airport
Atlanta,
Georgia 30320
Atlantic
Southeast Airlines, Inc.
Investment
Savings Plan
Audited
Financial Statements and Supplemental Schedule
As
of December 31, 2004 and 2003
and
for the year ended December 31, 2004
with
Report of Independent Registered Public Accounting
Firm
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
Audited
Financial Statements and Supplemental Schedule
As
of
December 31, 2004 and 2003 and year ended December 31, 2004
Contents
Report
of Independent Registered Public Accounting Firm
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1
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Audited
Financial Statements
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|
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Statements
of Net Assets Available for Benefits
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2
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Statement
of Changes in Net Assets Available for Benefits
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3
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Notes
to Financial Statements
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4
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|
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Supplemental
Schedule
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|
|
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Schedule
of Assets (Held at End of Year)
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10
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[Letterhead
of Barfield,
Murphy, Shank & Smith, P.C.]
Report
of Independent Registered Public Accounting Firm
Plan
Administrator
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
We
have
audited the accompanying statement of net assets available for benefits of
Atlantic Southeast Airlines, Inc. Investment Savings Plan as of December
31, 2004
and the
related statement of changes in net assets available for benefits for the year
then ended. These financial statements are the responsibility of the Plan’s
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The
financial statements of the Plan as of and for the year ended December 31,
2003
were audited by other auditors whose report dated May 28, 2004 expressed an
unqualified opinion on those statements.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In
our
opinion, the 2004 financial statements referred to above present fairly, in
all
material respects, the net assets available for benefits of the Plan as of
December
31, 2004 and
the
changes in its net assets available for benefits for the year then ended, in
conformity with accounting principles generally acepted in the United States
of
America.
Our
audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2004 is presented for the purposes
of
additional analysis and is not a required part of the financial statements,
but
is supplementary information required by the Department of Labor’s Rules and
Regulations for the Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. This supplemental schedule is the responsibility
of
the Plan's management. The supplemental schedule has been subjected to the
auditing procedures applied in our audit of the financial statements and, in
our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/
Barfield, Murphy, Shank & Smith, P.C.
Birmingham,
Alabama
June
23,
2005
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
Statements
of Net Assets Available for Benefits
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|
December
31
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2004
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|
2003
|
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|
|
|
|
|
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Assets
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|
|
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Investments,
at fair value
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$
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89,155,779
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$
|
72,644,087
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|
|
|
|
|
|
|
|
|
Contributions
receivable:
|
|
|
|
|
|
|
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Employer
|
|
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3,734,004
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|
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3,251,776
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Participant
|
|
|
357,934
|
|
|
306,944
|
|
|
|
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4,091,938
|
|
|
3,558,720
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|
Net
assets available for benefits
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$
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93,247,717
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$
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76,202,807
|
|
See
accompanying notes.
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
Statement
of Changes in Net Assets Available for Benefits
|
|
Year
ended
December
31
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|
2004
|
|
Additions
|
|
|
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Contributions:
|
|
|
|
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Employer
|
|
$
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3,717,700
|
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Participant
|
|
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11,284,183
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|
|
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15,001,883
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|
|
|
|
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Investment
income:
|
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Interest
and dividends
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2,593,020
|
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Net
appreciation in fair value of investments
|
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2,498,938
|
|
|
|
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5,091,958
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Total
additions
|
|
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20,093,841
|
|
|
|
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|
Deductions
|
|
|
|
|
Distributions
to participants
|
|
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2,975,907
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Administrative
expenses
|
|
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73,024
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Total
deductions
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3,048,931
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|
|
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Net
increase in net assets available for benefits
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17,044,910
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Net
assets available for benefits:
Beginning
of year
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76,202,807
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|
End
of year
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$
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93,247,717
|
|
See
accompanying notes.
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
Notes
to Financial Statements
December
31, 2004 and 2003
1.
Description of Plan
The
following description of the Atlantic Southeast Airlines, Inc. Investment
Savings Plan (the “Plan”) provides only general information. Participants should
refer to the Summary Plan Description for a more complete description of the
Plan’s provisions.
General
The
Plan
is a defined contribution plan covering all employees of Atlantic Southeast
Airlines, Inc. (the “Company”). Employees become eligible to enroll on the
enrollment date following the date of completion of ninety days of continuous
employment. The enrollment dates for the Plan are January 1, April 1,
July 1, or October 1 of each year.
Employer
matching contributions are awarded to employees who work at least 1,000 hours
each year and have at least one year of service. Once the length of service
provision is met, the employee is eligible for matching contributions for the
following Plan year, which begins on January 1. Eligible employees must
be
employed on December 31 to
receive a matching contribution for the Plan year. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).
The
Plan
provides Delta Air Lines, Inc. (“Delta”) common stock as one of twelve
investment options available under the Plan. Atlantic Southeast Airlines, Inc.
is a wholly-owned subsidiary of Delta. Effective September 11, 2004, the Delta
common stock investment option was closed to new investments. Funds that were
allocated to Delta common stock as an investment option will be automatically
allocated to the Stable Asset Fund. Plan participants are permitted to transfer
existing account balances from the Delta common stock account to any other
investment in the Plan.
Participant
Accounts
Each
participant’s account is credited with the participant’s contributions and
allocations of the Company’s contributions and Plan investment results. The
allocations are based on participant earnings or account balances, as defined.
A
quarterly recordkeeping fee is charged to each participant’s account.
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
Notes
to Financial Statements (continued)
1.
Description of Plan (continued)
Contributions
Participants
are able to contribute up to 50% of pretax annual compensation, as defined
by
the Plan. Participants may also make rollover contributions from other qualified
defined benefit or defined contribution plans. Participants direct the
investment of their contributions into various investment options offered by
the
Plan.
The
Company may make a discretionary matching contribution of up to 6% of a
participant’s eligible compensation, as defined by the Plan. This matching
contribution is subject to a factor based on years of service for participants
and ranges from 20% to 75%, regardless of the date of participation.
Vesting
All
participant contributions and earnings thereon are 100% vested. Company
contributions to participant accounts vest on a graded basis at 10% per year
for
two years of service, increasing to 20% per year thereafter until fully vesting
after six years of service.
Payment
of Benefits
Upon
termination, participants may elect lump-sum distributions or periodic
distributions over either a 5 or 10-year period. The full value of benefits
are
payable upon normal or postponed retirement, total or permanent disability
or to
beneficiaries upon death of the participant.
Transfers
to Related Plan
Participants
who terminate employment with the Company to begin employment for Delta are
not
permitted to take a distribution of their account balance, but may elect to
sell
their investments in the Plan and transfer the proceeds to the Delta Family-Care
Savings Plan (the “Delta Plan”). There were no transfers to the Delta Plan
during 2004.
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
Notes
to Financial Statements (continued)
1.
Description of Plan (continued)
Forfeitures
Forfeitures
of terminated participants’ nonvested accounts are used to reduce future
matching contributions. Forfeitures were $20,650 during the year ended
December 31, 2004.
Participant
Loans
Participants
may borrow a minimum of $1,000 up to a maximum of the lesser of $25,000 or
50%
of their deferred account balances. Loan terms range from 1 - 5 years. Loans
are
secured by the balance in the participant’s account and bear interest at a rate
commensurate with local prevailing rates as determined at the time of the loan.
Administrative
Expenses
The
Company has paid certain administrative expenses of the Plan. All other
administrative expenses are paid by the Plan as provided in the Plan
document.
Plan
Termination
Under
the
provisions of the Plan, the Company reserves the right to amend or terminate
the
Plan at any time provided that amendments will not divert a vested interest
or
permit any part of the fund to revert to the Company or to be used for any
purpose other than for the exclusive benefit of participants or their
beneficiaries. If the Plan is terminated, each participant’s account will become
fully vested.
2.
Summary of Significant Accounting Policies
Basis
of Presentation
The
Plan’s financial statements have been prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
Notes
to Financial Statements (continued)
2.
Summary of Significant Accounting Policies (continued)
Valuation
of Investments
Mutual
funds and common stock are stated at fair value based on the quoted market
prices. Participant loans are valued at their outstanding balance, which
approximates fair value.
The
Plan
invests in various investments. Investments are exposed to various risks such
as
interest rate, market and credit risks. Due to the level of risk associated
with
certain investments, it is at least reasonable possible that changes in the
values of investments will occur in the near term and that such changes could
materially affect participants’ account balances and the amounts reported in the
statements of net assets available for benefits.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates that affect the reported amounts reported in the financial statements
and accompanying notes. Actual results could differ from those
estimates.
3.
Investments
During
the year ended December 31, 2004, the Plan’s investments (including investments
purchased, sold, as well as held during the year) appreciated in fair value
as
determined by quoted market prices as follows:
Net
appreciation (depreciation) in fair value of investments:
|
|
|
|
|
Delta
Air Lines, Inc. Common Stock
|
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$
|
(2,492,241
|
)
|
Mutual
Funds
|
|
|
4,991,179
|
|
|
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$
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2,498,938
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|
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
Notes
to Financial Statements (continued)
3.
Investments (continued)
The
fair
value of individual investments that represent 5 percent or more of the Plan’s
net assets is as follows:
|
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December
31
|
|
|
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2004
|
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2003
|
|
|
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American
Century Investments:
|
|
|
|
|
|
|
|
Ultra
Fund
|
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$
|
27,950,372
|
|
$
|
23,560,330
|
|
Premium
Capital Reserve Fund
|
|
|
*
|
|
|
8,795,993
|
|
International
Growth Fund
|
|
|
6,530,084
|
|
|
4,725,562
|
|
Equity
Income Fund
|
|
|
10,790,650
|
|
|
8,494,333
|
|
Equity
Index Fund
|
|
|
10,993,228
|
|
|
9,363,251
|
|
Value
Fund
|
|
|
7,111,963
|
|
|
5,049,939
|
|
Stable
Asset Fund
|
|
|
10,718,116
|
|
|
*
|
|
Delta
Air Lines, Inc. Common Stock
|
|
|
*
|
|
|
6,023,702
|
|
*
less
than 5% of the Plan’s net assets
4.
Transactions with Parties-in-Interest
The
Plan
purchased 279,737 shares of Delta common stock with a fair value of $1,971,426
during the year ended December 31, 2004. The Plan sold 290,392 shares of Delta
common stock for proceeds of $1,774,443 resulting in a loss of $2,092,563 based
on historical cost during the year ended December 31, 2004.
The
Plan
held 499,396 and 510,051 shares of Delta common stock with a fair value of
$3,735,337 and $6,023,702 as of December 31, 2004 and 2003,
respectively.
5.
Income Tax Status
The
Plan
has received a determination letter from the Internal Revenue Service dated
May 16, 2003, stating that the Plan is qualified under Section 401(a)
of
the Internal Revenue Code (the “Code”) and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. Although the Plan has
been amended since receiving the determination letter, the Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan, as amended,
is
qualified and the related trust is tax exempt.
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
Notes
to Financial Statements (continued)
6.
Financial Condition of Delta Air Lines, Inc.
Delta’s
financial performance continued to deteriorate during 2004, the fourth
consecutive year it reported substantial losses. Delta also reported a
substantial loss for the March 2005 quarter. In addition, Delta’s
unrestricted cash and cash equivalents and short-term investments have declined
significantly since January 1, 2004. These results underscore Delta’s
urgent need to make fundamental changes in the way it does
business.
In
2004,
Delta announced its transformation plan, which is intended to appropriately
align Delta’s cost structure with the revenue it can generate and to enable
Delta to compete with low-cost carriers. Historically high aircraft fuel prices
are, however, masking the progress Delta is making under its transformation
plan. Accordingly, Delta believes that actions in addition to those contemplated
by its transformation plan are essential if Delta is to achieve its
goals.
Delta
has
significant obligations due in 2005 and thereafter. Delta’s ability to fund its
obligations and maintain adequate liquidity will depend on a number of factors
not within its control, including the level of aircraft fuel prices and
passenger mile yield. If Delta is not successful in further reducing its
operating expenses and continues to experience significant losses, or if Delta’s
cash and cash equivalents and short-term investments otherwise decline to an
unacceptably low level, Delta would need to seek to restructure under
Chapter 11 of the U.S. Bankruptcy Code. A restructuring under
Chapter 11 of the U.S. Bankruptcy Code may be particularly difficult
for
Delta because it pledged substantially all of its remaining unencumbered
collateral in connection with transactions it completed in the
December 2004 quarter as a part of its out-of-court
restructuring.
Supplemental
Schedule
Atlantic
Southeast Airlines, Inc. Investment Savings Plan
EIN:
58-1354495 Plan No.: 001
Schedule
H, Line 4i
Schedule
of Assets (Held at End of Year)
December
31, 2004
(a)
|
(b)
Identity
of Issue, Borrower,
Lessor
or Similar Party
|
(c)
Description
of Investment including
maturity
date, rate of interest, collateral,
par,
or maturity value
|
(e)
Current
Value
|
|
|
|
|
|
American
Century Investments
|
Stable
Asset Fund
|
$
|
10,718,116 |
|
|
Short-Term
Government Fund
|
2,453,928
|
|
|
Strategic
Allocation Fund - Aggressive
|
510,944
|
|
|
Strategic
Allocation Fund - Conservative
|
78,723
|
|
|
Strategic
Allocation Fund - Moderate
|
3,145,865
|
|
|
Equity
Index Fund
|
10,993,228
|
|
|
Equity
Income Fund
|
10,790,650
|
|
|
International
Growth Fund
|
6,530,084
|
|
|
Ultra
Fund
|
27,950,372
|
|
|
Value
Fund
|
7,111,963
|
|
|
|
80,283,873
|
|
|
|
|
|
Buffalo
Funds
|
Small
Cap Fund
|
3,061,516
|
|
|
|
|
*
|
Delta
Air Lines, Inc.
|
Common
Stock
|
3,735,337
|
|
|
|
|
*
|
Participant
Loans
|
Interest
rates from 4.4% to 9.1%
maturing
through 2008
|
2,075,053
|
|
|
|
$
|
89,155,779 |
*
Indicates a party-in-interest to the Plan.
Column
(d) cost information is not applicable for participant directed
investments.
SIGNATURES
The
Plan
Pursuant
to the requirements of the Securities Exchange Act of 1934, the trustees (or
other persons who administer the employee benefit plan) have duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
ATLANTIC
SOUTHEAST AIRLINES, INC. INVESTMENT SAVINGS PLAN
|
/s/ Charles
J.
Thibaudeau
By:
Charles
J. Thibaudeau
Plan Administrator
|
Date: June
28,
2005
EXHIBIT
INDEX
Exhibit
23.1
|
Consent
of Barfield, Murphy, Shank & Smith, P.C.
|
|
|
Exhibit
23.2
|
Consent
of Ernst & Young LLP
|