<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
Commission File Number 0-23642
NORTHWEST AIRLINES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 41-1905580
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 LONE OAK PARKWAY, EAGAN, MINNESOTA 55121
(Address of principal executive offices)
(Zip Code)
(612) 726-2111
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
At March 31, 1999, there were 84,097,712 shares of the registrant's Common Stock
outstanding.
<PAGE>
NORTHWEST AIRLINES CORPORATION
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
--------
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Statements of Operations - Three months
ended March 31, 1999 and 1998. 3
Condensed Consolidated Balance Sheets - March 31, 1999 and
December 31, 1998 4
Condensed Consolidated Statements of Cash Flows - Three months
ended March 31, 1999 and 1998. 5
Notes to Condensed Consolidated Financial Statements 6
The Computations of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Fixed Charges and Preferred Stock Requirements, are
attached hereto and filed as Exhibits 12.1 and 12.2.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
EXHIBIT INDEX 14
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NORTHWEST AIRLINES CORPORATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------------------------------------
Three months ended
March 31
(UNAUDITED, IN MILLIONS EXCEPT PER SHARE AMOUNTS) 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING REVENUES
Passenger $ 1,883 $ 2,048
Cargo 154 168
Other 244 213
----------- ------------
2,281 2,429
OPERATING EXPENSES
Salaries, wages and benefits 817 767
Aircraft fuel and taxes 229 313
Aircraft maintenance materials and repairs 178 184
Commissions 171 188
Other rentals and landing fees 115 111
Depreciation and amortization 114 101
Aircraft rentals 84 86
Other 587 523
----------- ------------
2,295 2,273
----------- ------------
OPERATING INCOME (LOSS) (14) 156
OTHER INCOME (EXPENSE)
Interest expense, net (92) (55)
Interest of mandatorily redeemable preferred
security holder (7) (6)
Investment income 10 16
Foreign currency gain 8 2
Other 47 2
----------- ------------
(34) (41)
----------- ------------
INCOME (LOSS) BEFORE INCOME TAXES (48) 115
Income tax expense (benefit) (19) 44
----------- ------------
NET INCOME (LOSS) $ (29) $ 71
----------- ------------
----------- ------------
Earnings (loss) per common share:
BASIC $ (.36) $ .72
----------- ------------
----------- ------------
DILUTED $ (.36) $ .66
----------- ------------
----------- ------------
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
NORTHWEST AIRLINES CORPORATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------------------------------------------------------
March 31 December 31
(UNAUDITED, IN MILLIONS) 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 451 $ 480
Short-term investments 464 48
Accounts receivable, net 686 665
Flight equipment spare parts, net 425 387
Prepaid expenses and other 346 290
-------------- ----------------
2,372 1,870
PROPERTY AND EQUIPMENT
Flight equipment, net 4,911 4,683
Other property and equipment, net 952 976
-------------- ----------------
5,863 5,659
FLIGHT EQUIPMENT UNDER CAPITAL LEASES, NET 604 610
OTHER ASSETS
International routes, net 698 704
Investments in affiliated companies 691 676
Other 988 762
-------------- ----------------
2,377 2,142
-------------- ----------------
$ 11,216 $ 10,281
-------------- ----------------
-------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Air traffic liability $ 1,528 $ 1,107
Accounts payable and other liabilities 1,935 1,978
Current maturities of long-term debt and
capital lease obligations 270 377
-------------- ----------------
3,733 3,462
LONG-TERM DEBT 4,356 3,682
LONG-TERM OBLIGATIONS UNDER CAPITAL LEASES 582 597
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 1,080 1,113
Pension and postretirement benefits 631 500
Other 536 579
-------------- ----------------
2,247 2,192
MANDATORILY REDEEMABLE PREFERRED SECURITY OF
SUBSIDIARY WHICH HOLDS SOLELY NON-RECOURSE
OBLIGATION OF COMPANY 530 564
REDEEMABLE PREFERRED STOCK 257 261
COMMON STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 1 1
Additional paid-in capital 1,443 1,445
Accumulated deficit (677) (649)
Accumulated other comprehensive loss (51) (68)
Treasury stock (1,205) (1,206)
-------------- ----------------
(489) (477)
-------------- ----------------
$ 11,216 $ 10,281
-------------- ----------------
-------------- ----------------
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
NORTHWEST AIRLINES CORPORATION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------------------------
Three months ended
March 31
(UNAUDITED, IN MILLIONS) 1999 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 243 $ 113
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (222) (226)
Net decrease (increase) in short-term investments (446) 325
Other, net 31 (28)
-------------- --------------
Net cash provided by (used in) investing activities (637) 71
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 421 399
Payments of long-term debt and capital lease obligations (29) (321)
Proceeds from sale and leaseback transactions -- 42
Other, net (27) (10)
-------------- --------------
Net cash provided by financing activities 365 110
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (29) 294
Cash and cash equivalents at beginning of period 480 740
-------------- --------------
Cash and cash equivalents at end of period $ 451 $ 1,034
-------------- --------------
-------------- --------------
Cash and cash equivalents and unrestricted short-term
investments at end of period $ 451 $ 1,101
-------------- --------------
-------------- --------------
Available to be borrowed under credit facilities $ 754 $ 1,079
-------------- --------------
-------------- --------------
Noncash Transactions:
Manufacturer financing obtained in connection with
the acquisition of aircraft $ 265 $ 83
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
NORTHWEST AIRLINES CORPORATION
- -------------------------------------------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. The condensed consolidated financial statements of Northwest Airlines
Corporation (the "Company") included herein have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as permitted by such
rules and regulations. These financial statements and related notes should
be read in conjunction with the financial statements and notes thereto
included in the Company's audited consolidated financial statements for the
year ended December 31, 1998 contained in the Company's Annual Report on
Form 10-K for 1998 (the "Annual Report"). The Company's accounting and
reporting policies are summarized in Note A of the Notes to Consolidated
Financial Statements in the Annual Report.
In the opinion of management, the interim financial statements reflect
adjustments, consisting of normal recurring accruals, which are necessary
to present fairly the Company's financial position, results of operations
and cash flows for the periods indicated.
2. The income tax expense (benefit) is based on estimated annual effective tax
rates, which differ from the federal statutory rate of 35% primarily due to
state income taxes and certain nondeductible expenses.
3. At March 31, 1999, maturities of long-term debt were $194 million in 1999,
$299 million in 2000, $162 million in 2001, $1.11 billion in 2002 and $123
million in 2003.
At March 31, 1999, the Company had $754 million available to be borrowed
under revolving credit facilities along with $451 million of cash, cash
equivalents and unrestricted short-term investments, which provided the
Company with $1.21 billion of available liquidity.
4. On February 16, 1999, the Company's clerks, agents and equipment service
employees represented by the International Association of Machinist and
Aerospace Workers ratified a new four-year agreement that, among other
things, provided increased pension benefits. In accordance with Statement
of Financial Accounting Standards No. 87, "Employers' Accounting for
Pensions," the Company remeasured plan assets and obligations resulting
in a $253 million increase to the minimum pension liability and a
$241 million increase to the intangible pension asset included in other
assets in the accompanying consolidated balance sheets.
5. The Company is managed as one cohesive business unit, the revenues of which
are derived primarily from the commercial transportation of passengers and
cargo. Geographic operating revenues are based on allocation guidelines
provided by the U.S. Department of Transportation ("DOT"), which classifies
flights between the U.S. and foreign destinations into regions, and thus,
differs from the definition of foreign operations under generally accepted
accounting principles. The following table shows the operating revenues for
each region based on such DOT guidelines (in millions):
<TABLE>
<CAPTION>
Three months ended
March 31
---------------------------
1999 1998
---------- -----------
<S> <C> <C>
Domestic $ 1,607 $ 1,708
Pacific, principally Japan 476 546
Atlantic 198 175
---------- -----------
Total operating revenues $ 2,281 $ 2,429
---------- -----------
---------- -----------
</TABLE>
6
<PAGE>
6. As of March 31, 1999, the Company had firm orders for 99 new aircraft
including five Airbus A320 aircraft, 50 Airbus A319 aircraft, 25 Boeing
757-200 aircraft, 16 Airbus A330 aircraft and three Boeing 747-400
aircraft. Committed expenditures for these aircraft and related equipment,
including estimated amounts for contractual price escalations and
predelivery deposits, will be approximately $760 million in 1999, $290
million in 2000, $363 million in 2001, $498 million in 2002 and $466
million in 2003. Financing has been arranged for the committed Airbus A320
and A319 and Boeing 747-400 aircraft deliveries.
The Company also has firm orders for aircraft that will be operated by and
leased to Northwest Airlink regional carriers. As of March 31, 1999, the
Company had firm orders for 14 Avro RJ85 aircraft and 54 Bombardier
CRJ200 aircraft. Forty-two of the CRJ200 aircraft will be operated by
Express Airlines I. Committed expenditures for these aircraft, including
estimated amounts for contractual price escalations and predelivery
deposits, will be approximately $140 million in 1999, $340 million in
2000, $400 million in 2001, $200 million in 2002 and $150 million in 2003.
7. The following table sets forth the computation of basic and diluted
earnings (loss) per common share (in millions, except share data):
<TABLE>
<CAPTION>
Three months ended March 31
---------------------------------
1999 1998
------------- --------------
<S> <C> <C>
NUMERATOR:
Net income (loss) $ (29) $ 71
------------- --------------
------------- --------------
DENOMINATOR:
Weighted-average shares outstanding
for basic earnings (loss) per share 80,046,801 97,784,562
Effect of dilutive securities:
Series C Preferred Stock -- 8,520,177
Employee stock options -- 1,581,071
------------- --------------
Adjusted weighted-average shares outstanding and assumed
conversions for diluted earnings (loss) per share 80,046,801 107,885,810
------------- --------------
------------- --------------
</TABLE>
For the three months ended March 31, 1999, no incremental shares
related to dilutive securities were added to the denominator because
inclusion of such shares would be antidilutive.
In accordance with the Emerging Issues Task Force Issue No. 97-14,
"Accounting for Deferred Compensation Arrangements Where Amounts
Earned are Held in a Rabbi Trust," 3,953,978 shares held by the
Company's non-qualified rabbi trusts are treated as treasury stock
and excluded from the shares outstanding calculation for basic
earnings per share as of March 31, 1999.
8. Other comprehensive income was $17 million and $1 million for the three
months ended March 31, 1999 and 1998, respectively.
9. In February 1999, the Company sold a portion of its interest in EQUANT N.V.
and recorded a gain of $28 million ($18 million after tax or $.22 per
share) related to this transaction. The gain is recorded in other
non-operating other income in the accompanying consolidated statements of
operations.
7
<PAGE>
10. The following summary data is presented for Northwest Airlines, Inc., the
principal indirect operating subsidiary of the Company (in millions):
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended
March 31
------------------------
1999 1998
---------- -----------
<S> <C> <C>
Operating revenues $ 2,128 $ 2,299
Operating expenses 2,153 2,154
---------- -----------
Operating income (loss) (25) 145
Other expense 47 45
---------- -----------
Income (loss) before income taxes (72) 100
Income tax expense (benefit) (24) 40
---------- -----------
Net income (loss) $ (48) $ 60
---------- -----------
---------- -----------
CONDENSED CONSOLIDATED BALANCE SHEET DATA March 31 December 31
1999 1998
---------- -----------
Current assets $ 2,108 $ 1,602
Noncurrent assets 7,662 7,242
Current liabilities 3,831 3,599
Long-term debt and obligations under capital leases 4,623 3,955
Deferred credits and other liabilities 1,074 1,001
Mandatorily redeemable preferred security of subsidiary 530 564
</TABLE>
See also Note R to the Consolidated Financial Statements in the Annual Report.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For the quarter ended March 31, 1999, the Company reported a net loss of $29
million and an operating loss of $14 million. Diluted loss per common share was
$.36 compared with diluted earnings per common share of $.66 in 1998. The
continuing effects of the 1998 strike and labor disruptions during the second
and third quarters negatively impacted the quarter ended March 31, 1999 by
approximately $90 million on a pre-tax basis. In February 1999, the Company
recognized a $28 million ($18 million after tax or $.22 per share) gain from the
sale of a portion of its investment in EQUANT N.V.
Substantially all of the Company's results of operations are attributable to
Northwest Airlines, Inc. ("Northwest") and the following discussion pertains
primarily to Northwest. The Company's results of operations for interim periods
are not necessarily indicative of such results for an entire year due to
seasonal factors as well as competitive and general economic conditions.
Information with respect to the Company's operating statistics follows (1):
<TABLE>
<CAPTION>
THREE MONTHS ENDED %
MARCH 31 CHG.
------------------ ----
Scheduled service: 1999 1998
------ -----
<S> <C> <C> <C>
Available seat miles (ASM) (millions) 23,017 23,774 (3.2)
Revenue passenger miles (millions) 16,325 16,801 (2.8)
Passenger load factor (percent) 70.9 70.7 0.2 pts.
Revenue passengers (thousands) 12,416 12,704 (2.3)
Revenue yield per passenger mile (cents) 11.38 12.03 (5.4)
Passenger revenue per scheduled ASM (cents) 8.07 8.50 (5.1)
Operating revenue per total ASM (cents) (2) 8.88 9.34 (4.9)
Operating expense per total ASM (cents) (2) 8.95 8.67 3.2
Cargo ton miles (millions) 497 501 (0.8)
Cargo revenue yield per ton mile (cents) 30.97 33.47 (7.5)
Fuel gallons consumed (millions) 469 487 (3.7)
Average fuel cost per gallon (cents) 43.91 58.99 (25.6)
Number of operating aircraft at end of period 408 408 --
Full-time equivalent employees at end of period 51,278 49,948 2.7
</TABLE>
(1) All statistics exclude Express Airlines I, Inc. ("Express").
(2) Excludes the estimated revenues and expenses associated with the operation
of Northwest's fleet of eight 747 freighter aircraft and MLT Inc.
RESULTS OF OPERATIONS--THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Operating income decreased $170 million to an operating loss of $14 million in
1999. The unfavorable impacts of a $148 million decrease in operating revenues
and increased salaries, wages and benefits of $50 million were offset by a $84
million decrease in aircraft fuel cost.
OPERATING REVENUES. Operating revenues were $2.28 billion, a decrease of $148
million (6.1%). System passenger revenues (which represented 82.6% of total
operating revenues) decreased 8.1%. The decrease was primarily attributable to a
decrease in scheduled service ASMs and a decrease in passenger revenue per
scheduled ASM ("RASM"). The decrease in RASM was connected with the residual
effects of the 1998 disruptions on premium traffic and a weaker Asian economic
environment. Passenger revenue included $26 million of Express revenues for each
of the three months ended March 31, 1999 and 1998.
9
<PAGE>
The following analysis by market is based on information reported to the
Department of Transportation ("DOT") and excludes Express:
<TABLE>
<CAPTION>
SYSTEM DOMESTIC PACIFIC ATLANTIC
------ -------- ------- --------
<S> <C> <C> <C> <C>
1999
Passenger revenue (in millions) $ 1,857 $ 1,326 $ 374 $ 157
INCREASE/(DECREASE) FROM 1998:
Passenger revenue (in millions) $ (165) $ (115) $ (70) $ 20
Percent (8.1)% (8.0)% (15.5)% 14.4 %
Scheduled service ASMs (capacity) (3.2)% (1.6)% (15.3)% 32.3 %
Passenger RASM (5.1)% (6.5)% (.3)% (13.5)%
Yield (5.4)% (6.6)% (4.0)% (7.0)%
Passenger load factor .2 pts. .1 pts. 2.8 pts. (5.5) pts.
</TABLE>
Domestic passenger revenue decreased due to a decrease in capacity caused by
severe winter weather and also from lower yields attributable to less premium
traffic following the 1998 labor disruptions. The Company had increased revenue
of approximately $13 million from displaced passengers affected by the American
Airlines pilots' sick-out.
Pacific passenger revenue was adversely affected by the continued unfavorable
general economic environment in the Pacific, of which the largest impact was due
to the Japanese economy. In response to the continued weak Asian economic
environment, lower demand and increased competition, the Company reduced
capacity in the region since the first quarter of 1998. This was partially
offset by a 9.3% strengthening of the yen. The average yen per U.S. dollar
exchange rates for the three months ended March 31, 1999 and 1998 were 118 and
129, respectively.
Atlantic passenger revenue increased due to an increase in capacity which
resulted primarily from new flying, including the initiation of
Philadelphia-Amsterdam and Seattle-Amsterdam service and increases in
Detroit-Amsterdam service, offset by a decrease in RASM as a result of less
premium traffic following the 1998 labor disruptions.
Cargo revenue decreased $14 million (8.3%) to $154 million due to .8% fewer
cargo ton miles and a 7.5% decrease in cargo revenue yield per ton mile due to
the weaker Asian economic environment. Other revenue increased $31 million
(14.6%) due primarily to increased revenue from MLT Inc.
OPERATING EXPENSES. Operating expenses increased $22 million (1.0%). Operating
capacity decreased 3.2% to 23.0 billion total service ASMs primarily due to
severe weather in January and March which contributed to the 3.2% increase in
operating expense per total service ASM. Salaries, wages and benefits increased
$50 million (6.5%) due to wage and benefit increases from settled contracts with
collective bargaining units and an increase in average full-time equivalent
employees of 3.4%.
Aircraft fuel and taxes decreased $84 million (26.8%) due primarily to a 25.6%
decrease in average fuel cost per gallon, net of hedging transactions.
Commissions decreased by $17 million (9.0%) primarily due to lower revenues.
Depreciation and amortization increased $13 million due to additional owned
aircraft and aircraft modifications. Other expenses grew $64 million (12.2%)
largely due to higher volume of business for MLT Inc., increased claims and
supplies as a result of severe winter weather and increased outside services.
OTHER INCOME AND EXPENSE. Interest expense-net increased $37 million (67.3%) due
to additional borrowings to fund the Company's cash requirements. The foreign
currency gains for the three months ended March 31, 1999 and 1998 were
attributable to balance sheet remeasurement of foreign currency-denominated
assets and liabilities. Other income increased $45 million primarily due to a
$28 million gain from the sale of a portion of the Company's investment in
EQUANT N.V. and increased earnings from other investments.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had cash and cash equivalents of $451 million and
borrowing capacity of $754 million under its revolving credit facilities,
providing total available liquidity of $1.21 billion. In April 1999, the Company
issued $200 million of unsecured 8.52% notes due 2004. The proceeds are
available for general corporate purposes.
Net cash provided by operating activities for the three months ended March 31,
1999 was $243 million, a $130 million increase compared with the three months
ended March 31, 1998 due primarily to the timing of pension contributions and
higher than normal sale proceeds of frequent flyer miles in excess of revenue in
1999 somewhat offset by the 1999 net loss. Investing activities in the first
quarter of 1999 consisted primarily of the purchase of four Avro RJ85 aircraft
and two Airbus A320 aircraft, the purchase off lease of four DC9-50 aircraft,
costs to commission aircraft before entering revenue service, engine
hushkitting, aircraft modifications and aircraft deposits. Investing activities
in 1998 consisted primarily of costs to commission aircraft before entering
revenue service, the purchase of two Avro RJ85 aircraft and three Airbus A320
aircraft, aircraft deposits and engine hushkitting. Financing activities for the
three months ended March 31, 1999 consisted primarily of the payment of debt and
capital lease obligations and the issuance of $421 million of pass-through
certificates to finance the acquisition of four new Boeing 747-400 aircraft in
1999. Financing activities in 1998 consisted primarily of the issuance of $200
million of 7.625% notes due 2005 and $200 million of 7.875% notes due 2008 and
the payment of debt and capital lease obligations.
OTHER INFORMATION
LABOR AGREEMENTS. In November 1998, at a representation election, a majority of
the mechanics and related employees elected the Aircraft Mechanics Fraternal
Association to be their collective bargaining representative. The International
Association of Machinist and Aerospace Workers is protesting the election and
certification of the vote is still under review by the National Mediation Board
("NMB"). The Company remains in direct negotiations with the International
Brotherhood of Teamsters which represents its flight attendants. Contract
negotiations are being mediated by the NMB. Because the terms of new labor
agreements will be determined by collective bargaining, the Company cannot
predict the outcome of the negotiations at this time.
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Note C to the Consolidated Financial Statements in the Annual
Report contain additional discussion on labor agreements.
ALLIANCES. In May 1999, the Company, KLM Royal Dutch Airlines ("KLM"), and
Alitalia Italian Airlines ("Alitalia") announced that Alitalia will join the
Northwest/KLM trans-Atlantic joint venture. As part of this operating alliance,
the three airlines have jointly applied to the DOT for immunity from the U.S.
antitrust laws.
FOREIGN CURRENCY. The Company is exposed to the effect of foreign currency
exchange rate fluctuations on the U.S. dollar value of foreign
currency-denominated operating revenues and expenses. The Company's largest
exposure comes from the Japanese yen. In recent periods, the yen to U.S.
dollar exchange rate has changed from 133 yen to $1 at March 31, 1998 to 113
yen to $1 at December 31, 1998 to 119 yen to $1 at March 31, 1999. From time
to time the Company uses financial instruments to hedge its exposure to the
Japanese yen. There was no material impact on earnings for the three months
ended March 31, 1999 associated with the forward contracts purchased to hedge
its 1999 yen-denominated ticket sales. Hedging gains or losses are recorded
in passenger revenue when transportation is provided. These forward contracts
hedge approximately 40% of the Company's anticipated remaining 1999
yen-denominated ticket sales. Management's Discussion and Analysis of
Financial Condition and Results of Operations and Note O to the Consolidated
Financial Statements in the Annual Report contain additional discussion on
risk management and financial instruments.
AIRCRAFT FUEL. In the ordinary course of business, the Company manages the price
risk of fuel primarily utilizing futures contracts traded on regulated
exchanges. At March 31, 1999, the Company recorded $1 million of unrealized
gains in accumulated other comprehensive loss as a result of the fuel futures
contracts, which if realized, will be recorded in fuel expense when the related
fuel inventory is utilized throughout 1999. As of March 31, 1999, the Company
had hedged approximately 2% of its remaining 1999 fuel requirements.
11
<PAGE>
YEAR 2000 READINESS. The Company spent $26 million of its initial estimated cost
of $55 million. The Company now estimates that the total project costs will be
somewhat less than the estimated $55 million.
The five phases of the Company's Year 2000 project used for identifying and
modifying the various programs and systems include inventory, assessment,
conversion, testing and implementation. The Company has completed all phases for
94% of its internal information technology ("IT") systems and anticipates
completion of the remaining systems in the third quarter of 1999. These systems
perform such functions as ticketing, passenger check-in, aircraft weight and
balance, flight operations and baggage and cargo processing. The Company is
approximately 95% completed with the assessment phase of the impact of Year 2000
on its non-IT systems and third party relationships, with expected completion in
the second quarter of 1999. The Company expects completion of the conversion
phase of its non-IT systems and third party relationships in the third quarter
of 1999, with completion of testing and implementation in the fourth quarter of
1999. To some extent, the Company's readiness in this area is dependent on the
readiness of third parties. However, the Company's aircraft manufacturers have
determined that its aircraft are Year 2000 compliant.
As a precautionary measure, the Company is also developing entity-wide
contingency plans designed to reduce the impact on continued operation in the
event of failure of the Company's or third parties' systems. Contingency plans
are expected to be in place for the most critical business processes by the end
of the second quarter of 1999 and will be executed as necessary.
Management's Discussion and Analysis of Financial Condition in the Annual Report
contains additional information about this issue.
This section captioned "Year 2000 Readiness" is a "Year 2000 Readiness
Disclosure" as defined in section 3(9) of the "Year 2000 Information and
Readiness Disclosure Act," (Public Law 105-271), enacted in October 1998.
REGULATION. The European Union (EU) has delayed until May 1, 2000 a rule
which will prohibit the registration in Europe of aircraft with hushkits as
of that date and ban hushkitted aircraft registered elsewhere from flying in
European skies as of April 1, 2002. The U.S. has indicated that it will
continue to oppose the new rule. Northwest does not operate any hushkitted
aircraft in Europe. However, unless it is further delayed or modified, the
new rule could reduce the Company's fleet strategy options in relation to
older aircraft, which are often retired and sold in Europe, Africa and Asia.
The new rule does not affect the current book value of Northwest's hushkitted
aircraft.
FORWARD-LOOKING STATEMENTS. Certain of the statements made in this section and
elsewhere in this report are forward-looking and are based upon information
available to the Company on the date hereof. The Company through its management
may also from time to time make oral forward-looking statements. In connection
with the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995, the Company is hereby identifying important factors that could
cause actual results to differ materially from those contained in any
forward-looking statement made by or on behalf of the Company. Any such
statement is qualified by reference to the following cautionary statements.
It is not reasonably possible to itemize all of the many factors and specific
events that could affect the outlook of an airline operating in the global
economy. Some factors that could significantly impact expected capacity, load
factors, revenues, expenses and cash flows include the airline pricing
environment, fuel costs, labor negotiations both at the Company and other
carriers, low-fare carrier expansion, capacity decisions of other carriers,
actions of the U.S. and foreign governments, foreign currency exchange rate
fluctuation, inflation, the general economic environment in the U.S.
and other regions of the world and other factors discussed herein.
Developments in any of these areas, as well as other risks and uncertainties
detailed from time to time in the Company's Securities and Exchange Commission
filings, could cause the Company's results to differ from results that have been
or may be projected by or on behalf of the Company. The Company cautions that
the foregoing list of important factors is not exclusive. The Company undertakes
no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. These
statements deal with the Company's expectations about the future and are subject
to a number of factors that could cause actual results to differ materially from
the Company's expectations.
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<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item is provided under the captions "Foreign
Currency" and "Aircraft Fuel" under "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations." Also see "Market
Risk Sensitive Instruments and Positions" in "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the
Company's Annual Report on Form 10-K for 1998.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to "Item 3. Legal Proceedings" included in the Annual
Report.
In addition, in the ordinary course of its business, the Company is party to
various other legal actions which the Company believes are incidental to the
operation of its business. The Company believes that the outcome of the
proceedings to which it is currently a party will not have a material adverse
effect on the Company's consolidated financial statements taken as a whole.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
4.1 Amended and Restated Bylaws of Northwest Airlines
Corporation.
4.2 Amended and Restated Bylaws of Northwest Airlines, Inc.
12.1 Computation of Ratio of Earnings to Fixed Charges.
12.2 Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Requirements.
27.1 Financial Data Schedule.
(b) REPORTS ON FORM 8-K:
Form 8-K filed on January 22, 1999
Form 8-K filed on February 24, 1999
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Northwest Airlines Corporation
Dated: May 14, 1999 By: /s/ Rolf S. Andresen
-------------------------------
Rolf S. Andresen
Vice President-Finance and
Chief Accounting Officer
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1 Amended and Restated Bylaws of Northwest Airlines Corporation.
4.2 Amended and Restated Bylaws of Northwest Airlines, Inc.
12.1 Computation of Ratio of Earnings to Fixed Charges.
12.2 Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Requirements.
27.1 Financial Data Schedule.
</TABLE>
14
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
NORTHWEST AIRLINES CORPORATION
(hereinafter called the "Corporation")
Adopted April 23, 1999
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office of the office of
the Corporation shall be in Wilmington, New Castle County, State of Delaware.
Section 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. ANNUAL MEETINGS. The Annual Meeting of Stockholders shall be
held on such date and at such time as shall be designated from time to time
by the Board of Directors and stated in the notice of the meeting, at which
meeting the stockholders shall elect by a plurality vote a Board of
Directors, and transact such other business as may properly be brought before
the meeting.
Section 3. SPECIAL MEETINGS. Special Meetings of Stockholders, for any
purpose or purposes, may be called only by the Chairman of the Board, and
shall be called by the Chairman of the Board at the request in writing of a
majority of the Board of Directors. Such request shall state the purpose or
purposes of the proposed meeting.
Section 4. NOTICE OF MEETINGS. Written notice of an Annual Meeting or
Special Meeting stating the place, date and hour of the meeting and in the
case of a Special Meeting, the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting to each stockholder entitled to vote at such meeting.
Section 5. QUORUM. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall
not be present
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or represented at any meeting of the stockholders, the stockholders entitled
to vote thereat, present in person or represented by proxy, shall have power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the
meeting as originally noticed. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder entitled to vote at the meeting.
Section 6. VOTING. Except as otherwise provided by the Certificate of
Incorporation or these Bylaws, any questions brought before any meeting of
stockholders shall be decided by a majority vote of the number of shares
present in person or represented by proxy and entitled to vote on the subject
matter. Such votes may be cast in person or by proxy but no proxy shall be
voted on after three years from its date, unless such proxy provides for a
longer period. The Board of Directors, in its discretion, or the officer of
the Corporation presiding at a meeting of stockholders, in his discretion,
may require that any votes cast at such meeting shall be cast by written
ballot.
Section 7. SPECIAL VOTING REQUIREMENTS. Notwithstanding anything in
Section 6 above, any plan of merger or consolidation with or into another
person or entity in one or a series of related transactions that is not
approved by the Board of Directors in accordance with the provisions of these
Bylaws and which is brought before any meeting of stockholders shall require
the vote of not less than two-thirds of the shares of stock entitled to vote
thereon. Any amendment to this Section 7 of Article II of these Bylaws shall
require the approval of not less than two-thirds of the shares of stock
entitled to vote thereon or a two-thirds vote of the Board of Directors.
Section 8. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder of the
Corporation who is present.
Section 9. STOCKHOLDER LEDGER. Except as otherwise provided in the
Certificate of Incorporation or in Article IX of these Bylaws, the stock
ledger of the Corporation shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by
Section 8 of this Article II or the books of the Corporation, or to vote in
person or by proxy at any meeting of stockholders.
Section 10. ADVANCE NOTICE OF STOCKHOLDER BUSINESS.
(a) ANNUAL MEETINGS OF STOCKHOLDERS.
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<PAGE>
(1) The proposal of business to be considered by the stockholders (other
than nominations of persons for election to the Board of Directors, which
must be made in accordance with the provisions of ARTICLE III, Section 1
hereof) may be made at an annual meeting of stockholders (A) pursuant to the
Corporation's notice of meeting, (B) by or at the direction of the Board of
Directors, or (C) by any stockholder of the Corporation who was a stockholder
of record at the time of giving of notice provided for in this By-Law, who is
entitled to vote at the meeting and who complies with the notice procedures
set forth in this By-Law.
(2) For the proposal of business to be properly brought before an annual
meeting by a stockholder pursuant to clause (C) of paragraph (a)(1) of this
By-Law, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice
shall be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 90th day nor earlier
than the close of business on the 120th day prior to the first anniversary of
the preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is more than 30 days before or more than
60 days after such anniversary date, notice by the stockholder to be timely
must be so delivered not earlier than the close of business on the 120th day
prior to such annual meeting and not later than the close of business on the
later of the 90th day prior to such annual meeting or the 10th day following
the day on which public announcement of the date of such meeting is first
made by the Corporation. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the giving of
a stockholder's notice as described above. Such stockholder's notice shall
set forth: (a) as to any business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting
and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (b) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the proposal is made (i) the name and address of such stockholder, as
they appear on the Corporation's books, and of such beneficial owner and (ii)
the class and number of shares of the Corporation which are owned
beneficially and of records by such stockholder and such beneficial owner.
(b) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made at
a special meeting of stockholders in accordance with ARTICLE III, Section 1
of these By-Laws.
(c) GENERAL.
(1) Only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the
procedures set forth in this By-Law. Except as otherwise provided by law, the
Restated Certificate of Incorporation, as amended, or these By-Laws, the
Chairman of the meeting shall have the power and duty to determine whether
any business proposed to be brought before the meeting was made or proposed,
as the case may be, in accordance with the procedures set forth in this
By-Law and, if any proposed business is not in compliance with this By-Law,
to declare that such defective
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<PAGE>
proposal shall be disregarded.
(2) For purposes of this By-Law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
(3) Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this By-Law. Nothing in this By-Law shall be deemed to
affect any rights (i) of stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange
Act or (ii) of the holders of any series of preferred stock to elect
directors under specified circumstances.
ARTICLE III
DIRECTORS
Section 1. NUMBER AND ELECTION OF DIRECTORS. (a) The Board of Directors
shall consist of 15 members. Except as provided in Sections 1 and 2 of this
Article, directors shall be elected by a plurality of the votes cast at
Annual Meetings of Stockholders, and each director so elected shall hold
office until the next Annual Meeting and until his successor is duly elected
and qualified, or until his earlier resignation or removal. Directors need
not be stockholders of the Corporation.
(b) Notwithstanding anything in this Section 1 or in Section 2 of this
Article III to the contrary, each of the holders of the series C preferred
stock, par value $0.01 per share (the "Series C Preferred Stock"), of the
Corporation may vote to elect directors to the Board of Directors, and to
fill vacancies on the Board of Directors, in accordance with the terms of the
certificate of designation for such stock; PROVIDED, HOWEVER, that each
director elected by holders of the Series C Preferred Stock (a "Series C
Director") must be a citizen of the United States.
(c) Subject to the exclusive rights of holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect Series C Directors or directors of the Corporation upon
the happening of certain events (including as referred to in Section l(b)),
nominations of candidates for election as directors of the Corporation at any
meeting of stockholders of the Corporation may be made by the Chairman of the
Board of Directors or by any stockholder entitled to vote at such meeting who
complies with the provisions of this Section l(c). Not later than the close
of business on the 90th day nor earlier than the close of business on the
120th day prior to the first anniversary of the preceding year's annual
meeting, in the case of an annual meeting, or, in the case of a special
meeting called by the Chairman of the Board for the purpose of electing
directors, not earlier than the close of business on the 120th day prior to
such special meeting and not later than the close of business on the later of
the 90th day prior to such special meeting or the 10th day following the day
on which public announcement is first made of the date of the special meeting
and of the nominees proposed by the Board of Directors to be elected at such
meeting, any stockholder who intends to make a nomination at the meeting
shall deliver written notice to the Secretary of the Corporation setting
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<PAGE>
forth (i) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (ii) a
representation that the stockholder (A) is a United States Citizen (as such
term is deemed in the Certificate of Incorporation), (B) is a holder of
record of stock of the Corporation specified in such notice, (C) is or will
be entitled to vote at such meeting, and (D) intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (iii) a statement that the nominee (or nominees) is a United States
Citizen (as defined above) and is willing to be nominated; and (iv) such
other information concerning each such nominee as would be required under the
rules of the Securities and Exchange Commission in a proxy statement
soliciting proxies for the election of such nominee and in a Schedule 14B (or
other comparable required filing then in effect) under the Exchange Act. In
no event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a stockholder's notice as
described above. In the event that a person is validly designated as a
proposed nominee in accordance with this Section l(c) (including a bona fide
statement that the nominee is willing to be nominated) and shall thereafter
become unable or unwilling to stand for election to the Board of Directors,
the stockholder who made such designation may designate promptly in the
manner set forth above a substitute proposed nominee, notwithstanding the
minimum time period set forth in this Section l(c). No person may be elected
as a director at a meeting of stockholders unless nominated in accordance
with this Section l(c), and any purported nomination or purported election
not made in accordance with the procedures as set forth in this Section l(c)
shall be void. In addition to any other requirements relating to amendments
to these Bylaws, no proposal by any stockholder to repeal or amend this
Section l(c) shall be brought before any meeting of the stockholders of the
Corporation unless written notice is given of (i) such proposed repeal or the
substance of such proposed amendment; (ii) the name and address of the
stockholder who intends to propose such repeal or amendment; and (iii) a
representation that the stockholder is a holder of record of stock of the
Corporation specified in such notice, is or will be entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to make
the proposal. Such notice shall be given in the manner and at the time
specified above in this Section l(c). Any proposal to repeal or amend or any
such purported repeal or purported amendment of this Section l(c) not made or
adopted in accordance with the procedures set forth in this Section l(c)
shall be void. Any amendment to this Section 1(c) shall require the vote of
holders of not less than two-thirds of the shares of stock entitled to vote
thereon.
Section 2. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors shall be
filled by a majority vote of all directors, including the Series C Directors,
as defined in Section 1 of this Article III, or by a sole remaining director,
and the directors so chosen shall hold office until the next annual election
and until their successors are duly elected and qualified, or until their
earlier resignation or removal; provided, however, that:
(a) Any interim vacancy among the Series C Directors, whether such
vacancy occurs as a result of death, removal or otherwise, shall be filled,
effective at the beginning of the next meeting of the Board of Directors, by
a designee nominated by the Union, as defined in the Certificate of
Designation for the Series C Preferred Stock (the "Series C Certificate of
Designation"), that nominated the previous holder of the vacant position
pursuant to the terms of the Letter Agreements (as defined below); PROVIDED,
HOWEVER, that for any vacancy among the Series C Directors created by an
increase in the size of the Board of Directors pursuant to the provisions of
paragraph 7(ii)(a) or 7(ii)(b) of the Series C Certificate of Designation,
the Air Line
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<PAGE>
Pilots Association, the International Brotherhood of Teamsters and the
International Association of Machinists and Aerospace Workers, each acting
through its President or, in the case of Airline Pilots Association, the
Northwest Airlines, Inc. Master Executive Council, shall each be entitled to
nominate one-third of the Series C Directors and- if the total number of
Series C Directors is not a multiple of three, any remaining Series C
Directors shall be nominated by a unanimous vote of the existing Series C
Directors designated by such three Unions.
(b) In the event that, in connection with the redemption of Series C
Preferred Stock pursuant to paragraph 9(i)(a) of the Series C Certificate of
Designation, the Corporation issues additional shares of Common Stock to the
exchanging holders of Series C Preferred Stock and, following such issuance,
the number of shares of Common Stock held by Qualified Holders of Employee
Stock, as such terms are defined in the Series C Certificate of Designation,
after such redemption is greater than 50% of the number of shares of voting
capital stock of the Corporation then outstanding, the terms of all sitting
members of the Board of Directors of the Corporation, other than the Series C
Directors, shall thereupon terminate and the Series C Directors shall appoint
the successors of such directors. Any director may resign at any time upon
notice to the Corporation. Directors need not be stockholders.
Section 3. COMMITTEES. The Board of Directors may designate one or more
committees, which committees shall, to the extent provided in the resolution
of the Board of Directors establishing such a committee, have all authority
and may exercise all the powers of the Board of Directors in the management
of the business and affairs of the Corporation to the extent lawful under the
General Corporation Law of the State of Delaware, PROVIDED, HOWEVER, to the
extent that directors serve as members of a committee designated by the Board
of Directors, at least one of such directors shall be a Series C Director as
long as any Series C Directors sit on the Board of Directors.
Section 4. DUTIES AND POWERS. The business of the Corporation shall be
managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by
these Bylaws directed or required to be exercised or done by the stockholders.
Section 5. MEETINGS. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as may from time to time be determined
by the Board of Directors. Special meetings of the Board of Directors may be
called by the Chairman, if there be one, the President, or any two directors.
Notice thereof stating the place, date and hour of the meeting shall be given
to each director either by mail not less than forty-eight (48) hours before
the date of the meeting, by telephone, telegram or telecopy (facsimile) on
twenty-four (24) hours' notice, or on such shorter notice as the person or
persons calling such meeting may deem necessary or appropriate in the
circumstances.
Section 6. QUORUM; BOARD ACTION.
(a) Except as may be otherwise specifically provided by law, the
Certificate of Incorporation or these Bylaws, at all meetings of the Board of
Directors, a majority of the entire
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<PAGE>
Board of Directors shall constitute a quorum for the transaction of business
and the act of a majority of the entire Board of Directors shall be the act
of the Board of Directors. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum shall be present.
(b) [Deleted]
(c) Notwithstanding anything in Section 6(a) to the contrary, the
Corporation's Certificate of Incorporation or these Bylaws may not be amended
to abrogate any of the terms or rights or powers of the Series C Preferred
Stock in a manner inconsistent with the terms of the Letter Agreements, or
the Common Stock into which such Series C Preferred Stock may be converted,
without the affirmative vote of a majority of the Series C Directors.
(d) The following term shall have the following meaning for the purpose
of this Article III:
"Letter Agreements" shall mean the equity letter agreements entered into
in 1993 between the Corporation and Northwest on the one hand and the Air
Line Pilots Association, the International Brotherhood of Teamsters, the
International Association of Machinists and Aerospace Workers, the Transport
Workers Union of America, the Airline Technical Support Association and the
Northwest Airlines Meteorologists Association on the other hand.
Section 7. ACTIONS OF BOARD. Unless otherwise provided by the
Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
Section 8. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Members of the
Board of Directors of the Corporation, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 8 shall
constitute presence in person at such meeting.
Section 9. COMPENSATION. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a
stated salary as director or both. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
ARTICLE IV
OFFICERS
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Section 1. GENERAL. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman of the
Board of Directors (who must be a director) and one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person. The officers of Corporation need not
be stockholders of the Corporation nor, except in the case of the Chairman of
the Board of Directors, need such officers be directors of the Corporation.
Section 2. ELECTION. The Board of Directors at its first meeting held
after each Annual Meeting of Stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined from time to time
by the Board of Directors; and all officers of the Corporation shall hold
office until their successors are chosen and qualified, or until their
earlier resignation or removal. Any officer may be removed at any time by the
Board of Directors. Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors. The salaries of all officers of
the Corporation shall be fixed by the Board of Directors.
Section 3. VOTING SECURITIES OWNED BY THE CORPORATION. Notwithstanding
anything to the contrary contained herein, powers of attorney, proxies,
waivers of notice of meeting, consents and other instruments relating to
securities owned by the Corporation may be executed in the name of and on
behalf of and such securities, if voting securities, may be voted on behalf
of, the Corporation (i) by such offcer or officers as are specifically
delegated to do so in any particular instance by the Board of Directors of
the Corporation and (ii) the President or any Vice President, in any other
case, and any such officer may, in the name of and on behalf of the
Corporation, take all such action as such officer may deem advisable to vote
such securities in person or by proxy at any meeting of security holders of
any corporation in which the Corporation may own securities and at any such
meeting shall possess and may exercise any and all rights and power incident
to the ownership of such securities and which, as the owner thereof, the
Corporation might have exercised and possessed if present. The Board of
Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
Section 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board of
Directors shall also perform such duties and may exercise such powers as from
time to time may be assigned to him or her by these Bylaws or by the Board of
Directors.
Section 5. PRESIDENT. The President shall be subject to the
control of the Board of Directors and, if there be one, the Chairman of the
Board of Directors. As provided in Article VII of these Bylaws, the President
shall have authority to execute all deeds, mortgages, bonds, checks, contracts
and other instruments pertaining to the business and affairs of the Corporation.
In the absence or disability of the Chairman of the Board of Directors, or if
there be none, the President shall preside at all meetings of the stockholders
and the Board of Directors. Unless the Board of Directors establishes otherwise,
the President shall be the Chief Executive Officer of the Corporation. The
President shall also perform such other duties and may exercise such other
powers as from time to time may be assigned to him or her by these Bylaws or by
the Board of Directors.
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<PAGE>
Section 6. VICE PRESIDENTS. At the request of the President or in his
or her absence or in the event of his or her inability or refusal to act (and
if there be no Chairman of the Board of Directors), the Vice President or the
Vice Presidents if there is more than one (in the order designated by the
Board of Directors) shall perform the duties of the Chief Executive Officer
of the Corporation, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. Each Vice President shall
perform such other duties and have such other powers as the Board of
Directors from time to time may prescribe. If there be no Chairman of the
Board of Directors and no Vice President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President
or in the event of the inability or refusal of the President to act, shall
perform the duties of the Chief Executive Officer of the Corporation, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon such Chief Executive Officer.
Section 7. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors or the Chief Executive Officer of the Corporation, under whose
supervision he or she shall be. If the Secretary shall be unable or shall
refuse to cause to be given notice of all meetings of the stockholders and
special meetings of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors or the Chief Executive Officer
of the Corporation may choose another officer to cause such notice to be
given. The Secretary shall have custody of the seal of the Corporation and
the Secretary or any Assistant Secretary, if there be one, shall have
authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation
and to attest the affixing by his signature. The Secretary shall see that all
books, reports, statements, certificates and other documents and records
required by law to be kept or filed are properly kept or filed, as the case
may be.
Section 8. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit
of the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chief Executive Officer of the
Corporation and the Board of Directors, at its regular meetings, or when the
Board of Directors so requires, an account of all his or her transactions as
Treasurer and of the financial condition of the Corporation. If required by
the Board of Directors, the Treasurer shall give the Corporation a bond in
such sum and with such surety or sureties as shall be satisfactory to the
Board of Directors for the faithful performance of the duties of his or her
office and for the restoration to the Corporation, in case of his or her
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or
under his or her control belonging to the Corporation.
Section 9. ASSISTANT SECRETARIES. Except as may be otherwise provided
in these
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Bylaws, Assistant Secretaries, if there be any, shall perform such duties and
have such powers as from time to time may be assigned to them by the Board of
Directors, the Chairman of the Board of Directors, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of his or her disability or refusal to act, shall
perform the duties of the Secretary, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Secretary.
Section 10. ASSISTANT TREASURERS. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may
be assigned to them by the Board of Directors, the Chairman of the Board of
Directors, the President, any Vice President, if there be one, or the
Treasurer, and in the absence of the Treasurer or in the event of his or her
disability or refusal to act, shall perform the duties of the Treasurer, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the Treasurer. If required by the Board of Directors, an
Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of his or her office and for the
restoration to the Corporation, in case of his or her death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his or her control
belonging to the Corporation.
Section 11. OTHER OFFICERS. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and
powers.
ARTICLE V
STOCK
Section 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of
the Corporation (i) by the Chairman of the Board of Directors, the President
or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him or her in the Corporation.
Section 2. SIGNATURES. Where a certificate is countersigned by (i) a
transfer agent other than the Corporation or its employee, or (ii) a
registrar other than the Corporation or its employee, any other signature on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with
the same effect as if he or she were such officer, transfer agent or
registrar at the date of issue.
Section 3. LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
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certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or his or her legal representative, to advertise the
same in such manner as the Board of Directors shall require and/or to give
the Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 4. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these Bylaws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the
certificate or by his or her attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be canceled
before a new certificate shall be issued.
Section 5. RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty days nor less than
ten days before the date of such meeting, nor more than sixty days prior to
any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; PROVIDED, HOWEVER, that the Board of Directors
may fix a new record date for the adjourned meeting.
Section 6. BENEFICIAL OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the
same shall be deposited in the United States mail. Written notice may also be
given personally or by telegram, telex, cable or telecopy (facsimile).
Section 2. WAIVERS OF NOTICE. Whenever any notice is required by law,
the Certificate of Incorporation or these Bylaws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed by the person entitled to notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting, except when
the person
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attends a meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written notice unless so required by the Certificate of Incorporation or
these Bylaws.
ARTICLE VII
GENERAL PROVISIONS
Section 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation,
may be declared by the Board of Directors at any regular or special meeting,
and may be paid in cash, in property or in shares of the capital stock.
Before payment of any dividend, there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for any
proper purpose, and the Board of Directors may modify or abolish any such
reserve.
Section 2. DISBURSEMENTS. All checks or demands for money and notes of
the Corporation shall be signed by the Treasurer or such officer or officers
or such other person or persons as the Board of Directors may from time to
time designate.
Section 3. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 4. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the
words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
Section 5. [Deleted]
Section 6. CERTAIN REPURCHASES OF SERIES C PREFERRED STOCK. (a) Any
decision by the Board of Directors either (i) not to repurchase all of the
Series C Preferred Stock with respect to which holders have exercised the Put
Right, as defined in the Series C Certificate of Designation, either (x) with
cash pursuant to paragraph 9(i)(a) of-the Series C Certificate of Designation
or (y) pursuant to the procedures set forth in paragraph 9(i)(b) of the
Series C Certificate of Designation, but instead to redeem such Series C
Preferred Stock with shares of Common Stock pursuant to paragraph 9(i)(a) of
the Series C Certificate of Designation, or (ii) not to redeem any of the
Series C Preferred Stock in accordance with the requirements of paragraph
9(i) of the Series C Certificate of Designation, may only be made if a
majority of the Series C Directors consent to such decision.
(b) Any decision by the Board of Directors of the Corporation--on any
Partial Repurchase Date, as defined in the Series C Certificate of
Designation, not to use all Available Cash as defined in the Series C
Certificate of Designation, to effect a Partial Repurchase, as defined in the
Series C Certificate of Designation, may only be made if a majority of the
Series C
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Directors consent to such decision.
Section 7. EXECUTION OF INSTRUMENTS. All deeds, mortgages, bonds,
checks, contracts and other instruments pertaining to the business and
affairs of the Corporation shall be signed on behalf of the Corporation by
the Chief Executive Officer, the President, any Vice President or other
officer of the Corporation, or by such other person or persons as may be
designated from time to time by the Board of Directors.
ARTICLE VIII
INDEMNIFICATION
Section 1. POWER TO INDEMNIFY IN ACTIONS SUITS OR PROCEEDINGS OTHER
THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 4 of
this Article VIII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he or she is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
or her in connection with such action, suit or proceeding if he or she acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or
its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
Section 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN
THE RIGHT OF THE CORPORATION. Subject to Section 4 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by
or in the right of the Corporation to procure agent in its favor by reason of
the fact that he or she is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for gross negligence or willful misconduct to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
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all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 3. Notwithstanding the other provisions of this Article VIII,
to the extent that a director or officer of the Corporation has been
successful on the merits or otherwise, including without limitation the
dismissal of an action without prejudice, in the defense of any action, suit
or proceeding referred to in Sections 1 and 2 above, or in the defense of any
claim, issue or matter therein, that person shall be indemnified against all
costs, charges and expenses (including attorneys' fees) actually and
reasonably incurred by that person or on that person's behalf in connection
therewith.
Section 4. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the
Corporation unless a determination is made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (ii) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the stockholders,
that indemnification of the director or officer is not proper because that
person has not met the applicable standards of conduct set forth in Sections
1 and 2 above.
Section 5. GOOD FAITH DEFINED. For purposes of any determination under
this Article VIII, a person shall be deemed to have acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his or her conduct was
unlawful, if his or her action is based on the records or books of account of
this Corporation or another enterprise, or on information supplied to him or
her by the officers of the Corporation or another enterprise in the course of
their duties, or on the advice of legal counsel for the Corporation or
another enterprise or on information or record given or reports made to the
Corporation or another enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care
by the Corporation or another enterprise. The term "another enterprise" as
used in this Section 5 shall mean any other corporation or any partnership,
joint venture, trust or other enterprise of which such person is or was
serving at the request of the Corporation as a director or officer. The
provisions of this Section 5 shall not be deemed to be exclusive or to limit
in any way the circumstances in which a person may be deemed to have met the
applicable standard of conduct set forth in Sections 1 and 2 of this Article
VIII, as the case may be.
Section 6. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 4 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to any court of competent jurisdiction in the State of
Delaware for indemnification to the extent otherwise permissible under
Sections 1 and 2 of this Article VIII. The basis of such indemnification by a
court shall be a determination by such court that indemnification of the
director or officer is proper in the circumstances because he or she has met
the applicable standards of conduct set forth in Sections 1 and 2 of this
Article VIII:, as the case may be. Notice of any application for
indemnification pursuant to this Section 6 shall he given to the Corporation
promptly upon the filing of such application.
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Section 7. ADVANCE OF COSTS, CHARGES AND EXPENSES. Costs, charges and
expenses (including attorneys' fees) incurred by a person referred to in
Sections 1 and 2 above in defending a civil or criminal action, suit or
proceeding (including investigations by any government agency and all costs,
charges and expenses incurred in preparing for any threatened action, suit or
proceeding) shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding; PROVIDED HOWEVER, that the
payment of such costs, charges and expenses incurred by a director or officer
in that person's capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director
or officer) in advance of the final disposition of such action, suit or
proceeding shall be made only upon receipt of an undertaking by or on behalf
of the director or officer to repay all amounts so advanced in the event that
it shall ultimately be determined that such director or officer is not
entitled to be indemnified by the Corporation as authorized in this Article
VIII. No security be required for such undertaking and such undertaking shall
be accepted without reference to the recipient's financial ability to make
repayment. The repayment of such charges and expenses incurred by other
employees and agents of the Corporation which are paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
permitted by this Section 7 may be required upon such terms and conditions,
if any, as the Board of Directors deems appropriate. The Board of Directors
may, in the manner set forth above, and subject to the approval of such
director or officer of the Corporation, authorize the Corporation's counsel
to represent such person, in any action, suit or proceeding, whether or not
the Corporation is party to such action, suit or proceeding.
Section 8. PROCEDURE FOR INDEMNIFICATION. Any indemnification under
Sections 1, 2 or 3 or advance of costs, charges and expenses under Section 7
of this Article VIII shall be made promptly, and in any event, within sixty
(60) days, upon the written request of the director or officer directed to
the Secretary of the Corporation. The right to indemnification or advances
granted in this Article VIII shall be enforceable by the director or officer
in any court of competent jurisdiction if the Corporation denies such
request, in whole or part, or if no disposition thereof is made within sixty
(60) days. Such person's costs and expenses incurred in connection with
successfully establishing that person's right to indemnification or advances,
in whole or in part, in any such action shall also be indemnified by the
Corporation. It shall be a defense to any such action (other than an action
brought to enforce a claim for advance costs, charges and expenses under
Section 7 of this Article VIII where the required undertaking, if any, has
been received by the Corporation) that the claimant has not met the standard
of conduct set forth in Sections 1 or 2 of this Article VIII, but the burden
of proving such standard of conduct has not been met shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel and its stockholders) to have made
such a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in Sections 1 and 2
of this Article VIII, nor the fact that there has been an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel and its stockholders) that the claimant has not met
such applicable standard, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
Section 9. NON-EXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any
other rights to which those seeking
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indemnification or advancement of expenses may be entitled under any Bylaw,
agreement, contract, vote of stockholders or disinterested directors or
pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding such office, it being the
policy of the Corporation that indemnification of the persons specified in
Sections 1 and 2 of this Article VIII shall be made to the fullest extent
permitted by law. The provisions of this Article VIII shall not be deemed to
preclude the indemnification of any person who is not specified in Sections 1
or 2 of this Article VIII but whom the Corporation has the power to indemnify
under the provisions of the General Corporation Law of the State of Delaware
or otherwise and has either the obligation to indemnify such person or has
determined that it is in the best interests of the Corporation to do so.
Section 10. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as
director or officer of another corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against him or her and
incurred by him or her in any such capacity, or arising out of his or her
status as such, whether or not the Corporation would have the power or the
obligation to indemnify him or her against such liability under the
provisions of this Article VIII.
Section 11. MEANING OF "CORPORATION" FOR PURPOSES OF ARTICLE VIII. For
purposes of this Article VIII, references to "the Corporation" shall include,
in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power
and authority to indemnify its directors and officers, so that any person who
is or was a director or officer of such constituent corporation, or is or was
serving at the request for such constituent corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article VIII with respect to the resulting or surviving corporation as he or
she would have with respect to such constituent corporation if its separate
existence had continued.
Section 12. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
ARTICLE IX
OWNERSHIP BY FOREIGN PERSONS
Section 1. FOREIGN STOCK RECORD. There shall be maintained a separate
stock record, designated the "FOREIGN STOCK RECORD", for the registration of
Alien Owned Shares. The Beneficial Ownership by Persons of Alien Owned Shares
shall be determined in conformity with regulations prescribed by the Board of
Directors.
Section 2. PERMITTED PERCENTAGE. At no time shall ownership of shares
representing more than the Permitted Percentage be registered on the Foreign
Stock Record.
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Section 3. REGISTRATION OF SHARES. If at any time there exist Alien
Owned Shares that are not registered on the Foreign Stock Record, the
Beneficial Owner thereof may request, in writing, that the corporation
register ownership of such shares on the Foreign Stock Record and the
Corporation shall comply with such request, subject to the limitation set
forth in Section 2. The order in which Alien Owned Shares shall be registered
on the Foreign Stock Record shall be chronological, based on the date the
Corporation received a written request to so register such shares of Alien
Owned Shares; PROVIDED, that any Person who is not a U.S. Citizen who
purchases or otherwise acquires Alien Owned Shares that are registered on the
Foreign Stock Record, may register such shares in its own name within thirty
days of such acquisition, in which event such Person will assume the position
of the seller of such shares in the chronological order of shares registered
on the Foreign Stock Record. If at any time the Corporation shall find that
the combined voting power of Alien Owned Shares then registered on the
Foreign Stock Record exceeds the Permitted Percentage, there shall be removed
from the Foreign Stock Record the registration of such number of shares so
registered as is sufficient to reduce the combined voting power of the shares
so registered to an amount not in excess of the Permitted Percentage. The
order in which such shares shall be removed shall be reverse chronological
order based upon the date the Corporation received a written request to so
register such shares of Alien Owned Shares.
Section 4. DEFINITIONS. Capitalized terms used in this Article IX and
not defined herein shall have the meaning ascribed to them in the Certificate
of Incorporation.
AMENDMENTS
Section 1. Subject to the voting requirements of Section 7 of Article
II and Sections l(c) and 6 of Article III hereof, these Bylaws may be
altered, amended or repealed, in whole or in part, or new Bylaws may be
adopted, by the vote of the stockholders or the Board of Directors.
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AMENDED AND RESTATED BYLAWS
of
NORTHWEST AIRLINES, INC.
(hereinafter called the "Corporation")
Adopted as of April 23, 1999
SHAREHOLDERS
Section 1.01 PLACE OF MEETINGS. Each meeting of the shareholders shall
be held at the principal executive office of the Corporation or at such other
place as may be designated by the Board of Directors or the Chief Executive
Officer; provided, however, that any meeting called by or at the demand of a
shareholder or shareholders shall be held in the county where the principal
executive office of the Corporation is located.
Section 1.02 REGULAR MEETINGS. Regular meetings of the shareholders may
be held on an annual or other less frequent basis as determined by the Board
of Directors; provided, however, that if a regular meeting has not been held
during the immediately preceding 15 months, a shareholder or shareholders
holding three percent or more of the voting power of all shares entitled to
vote may demand a regular meeting of shareholders by written demand given to
the Chief Executive Officer or the Chief Financial Officer of the
Corporation. At each regular meeting the shareholders shall elect qualified
successors for directors who serve for an indefinite term or whose terms have
expired or are due to expire within six months after the date of the meeting
and may transact any other business, provided, however, that no business with
respect to which special notice is required by law shall be transacted unless
such notice shall have been given.
Section 1.03 SPECIAL MEETINGS. A special meeting of the shareholders
may be called for any purpose or purposes at any time by the Chief Executive
Officer; by the Chief Financial Officer; by the Board of Directors or any two
or more members thereof; or by one or more shareholders holding not less than
ten percent of the voting power of all shares of the Corporation entitled to
vote (except that a special meeting for the purpose of considering any action
to directly or indirectly facilitate or effect a business combination,
including any action to change or otherwise affect the composition of the
Board for that purpose, must be called by shareholders holding not less than
25 percent of the voting power of all shares of the Corporation entitled to
vote), who shall demand such special meeting by written notice given to the
Chief Executive Officer or the Chief Financial Officer of the Corporation
specifying the purposes of such meeting.
Section 1.04 MEETINGS HELD UPON SHAREHOLDER DEMAND. Within 30 days
after receipt of a demand by the Chief Executive Officer or the Chief
Financial Officer from any
<PAGE>
shareholder or shareholders entitled to call a meeting of the shareholders,
it shall be the duty of the Board of Directors of the Corporation to cause a
special or regular meeting of shareholders, as the case may be, to be duly
called and held on notice no later than 90 days after receipt of such demand.
If the Board fails to cause such a meeting to be called and held as required
by this Section, the shareholder or shareholders making the demand may call
the meeting by giving notice as provided in Section 1.06 hereof at the
expense of the Corporation.
Section 1.05 ADJOURNMENTS. Any meeting of the shareholders may be
adjourned from time to time to another date, time and place. If any meeting
of the shareholders is so adjourned, no notice as to such adjourned meeting
need be given if the adjourned meeting is to be held not more than 120 days
after the date fixed for the original meeting and the date, time and place at
which the meeting will be reconvened are announced at the time of adjournment.
Section 1.06 NOTICE OF MEETINGS. Unless otherwise required by law,
written notice of each meeting of the shareholders, stating the date, time
and place and, in the case of a special meeting, the purpose or purposes,
shall be given at least ten days and not more than 60 days prior to the
meeting to every holder of shares entitled to vote at such meeting except as
specified in Section 1.05 or as otherwise permitted by law. The business
transacted at a special meeting of shareholders is limited to the purposes
stated in the notice of the meeting.
Section 1.07 WAIVER OF NOTICE. A shareholder may waive notice of the
date, time, place and purpose or purposes of a meeting of shareholders. A
waiver of notice by a shareholder entitled to notice is effective whether
given before, at or after the meeting, and whether given in writing, orally
or by attendance. Attendance by a shareholder at a meeting is a waiver of
notice of that meeting, unless the shareholder objects at the beginning of
the meeting to the transaction of business because the meeting is not
lawfully called or convened, or objects before a vote on an item of business
because the item may not lawfully be considered at that meeting and does not
participate in the consideration of the item at that meeting.
Section 1.08 VOTING RIGHTS. Subdivision 1. A shareholder shall have one
vote for each share held which is entitled to vote. Except as otherwise
required by law, a holder of shares entitled to vote may vote any portion of
the shares in any way the shareholder chooses. If a shareholder votes without
designating the proportion or number of shares voted in a particular way, the
shareholder is deemed to have voted all of the shares in that way.
Subdivision 2. The Board of Directors may fix a date not more than 60
days before the date of a meeting of shareholders as the date for the
determination of the holders of shares entitled to notice of and entitled to
vote at the meeting. When a date is so fixed, only shareholders on that date
are entitled to notice of and permitted to vote at that meeting of
shareholders.
Section 1.09 PROXIES. A shareholder may cast or authorize the casting
of a vote by filing a written appointment of a proxy with an officer of the
Corporation at or before the meeting at which the appointment is to be
effective. The shareholder may sign or authorize the written appointment by
telegram, cablegram or other means of electronic transmission,
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provided that the Corporation has no reason to believe that the telegram,
cablegram or other electronic transmission was not authorized by the
shareholder. Any copy, facsimile, telecommunication or other reproduction of
the original of either the writing or transmission may be used in lieu of the
original, provided that it is a complete and legible reproduction of the
entire original.
Section 1.10 QUORUM. The holders of a majority of the voting power of
the shares entitled to vote at a shareholders meeting are a quorum for the
transaction of business. If a quorum is present when a duly called or held
meeting is convened, the shareholders present may continue to transact
business until adjournment, even though the withdrawal of a number of the
shareholders originally present leaves less than the proportion or number
otherwise required for a quorum.
Section 1.11 ACTS OF SHAREHOLDERS. Subdivision 1. Except as otherwise
required by law or specified in the Articles of Incorporation of the
Corporation, the shareholders shall take action by the affirmative vote of
the holders of the greater of (a) a majority of the voting power of the
shares present and entitled to vote on that item of business or (b) a
majority of the voting power of the minimum number of shares entitled to vote
that would constitute a quorum for the transaction of business at a duly held
meeting of shareholders.
Subdivision 2. A shareholder voting by proxy authorized to vote on less
than all items of business considered at the meeting shall be considered to
be present and entitled to vote only with respect to those items of business
for which the proxy has authority to vote. A proxy who is given authority by
a shareholder who abstains with respect to an item of business shall be
considered to have authority to vote on that item of business.
Section 1.12 ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at a meeting of the shareholders of the Corporation may be taken
without a meeting by written action signed by all of the shareholders
entitled to vote on that action. The written action is effective when it has
been signed by all of those shareholders, unless a different effective time
is provided in the written action.
DIRECTORS
Section 2.01 NUMBER; QUALIFICATIONS. Except as authorized by the
shareholders pursuant to a shareholder control agreement or unanimous
affirmative vote, the business and affairs of the Corporation shall be
managed by or under the direction of a Board of one or more directors.
Directors shall be natural persons and need not be shareholders of the
Corporation. The shareholders at each regular meeting shall determine the
number of directors to constitute the Board, provided that thereafter the
authorized number of directors may be increased by the shareholders or the
Board and decreased by the shareholders. Directors need not be shareholders.
Section 2.02 TERM. Each director shall serve for an indefinite
term that expires at the next regular meeting of the shareholders. A director
shall hold office until a successor is
3
<PAGE>
elected and has qualified or until the earlier death, resignation, removal or
disqualification of the director.
Section 2.03 VACANCIES. Vacancies on the Board of Directors resulting
from the death, resignation, removal or disqualification of a director may be
filled by the affirmative vote of a majority of the remaining members of the
Board, though less than a quorum. Vacancies on the Board resulting from newly
created directorships may be filled by the affirmative vote of a majority of
the directors serving at the time such directorships are created. Each person
elected to fill a vacancy shall hold office until a qualified successor is
elected by the shareholders at the next regular meeting or at any special
meeting duly called for that purpose.
Section 2.04 PLACE OF MEETINGS. Each meeting of the Board of Directors
shall be held at the principal executive office of the Corporation or at such
other place as may be designated from time to time by a majority of the
members of the Board, by the Chairman or by the Chief Executive Officer. A
meeting may be held by conference among the directors using any means of
communication through which the directors may simultaneously hear each other
during the conference.
Section 2.05 REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as may
from time to time be determined by the Board of Directors.
Section 2.06 SPECIAL MEETINGS. A special meeting of the Board of
Directors may be called for any purpose or purposes at any time by any member
of the Board. Notice thereof stating the place, date and hour of the meeting
shall be given to each director either by mail not less than forty-eight (48)
hours before the date of the meeting, by telephone or telegram on twenty-four
(24) hours' notice, or on such shorter notice as the person or persons
calling such meeting may deem necessary or appropriate in the circumstances.
The notice need not state the purpose of the meeting.
Section 2.07 WAIVER OF NOTICE; PREVIOUSLY SCHEDULED MEETINGS.
Subdivision 1. A director of the Corporation may waive notice of the date,
time and place of a meeting of the Board. A waiver of notice by a director
entitled to notice is effective whether given before, at or after the
meeting, and whether given in writing, orally or by attendance. Attendance by
a director at a meeting is a waiver of notice of that meeting, unless the
director objects at the beginning of the meeting to the transaction of
business because the meeting is not lawfully called or convened and
thereafter does not participate in the meeting.
Subdivision 2. If the day or date, time and place of a Board meeting
have been provided herein or announced at a previous meeting of the Board, no
notice is required. Notice of an adjourned meeting need not be given other
than by announcement at the meeting at which adjournment is taken of the
date, time and place at which the meeting will be reconvened.
Section 2.08 QUORUM. The presence in person of a majority of the
directors currently holding office shall be necessary to constitute a quorum
for the transaction of business. In the absence of a quorum, a majority of
the directors present may adjourn a meeting
4
<PAGE>
from time to time without further notice until a quorum is present. If a
quorum is present when a duly called or held meeting is convened, the
directors present may continue to transact business until adjournment, even
though the withdrawal of a number of the directors originally present leaves
less than the proportion or number otherwise required for a quorum.
Section 2.09 ACTS OF BOARD. Except as otherwise required by
law or specified in the Articles of Incorporation of the Corporation, the Board
shall take action by the affirmative vote of the greater of (a) a majority of
the directors present at a duly held meeting at the time the action is taken or
(b) a majority of the minimum proportion or number of directors that would
constitute a quorum for the transaction of business at the meeting.
Section 2.10 PARTICIPATION BY ELECTRONIC COMMUNICATIONS. A director may
participate in a Board meeting by any means of communication through which
the director, other directors so participating and all directors physically
present at the meeting may simultaneously hear each other during the meeting.
A director so participating shall be deemed present in person at the meeting.
Section 2.11 ABSENT DIRECTORS. A director of the Corporation may give
advance written consent or opposition to a proposal to be acted on at a Board
meeting. If the director is not present at the meeting, consent or opposition
to a proposal does not constitute presence for purposes of determining the
existence of a quorum, but consent or opposition shall be counted as the vote
of a director present at the meeting in favor of or against the proposal and
shall be entered in the minutes or other record of action at the meeting, if
the proposal acted on at the meeting is substantially the same or has
substantially the same effect as the proposal to which the director has
consented or objected.
Section 2.12 ACTION WITHOUT A MEETING. An action required or permitted
to be taken at a Board meeting may be taken without a meeting by written
action signed by all of the directors. Any action, other than an action
requiring shareholder approval, if the Articles of Incorporation so provide,
may be taken by written action signed by the number of directors that would
be required to take the same action at a meeting of the Board at which all
directors were present. The written action is effective when signed by the
required number of directors, unless a different effective time is provided
in the written action. When written action is permitted to be taken by less
than all directors, all directors shall be notified immediately of its text
and effective date.
Section 2.13 COMMITTEES. Subdivision 1. A resolution approved by the
affirmative vote of a majority of the Board may establish committees having
the authority of the Board in the management of the business of the
Corporation to the extent provided in the resolution. Committees shall be
subject at all times to the direction and control of the Board, except as
provided in Section 2.14 or otherwise provided by law.
Subdivision 2. A committee shall consist of one or more natural persons,
who need not be directors, appointed by affirmative vote of a majority of the
directors present at a duly held Board meeting.
5
<PAGE>
Subdivision 3. Section 2.04 and Sections 2.06 to 2.12 hereof shall apply
to committees and members of committees to the same extent as those sections
apply to the Board and directors.
Subdivision 4. Minutes, if any, of committee meetings shall be made
available upon request to members of the committee and to any director.
Section 2.14 SPECIAL LITIGATION COMMITTEE. Pursuant to the procedure
set forth in Section 2.13, the Board may establish a committee composed of
one or more independent directors or other independent persons to determine
whether it is in the best interests of the Corporation to consider legal
rights or remedies of the Corporation and whether those rights and remedies
should be pursued. The committee, once established, is not subject to the
direction or control of, or (unless required by law) termination by, the
Board. To the extent permitted by law, a vacancy on the committee may be
filled by a majority vote of the remaining committee members. The good faith
determinations of the committee are binding upon the Corporation and its
directors, officers and shareholders to the extent permitted by law. The
committee terminates when it issues a written report of its determinations to
the Board.
Section 2.15 COMPENSATION. The Board may fix the compensation, if any,
of directors.
OFFICERS
Section 3.01 NUMBER AND DESIGNATION. The Corporation shall have one or
more natural persons exercising the functions of the offices of Chief
Executive Officer and Chief Financial Officer. The Board of Directors may
elect or appoint such other officers or agents as it deems necessary for the
operation and management of the Corporation, with such powers, rights, duties
and responsibilities as may be determined by the Board, including, without
limitation, a President, one or more Vice Presidents, a Secretary and a
Treasurer, each of whom shall have the powers, rights, duties and
responsibilities set forth in these By-Laws unless otherwise determined by
the Board. Any of the offices or functions of those offices may be held by
the same person.
Section 3.02 CHIEF EXECUTIVE OFFICER. Unless provided otherwise by a
resolution adopted by the Board of Directors, the Chief Executive Officer (a)
shall have general active management of the business of the Corporation; (b)
shall, when present, preside at all meetings of the shareholders and Board;
(c) shall see that all orders and resolutions of the Board are carried into
effect; (d) may maintain records of and certify proceedings of the Board and
shareholders; and (e) shall perform such other duties as may from time to
time be assigned by the Board.
Section 3.03 CHIEF FINANCIAL OFFICER. Unless provided otherwise by a
resolution adopted by the Board of Directors, the Chief Financial Officer (a)
shall keep accurate financial records for the Corporation; (b) shall deposit
all monies, drafts and checks in the name of and to the credit of the
Corporation in such banks and depositories as the Board shall designate from
time to time; (c) shall endorse for deposit all notes, checks and drafts
received
6
<PAGE>
by the Corporation as ordered by the Board, making proper vouchers therefor;
(d) shall disburse corporate funds and issue checks and drafts in the name of
the Corporation, as ordered by the Board; (e) shall render to the Chief
Executive Officer and the Board, whenever requested, an account of all of
such officer's transactions as Chief Financial Officer and of the financial
condition of the Corporation; and (f) shall perform such other duties as may
be prescribed by the Board or the Chief Executive Officer from time to time.
Section 3.04 PRESIDENT. Unless otherwise determined by the Board of
Directors, the President shall be the Chief Executive Officer of the
Corporation. If an officer other than the President is designated Chief
Executive Officer, the President shall perform such duties as may from time
to time be assigned by the Board.
Section 3.05 VICE PRESIDENTS. Any one or more Vice Presidents, if any,
may be designated by the Board of Directors as Executive Vice Presidents or
Senior Vice Presidents. During the absence or disability of the President, it
shall be the duty of the highest ranking Executive Vice President, and, in
the absence of any such Vice President, it shall be the duty of the highest
ranking Senior Vice President or other Vice President, who shall be present
at the time and able to act, to perform the duties of the President. The
determination of who is the highest ranking of two or more persons holding
the same office shall, in the absence of specific designation of order of
rank by the Board, be made on the basis of the earliest date of appointment
or election, or, in the event of simultaneous appointment or election, on the
basis of the longest continuous employment by the Corporation.
Section 3.06 SECRETARY. The Secretary, unless otherwise determined by
the Board of Directors, shall attend all meetings of the shareholders and all
meetings of the Board, shall record or cause to be recorded all proceedings
thereof in a book to be kept for that purpose, and may certify such
proceedings. Except as otherwise required or permitted by law or by these
By-Laws, the Secretary shall give or cause to be given notice of all meetings
of the shareholders and all meetings of the Board.
Section 3.07 TREASURER. Unless otherwise determined by the Board of
Directors, the Treasurer shall be the Chief Financial Officer of the
Corporation. If an officer other than the Treasurer is designated Chief
Financial Officer, the Treasurer shall perform such duties as may from time
to time be assigned by the Board.
Section 3.08 AUTHORITY AND DUTIES. In addition to the foregoing
authority and duties, all officers of the Corporation shall respectively have
such authority and perform such duties in the management of the business of
the Corporation as may be designated from time to time by the Board of
Directors. Unless prohibited by a resolution approved by the affirmative vote
of a majority of the directors present, an officer elected or appointed by
the Board may, without the approval of the Board, delegate some or all of the
duties and powers of an office to other persons.
Section 3.09 TERM. Subdivision 1. All officers of the Corporation shall
hold office until their respective successors are chosen and have qualified
or until their earlier death, resignation or removal.
7
<PAGE>
Subdivision 2. An officer may resign at any time by giving written
notice to the Corporation. The resignation is effective without acceptance
when the notice is given to the Corporation, unless a later effective date is
specified in the notice.
Subdivision 3. An officer may be removed at any time, with or without
cause, by a resolution approved by the affirmative vote of a majority of the
directors present at a duly held Board meeting.
Subdivision 4. A vacancy in an office because of death, resignation,
removal, disqualification or other cause may, or in the case of a vacancy in
the office of Chief Executive Officer or Chief Financial Officer shall, be
filled for the unexpired portion of the term by the Board.
Section 3.10 SALARIES. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors or by the Chief Executive Officer if
authorized by the Board.
INDEMNIFICATION
Section 4.01 INDEMNIFICATION. Subject to Section 4.02 hereof, the
Corporation shall indemnify its officers, directors and employees for such
expenses and liabilities, in such manner, under such circumstances, and to
such extent, as required or permitted by Minnesota Statutes, Section
302A.521, as amended from time to time, or as required or permitted by other
provisions of law.
Section 4.02 ADVANCES. If a person is made or threatened to be made a
party to a proceeding by reason of his or her former or present official
capacity as a director or officer of the Corporation, such person shall be
entitled, in such manner, under such circumstances, and to such extent, as
required or permitted by subdivision 3 of Section 302A.521 of the Minnesota
Statutes, as amended from time to time, to payment or reimbursement by the
Corporation of reasonable expenses, including attorneys' fees and
disbursements incurred by such in advance of the final disposition of the
proceeding. With respect to any person who is made or threatened to be made a
party to a proceeding by reason of his or her former or present official
capacity as a non-officer employee of the Corporation and who is entitled,
pursuant to subdivision 3 of Section 302A.521 of the Minnesota Statutes, to
payment or reimbursement by the Corporation of expenses incurred by such
person in connection with a proceeding, the Corporation may, in lieu of such
payment or reimbursement, authorize the Corporation's counsel to represent
such person in the proceeding, whether or not the Corporation is party to
such proceeding. In the event such representation presents an actual conflict
of interest as determined by such counsel and the person is otherwise
entitled to payment or reimbursement by the Corporation of reasonable
expenses incurred by such person in advance of the final disposition of the
proceeding pursuant to the provisions of subdivision 3 of Section 302A.521 of
the Minnesota Statutes, the Corporation shall retain separate counsel to
represent such person.
Section 4.03 INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person in such person's official capacity against
any liability asserted against
8
<PAGE>
and incurred by such person in or arising from that capacity, whether or not
the Corporation would otherwise be required to indemnify the person against
the liability.
SHARES
Section 5.01 CERTIFICATED AND UNCERTIFICATED SHARES. Subdivision 1. The
shares of the Corporation shall be either certificated shares or
uncertificated shares. Each holder of duly issued certificated shares is
entitled to a certificate of shares.
Subdivision 2. Each certificate of shares of the Corporation shall bear
the corporate seal, if any, and shall be signed by the Chief Executive
Officer, or the President or any Vice President, and the Chief Financial
Officer, or the Secretary or any Assistant Secretary, but when a certificate
is signed by a transfer agent or a registrar, the signature of any such
officer and the corporate seal upon such certificate may be facsimiles,
engraved or printed. If a person signs or has a facsimile signature placed
upon a certificate while an officer, transfer agent or registrar of the
Corporation, the certificate may be issued by the Corporation, even if the
person has ceased to serve in that capacity before the certificate is issued,
with the same effect as if the person had that capacity at the date of its
issue.
Subdivision 3. A certificate representing shares issued by the
Corporation shall, if the Corporation is authorized to issue shares of more
than one class or series, set forth upon the face or back of the certificate,
or shall state that the Corporation will furnish to any shareholder upon
request and without charge, a full statement of the designations,
preferences, limitations and relative rights of the shares of each class or
series authorized to be issued, so far as they have been determined, and the
authority of the Board to determine the relative rights and preferences of
subsequent classes or series.
Subdivision 4. A resolution approved by the affirmative vote of a
majority of the directors present at a duly held meeting of the Board may
provide that some or all of any or all classes and series of the shares of
the Corporation will be uncertificated shares. Any such resolution shall not
apply to shares represented by a certificate until the certificate is
surrendered to the Corporation.
Section 5.02 DECLARATION OF DIVIDENDS AND OTHER DISTRIBUTIONS. The
Board of Directors shall have the authority to declare dividends and other
distributions upon the shares of the Corporation to the extent permitted by
law.
Section 5.03 TRANSFER OF SHARES. Shares of the Corporation may be
transferred only on the books of the Corporation by the holder thereof, in
person or by such person's attorney. In the case of certificated shares,
shares shall be transferred only upon surrender and cancellation of
certificates for a like number of shares. The Board of Directors, however,
may appoint one or more transfer agents and registrars to maintain the share
records of the Corporation and to effect transfers of shares.
Section 5.04 RECORD DATE. The Board of Directors may fix a time, not
exceeding 60 days preceding the date fixed for the payment of any dividend or
other
9
<PAGE>
distribution, as a record date for the determination of the shareholders
entitled to receive payment of such dividend or other distribution, and in
such case only shareholders of record on the date so fixed shall be entitled
to receive payment of such dividend or other distribution, notwithstanding
any transfer of any shares on the books of the Corporation after any record
date so fixed.
MISCELLANEOUS
Section 6.01 EXECUTION OF INSTRUMENTS. Subdivision 1. All deeds,
mortgages, bonds, checks, contracts and other instruments pertaining to the
business and affairs of the Corporation shall be signed on behalf of the
Corporation by the Chief Executive Officer, or the President, or any Vice
President or other officer of the Corporation, or by such other person or
persons as may be designated from time to time by the Board of Directors.
Subdivision 2. If a document must be executed by persons holding
different offices or functions and one person holds such offices or exercises
such functions, that person may execute the document in more than one
capacity if the document indicates each such capacity.
Section 6.02 ADVANCES. The Corporation may, without a vote of the
directors, advance money to its directors, officers or employees to cover
expenses that can reasonably be anticipated to be incurred by them in the
performance of their duties and for which they would be entitled to
reimbursement in the absence of an advance.
Section 6.03 CORPORATE SEAL. The seal of the Corporation, if any, shall
be a circular embossed seal having inscribed thereon the name of the
Corporation and the following words:
"Corporate Seal Minnesota".
Section 6.04 FISCAL YEAR. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 6.05 AMENDMENTS. The Board of Directors shall have the power to
adopt, amend or repeal the By-Laws of the Corporation, subject to the power
of the shareholders to change or repeal the same, provided, however, that the
Board shall not adopt, amend or repeal any By-Law fixing a quorum for
meetings of shareholders, prescribing procedures for removing directors or
filling vacancies in the Board, or fixing the number of directors or their
classifications, qualifications or terms of office, but may adopt or amend a
By-Law that increases the number of directors.
10
<PAGE>
EXHIBIT 12.1
NORTHWEST AIRLINES CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------------------
1999 1998
-------- ----------
<S> <C> <C>
EARNINGS:
Income (loss) before income taxes $ (48) $ 115
Less: Income from less than 50%
owned investees 17 1
Add:
Rent expense representative of interest (1) 48 47
Interest expense net of capitalized interest 89 53
Interest of preferred security holder 7 6
Amortization of debt discount and expense 3 2
Amortization of interest capitalized 1 1
------- ---------
ADJUSTED EARNINGS $ 83 $ 223
------- ---------
------- ---------
FIXED CHARGES:
Rent expense representative of interest (1) $ 48 $ 47
Interest expense net of capitalized interest 89 53
Interest of preferred security holder 7 6
Amortization of debt discount 3 2
Capitalized interest 5 3
------- ---------
FIXED CHARGES $ 152 $ 111
------- ---------
------- ---------
RATIO OF EARNINGS TO FIXED CHARGES -- (2) 2.01
------- ---------
------- ---------
</TABLE>
(1) Calculated as one-third of rentals, which is considered representative of
the interest factor.
(2) Earnings were inadequate to cover fixed charges by $69 million for the
three months ended March 31, 1999.
<PAGE>
EXHIBIT 12.2
NORTHWEST AIRLINES CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK REQUIREMENTS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
------------------------------------
1999 1998
-------- ----------
<S> <C> <C>
EARNINGS:
Income (loss) before income taxes $ (48) $ 115
Less: Income from less than 50%
owned investees 17 1
Add:
Rent expense representative of interest (1) 48 47
Interest expense net of capitalized interest 89 53
Interest of preferred security holder 7 6
Amortization of debt discount and expense 3 2
Amortization of interest capitalized 1 1
-------- ----------
ADJUSTED EARNINGS (LOSS) $ 83 $ 223
-------- ----------
-------- ----------
FIXED CHARGES AND PREFERRED STOCK REQUIREMENTS:
Rent expense representative of interest (1) $ 48 $ 47
Interest expense net of capitalized interest 89 53
Interest of preferred security holder 7 6
Preferred stock requirements 1 1
Amortization of debt discount 3 2
Capitalized interest 5 3
-------- ----------
FIXED CHARGES AND PREFERRED
STOCK REQUIREMENTS $ 153 $ 112
-------- ----------
-------- ----------
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK REQUIREMENTS -- (2) 2.00
-------- ----------
-------- ----------
</TABLE>
(1) Calculated as one-third of rentals, which is considered representative of
the interest factor.
(2) Earnings were inadequate to cover fixed charges and preferred stock
requirements by $70 million for the three months ended March 31, 1999.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 451
<SECURITIES> 464
<RECEIVABLES> 686
<ALLOWANCES> 23
<INVENTORY> 425
<CURRENT-ASSETS> 2,372
<PP&E> 8,106
<DEPRECIATION> 2,242
<TOTAL-ASSETS> 11,216
<CURRENT-LIABILITIES> 3,733
<BONDS> 0
257
0
<COMMON> 0
<OTHER-SE> (489)
<TOTAL-LIABILITY-AND-EQUITY> 11,212
<SALES> 2,281
<TOTAL-REVENUES> 2,281
<CGS> 0
<TOTAL-COSTS> 2,295
<OTHER-EXPENSES> 34
<LOSS-PROVISION> 2
<INTEREST-EXPENSE> 97
<INCOME-PRETAX> (48)
<INCOME-TAX> (19)
<INCOME-CONTINUING> (29)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29)
<EPS-PRIMARY> (.36)
<EPS-DILUTED> (.36)
</TABLE>
