<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, 1997
Commission File Number 0-23642
NORTHWEST AIRLINES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-4205287
(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, 1997, there were 97,306,475 shares of the registrant's Class A
Common Stock and 4,280,433 shares of the registrant's Class B Common Stock
outstanding.
<PAGE>
NORTHWEST AIRLINES CORPORATION
PART I. FINANCIAL INFORMATION Page No.
--------
Item 1. Financial Statements
Condensed Consolidated Statements of Income --
Three months ended March 31, 1997 and 1996. 3
Condensed Consolidated Balance Sheets - March 31,
1997, December 31, 1996 and March 31, 1996. 4
Condensed Consolidated Statements of Cash Flows --
Three months ended March 31, 1997 and 1996. 5
Notes to Condensed Consolidated Financial Statements 6
The Computations of Primary and Fully Diluted Earnings
Per Common Share, attached hereto and filed as Exhibits
11.1 and 11.2, and the Computations of Ratio of Earnings
to Fixed Charges and Ratio of Earnings to Fixed Charges
and Preferred Stock Requirements, attached hereto and
filed as Exhibits 12.1 and 12.2, are incorporated herein
by reference.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE 12
EXHIBIT INDEX 13
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NORTHWEST AIRLINES CORPORATION
- ------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months ended March 31
(UNAUDITED, IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS) 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING REVENUES
Passenger $ 2,040.3 $ 1,935.5
Cargo 170.7 170.3
Other 164.5 159.0
----------- -----------
2,375.5 2,264.8
OPERATING EXPENSES
Salaries, wages and benefits 732.5 644.2
Stock-based employee compensation -- 120.1
Aircraft fuel and taxes 371.5 305.6
Commissions 206.1 203.7
Aircraft maintenance materials and repairs 154.2 123.6
Other rentals and landing fees 105.5 108.7
Aircraft rentals 84.3 84.1
Depreciation and amortization 94.1 90.0
Other 492.3 450.4
----------- -----------
2,240.5 2,130.4
OPERATING INCOME 135.0 134.4
OTHER INCOME (EXPENSE)
Interest expense, net (57.3) (68.6)
Interest of mandatorily redeemable preferred security holder (6.1) (7.0)
Investment income 12.1 15.3
Foreign currency gain 12.8 6.9
Other 8.1 6.8
----------- -----------
(30.4) (46.6)
----------- -----------
INCOME BEFORE INCOME TAXES 104.6 87.8
Income tax expense 40.0 34.4
----------- -----------
NET INCOME 64.6 53.4
Preferred stock requirements (5.0) (13.0)
----------- -----------
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 59.6 $ 40.4
----------- -----------
----------- -----------
Earnings per common share:
PRIMARY $ .58 $ .41
----------- -----------
----------- -----------
FULLY DILUTED $ .52 $ .37
----------- -----------
----------- -----------
Average shares used in computation:
PRIMARY 103,577,380 98,370,401
FULLY DILUTED 114,203,004 108,281,429
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
NORTHWEST AIRLINES CORPORATION
- ------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------
March 31 December 31 March 31
(UNAUDITED, IN MILLIONS) 1997 1996 1996
- ------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 971.3 $ 559.4 $ 848.2
Short-term investments 289.7 253.1 307.8
Accounts receivable, net 671.9 656.1 728.7
Flight equipment spare parts, net 281.4 262.2 270.8
Prepaid expenses and other 337.3 359.1 288.3
-------- -------- --------
2,551.6 2,089.9 2,443.8
PROPERTY AND EQUIPMENT
Flight equipment, net 3,660.9 3,616.4 3,227.8
Other property and equipment, net 887.9 924.1 958.4
-------- -------- --------
4,548.8 4,540.5 4,186.2
FLIGHT EQUIPMENT UNDER CAPITAL LEASES, NET 662.6 671.5 700.7
OTHER ASSETS
International routes, net 745.3 751.4 769.6
Investments in affiliated companies and other 469.6 458.4 505.1
-------- -------- --------
1,214.9 1,209.8 1,274.7
-------- -------- --------
$8,977.9 $8,511.7 $8,605.4
-------- -------- --------
-------- -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Air traffic liability $1,138.2 $1,010.7 $1,014.0
Accounts payable and other liabilities 1,763.3 1,666.4 1,553.6
Current maturities of long-term debt and
capital lease obligations 315.2 206.1 346.0
-------- -------- --------
3,216.7 2,883.2 2,913.6
LONG-TERM DEBT 2,034.3 1,916.0 2,062.0
LONG-TERM OBLIGATIONS UNDER CAPITAL LEASES 689.7 710.5 754.3
DEFERRED CREDITS AND OTHER LIABILTIES
Deferred income taxes 1,007.5 947.2 777.1
Pension and postretirement benefits 427.9 461.2 843.3
Other 330.0 348.9 362.9
-------- -------- --------
1,765.4 1,757.3 1,983.3
MANDATORILY REDEEMABLE PREFERRED SECURITY OF
SUBSIDIARY WHICH HOLDS SOLELY NON-RECOURSE
OBLIGATION OF COMPANY 507.8 549.2 588.5
REDEEMABLE PREFERRED STOCK 598.4 602.6 1,006.9
COMMON STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 1.0 1.0 .9
Additional paid-in capital 1,161.0 1,151.1 1,044.3
Accumulated deficit (885.6) (945.2) (1,477.5)
Other (110.8) (114.0) (270.9)
-------- -------- --------
165.6 92.9 (703.2)
-------- -------- --------
$8,977.9 $8,511.7 $8,605.4
-------- -------- --------
-------- -------- --------
SEE ACCOMPANYING NOTES.
4
<PAGE>
NORTHWEST AIRLINES CORPORATION
- ------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------
Three months ended March 31
(UNAUDITED, IN MILLIONS) 1997 1996
- -------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 373.5 $ 289.7
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (125.2) (252.3)
Net increase in short-term investments (27.2) (46.6)
Other, net (4.2) 7.1
-------- --------
Net cash used in investing activities (156.6) (291.8)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 250.6 2.9
Payment of long-term debt and capital lease
obligations (40.0) (40.6)
Proceeds from sale and leaseback transaction -- 50.0
Other, net (15.6) (12.9)
-------- --------
Net cash provided by (used in) financing
activities 195.0 (0.6)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 411.9 (2.7)
Cash and cash equivalents at beginning of period 559.4 850.9
-------- --------
Cash and cash equivalents at end of period $ 971.3 $ 848.2
-------- --------
-------- --------
Cash and cash equivalents and unrestricted short-term
investments at end of period $1,185.9 $1,045.1
-------- --------
-------- --------
Available to be borrowed under revolving credit
facility $ 487.5 $ 187.5
-------- --------
-------- --------
SEE ACCOMPANYING NOTES.
5
<PAGE>
NORTHWEST AIRLINES CORPORATION
- ------------------------------------------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
1. The condensed consolidated financial statements of Northwest
Airlines Corporation ("NWAC" or the "Company") included herein have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). 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, 1996 contained in the Company's Annual Report on Form 10-K
for 1996 (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 Company's accounting and reporting policies are summarized in
Note A of the Notes to Consolidated Financial Statements in the Annual
Report.
3. The income tax expense 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.
4. At March 31, 1997, the Company had no borrowings outstanding under its
revolving credit facility. The $487.5 million available to be borrowed
under the revolving credit facility along with $1.186 billion of cash,
cash equivalents and unrestricted short-term investments provided the
Company with $1.673 billion of available liquidity at March 31, 1997.
In addition, the Company has the ability under another facility to
borrow up to $240 million using existing aircraft as collateral.
Scheduled maturities of long-term debt subsequent to March 31, 1997,
excluding short-term notes payable, are $127.2 million in 1997, $165.8
million in 1998, $220.3 million in 1999, $110.5 million in 2000 and
$127.9 million in 2001.
5. Currently, earnings per share ("EPS") calculations are performed pursuant
to Accounting Principles Board Opinion No. 15. NWAC will be required to
present EPS data in accordance with Statement of Financial Accounting
Standards No. 128 "Earnings per Share" commencing with the fourth quarter
of 1997. While early adoption of Statement No. 128 is not permitted, the
following pro forma supplemental data is presented:
<TABLE>
<CAPTION>
Three months ended March 31
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
Earnings per common share using Statement No. 128 approach:
Basic $ .59 $ .42
Diluted $ .52 $ .37
</TABLE>
6
<PAGE>
6. In accordance with Rule 1-02 (bb) of Regulation S-X, the following summary
data is presented for Northwest Airlines, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN MILLIONS) Three Months Ended
March 31
-------------------
1997 1996
-------- --------
Operating revenues $2,290.4 $2,178.2
Operating expenses 2,167.8 2,060.3
-------- --------
Operating income 122.6 117.9
Other income (expense) (43.8) (47.6)
-------- --------
Income before income taxes 78.8 70.3
Income tax expense 32.0 27.3
-------- --------
Net income $ 46.8 $ 43.0
-------- --------
-------- --------
CONDENSED CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
(UNAUDITED, IN MILLIONS) March 31 December 31 March 31
1997 1996 1996
-------- ----------- --------
<S> <C> <C> <C>
Current assets $2,038.1 $1,626.8 $1,917.8
Noncurrent assets 5,830.8 5,818.3 5,558.1
Current liabilities 3,141.2 2,832.2 2,637.5
Long-term debt and obligations under capital leases 2,208.0 2,103.9 2,257.4
Deferred credits and other liabilities 879.8 935.7 1,341.9
Mandatorily redeemable preferred security of
subsidiary 507.8 549.2 588.5
</TABLE>
See also Note P to Consolidated Financial Statements in the Annual Report.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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.
For the quarter ended March 31, 1997, the Company reported net income of
$64.6 million and operating income of $135.0 million. Primary earnings per
common share were $.58 ($.52 fully diluted), an improvement of $.17 ($.15
fully diluted). Cash, cash equivalents and unrestricted short-term
investments were $1.186 billion at March 31, 1997. Additionally, at March
31, 1997, the Company had available $487.5 million in borrowing capacity
under its revolving credit facility providing total available liquidity of
$1.673 billion.
Information with respect to the Company's operating statistics follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED %
MARCH 31 CHG.
------------------- ----
Scheduled service: 1997 1996
--------- --------
<S> <C> <C> <C>
Available seat miles (ASM) (millions) 23,054.8 22,185.7 3.9
Revenue passenger miles (millions) 16,592.4 15,576.5 6.5
Passenger load factor (percent) 72.0 70.2 1.8 pts.
Revenue passengers (thousands) 12,661 12,036 5.2
Revenue yield per passenger mile (cents) 12.30 12.43 (1.0)
Passenger revenue per scheduled ASM (cents) 8.85 8.72 1.5
Operating revenue per total ASM (cents) (1) 9.57 9.44 1.4
Operating expense per total ASM (cents) (1) 9.01 8.91 1.1
Cargo ton miles (millions) 492.7 487.2 1.1
Cargo revenue per ton mile (cents) 34.65 34.95 (0.9)
Fuel gallons consumed (millions) 471.5 458.0 2.9
Average fuel cost per gallon (cents) 74.00 61.86 19.6
Number of operating aircraft at end of period 401 386 3.9
Full-time equivalent employees at end of period 47,577 45,619 4.3
</TABLE>
(1) 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, 1997 COMPARED WITH THREE
MONTHS ENDED MARCH 31, 1996
Operating income increased $.6 million to $135.0 million. The favorable
impacts of a $104.8 million increase in passenger revenues and the conclusion
of stock-based employee compensation were largely offset by increases in
salaries, wages and benefits of $88.3 million, aircraft fuel and related
taxes of $65.9 million and aircraft maintenance of $30.6 million.
OPERATING REVENUES. Operating revenues were $2.38 billion, an improvement of
$110.7 million (4.9%). System passenger revenues (which represented 86% of
total operating revenues) increased $104.8 million (5.4%). The increase was
primarily attributable to a 3.9% increase in scheduled service ASMs and a
1.5% increase in passenger revenue per scheduled ASM ("RASM") which was
attributable to a 2.6% (1.8 points) increase in passenger load factor offset
by a 1.0% decrease in system yield. The Company expects second quarter ASM
growth to be less than originally planned due to the late delivery of five
widebody aircraft which are currently undergoing third party commissioning.
8
<PAGE>
Domestic passenger revenue increased $103.4 million (7.8%) to $1.42 billion.
A 4.4% increase in scheduled service ASMs and a 3.3% increase in RASM
resulted in the improved performance. The increase in scheduled service ASMs
resulted primarily from the addition of DC9-30, DC10-30 and B757 aircraft
during the second and third quarters of 1996 and the first quarter of 1997,
which allowed the Company to increase frequencies to 25 cities and enter nine
new markets. The increase in RASM was due to a 1.8% (1.2 points) increase in
passenger load factor and a 1.3% increase in yield. See also "Other
Information - U.S. TRANSPORTATION TAX." Pacific passenger revenue decreased
by $1.3 million (.3%) to $507.7 million due to a 4.3% decrease in Pacific
RASM which was offset by a 4.1% increase in scheduled service ASMs related to
Detroit - Beijing service and additional trans-Pacific frequencies, mainly
Minneapolis/St. Paul-Tokyo. The decrease in Pacific RASM was due to a 7.7%
decrease in yield which was partially mitigated by a 3.6% (2.7 pts.) increase
in passenger load factor. The Pacific yield decrease was largely
attributable to a weaker Japanese yen. The average yen per U.S. dollar
exchange rate for the three months ended March 31, 1997 and 1996 was 119 and
105, respectively, a weakening of the yen of 13.3%. Atlantic passenger
revenue increased $2.7 million (2.5%) to $110.2 million due to a 3.8%
increase in RASM which was largely yield related.
OPERATING EXPENSES. Operating expenses increased $110.1 million (5.2%).
While operating capacity increased 3.9% to 23.1 billion total service ASMs,
operating expense per total service ASM increased 1.1%. Salaries, wages and
benefits expense increased $88.3 million (13.7%) due to an increase in
average full-time equivalent employees of 4.3% and the end of the Wage
Savings Period discussed under "Other Information - LABOR AGREEMENTS." The
increase in average full-time equivalent employees was attributable to
increased flying of 4.1% and increased traffic of 5.2%. Aircraft fuel and
taxes increased $65.9 million (21.6%). A 19.6% increase in average fuel cost
per gallon caused $57.2 million of the increase with the balance attributable
to increased flying. Aircraft maintenance materials and repairs increased
$30.6 million (24.8%) due primarily to the timing of maintenance activities,
increased flying and higher engine overhaul costs. Other expenses grew $41.9
million (9.3%) largely due to increased advertising, supplies, selling and
marketing fees, claims and outside services.
OTHER INCOME AND EXPENSE. Interest expense-net decreased $11.3 million
(16.5%) primarily due to the retirement of debt prior to scheduled maturity
and lower interest rates on debt. The foreign currency gains for the three
months ended March 31, 1997 and 1996 were primarily attributable to balance
sheet remeasurement of foreign currency-denominated assets and liabilities.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had cash and cash equivalents of $971.3
million, unrestricted short-term investments of $214.6 million and borrowing
capacity of $487.5 million under its revolving credit facility, providing
total available liquidity of $1.673 billion. In addition, the Company has the
ability under another facility to borrow up to $240 million using existing
aircraft as collateral. Net cash provided by operating activities for the
three months ended March 31, 1997 was $373.5 million, a $83.8 million
increase compared with the three months ended March 31, 1996. Investing
activities in the first quarter of 1997 consisted primarily of costs to
commission aircraft that have not yet entered revenue service, engine
hushkitting and DC9-50 interior refurbishment. Investing activities in 1996
pertained primarily to the acquisition of three 757-200 aircraft and one DC-9
aircraft and the modification of DC-9 aircraft. Financing activities for the
three months ended March 31, 1997 consisted primarily of the issuance of
$150 million of 8.375% notes due 2004 and $100 million of 8.70% notes due
2007.
9
<PAGE>
OTHER INFORMATION
LABOR AGREEMENTS. The Company's labor agreements provided for wage and other
cost reductions which aggregated $897 million over a 36 to 39 month period
(depending on the labor group) (the "Wage Savings Period"). The Wage Savings
Period ended on July 31, 1996 for flight attendants, September 30, 1996 for
mechanics, ground personnel and management and October 30, 1996 for pilots.
The Company's agreements with the employee unions provide that wage scales at
the end of the Wage Savings Period snapback to August 1, 1993 levels and
potentially snap-up pursuant to formulae based in part on wage rates and wage
rate increases at other large U.S. airlines. Consequently, at the end of the
Wage Savings Period, salaries and wages increased by approximately $330
million on an annualized basis for both the snapbacks and snap-ups. This
increase includes the estimated impact of April 1997 arbitration decisions
regarding the calculation of pilot and flight attendant snap-ups.
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Note B of the Notes to Consolidated Financial Statements in the
Annual Report contain additional discussion of the labor cost savings
agreements, stock issued to employees and the related accounting treatment.
FOREIGN CURRENCY. The Company's annual yen-denominated revenues exceed its
yen-denominated expenses by approximately 70 billion yen and its
yen-denominated liabilities exceed its yen-denominated assets. In general,
as the Japanese yen strengthens (weakens), the Company's operating income is
favorably (unfavorably) impacted and a nonoperating foreign currency loss
(gain) is recognized due to the remeasurement of net yen-denominated
liabilities. In recent periods, the yen has weakened as the yen to U.S.
dollar exchange rate has changed from 107 yen to $1 at March 31, 1996 to 116
yen to $1 at December 31, 1996 to 124 yen to $1 at March 31, 1997.
USE OF FINANCIAL INSTRUMENTS. In order to mitigate its exposure to foreign
exchange rate fluctuations, from time to time the Company enters into collar
option and forward exchange contracts to hedge its anticipated
yen-denominated net cash flows. At April 30, 1997, the Company had $378.9
million (45.7 billion yen) in collar options and forward contracts
outstanding to hedge approximately 90% of its remaining 1997 anticipated
yen-denominated net cash inflows. In the ordinary course of business, the
Company manages the price risk of fuel costs utilizing both regulated
exchange traded futures contracts and fuel swap agreements. Gains or losses
on hedge contracts are deferred until the related fuel inventory is expensed.
As of March 31, 1997, the Company had hedged approximately 21% of its
remaining 1997 fuel requirements.
U.S. TRANSPORTATION TAX. The United States 10% passenger ticket tax
applicable to domestic travel, the 6.25% domestic cargo waybill tax and the
$6 per passenger international departure tax expired on December 31, 1995.
Consequently, the Company ceased collecting these taxes on January 1, 1996.
These taxes were reinstated for tickets sold subsequent to August 27, 1996
for travel through December 31, 1996. These taxes lapsed again on January 1,
1997 and were reinstated for tickets sold from March 7, 1997 to September 30,
1997.
EXPRESS AIRLINES AGREEMENT. On April 1, 1997, NWA Inc., a wholly owned
subsidiary of the Company, purchased all of the outstanding stock of Express
Airlines I, Inc. and an affiliate. Express Airlines I, Inc. is a regional
carrier that provides passenger traffic to Northwest at Minneapolis/St. Paul
and Memphis.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
Exhibit 11.1 - Computation of Primary Earnings per Common Share.
Exhibit 11.2 - Computation of Fully Diluted Earnings per Common Share.
Exhibit 12.1 - Computation of Ratio of Earnings to Fixed Charges.
Exhibit 12.2 - Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Requirements.
Exhibit 27.1 - Financial Data Schedule.
(b) REPORTS ON FORM 8-K:
Form 8-K dated March 6, 1997.
11
<PAGE>
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, 1997 By: /s/ Mark W. Osterberg
------------------------------
Mark W. Osterberg
Vice President and
Chief Accounting Officer
12
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
11.1 Computation of Primary Earnings Per Common Share.
11.2 Computation of Fully Diluted Earnings per Common Share.
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.
<PAGE>
EXHIBIT 11.1
NORTHWEST AIRLINES CORPORATION
COMPUTATION OF PRIMARY EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Three months ended March 31
---------------------------
1997 1996
------------- -----------
<S> <C> <C>
Reconciliation of net income applicable to common stockholders:
Net income before preferred stock requirements $ 64.6 $ 53.4
Preferred stock requirements (5.0) (13.0)
------------- -----------
Net income applicable to common stockholders $ 59.6 $ 40.4
------------- -----------
------------- -----------
Reconciliation of weighted average number of shares outstanding
to amount used in primary earnings per share computation:
Weighted average number of common shares outstanding 101,394,340 95,694,925(1)
Stock options issued reduced by the number of
shares which could have been purchased with
the proceeds from exercise of such options 2,183,040 2,675,476
------------- -----------
Weighted average number of common shares
outstanding, as adjusted 103,577,380 98,370,401
------------- -----------
------------- -----------
Earnings per common share $ .58 $ .41
------------- -----------
------------- -----------
</TABLE>
(1) Includes the weighted average number of common shares earned by employees
since August 1, 1993 due to the February 1994 exercise of the Series C
Preferred Stock special conversion option.
<PAGE>
EXHIBIT 11.2
NORTHWEST AIRLINES CORPORATION
COMPUTATION OF FULLY DILUTED EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Three months ended March 31
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
Reconciliation of net income applicable to common stockholders:
Net income before preferred stock requirements $ 64.6 $ 53.4
Preferred stock requirements (5.0) (13.0)
Addback: Series C Preferred Stock requirements 0.3 --
------------ ------------
Net income applicable to common stockholders, as adjusted $ 59.9 $ 40.4
------------ ------------
------------ ------------
Reconciliation of weighted average number of shares outstanding
to amount used in fully diluted earnings per share computation:
Weighted average number of common shares outstanding 101,394,340 95,694,925(1)
Weighted average number of shares of Series C Preferred
Stock assumed to be converted to common stock which
were outstanding in 1997 and earned by employees
since August 1, 1993 in 1996 10,588,792 9,856,577
Stock options issued reduced by the number of
shares which could have been purchased with
the proceeds from exercise of such options 2,219,872 2,729,927
------------ ------------
Weighted average number of common shares
outstanding, as adjusted 114,203,004 108,281,429
------------ ------------
------------ ------------
Earnings per common share assuming full dilution $ .52 $ .37
------------ ------------
------------ ------------
</TABLE>
(1) Includes the weighted average number of common shares earned by employees
since August 1, 1993 due to the February 1994 exercise of the Series C
Preferred Stock special conversion option.
<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
------------------
1997 1996
-------- --------
<S> <C> <C>
EARNINGS:
Income before income taxes $ 104.6 $ 87.8
Less: Income from less than 50%
owned investees 6.9 3.7
Add:
Rent expense representative of interest (1) 46.9 46.1
Interest expense net of capitalized interest 56.0 65.7
Interest of mandatorily redeemable preferred security holder 6.1 7.0
Amortization of debt discount and expense 1.3 2.9
Amortization of interest capitalized .7 .7
-------- --------
ADJUSTED EARNINGS $ 208.7 $ 206.5
-------- --------
-------- --------
FIXED CHARGES:
Rent expense representative of interest (1) $ 46.9 $ 46.1
Interest expense net of capitalized interest 56.0 65.7
Interest of mandatorily redeemable preferred security holder 6.1 7.0
Amortization of debt discount and expense 1.3 2.9
Capitalized interest 2.4 2.2
-------- --------
FIXED CHARGES $ 112.7 $ 123.9
-------- --------
-------- --------
RATIO OF EARNINGS TO FIXED CHARGES 1.85 1.67
-------- --------
-------- --------
</TABLE>
(1) Calculated as one-third of rentals, which is considered representative of
the interest factor.
<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
------------------
1997 1996
-------- --------
<S> <C> <C>
EARNINGS:
Income before income taxes $ 104.6 $ 87.8
Less: Income from less than 50%
owned investees 6.9 3.7
Add:
Rent expense representative of interest (1) 46.9 46.1
Interest expense net of capitalized interest 56.0 65.7
Interest of mandatorily redeemable preferred security holder 6.1 7.0
Amortization of debt discount and expense 1.3 2.9
Amortization of interest capitalized .7 .7
-------- --------
ADJUSTED EARNINGS $ 208.7 $ 206.5
-------- --------
-------- --------
FIXED CHARGES AND PREFERRED STOCK REQUIREMENTS:
Rent expense representative of interest (1) $ 46.9 $ 46.1
Interest expense net of capitalized interest 56.0 65.7
Interest of mandatorily redeemable preferred security holder 6.1 7.0
Preferred stock requirements 8.1 21.4
Amortization of debt discount and expense 1.3 2.9
Capitalized interest 2.4 2.2
-------- --------
FIXED CHARGES AND PREFERRED STOCK REQUIREMENTS $ 120.8 $ 145.3
-------- --------
-------- --------
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK REQUIREMENTS 1.73 1.42
-------- --------
-------- --------
</TABLE>
(1) Calculated as one-third of rentals, which is considered representative of
the interest factor.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 971
<SECURITIES> 290
<RECEIVABLES> 694
<ALLOWANCES> 22
<INVENTORY> 281
<CURRENT-ASSETS> 2,552
<PP&E> 6,272
<DEPRECIATION> 1,723
<TOTAL-ASSETS> 8,978
<CURRENT-LIABILITIES> 3,217
<BONDS> 0
598
0
<COMMON> 1
<OTHER-SE> 165
<TOTAL-LIABILITY-AND-EQUITY> 8,978
<SALES> 2,376
<TOTAL-REVENUES> 2,376
<CGS> 0
<TOTAL-COSTS> 2,241
<OTHER-EXPENSES> 30
<LOSS-PROVISION> 4
<INTEREST-EXPENSE> 57
<INCOME-PRETAX> 105
<INCOME-TAX> 40
<INCOME-CONTINUING> 65
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.52
</TABLE>
