Delta Airlines 2002 Annual Report Download - page 136

Notes to the Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
BASIS OF PRESENTATION
Delta Air Lines, Inc. (a Delaware corporation) is a major air carrier that
provides air transportation for passengers and cargo throughout the U.S. and
around the world. Our Consolidated Financial Statements include the accounts of
Delta Air Lines, Inc. and our wholly owned subsidiaries, including ASA Holdings,
Inc. (ASA Holdings) and Comair Holdings, Inc. (Comair Holdings), collectively
referred to as Delta. ASA Holdings is the parent company of Atlantic Southeast
Airlines, Inc. (ASA), and Comair Holdings is the parent company of Comair, Inc.
(Comair). We completed our acquisitions of ASA Holdings and Comair Holdings in
April 1999 and in January 2000, respectively. We have eliminated all material
intercompany transactions in our Consolidated Financial Statements. These
Consolidated Financial Statements have been prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP).
We have reclassified certain prior period amounts in our Consolidated Financial
Statements to be consistent with our current period presentation. The effect of
these reclassifications is not material.
We do not consolidate the financial statements of any company in which we have
an ownership interest of 50% or less unless we control that company. During
2002, 2001 and 2000, we did not control any company in which we had an ownership
interest of 50% or less.
CHANGE IN YEAR END
Effective December 31, 2000, we changed our year end from June 30 to December
31. Accordingly, this Annual Report includes audited Consolidated Balance Sheets
as of December 31, 2002 and 2001, and audited Consolidated Statements of
Operations, Cash Flows and Shareowners' Equity for the years ended December 31,
2002, 2001 and 2000.
USE OF ESTIMATES
We are required to make estimates and assumptions when preparing our
Consolidated Financial Statements in accordance with GAAP. These estimates and
assumptions affect the amounts reported in our financial statements and the
accompanying notes. Actual results could differ materially from those estimates.
NEW ACCOUNTING STANDARDS
On January 1, 2002, we adopted Statement of Financial Accounting Standards
(SFAS) No. 142, "Goodwill and Other Intangible Assets" (SFAS 142), which
addresses financial accounting and reporting for goodwill and other intangible
assets (see Note 5).
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
143, "Accounting for Asset Retirement Obligations" (SFAS 143), which is
effective for fiscal years beginning after June 15, 2002. We adopted SFAS 143 on
January 1, 2003. The adoption of SFAS 143 did not have a material impact on our
Consolidated Financial Statements.
On January 1, 2002, we adopted SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-lived Assets" (SFAS 144), which supersedes previous accounting
and reporting standards for (1) testing for impairment or disposal of long-lived
assets and (2) the disposal of segments of a business. Our impairment charges
recorded during 2002 were determined in accordance with SFAS 144 (see Note 16).
On October 1, 2002, we adopted SFAS No. 145, "Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections"
(SFAS 145), which, among other things, (1) requires that gains and losses due to
the extinguishment of debt be classified as extraordinary items on the
Consolidated Statements of Operations only if certain criteria are met and (2)
amends the accounting for sale and leaseback transactions. In accordance with
SFAS 145, we recorded a $42 million loss on the extinguishment of ESOP Notes in
other income (expense) on our 2002 Consolidated Statement of Operations (see
Note 6).
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" (SFAS 146), which supersedes previous
accounting and reporting standards for costs associated with exit or disposal
activities by requiring the related liability to be recognized and measured
initially at fair value when the liability is incurred. Under the previous
accounting
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