Delta Airlines 2002 Annual Report Download - page 153

Note 7. Lease Obligations
We lease aircraft, airport terminal and maintenance facilities, ticket offices
and other property and equipment. Rental expense for operating leases, which is
recorded on a straight-line basis over the life of the lease, totaled
$1.3 billion for each year ended December 31, 2002, 2001 and 2000. Amounts due
under capital leases are recorded as liabilities. Our interest in assets
acquired under capital leases is recorded as property and equipment on our
Consolidated Balance Sheets. Amortization of assets recorded under capital
leases is included in depreciation and amortization expense on our Consolidated
Statements of Operations. Our leases do not include residual value guarantees.
The following table summarizes, as of December 31, 2002, our minimum rental
commitments under capital leases and noncancelable operating leases with initial
or remaining terms in excess of one year:
Years Ending December 31, Capital Operating
(in millions) Leases Leases
------- ---------
2003 $ 40 $ 1,277
2004 31 1,203
2005 24 1,176
2006 16 1,128
2007 15 1,042
After 2007 46 6,918
---- -------
Total minimum lease payments 172 $12,744
Less: lease payments that represent interest 45 -------
----
Present value of future minimum capital lease payments 127
Less: current obligations under capital leases 27
----
Long-term capital lease obligations $100
====
The total minimum rental commitments under operating leases in the table above
do not include approximately $144 million in future minimum lease payments which
we expect to receive under noncancelable subleases.
As of December 31, 2002, we operated 313 aircraft under operating leases and 45
aircraft under capital leases. These leases have remaining terms ranging from
one month to 15 years.
Certain municipalities have issued special facilities revenue bonds to build or
improve airport and maintenance facilities leased to us. The facility lease
agreements require us to make rental payments sufficient to pay principal and
interest on the bonds. The above table includes $1.8 billion of operating lease
rental commitments for such payments.
Note 8. Sale of Receivables
We are party to an agreement, as amended, under which we sell a defined pool of
our accounts receivable, on a revolving basis, through a special-purpose, wholly
owned subsidiary, which then sells an undivided interest in the defined pool of
accounts receivable to a third party. In accordance with SFAS 140, this
subsidiary is not consolidated in our Consolidated Financial Statements. We
retain servicing and record-keeping responsibilities for the receivables sold,
the fair value of which is not material at December 31, 2002 and 2001.
In exchange for the sale of receivables, we receive (1) cash up to a maximum of
$250 million from the subsidiary's sale of an undivided interest in the pool of
receivables to the third party and (2) a subordinated promissory note from the
subsidiary, less certain program fees. Proceeds from new securitizations under
this agreement were approximately $38 million for the year ended December 31,
2002, which are recorded as cash flows from operations on our Consolidated
Statements of Cash Flows. The amount of the promissory note fluctuates because
it represents the portion of the purchase price payable for the volume of
receivables sold. The principal amount of the promissory note was $67 million
and $144 million at December 31, 2002 and 2001, respectively, and is included in
accounts receivable on our Consolidated Balance Sheets. Additionally, our
investment in the subsidiary, which represents our funding of the entity,
totaled $117 million at December 31, 2002, and is recorded in investments in
associated companies on our Consolidated Balance Sheets.
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