Delta Airlines 2002 Annual Report Download - page 157

Based on the actions we have taken and will continue to take to improve
financial performance and other relevant factors, we believe that it is more
likely than not that our net deferred tax assets recorded at December 31, 2002,
will be fully realized.
Our income tax benefit (provision) for the years ended December 31, 2002, 2001
and 2000 consisted of:
(in millions) 2002 2001 2000
---- ---- -----
Current tax benefit (provision) $319 $ -- $(230)
Deferred tax benefit (provision) 407 644 (396)
Tax benefit of dividends on allocated Series B ESOP Convertible
Preferred Stock 4 4 5
---- ---- -----
Income tax benefit (provision) $730 $648 $(621)
==== ==== =====
The following table presents the principal reasons for the difference between
our effective income tax rate and the U.S. federal statutory income tax rate for
the years ended December 31, 2002, 2001 and 2000:
2002 2001 2000
----- ----- ----
U.S. federal statutory income tax rate (35.0)% (35.0)% 35.0%
State taxes, net of federal income tax effect (2.4) (2.6) 3.4
Meals and entertainment 0.7 1.0 1.1
Amortization -- 1.0 1.0
Municipal bond interest -- (0.1) (0.2)
Increase in valuation allowance -- 0.8 --
Other, net 0.2 0.1 (0.2)
----- ----- ----
Effective income tax rate (36.5)% (34.8)% 40.1%
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Note 11. Employee Benefit Plans
We sponsor qualified and non-qualified defined benefit pension plans, defined
contribution pension plans, healthcare plans, and disability and survivorship
plans for eligible employees and retirees, and their eligible family members. We
reserve the right to modify or terminate these plans as to all participants and
beneficiaries at any time, except as restricted by the Internal Revenue Code or
the Employee Retirement Income Security Act (ERISA).
DEFINED BENEFIT PENSION PLANS
Our qualified defined benefit pension plans meet or exceed ERISA's minimum
funding requirements as of December 31, 2002. Our non-qualified pension plans
are funded primarily with current assets.
The following table shows the change in the projected benefit obligation for our
defined benefit pension plans for the years ended December 31, 2002 and 2001 (as
measured at September 30, 2002 and 2001):
(in millions) 2002 2001
-------- --------
Projected benefit obligation at beginning of period $ 10,657 $ 9,263
Service cost 282 246
Interest cost 825 763
Actuarial loss 798 531
Benefits paid (888) (623)
Special termination benefits -- 185
Curtailment loss -- 30
Plan amendments 8 262
-------- --------
Projected benefit obligation at end of period $ 11,682 $ 10,657
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The special termination benefits and curtailment loss reflected in the table
above relate to the workforce reduction programs offered to certain of our
employees in 2001. In December 2002, we recorded a $7 million pretax charge for
special termination benefits related to the 2002 workforce reduction programs.
During the March 2003 quarter, we will record a $47 million pretax charge for
the associated cost of curtailing the pension obligations for participants in
the 2002 workforce reduction programs.
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