Delta Airlines 2002 Annual Report Download - page 171

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Notes to the Consolidated Financial Statements
Note 17. Restructuring and Other Reserves
The following table shows changes in our restructuring and other reserve
balances as of December 31, 2002, 2001 and 2000, and the associated activity for
the years then ended:
Restructuring and Other Charges
-------------------------------------------
Severance and Related Costs
--------------------------
2002 2001
Workforce Workforce
Leased Facilities Reduction Reduction
(in millions) Aircraft and Other Programs Programs
------------- -------- ---------- --------- ---------
Balance at December 31, 1999 $ -- $ 41 $ -- $ --
Additional costs and expenses -- 22 -- --
Payments -- (7) -- --
------ ------ ----- ------
Balance at December 31, 2000 -- 56 -- --
------ ------ ----- ------
Additional costs and expenses 71 24 -- 91
Payments (1) (6) -- (44)
------ ------ ----- ------
Balance at December 31, 2001 70 74 -- 47
------ ------ ----- ------
Additional costs and expenses -- 14 76 --
Payments (14) (9) (5) (35)
Adjustments (56) (14) -- (9)
------ ------ ----- ------
BALANCE AT DECEMBER 31, 2002 $ -- $ 65 $ 71 $ 3
====== ====== ===== ======
At December 31, 2002, the facilities and other reserve represents costs related
primarily to (1) future lease payments for facilities closures and (2) contract
termination fees. During 2002, we recorded a $14 million charge related to our
decision in 2002 to close certain facilities and a $14 million adjustment to
prior year reserves based on revised estimates of remaining costs.
The leased aircraft reserve represents future lease payments for B-737 aircraft
previously removed from service prior to the lease expiration date, less
estimated sublease income. Due to changes in our fleet plan during the December
2002 quarter, these aircraft will be returned to service in 2003. Therefore, we
reversed the remaining $56 million balance of this reserve.
The severance and related costs reserve represents future payments associated
with our 2002 and 2001 voluntary and involuntary workforce reduction programs.
At December 31, 2002, the remaining $71 million balance related to the 2002
workforce reduction programs represents severance and medical benefits for
employees who received severance or are participating in certain leave of
absence programs; this amount will be paid during 2003. At December 31, 2002,
the remaining $3 million balance related to the 2001 workforce reduction
programs primarily consists of severance for international employees that will
be paid during early 2003 in accordance with local country laws and regulations.
During 2002, we also recorded a $9 million adjustment to the 2001 reserve based
on revised estimates of the remaining costs, including (1) the adjustment of
medical benefits for certain employees participating in the leave of absence
programs who returned to the workforce earlier than originally scheduled and (2)
the change in the number of pilot furloughs from up to 1,400 to approximately
1,100.
See Note 16 for additional information related to the charges discussed above.
62