Delta Airlines 2003 Annual Report Download - page 129

Table of Contents
programs primarily consists of severance for international employees that will be paid in accordance with local country laws and regulations. During 2003, we
recorded a $21 million adjustment to prior year reserves based upon revised estimates of remaining costs primarily due to fewer employee reductions under
our 2002 involuntary workforce reduction program than originally anticipated because of higher than expected reductions from attrition and retirements.
During 2002, we recorded a $9 million adjustment to the 2001 severance and related costs 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 15 for additional information related to the charges discussed above.
Note 17. Equity Investments
WORLDSPAN, L.P. (Worldspan)
On June 30, 2003, we sold our 40% equity investment in Worldspan, which operates and markets a computer reservation system for the travel industry. In
exchange for the sale of our equity interest, we received (1) $285 million in cash and (2) a $45 million subordinated promissory note, which bears interest at
10% per annum and matures in 2012. As a result of this transaction, we recorded a gain of $279 million ($176 million net of tax) in other income (expense) on
our 2003 Consolidated Statement of Operations. In addition, we will receive credits totaling approximately $125 million, which will be recognized ratably as
a reduction of costs through 2012, for future Worldspan-provided services. At December 31, 2003, the carrying and fair value of the subordinated promissory
note was $38 million, which reflects a writedown resulting from a decrease in its fair value. This note is classified as a trading security under SFAS 115 (see
Note 1).
Our equity earnings from this investment totaled $18 million, $43 million and $19 million for the years ended December 31, 2003, 2002 and 2001,
respectively. We also received cash dividends from Worldspan of $44 million, $40 million and $70 million for the years ended December 31, 2003, 2002, and
2001, respectively. At December 31, 2002, our Worldspan investment of $57 million was recorded in investments in associated companies on our
Consolidated Balance Sheet.
Worldspan provides computer reservation and related services for us, which totaled approximately $90 million for the six-months ended June 30, 2003 and
approximately $180 million for the year ended December 31, 2002. As discussed above, we sold our equity interest in Worldspan on June 30, 2003.
Orbitz, Inc. (Orbitz)
Prior to December 2003, we had an 18% ownership and voting interest in Orbitz, which we accounted for under the equity method. We used the equity
method because we had the ability to exercise significant influence, but not control, over the financial and operating policies of Orbitz. This influence was
evidenced by, among other things, our right to appoint two of our senior
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