Delta Airlines 2003 Annual Report Download - page 55

Table of Contents
As discussed above, we changed the form of payment we will use to redeem shares of ESOP Preferred Stock when redemptions are required under the
Savings Plan. For the indefinite future, we will pay the redemption price of the ESOP Preferred Stock in shares of our common stock rather than in cash. For
additional information about our ESOP Preferred Stock, see Notes 11 and 12 of the Notes to the Consolidated Financial Statements.
For additional information about other contingencies, see Note 9 of the Notes to the Consolidated Financial Statements.
Off-Balance Sheet Arrangements.
Sale of Receivables. We were party to an agreement, as amended, under which we sold a defined pool of our accounts receivable, on a revolving basis,
through a special-purpose, wholly-owned subsidiary to a third party. In accordance with accounting principles generally accepted in the United States of
America ("GAAP"), we did not consolidate this subsidiary in our Consolidated Financial Statements. This agreement terminated on its scheduled expiration
date of March 31, 2003. As a result, on April 2, 2003, we paid $250 million, which represented the total amount owed to the third party by the subsidiary, and
subsequently collected the related receivables. For additional information about this agreement, see Note 8 of the Notes to the Consolidated Financial
Statements.
Other.
Legal Contingencies. We are involved in legal proceedings relating to antitrust matters, employment practices, environmental issues and other matters
concerning our business. We are also a defendant in numerous lawsuits arising out of the terrorist attacks of September 11, 2001. We cannot reasonably
estimate the potential loss for certain legal proceedings because, for example, the litigation is in its early stages or the plaintiff does not specify the damages
being sought. Although the ultimate outcome of our legal proceedings cannot be predicted with certainty, we believe that the resolution of these actions will
not have a material adverse effect on our Consolidated Financial Statements.
Application of Critical Accounting Policies.
Critical Accounting Estimates. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and
assumptions. We periodically evaluate these estimates and assumptions, which are based on historical experience, changes in the business environment and
other factors that management believes to be reasonable under the circumstances. Actual results may differ materially from these estimates.
Rules proposed by the Securities and Exchange Commission would require disclosures related to accounting estimates management makes in applying
accounting policies and the initial adoption of an accounting policy that has a material impact on its financial statements. These Rules define critical
accounting estimates as those accounting estimates which (1) require management to make assumptions about matters that are highly uncertain at the time the
estimate is made and (2) would have resulted in material changes to our Consolidated Financial
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