Delta Airlines 2003 Annual Report Download - page 88

Table of Contents
rent expense. Gains on the sale and leaseback of property and equipment under capital leases reduce the carrying value of the related assets.
Manufacturers' Credits
We periodically receive credits in connection with the acquisition of aircraft and engines. These credits are deferred until the aircraft and engines are
delivered, then applied on a pro rata basis as a reduction to the cost of the related equipment.
Maintenance Costs
We record maintenance costs in operating expenses as they are incurred.
Inventories
Inventories of expendable parts related to flight equipment are carried at moving average cost and charged to operations as consumed. An allowance for
obsolescence for the cost of these parts is provided over the remaining useful life of the related fleet.
Advertising Costs
We expense advertising costs as other selling expenses in the year incurred. Advertising expense was $135 million, $130 million and $153 million for the
years ended December 31, 2003, 2002 and 2001, respectively.
Commissions
We record passenger commissions in prepaid expenses and other on our Consolidated Balance Sheets when the related passenger tickets are sold. Passenger
commissions are recognized in operating expenses on our Consolidated Statements of Operations when the transportation is provided and the related revenue
is recognized.
Foreign Currency Remeasurement
We remeasure assets and liabilities denominated in foreign currencies using exchange rates in effect on the balance sheet date. Fixed assets and the related
depreciation or amortization charges are recorded at the exchange rates in effect on the date we acquired the assets. Revenues and expenses denominated in
foreign currencies are remeasured using average exchange rates for each of the periods presented. We recognize the resulting foreign exchange gains
(losses) as a component of miscellaneous income (expense) on our Consolidated Statements of Operations. These gains (losses) are immaterial for all periods
presented.
Stock-Based Compensation
We account for our stock-based compensation plans under the intrinsic value method in accordance with Accounting Principles Bulletin (APB) Opinion 25,
"Accounting for Stock Issued to Employees," and related interpretations (see Note 12 for additional information related to our stock-based compensation
plans). No stock option compensation expense is recognized in our Consolidated Statements of Operations because all stock options granted had an exercise
price equal to the fair value of the underlying common stock on the grant date.
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