Delta Airlines 2004 Annual Report Download - page 110
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Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 15. Restructuring and Other Reserves
The following table shows changes in our restructuring and other reserve balances as of December 31, 2004, 2003, and 2002, and the associated activity
for the years then ended:
Restructuring and Other Charges
Severance and Related Costs
Facilities Workforce Reduction Programs
Leased and
(in millions) Aircraft Other 2004 2002 2001
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
Payments — (9) — (45) (2)
Adjustments — (9) — (21) —
Balance at December 31, 2003 — 47 — 5 1
Additional costs and expenses — — 42 — —
Payments — (8) — (2) (1)
Adjustments — (1) — (3) —
Balance at December 31, 2004 $ — $ 38 $ 42 $ — $ —
The leased aircraft reserve represented future lease payments under operating leases for nine B737-300 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, we (1) reversed the remaining
$56 million balance of this reserve and (2) returned these aircraft to service in 2003.
The facilities and other reserve represents costs related primarily to (1) future lease payments for facility closures and (2) contract termination fees. During
2003, we recorded a $9 million adjustment to prior year reserves based on revised estimates of remaining costs primarily due to changes in certain facility
lease terms. During 2002, we recorded a $14 million adjustment to prior year reserves based on revised estimates of remaining costs.
The severance and related costs reserve represents future payments associated with our 2004, 2002 and 2001 voluntary and involuntary workforce
reduction programs. At December 31, 2004, the $42 million balance related to the 2004 workforce reduction programs represents severance and medical
benefits for employees who qualified for the programs; this amount will be paid during 2005. During 2003, we recorded a $21 million adjustment to prior year
reserves based on 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 14 for additional information about the charges discussed above.
F-53