Delta Airlines 2003 Annual Report Download - page 56

Table of Contents
Statements if different estimates, which we reasonably could have used, were made. Our critical accounting estimates are briefly described below.
Goodwill. SFAS 142 addresses financial accounting and reporting for goodwill and other intangible assets, including when and how to perform
impairment tests of recorded balances. We have three reporting units that have assigned goodwill: Delta-Mainline, Atlantic Southeast Airlines, Inc. and
Comair. Quoted stock market prices are not available for these individual reporting units. Accordingly, consistent with SFAS 142, our methodology for
estimating the fair value of each reporting unit primarily considers discounted future cash flows. In applying this methodology, we (1) make assumptions
about each reporting unit's future cash flows based on capacity, yield, traffic, operating costs and other relevant factors and (2) discount those cash flows
based on each reporting unit's weighted average cost of capital. Changes in these assumptions may have a material impact on our Consolidated Financial
Statements. For additional information about our accounting policy related to goodwill and other intangibles, see Notes 1 and 5 in the Notes to the
Consolidated Financial Statements.
Income Tax Valuation Allowance. In accordance with SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109"), deferred tax assets should be
reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The future realization of
our net deferred tax assets depends on the availability of sufficient future taxable income. In making this determination, we consider all available positive and
negative evidence and make certain assumptions. We consider, among other things, the overall business environment; our historical earnings, including our
significant pretax losses incurred during the last three years; our industry's historically cyclical periods of earnings and losses; and our outlook for future
years.
We performed this analysis as of December 31, 2003 and determined that there was sufficient positive evidence to conclude that it is more likely than not
that our net deferred tax assets will be realized. The positive evidence included (1) our expectation that we will report pre-tax book and taxable income in
future years; (2) our federal net operating losses ("NOL"s) have never expired unused; (3) our alternative minimum tax ("AMT") credit carryforwards do not
expire; (4) substantially all of our cumulative NOL carryforward at December 31, 2003 will not begin to expire until 2022; and (5) given the long economic
cycles of this industry, our belief that we are not in a cumulative loss position for purposes of assessing recoverability of our net deferred tax assets.
Additionally, a significant portion of our deferred tax assets is associated with our additional minimum pension liability. Over time, this liability is required to
be funded, which will eliminate the related deferred tax asset. We will assess the need for a deferred tax asset valuation allowance on an ongoing basis
considering factors such as those mentioned above as well as other relevant criteria. Changes in the assumptions discussed above may have a material impact
on our Consolidated Financial Statements. For additional information about income taxes, see Notes 1 and 10 of the Notes to the Consolidated Financial
Statements.
Pension Plans. We sponsor defined benefit pension plans ("Plans") for eligible employees and retirees. The impact of the Plans on our Consolidated
Financial Statements as of December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001 is presented in Note 11 of the Notes to
the Consolidated Financial Statements. We currently
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