Delta Airlines 2004 Annual Report Download - page 70

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Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Under our cash management system, we utilize controlled disbursement accounts that are funded daily. Checks we issue which have not been presented
for payment are recorded in accounts payable, deferred credits and other accrued liabilities on our Consolidated Balance Sheets. These amounts totaled
$63 million and $129 million at December 31, 2004 and 2003, respectively.
Short-Term Investments
Our short-term investments at December 31, 2004 and 2003 were auction rate securities. In accordance with SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS 115"), we account for these investments as trading securities. For additional information about trading
securities, see "Investments in Debt and Equity Securities" in this Note.
Restricted Assets
We have restricted cash, which primarily relates to cash held as collateral to support certain projected insurance obligations. Restricted cash included in
current assets on our Consolidated Balance Sheets totaled $348 million and $207 million at December 31, 2004 and 2003, respectively. Restricted cash
recorded in other noncurrent assets on our Consolidated Balance Sheet totaled $2 million and $28 million at December 31, 2004 and 2003, respectively.
We have restricted investments for the redevelopment and expansion of Terminal A at Boston's Logan International Airport (see Note 6 for additional
information about this project). Restricted investments included in other assets on our Consolidated Balance Sheets totaled $127 million and $286 million at
December 31, 2004 and 2003, respectively.
Derivative Financial Instruments
We account for derivative financial instruments in accordance with SFAS 133, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"). These derivative instruments include fuel hedge contracts, interest rate swap agreements and equity warrants and other similar rights in certain
companies (see Note 4).
Fuel Hedge Contracts
Our fuel hedge contracts qualified for hedge accounting as cash flow hedges under SFAS 133. For these types of hedges, we record the fair value of our
fuel hedge contracts on our Consolidated Balance Sheets and regularly adjust the balances to reflect changes in the fair values of those contracts.
Effective gains or losses related to the fair value adjustments of fuel hedge contracts are recorded in shareowners' (deficit) equity as a component of
accumulated other comprehensive income (loss). These gains or losses are recognized in aircraft fuel expense when the related aircraft fuel purchases being
hedged are consumed. However, to the extent that the change in fair value of a fuel hedge contract does not perfectly offset the change in the value of the
aircraft fuel being hedged, the ineffective portion of the hedge is immediately recognized as a fair value adjustment of SFAS 133 derivatives in other income
(expense) on our Consolidated Statements of Operations. In calculating the ineffective portion of a fuel hedge contract, we include all changes in the fair
value attributable to the time value component and recognize the amount in other income (expense) during the life of the contract.
Interest Rate Swap Agreements
We record interest rate swap agreements that qualify as fair value hedges under SFAS 133 at their fair value on our Consolidated Balance Sheets and
adjust these amounts and the related debt to reflect changes in their fair values. We record net periodic interest rate swap settlements as adjustments to interest
expense in other income (expense) on our Consolidated Statements of Operations.
F-13