Delta Airlines 2004 Annual Report Download - page 75

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Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table shows what our net loss and loss per share would have been for the years ended December 31, 2004, 2003 and 2002 had we accounted
for our stock-based compensation plans under the fair value method of SFAS 123, as amended by SFAS 148, using the assumptions in the table above:
(in millions, except per share data) 2004 2003 2002
Net loss:
As reported $ (5,198) $ (773) $ (1,272)
Deduct: total stock option compensation expense determined under the fair value based method, net of tax(1) (38) (33) (47)
As adjusted for the fair value method under SFAS 123 $ (5,236) $ (806) $ (1,319)
Basic and diluted loss per share:
As reported $ (41.07) $ (6.40) $ (10.44)
As adjusted for the fair value method under SFAS 123 $ (41.36) $ (6.66) $ (10.82)
(1) These amounts are shown net of tax for 2003 and 2002. There is no tax effect in 2004 because we discontinued recording tax benefits for losses in
2004.
In accordance with SFAS 123R, beginning July 1, 2005, we will recognize compensation expense for all stock-based compensation, including stock
options. We are evaluating the impact, which may be material, of SFAS 123R on our 2005 Consolidated Financial Statements. For additional information
about SFAS 123R, see "New Accounting Standards" in this Note.
Fair Value of Financial Instruments
We record our cash equivalents and short-term investments at cost, which we believe approximates their fair values. The estimated fair values of other
financial instruments, including debt and derivative instruments, have been determined using available market information and valuation methodologies,
primarily discounted cash flow analyses and the Black-Scholes model.
Note 2. Marketable and Other Equity Securities
Republic Airways Holdings, Inc. and Affiliates ("Republic Holdings")
We have contract carrier agreements with Chautauqua Airlines, Inc. ("Chautauqua") and Republic Airline, Inc. ("Republic Airline"), regional air carriers
that are subsidiaries of Republic Holdings (see Note 8). As part of these agreements, we received warrants to purchase Republic Holdings common stock.
At December 31, 2004 and 2003, our investment in Republic Holdings consisted of the following:
Number of
Underlying
Common Shares Carrying Values
Expiration Exercise Price Per
(in millions)(1)(2) Date Common Share 2004 2003 2004 2003
2002 Warrant June 2012 $ 12.50 0.8 1.5 $ 6 $ 10
2003 Warrant (February) February 2013 $ 13.00 0.4 0.7 3 5
2003 Warrant (October) October 2013 $ 12.35 0.2 0.3 1 3
2004 Warrant (March) March 2014 $ 12.35 0.3 — 2 —
2004 Warrant (December) December 2014 $ 11.60 1.0 — 8 —
IPO Warrant May 2014 $ 12.35 0.8 — 6 —
Total 3.5 2.5 $ 26 $ 18
(1) Except per share data. F-18