Delta Airlines 2007 Annual Report Download - page 87

Download and view the complete annual report

Please find page 87 of the 2007 Delta Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

Table of Contents
Index to Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(b) Cost approach. Amount that would be required to replace the service capacity of an asset (replacement cost).
(c) Income approach. Techniques to convert future amounts to a single present amount based on market expectations (including present value
techniques, option-pricing and excess earnings models).
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Successor Quoted
Prices In
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Valuation
Technique
(in millions)
December 31,
2007
Short-term investments $ 138 $ 31 $ — $ 107 (a)(c)
Fuel hedging derivatives 53 — 53 — (a)
Based on market conditions, we changed our valuation technique for our insured auction rate securities to an income approach using a discounted cash
flow model. Accordingly, our short-term investments, comprised of these securities, changed from Level 1 to Level 3 within SFAS 157's three-tier fair value
hierarchy since initial valuation at May 1, 2007.
Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
(in millions)
Short-term
Investments
Balance at May 1, 2007 (Successor) $ —
Transfers to Level 3 110
Impairment included in earnings (3)
Balance at December 31, 2007 (Successor) $ 107
Realized losses included in earnings for the period are reported in other (expense) income.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Successor Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs
(Level 3)(1)
Valuation
Technique
(in millions)
May 1,
2007
Expendable parts and supplies inventories $ 241 $ 241 $ — (a)(b)
Prepaid expense and other 343 343 — (a)(b)(c)
Net flight equipment and net flight equipment under capital lease 9,833 9,833 — (a)(b)
Other property and equipment 1,713 1,713 — (a)(b)
Definite-lived intangible assets(2) 956 — 956 (c)
Other noncurrent assets 856 856 — (a)(b)(c)
Debt and obligations under capital lease 6,899 6,899 — (a)(c)
SkyMiles deferred revenue(3) 3,474 — 3,474 (a)
Accounts payable and other noncurrent liabilities 405 405 — (a)(c)
(1) These valuations were based on the present value of future cash flows for specific assets derived from our projections of future revenue, expense and airline market conditions. These cash
flows were discounted to their present value using a rate of return that considers the relative risk of not realizing the estimated annual cash flows and time value of money.
F-27