Delta Airlines 2008 Annual Report Download - page 77

Table of Contents
Index to Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Background
Delta Air Lines, Inc., a Delaware corporation, is the world's largest airline, providing scheduled air transportation for passengers and cargo throughout
the United States ("U.S.") and around the world.
On October 29, 2008 (the "Closing Date"), a wholly-owned subsidiary of Delta ("Merger Sub") merged (the "Merger") with and into Northwest
Airlines Corporation. Pursuant to the Agreement and Plan of Merger, dated as of April 14, 2008, among Delta, Merger Sub and Northwest Airlines
Corporation (the "Merger Agreement"), on the Closing Date (1) Northwest Airlines Corporation and its wholly-owned subsidiaries, including Northwest
Airlines, Inc. (collectively, "Northwest"), became wholly-owned subsidiaries of Delta and (2) each share of Northwest common stock outstanding on the
Closing Date or issuable under Northwest's Plan of Reorganization (as defined below) was converted into the right to receive 1.25 shares of Delta common
stock. We accounted for the Merger in accordance with Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" ("SFAS
141"), whereby the purchase price paid to effect the Merger was allocated to the tangible and intangible assets acquired and liabilities assumed from
Northwest based on their estimated fair values.
Unless otherwise indicated, Delta Air Lines, Inc. and our wholly-owned subsidiaries are collectively referred to as "Delta," "we," "us," and "our." Prior
to October 30, 2008, these references do not include Northwest.
In September 2005, we and substantially all of our subsidiaries (the "Delta Debtors") filed voluntary petitions for reorganization under Chapter 11 of
the U.S. Bankruptcy Code (the "Bankruptcy Code"). On April 30, 2007 (the "Effective Date"), the Delta Debtors emerged from bankruptcy. Upon emergence
from Chapter 11, we adopted fresh start reporting in accordance with American Institute of Certified Public Accountants' Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization under the Bankruptcy Code" ("SOP 90-7"). The adoption of fresh start reporting resulted in our becoming
a new entity for financial reporting purposes. Accordingly, the Consolidated Financial Statements on or after May 1, 2007 are not comparable to the
Consolidated Financial Statements prior to that date.
Fresh start reporting requires resetting the historical net book value of assets and liabilities to fair value by allocating the entity's reorganization value to
its assets and liabilities pursuant to SFAS 141. The excess reorganization value over the fair value of tangible and identifiable intangible assets is recorded as
goodwill on our Consolidated Balance Sheet. Deferred income taxes are determined in conformity with SFAS No. 109, "Accounting for Income Taxes"
("SFAS 109"). For additional information regarding the impact of fresh start reporting on the Consolidated Balance Sheet as of the Effective Date, see Note
11.
References in this Form 10-K to "Successor" refer to Delta on or after May 1, 2007, after giving effect to (1) the cancellation of Delta common stock
issued prior to the Effective Date, (2) the issuance of new Delta common stock and certain debt securities in accordance with the Delta Debtors' Joint Plan of
Reorganization ("Delta's Plan of Reorganization"), and (3) the application of fresh start reporting. References to "Predecessor" refer to Delta prior to May 1,
2007.
In September 2005, Northwest and substantially all of its subsidiaries (the "Northwest Debtors") filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code. On May 31, 2007, the Northwest Debtors emerged from bankruptcy pursuant to the Northwest Debtors' First Amended
Joint and Consolidated Plan of Reorganization ("Northwest's Plan of Reorganization").
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