Delta Airlines 2008 Annual Report Download - page 79

Table of Contents
Index to Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Cash and Cash Equivalents
We classify short-term, highly liquid investments with maturities of three months or less when purchased as cash and cash equivalents. These
investments are recorded at cost, which approximates fair value.
Short-Term Investments
At December 31, 2008, our short-term investments were comprised of an investment in The Reserve Primary Fund (the "Primary Fund"), a money
market fund that is undergoing an orderly liquidation. In accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities,"
we record these investments as available-for-sale securities at fair value on our Consolidated Balance Sheet.
At December 31, 2008, the fair value of our investment in the Primary Fund was $212 million. The cost of this investment was $225 million. In mid-
September 2008, the net asset value of the Primary Fund decreased below $1 per share as a result of the Primary Fund's valuing at zero its holdings of debt
securities issued by Lehman Brothers Holdings, Inc. ("Lehman Brothers"), which filed for bankruptcy on September 15, 2008. Accordingly, we recorded an
other than temporary impairment of $13 million as an unrealized loss to the cost basis of our pro rata share of the estimated loss in this investment.
We have requested the redemption of our investment in the Primary Fund. We expect distributions will occur as the Primary Fund's assets mature or are
sold. While we expect to receive substantially all of our current holdings in the Primary Fund, we cannot predict when this will occur or the amount we will
receive. Accordingly, we have reclassified our investment from cash and cash equivalents to short-term investments on our Consolidated Balance Sheet as of
December 31, 2008.
At December 31, 2007, our short-term investments were comprised of insured auction rate securities. For additional information regarding our
accounting for auction rate securities, see "Investments in Debt and Equity Securities" in this Note.
Restricted Cash and Cash Equivalents
Restricted cash and cash equivalents included in current assets on our Consolidated Balance Sheets totaled $429 million and $520 million at
December 31, 2008 and 2007, respectively. Restricted cash recorded in other noncurrent assets on our Consolidated Balance Sheets totaled $24 million and
$15 million at December 31, 2008 and 2007, respectively. Restricted cash and cash equivalents are recorded at cost, which approximates fair value.
At December 31, 2008, our restricted cash and cash equivalents primarily related to cash held to meet certain projected self-insurance obligations and
employee benefits.
At December 31, 2007, our restricted cash primarily related to (1) $295 million held in a grantor trust for the benefit of Delta pilots to fund the then
remaining balance of an obligation we had under our comprehensive agreement with the Air Line Pilots Association, International ("ALPA"), the collective
bargaining representative of Delta pilots, to reduce pilot labor costs and (2) cash held to meet certain projected self-insurance obligations. The amount in the
grantor trust was classified as restricted cash with a corresponding note payable on our Consolidated Balance Sheet until the amount was distributed in
January 2008.
Derivative Financial Instruments
Our results of operations are materially impacted by changes in aircraft fuel prices, interest rates and foreign currency exchange rates. In an effort to
manage our exposure to these risks, we periodically enter into various derivative instruments, including fuel, interest rate and foreign currency hedges. In
accordance with SFAS 133,
F-9