Delta Airlines 2009 Annual Report Download - page 38

Table of Contents
Other (Expense) Income
2008
GAAP
Year Ended GAAP Northwest Combined
December 31, Year Ended January 1 to Year Ended Favorable
(in millions) 2009 December 31 October 29 December 31 (Unfavorable)
Interest expense $ (1,278) $ (705) $ (373) $ (1,078) $ (200)
Interest income 27 92 86 178 (151)
Loss on extinguishment of debt (83) — — — (83)
Miscellaneous, net 77 (114) (230) (344) 421
Total other expense, net $ (1,257) $ (727) $ (517) $ (1,244) $ (13)
Other expense, net for 2009 was $1.3 billion, compared to $1.2 billion for 2008 on a combined basis. This change is primarily attributable to (1) a
$200 million increase in interest expense from increased amortization of debt discount, (2) a $151 million decrease in interest income primarily from
significantly reduced short-term interest rates, (3) an $83 million non-cash loss for the write-off of the unamortized discount on the extinguishment of the
Northwest senior secured exit financing facility (the "Bank Credit Facility") and (4) a $421 million favorable change in miscellaneous, net due to the
following:
Favorable
(Unfavorable)
2009 GAAP vs.
(in millions) 2008 Combined
Miscellaneous, net
Impairment in 2008 of minority ownership interest in Midwest Air Partners, LLC $ 213
Foreign currency exchange rates 99
Mark-to-market adjustments on the ineffective portion of fuel hedge contracts 77
Loss on investments in The Reserve Primary Fund and insured auction rate securities in 2008 41
Other (9)
Total miscellaneous, net $ 421
Income Taxes
2008
GAAP
Year Ended GAAP Northwest Combined
December 31, Year Ended January 1 to Year Ended
(in millions) 2009 December 31 October 29 December 31 Increase
Income tax benefit $ 344 $ 119 $ 211 $ 330 $ 14
We consider all income sources, including other comprehensive income, in determining the amount of tax benefit that should be allocated to continuing
operations. For 2009, we recorded an income tax benefit of $344 million, including a non-cash income tax benefit of $321 million on the loss from continuing
operations, with an offsetting non-cash income tax expense of $321 million on other comprehensive income. We did not record an income tax benefit for the
remainder of our loss for 2009. The deferred tax asset resulting from such a net operating loss was fully reserved by a valuation allowance.
We recorded an income tax benefit of $330 million for 2008 on a combined basis as a result of the impairment of our indefinite-lived intangible assets. The
impairment of goodwill did not result in an income tax benefit as goodwill is not deductible for income tax purposes. We did not record an income tax benefit
as a result of our loss for 2008. The deferred tax asset resulting from such a net operating loss is fully reserved by a valuation allowance.
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