Delta Airlines 2010 Annual Report Download - page 86

Table of Contents
Valuation Allowance
We periodically assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets and
establish valuation allowances if it is not likely we will realize our deferred income tax assets. In making this determination, we consider all available positive
and negative evidence and make certain assumptions. We consider, among other things, our deferred tax liabilities, the overall business environment, our
historical financial results, our industry's historically cyclical financial results and potential, current and future tax planning strategies. We cannot presently
determine when we will be able to generate sufficient taxable income to realize our deferred tax assets. Accordingly, we have recorded a full valuation
allowance against our net deferred tax assets.
The following table shows the balance of our valuation allowance and the associated activity:
Valuation
(in millions) Allowance(1)
Balance at January 1, 2008 $ 4,843
Income tax benefit 747
OCI income tax benefit 1,681
Liabilities assumed from Northwest 2,686
Other (127)
Balance at December 31, 2008 9,830(2)
Income tax benefit 521
OCI income tax provision (308)
Other (146)
Balance at December 31, 2009 9,897(2)
Income tax provision (257)
OCI income tax benefit 6
Other (14)
Balance at December 31, 2010 $ 9,632(2)
(1) Prior to January 1, 2009, any reduction in the valuation allowance as a result of the recognition of deferred tax assets was adjusted first through
goodwill followed by other indefinite-lived intangible assets until the new carrying value of those assets was zero. Beginning January 1, 2009, any
reduction in the valuation allowance is reflected through the income tax provision.
(2) At December 31, 2010, 2009 and 2008, $1.2 billion, $1.2 billion and $1.5 billion of these balances were recorded in accumulated other comprehensive
loss on our Consolidated Balance Sheets, respectively.
NOTE 10. EMPLOYEE BENEFIT PLANS
We sponsor defined benefit and defined contribution pension plans, healthcare plans, and disability and survivorship plans for eligible employees and
retirees, and their eligible family members.
Defined Benefit Pension Plans. We sponsor a defined benefit pension plan for eligible pre-Merger non-pilot Delta employees and retirees (the "Delta Non-
Pilot Plan") and defined benefit pension plans for eligible pre-Merger Northwest employees and retirees (the "Northwest Pension Plans"). These plans are
closed to new entrants and frozen for future benefit accruals.
The Pension Protection Act of 2006 allows commercial airlines to elect alternative funding rules ("Alternative Funding Rules") for defined benefit plans
that are frozen. Under the Alternative Funding Rules, the unfunded liability for a frozen defined benefit plan may be amortized over a fixed 17-year period
and is calculated using an 8.85% interest rate. The Alternative Funding Rules apply to the Delta Non-Pilot Plan and the Northwest Pension Plans. We estimate
the funding requirements under these plans will total approximately $600 million in 2011.
Defined Contribution Pension Plans. Delta sponsors several defined contribution plans. These plans generally cover different employee groups and
employer contributions vary by plan. The cost associated with our defined contribution pension plans is shown in the tables below.
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