Delta Airlines 2012 Annual Report Download - page 22

Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal income tax purposes is subject to limitation.
In general, under Section 382 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change” is subject
to limitations on its ability to utilize its pre-change net operating losses (“NOLs”), to offset future taxable income. In general, an ownership change
occurs if the aggregate stock ownership of certain stockholders (generally 5% shareholders, applying certain look-through rules) increases by more
than 50 percentage points over such stockholders' lowest percentage ownership during the testing period (generally three years).
As of December 31, 2012 , Delta reported a consolidated federal pretax NOL carryforward of approximately $16.3 billion . Both Delta and
Northwest experienced an ownership change in 2007 as a result of their respective plans of reorganization under Chapter 11 of the U.S. Bankruptcy
Code. As a result of the merger, Northwest experienced a subsequent ownership change. Delta also experienced a subsequent ownership change on
December 17, 2008 as a result of the merger, the issuance of equity to employees in connection with the merger and other transactions involving the
sale of our common stock within the testing period.
The Delta and Northwest ownership changes resulting from the merger could limit the ability to utilize pre-change NOLs that were not subject to
limitation, and could further limit the ability to utilize NOLs that were already subject to limitation. Limitations imposed on the ability to use NOLs
to offset future taxable income could cause U.S. federal income taxes to be paid earlier than otherwise would be paid if such limitations were not in
effect and could cause such NOLs to expire unused, in each case reducing or eliminating the benefit of such NOLs. Similar rules and limitations may
apply for state income tax purposes. NOLs generated subsequent to December 17, 2008 are not limited.
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