Delta Airlines 2012 Annual Report Download - page 83

Fair Value of Debt
Market risk associated with our fixed and variable rate long-term debt relates to the potential reduction in fair value and negative impact to future
earnings, respectively, from an increase in interest rates. In the table below, the aggregate fair value of debt was based primarily on reported market
values, recently completed market transactions and estimates based on interest rates, maturities, credit risk and underlying collateral and is classified
primarily as Level 2 within the fair value hierarchy.
NOTE 9 . LEASE OBLIGATIONS
We lease aircraft, airport terminals, maintenance facilities, ticket offices and other property and equipment from third parties. Rental expense for
operating leases, which is recorded on a straight-line basis over the life of the lease term, totaled approximately $1.1 billion for each of the years
ended December 31, 2012 , 2011 and 2010 . Amounts due under capital leases are recorded as liabilities, while assets acquired under capital leases
are recorded as property and equipment. Amortization of assets recorded under capital leases is included in depreciation and amortization expense.
Our airport terminal leases include contingent rents, which vary based upon: facility usage, enplanements, aircraft weight and other factors. Many of
our aircraft, facility and equipment leases include rental escalation clauses and/or renewal options. Our leases do not include residual value
guarantees and we are not the primary beneficiary in or have other forms of variable interest with the lessor of the leased assets. As a result, we have
not consolidated any of the entities that lease to us.
The following tables summarize, as of December 31, 2012 , our minimum rental commitments under capital leases and noncancelable operating
leases (including certain aircraft flown by Contract Carriers) with initial or remaining terms in excess of one year:
Capital Leases
76
December 31,
(in millions) 2012 2011
Total debt at par value
$
12,633
$
13,797
Unamortized discount, net
(527
)
(737
)
Net carrying amount
$
12,106
$
13,060
Fair value
$
13,000
$
13,600
Years Ending December 31,
(in millions) Total
2013
$
209
2014
173
2015
158
2016
164
2017
97
Thereafter
113
Total minimum lease payments
914
Less: amount of lease payments representing interest
(313
)
Present value of future minimum capital lease payments
601
Plus: unamortized premium
2
Less: current obligations under capital leases
(120
)
Long-term capital lease obligations
$
483