Delta Airlines 2012 Annual Report Download - page 93

Alternative Investments. The valuation of alternative investments requires significant judgment due to the absence of quoted market prices as well
as the inherent lack of liquidity and the long-term nature of these assets. Accordingly, these assets are generally classified in Level 3. Alternative
investments include private equity, real estate, energy and timberland. Investments are valued based on valuation models where one or more of the
significant inputs into the model cannot be observed and which require the development of assumptions. We also assess the potential for adjustment
to the fair value of these investments due to the lag in the availability of data. In these cases, we solicit preliminary valuation updates at year-end
from the investment managers and use that information and corroborating data from public markets to determine any needed adjustments to fair
value.
Fixed Income. Investments include corporate bonds, government bonds, collateralized mortgage obligations and other asset backed securities.
These investments are generally valued at the bid price or the average of the bid and ask price. Prices are based on pricing models, quoted prices of
securities with similar characteristics, or broker quotes.
Hedge Funds. Our hedge fund investments are primarily made through shares of limited partnerships or similar limited liability structures for
which a liquid secondary market does not exist. Hedge funds are considered Level 3 assets. Hedge funds are valued monthly by a third-party
administrator that has been appointed by the fund's general partner.
Foreign Currency Derivatives. Our foreign currency derivatives consist of various forward contracts and are valued based on data readily
observable in public markets.
Cash Equivalents and Other. These investments primarily consist of short term investment funds which are valued using the net asset value. Cash
is not included in the table above.
Changes in Level 3. The following table shows the changes in our benefit plan assets classified in Level 3:
Other
We also sponsor defined benefit pension plans for eligible employees in certain foreign countries. These plans did not have a material impact on
our Consolidated Financial Statements in any period presented.
Profit Sharing Program
Our broad based employee profit sharing program provides that, for each year in which we have an annual pre-
tax profit, as defined, we will pay a
specified portion of that profit to employees. Based on our pre-tax earnings for the years ended December 31, 2012 , 2011 and 2010 , we accrued
$372 million , $264 million and $313 million under the profit sharing program, respectively.
86
(in millions) Private Equity Real Estate Hedge Funds Common Stock
Commingled
Funds Total
Balance at January 1, 2011
$
1,477
$
478
$
—
$
32
$
40
$
2,027
Actual return on plan assets:
Related to assets still held at the reporting date
64
(8
)
(8
)
3
(10
)
41
Related to assets sold during the period
42
5
—
(
6
)
12
53
Purchases, sales and settlements, net
(66
)
52
440
6
(31
)
401
Transfers from Level 3
—
—
—
(
35
)
—
(
35
)
Balance at December 31, 2011
1,517
527
432
—
11
2,487
Actual return on plan assets:
Related to assets still held at the reporting date
—
(
11
)
50
—
2
41
Related to assets sold during the period
44
8
(9
)
—
—
43
Purchases, sales and settlements, net
(95
)
89
(2
)
—
—
(
8
)
Transfers to Level 3
—
—
13
—
—
13
Balance at December 31, 2012
$
1,466
$
613
$
484
$
—
$
13
$
2,576