Delta Airlines 2014 Annual Report Download - page 73

NOTE 3 . FAIR VALUE MEASUREMENTS
Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants
would use in pricing an asset or liability.
Assets and liabilities measured at fair value are based on the valuation techniques identified in the tables below. The valuation techniques are as
follows:
Assets (Liabilities) Measured at Fair Value on a Recurring Basis
(1)
66
•
Level 1.
Observable inputs such as quoted prices in active markets;
•
Level 2
. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
•
Level 3
. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
(a)
Market approach
. Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;
and
(b)
Income approach.
Techniques to convert future amounts to a single present amount based on market expectations (including present value
techniques, option-pricing and excess earnings models).
(in millions) December 31, 2014 Level 1 Level 2 Valuation Technique
Cash equivalents
$
1,612
$
1,612
$
— (a)
Short-term investments
U.S. government and agency securities
59
—
59
(a)
Asset- and mortgage-backed securities
392
—
392
(a)
Corporate obligations
749
—
749
(a)
Other fixed income securities
17
—
17
(a)
Restricted cash equivalents and investments
37
37
— (a)
Long-term investments
118
90
28
(a)(b)
Hedge derivatives, net
Fuel hedge contracts
(1,848
)
(167
)
(1,681
) (a)(b)
Interest rate contracts
(7
) — (
7
) (a)(b)
Foreign currency exchange contracts
73
—
73
(a)
(in millions) December 31, 2013 Level 1 Level 2 Valuation Technique
Cash equivalents
$
2,487
$
2,487
$
— (a)
Short-term investments
U.S. government securities
959
959
— (a)
Restricted cash equivalents and investments
118
118
— (a)
Long-term investments
109
80
29
(a)(b)
Hedge derivatives, net
Fuel hedge contracts
314
16
298
(a)(b)
Interest rate contracts
(67
) — (
67
) (a)(b)
Foreign currency exchange contracts
257
—
257
(a)
(1)
See Note 11 , “Employee Benefit Plans,”
for fair value of benefit plan assets.