Delta Airlines 2015 Annual Report Download - page 67

Download and view the complete annual report

Please find page 67 of the 2015 Delta Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 191

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191

TableofContents
Refinery.Refinedproduct,feedstockandblendstockinventories,allofwhicharefinishedgoods,arecarriedatrecoverablecost.Weusejetfuelproducedbythe
refineryandprocuredthroughtheexchangewiththirdpartiesofgasoline,dieselandotherrefinedproducts("non-jetfuelproducts")therefineryproducesinour
airlineoperations.Costisdeterminedusingthefirst-in,first-outmethod.Costsincludetherawmaterialconsumedplusdirectmanufacturingcosts(suchaslabor,
utilitiesandsupplies)asincurredandanapplicableportionofmanufacturingoverhead.
Accounting for Refinery Related Buy/Sell Agreements
To the extent that we receive jet fuel for non-jet fuel products exchanged under buy/sell agreements, we account for these transactions as nonmonetary
exchanges.Wehaverecordedthesenonmonetaryexchangesatthecarryingamountofthenon-jetfuelproductstransferredwithinaircraftfuelandrelatedtaxeson
theConsolidatedStatementsofOperations.
Derivatives
Changesinaircraftfuelprices,interestratesandforeigncurrencyexchangeratesimpactourresultsofoperations.Inanefforttomanageourexposuretothese
risks,weenterintoderivativecontractsandadjustourderivativeportfolioasmarketconditionschange.Werecognizederivativecontractsatfairvalueonour
ConsolidatedBalanceSheets.
NotDesignatedasAccountingHedges.Wedonotdesignateourfuelderivativecontractsasaccountinghedges.Werecordchangesinthefairvalueofourfuel
hedgesinaircraftfuelandrelatedtaxes.Thesechangesinfairvalueincludesettledgainsandlossesaswellasmark-to-marketadjustments("MTMadjustments").
MTMadjustmentsaredefinedasfairvaluechangesrecordedinperiodsotherthanthesettlementperiod.Suchfairvaluechangesarenotnecessarilyindicativeof
theactualsettlementvalueoftheunderlyinghedgeinthecontractsettlementperiod.
DesignatedasCashFlowHedges.Forderivativecontractsdesignatedascashflowhedges(interestratecontractsandforeigncurrencyexchangecontracts),the
effectiveportionofthegainorlossonthederivativeisreportedasacomponentofAOCIandreclassifiedintoearningsinthesameperiodinwhichthehedged
transactionaffectsearnings.Theeffectiveportionofthederivativerepresentsthechangeinfairvalueofthehedgethatoffsetsthechangeinfairvalueofthe
hedgeditem.Totheextentthechangeinthefairvalueofthehedgedoesnotperfectlyoffsetthechangeinthefairvalueofthehedgeditem,theineffectiveportion
ofthehedgeisimmediatelyrecognizedinotherexpense.
DesignatedasFairValueHedges.Forderivativecontractsdesignatedasfairvaluehedges(interestratecontracts),thegainorlossonthederivativeisreported
inearningsandanequivalentamountisreflectedasachangeinthecarryingvalueoflong-termdebtandcapitalleases,withanoffsettinglossorgainrecognizedin
currentearnings.Weincludethegainorlossonthehedgediteminthesameaccountastheoffsettinglossorgainontherelatedderivativecontract,resultinginno
impacttoourConsolidatedStatementsofOperations.
ThefollowingtablesummarizestheriskeachtypeofderivativecontractishedgingandtheclassificationofrelatedgainsandlossesonourConsolidated
StatementsofOperations:
DerivativeType HedgedRisk ClassificationofGainsandLosses
Fuelhedgecontracts Increasesinjetfuelprices Aircraftfuelandrelatedtaxes
Interestratecontracts Increasesininterestrates Interestexpense,net
Foreigncurrencyexchangecontracts Fluctuationsinforeigncurrencyexchangerates Passengerrevenue
Thefollowingtablesummarizestheaccountingtreatmentofourderivativecontracts:
ImpactofUnrealizedGainsandLosses
AccountingDesignation EffectivePortion IneffectivePortion
Notdesignatedashedges Changeinfairvalueofhedgeisrecordedinearnings
Designatedascashflowhedges MarketadjustmentsarerecordedinAOCI Excess,ifany,overeffectiveportionofhedgeis
recordedinotherexpense
Designatedasfairvaluehedges Marketadjustmentsarerecordedinlong-term
debtandcapitalleases
Excess,ifany,overeffectiveportionofhedgeis
recordedinotherexpense
61