Delta Airlines 2007 Annual Report Download - page 73

Table of Contents
Index to Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(3) We revalued our assets and liabilities at estimated fair value as a result of fresh start reporting. This resulted in a $238 million gain, primarily reflecting the fair value of newly recognized
intangible assets, which was partially offset by reductions in the fair value of tangible property and equipment.
(4) Estimated claims for the four months ended April 30, 2007 relate to the restructuring of the financing arrangements for 143 aircraft, the rejection of two aircraft leases and adjustments to
prior claims estimates. Estimated claims for the year ended December 31, 2006 relate to the restructuring of the financing arrangements for 188 aircraft and the rejection of 16 aircraft
leases. Estimated claims for the year ended December 31, 2005 relate to the restructuring of the financing arrangements of seven aircraft, the rejection of 50 aircraft leases and the
repossession of 15 aircraft.
(5) In connection with amendments to our contract carrier agreements with Chautauqua Airlines, Inc. ("Chautauqua") and Shuttle America Corporation ("Shuttle America"), both subsidiaries
of Republic Airways Holdings, Inc. ("Republic Holdings"), which, among other things, reduced the rates we pay those carriers, we recorded (a) a $91 million allowed general, unsecured
claim and (b) a $37 million net charge related to our surrender of warrants to purchase up to 3.5 million shares of Republic Holdings common stock. Additionally, in connection with an
amendment to our contract carrier agreement with Freedom Airlines, Inc. ("Freedom"), a subsidiary of Mesa Air Group, Inc., which, among other things, reduced the rates we pay that
carrier, we recorded a $35 million allowed general, unsecured claim.
(6) In accordance with the Plan of Reorganization, we made $130 million in lump-sum cash payments to approximately 39,000 eligible non-contract, non-management employees. We
also recorded an additional charge of $32 million related to our portion of payroll related taxes associated with the issuance, as contemplated by the Plan of Reorganization, of
approximately 14 million shares of common stock to these employees. For additional information regarding the stock grants, see Note 12.
(7) Allowed general, unsecured claims of $83 million for the four months ended April 30, 2007 and $2.1 billion for the year ended December 31, 2006 in connection with Comair's and
Delta's respective comprehensive agreements with ALPA reducing pilot labor costs.
(8) Reflects interest earned due to the preservation of cash during our Chapter 11 proceedings.
(9) For the four months ended April 30, 2007, we recorded a net $43 million gain, primarily reflecting a $126 million net gain in connection with our settlement agreement with the
Massachusetts Port Authority ("Massport") which was partially offset by a net $80 million charge from an allowed general, unsecured claim under the Cincinnati Airport Settlement
Agreement. For additional information regarding our settlement agreement with Massport and the Cincinnati Airport Settlement Agreement, see Notes 6 and 8.
(10) Allowed general, unsecured claims in connection with agreements reached with committees representing pilot and non-pilot retired employees reducing their postretirement healthcare
benefits.
(11) Reflects a charge for rejecting substantially all of our stock options in our Chapter 11 proceedings. For additional information regarding this matter, see Note 2.
(12) $2.2 billion and $801 million allowed general, unsecured claims in connection with our settlement agreements with the PBGC and a group representing retired pilots, respectively.
Charges for these claims were offset by $1.3 billion in settlement gains associated with the derecognition of previously recorded Pilot Plan and pilot non-qualified plan obligations upon
each plan's termination. For additional information regarding our settlement agreements and the termination of those plans, see Note 10.
Fresh Start Consolidated Balance Sheet
As previously noted, upon emergence from Chapter 11, we adopted fresh start reporting, which required us to revalue our assets and liabilities to fair
value. In estimating fair value, we based the estimates and assumptions on guidance prescribed by SFAS No. 157, "Fair Value Measurements" ("SFAS 157").
SFAS 157, among other things, defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements.
For additional information about SFAS 157, see Note 3.
To facilitate the calculation of the enterprise value of the Successor, management developed a set of financial projections for the Successor using a
number of estimates and assumptions. The enterprise and corresponding reorganization value of the Successor was based on financial projections using
various valuation methods, including (1) a comparison of our projected performance to the market values of comparable
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