American Airlines 1997 Annual Report Download - page 60

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AMR CORPORATION
58
7. Income Taxes
The significant components of the income tax provision
were (in millions):
Year Ended December 31,
1997 1996 1995
Current $299 $310 $ 112
Deferred 362 218 50
$661 $528 $ 162
The income tax provision includes a federal income tax
provision of $573 million, $463 million and $133 million
for the years ended December 31, 1997, 1996 and 1995,
respectively.
The income tax provision differed from amounts com-
puted at the statutory federal income tax rate as follows
(in millions):
Year Ended December 31,
1997 1996 1995
Statutory income tax provision $576 $572 $ 125
State income tax provision, net 47 36 11
Meal expense 21 18 22
Minority interest 12 1-
Gain on sale of stock by subsidiary -(174) -
Change in valuation allowance - 60 -
Other, net 5 15 4
Income tax provision $661 $528 $ 162
The change in valuation allowance in 1996 relates to
the deferred tax asset resulting from the write-off of AMR’s
investment in Canadian Airlines International Limited
(see Note 14) and expiring foreign tax credits.
The components of AMR’s deferred tax assets and
liabilities were (in millions):
December 31,
1997 1996
Deferred tax assets:
Alternative minimum tax credit carryforwards $862 $680
Postretirement benefits other than pensions 583 550
Rent expense 323 231
Gains from lease transactions 234 248
Frequent flyer obligation 232 172
Other 417 603
Operating loss carryforwards -345
Valuation allowance (72) (72)
To tal deferred tax assets 2,579 2,757
Deferred tax liabilities:
Accelerated depreciation and amortization (2,964) (2,679)
Pensions (94) (144)
Other (220) (273)
To tal deferred tax liabilities (3,278) (3,096)
Net deferred tax liability $(699) $(339)
At December 31, 1997, AMR had available for federal
income tax purposes approximately $862 million of
alternative minimum tax credit carryforwards available
for an indefinite period.
Cash payments (refunds) for income taxes were $423
million, $194 million and $(36) million for 1997, 1996
and 1995, respectively.
8. Common And Preferred Stock
In January 1998, the Board of Directors approved an
amendment to the Company’s Certificate of Incorporation
increasing the total number of authorized shares of all class-
es of stock to 770 million, of which 20 million may be
shares of preferred stock (without par value) and 750
million may be shares of common stock ($1 par value). The
amendment to the Company’s Certificate of Incorporation
will be presented to the Company’s stockholders for
approval at the Company’s 1998 annual meeting.
9. Stock Awards And Options
Under the 1988 Long Term Incentive Plan (1988 Plan), as
amended in 1994, officers and key employees of AMR
and its subsidiaries may be granted stock options, stock
appreciation rights, restricted stock, deferred stock, stock
purchase rights, other stock-based awards and/or perfor-
mance related awards, including cash bonuses. The total
number of common shares authorized for distribution