American Airlines 2005 Annual Report Download - page 60

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57
2. Restructuring Charges and U.S. Government Grant (Continued)
Other
On September 22, 2001, President Bush signed into law the Air Transportation Safety and System Stabilization
Act (the Stabilization Act). The Stabilization Act provides that, notwithstanding any other provision of law, liability
for all claims, whether compensatory or punitive, arising from the Terrorist Attacks, against any air carrier shall not
exceed the liability coverage maintained by the air carrier. Based upon estimates provided by the Company’s
insurance providers, the Company recorded a liability of approximately $2.3 billion for claims arising from the
Terrorist Attacks, after considering the liability protections provided for by the Stabilization Act. The balance,
recorded in the accompanying consolidated balance sheet, was $1.9 billion at both December 31, 2005 and 2004.
The Company has also recorded a liability of approximately $423 million related to flight 587, which crashed on
November 12, 2001. The Company has recorded a receivable for all of these amounts, which the Company
expects to recover from its insurance carriers as claims are resolved. These insurance receivables and liabilities
are classified as Other assets and Other liabilities and deferred credits, respectively, on the accompanying
consolidated balance sheets, and are based on reserves established by the Company’s insurance carriers.
These estimates may be revised as additional information becomes available concerning the expected claims.
3. Investments
Short-term investments consisted of (in millions):
December 31,
2005 2004
Overnight investments and time deposits $ 210 $ 222
Corporate and bank notes 3,340 2,214
U. S. government agency mortgages 74 115
U. S. government agency notes 13 212
Asset backed securities - 24
Other 39 22
$ 3,676 $ 2,809
Short-term investments at December 31, 2005, by contractual maturity included (in millions):
Due in one year or less $ 2,433
Due between one year and three years 1,169
Due after three years 74
$ 3,676
All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and
losses are reflected as a component of Accumulated other comprehensive loss.