American Airlines 2005 Annual Report Download - page 67

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64
6. Indebtedness (Continued)
In 2004, the Company issued $324 million principal amount of its 4.50 percent senior convertible notes due 2024
(the 4.50 Notes) and in 2003 the Company issued $300 million principal amount of its 4.25 percent senior
convertible notes due 2023 (the 4.25 Notes). Each note is convertible into AMR common stock at a conversion
rate of 45.3515 shares for the 4.50 Notes and 57.61 shares for the 4.25 Notes, per $1,000 principal amount of
notes (which represents an equivalent conversion price of $22.05 per share for the 4.50 Notes and $17.36 per
share for the 4.25 Notes), subject to adjustment in certain circumstances. The notes are convertible under certain
circumstances, including if (i) the closing sale price of the Company’s common stock reaches a certain level for a
specified period of time, (ii) the trading price of the notes as a percentage of the closing sale price of the
Company’s common stock falls below a certain level for a specified period of time, (iii) the Company calls the
notes for redemption, or (iv) certain corporate transactions occur. Holders of the notes may require the Company
to repurchase all or any portion of the 4.50 Notes on February 15, 2009, 2014 and 2019 and 4.25 Notes on
September 23, 2008, 2013 and 2018 at a purchase price equal to the principal amount of the notes being
purchased plus accrued and unpaid interest to the date of purchase. The Company may pay the purchase price
in cash, common stock or a combination of cash and common stock. After February 15, 2009 and September 23,
2008, the Company may redeem all or any portion of the 4.50 Notes and 4.25 Notes, respectively, for cash at a
price equal to the principal amount of the notes being redeemed plus accrued and unpaid interest as of the
redemption date. These notes are guaranteed by American. If the holders of the 4.50 Notes or the 4.25 Notes
require the Company to repurchase all or any portion of the notes on the repurchase dates, it is the Company’s
present intention to satisfy the requirement in cash.
Certain debt is secured by aircraft, engines, equipment and other assets having a net book value of
approximately $13.8 billion as of December 31, 2005.
As of December 31, 2005, AMR has issued guarantees covering approximately $1.7 billion of American’s tax-
exempt bond debt and American has issued guarantees covering approximately $1.2 billion of AMR’s unsecured
debt. In addition, as of December 31, 2005, AMR and American have issued guarantees covering approximately
$428 million of AMR Eagle’s secured debt, and AMR has issued guarantees covering an additional $2.9 billion of
AMR Eagle’s secured debt.
Cash payments for interest, net of capitalized interest, were $828 million, $729 million and $661 million for 2005,
2004 and 2003, respectively.