American Airlines 2005 Annual Report Download - page 71

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8. Income Taxes (Continued)
The components of AMR's deferred tax assets and liabilities were (in millions):
December 31,
2005 2004
Deferred tax assets:
Postretirement benefits other than pensions $ 1,113 $ 1,082
Rent expense 594 696
Alternative minimum tax credit carryforwards 418 423
Operating loss carryforwards 2,504 2,065
Pensions 727 536
Frequent flyer obligation 304 267
Gains from lease transactions 158 197
Other 698 598
Total deferred tax assets 6,516 5,864
Valuation allowance (1,339) (833)
Net deferred tax assets 5,177 5,031
Deferred tax liabilities:
Accelerated depreciation and amortization (4,783) (4,620)
Other (394) (411)
Total deferred tax liabilities (5,177) (5,031)
Net deferred tax liability $ - $ -
At December 31, 2005, the Company had available for federal income tax purposes an alternative minimum tax
credit carryforward of approximately $418 million, which is available for an indefinite period, and federal net
operating losses of approximately $6.6 billion for regular tax purposes, which will expire, if unused, beginning in
2022. The Company had available for state income tax purposes net operating losses of $4.2 billion, which
expire, if unused, in years 2006 through 2024. The amount that will expire in 2006 is $162 million.
Cash payments for income taxes were $7 million and $3 million for 2005 and 2004, respectively. Cash refunds for
income taxes were $575 million in 2003. The amount received in 2003 relates primarily to net operating loss
carryback claims, including a carryback claim filed as a result of a provision in Congress’ economic stimulus
package that changes the period for carrybacks of net operating losses (NOLs). This change allows the
Company to carry back 2001 and 2002 NOLs for five years, rather than two years under the previous law,
allowing the Company to more quickly recover its NOLs.
9. Stock Awards and Options
In March 2003, the Board of Directors of AMR approved the issuance of additional shares of AMR common stock
to employees and certain vendors, lessors, lenders and suppliers in connection with negotiations concerning
concessions. The maximum number of shares authorized for issuance was approximately 46.9 million shares.
From the foregoing authorization, the Company issued approximately 2.5 million shares to vendors from treasury
stock in 2003, resulting in a re-allocation from Treasury stock to Additional paid-in capital of $142 million. Also in
2003, the Company established the 2003 Employee Stock Incentive Plan (the 2003 Plan) to provide equity
awards to employees (from the above shares authorized for issuance) in connection with the Labor Agreements
and Management Reductions. Under the 2003 Plan, employees may be granted stock options, restricted stock
and deferred stock. The total number of shares authorized for distribution under the 2003 Plan is 42,680,000
shares.