American Airlines 2006 Annual Report Download - page 43

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39
O
THER
I
NCOME
(E
XPENSE
)
Other income (expense) consists of interest income and expense, interest capitalized and miscellaneous - net.
2006 Compared to 2005 Increases in both short-term investment balances and interest rates caused an
increase in Interest income of $130 million, or 87.2 percent, to $279 million. Interest expense increased $73
million, or 7.6 percent, to $1.0 billion primarily as a result of increases in interest rates. Miscellaneous – net
includes a charge of $102 million for changes in market value of hedges that did not qualify for hedge accounting
during certain periods in 2006. Gains deferred in Accumulated other comprehensive loss prior to these hedges
being deemed ineffective partially offset this charge as the hedges settled in 2006 and settle in 2007.
2005 Compared to 2004 Increases in both short-term investment balances and interest rates caused an
increase in Interest income of $83 million, or 125.8 percent, to $149 million. Interest expense increased $86
million, or 9.9 percent, to $957 million primarily as a result of increases in interest rates. Miscellaneous-net for
2004 includes a $146 million gain on the sale of the Company’s remaining interest in Orbitz.
I
NCOME
T
AX
B
ENEFIT
The Company did not record a net tax provision or benefit associated with its 2006 earnings or 2005 and 2004
losses due to the Company providing a valuation allowance, as discussed in Note 8 to the consolidated financial
statements.