American Airlines 2007 Annual Report Download - page 41

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38
Other Income (Expense)
Other income (expense) consists of interest income and expense, interest capitalized and miscellaneous - net.
2007 Compared to 2006 Increases in both short-term investment balances and interest rates caused an
increase in Interest income of $58 million, or 20.8 percent, to $337 million. Interest expense decreased $116
million, or 11.2 percent, to $914 million primarily as a result of prepayment and repayment of existing debt.
Miscellaneous – net includes a gain of $138 million for the sale of ARINC.
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 income (loss) prior to these
hedges being deemed ineffective partially offset this charge as the hedges settled in 2006 and settle in 2007.
Income Tax Benefit
The Company did not record a net tax provision or benefit associated with its 2007 or 2006 earnings and 2005
losses due to the Company providing a valuation allowance, as discussed in Note 8 to the consolidated financial
statements.