American Airlines 2010 Annual Report Download - page 46

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43
Other Income (Expense)
Other income (expense) consists of Interest income and expense, Interest capitalized and Miscellaneous - net.
2010 Compared to 2009 Decreases in both short-term investment balances and interest rates caused a
decrease in Interest income of $8 million, or 23.1 percent, to $26 million. Interest expense increased $79 million,
or 10.7 percent, to $823 million primarily as a result of an increase in the Company’s long-term debt balance.
2009 Compared to 2008 Decreases in both short-term investment balances throughout most of 2009 and
decreases in interest rates caused a decrease in Interest income of $147 million, or 81.2 percent, to $34 million.
Interest expense decreased $59 million, or 7.3 percent, to $744 million primarily as a result of a decrease in the
Company’s long-term debt balance throughout most of 2009 and decreases in interest rates on variable rate debt.
Income Tax Benefit
The Company has recorded in 2010 and 2009 an income tax expense credit of approximately $30 million and $36
million, respectively, resulting from the Company’s anticipated election under applicable sections of the Tax
Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and Section 3081 of the Housing
and Economic Recovery Act of 2008 (as extended by the American Recovery and Reinvestment Act of 2009),
allowing corporations to accelerate utilization of certain research and alternative minimum tax (AMT) credit
carryforwards in lieu of applicable bonus depreciation on certain qualifying capital investments.
The Company did not record a net tax provision (benefit) associated with 2008 net loss due to the Company
providing a valuation allowance, as discussed in Note 8 to the consolidated financial statements. However, during
2009, the Company generated a pre-tax loss of $1.8 billion and other comprehensive income of approximately
$701 million. In accordance with accounting standards, the net zero tax provision is required to be allocated
between Operating loss and Accumulated other comprehensive income. Application of this guidance during 2009
resulted in a non-cash income tax benefit of $248 million, offset by a $248 million charge to other comprehensive
income related to such items being recognized in 2009. See Note 8 for additional information regarding the
allocation of income tax benefit to Operating income and Accumulated other comprehensive income.