American Airlines 2010 Annual Report Download - page 74

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71
7. Financial Instruments and Risk Management (Continued)
The carrying value and estimated fair values of the Company's long-term debt, including current maturities, were
(in millions):
December 31,
2010
2009
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Secured variable and fixed rate
indebtedness
$ 5,114
$ 4,562
$ 5,553
$ 4,310
Enhanced equipment trust
certificates
2,002
2,127
2,022
1,999
6.00% - 8.50% special facility
revenue bonds
1,641
1,657
1,658
1,600
AAdvantage Miles advance
purchase
890
903
890
893
4.50% - 6.25% senior convertible
notes
460
526
460
476
9.00% - 10.20% debentures
214
207
214
158
7.88% - 10.55% notes
211
209
211
181
$ 10,532
$ 10,191
$ 11,008
$ 9,617
8. Income Taxes
The Company has an unrecognized tax benefit of approximately $6 million, which did not change during the
twelve months ended December 31, 2010. Changes in the unrecognized tax benefit have no impact on the
effective tax rate due to the existence of the valuation allowance. Accrued interest on tax positions is recorded as
a component of interest expense but was not significant at December 31, 2010.
The reconciliation of the beginning and ending amounts of unrecognized tax benefit are (in millions):
2010
2009
Unrecognized Tax Benefit at January 1
$ 6
$ 24
Decreases due to settlements with taxing authority
0
(18)
Unrecognized Tax Benefit at December 31
$ 6
$ 6
The Company estimates that the unrecognized tax benefit will not significantly change within the next twelve
months.
The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The
Company’s 2004 through 2009 tax years are still subject to examination by the Internal Revenue Service.
Various state and foreign jurisdiction tax years remain open to examination and the Company is under
examination, in administrative appeals, or engaged in tax litigation in certain jurisdictions. The Company believes
that the effect of any additional assessment(s) will be immaterial to its consolidated financial statements.