American Airlines 2010 Annual Report Download - page 76

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8. Income Taxes (Continued)
The components of AMR's deferred tax assets and liabilities were (in millions):
December 31,
2010
2009
Deferred tax assets:
Postretirement benefits other than pensions
$ 1,056
$ 971
Rent expense
333
331
Alternative minimum tax credit carryforwards
392
397
Operating loss carryforwards
2,271
2,276
Pensions
1,865
1,686
Frequent flyer obligation
630
669
Gains from lease transactions
55
90
Other
583
787
Total deferred tax assets
7,185
7,207
Valuation allowance
(2,990)
(2,869)
Net deferred tax assets
4,195
4,338
Deferred tax liabilities:
Accelerated depreciation and amortization
(3,985)
(4,152)
Other
(185)
(186)
Total deferred tax liabilities
(4,170)
(4,338)
Net deferred tax asset
$ 25
$ -
At December 31, 2010, the Company had available for federal income tax purposes an alternative minimum tax
credit carryforward of approximately $392 million, which is available for an indefinite period, and federal net
operating losses of approximately $6.7 billion for regular tax purposes, which will expire, if unused, beginning in
2022. These net operating losses include an unrealized benefit of approximately $666 million related to the
implementation of share-based compensation accounting guidance that will be recorded in equity when realized.
The Company had available for state income tax purposes net operating losses of $3.7 billion, which expire, if
unused, in years 2011 through 2027. The amount that will expire in 2011 is $25 million.
Cash payments (refunds) for income taxes were ($32) million, $6 million and $(14) million for 2010, 2009 and
2008, respectively.
Under special tax rules (the Section 382 Limitation), cumulative stock ownership changes among material
shareholders exceeding 50 percent during a 3-year period can potentially limit a company’s future use of net
operating losses and tax credits (NOLs). The Section 382 Limitation may be increased by certain “built-in gains,”
as provided by current IRS guidance. Based on available information, the Company believes it is not currently
subject to the Section 382 Limitation. If triggered under current conditions, the Section 382 Limitation is not
expected to significantly impact the recorded value of deferred taxes or timing of utilization of the Company’s
NOLs.
9. Share Based Compensation
AMR grants, or has granted, stock compensation under three plans: the 1998 Long Term Incentive Plan (the 1998
Plan), the 2003 Employee Stock Incentive Plan (the 2003 Plan) and the 2009 Long Term Incentive Plan (the 2009
Plan). Collectively, the 1998 Plan and the 2009 Plan are referred to as the LTIP Plans.
Under the LTIP Plans, officers and key employees of AMR and its subsidiaries may be granted certain types of
stock or performance based awards. At December 31, 2010, the Company had stock option awards, stock
appreciation right (SAR) awards, performance share awards, deferred share awards and other awards
outstanding under these plans. The total number of common shares authorized for distribution under the 1998
Plan and the 2009 Plan is 23,700,000 and 4,000,000 shares, respectively. The 1998 Plan expired by its terms in
2008.
The Company established the 2003 Plan to provide equity awards to employees. Under the 2003 Plan,
employees may be granted stock options, restricted stock and deferred stock. At December 31, 2010, the
Company had stock options and deferred awards outstanding under this plan. The total number of shares
authorized for distribution under the 2003 Plan is 42,680,000 shares.