American Airlines 2012 Annual Report Download - page 99

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Table of Contents
2012
2011
Assumed health care trend rates at December 31
Health care cost trend rate assumed for next year
7.0%
7.5%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
4.5%
4.5%
Year that the rate reaches the ultimate trend rate
2018
2018
A one percentage point change in the assumed health care cost trend rates would have the following effects (in millions):
One Percent
Increase
One Percent
Decrease
Impact on 2012 service and interest cost
$15
$(16)
Impact on postretirement benefit obligation
as of December 31, 2012
60
(63)
The Company is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of ERISA, the
Pension Funding Equity Act of 2004, the Pension Protection Act of 2006, and the Pension Relief Act of 2010.
As a result of the Chapter 11 Cases, AMR contributed $272 million to its US defined benefit pension plans in 2012 to cover post-petition periods. As a result
of only contributing the post-petition portion of the required contribution, the PBGC filed a lien against certain assets of the Company. The Company’s 2013
contribution to its defined benefit pension plans is subject to the Chapter 11 proceedings.
The following benefit payments, which reflect expected future service as appropriate, are expected to be paid:
Pension
Retiree Medical
and Other
2013
$620
$135
2014
620
131
2014
645
124
2016
663
117
2017
699
110
2018 – 2022
4,011
450
12. Intangible Assets
The Company has recorded international slot and route authorities of $708 million as of December 31, 2012 and 2011. The Company considers these assets
indefinite life assets and as a result, they are not amortized but instead are tested for impairment annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired. Such triggering events may include significant changes to the Company’s network or capacity, or the
implementation of open skies agreements in countries where the Company operates flights.
As there is minimal market activity for the valuation of routes and international slots and landing rights, the Company measures fair value with inputs using
the income approach. The income approach uses valuation techniques, such as future cash flows, to convert future amounts to a single present discounted
amount. The inputs utilized for these valuations are unobservable and reflect the Company’s assumptions about market participants and what they would use
to value the routes and accordingly are considered Level 3 in the fair value hierarchy. The Company’s unobservable inputs are developed based on the best
information available as of December 31, 2012.
The following tables provide information relating to the Company’s amortized intangible assets as of December 31 (in millions):
2012
Cost
Accumulated
Amortization
Net Book Value
Amortized intangible assets:
Airport operating rights
$515
$ 385
$130
Gate lease rights
155
124
31
Total
$ 670
$509
$161
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