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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event
reported: October 4, 2002
American Airlines, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-2691 13-1502798
(State of Incorporation) ( Commission File Number) (IRS Employer
Identification No.)
4333 Amon Carter Blvd. Fort Worth, Texas 76155
(Address of principal executive offices) (Zip Code)
(817) 963-1234
(Registrant's telephone number)
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Item 5. Other Events
In July 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" (SFAS 142). SFAS 142 requires
companies to test goodwill and indefinite-lived intangible assets
for impairment rather than amortize them. The goodwill
impairment test is a two-step process. The first step of the
impairment analysis - which for 2002 must have been completed by
June 30 - compares a company's fair value to its net book value.
In determining fair value, SFAS 142 allows for the use of several
valuation methodologies, although it states quoted market prices
are the best evidence of fair value. If the company's fair value
is determined to be less than its net book value, the second step
of the impairment analysis must be performed to measure the
amount of the impairment charge, if any. Step two of the
analysis compares the implied fair value of goodwill to its
carrying amount. If the carrying amount of goodwill exceeds its
implied fair value, an impairment loss is recognized equal to
that excess. This step must be completed by December 31, 2002.
However, SFAS 142 requires that any resulting impairment charge
be recorded as of January 1, 2002.
American Airlines, Inc. (American or the Company, a wholly owned
subsidiary of AMR Corporation) first disclosed this new
accounting pronouncement in its second quarter 2001 Form 10-Q,
and noted that it was evaluating its impact on the Company. Most
recently, the Company disclosed in its second quarter 2002 Form
10-Q that it had completed the first step of its goodwill
impairment analysis and determined American's net book value was
in excess of its fair value at January 1, 2002. Furthermore, the
Company disclosed it was in the process of completing the second
step of the impairment analysis, which would likely result in
American recording a pre-tax charge of up to $1.3 billion to
write-off the Company's goodwill. American's goodwill balance of
approximately $1.3 billion included amounts related to the
acquisitions of Reno Air, Inc., ACI Holdings, Inc. (AirCal) and
certain assets from Trans World Airlines, Inc.
The Company has now completed the second step of the impairment
analysis and concluded that American's entire goodwill balance is
impaired as defined by SFAS 142. As a result, the Company will
record a one-time cumulative effect of a change in accounting of
approximately $900 million after taxes. This charge will be
recorded as of January 1, 2002, is nonoperational in nature and
has no impact on cash flows. This charge does not affect
American's financial covenants in any of its credit agreements.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
American Airlines, Inc.
/s/ Charles D. MarLett
Charles D. MarLett
Corporate Secretary
Dated: October 4, 2002