1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A No. 1
[]Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Period Ended March 31, 1996.
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From to
.
Commission file number 1-8400.
AMR Corporation
(Exact name of registrant as specified in its charter)
Delaware 75-1825172
(State or other (I.R.S. Employer
jurisdiction Identification No.)
of incorporation or
organization)
4333 Amon Carter Blvd.
Fort Worth, Texas 76155
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, (817) 963-1234
including area code
Not Applicable
(Former name, former address and former fiscal year , if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter periods that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No .
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date.
Common Stock, $1 par value - 76,911,973 as of April 24, 1996
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INDEX
AMR CORPORATION
PART I: FINANCIAL INFORMATION
Item 1. Financial Information
Consolidated Statement of Operations -- Three months ended March
31, 1996 and 1995 (as amended June 4, 1996)
Condensed Consolidated Balance Sheet -- March 31, 1996 and December
31, 1995
Condensed Consolidated Statement of Cash Flows -- Three months
ended March 31, 1996 and 1995
Notes to Condensed Consolidated Financial Statements -- March 31,
1996
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (as amended June 4, 1996, to reflect
certain reclassifications between reporting segments)
SIGNATURE
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PART 1. FINANCIAL INFORMATION
AMR CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited) (In millions, except per share amounts)
Three Months Ended
March 31,
1996 1995
Revenues
Airline Group:
Passenger - American Airlines, Inc. $3,287 $3,090
- AMR Eagle, Inc. 267 208
Cargo 163 158
Other 197 155
3,914 3,611
The SABRE Group 428 385
Management Services Group 157 143
Less: Intergroup revenues (191) (169)
Total operating revenues 4,308 3,970
Expenses
Wages, salaries and benefits 1,487 1,405
Aircraft fuel 441 378
Commissions to agents 315 320
Depreciation and amortization 300 315
Other rentals and landing fees 216 214
Aircraft rentals 164 170
Food service 156 160
Maintenance materials and repairs 168 152
Other operating expenses 660 604
Total operating expenses 3,907 3,718
Operating Income 401 252
Other Income (Expense)
Interest income 16 13
Interest expense (146) (177)
Miscellaneous - net (6) (16)
(136) (180)
Earnings Before Income Taxes 265 72
Income tax provision 108 35
Net Earnings $ 157 $ 37
Earnings Per Common Share
Primary $ 2.02 $ 0.48
Fully Diluted $ 1.84 $ 0.48
Number of shares used in computations
Primary 78 77
Fully Diluted 92 77
The accompanying notes are an integral part of these financial statements.
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AMR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
March December
31, 31,
1996 1995
(Unaudited) (Note 1)
Assets
Current Assets
Cash $ 38 $ 82
Short-term investments 796 819
Receivables, net 1,378 1,153
Inventories, net 606 589
Deferred income taxes 358 357
Other current assets 166 137
Total current assets 3,342 3,137
Equipment and Property
Flight equipment, net 9,649 9,852
Other equipment and property, net 1,959 1,964
11,608 11,816
Equipment and Property Under Capital Leases
Flight equipment, net 1,559 1,588
Other equipment and property, net 160 161
1,719 1,749
Route acquisition costs, net 996 1,003
Other assets, net 1,816 1,851
$ 19,481 $ 19,556
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 880 $ 817
Accrued liabilities 1,775 1,999
Air traffic liability 1,707 1,466
Current maturities of long-term debt 148 228
Current obligations under capital leases 146 122
Total current liabilities 4,656 4,632
Long-term debt, less current maturities 4,730 4,983
Obligations under capital leases, less 1,990 2,069
current obligations
Deferred income taxes 443 446
Other liabilities, deferred gains, deferred
credits and postretirement benefits 3,766 3,706
Stockholders' Equity
Convertible preferred stock 78 78
Common stock 77 76
Additional paid-in capital 2,263 2,239
Retained earnings 1,478 1,327
3,896 3,720
$ 19,481 $ 19,556
The accompanying notes are an integral part of these financial
statements.
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AMR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
Three Months Ended
March 31,
1996 1995
Net Cash Provided by Operating Activities $ 325 $ 253
Cash Flow from Investing Activities:
Capital expenditures (107) (458)
Net decrease in short-term investments 23 270
Proceeds from sale of equipment and property 73 60
Net cash used for investing activities (11) (128)
Cash Flow from Financing Activities:
Payments on long-term debt and capital lease
obligations (379) (86)
Other 21 (1)
Net cash used for financing activities (358) (87)
Net increase (decrease) in cash (44) 38
Cash at beginning of period 82 23
Cash at end of period $ 38 $ 61
Cash Payments (Refunds) For:
Interest $ 138 $ 155
Income taxes 133 (9)
The accompanying notes are an integral part of these financial
statements.
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AMR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, these
financial statements contain all adjustments, consisting of normal
recurring accruals, necessary to present fairly the financial
position, results of operations and cash flows for the periods
indicated. The balance sheet at December 31, 1995 has been derived
from the audited financial statements at that date. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the AMR Corporation Annual Report on
Form 10-K for the year ended December 31, 1995.
2.Certain amounts from 1995 have been reclassified to conform with
the 1996 presentation.
3.Accumulated depreciation of owned equipment and property at March
31, 1996 and December 31, 1995, was $6.0 billion and $5.8 billion,
respectively. Accumulated amortization of equipment and property
under capital leases at March 31, 1996 and December 31, 1995, was
$890 million and $875 million, respectively.
4.As discussed in the notes to the consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, the Miami International Airport Authority
is currently remediating various environmental conditions at Miami
International Airport (Airport) and funding the remediation costs
through landing fee revenues. Some of the costs of the remediation
effort may be borne by carriers currently operating at the Airport,
including American Airlines, Inc. (American), through increased
landing fees. The ultimate resolution of this matter is not
expected to have a significant impact on the financial position or
liquidity of AMR.
5.On April 17, 1996, the Company announced that its Board of
Directors had approved a reorganization of The SABRE Group as a
separate, wholly-owned subsidiary of AMR Corporation subject to the
receipt of a favorable tax ruling and certain other conditions.
This reorganization will involve the dividend of American's SABRE
Travel Information Network, SABRE Computer Services, SABRE
Development Services and SABRE Interactive divisions to the
Company. The reorganization should be completed sometime during
the third quarter.
The Company also continues to study, as it has in the past, other
transactions which may involve The SABRE Group, such as strategic
partnerships or an initial public offering of a portion of The
SABRE Group's stock. No decisions, however, have been made at this
time as to what, if any, transactions involving The SABRE Group may
occur after the reorganization is complete.
6.On April 19, 1996, the Company announced the call for redemption on
May 20, 1996 of all its outstanding 6 1/8% Convertible
Subordinated Quarterly Income Capital Securities due 2024. At
March 31, 1996, debentures in an aggregate principal amount of
$1,020,356,000 were outstanding. The redemption price of the
debentures is $1,042 per $1,000 principal amount of debentures,
plus accrued and unpaid interest to the redemption date. As an
alternative to redemption, holders of debentures have the option,
until May 17, 1996, to convert their debentures into AMR Common
Stock at a conversion price of $79 per share of Common Stock
(equivalent to 12.658 shares of Common Stock for each $1,000
principal amount of debentures). The Company has entered into a
standby arrangement with certain parties in which the parties have
agreed to purchase from the Company, at the Company's option, up to
the number of shares of Common Stock that would have been issuable
upon conversion of any debentures that are not surrendered for
conversion by May 17, 1996. Debentures that are redeemed rather
than converted will result in the Company recording an
extraordinary loss on early retirement of debt during the second
quarter arising from the excess of the redemption price for such
debentures over their carrying value. This differential as of
March 31, 1996 equaled approximately $231 for each $1,000 principal
amount of debentures.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7.On April 19, 1996, the Company announced the call for redemption on
May 20, 1996 of all its outstanding $500 Series A Cumulative
Convertible Preferred Stock. The redemption price for the
Preferred Stock is $521 per share of Preferred Stock, plus accrued
and unpaid dividends to the redemption date. As an alternative to
redemption, holders of the Preferred Stock have the option, until
May 17, 1996, of converting their Preferred Stock into AMR Common
Stock at a conversion price of $78.75 per share of Common Stock
(equivalent to 6.3492 shares of Common Stock for each share of
Preferred Stock).
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Summary AMR recorded net earnings for the three months ended March
31, 1996, of $157 million, or $2.02 per common share ($1.84 fully
diluted). This compares to net earnings of $37 million, or $0.48 per
common share (both primary and fully diluted) for the first quarter
of 1995. AMR's operating income improved 59.1 percent or $149
million.
AMR's improved net earnings for the first quarter reflect better
performance by each of the Company's three business units - the
Airline Group, which includes American Airlines, Inc.'s Passenger and
Cargo Divisions and AMR Eagle, Inc.; The SABRE Group, which includes
AMR's information technology and consulting businesses; and the
Management Services Group, which includes AMR's airline management,
aviation services, and investment service activities.
In April of 1996, American and The SABRE Group completed negotiations
on the economics of a new market rate services agreement between the
two business units, pursuant to which The SABRE Group performs data
processing and solutions services for American. The new agreement --
which will reflect the recent downward trend in market prices for
such data processing services -- is expected to increase the Airline
Group's operating income and decrease The SABRE Group's operating
income by approximately $36 million in 1996. Additionally, the two
business units completed negotiations on the economics of new
agreements covering the provision of air travel and certain marketing
services by American to The SABRE Group. These agreements are
expected to increase the Airline Group's operating income and
decrease The SABRE Group's operating income by approximately $35
million in 1996. As these agreements will be effective retroactive
to January 1, 1996, their estimated impact has been reflected in the
reporting segments' financial highlights noted below.
On April 17, 1996, the Company announced the planned reorganization
of The SABRE Group as a separate, wholly-owned subsidiary of AMR. It
is anticipated that upon completion of the reorganization
approximately $850 million of American's debt owed to AMR will be
replaced by an equivalent amount of debt owed to AMR by The SABRE
Group, thereby reducing the Airline Group's annual interest costs --
and increasing The SABRE Group's annual interest costs -- by
approximately $50-60 million.
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Results of Operations (continued)
The following sections provide a discussion of AMR's results by
reporting segment, which are described in AMR's Annual Report on Form
10-K for the year ended December 31, 1995.
AIRLINE GROUP
FINANCIAL HIGHLIGHTS
(Unaudited) (Dollars in millions)
Three Months Ended
March 31,
1996 1995
Revenues
Passenger - American Airlines, Inc. $3,287 $3,090
- AMR Eagle, Inc. 267 208
Cargo 163 158
Other 197 155
3,914 3,611
Expenses
Wages, salaries and benefits 1,301 1,240
Aircraft fuel 441 378
Commissions to agents 315 320
Depreciation and amortization 252 266
Other operating expenses 1,343 1,291
Total operating expenses 3,652 3,495
Operating Income 262 116
Other Income (Expense) (134) (171)
Earnings (Loss) Before Income Taxes $ 128 $ (55)
Average number of equivalent employees 89,900 89,300
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Results of Operations (continued)
OPERATING STATISTICS
Three Months Ended
March 31,
1996 1995
American Airlines, Inc.
Jet Airline Operations
Revenue passenger miles (millions) 24,632 23,834
Available seat miles (millions) 37,554 37,398
Cargo ton miles (millions) 498 489
Passenger revenue yield per passenger mile 13.34 12.96
(cents)
Passenger revenue per available seat mile 8.75 8.26
(cents)
Cargo revenue yield per ton mile (cents) 32.26 31.99
Operating expenses per available seat mile 8.97 8.67
(cents)
Passenger load factor 65.6% 63.7%
Breakeven load factor 59.8% 60.3%
Fuel consumption (gallons, in millions) 663 666
Fuel price per gallon (cents) 63.9 54.8
Operating aircraft at period-end 632 648
AMR Eagle, Inc.
Revenue passenger miles (millions) 636 496
Available seat miles (millions) 1,137 960
Passenger load factor 56.0% 51.7%
Operating aircraft at period-end 255 267
Operating aircraft at March 31, 1996, included:
Jet Aircraft: Regional Aircraft:
Airbus A300-600R 35 ATR 42 46
Boeing 727-200 68 Super ATR 33
Boeing 757-200 86 Jetstream 32 38
Boeing 767-200 8 Saab 340A 9
Boeing 767-200 Extended 22 Saab 340B 95
Range
Boeing 767-300 Extended 41 Saab 340B Plus 14
Range
Fokker 100 75 Shorts 360 20
McDonnell Douglas DC-10-10 15 Total 255
McDonnell Douglas DC-10-30 4
McDonnell Douglas MD-11 18
McDonnell Douglas MD-80 260
Total 632
89.2% of the jet aircraft fleet is Stage III, a classification of
aircraft meeting noise standards as promulgated by the Federal
Aviation Administration.
Average aircraft age is 8 years for jet aircraft and 4 years for
regional aircraft.
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Results of Operations (continued)
The Airline Group's revenues increased $303 million or 8.4 percent.
American's passenger revenues increased by 6.4 percent, $197
million. American's yield (the average amount one passenger pays to
fly one mile) of 13.34 cents increased by 2.9 percent compared to the
same period in 1995. Domestic yields increased 4.0 percent from
first quarter 1995, while international yields were up 0.6 percent.
American's traffic or revenue passenger miles (RPMs) increased 3.3
percent to 24.6 billion miles for the quarter ended March 31, 1996.
American's capacity or available seat miles (ASMs) increased 0.4
percent to 37.6 billion miles in the first quarter of 1996, primarily
as a result of increases in jet stage length and aircraft
productivity. Jet stage length increased 8.7 percent and aircraft
productivity, as measured by miles flown per aircraft per day,
increased 2.1 percent compared with first quarter 1995. American's
domestic traffic increased 0.9 percent on capacity decreases of 1.9
percent and international traffic grew 9.4 percent on capacity
increases of 6.3 percent. The increase in international traffic was
led by a 13.4 percent increase in traffic to Europe on capacity
growth of 5.1 percent, and a 5.6 percent increase in traffic to Latin
America on capacity growth of 7.2 percent.
Although not quantifiable, some portion of the passenger revenue
increase is attributable to the January 1, 1996 expiration of the ten
percent federal excise tax on airline travel.
AMR Eagle passenger revenues increased 28.4 percent, $59 million, due
principally to an increase in traffic of 28.2 percent to 636 million
RPMs. The increase in traffic was due in large part to the Federal
Aviation Administration's temporary restrictions on the operation of
ATR aircraft during first quarter 1995, which contributed to a
decrease in capacity at that time.
Other revenues increased 27.1 percent, $42 million, primarily due to
contract maintenance work performed by American for other airlines.
The new agreement covering air travel to be signed by American and
The SABRE Group discussed previously, increased other revenues $4
million.
The Airline Group's operating expenses increased 4.5 percent, $157
million. American's Jet Airline cost per ASM increased by 3.5
percent to 8.97 cents. Wages, salaries and benefits rose 4.9
percent, $61 million, due primarily to contractual wage rate and
seniority increases that are built into the Company's labor contracts
and an increase in the provision for profit sharing, partially offset
by a decrease due to the outsourcing of certain services. Aircraft
fuel expense increased 16.7 percent, $63 million, due to a 9.1 cent
increase in American's average price per gallon, which includes the
impact of the October 1995 expiration of the fuel tax exemption for
the airline industry. Other operating expenses, consisting of
maintenance costs, aircraft rentals, other rentals and landing fees,
food service costs, data processing charges, and miscellaneous
operating expenses increased 4.0 percent, $52 million, primarily due
to an increase in outsourced services, costs associated with
increased contract maintenance work performed for other airlines, and
adverse winter weather. Absent the new agreements covering marketing
and technology services to be signed by American and The SABRE Group
discussed previously, other operating expenses would have increased
an additional $11 million.
Other Income (Expense) decreased 21.6 percent or $37 million.
Interest expense decreased $31 million primarily due to scheduled
debt repayments and the retirement of debt prior to scheduled
maturity.
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Results of Operations (continued)
THE SABRE GROUP
FINANCIAL HIGHLIGHTS
(Unaudited) (Dollars in millions)
Three Months Ended
March 31,
1996 1995
Revenues $ 428 $ 385
Expenses
Wages, salaries and benefits 119 103
Depreciation and amortization 43 45
Other operating expenses 150 118
Total operating expenses 312 266
Operating Income 116 119
Other Income (Expense) (1) (9)
Earnings Before Income Taxes $ 115 $ 110
Average number of equivalent employees 7,900 7,300
Revenues
Revenues for The SABRE Group increased 11.2 percent, $43 million,
primarily due to higher booking fee prices and increased volumes.
Absent the new technology services agreement to be signed by American
and The SABRE Group discussed previously, revenues would have
increased an additional $7 million.
Expenses
Wages, salaries and benefits increased 15.5 percent, $16 million, due
primarily to an increase in the average number of equivalent
employees. Other operating expenses increased 27.1 percent, $32
million, due primarily to increased product development costs. The
new agreements covering air travel and certain marketing services to
be signed by American and The SABRE Group discussed previously,
increased other operating expenses $8 million.
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Results of Operations (continued)
MANAGEMENT SERVICES GROUP
FINANCIAL HIGHLIGHTS
(Unaudited) (Dollars in millions)
Three Months Ended
March 31,
1996 1995
Revenues $ 157 $ 143
Expenses
Wages, salaries and benefits 67 62
Other operating expenses 67 64
Total operating expenses 134 126
Operating Income 23 17
Other Income (Expense) (1) -
Earnings Before Income Taxes $ 22 $ 17
Average number of equivalent employees 13,500 12,700
Revenues
Revenues for the Management Services Group increased 9.8 percent, or
$14 million. AMR Services Corporation contributed $12.8 million to
the increase, principally due to increased airline passenger, ramp
and cargo handling services provided by its Airline Services
division.
Expenses
Wages, salaries and benefits increased 8.1 percent, $5 million, due
primarily to an increase in the average number of equivalent
employees.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities in the three month period
ended March 31, 1996, was $325 million, compared to $253 million in
1995. Capital expenditures for the first quarter of 1996 were $107
million. These capital expenditures were financed with internally
generated cash.
On April 19, 1996, the Company announced the call for redemption on
May 20, 1996 of all its outstanding 6 1/8% Convertible Subordinated
Quarterly Income Capital Securities due 2024. This will reduce the
Company's annual cash interest expense by approximately $62 million.
On April 19, 1996, the Company announced the call for redemption on
May 20, 1996 of all its outstanding $500 Series A Cumulative
Convertible Preferred Stock. The redemption price for the Preferred
Stock is $521 per share of Preferred Stock, plus accrued and unpaid
dividends to the redemption date (approximately $83 million if all
the outstanding Preferred Stock is redeemed). Payments made for
shares redeemed will be made with internally generated cash.
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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 thereunto duly authorized.
AMR CORPORATION
Date: June 4, 1996 BY: /s/ Gerard J. Arpey
Gerard J. Arpey
Senior Vice President and
Chief Financial Officer
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5
1,000,000
3-MOS
DEC-31-1996
MAR-31-1996
38
796
1,389
11
606
3,342
20,207
6,880
19,481
4,656
0
77
78
0
3,741
19,481
0
4,308
0
3,907
0
0
146
265
108
157
0
0
0
157
2.02
1.84
