REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMR CORPORATION AMERICAN AIRLINES, INC.
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
75-1825172 13-1502798
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
P.O. BOX 619616
DALLAS/FORT WORTH AIRPORT, TEXAS 75261-9616
(817) 963-1234
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
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GARY F. KENNEDY, ESQ. JOHN T. CURRY, III, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL DEBEVOISE & PLIMPTON
AMR CORPORATION 919 THIRD AVENUE
P.O. BOX 619616 NEW YORK, NEW YORK 10022
DALLAS/FORT WORTH AIRPORT, TEXAS 75261-9616 (212) 909-6000
(817) 963-1234
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENTS FOR SERVICE)
COPY TO:
ROHAN S. WEERASINGHE, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 848-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this registration statement.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
----------------------------------------------------------- --------------- ----------------- - --------------- ----------------
4.25% Senior Convertible Notes due 2023 of AMR Corporation $300,000,000(2) 100% $300,000,000(2) $24,270
Common Stock, par value $1.00 per share, of AMR Corporation 17,283,000(3) (4) (4) (4)
Guarantee of American Airlines, Inc. (5) (5) (5) (5)
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o) under the Securities Act. Exclusive of accrued interest, if
any.
(2) Represents the aggregate principal amount of AMR Corporation's 4.25% Senior
Convertible Notes due 2023.
(3) Represents 17,283,000 shares of AMR Corporation's common stock issuable
upon conversion of the notes at the initial conversion rate of 57.61 shares
of common stock per each $1,000 principal amount of notes. In addition,
pursuant to Rule 416 under the Securities Act, the amount to be registered
includes an indeterminate number of shares of common stock as may be
issued, as a result of the anti-dilution provisions of the notes, from time
to time upon conversion of the notes to prevent dilution resulting from
stock splits, stock dividends, recapitalization or similar events.
(4) Pursuant to Rule 457(i) under the Securities Act, no registration fee is
payable with respect to the shares of common stock issuable upon conversion
of the notes because no additional consideration is payable in connection
with the holder's exercise of the conversion right.
(5) American Airlines, Inc. has guaranteed all payments, including principal
and interest, on the notes being registered hereunder. Pursuant to Rule
457(n) under the Securities Act, no registration fee is required with
respect to this guarantee.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 24, 2003
PROSPECTUS
$300,000,000
AMR CORPORATION
4.25% Senior Convertible Notes due 2023
Guaranteed by
American Airlines, Inc.
Common Stock Issuable Upon Conversion of
the 4.25% Senior Convertible Notes due 2023
AMR Corporation issued $300,000,000 principal amount of its Senior
Convertible Notes due 2023 in a private placement in September 2003. This
prospectus will be used by selling securityholders to resell their notes and the
common stock issuable upon conversion of the notes. We will not receive any of
the proceeds from the sale of these securities.
The notes and the shares of common stock issuable upon conversion of
the notes may be sold from time to time by and for the account of the selling
securityholders named in this prospectus or in supplements to this prospectus.
The selling securityholders may sell all or a portion of the notes or the shares
of common stock issuable upon conversion of the notes from time to time in
market transactions, in negotiated transactions or otherwise, and at prices and
on terms which will be determined by the then prevailing market price for the
notes or shares of common stock or at negotiated prices directly or through a
broker or brokers, who may act as agent or as principal, or by a combination of
such methods of sale. See "Plan of Distribution" on page 47 for additional
information on the methods of sale.
Interest on the notes at the rate of 4.25% per year is payable
semiannually in arrears on March 23 and September 23 of each year, beginning
March 23, 2004. The notes will mature on September 23, 2023. The notes are
unsecured senior obligations and rank equal in right of payment with our
existing and future unsecured and unsubordinated indebtedness. Our wholly-owned
subsidiary, American Airlines, Inc., is guaranteeing the notes on an unsecured
senior basis. The guarantee ranks equal in right of payment with all existing
and future unsecured and unsubordinated indebtedness of American Airlines, Inc.
Holders may convert each $1,000 principal amount of notes into 57.61
shares of our common stock, subject to adjustment, only if (1) the closing sale
price of our common stock reaches, or the trading price of the notes falls
below, specified thresholds, (2) the notes are called for redemption, or (3)
specified corporate transactions have occurred. Upon conversion, we will have
the right to deliver, in lieu of our common stock, cash or a combination of cash
and common stock in an amount described in this prospectus. Our common stock
currently trades on the New York Stock Exchange under the symbol "AMR." On
October 23, 2003 the last reported sale price of our common stock on the New
York Stock Exchange was $13.25 per share.
Holders may require us to purchase all or a portion of their notes on
each of September 23, 2008, 2013 and 2018 at a price equal to 100% of the
principal amount of the notes being purchased plus, in each case, accrued and
unpaid interest, if any, to the date of purchase. In addition, if a change in
control occurs, each holder may require us to purchase all or a portion of such
holder's notes at a price equal to 100% of the principal amount of the notes
being purchased plus accrued and unpaid interest, if any, to the date of
purchase. In either event, we may choose to pay the purchase price of such notes
in cash or common stock or a combination of cash and common stock.
We may redeem for cash all or a portion of the notes at any time on or
after September 23, 2008, at a price equal to 100% of the principal amount of
the notes being redeemed plus accrued and unpaid interest, if any, to the
redemption date.
INVESTING IN THE NOTES OR SHARES OF COMMON STOCK INVOLVES RISKS. SEE
"RISK FACTORS" BEGINNING ON PAGE 7.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2003
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
AND THOSE DOCUMENTS INCORPORATED BY REFERENCE HEREIN. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH
DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO PURCHASE, THE SECURITIES OFFERED BY THIS PROSPECTUS IN ANY JURISDICTION TO OR
FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION OF AN OFFER IN SUCH JURISDICTION. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY DOCUMENT INCORPORATED BY
REFERENCE IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT COVER OF
THE APPLICABLE DOCUMENT. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES PURSUANT TO THIS PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH OR INCORPORATED INTO THIS PROSPECTUS BY REFERENCE OR IN
OUR AFFAIRS SINCE THE DATE OF THIS PROSPECTUS. OUR BUSINESS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
TABLE OF CONTENTS
PAGE
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About This Prospectus ................................... i
Where You Can Find More Information ..................... ii
Special Note Regarding Forward-Looking Statements ....... iii
Summary ................................................. 1
Risk Factors ............................................ 7
Use of Proceeds ......................................... 14
Price Range of Our Common Stock ......................... 15
Dividend Policy ......................................... 15
Ratios of Earnings to Fixed Charges ..................... 16
Description of the Notes ................................ 17
Description of Our Capital Stock ........................ 36
Certain United States Federal Income Tax Considerations.. 38
Certain ERISA Considerations ............................ 44
Selling Securityholders ................................. 45
Plan of Distribution .................................... 47
Legal Opinion ........................................... 49
Experts ................................................. 49
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we
and our subsidiary, American Airlines, Inc., filed jointly with the Securities
and Exchange Commission (the "SEC") using a "shelf" registration or continuous
offering process. Under this shelf process, selling securityholders may from
time to time sell the securities described in this prospectus in one or more
offerings.
This prospectus provides you with a general description of the
securities that the selling securityholders may offer. Each time a selling
securityholder sells securities, the selling securityholders are required to
provide you with a prospectus and/or a prospectus supplement containing specific
information about the selling securityholder and the terms of the securities
being offered. A prospectus supplement may include other special considerations
applicable to those securities. The prospectus supplement may also add, update
or change information in this prospectus. If there is any inconsistency between
the information in this prospectus and any prospectus supplement, you should
rely on the information in that prospectus supplement. You should read carefully
both this prospectus
i
and any prospectus supplement together with the additional information described
under the heading "Where You Can Find More Information."
The registration statement containing this prospectus, including the
exhibits to the registration statement, provides additional information about us
and the securities offered under this prospectus. The registration statement,
including the exhibits, can be read on the SEC web site or at the SEC offices
mentioned under the heading "Where You Can Find More Information."
References in this prospectus to "AMR," the "Company," "we," "us" and
"our" refer to AMR Corporation together with its subsidiaries, unless otherwise
specified.
WHERE YOU CAN FIND MORE INFORMATION
We and American Airlines, Inc. file annual, quarterly and special
reports, proxy statements (in the case of AMR Corporation only) and other
information with the SEC. This information may be read and copied at the Public
Reference Room of the SEC at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. Information regarding the operation of the Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Our SEC
filings also are available from the SEC's Internet site at http://www.sec.gov,
which contains reports, proxy and information statements, and other information
regarding issuers that file electronically.
We "incorporate by reference" in this prospectus certain documents that
we and American Airlines, Inc. file with the SEC, which means:
- we can disclose important information to you by referring you to
those documents;
- information incorporated by reference is considered to be part of
this prospectus, even though it is not repeated in this
prospectus; and
- information that we and American Airlines, Inc. file later with
the SEC will automatically update and supersede this prospectus.
We incorporate by reference the documents listed below and all
documents that AMR or American Airlines, Inc. files with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") after the date of this prospectus and prior to the
termination of this offering, other than current reports (or portions thereof)
furnished under Items 9 or 12 of Form 8-K:
- Annual Reports of AMR and of American Airlines, Inc. on Form 10-K
for the year ended December 31, 2002;
- Quarterly Reports of AMR and American Airlines, Inc. on Form 10-Q
for the quarters ended March 31, 2003, June 30, 2003 and
September 30, 2003;
- Current Reports of AMR on Form 8-K filed on January 22, 2003,
April 1, 2003 (two Reports filed on this date), April 17, 2003
(Report with respect to labor matters), April 23, 2003, April 25,
2003, May 2, 2003, June 11, 2003, June 25, 2003, July 3, 2003
(8-K/A), July 16, 2003, August 1, 2003, September 18, 2003 and
October 22, 2003; and
- Current Reports of American Airlines, Inc. on Form 8-K filed on
January 22, 2003, April 1, 2003 (two Reports filed on this date),
April 17, 2003, April 23, 2003, April 25, 2003, June 12, 2003,
June 25, 2003, July 3, 2003 (8-K/A), July 16, 2003, August 1,
2003 and October 22, 2003.
ii
You may obtain a copy of these filings (other than their exhibits,
unless those exhibits are specifically incorporated by reference in the filings)
at no cost by writing or telephoning us at the following address:
Corporate Secretary
AMR Corporation
P.O. Box 619616, Mail Drop 5675
Dallas/Fort Worth Airport, Texas 75261-9616
(817) 967-1254
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain
various "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the
Exchange Act, which represent our expectations or beliefs concerning future
events. When used in this prospectus and in documents incorporated herein by
reference, the words "believes," "expects," "plans," "anticipates," and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements include, without limitation, our
expectations concerning operations and financial conditions, including changes
in capacity, revenues, and costs, expectations as to future financing needs,
overall economic conditions and plans and objectives for future operations, the
impact on us of the events of September 11, 2001 and of our results of
operations for the past two years and the sufficiency of our financial resources
to absorb that impact. Other forward-looking statements include statements which
do not relate solely to historical facts, such as, without limitation,
statements which discuss the possible future effects of current known trends or
uncertainties, or which indicate that the future effects of known trends or
uncertainties cannot be predicted, guaranteed, or assured.
All forward-looking statements in this prospectus and the documents
incorporated by reference are based upon information available to us on the date
of this prospectus or such document. We undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result of new
information, future events, or otherwise. Forward-looking statements are subject
to a number of factors that could cause actual results to differ materially from
our expectations.
The following factors, in addition to other possible factors not
listed, could cause our actual results to differ materially from those expressed
in forward-looking statements: the uncertain financial and business environment
we face, the struggling economy, high fuel prices and the availability of fuel,
the residual effects of the war in Iraq, conflicts in the Middle East,
historically low fare levels and the general competitive environment, our
ability to implement our restructuring program and the effect of the program on
our operational performance and service levels, uncertainties with respect to
our international operations, changes in our business strategy, actions by U.S.
or foreign government agencies, the possible occurrence of additional terrorist
attacks, another outbreak of SARS, our or American Airlines, Inc.'s inability to
satisfy existing liquidity requirements or other covenants in certain of our or
American Airlines, Inc.'s credit agreements, and the availability of future
financing.
Additional information concerning these and other factors is contained
in our and American Airlines, Inc.'s SEC filings, including but not limited to
our and American Airlines, Inc.'s Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2003, June 30, 2003 and September 30, 2003 and our and
American Airlines, Inc.'s Annual Reports on Form 10-K for the year ended
December 31, 2002.
iii
SUMMARY
This summary contains basic information about us and this offering.
Because it is a summary, it does not contain all of the information that you
should consider before investing. You should read this entire prospectus
carefully, including the section entitled "Risk Factors" and the documents
incorporated by reference in this prospectus, including any incorporated after
the date of this prospectus, before making an investment decision.
AMR CORPORATION
AMR Corporation was incorporated in October 1982. AMR's operations fall
almost entirely in the airline industry. AMR's principal subsidiary, American
Airlines, Inc., was founded in 1934. On April 9, 2001, American Airlines, Inc.
(through a wholly owned subsidiary, TWA Airlines LLC ("TWA LLC")) purchased
substantially all of the assets and assumed certain liabilities of Trans World
Airlines, Inc. ("TWA"), the eighth largest U.S. carrier. American Airlines,
Inc., including TWA LLC (collectively, "American"), is the largest scheduled
passenger airline in the world. At the end of 2002, American provided scheduled
jet service to more than 152 destinations throughout North America, the
Caribbean, Latin America, Europe and the Pacific. American is also one of the
largest scheduled air freight carriers in the world, providing a wide range of
freight and mail services to shippers throughout its system.
In addition, AMR Eagle Holding Corporation, a wholly-owned subsidiary
of AMR, owns two regional airlines which do business as "American Eagle" --
American Eagle Airlines, Inc. and Executive Airlines, Inc. (collectively the
"American Eagle Carriers"). In addition, American contracts with two
independently owned regional airlines which do business as the
"AmericanConnection" (the "AmericanConnection Carriers"). The American Eagle
Carriers and the AmericanConnection Carriers provide connecting service from
eight of American's high-traffic cities to smaller markets throughout the United
States, Canada, the Bahamas and the Caribbean.
AMR Investment Services, Inc., a wholly-owned subsidiary of AMR ("AMR
Investment"), is responsible for the investment and oversight of the assets of
AMR's defined benefit and defined contribution plans, as well as its short-term
investments.
The postal address for AMR's and American's principal executive offices
is P.O. Box 619616, Dallas/Fort Worth Airport, Texas 75261-9616 (Telephone:
817-963-1234). Our Internet address is http://www.amrcorp.com. Information on
our website is not incorporated into this prospectus and is not a part of this
prospectus.
1
THE NOTES
This prospectus relates to resales of $300,000,000 aggregate principal
amount of the notes and 17,283,000 shares of our common stock issuable upon
conversion of the notes at the initial conversion rate, plus an indeterminate
number of additional shares of common stock that may be issued from time to time
upon conversion of the notes as a result of antidilution adjustments, in
circumstances described in this prospectus.
The following is a brief summary of the terms of the notes. For a more
complete description of the notes, see "Description of the Notes" in this
prospectus.
Issuer................... AMR Corporation.
Notes offered............ $300,000,000 aggregate principal amount of 4.25%
Senior Convertible Notes due 2023.
Maturity................. September 23, 2023.
Interest................. 4.25% per year, payable semiannually in arrears on
March 23 and September 23 of each year, beginning
March 23, 2004. The amount of interest payable is
calculated using a 360-day year comprised of twelve
30-day months.
Guarantee................ The notes are unconditionally guaranteed by American
Airlines, Inc.
Ranking.................. The notes are our unsecured senior obligations and
rank equal in right of payment with all of our other
existing and future unsecured and unsubordinated
indebtedness.
The American Airlines, Inc. guarantee is an unsecured
senior obligation of American Airlines, Inc. and
ranks equal in right of payment with all existing and
future unsecured and unsubordinated indebtedness of
American Airlines, Inc. The notes and the guarantee
are effectively subordinated to all existing and
future secured debt of AMR Corporation and American
Airlines, Inc., respectively, to the extent of the
security for such secured debt.
As of September 30, 2003, there was approximately
$13.9 billion of long-term debt (including current
maturities) and obligations under capital leases
(including current obligations) of AMR Corporation,
American Airlines, Inc. and their consolidated
subsidiaries. As of September 30, 2003, $10.5 billion
of the long-term debt (including current maturities)
of AMR Corporation, American Airlines, Inc. and their
consolidated subsidiaries was secured. Since
September 30, 2003, AMR Corporation, American
Airlines, Inc. and their consolidated subsidiaries
have incurred additional indebtedness. AMR
Corporation, American Airlines, Inc. and their
respective subsidiaries may incur substantial
additional debt, including secured
2
debt, in the future.
In addition, the notes and the guarantee are
"structurally subordinated" to all existing and
future liabilities (including debt and trade
payables) of the existing and future subsidiaries of
AMR Corporation (other than American Airlines, Inc.)
and American Airlines, Inc., respectively.
Conversion rights........ For each $1,000 principal amount of notes surrendered
for conversion, if the conditions for conversion are
satisfied, a holder will receive 57.61 shares of our
common stock, subject to adjustment. In lieu of
delivering shares of our common stock upon conversion
of all or any portion of our notes, we may elect to
pay holders surrendering notes cash or a combination
of cash and shares of our common stock for the notes
surrendered. If we elect to pay holders cash for
their notes, the payment will be based on the average
closing sale price of our common stock for the five
consecutive trading days immediately following
either:
- the date of our notice of our election to
deliver cash, which we must give within two
business days after receiving a conversion
notice, unless we have earlier given notice of
redemption as described in this prospectus; or
- the conversion date, if we have given notice of
redemption specifying that we intend to deliver
cash upon conversion thereafter.
The conversion rate may be adjusted for certain
reasons, but will not be adjusted for accrued and
unpaid interest. Upon conversion, a holder will not
receive any payment representing any accrued and
unpaid interest. Instead, accrued and unpaid interest
will be deemed paid by the shares of common stock
received by the holder on conversion.
Holders may surrender notes for conversion into our
shares of common stock in any calendar quarter
commencing after September 30, 2003 if the closing
sale price of our common stock for at least 20
trading days in a period of 30 consecutive trading
days ending on the last trading day of the preceding
calendar quarter is more than 120% of the conversion
price per share of common stock on the last trading
day of such preceding calendar quarter. If the
foregoing condition is satisfied, then the notes will
be convertible at any time thereafter at the option
of the holder, through maturity. The conversion price
per share as of any day will equal $1,000 divided by
the conversion rate (initially 57.61, but subject to
the adjustments described herein, including any
adjustments
3
to the conversion rate through that day).
Holders may also surrender notes for conversion
during the five business day period after any five
consecutive trading day period in which the trading
price per $1,000 principal amount of notes for each
day of that trading day period was less than 98% of
the product of the closing sale price for our common
stock and the number of shares of common stock
issuable upon conversion of $1,000 principal amount
of notes; if on the date of any such conversion, the
closing sale price of our common stock is greater
than the conversion price, then holders will receive,
in lieu of common stock based on the conversion
price, cash or common stock or a combination of cash
and common stock, at our option, with a value equal
to the principal amount of such notes, plus accrued
and unpaid interest, if any, as of the conversion
date. See "Description of the Notes -- Conversion
Rights."
Notes or portions of notes in integral multiples of
$1,000 principal amount called for redemption may be
surrendered for conversion until the close of
business on the second business day prior to the
redemption date. In addition, if we make certain
distributions to our stockholders, or if we are a
party to certain consolidations, mergers or binding
share exchanges, in addition to any adjustment to the
conversion rate as a result of such distribution,
consolidation, merger or exchange, notes may be
surrendered for conversion, as provided in
"Description of the Notes -- Conversion Rights." The
ability to surrender notes for conversion will expire
at the close of business on September 17, 2023.
Redemption of notes at We may redeem for cash all or a portion of the notes
our option............... at any time on or after September 23, 2008, at
redemption prices equal to 100% of the principal
amount of the notes being redeemed plus accrued and
unpaid interest, if any, to the applicable redemption
date. See "Description of the Notes -- Redemption of
Notes at Our Option."
Purchase of the notes by Holders may require us to purchase all or a portion
AMR at option of the of their notes on each of September 23, 2008, 2013
holder................... and 2018 at a price equal to 100% of the principal
amount of notes being purchased, plus, in each case,
accrued and unpaid interest, if any, to the purchase
date.
We may, at our option, choose to pay the purchase
price in cash or shares of our common stock or in a
combination of cash and shares of our common stock.
See "Description of the Notes -- Purchase of Notes by
AMR at the Option of the Holder."
4
Change in control........ Upon a change in control of AMR or American Airlines,
Inc., holders may require us to purchase all or a
portion of their notes at a price equal to 100% of
the principal amount of the notes being purchased
plus accrued and unpaid interest, if any, to the date
of purchase. See "Description of the Notes -- Change
in Control Permits Purchase of Notes by AMR at the
Option of the Holder" for a description of the events
that would constitute such a "change in control." We
may at our option choose to pay the purchase price
for any such notes in cash or shares of common stock
or any combination thereof.
DTC eligibility.......... The notes were issued in fully registered book-entry
form and are represented by one or more permanent
global notes without coupons. Global notes are
deposited with a custodian for and registered in the
name of a nominee of DTC. Beneficial interests in
global notes are shown on, and transfers thereof are
effected only through, records maintained by DTC and
its direct and indirect participants, and your
interest in any global note may not be exchanged for
certificated notes, except in limited circumstances
described herein. See "Description of the Notes --
Book-Entry System."
Registration rights...... We and American Airlines, Inc., for the benefit of
holders, have agreed to file with the SEC within 90
days after the date of the original issuance of the
notes, a shelf registration statement, of which this
prospectus is a part, covering resales of the notes
and the shares of our common stock issuable upon
conversion of the notes. We have agreed to use our
reasonable efforts to cause the shelf registration
statement to become effective within 180 days after
the original issuance and keep such shelf
registration statement effective until the earlier of
(i) the sale pursuant to the shelf registration
statement of all the notes and the shares of common
stock issuable upon conversion of the notes, and (ii)
the expiration of the holding period applicable to
such securities held by non-affiliates of AMR under
Rule 144(k) under the Securities Act, or any
successor provision, subject to certain permitted
exceptions. See "Description of the Notes --
Registration Rights."
Sinking fund............. None.
Trading.................. We do not intend to list the notes on any national
securities exchange. The notes are currently eligible
for trading on the Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") system
of the National Association of Securities Dealers,
Inc.; however, notes sold using this prospectus will
no longer be eligible for trading on PORTAL. The
notes are securities for which there is currently no
public market.
Common Stock............. Our common stock is traded on the New York Stock
Exchange under the symbol "AMR."
5
Use of proceeds.......... The selling securityholders will receive all of the
proceeds from the sale of the notes and the common
stock issuable upon conversion of the notes offered
by this prospectus. We will not receive any proceeds.
For more information, see "Use of Proceeds."
6
RISK FACTORS
In considering whether to purchase the notes, you should carefully
consider all the information we have included or incorporated by reference in
this prospectus, including but not limited to, our and American's reports on
Form 10-K for the year ended December 31, 2002 and our and American's reports on
Form 10-Q for the quarters ended March 31, 2003, June 30, 2003 and September 30,
2003. In addition, you should carefully consider the risk factors described
below, along with any risk factors that may be included in a supplement to this
prospectus or in our future reports to the SEC.
RISK FACTORS RELATING TO AMR AND AMERICAN
As used in these Risk Factors Relating to AMR and American, the word
"American" refers only to American Airlines, Inc., and does not include any
current or future subsidiary of American Airlines, Inc.
WE HAVE INCURRED SIGNIFICANT LOSSES.
We incurred operating losses of approximately $617 million in the first
nine months of 2003, $3.3 billion in 2002 and $2.5 billion in 2001. We incurred
net losses of approximately $1.1 billion in the first nine months of 2003, $3.5
billion in 2002 and $1.8 billion in 2001. Our 2003 results include the benefit
of $358 million in security costs reimbursements we received in May under the
Emergency Wartime Supplemental Appropriations Act, 2003.
In addition to the residual effects of the September 11, 2001 terrorist
attacks, the war in Iraq and concerns about another outbreak of SARS, our
revenues continue to be negatively impacted by the economic slowdown (seen
largely in decreased business travel), reduced fares and increased competition.
We need to see a combination of continued improvement in the revenue
environment, cost reductions and productivity improvements before we can return
to sustained profitability at acceptable levels.
WE NEED TO RAISE ADDITIONAL FUNDS TO MAINTAIN SUFFICIENT LIQUIDITY.
Our recent losses, coupled with capital expenditures, have
significantly reduced our liquidity at a time when the savings from our cost
reduction program are phasing in, our revenues are depressed relative to
historical levels and our access to the capital markets is more limited than in
the past. Moreover, we will need additional liquidity because we have
significant debt obligations maturing in the next several years, including $154
million in the fourth quarter of 2003, $594 million in 2004, $1.4 billion in
2005 (including $834 million drawn under American's bank credit facility), $1.2
billion in 2006 and $1.1 billion in 2007, as well as substantial, and
increasing, pension funding obligations. Our 2003 minimum required contributions
to our defined benefit pension plans were approximately $186 million (all of
which had been contributed by September 15, 2003) and our estimated 2004 minimum
required contributions to our defined benefit pension plans are between $550 and
$650 million. In addition, in 2003, we have contributed $145 million to our
defined contribution pension plans. Due to uncertainties regarding significant
assumptions involved in estimating future required contributions, such as
pension plan benefit levels, interest rate levels and the amount and timing of
asset returns, we are not able to reasonably estimate the amount of future
required contributions to our defined benefit contribution plans beyond 2004.
However, based on the current regulatory environment and market conditions, we
expect our 2005 minimum required pension contributions to our defined benefit
pension plans to significantly exceed our 2004 minimum required contributions.
To maintain sufficient liquidity as our cost savings phase in and we
implement our plan to return to sustained profitability, we will need continued
access to additional funding, most likely through a combination of financings
(such as that resulted from issuance of the notes) and asset sales. We cannot be
sure that our recent unit revenue improvements will continue or that we will be
able to raise such financing or effect such sales on acceptable terms. In
particular, if our revenue environment deteriorates beyond normal seasonal
trends, or we are unable to access the capital markets or sell assets, we may be
unable to fund our obligations and sustain our operations.
In addition, a covenant in American's $834 million bank credit facility
(which is fully drawn) requires American to maintain at all times at least $1
billion of available unrestricted cash and short-term investments. While at
September 30, 2003, we had $2.7 billion of available cash and short-term
investments (and an additional $540
7
million of restricted cash and short-term investments), we cannot be sure that
we will continue to satisfy this liquidity covenant until the amounts
outstanding under the bank credit facility are repaid. Failure to do so would
result in a default under our bank credit facility and a significant amount of
our other debt.
LINGERING EFFECTS OF TERRORIST ATTACKS, WAR IN IRAQ, WEAK U.S. ECONOMY AND SARS
CONCERNS HAVE DEPRESSED DEMAND FOR AIR TRAVEL, PARTICULARLY BUSINESS TRAVEL.
A combination of factors has depressed the demand for air travel and,
in particular, business travel. Because we have in recent years tailored our
network, product, schedule and pricing strategies to the business travel market,
reduced demand for business travel has affected us more than most other
carriers. These factors include the lingering effects of the September 11, 2001
terrorist attacks, the war in Iraq, the weak U.S. economy and, to a lesser
extent, concerns about another outbreak of SARS. The terrorist attacks of
September 11, 2001 accelerated and exacerbated an existing trend of decreased
demand and reduced industry revenues. Additional terrorist attacks, even if not
directed at the airline industry, the fear of such attacks (which could escalate
at times of international crises or U.S. military involvement in overseas
hostilities), or continuing weakness in the U.S. and global economy or other
events that affect travel, particularly business travel, could have a material
adverse impact on our business, financial condition and results of operations,
and on the airline industry in general.
OUR REDUCED PRICING POWER ADVERSELY AFFECTS OUR ABILITY TO ACHIEVE ADEQUATE
PRICING, ESPECIALLY WITH RESPECT TO BUSINESS TRAVEL.
We have reduced pricing power, resulting mainly from greater cost
sensitivity on the part of travelers, especially business travelers, and
increasing competition from low cost carriers. The percentage of our routes on
which we compete with carriers having substantially lower operating costs has
grown significantly over the past decade. We now compete with low cost carriers
on most of our domestic network. At the same time, the continuous increase in
pricing transparency resulting from the use of the Internet has enabled cost
conscious customers to more easily obtain the lowest fare on any given route.
WE COMPETE WITH CARRIERS NOW OR RECENTLY IN BANKRUPTCY, WHICH MAY BE A
COMPETITIVE DISADVANTAGE.
We must compete with carriers that have recently reorganized or are
reorganizing under the protection of Chapter 11 of the Bankruptcy Code,
including United Airlines, the second largest air carrier. It is possible that
our other competitors may seek to reorganize in or out of Chapter 11. Successful
completion of such reorganizations could present us with competitors with
operating costs derived from renegotiated labor, supply, and financing contracts
that may be below our reduced cost structure. In addition, in the past, air
carriers involved in reorganizations have often undertaken substantial fare
discounting to maintain cash flows and to enhance customer loyalty. Fare sales
(including fare sales initiated by carriers in reorganization) have been
significant and widespread and have further lowered yields for all carriers,
including us. These competitive pressures may limit our ability to adequately
price our services and could have a material adverse impact on our business,
financial condition and results of operations.
OUR CREDIT RATINGS ARE BELOW INVESTMENT GRADE AND OUR ACCESS TO THE CAPITAL
MARKETS IS MORE LIMITED AND ON LESS FAVORABLE TERMS THAN IN THE PAST.
Since the September 11, 2001 terrorist attacks, AMR's senior unsecured
rating has been lowered by Moody's from Baa3 to Caa2, and AMR's senior unsecured
credit rating has been lowered by Standard & Poor's from BBB- to CCC (recently
increased from CC). The ratings on American's debt have also been lowered. These
reductions have increased our borrowing costs and limited the borrowing options
available to us. Additional significant reductions in AMR's or American's credit
ratings would further increase borrowing or other costs and further restrict the
availability of future financing. Moody's has given AMR and American a negative
ratings outlook, while Standard & Poor's has given us a stable outlook.
Our ability to obtain future financing or to sell assets may also be
adversely affected because we have fewer unencumbered assets available to us
than in years past. In recent years, we have encumbered a large portion of our
aircraft assets (including virtually all of our aircraft eligible for the
benefits of Section 1110 of the
8
Bankruptcy Code). While we have other unencumbered assets that could be
encumbered or sold, our ability to borrow on or sell those assets on acceptable
terms is uncertain, and in any event those assets may not maintain their current
market value.
WE ARE BEING ADVERSELY AFFECTED BY INCREASES IN FUEL PRICES.
Our operations are significantly affected by the price and availability
of jet fuel. During the first nine months of 2003, our aircraft fuel expense
increased 10.5%, or $197 million, compared to the first nine months of 2002, due
primarily to a 18.3% increase in American's average price per gallon of fuel.
Due to the competitive nature of the airline industry, our ability to pass on
increased fuel prices to our customers by increasing fares is uncertain.
Likewise, any potential benefit of lower fuel prices may be offset by increased
fare competition and lower revenues for all air carriers.
As of September 30, 2003, we had hedged approximately 28% of our
expected fuel needs for the remainder of 2003, approximately 20% of our expected
first quarter 2004 fuel needs, and an insignificant percentage of our expected
fuel needs beyond March 31, 2004. Beginning in March 2003, we revised our
hedging strategy and, in June 2003, terminated substantially all of our
contracts with maturities beyond March 2004. Commencing in October 2003, the
Company began to enter into new fuel hedging contracts with maturities beyond
March 2004 for a portion of its future fuel requirements.
While we do not currently anticipate a significant reduction in fuel
availability, dependency on foreign imports of crude oil and the possibility of
changes in government policy on jet fuel production, transportation and
marketing make it impossible to predict the future availability of jet fuel. If
there are new outbreaks of hostilities or other conflicts in oil producing areas
or elsewhere, there could be reductions in the production and/or importation of
crude oil and/or significant increases in the cost of fuel. If there were major
reductions in the availability of jet fuel or significant increases in its cost,
our business, as well as that of the entire industry, would be adversely
affected.
OUR INSURANCE COSTS HAVE INCREASED SUBSTANTIALLY AND FURTHER INCREASES IN
INSURANCE COSTS OR REDUCTIONS IN COVERAGE COULD HAVE A MATERIAL ADVERSE IMPACT
ON US.
We carry insurance for public liability, passenger liability, property
damage and all-risk coverage for damage to our aircraft. As a result of the
September 11, 2001 terrorist attacks, aviation insurers have significantly
reduced the amount of insurance coverage available to commercial air carriers
for liability to persons other than employees or passengers for claims resulting
from acts of terrorism, war or similar events (war-risk coverage). At the same
time, they have significantly increased the premiums for such coverage as well
as for aviation insurance in general. The U.S. government has provided
commercial war-risk insurance for U.S. based airlines until December 10, 2003,
covering losses to crew members, passengers, third parties and aircraft. We
believe this insurance coverage will be extended beyond December 10, 2003
because the Emergency Wartime Supplemental Appropriations Act, 2003 provides for
the insurance to remain in place until August 31, 2004, and the Department of
Transportation has stated its intent to do so. In addition, the Secretary of
Transportation may extend the policy until December 31, 2004, at his discretion.
However, there is no assurance that it will be extended. In the event the U.S.
government sponsored insurance is not so extended or the commercial insurance
carriers further reduce the amount of insurance coverage available to us or
significantly increase the cost of aviation insurance, our business, financial
condition and results of operations would be materially adversely affected.
OUR INDEBTEDNESS AND OTHER OBLIGATIONS ARE SUBSTANTIAL AND COULD AFFECT OUR
BUSINESS.
We have now and will continue to have a significant amount of
indebtedness. As of September 30, 2003, we had approximately $13.9 billion of
long-term debt (including current maturities) and obligations under capital
leases (including current obligations). AMR, American and their respective
subsidiaries may incur substantial additional debt, including secured debt, in
the future. Our substantial indebtedness could have important consequences. For
example, it could:
- limit our ability to obtain additional financing for working
capital, capital expenditures, acquisitions and general corporate
purposes;
9
- require us to dedicate a substantial portion of our cash flow
from operations to payments on our indebtedness, thereby reducing
the funds available to us for other purposes;
- make us more vulnerable to economic downturns, limit our ability
to withstand competitive pressures and reduce our flexibility in
responding to changing business and economic conditions; and
- limit our flexibility in planning for, or reacting to, changes in
our business and the industry in which we operate.
Any of the foregoing could adversely affect our business and our
ability to service our debt, including the notes.
THE AIRLINE INDUSTRY IS FIERCELY COMPETITIVE.
On most of our domestic non-stop routes, we face competing service from
at least one, and sometimes more than one, domestic airline, including: AirTran,
Alaska Airlines, America West Airlines, Continental Airlines, Delta, JetBlue,
Northwest Airlines, Southwest Airlines, United Airlines and US Airways, and
their affiliated regional carriers. We face even greater competition between
cities that require a connection, where all major airlines may compete via their
respective hubs. We also compete with national, regional, all-cargo and charter
carriers and, particularly on shorter routes, ground transportation, as well as
with foreign airlines and numerous U.S. carriers on our international routes. On
all of our routes, pricing decisions are affected, in large part, by competition
from other airlines. On most of our domestic network, we compete with airlines
that have cost structures significantly lower than ours and can therefore
operate profitably at lower fare levels.
We also encounter substantial price competition. Historically, fare
discounting by competitors has affected our financial results negatively because
we are generally required to match competitors' fares to maintain passenger
traffic. During recent years, a number of new low cost carriers have entered the
domestic market, and several major airlines have implemented efforts to lower
their cost structures.
OUR BUSINESS IS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION.
Airlines are subject to extensive regulatory requirements that result
in significant costs. For example, the Federal Aviation Administration from time
to time issues directives and other regulations relating to the maintenance and
operation of aircraft, and compliance with those requirements drives significant
expenditures. These requirements cover, among other things, modifications to
improve cockpit security, enhanced ground proximity warning systems, McDonnell
Douglas MD-80 metal-mylar insulation replacement, McDonnell Douglas MD-80 main
landing gear piston improvements, Boeing 757 and Boeing 767 pylon improvements,
Boeing 737 elevator and rudder improvements, inspections to monitor Airbus A300
vertical stabilizers and Airbus A300 structural improvements. We expect to
continue incurring expenses to comply with these requirements and other FAA
regulations.
Additional laws, regulations, taxes and airport rates and charges have
been proposed from time to time that could significantly increase the cost of
airline operations or reduce revenues. For example, the Aviation and
Transportation Security Act, which became law in November 2001, mandates the
federalization of certain airport security procedures and imposes additional
security requirements on airlines. In addition, the ability of U.S. carriers to
operate international routes is subject to change because the applicable
arrangements between the United States and foreign governments may be amended
from time to time, or because appropriate slots or facilities are not made
available. We cannot provide assurance that laws or regulations enacted in the
future will not adversely affect us.
10
RISK FACTORS RELATED TO THE NOTES
As used in the description of these Risk Factors Related to the Notes,
the words "AMR" and "American" refer only to AMR Corporation and American
Airlines, Inc., respectively, and do not include any current or future
subsidiary of either corporation.
THE NOTES ARE UNSECURED, ARE EFFECTIVELY SUBORDINATED TO AMR'S AND AMERICAN'S
SECURED INDEBTEDNESS, AND ARE STRUCTURALLY SUBORDINATED TO OBLIGATIONS OF AMR'S
AND AMERICAN'S SUBSIDIARIES.
The notes and the American guarantee represent unsecured senior
obligations and rank equal in right of payment with all the existing and future
unsecured and unsubordinated indebtedness of AMR and American, respectively.
However, the notes and the American guarantee are effectively subordinated to
all existing and future secured debt of AMR and American, respectively, to the
extent of the security for such secured debt. As of September 30, 2003, there
was approximately $13.9 billion of long-term debt (including current maturities)
and obligations under capital leases (including current obligations) of AMR,
American and their consolidated subsidiaries. As of September 30, 2003, $10.5
billion of the long-term debt (including current maturities) of AMR, American
and their consolidated subsidiaries was secured. Since September 30, 2003, AMR,
American and their consolidated subsidiaries have incurred additional
indebtedness. AMR, American and their respective subsidiaries may incur
substantial additional debt, including secured debt, in the future. In the event
of any distribution or payment of assets in any foreclosure, dissolution,
winding-up, liquidation, reorganization, or other bankruptcy proceeding
involving AMR or American, holders of secured indebtedness will have a prior
claim to those assets that constitute their collateral. Holders of the notes
will participate ratably with all holders of our unsecured indebtedness that is
deemed to be of the same class as the notes, and potentially with all of our
other general creditors, based upon the respective amounts owed to each holder
or creditor, in our remaining assets. In any of the foregoing events, there
would likely not be sufficient assets to pay the full amounts due on the notes
and, if so, holders of notes would receive less, ratably, than holders of
secured indebtedness.
In addition, the notes and the American guarantee are "structurally
subordinated" to all existing and future liabilities (including debt and trade
payables) of the existing and future subsidiaries of AMR (other than American)
and American, respectively. Such subordination occurs because, as a general
matter, claims of creditors of a subsidiary which is not a guarantor of parent
company debt, including trade creditors, will have priority with respect to the
assets and earnings of the subsidiary over the claims of creditors of its parent
company.
Moreover, if we fail to deliver our common stock upon conversion of a
note and thereafter become the subject of bankruptcy proceedings, a holder's
claim for damages arising from such failure could be subordinated to all of our
and our subsidiaries' existing and future obligations.
WE ARE DEPENDENT ON OUR SUBSIDIARIES BECAUSE OF OUR HOLDING COMPANY STRUCTURE.
AMR conducts all of its business through its wholly owned operating
subsidiaries, including American. AMR does not maintain a borrowing facility and
is dependent on the cash flow generated by the operations of its subsidiaries
and on dividends and other payments to it from its subsidiaries to meet its
liquidity needs and debt service obligations, including payment of the notes.
American is a separate and distinct legal entity and although it has
unconditionally guaranteed payment of the notes, due to limitations and
restrictions in its debt instruments, it may be unable to pay any amounts due on
its guarantee or to provide AMR with funds for AMR's payment obligations on the
notes, by dividend, distribution, loan or other payment. No other subsidiary of
AMR or American is guaranteeing the notes. Future borrowings by AMR, American
and AMR's other subsidiaries may include additional restrictions. In addition,
under applicable state law, American and AMR's other subsidiaries may be limited
in the amounts they are permitted to pay as dividends on their capital stock.
THE NOTES DO NOT HAVE THE BENEFIT OF RESTRICTIVE COVENANTS.
AMR, American and their respective subsidiaries are not restricted by
the notes or the indenture from incurring indebtedness. In addition, the notes
and the indenture do not restrict the ability of AMR, American or their
respective subsidiaries to incur liens or otherwise encumber or sell their
assets. Engaging in such a transaction may
11
have the effect of reducing the amount of proceeds distributable to holders of
the notes in connection with any distribution or payment of assets in any
foreclosure, dissolution, winding-up, liquidation, reorganization or other
bankruptcy proceeding involving AMR or American. In addition, the indenture
governing the notes does not contain any financial or operating covenants or
restrictions on the payments of dividends or the issuance or repurchase of
securities by AMR, American or any of their respective subsidiaries.
WE MAY NOT BE ABLE TO PURCHASE THE NOTES UPON AN AGREED PURCHASE DATE OR A
CHANGE IN CONTROL, AND MAY NOT BE OBLIGATED TO PURCHASE THE NOTES UPON CERTAIN
TRANSACTIONS.
On each of September 23, 2008, 2013 and 2018, holders of the notes may
require AMR to purchase their notes. In addition, holders of the notes may
require AMR to purchase their notes upon a change in control as defined in the
indenture. AMR and American might not have sufficient funds to make the required
purchase of the notes and may be required to secure third-party financing to do
so. However, AMR and American may not be able to obtain such financing on
acceptable terms, or at all. Moreover, AMR's ability to fund a required purchase
of the notes upon a change in control or to secure third-party financing to do
so may be adversely affected to the extent that AMR's or its subsidiaries'
current or future debt instruments also require the repayment of such debt upon
the occurrence of such a change in control. In addition, AMR's ability to
repurchase the notes when required, including upon a change in control under the
indenture, may be restricted by law or by the terms of agreements to which AMR
or its subsidiaries are now and may hereafter be parties. The failure to
repurchase the notes when required would constitute an event of default under
the indenture, which might in turn constitute a default under the terms of other
indebtedness of AMR or its subsidiaries. Further, certain important corporate
events, such as a spin-off transaction, a reorganization or a leveraged
recapitalization that would increase the level of AMR's indebtedness, may not
constitute a change in control under the indenture and would not trigger AMR's
obligation to repurchase the notes. See "Description of Notes -- Purchase of
Notes by AMR at the Option of the Holder" and " -- Change in Control Permits
Purchase of Notes by AMR at the Option of the Holder."
BECAUSE THERE IS NO PUBLIC MARKET FOR THE NOTES, AND THE NOTES ARE SUBJECT TO
TRANSFER RESTRICTIONS, HOLDERS MAY NOT BE ABLE TO RESELL THE NOTES EASILY OR AT
A FAVORABLE PRICE.
The notes are a new issue of securities for which there is no trading
market. Although the notes are currently eligible for trading on PORTAL, any
notes resold under this prospectus will no longer be eligible for trading on
PORTAL. We do not intend to apply for listing of the notes on any securities
exchange or other stock market. Although the initial purchaser of the notes has
advised us that it intends to make a market for the notes, it is not obligated
to do so. The initial purchaser could stop making a market in the notes at any
time without notice. Accordingly, a market for the notes may not develop, and we
are not certain of the liquidity of any market that may develop, the ability of
holders to sell their notes or the price at which holders would be able to sell
their notes. If a market were to develop, the market price for the notes may be
adversely affected by, among other factors, changes in our financial performance
or prospects, changes in our credit ratings, changes in the overall market for
similar securities, changes in interest rates and the financial performance or
prospects of other airlines.
We have the right, pursuant to the registration rights agreement, to
suspend the use of the shelf registration statement of which this prospectus is
a part in certain circumstances. During such a suspension, holders would not be
able to sell any notes or shares of common stock issuable upon conversion of the
notes. See "Description of the Notes -- Registration Rights."
WE EXPECT THAT THE TRADING VALUE OF THE NOTES WILL BE SIGNIFICANTLY AFFECTED BY
THE PRICE OF OUR COMMON STOCK AND THE AVAILABILITY OF SHARES FOR SALE IN THE
MARKET.
The market price of the notes is expected to be significantly affected
by the market price of our common stock, which has been volatile. This may
result in greater volatility in the trading value of the notes than would be
expected for nonconvertible debt securities we issue.
The sale or availability for sale of substantial amounts of our common
stock also could adversely impact its price. AMR maintains various plans
providing for the grant of stock options, stock appreciation rights, restricted
stock, deferred stock, stock purchase rights and other stock-based awards. As of
September 30, 2003, under such plans approximately 74.6 million shares of common
stock were subject to outstanding options, deferred stock
12
awards and other stock-based awards. This includes approximately 37.9 million
shares subject to options issued to employees (excluding officers) pursuant to
the modified labor agreements entered into in April 2003, which will vest over a
three year period and expire on April 17, 2013. In addition, AMR issued
approximately 2.5 million shares of our common stock to certain vendors,
lessors, lenders and suppliers with whom AMR and its subsidiaries have reached
concessionary agreements.
UNDER FRAUDULENT CONVEYANCE LAWS, A COURT COULD VOID OBLIGATIONS UNDER THE
AMERICAN GUARANTEE.
Under the federal bankruptcy laws and comparable provisions of state
fraudulent conveyance or fraudulent transfer laws, a court could void
obligations under the American guarantee, subordinate those obligations to pari
passu or more junior obligations of American or require holders of the notes to
repay any payments made pursuant to the guarantee, if an unpaid creditor or
representative of creditors, such as a trustee in bankruptcy of American as a
debtor-in-possession, claims that the guarantee constituted a fraudulent
conveyance or fraudulent transfer. For this claim to succeed, the claimant must
generally show that:
- American did not receive fair consideration or reasonably
equivalent value in exchange for the guarantee; and
- at the time the guarantee was issued, American:
- was insolvent;
- was rendered insolvent by reason of the guarantee;
- was engaged in a business or transaction for which its
remaining assets constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts
beyond its ability to pay them as the debts matured.
The measure of insolvency for these purposes will depend upon the law
of the jurisdiction being applied. Generally, however, an obligor will be
considered insolvent for these purposes if:
- the sum of its debts, including contingent liabilities, was
greater than the saleable value of all of its assets at a fair
valuation;
- the present fair saleable value of its assets was less than the
amount that would be required to pay its probable liability on its
existing debts, including contingent liabilities, as they become
absolute and mature; or
- it could not pay its debts as they become due.
Moreover, regardless of solvency, a court could void an incurrence of
indebtedness, including under the American guarantee, if it determined that the
transaction was made with intent to hinder, delay or defraud American's
creditors.
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USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the
sale of the notes and the common stock issuable upon conversion of the notes
offered by this prospectus. We will not receive any proceeds. We used the net
proceeds from the initial issuance of the notes for working capital and general
corporate purposes. See "Selling Securityholders" for a list of entities
receiving proceeds from the sale of the notes and the common stock issuable upon
conversion of the notes.
14
PRICE RANGE OF OUR COMMON STOCK
Our common stock is traded on the New York Stock Exchange ("NYSE")
under the symbol "AMR." The following table sets forth for the periods indicated
below the high and low closing prices for our common stock as reported by the
New York Stock Exchange.
HIGH LOW
------ ------
FISCAL YEAR ENDED DECEMBER 31, 2001
First Quarter .................................. $43.75 $31.06
Second Quarter ................................. 39.38 33.24
Third Quarter .................................. 37.94 17.90
Fourth Quarter ................................. 23.34 16.49
FISCAL YEAR ENDED DECEMBER 31, 2002
First Quarter .................................. $29.05 $21.92
Second Quarter ................................. 25.56 16.00
Third Quarter .................................. 15.93 3.60
Fourth Quarter ................................. 8.25 3.15
FISCAL YEAR ENDING DECEMBER 31, 2003
First Quarter .................................. $ 6.95 $ 1.41
Second Quarter ................................. 11.32 3.00
Third Quarter .................................. 13.23 8.04
Fourth Quarter (through October 23, 2003) ...... 14.90 11.67
In March 2003, Standard and Poor's removed our common stock from the
S&P 500 index.
DIVIDEND POLICY
We have paid no cash dividends on our common stock and have no current
intention of doing so. Any future determination to pay cash dividends will be at
the discretion of our board of directors, subject to applicable limitations
under Delaware law, and will be dependent upon our results of operations,
financial condition, contractual restrictions and other factors deemed relevant
by our board of directors.
15
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges
of AMR and of American for the periods indicated:
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
1998 1999 2000 2001 2002 SEPTEMBER 30, 2003
---- ---- ---- ---- ---- ------------------
Ratio of Earnings to Fixed Charges
AMR ......................... 2.55 1.72 1.87 (1) (3) (5)
American .................... 2.82 1.95 2.07 (2) (4) (6)
(1) For the year ended December 31, 2001, AMR earnings were not
sufficient to cover fixed charges. We needed additional earnings of $2,900
million to achieve a ratio of earnings to fixed charges of 1.0.
(2) In April 2001, the board of directors of American approved the
unconditional guarantee by American (the "American Guarantee") of the existing
debt obligations of AMR. As such, as of December 31, 2001, American
unconditionally guaranteed through the life of the related obligations
approximately $676 million of unsecured debt and approximately $573 million of
secured debt. The impact of these unconditional guarantees is not included in
the above computation. For the year ended December 31, 2001, earnings were not
sufficient to cover fixed charges. American needed additional earnings of $2,584
million to achieve a ratio of earnings to fixed charges of 1.0.
(3) For the year ended December 31, 2002, AMR earnings were not
sufficient to cover fixed charges. We needed additional earnings of $3,946
million to achieve a ratio of earnings to fixed charges of 1.0.
(4) At December 31, 2002, American's exposure under the American
Guarantee was approximately $636 million with respect to unsecured debt and
approximately $538 million with respect to secured debt. For the year ended
December 31, 2002, earnings were not sufficient to cover fixed charges. American
needed additional earnings of $3,749 million to achieve a ratio of earnings to
fixed charges of 1.0.
(5) For the nine months ended September 30, 2003, AMR earnings were not
sufficient to cover fixed charges. We needed additional earnings of $1,171
million to achieve a ratio of earnings to fixed charges of 1.0.
(6) At September 30, 2003, American's exposure under the American
Guarantee was approximately $936 million with respect to unsecured debt and
approximately $503 million with respect to secured debt. For the nine months
ended September 30, 2003, earnings were not sufficient to cover fixed charges.
American needed additional earnings of $1,239 million to achieve a ratio of
earnings to fixed charges of 1.0.
For purposes of the table, "earnings" represents consolidated income
from continuing operations before income taxes, extraordinary items, cumulative
effect of accounting change and fixed charges (excluding interest capitalized).
"Fixed charges" consists of interest expense (including interest capitalized),
amortization of debt expense and the portion of rental expense we deem
representative of the interest factor.
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DESCRIPTION OF THE NOTES
We issued the notes under an indenture, dated as of September 23, 2003,
among us, as issuer, American Airlines, Inc., as guarantor, and Wilmington Trust
Company, as trustee. The following summarizes the material provisions of the
notes. The following description does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all of the provisions of the
indenture and the notes, which we urge you to read because they, and not this
description, define your rights as a note holder. A copy of the indenture is
available upon request to us. As used in this description of the notes, the
words "we," "us," "our," or "AMR" refer only to AMR Corporation and do not
include any current or future subsidiary of AMR Corporation, and references to
"American Airlines, Inc." refer only to American Airlines, Inc. and do not
include any current or future subsidiary of American Airlines, Inc.
GENERAL
The notes are limited to $300,000,000 aggregate principal amount. The
notes will mature on September 23, 2023. The notes are in denominations of
$1,000 and integral multiples of $1,000. The notes are payable at the principal
corporate trust office of the paying agent, which initially is an office or
agency of the trustee, or an office or agency maintained by us for such purpose,
in the Borough of Manhattan, The City of New York.
The notes bear interest at the rate of 4.25% per year from the issue
date or from the most recent date to which interest has been paid or provided
for. Interest will be payable semiannually in arrears on March 23 and September
23 of each year, commencing on March 23, 2004, to holders of record at the close
of business on the March 8 or September 8 immediately preceding such interest
payment date. Each payment of interest on the notes will include interest
accrued through the day before the applicable interest payment date (or
purchase, redemption or, in certain circumstances, conversion date, as the case
may be). Any payment required to be made on any day that is not a business day
will be made on the next succeeding business day as if made on the date such
payment was due and no interest will accrue for the period from and after the
interest payment date, maturity date, purchase date or repurchase date, as the
case may be, to the date of payment on the next succeeding business day. The
amount of interest will be calculated using a 360-day year comprised of twelve
30-day months.
Interest will cease to accrue on a note upon its maturity, conversion,
purchase by us at the option of a holder or redemption. We may not reissue a
note that has matured or been converted, purchased by us at your option,
redeemed or otherwise cancelled, except for registration of transfer, exchange
or replacement of such note.
Notes may be presented for conversion at the office of the conversion
agent and for exchange or registration of transfer at the office of the
registrar. The conversion agent and the registrar shall initially be the
trustee. No service charge will be made for any registration of transfer or
exchange of notes. However, we may require the holder to pay any tax, assessment
or other governmental charge payable as a result of such transfer or exchange.
The indenture does not limit the amount of other indebtedness or
securities that may be issued by us or any of our subsidiaries. The indenture
does not contain any financial covenants or restrictions on the payment of
dividends, the incurrence of senior debt, securing our debt or the issuance or
repurchase of our securities (other than the notes). The indenture contains no
covenants or other provisions to afford protection to holders of notes in the
event of a highly leveraged transaction or a change in control except to the
extent described under " -- Change in Control Permits Purchase of Notes by AMR
at the Option of the Holder."
GUARANTEE
American Airlines, Inc. unconditionally guarantees, on an unsecured
basis, the performance and full and punctual payment when due, whether at stated
maturity or otherwise, of all our obligations under the indenture (including
obligations to the trustee) and the notes, whether for payment of principal of
or interest on or any additional amounts in respect of the notes, expenses,
indemnification or otherwise. American Airlines, Inc. agrees to pay, in addition
to the amount stated above, any and all costs and expenses incurred by the
trustee or the holders
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in enforcing their rights under the note guarantee. The guarantee is limited in
amount to an amount not to exceed the maximum amount that can be guaranteed by
American Airlines, Inc. without rendering the guarantee voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
RANKING
The notes are our unsecured senior obligations and rank equal in right
of payment with all of our other existing and future unsecured and
unsubordinated indebtedness. The American Airlines, Inc. guarantee is an
unsecured senior obligation of American Airlines, Inc. and ranks equal in right
of payment with all existing and future unsecured and unsubordinated
indebtedness of American Airlines, Inc. The notes and the guarantee are
effectively subordinated to all existing and future secured debt of AMR
Corporation and American Airlines, Inc., respectively, to the extent of the
security for such secured debt.
As of September 30, 2003, there was approximately $13.9 billion of
long-term debt (including current maturities) and obligations under capital
leases (including current obligations) of AMR Corporation, American Airlines,
Inc. and their consolidated subsidiaries. As of September 30, 2003, $10.5
billion of the long-term debt (including current maturities) of AMR Corporation,
American Airlines, Inc. and their consolidated subsidiaries was secured. Since
September 30, 2003, AMR Corporation, American Airlines, Inc. and their
consolidated subsidiaries have incurred additional indebtedness. AMR
Corporation, American Airlines, Inc. and their respective subsidiaries may incur
substantial additional debt, including secured debt, in the future.
In addition, the notes and the guarantee are "structurally
subordinated" to all existing and future liabilities (including debt and trade
payables) of the existing and future subsidiaries of AMR Corporation (other than
American Airlines, Inc.) and American Airlines, Inc., respectively.
CONVERSION RIGHTS
A holder may convert notes, in multiples of $1,000 principal amount,
into common stock only if at least one of the conditions described below is
satisfied. In addition, a holder may convert a note only until the close of
business on the second business day prior to the redemption date if we call a
note for redemption. A note for which a holder has delivered a purchase notice
or a change in control purchase notice requiring us to purchase the note, as
described below, may be surrendered for conversion only if such notice is
withdrawn in accordance with the indenture.
The initial conversion rate is 57.61 shares of common stock per each
$1,000 principal amount of notes, subject to adjustment upon the occurrence of
certain events described below (the "conversion rate"). A holder of a note
otherwise entitled to a fractional share will receive cash equal to the
applicable portion of the closing sale price of our common stock on the trading
day immediately preceding the conversion date. Upon a conversion, we will have
the option to deliver cash, shares of our common stock or a combination of cash
and shares of our common stock as described below. The ability to surrender
notes for conversion will expire at the close of business on September 17, 2023.
To convert a note into shares of common stock, a holder must:
- complete and manually sign a conversion notice, a form of which
is on the back of the note, and deliver the conversion notice to
the conversion agent;
- surrender the note to the conversion agent;
- if required by the conversion agent, furnish appropriate
endorsements and transfer documents; and
- if required, pay all transfer or similar taxes.
If the notes are not in certificated form, a holder's notice must
comply with appropriate DTC procedures.
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On conversion of a note, except as described below, a holder will not
receive any payment representing accrued and unpaid interest. Delivery to the
holder of the full number of shares of common stock into which the note is
convertible (or, at our option, cash in lieu thereof), together with any cash
payment of such holder's fractional shares, will be deemed to satisfy:
- our obligation to pay the full principal amount of the note; and
- except as described below, our obligation to pay accrued and
unpaid interest attributable to the period from the issue date
through the conversion date.
As a result, except as described below, accrued and unpaid interest is
deemed paid in full rather than cancelled, extinguished or forfeited. Holders of
notes surrendered for conversion during the period from the close of business on
any regular record date next preceding any interest payment date to the opening
of business of such interest payment date will receive the semiannual interest
payable on such notes on the corresponding interest payment date notwithstanding
the conversion at any time after the close of business on such regular record
date. Notes surrendered for conversion by a holder during the period from the
close of business on any regular record date to the opening of business on the
next interest payment date, except for notes to be redeemed within this period,
must be accompanied by payment of an amount equal to the interest that the
holder is to receive on the notes so converted.
In lieu of delivery of shares of our common stock upon notice of
conversion of any notes (for all or any portion of the notes), we may elect to
pay holders surrendering notes an amount in cash for each $1,000 principal
amount of notes equal to the average closing sale price of our common stock for
the five consecutive trading days immediately following either (a) the date of
our notice of our election to deliver cash as described below, if we have not
given notice of redemption, or (b) the conversion date, if we have given notice
of redemption specifying that we intend to deliver cash upon conversion
thereafter, in either case multiplied by the conversion rate in effect on that
date. We will inform the holders through the trustee no later than two business
days following the date on which we receive a conversion notice of our election
to deliver shares of our common stock or to pay cash in lieu of delivery of the
shares, unless we have already informed holders of our election in connection
with our optional redemption of the notes as described under " -- Redemption of
Notes at Our Option." If we elect to deliver all of such payment in shares of
our common stock, the shares will be delivered through the conversion agent no
later than the fifth business day following the conversion date. If we elect to
pay all or a portion of such payment in cash, the payment, including any
delivery of our common stock, will be made to holders surrendering notes no
later than the tenth business day following the applicable conversion date. If
an event of default, as described under " -- Events of Default and Acceleration"
below (other than a default in a cash payment upon conversion of the notes), has
occurred and is continuing, we may not pay cash upon conversion of any notes or
portion of a note (other than cash for fractional shares).
For a discussion of the tax treatment of a holder surrendering notes
for conversion, see "Certain United States Federal Income Tax Considerations --
Conversion of Notes."
A "business day" is any weekday that is not a day on which banking
institutions in the city of New York are authorized or obligated to close. A
"trading day" is any day on which the NYSE is open for trading or, if the
applicable security is admitted for trading or quoted on the NASDAQ National
Market, a day on which trades may be made on such market or, if the applicable
security is not so listed, admitted for trading or quoted, any business day.
The conversion rate will not be adjusted for accrued and unpaid
interest. We will, however, adjust the conversion rate, as provided in the
indenture, for:
(1) dividends or distributions on our common stock payable in
our common stock or other capital stock of AMR;
(2) subdivisions, combinations or certain reclassifications of
our common stock;
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(3) distributions to all holders of our common stock of
certain rights to purchase our common stock for a period expiring
within 60 days of such distribution at a price per share less than the
then current sale price (as defined in the indenture); provided however
that if such rights are exercisable only upon the occurrence of a
triggering event, then the conversion price will not be adjusted until
such triggering event occurs;
(4) distributions to all holders of our common stock of cash,
assets (including shares of capital stock of a subsidiary), or debt
securities issued by us (but excluding those rights, dividends and
distributions referred to above); and
(5) the purchase of our common stock pursuant to a tender
offer or exchange offer for our common stock (excluding odd lots of
common stock) made by us or any of our subsidiaries to the extent that
the cash and value of any other consideration included in the payment
per share of common stock exceeds the closing sale price per share of
our common stock on the trading day next succeeding the last date on
which tenders or exchanges may be made pursuant to such tender or
exchange offer; provided that for purposes of this paragraph, purchases
pursuant to a stock buyback program shall not constitute a tender or
exchange offer.
However, no adjustment to the conversion rate need be made if holders of the
notes may participate in the transaction without conversion or in certain other
cases.
In the event that we elect to make a distribution to all holders of
shares of our common stock pursuant to clause (3) or (4) of the preceding
paragraph, which, in the case of clause (4), has a per share value equal to more
than 15% of the closing sale price of our shares of common stock on the day
preceding the declaration date for such distribution, we will be required to
give notice to the holders of notes at least 20 days prior to the date for such
distribution and, upon the giving of such notice, the notes may be surrendered
for conversion at any time until the close of business on the business day prior
to the date of distribution or until we announce that such distribution will not
take place.
In the event that we pay a dividend or make a distribution on shares of
our common stock consisting of capital stock of, or similar equity interests in,
a subsidiary or other business unit of ours, the conversion rate will be
adjusted based on the market value of the securities so distributed relative to
the market value of our common stock, in each case based on the average closing
sale prices of those securities for the ten trading days commencing on and
including the fifth trading day after the date on which "ex-dividend trading"
commences for such dividend or distribution on the New York Stock Exchange or
such other national or regional exchange or market on which the securities are
then listed or quoted or, if not so listed or quoted, otherwise as provided in
the indenture.
The indenture permits us to increase the conversion rate from time to
time.
In addition, the indenture provides that upon conversion of the notes,
the holders of such notes will receive, in addition to the shares of common
stock issuable upon such conversion, the rights related to such common stock
pursuant to any future shareholder rights plan, whether or not such rights have
separated from the common stock at the time of such conversion. However, there
shall not be any adjustment to the conversion privilege or conversion rate as a
result of:
- the issuance of the rights;
- the distribution of separate certificates representing the
rights;
- the exercise or redemption of such rights in accordance with any
rights agreement; or
- the termination or invalidation of the rights.
Holders of the notes may, in certain circumstances, be deemed to have
received a distribution subject to United States federal income tax as a
dividend upon:
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- a taxable distribution to holders of common stock which results
in an adjustment of the conversion rate;
- an increase in the conversion rate at our discretion; or
- failure to adjust the conversion rate in some instances.
See "Certain United States Federal Income Tax Considerations --
Constructive Dividend."
If we are a party to a consolidation, merger or binding share exchange
or a transfer of all or substantially all of our assets pursuant to which our
common stock is converted to cash, securities or other assets, the right to
convert a note into common stock may be changed into a right to convert it into
the kind and amount of securities, cash or other assets of AMR or another person
which the holder would have received if the holder had converted the holder's
note immediately prior to the applicable record date for the transaction. See "
-- Conversion Upon Occurrence of Certain Corporate Transactions" below. However,
if such transaction constitutes a change in control of AMR, the holder also will
be able to require us to purchase all or a portion of such holder's notes as
described under " -- Change in Control Permits Purchase of Notes by AMR at the
Option of the Holder."
No adjustment in the conversion rate is required unless such adjustment
would require a change of at least 1% of the conversion rate then in effect;
provided that any adjustment that would otherwise be required to be made shall
be carried forward and taken into account in any subsequent adjustment.
Except as stated above, the conversion rate will not be adjusted for
the issuance of common stock or any securities convertible into or exchangeable
for common stock or carrying the right to purchase any of the foregoing.
The conversion agent will, on our behalf, determine if the notes are
convertible and notify the trustee and us accordingly. If one or more of the
conditions to the conversion of the notes has been satisfied as described below,
we will promptly notify the holders of the notes thereof and use our reasonable
best efforts to post this information on our website or otherwise publicly
disclose this information.
Conversion Based on Common Stock Price. Holders may surrender notes for
conversion into our shares of common stock in any calendar quarter commencing
after September 30, 2003 if the closing sale price of our common stock for at
least 20 trading days in a period of 30 consecutive trading days ending on the
last trading day of the preceding calendar quarter is more than 120% of the
conversion price per share of common stock on the last trading day of such
preceding calendar quarter. If the foregoing condition is satisfied, then the
notes will be convertible at any time thereafter at the option of the holder,
through maturity.
The conversion price per share as of any day is equal to $1,000 divided
by the number of shares of common stock issuable upon conversion on that day of
a note with a principal amount of $1,000. The closing sale price of our common
stock on any trading day means the closing per share sale price (or if no
closing sale price is reported, the average of the bid and ask prices or, if
more than one in either case, the average of the average bid and the average ask
prices) on such date on the NYSE or other principal national securities exchange
on which the common stock is listed or, if our common stock is not listed on a
national securities exchange, as reported by the NASDAQ National Market or
otherwise as provided in the indenture.
Conversion Based on Trading Price of the Notes. Holders may surrender
notes for conversion prior to maturity during the five business day period after
any five consecutive trading day period in which the "trading price" per $1,000
principal amount of notes, as determined following a request by a holder of
notes in accordance with the procedures described below, for each day of that
trading day period was less than 98% of the product of the closing sale price of
our common stock and the number of shares of common stock issuable upon
conversion of $1,000 principal amount of notes (the "trading price condition").
If on the date of any conversion pursuant to the trading price
condition, the closing sale price of our common stock is greater than the
conversion price, then holders will receive, in lieu of common stock based on
the conversion price, cash or common stock or a combination of cash and common
stock, at our option, with a value
21
equal to the principal amount of such notes, plus accrued and unpaid interest,
if any, as of the conversion date ("Principal Value Conversion"). We will notify
holders that surrender their notes for conversion, if it is a Principal Value
Conversion, by the second trading day following the date of conversion, whether
we will pay them all or a portion of the principal amount of such notes, plus
accrued and unpaid interest, if any, in cash, common stock or a combination of
cash and common stock, and in what percentage. Any common stock delivered upon a
Principal Value Conversion will be valued at the greater of the conversion price
on the conversion date and the applicable stock price as of the conversion date.
We will pay such holders any portion of the principal amount of such notes, plus
accrued and unpaid interest, if any, to be paid in cash and deliver common stock
with respect to any portion of the principal amount of such notes, plus accrued
and unpaid interest, if any, to be paid in common stock no later than the third
business day following the determination of the applicable stock price.
The "applicable stock price" means, in respect of a date of
determination, the average of the closing sale price per share of common stock
over the five-trading day period starting the third trading day following such
date of determination.
The "trading price" of the notes on any date of determination means the
average of the secondary market bid quotations obtained by the trustee for $5
million principal amount of the notes at approximately 3:30 p.m., New York City
time, on such determination date from three independent nationally recognized
securities dealers we select; provided that if three such bids cannot reasonably
be obtained by the trustee, but two such bids are obtained, then the average of
the two bids shall be used, and if only one such bid can reasonably be obtained
by the trustee, that one bid shall be used. If the trustee cannot reasonably
obtain at least one bid for $5 million principal amount of the notes from a
nationally recognized securities dealer, then the trading price per $1,000
principal amount of notes will be deemed to be less than 98% of the product of
the closing sale price of our common stock and the number of shares issuable
upon conversion of $1,000 principal amount of the notes.
In connection with any conversion upon satisfaction of the above
trading pricing condition, the trustee shall have no obligation to determine the
trading price of the notes unless we have requested such determination; and we
shall have no obligation to make such request unless a holder of the notes
provides us with reasonable evidence that the trading price per $1,000 principal
amount of notes would be less than 98% of the product of the closing sale price
of our common stock and the number of shares of common stock issuable upon
conversion of $1,000 principal amount of the notes. At such time, we shall
instruct the trustee to determine the trading price of the notes beginning on
the next trading day and on each successive trading day until the trading price
per $1,000 principal amount of the notes is greater than 98% of the product of
the closing sale price of our common stock and the number of shares issuable
upon conversion of $1,000 principal amount of the notes.
Conversion Based on Redemption. A holder may surrender for conversion a
note called for redemption at any time prior to the close of business on the
second business day immediately preceding the redemption date, even if it is not
otherwise convertible at such time. A note for which a holder has delivered a
purchase notice or a change in control purchase notice, as described below,
requiring us to purchase such note may be surrendered for conversion only if
such notice is withdrawn in accordance with the indenture.
Conversion Upon Occurrence of Certain Corporate Transactions. If we are
party to a consolidation, merger or binding share exchange or a transfer of all
or substantially all of our assets pursuant to which our common stock is to be
converted to cash, securities or other assets, a note may be surrendered for
conversion at any time from and after the date which is 15 days prior to the
anticipated effective date of the transaction until 15 days after the actual
effective date of such transaction, and at the effective date, the right to
convert a note into common stock will be changed into a right to convert it into
the kind and amount of securities, cash or other assets of AMR or another person
which the holder would have received if the holder had converted the holder's
notes immediately prior to the applicable record date for the transaction. If
such transaction also constitutes a change in control of AMR or of American
Airlines, Inc., the holder also will be able to require us to purchase all or a
portion of such holder's notes as described under " -- Change in Control Permits
Purchase of Notes by AMR at the Option of the Holder."
The notes are also convertible upon the occurrence of certain
distributions resulting in an adjustment to the conversion price as described
above under " -- Conversion Rights."
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REDEMPTION OF NOTES AT OUR OPTION
No sinking fund is provided for the notes. Prior to September 23, 2008,
we cannot redeem the notes at our option. Beginning on September 23, 2008, we
may redeem the notes for cash, as a whole at any time or from time to time in
part. We will give not less than 30 days' or more than 60 days' notice of
redemption by mail to holders of notes.
If redeemed at our option, the notes will be redeemed at a price equal
to 100% of the principal amount of the notes being redeemed plus accrued and
unpaid interest, if any, on such notes to the applicable redemption date.
If less than all of the outstanding notes are to be redeemed, the
trustee will select the notes to be redeemed in principal amounts of $1,000 or
integral multiples of $1,000. In this case, the trustee may select the notes by
lot, pro rata or by any other method the trustee considers fair and appropriate.
If a portion of a holder's notes is selected for partial redemption and the
holder converts a portion of the notes, the converted portion will be deemed to
be the portion selected for redemption.
If the redemption notice is given and funds deposited as required, then
interest will cease to accrue on and after the redemption date on the notes or
portions of such notes called for redemption.
PURCHASE OF NOTES BY AMR AT THE OPTION OF THE HOLDER
On each of September 23, 2008, 2013 and 2018, a holder of a note has
the right to require us to purchase, at a price equal to 100% of the principal
amount of the note being purchased plus accrued and unpaid interest, if any, to
the purchase date, any outstanding note for which a written purchase notice has
been properly delivered by the holder and not withdrawn, subject to certain
additional conditions. Holders may submit their written purchase notice to the
paying agent at any time from the opening of business on the date that is 20
business days prior to such purchase date until the close of business on the
second business day immediately preceding such purchase date. As described in
the "Risk Factors" section of this prospectus under the caption "We may not be
able to purchase the notes upon an agreed purchase date or a change in control,
and may not be obligated to purchase the notes upon certain transactions," we
may not have funds sufficient to purchase notes when we are required to do so.
We may, at our option, elect to pay the purchase price in cash or
shares of common stock, or any combination thereof, provided that we may elect
to terminate our right to pay common stock, in whole or in part, for any note at
any time in our sole discretion. For a discussion of the tax treatment of a
holder receiving cash, common stock or any combination thereof, see "Certain
United States Federal Income Tax Considerations -- Our Purchase of Notes at Your
Option or Redemption at Our Option."
We will be required to give notice on a date not less than 20 business
days prior to each purchase date to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating among other things:
- the amount of the purchase price;
- whether we will pay the purchase price of the notes in cash or
common stock or any combination thereof, specifying the
percentages of each;
- if we elect to pay in common stock, the method of calculation of
the market price of the common stock; and
- the procedures that holders must follow to require us to
purchase their notes.
The purchase notice given by each holder electing to require us to
purchase notes shall state:
- if certificated notes have been issued, the certificate numbers
of the holder's notes to be delivered for purchase;
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- the portion of the principal amount of notes to be purchased,
which must be $1,000 or an integral multiple of $1,000;
- that the notes are to be purchased by us pursuant to the
applicable provisions of the notes; and
- in the event we elect, pursuant to the notice that we are
required to give, to pay the purchase price in common stock, in
whole or in part, but the purchase price is ultimately to be paid
to the holder entirely in cash because any of the conditions to
payment of the purchase price or portion of the purchase price in
common stock is not satisfied prior to the close of business on
the purchase date, as described below, whether the holder elects:
- to withdraw the purchase notice as to some or all of the
notes to which it relates; or
- to receive cash in respect of the entire purchase price for
all notes or portions of notes subject to such purchase
notice.
If the notes are not in certificated form, a holder's notice must
comply with appropriate DTC procedures.
If we elect to pay the purchase price for the notes subject to the
purchase notice in common stock, in whole or in part, but such purchase price is
ultimately to be paid to a holder entirely in cash because we have not satisfied
one or more of the conditions to payment of the purchase price in common stock
prior to the close of business on the purchase date, a holder shall be deemed to
have elected to receive cash in respect of the entire purchase price for all
such notes unless such holder has properly notified us of its election to
withdraw the purchase notice. For a discussion of the tax treatment of a holder
receiving cash instead of common stock, see "Certain United States Federal
Income Tax Considerations -- Our Purchase of Notes at Your Option or Redemption
at Our Option."
Any purchase notice may be withdrawn, in whole or in part, by the
holder by a written notice of withdrawal delivered to the paying agent prior to
the close of business on the business day prior to the purchase date.
The notice of withdrawal shall state:
- the principal amount being withdrawn;
- if certificated notes have been issued, the certificate numbers
of the notes being withdrawn; and
- the principal amount, if any, of the notes that remain subject to
the purchase notice.
If the notes are not in certificated form, a holder's notice must
comply with appropriate DTC procedures.
If we elect to pay the purchase price, in whole or in part, in shares
of our common stock, the number of such shares we deliver shall be equal to the
portion of the purchase price to be paid in common stock divided by the market
price of a share of common stock.
We will pay cash based on the market price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in whole
or in part, of the purchase price. See "Certain United States Federal Income Tax
Considerations -- Our Purchase of Notes at Your Option or Redemption at Our
Option."
The "market price" of our common stock shall be an amount equal to the
average of the closing sale prices of our common stock for the five trading-day
period ending on the third business day prior to the applicable purchase date,
or, if such business day is not a trading day, then on the last trading day
prior to such business day, appropriately adjusted to take into account any
occurrence during that period that would result in an adjustment of the
conversion rate with respect to the common stock.
Because the market price of our common stock is determined prior to the
applicable purchase date, holders of notes bear the market risk with respect to
the value of the common stock to be received from the date such market
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price is determined to such purchase date. We may pay the purchase price or any
portion of the purchase price in common stock only if the information necessary
to calculate the market price is published in a daily newspaper of national
circulation.
Upon determination of the actual number of shares of common stock to be
paid as the purchase price for the notes in accordance with the foregoing
provisions, we will promptly issue a press release and publish such information
on our website.
Our right to purchase notes, in whole or in part, with common stock is
subject to our satisfying various conditions, including:
- listing the common stock on the NYSE or listing on a national
securities exchange or admission for trading of the common stock
on NASDAQ;
- the registration of the common stock under the Securities Act and
the Exchange Act, if required; and
- any necessary qualification or registration under applicable
state securities law or the availability of an exemption from
such qualification and registration.
If such conditions are not satisfied with respect to a holder prior to
the close of business on the purchase date, we will pay the purchase price of
the notes of the holder entirely in cash. See "Certain United States Federal
Income Tax Considerations -- Our Purchase of Notes at Your Option or Redemption
at Our Option." We may not change the form or components or percentages of
components of consideration to be paid for the notes once we have given the
notice that we are required to give to holders of notes, except as described in
the first sentence of this paragraph.
In connection with any purchase offer, we will:
- comply with the provisions of Rule 13e-4 and any other tender
offer rules under the Exchange Act to the extent that such
provisions are then applicable; and
- file Schedule TO or other schedule to the extent that they are
required under the Exchange Act.
Payment of the purchase price for a note for which a purchase notice
has been delivered and not validly withdrawn is conditioned upon delivery of the
note, together with necessary endorsements, to the paying agent at any time
after delivery of the purchase notice. Payment of the purchase price for the
note will be made as soon as practicable following the later of the purchase
date or the time of delivery of the note.
If the paying agent holds money or securities sufficient to pay the
purchase price of a note on the business day following the purchase date in
accordance with the terms of the indenture, then, immediately after the purchase
date, the note will cease to be outstanding and interest on such note will cease
to accrue, whether or not the note is delivered to the paying agent. Thereafter,
all other rights of the holder shall terminate, other than the right to receive
the purchase price upon delivery of the note.
No notes may be purchased for cash at the option of holders if there
has occurred and is continuing an event of default with respect to the notes,
other than a default in the payment of the purchase price with respect to such
notes.
CHANGE IN CONTROL PERMITS PURCHASE OF NOTES BY AMR AT THE OPTION OF THE HOLDER
In the event of a change in control of AMR or American Airlines, Inc.,
each holder will have the right, at the holder's option, subject to the terms
and conditions of the indenture, to require AMR to purchase all or any portion
of the holder's notes. However, the principal amount submitted for purchase by a
holder must be $1,000 or an integral multiple of $1,000. As described in the
"Risk Factors" section of this prospectus under the caption "We may not be able
to purchase the notes upon an agreed purchase date or a change in control, and
may not be obligated
25
to purchase the notes upon certain transactions," we may not have funds
sufficient to purchase notes when we are required to do so.
We are required to purchase the notes as of a date set by us that is no
later than 30 business days after the occurrence of such change in control at a
price equal to 100% of the principal amount of the notes being purchased plus
accrued and unpaid interest, if any, on such notes to such date of purchase.
Instead of paying the purchase price in cash, we may, at our option,
pay the purchase price in shares of our common stock, or a combination of cash
and shares of our common stock, provided that we may elect to terminate our
right to pay common stock, in whole or in part, for any note at any time in our
sole discretion. The number of shares of our common stock a holder will receive
will equal the purchase price (less any amounts paid in cash) divided by 97 1/2%
of the market price of our common stock. See " -- Purchase of Notes by AMR at
the Option of the Holder" for a description of the manner in which the market
price of our common stock is determined. However, we may not pay in shares of
our common stock unless we satisfy certain conditions prior to the purchase date
as provided in the indenture. For a discussion of the tax treatment of a holder
receiving cash, common stock or any combination thereof, see "Certain United
States Federal Income Tax Considerations -- Our Purchase of Notes at Your Option
or Redemption at Our Option."
Within 15 days after the occurrence of a change in control, AMR is
obligated to mail to the trustee and to all holders of notes at their addresses
shown in the register of the registrar and to beneficial owners as required by
applicable law a notice regarding the change in control, which notice shall
state, among other things:
- the events causing a change in control;
- the date of such change in control;
- the last date on which the purchase right may be exercised;
- the change in control purchase price;
- whether we will pay the purchase price of the notes in cash or
common stock or any combination thereof, specifying the
percentages of each;
- if we elect to pay in common stock, the method of calculation of
the market price of the common stock;
- the change in control purchase date;
- the name and address of the paying agent and the conversion
agent;
- the conversion rate and any adjustments to the conversion rate
resulting from such change in control;
- that notes with respect to which a change in control purchase
notice is given by the holder may be converted only if the change
in control purchase notice has been withdrawn in accordance with
the terms of the indenture; and
- the procedures that holders must follow to exercise these rights.
To exercise this right, the holder must deliver a written notice to the
paying agent prior to the close of business on the second business day prior to
the change in control purchase date. The required purchase notice upon a change
in control shall state:
- if certificated notes have been issued, the certificate numbers
of the notes to be delivered by the holder;
26
- the portion of the principal amount of notes to be purchased,
which portion must be $1,000 or an integral multiple of $1,000;
- that we are to purchase such notes pursuant to the applicable
provisions of the notes; and
- in the event we elect, pursuant to the notice that we are
required to give, to pay the purchase price in common stock, in
whole or in part, but the purchase price is ultimately to be paid
to the holder entirely in cash because any of the conditions in
the indenture to payment of the purchase price or portion of the
purchase price in common stock is not satisfied prior to the
close of business on the purchase date, whether the holder
elects:
- to withdraw the purchase notice as to some or all of the
notes to which it relates; or
- to receive cash in respect of the entire purchase price for
all notes or portions of notes subject to such purchase
notice.
If the notes are not in certificated form, a holder's notice must
comply with appropriate DTC procedures.
If we elect to pay the purchase price for the notes subject to the
purchase notice in common stock, in whole or in part, but such purchase price is
ultimately to be paid to a holder entirely in cash because we have not satisfied
one or more of the conditions to payment of the purchase price in common stock
prior to the close of business on the purchase date, a holder shall be deemed to
have elected to receive cash in respect of the entire purchase price for all
such notes unless such holder has properly notified us of its election to
withdraw the purchase notice. For a discussion of the tax treatment of a holder
receiving cash instead of common stock, see "Certain United States Federal
Income Tax Considerations -- Our Purchase of Notes at Your Option or Redemption
at Our Option."
Any such change in control purchase notice may be withdrawn, in whole
or in part, by the holder by a written notice of withdrawal delivered to the
paying agent prior to the close of business on the business day prior to the
change in control purchase date.
The notice of withdrawal shall state:
- the principal amount being withdrawn;
- if certificated notes have been issued, the certificate numbers
of the notes being withdrawn; and
- the principal amount, if any, of the notes that remain subject to
a change in control purchase notice.
If the notes are not in certificated form, a holder's notice must
comply with appropriate DTC procedures.
Payment of the change in control purchase price for a note for which a
change in control purchase notice has been delivered and not validly withdrawn
is conditioned upon delivery of the note, together with necessary endorsements,
to the paying agent at any time after the delivery of such change in control
purchase notice. Payment of the change in control purchase price for such note
will be made promptly following the later of the change in control purchase date
or the time of delivery of such note.
We will pay cash based on the market price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in whole
or in part, of the purchase price. See "Certain United States Federal Income Tax
Considerations -- Our Purchase of Notes at Your Option or Redemption at Our
Option."
Because the market price of our common stock is determined prior to the
applicable purchase date, holders of notes bear the market risk with respect to
the value of the common stock to be received from the date such market price is
determined to such purchase date. We may pay the purchase price or any portion
of the purchase price in common stock only if the information necessary to
calculate the market price is published in a daily newspaper of national
circulation.
27
If the paying agent holds money or securities sufficient to pay the
change in control purchase price of a note on the business day following the
change in control purchase date in accordance with the terms of the indenture,
then immediately after the change in control purchase date, the note will cease
to be outstanding and interest on the note will cease to accrue, whether or not
the note is delivered to the paying agent. Thereafter, all other rights of the
holder shall terminate, other than the right to receive the change in control
purchase price upon delivery of the note.
Under the indenture, a "change in control" will be deemed to have
occurred at the time any of the following occurs:
(1) any "person" or "group" within the meaning of Section
13(d) of the Exchange Act other than AMR, any subsidiary of AMR or
American Airlines, Inc., or any employee benefit plan of AMR, American
Airlines, Inc. or any of their respective subsidiaries, files a
Schedule TO or any schedule, form or report under the Exchange Act
disclosing that such person or group has become the direct or indirect
ultimate "beneficial owner," as defined in Rule 13d-3 under the
Exchange Act, of AMR's common equity representing more than 50% of the
voting power of AMR's common equity entitled to vote generally in the
election of directors;
(2) any "person" or "group" within the meaning of Section
13(d) of the Exchange Act other than AMR, any subsidiary of AMR or
American Airlines, Inc., or any employee benefit plan of AMR, American
Airlines, Inc. or any of their respective subsidiaries, becomes
(whether by purchase, share exchange, consolidation, merger or
otherwise) the direct or indirect ultimate "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act, of American Airlines,
Inc.'s common equity representing more than 50% of the voting power of
American Airlines, Inc.'s common equity entitled to vote generally in
the election of directors; provided, however, that if such person or
group became such a direct or indirect "beneficial owner" of American
Airlines, Inc.'s common equity as a result of a transaction involving
AMR that does not otherwise constitute a change in control under this
provision, then any beneficial ownership of American Airlines, Inc.'s
common stock by such person or group shall not be a change in control
under this clause (2);
(3) consummation of any share exchange, consolidation or
merger of AMR pursuant to which our common stock will be converted into
cash, securities or other property or any sale, lease or other transfer
in one transaction or a series of transactions of all or substantially
all of the consolidated assets of either AMR and its subsidiaries,
taken as a whole, or American Airlines, Inc. and its subsidiaries,
taken as a whole, to any person other than AMR, American Airlines, Inc.
or one or more of our respective subsidiaries; provided, however, that
a transaction where the holders of AMR's or American Airlines, Inc.'s
common equity immediately prior to such transaction have, directly or
indirectly, more than 50% of the aggregate voting power of all classes
of common equity of the continuing or surviving corporation or
transferee entitled to vote generally in the election of directors
immediately after such event shall not be a change in control;
(4) during any period of 12 consecutive months,
individuals who at the beginning of such period constitute AMR's Board
of Directors (together with any new director whose election by AMR's
Board of Directors or whose nomination for election by AMR's
stockholders was approved by a vote of at least a majority of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously approved) cease for any reason (other than death or
disability) to constitute a majority of the directors then in office;
or
(5) during any period of 12 consecutive months,
individuals who at the beginning of such period constitute American
Airlines, Inc.'s Board of Directors (together with any new director
whose election by American Airlines, Inc.'s Board of Directors or whose
nomination for election by American Airlines, Inc.'s stockholders was
approved by a vote of at least a majority of the directors then still
in office who either were directors at the beginning of such period or
whose election or nomination for election was previously approved)
cease for any reason (other than death or disability) to constitute a
majority of the directors then in office.
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A change in control will not be deemed to have occurred in respect of
any of the foregoing, however, if either:
(1) the closing sale price of our common stock for any five
trading days within the 10 consecutive trading days ending immediately before
the later of the change in control or the public announcement thereof equals or
exceeds 105% of the conversion price of the notes in effect immediately before
the change in control or the public announcement thereof; or
(2) at least 90% of the consideration, excluding cash payments for
fractional shares, in the transaction or transactions constituting the change in
control consists of shares of capital stock traded on a national securities
exchange or quoted on the Nasdaq National Market or which will be so traded or
quoted when issued or exchanged in connection with a change in control (these
securities being referred to as "publicly traded securities") and as a result of
this transaction or transactions the notes become convertible into such publicly
traded securities, excluding cash payments for fractional shares.
For purposes of the above paragraph, the term capital stock of any
person means any and all shares (including ordinary shares or American
Depositary Shares), interests, participations or other equivalents however
designated of corporate stock or other equity participations, including
partnership interests, whether general or limited, of such person and any rights
(other than debt securities convertible or exchangeable into an equity
interest), warrants or options to acquire an equity interest in such person.
In connection with any purchase offer, we will:
- comply with the provisions of Rule 13e-4, and any other tender
offer rules under the Exchange Act to the extent that such
provisions are then applicable; and
- file Schedule TO or other schedule to the extent that they are
required under the Exchange Act.
The change in control purchase feature of the notes may, in certain
circumstances, make more difficult a takeover or discourage a potential
acquiror. The change in control purchase feature, however, is not the result of
our knowledge of any specific effort:
- to accumulate shares of common stock;
- to obtain control of us by means of a merger, tender offer,
solicitation or otherwise; or
- as part of a plan by management to adopt a series of
anti-takeover provisions.
Instead, the change in control purchase feature is a standard term
contained in other offerings of securities similar to the notes that have been
marketed by the initial purchaser. The terms of the change in control purchase
feature resulted from negotiations between the initial purchaser and us.
We could, in the future, enter into certain transactions, including
certain highly leveraged transactions, mergers or recapitalizations, that would
not constitute a change in control with respect to the change in control
purchase feature of the notes but that would increase the amount of our or our
subsidiaries' outstanding indebtedness.
No notes may be purchased at the option of holders upon a change in
control if there has occurred and is continuing an event of default with respect
to the notes, other than a default in the payment of the change in control
purchase price with respect to such notes.
29
EVENTS OF DEFAULT AND ACCELERATION
The following are events of default under the indenture:
- default in the payment of any principal amount at maturity,
redemption price, purchase price, or change in control purchase
price due with respect to the notes, when the same becomes due
and payable;
- default in payment of any interest under the notes, which default
continues for 30 days;
- our failure to comply with any of our agreements in the notes or
the indenture upon our receipt of notice of such default from the
trustee or to us and the trustee from holders of not less than
25% in aggregate principal amount of the notes then outstanding,
and our failure to cure (or obtain a waiver of) such default
within 60 days after we receive such notice;
- default resulting in acceleration of other indebtedness of AMR
Corporation or American Airlines, Inc. for borrowed money where
the aggregate principal amount with respect to which the
acceleration has occurred exceeds $50 million, and such
acceleration has not been rescinded or annulled within a period
of 10 days after written notice to us by the trustee or to us and
the trustee by the holders of at least 25% in aggregate principal
amount of the notes then outstanding; provided that such event of
default will be cured or waived if the default that resulted in
the acceleration of such other indebtedness is cured or waived;
- the American Airlines, Inc. guarantee ceases to be in full force
and effect or is declared null and void or American Airlines,
Inc. denies that it has any further liability under the
guarantee, or gives notice to such effect (other than by reason
of the termination of the indenture or the release of the
guarantee in accordance with the indenture), and such condition
shall have continued for a period of 30 days after written notice
of such failure requiring American Airlines, Inc. or us to remedy
the same shall have been given to us by the trustee or to us and
the trustee by the holders of 25% in aggregate principal amount
of the notes then outstanding; or
- certain events of bankruptcy, insolvency or reorganization
affecting us or American Airlines, Inc.
If an event of default shall have happened and be continuing, either
the trustee or the holders of not less than 25% in aggregate principal amount of
the notes then outstanding may declare by written notice to us (and to the
trustee if notice is given by such holders) 100% of the principal amount of the
notes, plus any accrued and unpaid interest through the date of such
declaration, to be immediately due and payable. In the case of certain events of
bankruptcy or insolvency, 100% of the principal amount of the notes plus any
accrued and unpaid interest through the occurrence of such event shall
automatically become and be immediately due and payable.
Holders of the notes may not enforce the indenture or the notes except
as provided in the indenture. Subject to the provisions of the indenture
relating to the duties of the trustee, the trustee is under no obligation to
exercise any of its rights or powers under the indenture at the request, order
or direction of any of the holders, unless such holders have offered to the
trustee security or an indemnity satisfactory to it against any cost, expense or
liability. Subject to all provisions of the indenture and applicable law, the
holders of a majority in aggregate principal amount of the notes then
outstanding have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the trustee or exercising any trust
or power conferred on the trustee. If a default or event of default occurs and
is continuing and is known to the trustee, the indenture requires the trustee to
mail a notice of default or event of default to each holder within 90 days after
the trustee obtains knowledge of such default or event of default. However, the
trustee may withhold from the holders notice of any continuing default or event
of default (except a default or event of default in the payment of principal
amount at maturity, accrued and unpaid interest, or redemption price, purchase
price or change in control purchase price, if applicable, on the notes) if it
determines in good faith that withholding notice is in their interest. The
holders of a majority in aggregate principal amount of the notes then
outstanding by written notice to the trustee may rescind any acceleration of the
notes and its consequences if all existing events of default (other than the
nonpayment of the principal amount of,
30
and accrued and unpaid interest, if any, on, the notes that have become due
solely by virtue of such acceleration) have been cured or waived and if the
rescission would not conflict with any judgment or decree of any court of
competent jurisdiction. No such rescission will affect any subsequent default or
event of default or impair any right consequent thereto.
A holder of notes may pursue any remedy under the indenture only if:
- the holder gives the trustee written notice of a continuing
event of default on the notes;
- the holders of at least 25% in aggregate principal amount of
the notes then outstanding make a written request to the
trustee to pursue the remedy;
- such holders offer to the trustee indemnity reasonably
satisfactory to the trustee;
- the trustee fails to act for a period of 60 days after the
receipt of notice and offer of indemnity; and
- during that 60-day period, the holders of a majority in
principal amount of the notes then outstanding do not give the
trustee a direction inconsistent with the request.
This provision does not, however, affect the right of a holder of notes
to sue for enforcement of the payment of the principal amount or accrued and
unpaid interest, if any, or redemption price, purchase price or change in
control purchase price, if applicable, on the holder's note on or after the
respective due dates expressed in its note or the holder's right to convert its
note in accordance with the indenture.
We will file annually with the trustee a certificate as to AMR's
compliance with all terms, provisions and conditions of the indenture.
MERGERS AND SALES OF ASSETS
The indenture provides that we may not consolidate with or merge into
any person or sell, convey or transfer our properties and assets substantially
as an entirety to another person unless:
- the resulting, surviving or transferee person is a person
organized and existing under the laws of the United States,
any state thereof or the District of Columbia, and such person
(if other than us) assumes all our obligations under the notes
and the indenture;
- after giving effect to the transaction no event of default,
and no event that, after notice or passage of time, would
become an event of default, has occurred and is continuing;
and
- other conditions described in the indenture are met.
Upon the assumption of our obligations by such person in such
circumstances, subject to certain exceptions, we shall be discharged from all
obligations under the notes and the indenture. The indenture also provides that
American Airlines, Inc. may not consolidate with or merge into any person or
sell, convey or transfer its properties and assets substantially as an entirety
to another person unless the surviving person assumes the obligations of
American Airlines, Inc. as guarantor and the surviving person is organized and
existing under the laws of the United States, any state thereof or the District
of Columbia.
Although such transactions are permitted under the indenture, certain
of the foregoing transactions occurring could constitute a change in control
permitting each holder to require us to purchase the notes of such holder as
described above.
31
MODIFICATION
The trustee and we may modify or amend the indenture or the notes with
the consent of the holders of not less than a majority in aggregate principal
amount of the notes then outstanding. However, the consent of the holder of each
outstanding note that would be affected by such modification or amendment would
be required to:
- alter the interest rate or the manner of calculation of
interest on any note or change the time of payment of
interest;
- make any note payable in money or securities other than as
stated in the note;
- change the stated maturity of any note;
- reduce the principal amount, redemption price, purchase price
or change in control purchase price with respect to any note;
- make any change that adversely affects the rights of such a
holder to convert any note;
- make any change that adversely affects the right of such a
holder to require us to purchase a note;
- impair the right to institute suit for the enforcement of any
payment with respect to the notes, or under the American
Airlines, Inc. guarantee, or with respect to conversion of the
notes;
- reduce the percentage in principal amount of the outstanding
notes the consent of whose holders is required for
modification or amendment of the indenture or for waiver of
compliance with certain provisions of the indenture or waiver
of certain defaults; and
- release American Airlines, Inc. from any of its obligations
under its guarantee other than in accordance with the terms of
the indenture.
Without the consent of any holder of notes, the trustee and we may
modify or amend the indenture for any of the following purposes:
- to evidence a successor to us or American Airlines, Inc., and
the assumption by that successor of our or American Airlines,
Inc.'s obligations under the indenture, the notes or the
guarantee, as applicable;
- to add to our covenants for the benefit of the holders of the
notes or to surrender any right or power conferred upon us;
- to make any change to comply with the Trust Indenture Act of
1939, as amended, or to comply with any requirement of the SEC
in connection with the qualification of the indenture under
the Trust Indenture Act of 1939, as amended, or as necessary
in connection with the registration of the notes and the
shares of common stock issuable upon conversion of the notes
under the Securities Act;
- to add additional events of default;
- to add or change any provisions to such extent as is necessary
to permit or facilitate the issuance of and trading of the
notes in global form;
- to evidence and provide for the acceptance of the appointment
under the indenture of separate or successor trustees;
- to increase the conversion rate;
32
- to make any change that would provide any additional rights or
benefits to the holders of notes;
- to modify the restrictions on, and procedures for, resale and
other transfers of notes or the shares of common stock
issuable upon conversion of notes pursuant to law, regulation
or practice relating to the resale or transfer of restricted
securities generally;
- to secure our obligations in respect of the notes or the
indenture;
- to cure any ambiguity or inconsistency or correct any mistake
in the indenture or the notes; or
- to make any other change that does not materially adversely
affect the rights of any holder of the notes.
The holders of a majority in principal amount of the outstanding notes
may, on behalf of all the holders of all notes:
- waive compliance by us with restrictive provisions of the
indenture, as detailed in the indenture; and
- waive any past default under the indenture and its
consequences, except a default in the payment of the principal
amount, accrued and unpaid interest, redemption price,
purchase price or change in control purchase price or
obligation to deliver common stock upon conversion with
respect to any note or in respect of any provision which under
the indenture cannot be modified or amended without the
consent of the holder of each outstanding note affected
thereby.
DISCHARGE OF THE INDENTURE
We may satisfy and discharge our obligations under the indenture by
delivering to the trustee for cancellation all outstanding notes or by
depositing with the trustee, the paying agent or the conversion agent, if
applicable, after the notes have become due and payable, whether at stated
maturity or any redemption date, or any purchase date, or a change in control
purchase date, or upon conversion or otherwise, cash or shares of common stock
(as applicable under the terms of the indenture) sufficient to pay all of the
outstanding notes and paying all other sums payable under the indenture.
CALCULATIONS IN RESPECT OF NOTES
We are responsible for making all calculations called for under the
notes. These calculations include, but are not limited to, determination of the
market prices of our common stock. We will make all these calculations in good
faith and, absent manifest error, our calculations will be final and binding on
holders of notes. We will provide a schedule of our calculations to the trustee,
and the trustee is entitled to rely upon the accuracy of our calculations
without independent verification.
LIMITATIONS OF CLAIMS IN BANKRUPTCY
If a bankruptcy proceeding is commenced in respect of AMR or American
Airlines, Inc., the claim of a holder of a note is, under Title 11 of the United
States Code, limited to the principal amount of the note, together with any
accrued and unpaid interest on such note as of the date of the commencement of
the proceeding.
GOVERNING LAW
The indenture, the notes and the guarantee are governed by, and
construed in accordance with, the law of the State of New York.
INFORMATION CONCERNING THE TRUSTEE
Wilmington Trust Company is the trustee, registrar, paying agent and
conversion agent under the indenture for the notes. Wilmington Trust Company
acts as trustee with respect to certain other financing transactions of ours
33
and of our affiliates. Wilmington Trust Company may from time to time provide
banking or other services to us and our affiliates.
BOOK-ENTRY SYSTEM
Except as described in "-- Exchange of Global Securities" below, the
notes were only issued in the form of global securities held in book-entry form.
DTC or its nominee is the sole registered holder of the notes for all purposes
under the indenture. Owners of beneficial interests in the notes represented by
the global securities hold their interests pursuant to the procedures and
practices of DTC. As a result, beneficial interests in any such securities are
shown on, and may only be transferred through, records maintained by DTC and its
direct and indirect participants and any such interest may not be exchanged for
certificated securities, except in limited circumstances. Owners of beneficial
interests must exercise any rights in respect of their interests, including any
right to convert or require purchase of their interests in the notes, in
accordance with the procedures and practices of DTC. Beneficial owners are not
holders and are not entitled to any rights under the global securities or the
indenture. AMR and the trustee, and any of their respective agents, may treat
DTC as the sole holder and registered owner of the global securities. Neither
AMR nor the trustee has any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the notes held by DTC or its nominee, or for maintaining,
supervising, or reviewing any records relating to such beneficial ownership
interests or for the performance by DTC or any DTC direct or indirect
participant of their respective obligations under the rules, regulations, and
procedures creating and affecting DTC and its operations or any other statutory,
regulatory, contractual, or customary procedures governing their operations.
EXCHANGE OF GLOBAL SECURITIES
Notes represented by a global security are exchangeable for
certificated securities with the same terms only if:
- DTC is unwilling or unable to continue as depositary or if DTC
ceases to be a clearing agency registered under the Exchange
Act and a successor depositary is not appointed by us within
90 days;
- we decide to discontinue use of the system of book-entry
transfer through DTC (or any successor depositary); or
- an event of default under the indenture occurs and is
continuing.
DTC has advised us as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC facilitates the settlement of transactions among
its participants through electronic computerized book-entry changes in
participants' accounts, eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers,
including the initial purchaser, banks, trust companies, clearing corporations
and other organizations, some of whom and/or their representatives, own DTC.
Access to DTC's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
NO RECOURSE AGAINST OTHERS
None of the directors, officers, employees, stockholders or affiliates,
as such, of AMR or American Airlines, Inc. shall have any liability or any
obligations under the notes or the indenture, or the American Airlines, Inc.
guarantee, as the case may be, or for any claim based on, in respect of or by
reason of such obligations or the creation of such obligations. Each holder by
accepting a note waives and releases all such liability. The waiver and release
are part of the consideration for the notes.
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REGISTRATION RIGHTS
We and American Airlines, Inc. entered into a registration rights
agreement with the initial purchaser pursuant to which we have, at our expense,
for the benefit of the holders, filed with the SEC within 90 days after the
first date of original issuance of the notes, a shelf registration statement, of
which this prospectus is a part, covering resale of the notes and the shares of
common stock issued upon conversion of the notes. We will use our reasonable
efforts to cause the shelf registration statement to become effective within 180
days of such first date of original issuance, and to keep a shelf registration
statement effective until the earlier of (i) the sale pursuant to a shelf
registration statement of all the securities registered thereunder and (ii) the
expiration of the holding period applicable to such securities held by persons
that are not affiliates of AMR under Rule 144(k) under the Securities Act or any
successor provision, subject to certain permitted exceptions. We may suspend the
use of a prospectus that is part of a shelf registration statement under certain
circumstances relating to corporate developments, public filings with the SEC
and similar events for a period not to exceed 45 days in any three-month period
and not to exceed an aggregate of 120 days in any 12-month period. We have
agreed to pay predetermined liquidated damages as described herein ("liquidated
damages") to holders of the notes if a shelf registration statement is not
timely filed or made effective or if the prospectus is unavailable for periods
in excess of those permitted above. Such liquidated damages will accrue until
such failure to file or become effective or unavailability is cured, in respect
of any notes whose sale is restricted, at a rate per year equal to 0.25% for the
first 90-day period after the occurrence of such event and 0.50% thereafter of
the principal amount. So long as the failure to file or become effective or
unavailability continues, we will pay liquidated damages in cash on March 23 and
September 23 of each year to the holders of record of the notes on the
immediately preceding March 8 or September 8. When such registration default is
cured, accrued and unpaid liquidated damages will be paid in cash to the record
holder as of the date of such cure.
A holder who sells notes and shares of common stock issued upon
conversion of the notes pursuant to the shelf registration statement generally
is required to be named as a selling securityholder in the related prospectus,
deliver a prospectus to purchasers and be bound by certain provisions of the
registration rights agreement that are applicable to such holder, including
certain indemnification provisions. We will pay all expenses of a shelf
registration statement, provide to each registered holder copies of such
prospectus, notify each registered holder when the shelf registration statement
has become effective and take certain other actions as are required to permit,
subject to the foregoing, unrestricted resales of the notes and the shares of
common stock issued upon conversion of the notes. If the securities are sold
through underwriters, broker-dealers or agents, the selling securityholders will
be responsible for underwriting discounts or commissions or agents' commissions
and transfer taxes, if any.
We agreed in the registration rights agreement to give notice to all
holders of the filing and effectiveness of a shelf registration statement by
release made to Reuters Economic Services, Bloomberg Business News or other
reasonable means of distribution. Holders are required to complete and deliver a
questionnaire prior to being named as a selling securityholder in the related
prospectus. Upon receipt of such a completed questionnaire, together with such
other information as may be reasonably requested by us from a holder following
the effectiveness of a shelf registration statement, we will, as promptly as
practicable, file such amendments to a shelf registration statement or
supplements to a related prospectus as are necessary to permit such holder to
deliver such prospectus to purchasers of notes and our shares of common stock
issuable upon conversion of the notes, subject to our right to suspend the use
of the prospectus as described above. Any holder that does not complete and
deliver a questionnaire or provide such other information will not be named as a
selling securityholder in the shelf registration statement and the related
prospectus and therefore will not be permitted to sell the notes or our shares
of common stock issuable upon conversion of the notes pursuant to the shelf
registration statement.
THE SUMMARY HEREIN OF CERTAIN PROVISIONS OF THE REGISTRATION RIGHTS
AGREEMENT IS SUBJECT TO, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, ALL
THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, A COPY OF WHICH IS FILED AS
AN EXHIBIT TO THE SHELF REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A
PART.
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DESCRIPTION OF OUR CAPITAL STOCK
The following statements with respect to our capital stock are
summaries and are subject to the detailed provisions of AMR's certificate of
incorporation, as amended (the "Certificate of Incorporation"), and by-laws, as
amended (the "By-Laws"). These statements do not purport to be complete or to
give full effect to the provisions of statutory or common law, and are subject
to, and are qualified in their entirety by reference to, the terms of the
Certificate of Incorporation and the By-Laws, copies of which are filed as
exhibits to the registration statement of which this prospectus is a part.
The Certificate of Incorporation authorizes us to issue 750,000,000
shares of common stock and 20,000,000 shares of preferred stock. On October 21,
2003, 159,347,481 shares of our common stock were outstanding. The Certificate
of Incorporation authorizes our board of directors to provide for the issuance
of shares of preferred stock, from time to time, in one or more series, and to
fix any voting powers, full or limited, and the designation, preferences and
relative, participating, optional or other special rights, applicable to the
shares to be included in any such series and any qualifications, limitations or
restrictions thereon. No shares of our preferred stock are outstanding as of the
date hereof.
VOTING RIGHTS
The holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Except as
otherwise provided by law, the holders of our common stock vote as one class.
The shares of our common stock do not have cumulative voting rights. As a
result, subject to the voting rights, if any, of the holders of any shares of
our preferred stock which may at the time be outstanding, the holders of common
stock entitled to exercise more than 50% of the voting rights in an election of
directors can elect 100% of the directors to be elected if they choose to do so.
In such event, the holders of the remaining shares of our common stock voting
for the election of directors will not be able to elect any persons to the board
of directors.
DELAWARE GENERAL CORPORATION LAW SECTION 203
As a corporation organized under the laws of the State of Delaware, we
are subject to Section 203 of the Delaware General Corporation Law (the "DGCL")
which restricts certain business combinations between us and an "interested
stockholder" (in general, a stockholder owning 15% or more of our outstanding
voting stock) or its affiliates or associates for a period of three years
following the date on which the stockholder becomes an "interested stockholder."
The restrictions do not apply if (i) prior to an interested stockholder becoming
such, the board of directors approves either the business combination or the
transaction in which the stockholder becomes an interested stockholder, (ii)
upon consummation of the transaction in which any person becomes an interested
stockholder, such interested stockholder owns at least 85% of our voting stock
outstanding at the time the transaction commences (excluding shares owned by
certain employee stock ownership plans and persons who are both directors and
officers of the Company) or (iii) on or subsequent to the date an interested
stockholder becomes such, the business combination is both approved by the board
of directors and authorized at an annual or special meeting of our stockholders,
not by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock not owned by the interested stockholder.
LIQUIDATION RIGHTS AND OTHER PROVISIONS
Subject to the prior rights of creditors and the holders of any
preferred stock which may be outstanding from time to time, the holders of our
common stock are entitled in the event of liquidation, dissolution or winding up
to share pro rata in the distribution of all remaining assets.
The holders of our common stock are entitled to such dividends as our
board of directors may declare from time to time from legally available funds
subject to the preferential rights of the holders of any shares of our preferred
stock that we may issue in the future. See "Dividend Policy."
The common stock is not liable to any calls or assessments and is not
convertible into any other securities. The Certificate of Incorporation provides
that the private property of the stockholders shall not be subject to the
36
payment of corporate debts. There are no redemption or sinking funds provisions
applicable to the common stock, and the Certificate of Incorporation provides
that there shall be no preemptive rights.
The Certificate of Incorporation provides that our directors shall not
be personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the directors' duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit.
Section 174 of the DGCL specifies conditions under which directors of Delaware
corporations may be liable for unlawful dividends or unlawful stock purchases or
redemptions.
The transfer agent and registrar for the common stock is EquiServe
Trust Company, N.A.
37
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary discusses certain material U.S. federal income
tax consequences to U.S. holders relating to the purchase, ownership, and
disposition of the notes and the shares of common stock that may be received
upon conversion or repurchase of the notes. A "U.S. holder" means a beneficial
owner of a note or common stock that is for U.S. federal income tax purposes:
- a citizen or resident alien individual of the United States;
- a corporation (or any entity treated as a corporation for U.S.
federal income tax purposes) created or organized in or under
the laws of the United States or any political subdivision of
the United States;
- an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or
- a trust if it (1) is subject to the primary supervision of a
court within the United States and one or more U.S. persons
have the authority to control all substantial decisions of the
trust or (2) has a valid election in effect under applicable
U.S. Treasury regulations to be treated as a U.S. person.
This summary deals only with notes and shares of common stock held as
capital assets (generally, property held for investment). This summary does not
address all of the U.S. federal income tax consequences that may be relevant to
a holder in light of its own particular circumstances, nor does it deal with
special situations, such as:
- tax consequences to U.S. holders who may be subject to special
tax treatment, such as dealers in securities or currencies,
banks, insurance companies, tax-exempt entities and traders in
securities that elect to use a mark-to-market method of
accounting for their securities holdings;
- tax consequences to persons holding notes or common stock as
part of a hedging, integrated, constructive sale or conversion
transaction or a straddle;
- tax consequences to U.S. holders whose "functional currency"
is not the U.S. dollar;
- alternative minimum tax consequences, if any; or
- any state, local or foreign tax consequences.
The discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury regulations, rulings and
judicial decisions as of the date hereof. Those authorities may be changed,
perhaps retroactively, so as to result in U.S. federal income tax consequences
different from those discussed below. There can be no assurance that the
Internal Revenue Service (the "IRS") will not challenge one or more of the tax
consequences discussed herein. If a partnership holds our notes or common stock,
the tax treatment of a partner in the partnership will generally depend upon the
status of the partner and the activities of the partnership. If you are a
partner of a partnership (or any entity treated as a partnership for U.S.
federal income tax purposes) holding our notes or common stock, you should
consult your own tax advisers. Whether a note is treated as debt (and not
equity) for U.S. federal income tax purposes is an inherently factual question
and no single factor is determinative. We will treat the notes as indebtedness
for U.S. federal income tax purposes and the following discussion assumes that
such treatment will be respected.
IF YOU ARE CONSIDERING THE PURCHASE OF NOTES, YOU SHOULD CONSULT YOUR
OWN TAX ADVISERS CONCERNING THE U.S. FEDERAL TAX CONSEQUENCES, AS WELL AS ANY
TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION, TO YOU
IN LIGHT OF YOUR OWN PARTICULAR CIRCUMSTANCES.
38
REGISTRATION OF NOTES
The registration of the notes pursuant to the registration statement
will not constitute a taxable event to U.S. holders. Consequently, no gain or
loss will be recognized by a U.S. holder upon such registration. A U.S. holder's
holding period of a registered note will include the holder's holding period of
the note while unregistered, and a U.S. holder's tax basis in a registered note
will be the same as the holder's tax basis in the note immediately before the
registration of such note.
INTEREST AND ORIGINAL ISSUE DISCOUNT
Stated interest payable on the notes generally will be included in
gross income of a U.S. holder as ordinary interest income at the time accrued or
received, in accordance with such U.S. holder's method of accounting for U.S.
federal income tax purposes.
The "stated redemption price at maturity" of the notes (generally, the
sum of all payments required under the notes other than payments of stated
interest) exceeded their "issue price" (generally, the first price at which a
substantial amount of notes were sold for money (excluding sales to bond houses,
brokers or similar persons or organizations acting as underwriters, placement
agents or wholesalers)) by more than the applicable de minimis amount and, thus,
the notes were issued with original issue discount ("OID"). A U.S. holder will
be required to include such OID in gross income as it accrues through September
23, 2008, in accordance with a constant-yield method based on a compounding of
interest, prior to the receipt of cash payments attributable to this income. A
U.S. holder's adjusted tax basis in the notes will be increased by the amount of
OID previously included in income (including in the year of disposition).
PREMIUM
If you purchase a note for an amount that is greater than its "adjusted
issue price" but equal to or less than the sum of all amounts (other than
payments of stated interest) payable on the note after the purchase date, you
will be considered to have purchased such note at an "acquisition premium." The
amount of OID that you must include in your gross income with respect to such
note for any taxable year will be reduced by the portion of such "acquisition
premium" properly allocable to such year. For this purpose, the "adjusted issue
price" of a note generally will be the "issue price" of the note (as described
above under "-- Interest and Original Issue Discount") plus the amount of OID
includible in the gross income of any holder of the note (determined without
regard to any "acquisition premium" or "premium") prior to the date you purchase
the note. If you purchase a note for an amount that exceeds the sum of all
amounts (other than stated interest) payable on the note after the purchase
date, you will not be required to include any OID on the note in income.
If your tax basis in a note (reduced by the value of the right to
convert the note into our common stock) exceeds the sum of all amounts (other
than stated interest) payable on the note after the date you purchase the note,
you will be considered to have purchased the note at a "premium." You generally
may elect to amortize such "premium" over the remaining term of the note on a
constant-yield method as an offset to interest income. If you make this
election, you will be required to reduce your adjusted tax basis in the note by
the amount of the "premium" amortized. This election will also apply to all debt
obligations held or subsequently acquired by you on or after the first day of
the first taxable year to which the election applies. You may not revoke the
election without the consent of the IRS. If you do not make this election, the
amount of the "premium" will decrease the gain or increase the loss you would
otherwise recognize on disposition of the note. You should consult your own tax
advisers before making this election.
LIQUIDATED DAMAGES
We may be required to make payments of liquidated damages if we do not
file or cause to be declared effective a registration statement, or if such
statement is unavailable for certain specified periods, all as described under
"Description of the Notes -- Registration Rights." We intend to take the
position for U.S. federal income tax purposes that any payments of liquidated
damages should be taxable to you as additional ordinary income only when
received or accrued, in accordance with your method of tax accounting. This
position is based in part on the
39
assumption that, as of the date of issuance of the notes, the possibility that
liquidated damages will have to be paid is a "remote" or "incidental"
contingency within the meaning of applicable U.S. Treasury regulations. Our
determination that such possibility is a remote or incidental contingency is
binding on you, unless you explicitly disclose that you are taking a different
position to the IRS on your tax return for the year during which you acquire the
note. However, the IRS may take a contrary position from that described above,
which could affect the timing and character of both your income from the notes
and our deductions with respect to the notes.
IF WE DO FAIL TO FILE OR CAUSE TO BE DECLARED EFFECTIVE A REGISTRATION
STATEMENT OR IT DOES BECOME UNAVAILABLE, YOU SHOULD CONSULT YOUR OWN TAX
ADVISERS CONCERNING THE APPROPRIATE TAX TREATMENT OF THE NOTES AND THE PAYMENT
OF LIQUIDATED DAMAGES WITH RESPECT TO THE NOTES.
SALE, EXCHANGE, REDEMPTION OR OTHER DISPOSITION OF NOTES
Except as provided below under "-- Conversion of Notes" and "-- Our
Purchase of Notes at Your Option or Redemption at Our Option," you generally
will recognize gain or loss upon the sale, exchange, redemption or other
disposition of a note equal to the difference between the amount realized upon
the sale, exchange, redemption or other disposition (except to the extent such
amount is attributable to accrued interest, which will be taxable as ordinary
income to the extent not previously includible in income) and your adjusted tax
basis in the note. Any gain or loss recognized on a disposition of the note will
be capital gain or loss, except as described below under "-- Market Discount."
If you are an individual and have held the note for more than one year at the
time of the sale, exchange, redemption or other disposition, such capital gain
generally will be subject to tax at a maximum rate of 15% through December 31,
2008, after which time the maximum rate is scheduled to revert to 20%.
Limitations apply to the deduction of capital losses.
CONVERSION OF NOTES
Except to the extent of (i) common stock received with respect to
accrued interest not previously includible in income, which will be taxable as
ordinary income, and (ii) cash received in lieu of a fractional share of common
stock, you will not recognize any income, gain or loss on the conversion of
notes solely into common stock. Cash received in lieu of a fractional share of
common stock generally should be treated as a payment in exchange for such
fractional share. The amount of gain or loss on the deemed sale of such
fractional share will be equal to the difference between the amount of cash you
receive in respect of such fractional share and the portion of your adjusted tax
basis in the note that is allocable to the fractional share. The tax basis of
the common stock received upon a conversion, other than to the extent received
with respect to accrued interest, will equal the adjusted tax basis of the note
(except to the extent allocable to any fractional share) that was converted into
common stock. The tax basis of the common stock received upon a conversion with
respect to accrued interest will equal the fair market value of such stock. Your
holding period for common stock generally will include the period during which
you held the notes. To the extent any common stock issued upon a conversion is
allocable to accrued interest or OID, however, your holding period for such
common stock may commence on the day following the date of delivery of common
stock.
If you receive a combination of common stock and cash (other than cash
attributable to a fractional share of common stock), the tax treatment is not
entirely certain. The fair market value of cash and common stock received with
respect to accrued interest will be taxable as ordinary income to the extent not
previously includible in income. Additionally, you may be required to recognize
gain, if any, in an amount equal to the lesser of (1) the cash received or (2)
the excess of the fair market value of the common stock and cash received over
your adjusted basis in the note at the time of conversion, in each case other
than any cash and common stock received with respect to accrued interest, and
may not be able to recognize a loss. To the extent allocable to accrued "market
discount", if any, that has not previously been included in gross income (see
"-- Market Discount", below), such gain may be treated as ordinary interest
income. Your tax basis in the common stock, other than to the extent received
with respect to accrued interest, generally would be equal to your adjusted
basis in the note at the time of conversion, increased by the amount of gain
recognized, if any, and reduced by the amount of cash received (other than cash
received with respect to accrued interest). Your tax basis in the common stock
received upon a conversion with respect to accrued interest would equal the fair
market value of such stock. Cash received in lieu of a fractional share of
common stock generally would be treated in the same manner as described in the
preceding paragraph. Alternatively, your receipt of cash and common stock upon
conversion may be treated as a sale of a portion of the note for cash and a
40
conversion of the remainder of the note. In such event, the cash received would
be treated as proceeds from a sale of a portion of the note, as described above
under "-- Sale, Exchange, Redemption or Other Disposition of Notes," and the
common stock would be treated as received upon a conversion of a portion of the
note, as described above in the preceding paragraph. Under this alternative,
your tax basis in the note would be allocated between the portion treated as
converted into common stock (including any fractional share treated as received)
and the portion treated as sold for cash. Under either alternative, your holding
period for the common stock generally would include your holding period for the
converted note. To the extent that any common stock is allocable to accrued
interest or OID, however, your holding period for such common stock may commence
on the day following the date of delivery of the common stock. You should
consult your own tax advisers regarding the tax consequences of receiving a
combination of common stock and cash upon conversion.
If you receive solely cash in exchange for your note upon conversion,
your gain or loss will be determined in the same manner as if you disposed of
the note in a taxable disposition (as described above under "-- Sale, Exchange,
Redemption or Other Disposition of Notes").
OUR PURCHASE OF NOTES AT YOUR OPTION OR REDEMPTION AT OUR OPTION
If you require us to purchase a note as described above under
"Description of the Notes -- Purchase of Notes by AMR at the Option of the
Holder" or "Description of the Notes -- Change in Control Permits Purchase of
Notes by AMR at the Option of the Holder" and we issue shares of our common
stock plus cash in lieu of any fractional share of common stock in full
satisfaction of the purchase price, our purchase of the note should be treated
in the same manner as a conversion of the note solely into common stock, as
described above under "-- Conversion of Notes."
If you require us to purchase a note as described above under
"Description of the Notes -- Purchase of Notes by AMR at the Option of the
Holder" or "Description of the Notes -- Change in Control Permits Purchase of
Notes by AMR at the Option of the Holder" and we deliver a combination of cash
and shares of our common stock in payment of the purchase price (other than cash
attributable to a fractional share of common stock), the tax treatment is not
entirely certain. The fair market value of cash and common stock received with
respect to accrued interest will be taxable as ordinary income to the extent not
previously includible in income. Additionally, you may be required to recognize
gain, if any, in an amount equal to the lesser of (1) the cash received or (2)
the excess of the fair market value of the common stock and cash received over
your adjusted basis in the note at the time of purchase by us, in each case
other than any cash and common stock received with respect to accrued interest,
and may not be able to recognize a loss. To the extent allocable to accrued
"market discount", if any, that has not previously been included in gross income
(see "-- Market Discount", below), such gain may be treated as ordinary interest
income. Your tax basis in the common stock, other than to the extent received
with respect to accrued interest, generally would be equal to your adjusted
basis in the note at the time of our purchase, increased by the amount of gain
recognized, if any, and reduced by the amount of cash received (other than cash
received with respect to accrued interest). Your tax basis in the common stock
received at the time of our purchase with respect to accrued interest would
equal the fair market value of such stock. Cash received in lieu of a fractional
share of common stock generally would be treated in the same manner as described
above in the first paragraph under "-- Conversion of Notes." Alternatively, your
receipt of cash and common stock upon our purchase of a note may be treated as a
sale of a portion of the note for cash and an exchange of the remainder of the
note for common stock. In such event, the cash received would be treated as
proceeds from a sale of a portion of the note, as described above under "--
Sale, Exchange, Redemption or Other Disposition of Notes," and the common stock
would be treated as received upon an exchange of a portion of the note, as
described above in the first paragraph under "-- Conversion of Notes." Under
this alternative, your tax basis in the note would be allocated between the
portion treated as exchanged for common stock (including any fractional share
treated as received) and the portion treated as sold for cash. Under either
alternative, your holding period for the common stock generally should include
your holding period for the note purchased by us. To the extent that any common
stock is allocable to accrued interest or OID, however, your holding period for
such common stock may commence on the day following the date of delivery of the
common stock. You should consult your own tax advisers regarding the tax
consequences of receiving a combination of common stock and cash upon a purchase
of a note by us.
If we elect to exercise our option to redeem a note or if you elect to
require us to purchase a note and, in either event, we deliver to you cash in
full satisfaction of the redemption or purchase price, the redemption or
41
purchase will be treated the same as a sale of the note, as described above
under "--Sale, Exchange, Redemption or Other Disposition of Notes."
MARKET DISCOUNT
If you purchase a note for an amount that is less than its "revised
issue price", then, unless a de minimis exception applies, the amount of the
difference between your purchase price and the "revised issue price" will be
treated as "market discount." "Revised issue price" means the sum of the "issue
price" of the note, as described above under "-- Interest and Original Issue
Discount", and the aggregate amount of OID includible in the income of all
holders for periods before your purchase of the note (determined without regard
to any "acquisition premium" or "premium", as described above under "--
Premium"). Under the de minimis exception, if the "market discount" is less than
1/4 of one percent of the stated redemption price at maturity multiplied by the
number of complete years to maturity after your purchase of the note, you will
not be subject to the "market discount" rules described below.
If you are treated as acquiring a note at a "market discount", you
generally will be required to treat any payment (other than stated interest) on,
or any gain realized on the gift, sale, exchange, redemption or other
disposition of, the note as ordinary interest income to the extent of the
"market discount" that has accrued and has not previously been included in your
income as of such time. You also may be required to defer the deduction of all
or a portion of any interest paid or accrued on indebtedness incurred or
maintained to purchase or carry the note. "Market discount" generally accrues
ratably during the period from the date of acquisition to the maturity date of
the note, unless you make an irrevocable election to accrue on a constant-yield
method. Your tax basis in the note will be increased by the amount of "market
discount" included in income.
Alternatively, you may elect (with respect to the note and all your
other "market discount" obligations acquired on or after the first day of the
first taxable year to which such election applies) to include "market discount"
in income currently as it accrues. If such an election is made, the rules
described above treating certain payments and gain as ordinary interest income
and requiring the deferral of certain interest deductions will not apply, and
your tax basis in the note will be increased by the amount of "market discount"
included in income. You may not revoke the election without the consent of the
IRS. You should consult your own tax advisers before making this election.
If you convert, or require us to purchase, a note with accrued "market
discount" that has not previously been included in gross income and we issue
shares of our common stock to you in full or partial satisfaction, a ratable
portion of such "market discount" will be allocated to each share of such common
stock. The amount of "market discount" allocable to such common stock may be
taxable as ordinary income upon a sale or other disposition of such common
stock.
CONSTRUCTIVE DIVIDEND
The conversion price of the notes will be adjusted in certain
circumstances. See "Description of the Notes -- Conversion Rights." Under
section 305(c) of the Code, adjustments (or failures to make adjustments) that
have the effect of increasing your proportionate interest in our assets or
earnings may in some circumstances result in a deemed distribution to you. Any
deemed distribution will be taxable as a dividend to the extent it is treated as
paid from our current or accumulated earnings and profits.
DIVIDENDS ON COMMON STOCK
If, after you convert a note into common stock, we make a distribution
of cash or other property (other than certain pro rata distributions of our
common stock) in respect of that stock, the distribution will be treated as a
dividend to the extent it is paid from our current or accumulated earnings and
profits. If the distribution exceeds our current and accumulated earnings and
profits, the excess will be treated first as a tax-free return of your
investment, up to your basis in such common stock. Any remaining excess will be
treated as capital gain, except as described above under "-- Market Discount."
If you are an individual, the amount of any such distribution treated as a
dividend generally will be taxable at a maximum rate of 15% through December 31,
2008, after which time
42
dividends will be taxable at the regular rates for ordinary income. If you are a
corporation, you may be able to claim a deduction for a portion of any
distribution received that is treated as a dividend.
SALE OR OTHER DISPOSITION OF COMMON STOCK
You will generally recognize capital gain or loss on a sale or other
disposition of common stock, except as described above under "-- Market
Discount." Your gain or loss will equal the difference between the proceeds you
received and your adjusted tax basis in the common stock. The proceeds received
will include the amount of any cash and the fair market value of any other
property received for the common stock. If you are an individual and your
holding period for the common stock at the time of the sale or other disposition
exceeds one year, such capital gain generally will be subject to tax at a
maximum rate of 15% through December 31, 2008, after which time the maximum rate
is scheduled to revert to 20%. Limitations apply to the deduction of capital
losses.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments to a U.S. holder of principal and interest on the notes (and the amount
of OID accruing for federal income tax purposes), dividends paid on the common
stock, and the proceeds of sale of a note or share of common stock unless you
are an exempt recipient (such as a corporation). Backup withholding tax will
apply to such payments if you fail to provide your taxpayer identification
number or certification of exempt status or fail to report in full dividend and
interest income. The backup withholding rate for 2003 is 28%.
Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against your U.S. federal income tax liability provided
the required information is furnished on a timely basis to the IRS.
43
CERTAIN ERISA CONSIDERATIONS
The following is a summary of certain considerations associated with
the purchase of the notes by employee benefit plans that are subject to Title I
of the U.S. Employee Retirement Income Security Act of 1974, as amended
("ERISA"), plans, individual retirement accounts and other arrangements that are
subject to Section 4975 of the Code or provisions under any federal, state,
local, non-U.S. or other laws or regulations that are similar to such provisions
of the Code or ERISA (collectively, "Similar Laws"), and entities whose
underlying assets are considered to include "plan assets" of such plans,
accounts and arrangements (each, a "Plan").
GENERAL FIDUCIARY MATTERS
ERISA and the Code impose certain duties on persons who are fiduciaries
of a Plan subject to Title I of ERISA or Section 4975 of the Code (an "ERISA
Plan") and prohibit certain transactions involving the assets of an ERISA Plan
and its fiduciaries or other interested parties. Under ERISA and the Code, any
person who exercises any discretionary authority or control over the
administration of such an ERISA Plan or the management or disposition of the
assets of such an ERISA Plan, or who renders investment advice for a fee or
other compensation to such a Plan, is generally considered to be a fiduciary of
the ERISA Plan.
In considering an investment in the notes of a portion of the assets of
any Plan, a fiduciary should determine whether the investment is in accordance
with the documents and instruments governing the Plan and the applicable
provisions of ERISA, the Code or any Similar Law relating to a fiduciary's
duties to the Plan including, without limitation, the prudence, diversification,
delegation of control and prohibited transaction provisions of ERISA, the Code
and any other applicable Similar Laws.
PROHIBITED TRANSACTION ISSUES
Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans
from engaging in specified transactions involving plan assets with persons or
entities who are "parties in interest," within the meaning of ERISA, or
"disqualified persons," within the meaning of Section 4975 of the Code, unless
an exemption is available. A party in interest or disqualified person who
engages in a non-exempt prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code. In addition, the
fiduciary of the ERISA Plan that engaged in such a non-exempt prohibited
transaction may be subject to penalties and liabilities under ERISA and the
Code.
The acquisition and/or holding of the notes by an ERISA Plan with
respect to which AMR, American Airlines, Inc. or the initial purchaser is
considered a party in interest or a disqualified person, and the conversion of
the notes by an ERISA Plan with respect to which AMR or American Airlines, Inc.
is considered a party in interest or disqualified person, may constitute or
result in a direct or indirect prohibited transaction under Section 406 of ERISA
and/or Section 4975 of the Code, unless the notes are acquired and held in
accordance with an applicable statutory, class or individual prohibited
transaction exemption. In this regard, the U.S. Department of Labor has issued
prohibited transaction class exemptions, or "PTCEs," that may apply to the
acquisition, holding and conversion of the notes. These class exemptions
include, without limitation, PTCE 84-14 respecting transactions determined by
independent qualified professional asset managers, PTCE 90-1 respecting
insurance company pooled separate accounts, PTCE 91-38 respecting bank
collective investment funds, PTCE 95-60 respecting life insurance company
general accounts and PTCE 96-23 respecting transactions determined by in-house
asset managers. There can be no assurance that all of the conditions of any such
exemptions will be satisfied.
Because of the foregoing, the notes should not be purchased or held by
any person investing "plan assets" of any Plan, unless such purchase, holding
and conversion will not constitute a non-exempt prohibited transaction under
ERISA and the Code or similar violation of any applicable Similar Laws.
REPRESENTATION
Accordingly, by acceptance of the notes, each purchaser and subsequent
transferee of the notes will be deemed to have represented and warranted that
either (1) no portion of the assets used by such purchaser or
44
transferee to acquire and hold the notes constitutes assets of any Plan or (2)
the purchase, holding and conversion of the notes by such purchaser or
transferee will not constitute a non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code or similar violation under any
applicable Similar Laws.
The foregoing discussion is general in nature and is not intended to be
all-inclusive. Due to the complexity of these rules and the penalties that may
be imposed upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries, or other persons considering purchasing
the notes on behalf of, or with the assets of, any Plan, consult with their
counsel regarding the potential applicability of ERISA, Section 4975 of the Code
and any Similar Laws to such investment and whether an exemption would be
applicable to the purchase and holding of the notes.
SELLING SECURITYHOLDERS
The notes were originally issued to Citigroup Global Markets Inc., as
initial purchaser, in a private placement that closed on September 23, 2003. The
initial purchaser has advised us that the notes were resold in transactions
exempt from the registration requirements of the Securities Act to "qualified
institutional buyers," as defined by Rule 144A under the Securities Act. Selling
securityholders, including their transferees, pledgees, donees or successors,
may from time to time offer and sell pursuant to this prospectus any or all of
the notes and the common stock into which the notes are convertible.
No offer or sale under this prospectus may be made by a holder of the
securities unless that holder is listed in the table in this prospectus or until
that holder has notified us and a supplement to this prospectus has been filed
or an amendment to the related registration statement has become effective. We
will supplement or amend this prospectus to include additional selling
securityholders as promptly as is reasonably practicable after additional
selling securityholders provide to us a questionnaire containing all required
information.
The following table, which we have prepared based on information
provided to us by the applicable selling securityholder, sets forth the name,
principal amount of notes, and number of shares of common stock beneficially
owned by the selling securityholders intending to sell notes or common stock and
the principal amount of notes or shares of common stock to be offered. Unless
set forth below, none of the selling securityholders selling in connection with
this prospectus has held any position or office with, been employed by, or
otherwise has had a material relationship with us or any of our predecessors or
affiliates during the three years prior to the date of this prospectus.
Citigroup Global Markets Inc. and certain of its affiliates have engaged and may
engage in investment banking transactions with us.
PRINCIPAL
AMOUNT OF NUMBER OF NUMBER OF PERCENTAGE OF
NOTES SHARES OF SHARES OF NUMBER OF SHARES COMMON STOCK
BENEFICIALLY COMMON STOCK COMMON STOCK OF COMMON STOCK OUTSTANDING
OWNED THAT OWNED PRIOR THAT MAY BE OWNED AFTER OWNED AFTER
NAME MAY BE SOLD TO CONVERSION SOLD HEREBY(1) OFFERING OFFERING(2)
---------------------------- ------------ ------------- -------------- ---------------- --------------
[Holder] [ ] [ ] [ ] [ ] [ ]
Any other holder of notes or
future transferee,
pledgee, donee, or
successor of any such
holder(3)................ $ [ ] [ ] [ ] [ ] [ ]
Total....................... $ [ ] [ ] [ ] [ ] [ ]
---------------------
(1) Assumes conversion of all of the holder's notes at a conversion rate of
57.61 shares of our common stock per $1,000 principal amount of the
notes. This conversion rate, however, will be subject to adjustment as
described under "Description of the Notes -- Conversion Rights." As a
result, the number of shares of our common stock issuable upon
conversion of the notes may increase or decrease in the future.
Excludes shares of common stock that may be issued by us upon the
repurchase of the notes and fractional shares. Holders will receive a
cash adjustment for any fractional share amount resulting from
conversion of the notes, as described under "Descriptions of the Notes
-- Conversion Rights."
45
(2) Calculated based on 159,347,481 shares of common stock outstanding as
of October 21, 2003. In calculating this amount for each holder, we
treated as outstanding the number of shares of common stock issuable
upon conversion of all of that holder's notes but we did not assume
conversion of any other holder's notes.
(3) Information about other selling securityholders will be set forth in
one or more prospectus supplements, if required. Assumes that any other
holders of notes, or any future transferees, pledgees, donees, or
successors of or from any such other holders of notes, do not
beneficially own any common stock other than the common stock issuable
upon conversion of the notes at the initial conversion rate.
We prepared this table based on the information supplied to us by the
selling securityholders named in the table above on or before [ ], 2003, and
we have not sought to verify such information.
The selling securityholders listed in the above table may have sold,
transferred or otherwise disposed of, in transactions exempt from the
registration requirements of the Securities Act, some or all of their notes or
shares of our common stock issuable upon conversion of the notes since the date
on which the information in the above table was provided to us. Moreover,
information about the selling securityholders may change over time. We will set
forth in prospectus supplements or amendments to this prospectus, if and when
necessary, any changed information given to us by the selling securityholders.
From time to time, additional information concerning ownership of the notes and
the shares of common stock issuable upon conversion of the notes may rest with
holders not named in the table above and of whom we are unaware.
Because the selling securityholders may offer all or some of their
notes or the shares of our common stock issuable upon conversion of the notes
form time to time, we cannot estimate the amount of the notes or number of
shares of our common stock that will be held by the selling securityholders upon
the termination of any particular offering by such selling securityholder.
Please refer to "Plan of Distribution."
46
PLAN OF DISTRIBUTION
We are registering the notes and the shares of common stock issuable
upon conversion of the notes covered by this prospectus to permit
securityholders to conduct secondary trading of these securities from time to
time after the date of this prospectus. We will not receive any of the proceeds
of the sale of the notes and the shares of common stock issuable upon conversion
of the notes offered by this prospectus. The aggregate proceeds to the selling
securityholders from the sale of the notes or the shares of common stock
issuable upon conversion of the notes will be the purchase price of the notes or
the shares of common stock issuable upon conversion of the notes less any
discounts, commissions and transfer taxes, if any. The selling securityholders
reserve the right to accept and, together with their agents, to reject, any
proposed purchase of notes or common stock issuable upon conversion of the notes
to be made directly or through agents.
The notes and the shares of common stock issuable upon conversion of
the notes may be sold from time to time to purchasers:
- directly by the selling securityholders and their successors,
which includes their transferees, pledgees or donees or their
successors, or
- through underwriters, broker-dealers or agents who may receive
compensation in the form of discounts, concessions or
commissions from the selling securityholders or the purchasers
of the notes and the shares of common stock issuable upon
conversion of the notes. These discounts, concessions or
commissions may be in excess of those customary in the types
of transactions involved.
The selling securityholders and any underwriters, broker-dealers or
agents who participate in the distribution of the notes and the shares of common
stock issuable upon conversion of the notes may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Any selling
securityholder which is a broker-dealer or an affiliate of a broker-dealer will
be deemed to be an "underwriter" within the meaning of Section 2(11) of the
Securities Act, unless such selling securityholder purchased in the ordinary
course of business and at the time of its purchase of the notes to be resold,
did not have any agreements or understandings, directly or indirectly, with any
person to distribute the notes. As a result, any profits on the sale of the
notes and the shares of common stock issuable upon conversion of the notes by
selling securityholders who are deemed to be underwriters and any discounts,
commissions or concessions received by any such broker-dealers or agents who are
deemed to be underwriters will be deemed to be underwriting discounts and
commissions under the Securities Act. Selling securityholders who are deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act will
be subject to prospectus delivery requirements of the Securities Act and to
certain statutory liabilities, including, but not limited to, those relating to
Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange
Act.
If the notes and the shares of common stock issuable upon conversion of
the notes are sold through underwriters or broker-dealers, the selling
securityholders will be responsible for underwriting discounts or commissions or
agent's commissions.
The notes and the shares of common stock issuable upon conversion of
the notes may be sold in one or more transactions at:
- fixed prices;
- prevailing market prices at the time of sale;
- prices related to such prevailing market prices;
- varying prices determined at the time of sale; or
- negotiated prices.
47
These sales may be effected in transactions:
- on any national securities exchange or quotation service on
which the notes and the shares of common stock issuable upon
conversion of the notes may be listed or quoted at the time of
the sale, including the NYSE in the case of the common stock;
- in the over-the-counter market;
- in transactions otherwise than on such exchanges or services
or in the over-the-counter market;
- through the writing of options, whether such options are
listed on an options exchange or otherwise; or
- through the settlement of short sales.
These transactions may include block transactions or crosses. Crosses
are transactions in which the same broker acts as an agent on both sides of the
trade.
The selling securityholders or their successors in interest may from
time to time pledge or grant a security interest in some or all of the notes or
shares of common stock issuable upon conversions of the notes and, if the
selling securityholders default in the performance of their secured obligation,
the pledgees or secured parties may offer and sell the notes or shares of common
stock issuable upon conversion of the notes from time to time under this
prospectus; however, in the event of a pledge or the default on the performance
of a secured obligation by the selling securityholders, in order for the notes
or shares of common stock issuable upon conversion of the notes to be sold under
this registration statement, unless permitted by law, we must distribute a
prospectus supplement and/or an amendment to the registration statement of which
this prospectus is a part amending the list of selling securityholders to
include the pledgee, transferee, secured party or other successors in interest
as selling securityholders under this prospectus.
In connection with the sales of the notes and the shares of common
stock issuable upon conversion of the notes or otherwise, the selling
securityholders may enter into hedging transactions with broker-dealers or other
financial institutions. These broker-dealers or other financial institutions may
in turn engage in short sales of the notes or the shares of common stock
issuable upon conversion of the notes in the course of hedging their positions.
The selling securityholders may also (1) sell the notes and shares of common
stock issuable upon conversion of the notes short and deliver notes and the
shares of common stock issuable upon conversion of the notes to close out short
positions, or (2) loan or pledge the notes or the shares of common stock
issuable upon conversion of the notes to broker-dealers that in turn may sell
the notes and the shares of common stock issuable upon conversion of the notes.
A short sale of the notes or the shares of common stock issuable upon
conversion of the notes by a broker-dealer, financial institution or selling
securityholder would involve the sale of such notes or shares of common stock
issuable upon conversion of the notes that are not owned, and therefore must be
borrowed, in order to make delivery of the security in connection with such
sale. In connection with a short sale of the notes or the shares of common stock
issuable upon conversion of the notes a broker-dealer, financial institution or
selling securityholder may purchase the notes or our common stock on the open
market to cover positions created by short sales. In determining the source of
the notes or shares of common stock to close out such short positions, the
broker-dealer, financial institution or selling securityholders may consider,
among other things, the price of shares of the notes or common stock available
for purchase in the open market.
At the time a particular offering of the notes or shares of common
stock issuable upon conversion of the notes is made, if required, a
post-effective amendment to the registration statement of which this prospectus
is a part will be filed, or a prospectus supplement will be distributed, which
will set forth the names of the selling securityholders, the aggregate amount
and type of securities being offered and the terms of the offering, including,
to the extent required, (1) the name or names of any underwriters,
broker-dealers or agents, (2) any discounts, commissions and other terms
constituting compensation from the selling securityholders and (3) any
discounts, commissions or concessions allowed or reallowed to be paid to
broker-dealers.
48
Our common stock trades on the NYSE under the symbol "AMR." The notes
are currently eligible for trading on the PORTAL system of the National
Association of Securities Dealers, Inc.; however, notes sold using this
prospectus will no longer be eligible for trading on PORTAL. We do not intend to
apply for listing of the notes on any securities exchange or other stock market.
Accordingly, a market for the notes may not develop and we are not certain of
the liquidity of any market that may develop, the ability of holders to sell
their notes or the price at which holders would be able to sell their notes. See
"Risk Factors - Risk Factors Related to the Notes."
We cannot assure you that any selling securityholder will sell any or
all of the notes or the shares of common stock issuable upon conversion of the
notes with this prospectus. Further, we cannot assure you that any such selling
securityholder will not transfer, devise or gift the notes and the shares of
common stock issuable upon conversion of the notes by other means not described
in this prospectus. In addition, any notes or shares of common stock issuable
upon conversion of the notes covered by this prospectus that qualify for sale
under Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or
Rule 144A rather than under this prospectus.
The notes and the shares of common stock issuable upon conversion of
the notes may be sold in some states only through registered or licensed brokers
or dealers. In addition, in some states the notes and shares of common stock
issuable upon conversion of the notes may not be sold unless they have been
registered or qualified for sale or the sale is entitled to an exemption from
registration.
The selling securityholders and any other person participating in the
sale of notes or the shares of common stock issuable upon conversion of the
notes will be subject to the Exchange Act and the rules and regulations
thereunder. The Exchange Act rules include, without limitation, Regulation M,
which may limit the timing of purchases and sales of any of the notes and the
shares of common stock issuable upon conversion of the notes by the selling
securityholders and any other such person. In addition, Regulation M of the
Exchange Act may restrict the ability of any person engaged in the distribution
of the notes and the shares of common stock issuable upon conversion of the
notes to engage in market-making activities with respect to the particular notes
and the shares of common stock issuable upon conversion of the notes being
distributed for a period of up to five business days before the commencement of
such distribution. This may affect the marketability of the notes and the shares
of common stock issuable upon conversion of the notes and the ability of any
person or entity to engage in market-making activities with respect to the notes
and the shares of common stock issuable upon conversion of the notes.
Under the registration rights agreement filed as an exhibit to the
registration statement of which this prospectus is a part, we and the selling
securityholders will be indemnified by the other against certain liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection with these liabilities.
We have agreed to pay substantially all of the expenses incidental to
the registration, offering and sale of the notes and shares of common stock
issuable upon conversion of the notes to the public other than underwriting
discounts or commissions or agent's commissions and transfer taxes, if any, and
certain legal expenses of the selling securityholders.
LEGAL OPINION
The validity of the notes and the shares of common stock issuable upon
conversion of the notes will be passed upon for us by Debevoise & Plimpton, 919
Third Avenue, New York, NY, 10022.
EXPERTS
The consolidated financial statements and schedules of AMR and American
Airlines, Inc. included in AMR's and American Airlines, Inc.'s Annual Reports on
Form 10-K for the year ended December 31, 2002, incorporated by reference in
this prospectus, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their reports (which contain an explanatory paragraph describing
conditions that raise substantial doubt about AMR's and American Airlines,
Inc.'s ability to continue as a going concern as described in Note 2 to the AMR
and American Airlines, Inc. consolidated financial statements) appearing
therein. Such consolidated financial statements and schedules are, and audited
consolidated financial statements to be included in subsequently filed documents
will be, incorporated herein in reliance upon the reports of Ernst & Young LLP
pertaining to such consolidated financial statements (to the extent covered by
consents filed with the SEC) given on the authority of such firm as experts in
accounting and auditing.
49
$300,000,000
AMR CORPORATION
4.25% Senior Convertible Notes due 2023
Guaranteed by
American Airlines, Inc.
Common Stock Issuable Upon Conversion of
the 4.25% Senior Convertible Notes due 2023
Prospectus
[Date]
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses expected to be incurred by
us in connection with the offering described in this registration statement. All
amounts are estimated except the registration fee. If the securities are sold
through underwriters, broker-dealers or agents, the selling securityholders will
be responsible for underwriting discounts or commissions or agents' commissions
and transfer taxes, if any.
Registration fee $ 24,270
Trustee fees and expenses $ 4,500
Printing costs for registration statement, prospectus and related
documents $ 50,000
Accounting fees and expenses $ 20,000
Legal fees and expenses (including Blue Sky fees) $ 90,000
Miscellaneous $ 5,000
----------
Total $ 193,770
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the DGCL provides in regard to indemnification of
directors and officers as follows:
Section 145. Indemnification of officers, directors, employees and
agents; insurance
(a) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
II-1
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (4)
by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions, if any, as
the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
II-2
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Article VII of each of AMR's and of American Airlines, Inc.'s by-laws
provide in regard to indemnification of directors and officers as follows:
Section 1. Nature of Indemnity. The corporation shall
indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that he is or was or has agreed to become a director
or officer of the corporation, or is or was serving or has agreed to
serve at the request of the corporation as a director or officer, of
another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a
party or is threatened to be made a party to such an action by reason
of the fact that he is or was or has agreed to become an employee or
agent of the corporation, or is or was serving or has agreed to serve
at the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or
on his behalf in connection with such action, suit or proceeding and
any appeal therefrom, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding
had no reasonable cause to believe his conduct was unlawful; except
that in the case of an action or suit by or in the right of the
corporation to procure a judgment in its favor (1) such indemnification
shall be limited to expenses (including attorneys' fees) actually and
reasonably incurred by such person in the defense or settlement of such
action or suit, and (2) no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent
that the Delaware Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses which the Delaware Court of Chancery or such other court
shall deem proper.
The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause
to believe that his conduct was unlawful.
Section 2. Successful Defense. To the extent that a director,
officer, employee or agent of the corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding
referred to in Section l hereof or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
Section 3. Determination That Indemnification Is Proper. (a)
Any indemnification of a director or officer of the corporation under
Section l hereof (unless ordered by a court) shall be made by the
corporation unless a determination is made that indemnification of the
director or officer is not proper in the circumstances because he has
not met the applicable standard of conduct set forth in Section l
hereof. Such determination shall be made, with respect to a director or
officer, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2)
by a committee of such directors designated by a majority vote of such
directors, even though less than a
II-3
quorum, or (3) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (4) by
the stockholders.
(b) Any indemnification of an employee or agent of the
corporation (who is not also a director or officer of the corporation)
under Section l hereof (unless ordered by a court) may be made by the
corporation upon a determination that indemnification of the employee
or agent is proper in the circumstances because such person has met the
applicable standard of conduct set forth in Section l hereof. Such
determination, in the case of an employee or agent, may be made (1) in
accordance with the procedures outlined in the second sentence of this
Section 3(a), or (2) by an officer of the corporation, upon delegation
of such authority by a majority of the Board of Directors.
Section 4. Advance Payment of Expenses. Expenses (including
attorneys' fees) incurred by a director or officer in defending any
civil, criminal, administrative or investigative action, suit or
proceeding shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to
be indemnified by the corporation as authorized in this Article. Such
expenses (including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the
corporation deems appropriate. The board of directors may authorize the
corporation's counsel to represent a director, officer, employee or
agent in any action, suit or proceeding, whether or not the corporation
is a party to such action, suit or proceeding.
Section 5. Procedure for Indemnification of Directors or
Officers. Any indemnification of a director or officer of the
corporation under Sections l and 2, or advance of costs, charges and
expenses of a director or officer under Section 4 of this Article,
shall be made promptly, and in any event within 60 days, upon the
written request of the director or officer. If the corporation fails to
respond within 60 days, then the request for indemnification shall be
deemed to be approved. The right to indemnification or advances as
granted by this Article shall be enforceable by the director or officer
in any court of competent jurisdiction if the corporation denies such
request, in whole or in part. Such person's costs and expenses incurred
in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such
action (other than an action brought to enforce a claim for the advance
of costs, charges and expenses under Section 4 of this Article where
the required undertaking, if any, has been received by the corporation)
that the claimant has not met the standard of conduct set forth in
Section l of this Article, but the burden of proving such defense shall
be on the corporation. Neither the failure of the corporation
(including its board of directors or a committee thereof, its
independent legal counsel, and its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because
he has met the applicable standard of conduct set forth in Section l of
this Article, nor the fact that there has been an actual determination
by the corporation (including its board of directors or a committee
thereof, its independent legal counsel, and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not
met the applicable standard of conduct.
Section 6. Survival; Preservation of Other Rights. The
foregoing indemnification provisions shall be deemed to be a contract
between the corporation and each director, officer, employee and agent
who serves in such capacity at any time while these provisions as well
as the relevant provisions of the Delaware Corporation Law are in
effect and any repeal or modification thereof shall not affect any
right or obligation then existing with respect to any state of facts
then or previously existing or any action, suit, or proceeding
previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a "contract right" may not be
modified retroactively without the consent of such director, officer,
employee or agent.
The indemnification provided by this Article VII shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a
director,
II-4
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 7. Insurance. The corporation shall purchase and
maintain insurance on behalf of any person who is or was or has agreed
to become a director or officer of the corporation, or is or was
serving at the request of the corporation as director or officer of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him or on his behalf in any such capacity, or arising out of his status
as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this
Article, provided that such insurance is available on acceptable terms,
which determination shall be made by a vote of a majority of the entire
board of directors.
Section 8. Savings Clause. If this Article or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the corporation shall nevertheless indemnify each
director or officer and may indemnify each employee or agent of the
corporation as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to
any action, suit or proceeding, whether civil, criminal, administrative
or investigative, including an action by or in the right of the
corporation, to the full extent permitted by any applicable portion of
this Article that shall not have been invalidated and to the full
extent permitted by applicable law.
Section 102(b)(7) of the DGCL provides in regard to the limitation of
liability of directors and officers as follows:
(b) In addition to the matters required to be set forth in the
certificate of incorporation by subsection (a) of this section, the
certificate of incorporation may also contain any or all of the
following matters:
* * * *
(7) A provision eliminating or limiting the personal liability
of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director: (i)
For any breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii)
under Section 174 of this title; or (iv) for any transaction from which
the director derived an improper personal benefit. No such provision
shall eliminate or limit the liability of a director for any act or
omission occurring prior to the date when such provision becomes
effective. All references in this paragraph to a director shall also be
deemed to refer (x) to a member of the governing body of a corporation
which is not authorized to issue capital stock, and (y) to such other
person or persons, if any, who, pursuant to a provision of the
certificate of incorporation in accordance with Section 141(a) of this
title, exercise or perform any of the powers or duties otherwise
conferred or imposed upon the board of directors by this title.
Article Ninth of each of AMR's and of American Airlines, Inc.'s
certificates of incorporation provide in regard to the limitation of liability
of directors and officers as follows:
NINTH: No director of the corporation shall be liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the corporation or its
shareholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal
benefit.
AMR's and American Airlines, Inc.'s directors and officers are also
insured against claims arising out of the performance of their duties in such
capacities.
II-5
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
3.1 Certificate of Incorporation of AMR Corporation, as amended (filed as Exhibit 4(a) to AMR
Corporation's Registration Statement on Form S-4, File No. 33-55191, with amendments filed
as Exhibit 3.1 to AMR Corporation's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003, and incorporated herein by reference).
3.2 By-Laws of AMR Corporation, amended as of April 24, 2003 (filed as Exhibit 3.2 to AMR
Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, and
incorporated herein by reference).
4.1 Registration Rights Agreement, dated as of September 23, 2003, among AMR Corporation,
American Airlines, Inc., as Guarantor, and Citigroup Global Markets Inc., as Initial
Purchaser.
4.2 Indenture, dated as of September 23, 2003, among AMR Corporation, American Airlines, Inc.,
as Guarantor, and Wilmington Trust Company, as Trustee.
4.3 Form of 4.25% Senior Convertible Note due 2023 (included as Exhibit A-1 to the Indenture
filed herewith as Exhibit 4.2).
4.4 Form of Guarantee (included as Exhibit A-2 to the Indenture filed herewith as Exhibit 4.2).
4.5 Specimen of Common Stock Certificate (filed as Exhibit 4(c) to AMR Corporation's
Registration Statement on Form S-3, File No. 33-38393, and incorporated herein by
reference).
5.1 Validity Opinion of Debevoise & Plimpton.
8.1 Tax Opinion of Debevoise & Plimpton.
12.1 Statement regarding computation of ratio of earnings to fixed charges for each year in the
five-year period ended December 31, 2002 (filed as Exhibit 12 to AMR Corporation's Annual
Report on Form 10-K for the year ended December 31, 2002, and incorporated herein by
reference).
12.2 Statement regarding computation of ratio of earnings to fixed charges for the nine months
ended September 30, 2003 and 2002 (filed as Exhibit 12 to AMR Corporation's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2003, and incorporated herein by
reference).
12.3 Statement regarding computation of ratio of earnings to fixed charges for each year in the
five-year period ended December 31, 2002 (filed as Exhibit 12 to American Airlines, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 2002, and incorporated herein by
reference).
12.4 Statement regarding computation of ratio of earnings to fixed charges for the nine months
ended September 30, 2003 and 2002 (filed as Exhibit 12 to American Airlines, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, and incorporated
herein by reference).
II-6
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------------------------------------------------------------------------
23.1 Consent of Ernst & Young LLP.
23.2 Consents of Debevoise & Plimpton (included in Exhibit 5.1 and Exhibit 8.1).
24.1 Powers of Attorney (AMR Corporation).
24.2 Powers of Attorney (American Airlines, Inc.).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939
of Wilmington Trust Company, as Trustee under the Indenture.
---------
ITEM 17. UNDERTAKINGS
(a) Rule 415 Offering.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the SEC pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the SEC by the registrants pursuant to section 13 or section
15(d) of the Exchange Act that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
registrants' annual reports pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-7
(c) Acceleration of Effective Date.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AMR
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Worth, State of Texas, on this 24 day of
October, 2003.
AMR CORPORATION
By /s/ Gary F. Kennedy
-------------------------------------------
GARY F. KENNEDY
Senior Vice President and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Gerard J. Arpey President, Chief Executive Officer and Director October 24, 2003
------------------------------- (Principal Executive Officer)
Gerard J. Arpey
/s/ Jeffrey C. Campbell Senior Vice President-Finance and Chief October 24, 2003
------------------------------- Financial Officer
Jeffrey C. Campbell (Principal Financial and Accounting Officer)
*
-------------------------------
Edward A. Brennan Director
*
-------------------------------
John W. Bachmann Director
*
-------------------------------
David L. Boren Director
*
-------------------------------
Armando M. Codina Director
*
-------------------------------
Earl G. Graves Director
*
-------------------------------
Ann McLaughlin Korologos Director
*
-------------------------------
Michael A. Miles Director
*
-------------------------------
Philip J. Purcell Director
II-9
*
-------------------------------
Joe M. Rodgers Director
*
-------------------------------
Judith Rodin Director
*
-------------------------------
Roger T. Staubach Director
*By: /s/ Gary F. Kennedy Attorney-in-Fact October 24, 2003
-------------------------
Gary F. Kennedy
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, American
Airlines, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Worth, State of Texas, on this 24 day of
October, 2003.
AMERICAN AIRLINES, INC.
By /s/ Gary F. Kennedy
----------------------------------
GARY F. KENNEDY
Senior Vice President and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Gerard J. Arpey President, Chief Executive Officer and Director October 24, 2003
-------------------------------- (Principal Executive Officer)
Gerard J. Arpey
/s/ Jeffrey C. Campbell Senior Vice President-Finance and Chief October 24, 2003
-------------------------------- Financial Officer
Jeffrey C. Campbell (Principal Financial and Accounting Officer)
*
--------------------------------
Edward A. Brennan Director
*
--------------------------------
John W. Bachmann Director
*
--------------------------------
David L. Boren Director
*
--------------------------------
Armando M. Codina Director
*
--------------------------------
Earl G. Graves Director
*
--------------------------------
Ann McLaughlin Korologos Director
*
--------------------------------
Michael A. Miles Director
*
--------------------------------
Philip J. Purcell Director
II-11
*
--------------------------------
Joe M. Rodgers Director
*
--------------------------------
Judith Rodin Director
*
--------------------------------
Roger T. Staubach Director
*By: /s/ Gary F. Kennedy Attorney-in-Fact October 24, 2003
----------------------------
Gary F. Kennedy
II-12
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
3.1 Certificate of Incorporation of AMR Corporation, as amended (filed as Exhibit 4(a) to AMR
Corporation's Registration Statement on Form S-4, File No. 33-55191, with amendments filed
as Exhibit 3.1 to AMR Corporation's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003, and incorporated herein by reference).
3.2 By-Laws of AMR Corporation, amended as of April 24, 2003 (filed as Exhibit 3.2 to AMR
Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, and
incorporated herein by reference).
4.1 Registration Rights Agreement, dated as of September 23, 2003, among AMR Corporation,
American Airlines, Inc., as Guarantor, and Citigroup Global Markets Inc., as Initial
Purchaser.
4.2 Indenture, dated as of September 23, 2003, among AMR Corporation, American Airlines, Inc.,
as Guarantor, and Wilmington Trust Company, as Trustee.
4.3 Form of 4.25% Senior Convertible Note due 2023 (included as Exhibit A-1 to the Indenture
filed herewith as Exhibit 4.2).
4.4 Form of Guarantee (included as Exhibit A-2 to the Indenture filed herewith as Exhibit 4.2).
4.5 Specimen of Common Stock Certificate (filed as Exhibit 4(c) to AMR Corporation's
Registration Statement on Form S-3, File No. 33-38393, and incorporated herein by
reference).
5.1 Validity Opinion of Debevoise & Plimpton.
8.1 Tax Opinion of Debevoise & Plimpton.
12.1 Statement regarding computation of ratio of earnings to fixed charges for each year in the
five-year period ended December 31, 2002 (filed as Exhibit 12 to AMR Corporation's Annual
Report on Form 10-K for the year ended December 31, 2002, and incorporated herein by
reference).
12.2 Statement regarding computation of ratio of earnings to fixed charges for the nine months
ended September 30, 2003 and 2002 (filed as Exhibit 12 to AMR Corporation's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2003, and incorporated herein by
reference).
12.3 Statement regarding computation of ratio of earnings to fixed charges for each year in the
five-year period ended December 31, 2002 (filed as Exhibit 12 to American Airlines, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 2002, and incorporated herein by
reference).
12.4 Statement regarding computation of ratio of earnings to fixed charges for the nine months
ended September 30, 2003 and 2002 (filed as Exhibit 12 to American Airlines, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, and incorporated
herein by reference).
II-13
23.1 Consent of Ernst & Young LLP.
23.2 Consents of Debevoise & Plimpton (included in Exhibit 5.1 and Exhibit 8.1).
24.1 Powers of Attorney (AMR Corporation).
24.2 Powers of Attorney (American Airlines, Inc.).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939
of Wilmington Trust Company, as Trustee under the Indenture.
II-14