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55
AMR CORPORATION
15.SEGMENT REPORTING
AMR’s operations fall within two lines of business: the
Airline Group and The Sabre Group. The Airline
Group consists primarily of American, one of the largest
scheduled passenger airline and air freight carriers in the
world, and AMR Eagle Holding Corporation (AMR Eagle), a
separate subsidiary of AMR. At December 31, 1998, AMR
Eagle owns two regional airlines which operate as
“American Eagle”, and provide connecting service to
American. The Sabre Group provides electronic distribution
of travel through its Sabre® computer reservations system
and information technology solutions to the travel and
transportation industries.
In 1998, the Company adopted Statement of
Financial Accounting Standards No. 131, “Disclosures about
Segments of an Enterprise and Related Information” (SFAS
131). SFAS 131 supersedes SFAS 14, “Financial Reporting
for Segments of a Business Enterprise,” and requires that a
public company report annual and interim financial and
descriptive information about its reportable operating seg-
ments pursuant to criteria that differ from current
accounting practice. Operating segments, as defined, are
components of an enterprise about which separate financial
information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate
resources and in assessing performance.
The Company evaluates performance and allocates
resources based upon segment operating income, which is
defined as income before interest, other non-operating
income and expense and income taxes. The accounting
policies of the reportable segments are the same as those
described in the summary of significant accounting policies.
The Company accounts for substantially all intersegment
transactions at amounts which approximate current
market prices.
Financial information by reportable segment is as
follows (in millions):
The
Airline Sabre
Group Group Total
December 31, 1998
Revenues from external customers $ 17,396 $ 1,732 $ 19,128
Intersegment revenues 53 574 627
Operating income 1,951 350 2,301
Depreciation and amortization
expense 1,038 248 1,286
Capital expenditures 2,340 320 2,660
Segment assets 19,582 1,927 21,509
December 31, 1997
Revenues from external customers $ 16,856 $ 1,263 $ 18,119
Intersegment revenues 47 526 573
Operating income 1,569 313 1,882
Depreciation and amortization
expense 1,038 185 1,223
Capital expenditures 1,139 218 1,357
Segment assets 18,708 1,504 20,212
December 31, 1996
Revenues from external customers $ 16,170 $ 1,125 $ 17,295
Intersegment revenues 41 500 541
Operating income 1,442 330 1,772
Depreciation and amortization
expense 1,018 165 1,183
Capital expenditures 338 184 522
Segment assets 18,519 1,287 19,806
The
Sabre
Group