JetBlue Airlines 2003 Annual Report Download - page 60

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JETBLUE AIRWAYS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2003
Note 1—Summary of Significant Accounting Policies (Continued)
than the fair value of our common stock on the grant date. The following table illustrates the effect on
net income and earnings per common share if we had applied the fair value method to measure stock-
based compensation, which is described more fully in Note 7, as required under the disclosure
provisions of SFAS No. 123, Accounting for Stock-Based Compensation, as amended (in thousands,
except per share amounts):
Year Ended December 31,
2003 2002 2001
Net income, as reported .......................... $ 103,898 $ 54,908 $ 38,537
Add: Stock-based employee compensation expense included
in reported net income, net of tax ................. 1,039 989 115
Deduct: Stock-based employee compensation expense
determined under the fair value method, net of tax:
Crewmember stock purchase plan ................ (2,759) (3,264) —
Employee stock options ....................... (7,652) (2,933) (320)
Proforma net income ............................ $ 94,526 $ 49,700 $ 38,332
Earnings per common share:
Basic—as reported ............................ $ 1.07 $ 0.73 $ 4.39
Basic—proforma .............................. $ 0.97 $ 0.65 $ 4.35
Diluted—as reported ........................... $ 0.97 $ 0.56 $ 0.51
Diluted—proforma ............................ $ 0.88 $ 0.51 $ 0.51
New Accounting Standard: In January 2003, the FASB issued Interpretation No. 46, or FIN 46,
Consolidation of Variable Interest Entities, which requires the consolidation of variable interest entities.
Fifteen of our 24 leased aircraft are owned and leased through trusts whose sole purpose is to
purchase, finance and lease these aircraft to us; therefore, they meet the criteria of a variable interest
entity. However, since these are single owner trusts in which we do not participate, we are not at risk
for losses and are not considered the primary beneficiary. As a result, based on the current rules, we
are not required to consolidate any of these lessors or any other entities in applying FIN 46. Our
maximum exposure under these leases is the remaining lease payments, which are reflected in the
future minimum lease payments table in Note 3.
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