JetBlue Airlines 2003 Annual Report Download - page 64

JETBLUE AIRWAYS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2003
Note 4—Stockholders’ Equity (Continued)
participating preferred stock at an exercise price of $53.33, subject to adjustment. The rights become
exercisable only after any person or group acquires beneficial ownership of 15% or more (25% or more
in the case of certain Investors) of the Company’s outstanding common stock or commences a tender
or exchange offer that would result in such person or group acquiring beneficial ownership of 15% or
more (25% or more in the case of certain Investors) of the Company’s common stock. If after the
rights become exercisable, the Company is involved in a merger or other business combination or sells
more than 50% of its assets or earning power, each right will entitle its holder (other than the
acquiring person or group) to receive common stock of the acquiring company having a market value
of twice the exercise price of the rights. The rights expire on April 17, 2012 and may be redeemed by
the Company at a price of $.01 per right prior to the time they become exercisable.
As of December 31, 2003, we had a total of 25.4 million shares of our common stock reserved for
issuance under our Crewmember Stock Purchase Plan, our Stock Incentive Plan and for our 31⁄2%
convertible notes.
Note 5—Convertible Redeemable Preferred Stock
From our inception through November 2001, we sold 30.7 million shares of convertible redeemable
preferred stock generating proceeds of $188.8 million. Upon the closing of our initial public offering on
April 17, 2002, all outstanding shares of our convertible redeemable preferred stock were automatically
converted into 69.1 million shares of common stock.
Holders of our convertible redeemable preferred stock were entitled to cash dividends, which were
accrued and accumulated if not paid, before any dividends were declared and paid or set aside for the
common stock. No dividends had been declared and concurrent with our initial public offering, the
Company’s obligation to pay accrued dividends was canceled upon automatic conversion of the
convertible redeemable preferred stock into common stock. No preferred stock has been issued since
this date.
Note 6—LiveTV
On September 27, 2002, we paid $80.3 million in cash to acquire the membership interests of
LiveTV and to retire $39.0 million of its outstanding debt. The primary reason for the acquisition was
to control the execution and marketing of an important aspect of our product.
Purchased technology, which is an intangible asset related to our acquisition of the membership
interests of LiveTV, is being amortized over seven years based on the average number of aircraft
expected to be in service as of the date of acquisition. Projected amortization expense is $7.3 million in
2004, $9.2 million in 2005, $11.0 million in 2006, $12.7 million in 2007 and $14.4 million in 2008.
Through December 31, 2003, LiveTV had installed satellite television systems for other airlines on
24 aircraft and had firm commitments for installations on 52 additional aircraft scheduled to be
installed through 2005, with options for 64 additional installations.
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