JetBlue Airlines 2004 Annual Report Download - page 71

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JETBLUE AIRWAYS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2004
Note 7—Earnings Per Share (Continued)
2004 2003 2002
Denominator:
Weighted-average shares outstanding for basic earnings per
share ...................................... 103,179,150 97,274,475 67,045,976
Effect of dilutive securities:
Employee stock options ........................ 7,602,240 8,932,805 7,455,285
Unvested common stock ........................ 27,810 1,333,408 3,096,878
Convertible debt ............................. — 1,962,933 —
Convertible redeemable preferred stock ............. — — 20,055,080
Adjusted weighted-average shares outstanding and
assumed conversions for diluted earnings per share .... 110,809,200 109,503,621 97,653,219
On September 30, 2004, the Emerging Issues Task Force, or EITF, reached consensus on Issue
No. 04-08, The Effect of Contingently Convertible Debt on Diluted Earnings per Share, which changes the
treatment of contingently convertible debt instruments in the calculation of diluted earnings per share.
EITF Issue No. 04-08 provides that these debt instruments be included in the earnings per share
computation, if dilutive, regardless of whether the contingent feature has been met. This change does
not have any effect on net income, but it does affect the related per share amounts. We have adopted
EITF Issue No. 04-08 as of December 31, 2004. We include, if dilutive, the assumed conversion of our
31⁄2% convertible notes issued in July 2003 in our diluted earnings per share calculations. Outstanding
unvested common stock purchased by certain of the Company’s management was subject to repurchase
by the Company and therefore was not included in the calculation of the weighted-average shares
outstanding for basic earnings per share.
For the year ended December 31, 2004, 4.1 million shares issuable upon conversion of our 31⁄2%
convertible notes are excluded from the diluted earnings per share calculation since the assumed
conversion would be anti-dilutive and result in an increase in diluted earnings per share. For the year
ended December 31, 2003, the assumed conversion of the 31⁄2% convertible notes was dilutive and as a
result, the previously reported diluted earnings per share of $0.97 has been restated to $0.96 per
diluted share.
For the years ended December 31, 2004 and 2003, we excluded 5.1 million shares and 0.9 million
shares, respectively, issuable upon exercise of outstanding stock options from the diluted earnings per
share computation, since their exercise price was greater than the average market price of our common
stock and thus anti-dilutive.
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