JetBlue Airlines 2005 Annual Report Download - page 62

in these trusts and we are not at risk for losses, we are not required to include these trusts in our
consolidated financial statements. Our maximum exposure is the remaining lease payments, which are
reflected in the future minimum lease payments in the table above.
Note 4—Assets Constructed for Others
In November 2005, we executed a lease agreement with the Port Authority of New York and
New Jersey, or PANYNJ, for the construction and operation of a new terminal at JFK. Under this
lease, we are responsible for construction, on behalf of the PANYNJ, of a 635,000 square foot 26-gate
terminal, a parking garage, roadways and an AirTrain Connector, collectively referred to as the
Project. The lease term ends on the earlier of the thirtieth anniversary of the date of beneficial
occupancy of the new terminal or November 21, 2039. We have a one-time early termination option
five years prior to the end of the scheduled lease term.
The aggregate cost of the Project is estimated at $740 million and is expected to be completed in
early 2009. We will be making various payments under the lease, including ground rents for the new
terminal site which began on lease execution and facility rents that are anticipated to commence upon
the date of beneficial occupancy. The facility rents are based on the number of passengers enplaned
out of the new terminal, subject to annual minimums. The PANYNJ will reimburse us for the costs of
constructing the Project in accordance with the lease, except for approximately $80 million in
leasehold improvements that will be provided by us. At December 31, 2005, we have a current
receivable from the PANYNJ for $29 million.
In accordance with Emerging Issues Task Force Issue 97-10, The Effect of Lessee Involvement in
Asset Construction, we are considered the owner of the Project for financial reporting purposes and,
accordingly, we will reflect an asset and liability related to in-process construction. The Project costs to
date are reflected on our balance sheets as Assets Constructed for Others in other long-term assets
and as a Long-Term Construction Obligation in other long-term liabilities in the accompanying
consolidated balance sheet at December 31, 2005. We do not currently expect to meet the criteria
necessary to derecognize Assets Constructed for Others and the related liability when construction of
the asset is complete and the lease term for the facility begins.
Assets Constructed for Others will be amortized over the shorter of the lease term or their
economic life. Facility rents will be recorded as debt service on the construction obligation, with the
portion not relating to interest reducing the principal balance. Ground rents are being recognized on a
straight-line basis over the lease term and are reflected in Note 3. Minimum estimated facility
payments, including escalations, associated with this lease are estimated to be $19 million in 2008,
$29 million in 2009, $33 million in 2010 and $943 million thereafter.
Note 5—Stockholders’ Equity
Our authorized shares of capital stock consist of 500 million shares of common stock and
25 million shares of preferred stock. The holders of our common stock are entitled to one vote per
share on all matters which require a vote by the Company’s stockholders as set forth in our Amended
and Restated Certificate of Incorporation and Bylaws.
We distributed 57 million and 51 million shares of common stock in connection with our
December 2005 and November 2003 three-for-two stock splits, respectively. All common share and per
share data for periods presented in the accompanying consolidated financial statements and notes
thereto give effect to these stock splits.
In November 2005, we completed a public offering of 12.9 million shares of our common stock at
$12.00 per share, raising net proceeds of $153 million, after deducting discounts and commissions paid
to the underwriters and other expenses incurred in connection with the offering. In July 2003, we
completed a public offering of 6.7 million shares of our common stock at $18.89 per share, raising net
proceeds of $123 million, after deducting discounts and commissions paid to the underwriters and
other expenses incurred in connection with the offering. Net proceeds from these offerings were
initially used to purchase investment securities pending their use to fund working capital and capital
expenditures.
54