JetBlue Airlines 2005 Annual Report Download - page 63

Unvested shares of common stock purchased by certain members of management in 1998 were
subject to repurchase by the Company upon their termination at the original purchase price. At
December 31, 2005, 2004 and 2003, all 13.4 million shares were fully vested under these agreements.
Pursuant to our Stockholder Rights Agreement, which became effective in February 2002, each
share of common stock has attached to it a right and, until the rights expire or are redeemed, each
new share of common stock issued by the Company will include one right. Upon the occurrence of
certain events, each right entitles the holder to purchase one one-thousandth of a share of Series A
participating preferred stock at an exercise price of $35.55, subject to further 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 specified stockholders) 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 stockholders) 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, 2005, we had a total of 67.7 million shares of our common stock reserved for
issuance under our Crewmember Stock Purchase Plan, our Stock Incentive Plan and for our
convertible debt.
Note 6—LiveTV
Purchased technology, which is an intangible asset related to our September 2002 acquisition of
the membership interests of LiveTV, is being amortized over six years based on the average number
of aircraft expected to be in service as of the date of acquisition. Projected amortization expense is
$13 million in 2006 and $15 million in both 2007 and 2008.
Through December 31, 2005, LiveTV had installed in-flight entertainment systems for other
airlines on 193 aircraft and had firm commitments for installations on 100 additional aircraft scheduled
to be installed through 2007, with options for 141 additional installations through 2015. Deferred profit
on hardware sales and advance deposits for future hardware sales included in the accompanying
consolidated balance sheets in non-current other liabilities at both December 31, 2005 and 2004 is
$21 million. Deferred profit to be recognized as income on installations completed through
December 31, 2005 will be approximately $4 million per year through 2009 and $6 million thereafter.
Note 7—Stock-Based Compensation
Crewmember Stock Purchase Plan: Our Crewmember Stock Purchase Plan, or CSPP, is available
to all employees, with 5.1 million shares of our common stock initially reserved for issuance. The
reserve automatically increases each January by an amount equal to 3%of the total number of shares
of our common stock outstanding on the last trading day in December of the prior calendar year. In
no event will any such annual increase exceed 9.1 million shares. The plan will terminate no later than
the last business day of April 2012.
The plan has a series of successive overlapping 24-month offering periods, with a new offering
period beginning on the first business day of May and November each year. Employees can only join
an offering period on the start date and participate in one offering period at a time. Employees may
contribute up to 10%of their pay, through payroll deductions, toward the purchase of common stock
at the lower of 85%of the fair market value per share at the beginning of the offering period or on
the purchase date. Purchase dates occur on the last business day of April and October each year.
If the fair market value per share of our common stock on any purchase date within a particular
offering period is less than the fair market value per share on the start date of that offering period,
then the participants in that offering period will automatically be transferred and enrolled in the new
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