JetBlue Airlines 2007 Annual Report Download - page 62

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The table below summarizes the impact on our results of operations for the years ended
December 31, 2007 and 2006 of outstanding stock options and restricted stock units under our 2002
Plan and issuances under our CSPP recognized under the provisions of SFAS 123(R) (in millions,
except per share data):
2007 2006
Stock-based compensation expense:
Issuances under crewmember stock purchase plan............ $ 6 $ 13
Issuances under stock incentive plan ....................... 9 8
Income tax benefit ......................................... (3) (4)
Decrease in net income (loss) ............................... $ 12 $ 17
Decrease in earnings (loss) per common share:
Basic ................................................... $0.08 $0.09
Diluted ................................................. $0.08 $0.09
Prior to our adoption of SFAS 123(R), we presented unearned compensation as a separate
component of stockholders’ equity. In accordance with the provisions of SFAS 123(R), on
January 1, 2006, we reclassified unearned compensation to additional paid-in capital on our balance
sheet. The following table illustrates the effect on net loss and loss per common share as 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 123 for the year ended December 31,
2005 (in millions, except per share amounts):
Net income (loss), as reported .......................... $ (20)
Add: Stock-based compensation expense included
in reported net income (loss), net of tax ............... 8
Deduct: Stock-based compensation expense
determined under the fair value method, net of tax
Crewmember stock purchase plan ................... (14)
Employee stock options............................ (95)
Pro forma net income (loss) ............................ $(121)
Earnings (loss) per common share:
Basic – as reported .................................. $(0.13)
Basic – pro forma ................................... $(0.76)
Diluted – as reported ................................ $(0.13)
Diluted – pro forma ................................. $(0.76)
In December 2005, we accelerated the vesting of 19.9 million stock options, representing 64%of
the options then outstanding. This action resulted in non-cash, stock-based compensation expense of
$7 million in 2005. It also resulted in an increase of $72 million, net of tax, in the pro forma employee
stock option stock-based compensation expense shown above. The decision to accelerate vesting of
these options was made primarily to avoid recognizing the related compensation cost in our future
consolidated financial statements upon our adoption of SFAS 123(R).
Our policy is to issue new shares for purchases under our CSPP and issuances under our 2002
Plan.
New Accounting Standards:
In September 2006, the FASB issued Statement of Financial Accounting Standards 157, Fair
Value Measurements, or SFAS 157, which defines fair value, establishes a framework for measuring fair
value and requires enhanced disclosures about fair value measurements. SFAS 157 requires companies
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