JetBlue Airlines 2008 Annual Report Download - page 65

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.
In January 2008, we completed a $301 million, net of transaction costs, equity offering to Deutsche
Lufthansa AG, or Lufthansa. Under the terms of the agreement, Lufthansa purchased, in a private placement,
approximately 42.6 million newly issued shares of JetBlue common stock, which represented approximately
19% of JetBlue’s then outstanding common stock. Under the terms of the agreement, as amended, two
Lufthansa nominees, Christoph Franz and Stephan Gemkow, were appointed to our Board of Directors.
Pursuant to our amended 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
described below, 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, 2008, we had a total of 138.8 million shares of our common stock reserved for
issuance under our CSPP, our 2002 Plan, our convertible debt, and our share lending facility. As of
December 31, 2008, we had a total of 16.9 million shares of treasury stock, almost all of which resulted from
the return of borrowed shares under our share lending agreement. Refer to Note 2 for further details on the
share lending agreement and Note 7 for further details on our stock-based compensation.
Note 6—Earnings (Loss) Per Share
The following table shows how we computed basic and diluted earnings (loss) per common share for the
years ended December 31 (dollars in millions; share data in thousands):
2008 2007 2006
Numerator:
Net income (loss) applicable to common stockholders ........ $ (76) $ 18 $ (1)
Denominator:
Weighted-average shares outstanding for basic earnings (loss)
per share ....................................... 226,262 179,766 175,113
Effect of dilutive securities:
Employee stock options ............................ — 4,483 —
Unvested common stock ............................ — 11 —
Adjusted weighted-average shares outstanding and assumed
conversions for diluted earnings (loss) per share . ......... 226,262 184,260 175,113
As of December 31, 2008, a total of approximately 28.0 million shares of our common stock, which were
loaned to our share borrower pursuant to the terms of our share lending agreement as described in Note 2
were issued and are outstanding for corporate law purposes, and holders of the borrowed shares have all the
rights of a holder of our common stock. However, because the share borrower must return all borrowed shares
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