JetBlue Airlines 2008 Annual Report Download - page 69

Prior to the 2007 amendment, if the fair market value per share of our common stock on any purchase
date within a particular offering period was less than the fair market value per share on the start date of that
offering period, then the participants in that offering period were automatically transferred and enrolled in the
new two-year offering period which began on the next business day following such purchase date and the
related purchase of shares. During 2006, certain participants were automatically transferred and enrolled in
new offering periods due to decreases in our stock price.
Should we be acquired by merger or sale of substantially all of our assets or sale of more than 50% of
our outstanding voting securities, then all outstanding purchase rights will automatically be exercised
immediately prior to the effective date of the acquisition at a price equal to 95% of the fair market value per
share immediately prior to the acquisition.
The following is a summary of CSPP share reserve activity for the years ended December 31:
Shares
Weighted
Average Shares
Weighted
Average Shares
Weighted
Average
2008 2007 2006
Available for future purchases,
beginning of year .......... 20,076,845 16,908,852 13,706,245
Shares reserved for issuance .... 5,447,803 5,328,277 5,178,659
Common stock purchased ...... (1,974,266) $4.65 (2,160,284) $8.15 (1,976,052) $8.73
Available for future purchases,
end of year ............... 23,550,382 20,076,845 16,908,852
SFAS 123(R) requires that deferred taxes be recognized on temporary differences that arise with respect
to stock-based compensation attributable to nonqualified stock options and awards. However, no tax benefit is
recognized for stock-based compensation attributable to incentive stock options (ISO) or CSPP shares until
there is a disqualifying disposition, if any, for income tax purposes. A portion of our stock-based
compensation is attributable to ISO and CSPP shares; therefore, our effective tax rate is subject to fluctuation.
Note 8—LiveTV
Purchased technology, which is an intangible asset related to our September 2002 acquisition of the
membership interests of LiveTV, is being amortized over seven years based on the average number of aircraft
expected to be in service as of the date of acquisition. Purchased technology will become fully amortized in
2009.
Through December 31, 2008, LiveTV had installed in-flight entertainment systems for other airlines on
358 aircraft and had firm commitments for installations on 405 additional aircraft scheduled to be installed
through 2015, with options for 191 additional installations through 2017. Revenues in 2008, 2007 and 2006
were $58 million, $40 million and $29 million, respectively. Deferred profit on hardware sales and advance
deposits for future hardware sales are included in long term liabilities in our consolidated balance sheets was
$19 million and $29 million at December 31, 2008 and 2007, respectively. Deferred profit to be recognized on
installations completed through December 31, 2008 will be approximately $6 million in 2009, $2 million per
year from 2010 through 2012, $1 million in 2013 and $4 million thereafter.
Note 9—Income Taxes
The provision (benefit) for income taxes consisted of a current expense of $1 million for 2008 and the
following for the years ended December 31 (in millions):
2008 2007 2006
Deferred:
Federal............................................................ $(1) $18 $ 9
State and foreign .................................................... — 5 1
Deferred income tax expense (benefit) ...................................... $(1) $23 $10
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