JetBlue Airlines 2008 Annual Report Download - page 71

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periods in which the related temporary differences will become deductible. At December 31, 2008, we
provided a $26 million valuation allowance, $21 million of which relates to an unrealized tax capital loss on
investment securities, to reduce the deferred tax assets to an amount that we consider is more likely than not
to be realized.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follow
(in millions):
Unrecognized tax benefits December 31, 2007 .............................. $2
Increases for tax positions taken during the current period...................... 6
Unrecognized tax benefits December 31, 2008 .............................. $8
Interest and penalties accrued on unrecognized tax benefits were not significant. If recognized, $7 million
of the unrecognized tax benefits at December 31, 2008 would impact the effective tax rate. We do not expect
any significant change in the amount of these unrecognized tax benefits within the next twelve months. As a
result of NOLs and statute of limitations in our major tax jurisdictions, years 2000 through 2008 remain
subject to examination by the relevant tax authorities.
Note 10—Employee Retirement Plan
We sponsor a retirement savings 401(k) defined contribution plan, or the Plan, covering all of our
employees. In 2008, we matched 100% of our employee contributions up to 5% of their compensation in cash,
which vests over five years of service measured from an employees hire date. Prior to 2007, the Company
match was up to 3% of employee contributions. Participants are immediately vested in their voluntary
contributions.
A component of the Plan is a profit sharing retirement plan. In 2007, we amended the profit sharing
retirement plan to provide for Company contributions, subject to Board of Director approval, to be 5% of
eligible non-management employee compensation or 15% of pre-tax earnings, whichever is greater. Prior to
the 2007 amendment, we contributed 15% of our pre-tax earnings, adjusted for stock option compensation
expense, which was distributed on a pro rata basis based on employee compensation. These contributions vest
immediately. Our contributions expensed for the Plan in 2008, 2007 and 2006 were $43 million, $39 million
and $13 million, respectively.
Note 11—Commitments
As of December 31, 2008, our firm aircraft orders consisted of 58 Airbus A320 aircraft, 70 EMBRAER
190 aircraft and 21 spare engines scheduled for delivery through 2016. Committed expenditures for these
aircraft and related flight equipment, including estimated amounts for contractual price escalations and
predelivery deposits, will be approximately $350 million in 2009, $300 million in 2010, $465 million in 2011,
$925 million in 2012, $960 million in 2013 and $1.98 billion thereafter. We have options to purchase 22
Airbus A320 aircraft scheduled for delivery from 2011 through 2015 and 86 EMBRAER 190 aircraft
scheduled for delivery from 2010 through 2015. Debt or lease financing has been arranged for all of our three
Airbus A320 and for all of our six net EMBRAER 190 aircraft scheduled for delivery in 2009. However, there
is no associated recourse with the committed financing in the event the financial institution providing this
financing fails to perform as anticipated.
In September 2008, we announced the long-term lease of two of our owned EMBRAER 190 aircraft that
have since been delivered to Azul Linhas Ae’reas Brasileiras, SA, or Azul, a new airline founded by David
Neeleman, our former CEO and Chairman of the Board. One aircraft was leased in September and the other
leased in October, each with a lease term of 12 years. Under the terms of these leases, we recorded
approximately $2 million in rental income during 2008. Future lease payments due to us over the next five
years are approximately $6 million per year. Additionally, in September 2008, we executed, and subsequently
amended, a purchase agreement relating to the sale of two new EMBRAER 190 aircraft scheduled for initial
delivery to us in the first quarter of 2009. The subsequent sales of these aircraft to a third party occurred
immediately after such aircraft were received by us in January 2009. We understand that these two
EMBRAER 190 aircraft are being operated by Azul, in addition to the two leased aircraft described above.
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