JetBlue Airlines 2010 Annual Report Download - page 59

grade interest bearing instruments classified as held-to-maturity investments and stated at amortized cost.
When sold, we use a specific identification method to determine the cost of the securities.
Investment securities consisted of the following at December 31, 2010 and 2009 (in millions):
2010 2009
Available-for-sale securities
Asset-back securities .............................................. $ 10 $109
Time deposits.................................................... 19 36
Commercial paper ................................................ 125 5
154 150
Held-to-maturity securities
Corporate bonds .................................................. 474 22
Trading securities
Student loan bonds ................................................ — 74
Total ............................................................ $628 $246
Held-to-maturity investment securities: During 2009 and 2010, we held various corporate bonds. Those
with original maturities less than twelve months are included in short-term investments on our consolidated
balance sheets, and those with original maturities in excess of twelve months but less than two years are
included in long-term investments on our consolidated balance sheets. We did not record any significant gains
or losses on these securities during the twelve months ended December 31, 2010 or 2009.
Derivative Instruments: Derivative instruments, including fuel hedge contracts and interest rate swap
agreements, are stated at fair value, net of any collateral postings. Derivative instruments are included in other
assets on our consolidated balance sheets.
Inventories: Inventories consist of expendable aircraft spare parts and supplies, which are stated at
average cost, and aircraft fuel, which is stated on a first-in, first-out basis. These items are charged to expense
when used. An allowance for obsolescence on aircraft spare parts is provided over the remaining useful life of
the related aircraft fleet.
Property and Equipment: We record our property and equipment at cost and depreciate these assets on
a straight-line basis to their estimated residual values over their estimated useful lives. Additions,
modifications that enhance the operating performance of our assets, and interest related to predelivery deposits
to acquire new aircraft and for the construction of facilities are capitalized.
Effective January 1, 2009, we adjusted the estimated useful lives for our in-flight entertainment systems
from 12 years to 7 years, which resulted in approximately $4 million of additional depreciation expense and
an estimated $0.01 reduction in diluted earnings per share in 2009.
Estimated useful lives and residual values for our property and equipment are as follows:
Estimated Useful Life Residual Value
Aircraft ............................ 25years 20%
In-flight entertainment systems ........... 7years 0%
Aircraft parts ........................ Fleet life 10%
Flight equipment leasehold improvements . . . Lower of lease term or economic life 0%
Ground property and equipment .......... 3-10 years 0%
Leasehold improvements — other ......... Loweroflease term or economic life 0%
Buildings on leased land................ Lease term 0%
Property under capital leases is initially recorded at an amount equal to the present value of future
minimum lease payments computed on the basis of our incremental borrowing rate or, when known, the
interest rate implicit in the lease. Amortization of property under capital leases is on a straight-line basis over
the expected useful life and is included in depreciation and amortization expense.
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