JetBlue Airlines 2010 Annual Report Download - page 64

December 31, 2010 and the effective interest rate is included in the above table. The interest rate for all
other certificates is based on three month LIBOR plus a margin. Interest is payable quarterly.
(4) In December 2006, the New York City Industrial Development Agency issued special facility revenue
bonds for JFK and, in November 2005, the Greater Orlando Aviation Authority issued special purpose
airport facilities revenue bonds, in each case for reimbursement to us for certain airport facility
construction and other costs. We have recorded the issuance of $39 million (net of $1 million discount)
and $45 million (net of $2 million discount), respectively, principal amount of these bonds as long-term
debt on our consolidated balance sheet because we have issued a guarantee of the debt payments on the
bonds. This fixed rate debt is secured by leasehold mortgages of our airport facilities.
(5) In 2008, we entered into the UBS auction rate security loan program under a credit line agreement with
UBS Securities LLC and UBS Financial Services Inc, or UBS, which provided us with a no net cost loan
in the principal amount of $56 million. However, this credit line agreement called for all interest income
earned on the ARS being held by UBS to be automatically transferred to UBS. This line of credit was
secured by our ARS being held by UBS. The term of the credit line was through at least June 30, 2010 or
when the underlying ARS were sold. In January 2010, the issuers redeemed at par $12 million of the ARS
securing this line of credit and proceeds were applied directly to the outstanding loan balance. In March
2010, this line of credit was increased by approximately $20 million due to a lending increase from 75%
to 100% of the mark to market value of the ARS. During 2010, all of the remaining ARS securing this
line of credit were either sold back to UBS or redeemed by their issuers and the proceeds were used to
terminate the line of credit.
(6) On June 9, 2009, we completed a public offering of $115 million aggregate principal amount of 6.75%
Series A convertible debentures due 2039, or the Series A 6.75% Debentures, and $86 million aggregate
principal amount of 6.75% Series B convertible debentures due 2039, or the Series B 6.75% Debentures,
and collectively with the Series A 6.75% Debentures, the 6.75% Debentures. The 6.75% Debentures are
general obligations and rank equal in right of payment with all of our existing and future senior unsecured
debt, effectively junior in right of payment to our existing and future secured debt, including our secured
equipment debentures, to the extent of the value of the assets securing such debt, and senior in right of
payment to any subordinated debt. In addition, the 6.75% Debentures are structurally subordinated to all
existing and future liabilities of our subsidiaries. The net proceeds were approximately $197 million after
deducting underwriting fees and other transaction related expenses. Interest on the 6.75% Debentures is
payable semi-annually on April 15 and October 15. The first interest payment on the 6.75% Debentures
was paid October 15, 2009.
Holders of either the Series A or Series B 6.75% Debentures may convert them into shares of our
common stock at any time at a conversion rate of 204.6036 shares per $1,000 principal amount of the
6.75% Debentures. The conversion rates are subject to adjustment should we declare common stock
dividends or effect any common stock splits or similar transactions. If the holders convert the
6.75% Debentures in connection with a fundamental change that occurs prior to October 15, 2014 for the
Series A 6.75% Debentures or October 15, 2016 for the Series B 6.75% Debentures, the applicable
conversion rate may be increased depending on our then current common stock price. The maximum
number of shares into which all of the 6.75% Debentures are convertible, including pursuant to this make-
whole fundamental change provision, is 235.2941 shares per $1,000 principal amount of the
6.75% Debentures outstanding, as adjusted.
We may redeem any of the 6.75% Debentures for cash at a redemption price of 100% of their principal
amount, plus accrued and unpaid interest at any time on or after October 15, 2014 for the Series A
6.75% Debentures and October 15, 2016 for the Series B 6.75% Debentures. Holders may require us to
repurchase the 6.75% Debentures for cash at a repurchase price equal to 100% of their principal amount
plus accrued and unpaid interest, if any, on October 15, 2014, 2019, 2024, 2029 and 2034 for the Series A
6.75% Debentures and October 15, 2016, 2021, 2026, 2031 and 2036 for the Series B 6.75% Debentures;
or at any time prior to their maturity upon the occurrence of a certain designated event.
We evaluated the various embedded derivatives within the supplemental indenture for bifurcation from the
6.75% Debentures under the applicable provisions, including the basic conversion feature, the fundamental
change make-whole provision and the put and call options. Based upon our detailed assessment, we
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