JetBlue Airlines 2012 Annual Report Download - page 50

JETBLUE AIRWAYS CORPORATION-2012 10K46
PART II
ITEM 8Financial Statements and Supplementary Data
Notes to Consolidated Financial Statements
December31, 2012
JetBlue Airways Corporation is an innovative passenger airline that provides
award-winning customer service at competitive fares primarily on point-to-
point routes. We offer our customers a high quality product with young,
fuel-effi cient aircraft, leather seats, free in-fl ight entertainment at every
seat, pre-assigned seating and reliable performance. We commenced
service in February 2000 and established our primary base of operations
at New York’s John F. Kennedy International Airport, or JFK, where we
now have more enplanements than any other airline. As of December31,
2012, we served 75 destinations in 23 states, Puerto Rico, the U.S. Virgin
Islands, Mexico, and 12 countries in the Caribbean and Latin America.
Our wholly owned subsidiary, LiveTV, LLC, or LiveTV, provides in-fl ight
entertainment systems for commercial aircraft, including live in-seat
satellite television, digital satellite radio, wireless aircraft data link service
and cabin surveillance systems.
NOTE 1 Summary of Signifi cant Accounting Policies
Basis of Presentation: Our consolidated fi nancial statements include the
accounts of JetBlue Airways Corporation, or JetBlue, and our subsidiaries,
collectively “we” or the “Company”, with all intercompany transactions and
balances having been eliminated. Air transportation services accounted
for substantially all the Company’s operations in 2012, 2011 and 2010.
Accordingly, segment information is not provided for LiveTV. Certain
prior year amounts have been reclassifi ed to conform to the current year
presentation.
Use of Estimates: We are required to make estimates and assumptions
when preparing our consolidated fi nancial statements in conformity with
accounting principles generally accepted in the United States affecting
the amounts reported in our consolidated fi nancial statements and
accompanying notes. Actual results could differ from those estimates.
Fair Value: The Fair Value Measurements and Disclosures topic of the
Financial Accounting Standards Board’s, or FASB, Accounting Standards
Codifi cation™, or Codifi cation, establishes a framework for measuring fair
value and requires enhanced disclosures about fair value measurements.
Additionally, this topic clarifi es that fair value is an exit price, representing
the amount that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants. The Fair
Value Measurements and Disclosures topic also requires disclosure about
how fair value is determined for assets and liabilities and establishes a
hierarchy for which these assets and liabilities must be grouped, based
on signifi cant levels of inputs. See Note 14 for more information.
Cash and Cash Equivalents: Our cash and cash equivalents include
short-term, highly liquid investments which are readily convertible into cash.
These investments include money market securities, treasury bills, and
commercial paper with maturities of three months or less when purchased.
Restricted Cash: Restricted cash primarily consists of security deposits
and performance bonds for aircraft and facility leases and funds held in
escrow for estimated workers’ compensation obligations.
Accounts and Other Receivables: Accounts and other receivables are
carried at cost. They primarily consist of amounts due from credit card
companies associated with sales of tickets for future travel. We estimate
an allowance for doubtful accounts based on known troubled accounts,
if any, and historical experience of losses incurred.
Investment Securities: Investment securities consist of available-for-sale
investment securities and held-to-maturity investment securities. When
sold, we use a specifi c identifi cation method to determine the cost of
the securities.
Available-for-sale investment securities: Our available-for-sale investment
securities include (a)highly liquid investments, such as certifi cates of
deposits and treasury bills, with maturities greater than three months when
purchased, stated at fair value and (b)commercial paper with maturities
between three and twelve months, stated at fair value.
Held-to-maturity investment securities: Our held-to-maturity investments
consist of investment-grade interest bearing instruments, primarily corporate
bonds, stated at amortized cost, which we do not intend to sell. 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 signifi cant gains or losses on these securities during the
twelve months ended December31, 2012, 2011 or 2010. The estimated
fair value of these investments approximated their carrying value as of
December31, 2012 and 2011.
Also included in our held-to-maturity investment securities as of
December31, 2012 are deposits made to lower the interest rate on the
debt secured by two aircraft as discussed in Note2. These funds on
deposit are readily available to us and are invested with the bank with a
deposit maturity within the next 12 months; however, if we were to draw
upon this deposit, the interest rates on the debt reverts to the higher rates
in effect prior to the re-fi nancing. As such, we have classifi ed these time
deposits as long-term held-to-maturity investments to refl ect our intent to
hold in connection with the maturity of the associated debt.