JetBlue Airlines 2012 Annual Report Download - page 62

JETBLUE AIRWAYS CORPORATION-2012 10K58
PART II
ITEM 8Financial Statements and Supplementary Data
A reconciliation of the beginning and ending amount of unrecognized tax benefi ts is as follow (in millions):
Unrecognized tax benefi ts December31, 2009 $9
Increases for tax positions taken during the period 2
Unrecognized tax benefi ts December31, 2010 11
Increases for tax positions taken during the period 1
Unrecognized tax benefi ts December31, 2011 12
Increases for tax positions taken during the period 1
Unrecognized tax benefi ts December31, 2012 $13
Interest and penalties accrued on unrecognized tax benefi ts were not signifi cant. If recognized, $10 million of the unrecognized tax benefi ts at
December31, 2012 would impact our effective tax rate. We do not expect any signifi cant change in the amount of the unrecognized tax benefi ts
within the next twelve months. As a result of NOLs and statute of limitations in our major tax jurisdictions, years 2001 through 2011 remain subject to
examination by the relevant tax authorities.
NOTE 10 Employee Retirement Plan
We sponsor a retirement savings 401(k) defi ned contribution plan, or the
Plan, covering all of our employees. In 2012, we matched 100% of our
employee contributions up to 5% of their compensation in cash, which
vests over fi ve years of service measured from an employee’s hire date.
Participants are immediately vested in their voluntary contributions.
Another component of the Plan is a Company discretionary contribution
of 5% of eligible non-management employee compensation, which we
refer to as Retirement Plus. Retirement Plus contributions vest 100%
after three years of service measured from an employee’s hire date. Our
non-management employees are also eligible to receive profi t sharing,
calculated as 15% of adjusted pre-tax income reduced by the guaranteed
Retirement Plus contributions discussed above. Additionally certain of
our FAA-licensed employees receive an additional contribution of 3% of
eligible compensation, which we refer to as Retirement Advantage. Total
Retirement Plus, Retirement Advantage, 401(k) company match and profi t
sharing expensed in 2012, 2011 and 2010 were $73 million, $61 million
and $55 million, respectively.
NOTE 11 Commitments
Flight Equipment Commitments
In December 2012, we prepaid $200 million for certain 2013 aircraft
deliveries and deposits on future aircraft deliveries in exchange for favorable
pricing terms.
In July 2012, we amended our EMBRAER purchase agreement accelerating
the delivery of one aircraft to 2013, which was previously scheduled for
delivery in 2014. Additionally, we extended the date for which we may
elect not to further amend our purchase agreement to order a new
EMBRAER 190 variant, if developed, to July 31, 2013. If the new variant
is not elected, seven EMBRAER 190 aircraft we previously deferred may
either be returned to their previously committed to delivery dates in 2013
and 2014 or canceled and subject to cancellation fees. In December
2012, we further amended our EMBRAER purchase agreement effectively
accelerating the delivery of four aircraft from 2018 to 2013.
During 2011, we cancelled the orders for a total of 14 EMBRAER 190
aircraft previously scheduled for delivery in 2013, 2014, 2017 and 2018.
We also deferred seven EMBRAER 190 aircraft previously scheduled for
delivery in 2013 and 2014 to 2018.
In October 2011, we executed a new purchase agreement with Airbus
S.A.S., which superseded our original purchase agreement and related
amendments. In this new agreement, we substituted 30 of our then
remaining A320 aircraft deliveries with A321 aircraft and placed a new
order for 40 A320 new engine option, or A320neo, aircraft with delivery
scheduled in 2018 through 2021.
As of December 31, 2012, our fi rm aircraft orders consisted of 14 Airbus
A320 aircraft, 30 Airbus A321 aircraft, 40 Airbus A320neo, 31 EMBRAER
190 aircraft and 10 spare engines scheduled for delivery through 2021.
Committed expenditures for these aircraft and related fl ight equipment,
including estimated amounts for contractual price escalations and predelivery
deposits, will be approximately $360 million in 2013, $525 million in 2014,
$745 million in 2015, $765 million in 2016, $575 million in 2017 and
$2.04billion thereafter.
We are scheduled to receive three new Airbus A320, four new Airbus A321
and seven new EMBRAER 190 aircraft in 2013. As described above, we
pre-paid some of our 2013 aircraft deliveries. We have committed fi nancing
for two EMBRAER 190 aircraft scheduled for delivery in 2013. We will
only opportunistically fi nance the remaining 2013 scheduled deliveries at
favorable borrowing terms relative to our weighted average cost of debt.
Other Commitments
We utilize several credit card processors to process our ticket sales. Our
agreements with these processors do not contain covenants, but do
generally allow the processor to withhold cash reserves to protect the
processor for potential liability for tickets purchased, but not yet used for
travel. While we currently do not have any collateral requirements related
to our credit card processors, we may be required to issue collateral to
our credit card processors, or other key vendors, in the future. As of
December 31, 2012, we had approximately $16 million pledged related
to our workers compensation insurance policies and other business
partner agreements, which will expire according to the terms of the related
policies or agreements.
Our commitments also include those of LiveTV, which has several
noncancelable long-term purchase agreements with its suppliers to provide
equipment to be installed on its customers’ aircraft, including JetBlue’s
aircraft. At December31, 2012, committed expenditures to these suppliers
were approximately $21 million in 2013, $16 million in 2014, $7million in
2015 and $2 million in each of 2016 and 2017.
In March 2011, we executed a seven year agreement, subject to an optional
three year extension, with ViaSat Inc. to develop and introduce in-fl ight
broadband connectivity technology on our aircraft. Committed expenditures