JetBlue Airlines 2015 Annual Report Download - page 57

JETBLUE AIRWAYS CORPORATION-2015Annual Report 53
PART II
ITEM 8Financial Statements and Supplementary Data
NOTE 5 Stockholders’ Equity
In September 2012, our Board of Directors authorized a share repurchase
program for up to 25 million shares of common stock over a five year
period. The repurchases may be commenced or suspended from time to
time without prior notice. During 2013, we repurchased approximately
0.5 million shares of our common stock for approximately $3 million. During
2014, we repurchased approximately 1.6 million shares of our common
stock for approximately $13 million.
On May 29, 2014, we entered into an accelerated share repurchase
agreement, or ASR, with JP Morgan, or the 2014 ASR, paying $60 million for
an initial delivery of approximately 5.1 million shares. The terms of the ASR
concluded on September 9, 2014 with JP Morgan delivering approximately
0.4 million additional shares to JetBlue. A total of approximately 5.5 million
shares was repurchased under the 2014 ASR, with an average price paid
per share of $10.90.
On June 16, 2015, we entered into an ASR with Goldman, Sachs & Co.,
or the 2015 ASR, paying $150 million for an initial delivery of approximately
6.1 million shares. The terms of the ASR concluded on September 15,
2015 with Goldman, Sachs & Co. delivering approximately 0.7 million
additional shares to JetBlue. A total of approximately 6.8 million shares
was repurchased under the 2015 ASR, with an average price paid per
share of $22.06.
The total shares purchased by JetBlue under the 2014 ASR and 2015 ASR
were based on the volume weighted average prices of JetBlue’s common
stock during the terms of the respective agreements.
In September 2015, JetBlue entered into an agreement for the repurchase
of up to 778,460 shares per day, structured pursuant to Rule 10b5-1
and 10b-18 under the Securities Exchange Act of 1934 as amended,
with a maximum of 3 million shares to be repurchased. The repurchases
commenced on October 30, 2015 and terminated on November 18,
2015 with 3 million shares repurchased for approximately $77 million. As
of December 31, 2015, 3.5 million shares remain available for repurchase
under the 2012 share repurchase program.
As of December 31, 2015, we had a total of 57.1 million shares of our
common stock reserved for issuance. These shares primarily related to
our equity incentive plans and our convertible debt. Refer to Note 7 for
further details on our share-based compensation.
As of December 31, 2015, we had a total of 69.6 million shares of treasury
stock, the majority of which relate to the return of borrowed shares
under our share lending agreement. Morgan Staley terminated our share
lending facility in January 2016 and returned the shares outstanding to
us. Refer to Note 2 for further details on the share lending agreement.
The treasury stock also includes shares that were repurchased under our
share repurchase program.
NOTE 6 Earnings Per Share
The following table shows how we computed basic and diluted earnings per common share for the years ended December 31 (dollars and share data
in millions):
2015 2014 2013
Numerator:
Net income $ 677 $ 401 $ 168
Effect of dilutive securities:
Interest on convertible debt, net of income taxes and profit sharing 4 7 9
Net income applicable to common stockholders after assumed conversions for diluted
earnings per share $ 681 $ 408 $ 177
Denominator:
Weighted average shares outstanding for basic earnings per share 315.1 294.7 282.8
Effect of dilutive securities:
Employee stock options and restricted stock units 2.8 2.4 2.1
Convertible debt 26.9 46.2 58.6
Adjusted weighted average shares outstanding and assumed conversions for diluted
earnings per share 344.8 343.3 343.5
Shares excluded from EPS calculation:
Shares issuable upon exercise of outstanding stock options or vesting of restricted stock
units as assumed exercise would be antidilutive — 6.9 13.8
As of December 31, 2015 and 2014, a total of approximately 1.4 million
shares of our common stock, which were lent to our share borrower
pursuant to the terms of our share lending agreement as described in
Note 2, were issued and outstanding for corporate law purposes, but
were returned during January 2016. Holders of the borrowed shares
had all the rights of a holder of our common stock. However, because
the share borrower had to return all borrowed shares to us, or identical
shares or, in certain circumstances of default by the counterparty, the
cash value thereof, the borrowed shares are not considered outstanding
for the purpose of computing and reporting basic or diluted earnings per
share. The fair value of similar common shares not subject to our share
lending arrangement based upon our closing stock price at December
31, 2015, was approximately $32 million.
As discussed in Note 2, during 2015 holders voluntarily converted
approximately $68 million in principal amount of the 5.5% Series B
convertible debentures. As a result, we issued 15.2 million shares of our
common stock.
As discussed in Note 5, JetBlue entered into the 2014 ASR and 2015
ASR and purchased approximately 5.5 million and 6.8 million shares,
respectively, for $60 million and $150 million, respectively based on the
volume weighted average prices of JetBlue’s common stock during the
term of the ASR agreements.
As discussed in Note 5, JetBlue repurchased 3 million shares pursuant
to Rule 10b5-1 and 10b-18 under the Securities Exchange Act of 1934
as amended, during the fourth quarter of 2015.