JetBlue Airlines 2015 Annual Report Download - page 65

JETBLUE AIRWAYS CORPORATION-2015Annual Report 61
PART II
ITEM 8Financial Statements and Supplementary Data
NOTE 14 Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) includes changes in fair value of our aircraft
fuel derivatives and interest rate swap agreements, which qualify for hedge
accounting. A rollforward of the amounts included in accumulated other
comprehensive income (loss), net of taxes for the years ended December
31, 2015, 2014 and 2013 is as follows (in millions):
Aircraft Fuel
Derivatives(1)
Interest
Rate Swaps(2) Total
Balance of accumulated losses at December 31, 2012 (1) (7) (8)
Reclassifications into earnings (net of $7 of taxes) 6 5 11
Change in fair value (net of $(2) of taxes) (4) 1 (3)
Balance of accumulated income (losses), at December 31, 2013 1 (1) —
Reclassifications into earnings (net of $12 of taxes) 18 1 19
Change in fair value (net of $(52) of taxes) (82) — (82)
Balance of accumulated losses, at December 31, 2014 $ (63) $ — $ (63)
Reclassifications into earnings (net of $49 of taxes) 77 1 78
Change in fair value (net of $(11) of taxes) (18) — (18)
Balance of accumulated losses, at December 31, 2015 (4) 1 (3)
(1) Reclassified to aircraft fuel expense
(2) Reclassified to interest expense
NOTE 15 Geographic Information
Under the Segment Reporting topic of the Codification, disclosures are
required for operating segments that are regularly reviewed by chief operating
decision makers. Air transportation services accounted for substantially
all the Company’s operations in 2015, 2014 and 2013.
Operating revenues are allocated to geographic regions, as defined
by the DOT, based upon the origination and destination of each flight
segment. We currently serve 29 locations in the Caribbean and Latin
American region, or Latin America as defined by the DOT. However,
our management includes our three destinations in Puerto Rico and two
destinations in the U.S. Virgin Islands in our Caribbean and Latin America
allocation of revenues. Therefore, we have reflected these locations within
the Caribbean and Latin America region in the table below. Operating
revenues by geographic regions for the years ended December 31 are
summarized below (in millions):
2015 2014 2013
Domestic $ 4,521 $ 4,093 $ 3,886
Caribbean & Latin America 1,895 1,724 1,555
TOTAL $ 6,416 $ 5,817 $ 5,441
Our tangible assets primarily consist of our fleet of aircraft, which is deployed system wide, with no individual aircraft dedicated to any specific route or
region; therefore our assets do not require any allocation to a geographic area.
NOTE 16 LiveTV
LiveTV, LLC, formerly a wholly owned subsidiary of JetBlue, provides in-flight
entertainment and connectivity solutions for various commercial airlines
including JetBlue. On June 10, 2014, JetBlue entered into an amended
and restated purchase agreement with Thales Holding Corporation, or
Thales, replacing the original purchase agreement between the parties
dated as of March 13, 2014. Under the terms of the amended and
restated purchase agreement, JetBlue sold LiveTV to Thales for $399
million, subject to purchase adjustments based upon the amount of cash,
indebtedness, and working capital of LiveTV at the closing date of the
transaction relative to a target amount. Excluded from this sale was LiveTV
Satellite Communications, LLC, which was retained by JetBlue pending
receipt of the necessary regulatory approvals for the sale. On September
25, 2014, JetBlue received all necessary regulatory approvals and sold
LiveTV Satellite Communications, LLC, to Thales for approximately $1
million in cash.
The total cash proceeds of $393 million reflect the agreed upon purchase
price, net of purchase agreement adjustments including post-closing
purchase price adjustments, which were finalized during the third quarter
of 2014. The sale resulted in a pre-tax gain of approximately $241 million
and is net of approximately $19 million in transaction costs. The gain on
the sale has been reported as a separate line item in the consolidated
statement of operations for the year ended December 31, 2014.
The tax expense recorded in connection with this transaction totaled $72
million, net of a $19 million tax benefit related to the utilization of a capital
loss carryforward. The capital gain generated from the sale of LiveTV
resulted in the release of a valuation allowance related to the capital
loss deferred tax asset. This resulted in an after tax gain on the sale of
approximately $169 million.
Following the close of the sales on June 10, 2014, and on September 25,
2014, the applicable LiveTV operations are no longer being consolidated
as a subsidiary in JetBlue’s consolidated financial statements. The effect of
this reporting structure change is not material to the consolidated financial
statements presented. LiveTV third party revenues in 2014 up to the date
of sale were $30 million , compared to $72 million in 2013.
Deferred profit on hardware sales and advance deposits for future hardware
sales were included in other accrued liabilities and other long term liabilities
on our consolidated balance sheets depending on whether we expected