JetBlue Airlines 2009 Annual Report Download - page 64

and an effective interest rate of 2.2%. 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 provides us with a no net cost loan
in the principal amount of $56 million. However, this credit line agreement calls for all interest income
earned on the ARS being held by UBS to be automatically transferred to UBS. This line of credit is
secured by approximately $85 million in par value of our ARS being held by UBS. The term of the credit
line is through at least June 30, 2010 or when the underlying ARS are sold. In January 2010, the issuers
redeemed at par $12 million of the ARS securing this line of credit and the proceeds were applied directly
to the outstanding loan balance.
(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
concluded these embedded derivatives were either (i) excluded from bifurcation as a result of being clearly
and closely related to the 6.75% Debentures or are indexed to our common stock and would be classified
in stockholders’ equity if freestanding or (ii) are immaterial embedded derivatives.
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