JetBlue Airlines 2013 Annual Report Download - page 52

JETBLUE AIRWAYS CORPORATION-2013Annual Report46
PART II
ITEM 8Financial Statements and Supplementary Data
JetBlue Airways Corporation
Notes to Consolidated Financial Statements
JetBlue Airways Corporation, or JetBlue, is New York’s Hometown Airline™,
commencing service on February 11, 2000. We believe our differentiated
product and service offerings combined with our competitive cost advantage
enables us to effectively compete in the high-value geography we serve.
As of December 31, 2013, we served 82 destinations in 25 states, the
District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin
Islands, and 15 countries in the Caribbean and Latin America. Our wholly
owned subsidiary, LiveTV, LLC, or LiveTV, provides in-flight entertainment
systems and internet connectivity for commercial aircraft.
NOTE 1 Summary of Significant Accounting Policies
Basis of Presentation
JetBlue predominately provides air transportation services across the
United States, Caribbean and Latin America. Our consolidated financial
statements have been prepared in accordance with accounting principles
generally accepted in the U.S., or U.S. GAAP, and include the accounts
of JetBlue and our subsidiaries. All majority-owned subsidiaries are
consolidated on a line by line basis, with all intercompany transactions
and balances being eliminated. Air transportation services accounted for
substantially all of the Company’s operations in 2013, 2012 and 2011.
Accordingly, segment information is not provided for LiveTV. In the first half
of 2013 we recorded $4 million of maintenance expense and $2 million
in other operating expenses that relate to prior years. Such amounts are
not considered material to the prior or current year results.
Use of Estimates
The preparation of our consolidated financial statements and accompanying
notes in conformity with U.S. GAAP require us to make certain estimates
and assumptions. 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
Codification™, or Codification, establishes a framework for measuring fair
value and requires enhanced disclosures about fair value measurements.
This topic clarifies 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 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 significant 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, funds held in escrow
for estimated workers’ compensation obligations and performance bonds
for aircraft and facility leases.
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 specific
identification 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 certificates 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, which are stated at amortized cost. We do not intend to sell these
investment securities and the contractual maturities are not greater than
24 months. Those with maturities less than twelve months are included
in short-term investments on our consolidated balance sheets. Those
with remaining maturities in excess of twelve months are included in
long-term investments on our consolidated balance sheets. We did not
record any material gains or losses on these securities during the years
ended December 31, 2013, 2012 or 2011. The estimated fair value of
these investments approximated their carrying value as of December 31,
2013 and 2012.
Also included in our held-to-maturity investment securities as of December 31,
2013 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 a bank with a deposit maturity within
the next 12 months. 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-financing.
As such, we have classified these time deposits as long-term held-to-
maturity investments to reflect our intent to hold them in connection with
the maturity of the associated debt.