Please find the following

Book value of total debt

Stock price

Shares outstanding

Market value of equity

Corporate tax rate

Yield on 10-year Treasury debt

Yield on long-term SWA debt

Market risk premium

Beta on SWA equity

CAPM Cost of equity

WACC

The contrasting view held that increasing the price might compromise the success of the deal. In management's view, a successful offering entailed not only raising the short-term capital needs, but also maintaining access to future capital and providing positive returns to the crew members (employees) and others involved in directed IPO share purchases. Because maintaining access to capital markets was considered vital to JetBlue's aggressive growth plans, discounting the company's IPO price seemed like a reasonable concession to ensure a successful deal and generate a certain level of investor buzz. Being conservative on the offer price seemed particularly prudent considering the risks of taking an infant New York airline public just six months after 9/11. (Exhibit 11 provides forecasts of expected aggregate industry growth and profitability; Exhibit 12 shows the share-price performance of airlines over the previous eight months.) By April 2002, the U.S. economy had been stalled for nearly two years. The Federal Reserve had attempted to stimulate economic activity by reducing interest rates to their lowest level in a generation. Current long-term U.S. Treasuries traded at a yield of 5%, short-term rates were at 2%, and the market risk premium was estimated to be 5%. Based on the JetBlue management team's forecast of aircraft acquisitions, Exhibit 13 provides a financial forecast for the company. 6 The Offering JetBlue Airways IPO Valuation Selections from Value Line Tear Sheet for Southwest Airlines Exhibit 2 JetBlue Airways IPO Valuation Balance Sheets of JetBlue Airways (in thousands of dollars) Year Ended December 31 200120001999 Cash Flows From Operating Activities Net income (loss) $38,537 ($21,330) ($13,764) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation Amortization Deferred income taxes Other, net Changes in certain operating assets and liabilities: Decrease (increase) in receivables Increase in inventories, prepaid expenses and other Increase in air traffic liability 9,9724453,3735,9603,8891063,892111619 Increase in accounts payable and other accrued liabilities Net cash provided by (used in) operating activities 111,27930,894 (6,556)6,818 Cash Flows From Investing Activities Capital expenditures Predelivery deposits for flight equipment, net Increase in security deposits Purchases of short-term investments Proceeds from maturities of short-term investments Other, net Net cash used in investing activities Cash Flows From Financing Activities Proceeds from issuance of convertible redeemable preferred stock Proceeds from issuance of common stock Southwest Airlines: Current Debt Outstanding Data sources: Mergent's Bond Record; Southwest annual report