Air Canada 2006 Annual Report Download - page 105

Download and view the complete annual report

Please find page 105 of the 2006 Air Canada annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

12. SHAREHOLDERS’ EQUITY
Share capital as at December 31, 2006 (net of issue costs) consists of the following:
2006
2005
Share capital
Common shares (a) $ 562 $ -
Special common shares - 325
562 325
Adjustment to shareholders’ equity (b) (288) (303)
$ 274 $ 22
(a) The net proceeds from the Treasury offering by Air Canada in 2006 resulted in an increase to shareholders'
equity of $187 (after $13 of expenses). The carrying value of outstanding common shares as at December
31, 2005 represents the net proceeds received by Air Canada from shares issued to ACE as at September
30, 2004.
(b) Under fresh start reporting, the balance in shareholders' equity after a comprehensive revaluation is
adjusted to the net value of identifiable assets and liabilities. Section 1625 of the CICA Handbook,
Comprehensive Revaluation of Assets and Liabilities, does not permit goodwill to be recorded even if the
fair value of net assets is less than the fair value of the enterprise as a whole.
During Quarter 4 2006, as a result of a review of outstanding provisions, it was determined that a portion of
the provision amounting to $15 would no longer be required. The amount reversed has been applied
against Share capital as these amounts related to provisions established before the application of fresh
start reporting.
As a result of the transactions related to the Air Canada IPO as described in Note 1, Air Canada became the
parent company of the entities included in the Air Canada Services segment within these combined
consolidated financial statements. In accordance with Emerging Issues Committee Abstract 89 of the CICA
Handbook, Exchanges of Ownership Interests Between Enterprises Under Common Control – Wholly and
Partially-Owned Subsidiaries, shareholders’ equity has been restated for all periods presented to reflect the
shareholders’ equity of Air Canada as if the companies had been combined since their inception.
The following table describes the continuity of Air Canada’s share capital during the year:
Outstanding shares
(in thousands)
Common
Shares
Special
Common
Shares
Special
Preferred
Shares
Exchangeable
Distress
Preferred
Shares
Class A
Non-
Voting
Shares
Non-
Voting
Shares
2006
Beginning of year - 50,000 50,000 - - -
Changes during the year: - - -
Transfer of investments
from ACE (c)
1
1 -
-
- -
Conversion for IPO (c) 90,475 (50,001) (50,000) - - -
Initial public offering 9,524 - - - - -
End of year 100,000 - - - - -
2005
Beginning of year 15,158 - - 23,647 3 22,646
Changes during the year:
Conversion to common 46,254 - - (23,647) (3) (22,646)
Conversion to special
common and preferred
(61,412)
50,000 50,000
-
- -
End of year - 50,000 50,000 - - -
(c) In connection with the Air Canada IPO as described in Note 1, ACE transferred to Air Canada all of its
interests in Air Canada Ground Handling, all of its interests in Air Canada Cargo and 51% of its interests in
105
Combined Consolidated Financial Statements 2006