Air Canada 2012 Annual Report Download - page 40

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2012 Air Canada Annual Report
40
At December 31, 2012, Deposits and other assets declined by $85 million from December 31, 2011 reflecting, in part, the
write-off of Air Canada’s investment in Aveos’ parent holding company in the first quarter of 2012 in the amount of
$65 million. Property and equipment amounted to $4,871 million at December 31, 2012, a reduction of $217 million from
December 31, 2011. This reduction in Property and equipment was mainly due to the impact of depreciation expense of
$637 million in 2012, partly offset by additions to property and equipment of $426 million. The additions to Property and
equipment included deposits and progress payments on future aircraft deliveries of $177 million, flight equipment (including
capitalized maintenance costs) of $115 million, and facility purchases of $85 million.
Pension and other benefit liabilities decreased $874 million from December 31, 2011, mainly due to Air Canada having made
pension funding payments of $433 million in 2012. The decrease also relates to the impact of benefit plan amendments of
$124 million, which is further described in section 9.7 of this MD&A.
9.3. Adjusted Net Debt
The following table reflects Air Canada’s adjusted net debt balances as at December 31, 2012 and as at December 31, 2011.
(Canadian dollars in millions) December 31, 2012 December 31, 2011 Change $
Total long-term debt and finance leases $3,449 $3,906 $ (457)
Current portion of long-term debt and finance leases 506 424 82
Total long-term debt and finance leases, including current portion 3,955 4,330 (375)
Less cash, cash equivalents and short-term investments (2,026) (2,099) 73
Net debt $1,929 $2,231 $ (302)
Capitalized operating leases(1) 2,352 2,345 7
Adjusted net debt $4,281 $4,576 $ (295)
(1) Adjusted net debt is a non-GAAP financial measure used by Air Canada and may not be comparable to measures presented by other public companies. Adjusted net debt is
a key component of the capital managed by Air Canada and provides management with a measure of its net indebtedness. Air Canada includes capitalized operating leases
which is a measure commonly used in the industry to ascribe a value to obligations under operating leases. Common industry practice is to multiply annualized aircraft rent
expense by 7.0. This definition of capitalized operating leases is used by Air Canada and may not be comparable to similar measures presented by other public companies.
Aircraft rent was $336 million for the twelve months ended December 31, 2012 and $335 million for the twelve months ended December 31, 2011.
Total long-term debt and finance leases, including current portion, amounted to $3,955 million at December 31, 2012, a
decrease of $375 million from December 31, 2011. The reduction in long-term debt and finance leases from December 31,
2011 was mainly due to debt repayments of $442 million, as well as the favourable impact of a stronger Canadian dollar at
December 31, 2012 compared to December 31, 2011 on Air Canada’s foreign currency denominated debt (mainly U.S. dollars),
which accounted for a decrease of $100 million. These decreases were partly offset by proceeds from borrowings of
$126 million.
At December 31, 2012, adjusted net debt of $4,281 million decreased $295 million from December 31, 2011. This reduction in
adjusted net debt reflected the impact of lower debt balances, as described above.