Westjet 2001 Annual Report Download - page 34

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32
We began the year with $181 million in
shareholders’ equity and $60.4 million in debt. Our
debt to equity ratio on December 31, 2000 was
0.33 to 1.0. During 2001, shareholders’ equity
increased by $37 million from earnings to $222
million. Long-term debt and capital leases
increased by $7.2 million to $67.6 million for an
improved debt to equity ratio of 0.3 to 1.0.
Including our $179 million in off balance sheet debt
– primarily the 737-700 operating leases –
WestJet’s total debt to equity ratio is 1.1 to 1.0,
which is well below this industry’s average and our
own guidelines of a ratio below 2 to 1.
We commenced 2001 with $79 million in cash and
$1.4 million more current assets than current
liabilities. Our current ratio declined during the year
to $9.4 million fewer current assets than current
liabilities due mainly to our capital spending with
cash and particularly our pre-delivery payments to
Boeing on the future purchases of 26 737-700
aircraft. Our working capital remains strong, and
has been substantially enhanced with a recently
announced equity issue.
Cash provided from operations was down from
$87.4 million in 2000 to $67.4 million in 2001. Our
non-cash adjusted net earnings contributed a
47.3% increase to cash of $76.5 million as
compared with $51.9 million in the previous year.
WestJet’s non-cash working capital declined by
$9.1 million as compared with an increase of $35.5
million in 2000. This was due to the increase in size
of our income tax installments, or prepayments of
2001 tax, and our December renewal of aviation
insurance and prepayment in that month of our
next year’s premiums. There was also the anomaly
of the timing differences of cheque runs to our
accounts payable suppliers (i.e. just after the year-
end in 2000 and just prior in 2001).
Financial Condition
Maintaining a low-cost structure and a strong balance sheet are two
important and related pillars of our business plan.
MANAGEMENT’S DISCUSSION AND ANALYSIS
New Destination
YMM - Fort McMurray, Alberta
WestJet first flew to "Fort Mac" on January 8, 2001. It was a logical
addition to WestJet's Western Canada service, connecting Fort
McMurray's bustling oil and gas economy with Edmonton and
Calgary, with connections to the rest of the network. Our fourth
Alberta destination, Fort McMurray further solidifies our presence
in the West, and it marks our return to a market we had previously
served. With friendly service and the only all-jet service in town, the
people in Fort McMurray are happy to have us back - and we’re
glad to be there.