Westjet 2001 Annual Report Download - page 48

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46
Years ended December 31, 2001 and 2000
(Tabular Amounts are Stated in Thousands of Dollars)
1. Significant accounting policies (continued):
(l) Stock-based compensation plans:
The Corporation has stock option plans, which are described in note 6. No compensation expense is
recognized for these plans when the options are issued. Any consideration received on exercise of
the stock options is credited to share capital.
(m) Financial instruments:
The Corporation manages its foreign exchange exposure through the use of options, forward
contracts and cross currency swaps. Resulting gains and losses are accrued as exchange rates
change to offset gains and losses resulting from the underlying hedged transactions. Premiums and
discounts are amortized over the term of the contracts.
The Corporation manages its exposure to jet fuel price volatility through the use of fixed price and
fixed ceiling price agreements. Premiums and discounts are amortized over the term of the contracts.
The Corporation has entered into an agreement to lease ten Boeing next generation aircraft. In
accordance with these aircraft operating lease agreements, the U.S. dollar amount of the lease
payments are fixed based on the value of the 10-year U.S. Swap Rate on the day the aircraft is
delivered. The Corporation has managed this exposure by entering into Interest Rate Collar and
Forward Starting Swap agreements. Any cash settlement resulting from these transactions will be
amortized over the lease term.
(n) Per share amounts:
Basic per share amounts are calculated using the weighted average number of shares outstanding
during the year. Diluted per share amounts are calculated based on the treasury stock method,
which assumes that any proceeds obtained on exercise of options would be used to purchase
common shares at the average price during the period. The weighted average number of shares
outstanding is then adjusted by the net change. In computing diluted net earnings per share,
879,455 shares were added to the weighted average number of common shares outstanding during
the year ended December 31, 2001 (2000 – 2,115,738) for the dilutive effect of employee stock
options.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS