Westjet 2003 Annual Report Download - page 22

42 | 2003 WestJet Annual Report
Years ended December 31, 2003 and 2002
(Tabular Amounts are Stated in Thousands of Dollars, Except Per Share Data)
1. Significant accounting policies:
(a) Basis of presentation:
These consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, as well as the
accounts of two special-purpose entities which are utilized to facilitate the financing of aircraft (see note 4). The Corporation has no
equity ownership in the special-purpose entities, however, the Corporation is the primary beneficiary of the special-purpose entities’
operations. All intercompany balances and transactions have been eliminated.
The preparation of financial statements in conformity with accounting principles generally accepted in Canada requires management
to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual
results could differ from these estimates.
(b) Cash and cash equivalents:
Cash and cash equivalents are comprised of cash and all investments that are highly liquid in nature and generally have a maturity
date of three months or less.
(c) Revenue recognition:
Guest revenue is recognized when air transportation is provided. Tickets sold but not yet used are included in the balance sheet as
advance ticket sales under current liabilities.
(d) Non-refundable guest credits:
The Corporation, under certain circumstances, may issue future travel credits which are non-refundable and which expire one year from
the date of issue. The utilization of guest credits is recorded as revenue when the guest has flown or upon expiry.
(e) Foreign currency:
Monetary assets and liabilities, denominated in foreign currencies, are translated into Canadian dollars at rates of exchange in effect
at the balance sheet date. Non-monetary assets and revenue and expense items are translated at rates prevailing when they were acquired
or incurred. Foreign exchange gains and losses are included in earnings.
(f) Inventory:
Materials and supplies are valued at the lower of cost and replacement value. Aircraft expendables and consumables are expensed as
acquired.
(g) Deferred costs:
Sales and marketing and reservation expenses attributed to advance ticket sales are deferred and expensed in the period the related
revenue is recognized. Included in prepaid expenses are $5,334,000 (2002 - $4,161,000) of deferred costs.
(h) Property and equipment:
Property and equipment are recorded at cost and depreciated to their estimated residual values.
Costs of new route development are expensed as incurred.
Asset Basis Rate
Aircraft net of estimated residual value – 700 series Cycles Cycles flown
Aircraft net of estimated residual value – 200 series Flight hours Hours flown
Ground property and equipment Straight-line 5 to 25 years
Buildings Straight-line 40 years
Spare engines and parts net of estimated residual
value – 700 series Straight-line 20 years
Aircraft under capital leases Straight-line Term of lease
Spare engines and parts net of estimated residual
value – 200 series Flight hours Fleet hours flown
Leasehold improvements Straight-line Term of lease
Years ended December 31, 2003 and 2002
(Stated in Thousands of Dollars)
2003 2002
Cash provided by (used in):
Operations:
Net earnings $ 60,539 $ 51,780
Items not involving cash:
Amortization 63,208 52,637
Gain on disposal of property and equipment (631) (97)
Issued from treasury stock 3,063 -
Future income tax 25,592 18,438
151,771 122,758
Decrease in non-cash working capital 40,646 38,866
192,417 161,624
Financing:
Increase in long-term debt 466,353 190,366
Repayment of long-term debt (49,158) (8,471)
Issuance of common shares 165,545 84,634
Share issuance costs (6,297) (3,672)
Increase in other long-term assets (25,101) (32,257)
Decrease in obligations under capital lease (6,498) (6,088)
544,844 224,512
Investments:
Aircraft additions (564,130) (320,871)
Other property and equipment additions (34,249) (24,031)
Other property and equipment disposals 2,092 234
(596,287) (344,668)
Increase in cash 140,974 41,468
Cash, beginning of year 100,410 58,942
Cash, end of year $ 241,384 $ 100,410
Cash is defined as cash and cash equivalents.
See accompanying notes to consolidated financial statements.
2003 WestJet Annual Report |43
WestJet Airlines Ltd.
Notes to Consolidated Financial Statements
WestJet Airlines Ltd.
Consolidated Statements of Cash Flows