Westjet 2008 Annual Report Download - page 55

WestJet 2008 Annual Report 51
The following non-GAAP measures are used to monitor our
fi nancial performance:
Adjusted debt: The sum of long-term debt, obligations under
capital lease and off-balance-sheet aircraft operating leases.
Our practice, consistent with common industry practice,
is to multiply the trailing twelve months of aircraft leasing
expense by 7.5 to derive a present value debt equivalent.
This measure is used in the calculation of adjusted
debt-to-equity and adjusted net debt to Earnings Before
Interest, Taxes, Depreciation, Aircraft Rent and other items,
as defi ned below.
Adjusted equity: The sum of share capital, contributed
surplus and retained earnings, excluding accumulated
other comprehensive loss (AOCL). This measure is used in
the calculation of adjusted debt-to-equity.
Adjusted net debt: Adjusted debt less cash and cash
equivalents. This measure is used in the calculation of
adjusted net debt to Earnings Before Interest, Taxes,
Depreciation, Aircraft Rent and other items, as defi ned below.
EBITDAR: Earnings Before Interest, Taxes, Depreciation,
Aircraft Rent and other items, such as asset impairments,
gains and losses on derivatives, and foreign exchange gains
or losses. EBITDAR is a non-GAAP measure commonly
used in the airline industry to evaluate results by excluding
differences in the method in which an airline fi nances
its aircraft.
Net earnings, diluted earnings per share and CASM,
adjusted for one-time items: We have excluded one-time
items, such as the reservation system impairment and
favourable income tax rate reduction in 2007, in assessing
the operating performance of our ongoing operations.
These items are excluded from our results, as they could
skew the trend analysis of our fi nancial performance and
were one-time items unique to 2007 that we do not expect
to see in the future.
CASM, excluding fuel and employee profi t share: We
exclude the effects of aircraft fuel expense and employee
profi t share expense to assess the operating performance of
our business. Fuel expense is excluded from our operating
results due to the fact that fuel prices are impacted by a
host of factors outside our control, such as signifi cant
weather events, geopolitical tensions, refi nery capacity and
global demand and supply. Excluding this expense allows
us to analyze our operating results on a comparable basis.
Employee profi t share expense is excluded from our
operating results due to its variable nature, and excluding
this expense allows greater comparability.
Economic cost of fuel: As presented in the non-GAAP
measures to GAAP reconciliation on page 29 of this MD&A
in Results of Operations – Aircraft Fuel, we believe it is
useful to refl ect aircraft fuel expense on an economic
basis, which includes realized losses on fuel derivatives not
designated under cash fl ow hedge accounting, and excludes
ineffectiveness, as defi ned, for future period derivative
instruments. Since fuel expense is highly volatile, we
believe presenting the economic cost of fuel is useful to a
reader. This table has not been repeated in this section.
We just don’t believe guests should have to pay extra
to speak to a real person; our low-cost advantage lets
us do lots of things outside the norm.
Vincent Lamb, Sales Super Agent
WestJetter since 2002