Westjet 2010 Annual Report Download - page 55

WestJet 2010 Annual Report 53
Adjusted net debt: Adjusted debt less cash and cash equivalents.
This measure is used in the calculation of adjusted net debt to
EBITDAR, as defined 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 by which an airline finances its aircraft.
Net earnings and diluted earnings per share, excluding special
items: We believe excluding special items is useful for investors
to evaluate our recurring operational performance.
CASM, excluding fuel and employee profit share: We exclude
the effects of aircraft fuel expense and employee profit share
expense to assess the operating performance of our business.
Fuel expense is excluded from our operating results because
fuel prices are affected by a host of factors outside our control,
such as significant weather events, geopolitical tensions,
refinery capacity, and global demand and supply. Excluding
this expense allows us to analyze our operating results on a
comparable basis. Employee profit share expense is excluded
from our operating results because of its variable nature and
excluding this expense allows for greater comparability.
Aircraft fuel expense, excluding hedging: As presented in the
non-GAAP measures to GAAP reconciliation on 20 of this MD&A
under the heading Results of operations – Aircraft fuel, we believe
it is useful to reflect aircraft fuel expense excluding hedging,
which excludes the effective portion of realized losses on fuel
derivatives and ineffectiveness. Since fuel expense is highly
volatile, we believe presenting the cost of fuel, both including
and excluding the effects of hedging, is useful to a reader. This
reconciliation table has not been repeated in this section.
Return on invested capital: ROIC is a measure commonly used
to assess the efficiency with which a company allocates its
capital to generate returns. Return is calculated based on our
earnings before tax, excluding special items, interest expense,
and implied interest on our off-balance-sheet aircraft operating
leases. Invested capital includes average long-term debt, average
capital lease obligations, average shareholders’ equity and
off-balance-sheet aircraft operating leases.
Free cash flow: Operating cash flow less capital expenditures.
This measure is used to calculate the amount of cash available
that can be used to pursue other opportunities after maintaining
and expanding the asset base.
Free cash flow per share: Free cash flow divided by the diluted
weighted average number of shares outstanding.
Operating cash flow per share: Cash flow from operations divided
by the diluted weighted average number of shares outstanding.