Westjet 2010 Annual Report Download - page 74

72 WestJet 2010 Annual Report
3. Capital management (continued)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
For the years ended December 31, 2010 and 2009
(Stated in thousands of Canadian dollars,
except share and per share amounts)
2010 2009 Change
Adjusted debt-to-equity
Long-term debt(i) $ 1,047,177 $ 1,219,777 $ (172,600)
Obligations under capital leases(ii) 3,357 4,102 (745)
Off-balance-sheet aircraft leases(iii) 1,066,815 779,655 287,160
Adjusted debt $ 2,117,349 $ 2,003,534 $ 113,815
Total shareholders’ equity 1,507,679 1,388,928 118,751
Add: AOCL 10,470 14,852 (4,382)
Adjusted equity $ 1,518,149 $ 1,403,780 $ 114,369
Adjusted debt-to-equity 1.39 1.43 (2.8%)
Adjusted net debt to EBITDAR(iv)
Net earnings $ 136,720 $ 98,178 $ 38,542
Add:
Net interest(v) 50,254 62,105 (11,851)
Taxes 59,947 38,618 21,329
Depreciation and amortization 132,894 141,303 (8,409)
Aircraft leasing 142,242 103,954 38,288
Other(vi) 814 10,478 (9,664)
EBITDAR $ 522,871 $ 454,636 $ 68,235
Adjusted debt (as above) 2,117,349 2,003,534 113,815
Less: Cash and cash equivalents (1,187,899) (1,005,181) (182,718)
Adjusted net debt $ 929,450 $ 998,353 $ (68,903)
Adjusted net debt to EBITDAR 1.78 2.20 (19.1%)
(i) As at December 31, 2010, long-term debt includes the current portion of long-term debt of $183,681 (2009 – $171,223) and long-term debt of $863,496
(2009 – $1,048,554).
(ii) As at December 31, 2010, obligations under capital leases includes the current portion of obligations under capital leases of $108 (2009 – $744) and obligations
under capital leases of $3,249 (2009 – $3,358).
(iii) Off-balance-sheet aircraft leases is calculated by multiplying the trailing 12 months of aircraft leasing expense by 7.5. As at December 31, 2010, the trailing
12 months of aircraft leasing costs totalled $142,242 (2009 – $103,954).
(iv) The trailing 12 months are used in the calculation of EBITDAR.
(v) As at December 31, 2010, net interest includes the trailing 12 months of interest income of $9,910 (2009 – $5,601) and the trailing 12 months of interest expense of
$60,164 (2009 – $67,706).
(vi) As at December 31, 2010, other includes the trailing 12 months foreign exchange loss of $780 (2009 – loss of $12,306) and the trailing 12 months of non-operating
loss on derivatives of $34 (2009 – gain of $1,828).
As at December 31, 2010 and 2009, the Corporation’s internal targets were an adjusted debt-to-equity measure of no more than 3.00 and an
adjusted net debt to EBITDAR of no more than 3.00. As at December 31, 2010, the Corporation’s adjusted debt-to-equity ratio improved by 2.8%
when compared to 2009, mainly due to the increase in shareholders’ equity as a result of net earnings more than offsetting the net increase in the
Corporation’s aircraft fi nancing. As at December 31, 2010, the Corporation’s adjusted net debt to EBITDAR improved by 19.1% when compared to
2009, mainly attributable to the increase in cash and cash equivalents and EBITDAR.
As part of the long-term debt agreements for the Calgary hangar facility and one fl ight simulator, the Corporation monitors certain fi nancial
covenants to ensure compliance with these debt agreements. As at December 31, 2010, the Corporation was in compliance with these fi nancial
covenants. There are no fi nancial covenant compliance requirements for the facilities guaranteed by the Export-Import Bank of the United States
(Ex-Im Bank).