Westjet 2015 Annual Report Download - page 33

WestJet Annual Report 2015 | 31
Investing cash flows
For the year ended December 31, 2015, cash flow used for investing activities totaled $822.9 million compared to $665.1
million in the prior year. Our investing activities during 2015 related primarily to the delivery of 12 Boeing 737 aircraft, nine
Q400 aircraft, two Boeing 767 aircraft and additional deposits for future Boeing 737 and Q400 aircraft as well as overhauls of
owned engines, installation of new inflight entertainment and slim-line seats with power.
Financing cash flows
For the year ended December 31, 2015, our financing cash outflows totaled $259.0 million as compared to financing cash
inflows of $170.0 million in the prior year. Our financing activities in 2015 consisted primarily of cash outflows of $123.8
million related to shares repurchased pursuant to our normal course issuer bid, dividends paid of $69.7 million and debt
repayments of principal and interest of $218.8 million. In contrast, the prior year had financing cash inflows, primarily due to
proceeds from our $400 million Senior Unsecured Notes.
Free cash flow
Free cash flow is a non-GAAP measure that represents the cash that a company is able to generate after meeting its
requirements to maintain or expand its asset base. It is a calculation of operating cash flow, less the amount of cash used in
investing activities related to property and equipment. Our free cash flow for the year ended December 31, 2015, was positive
$53.5 million compared to negative $88.5 million in the prior year. On a per share basis, this equated to $0.42 per share for
the year ended December 31, 2015, compared to negative $0.69 per share in the prior year. These improvements are a result
of increased operating cash flow year over year due primarily to stronger earnings and contributions from working capital.
Please refer to page 56 of this MD&A for a reconciliation of non-GAAP and additional GAAP measures.
Financing
We have grown through acquisitions of Boeing 737 NG, Boeing 767 and Bombardier Q400 aircraft. During 2015, all nine of our
Q400 aircraft deliveries were financed by individual secured term loans with EDC for approximately 80 per cent of the
purchase price of the aircraft. We also took delivery of 12 Boeing 737 NG 800 series aircraft and two Boeing 767 aircraft in
2015, funded with cash. At December 31, 2015, we had secured loans financing 44 Boeing 737 NG aircraft and 24 Q400
aircraft with a remaining debt balance of $776.9 million, net of transaction costs. This debt is financed in Canadian dollars and
has no financial covenants associated with it. Including our Senior Unsecured Notes, our total outstanding debt balance at
December 31, 2015 is $1,174.8 million, net of transaction costs.
To mitigate the earnings impact of changing interest rates on our variable rate loans, we have entered into interest rate swap
agreements to fix the interest rates over the term of these loans. Upon proper qualification, we designated the interest rate
swap contracts as effective cash flow hedges for accounting purposes. At December 31, 2015, no portion of the interest rate
swap agreements designated as cash flow hedges was considered ineffective. The following table presents the financial
impact and statement presentation of the interest rate swap agreements on the consolidated statement of financial position at
December 31, 2015 and December 31, 2014 and on the consolidated statement of earnings for the years ended December 31,
2015 and 2014.