UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2005
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____ to _____
Commission file number 000-51034
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
ACE Aviation Holdings Inc. Employee Share Purchase Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
ACE Aviation Holdings Inc.
5100 de Maisonneuve Boulevard West
Montreal, Quebec
Canada H4A 3T2
ACE AVIATION HOLDINGS INC. EMPLOYEE SHARE PURCHASE PLAN
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TABLE OF CONTENTS
REPORT OF INDEPENDENT AUDITORS
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2005
March 30, 2006
REPORT OF INDEPENDENT AUDITORS
To the Plan Administrator and Participants of the ACE Aviation Holdings Inc.
Employee Share Purchase Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of income and change in net assets of the plan
present fairly, in all material respects, the financial position of ACE
Aviation Holdings Inc. Employee Share Purchase Plan (the "Plan") as of December
31, 2005 and the income and change in net assets of the plan for the period
from February 8, 2005 to December 31, 2005, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the management of Ace Aviation Holdings
Inc.; our responsibility is to express an opinion on these financial statements
based on our audit. We conducted our audit of this statement in accordance with
the standards of the Public Company Accounting Oversight Board (United States),
which requires that we plan and perform the audit to obtain reasonable
assurance about whether the financials statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Chartered Accountants
Montreal, Canada
ACE AVIATION HOLDINGS INC. EMPLOYEE SHARE PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2005
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(in Canadian dollars)
2005
Assets --------------
Investments, at fair value
ACE Aviation Holdings Inc. shares (cost $6,952,262) $ 7,181,997
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Net assets available for benefits $ 7,181,997
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The accompanying notes are an integral part of the financial statements.
ACE AVIATION HOLDINGS INC. EMPLOYEE SHARE PURCHASE PLAN
STATEMENT OF INCOME AND CHANGE IN NET ASSETS OF THE PLAN
PERIOD FROM FEBRUARY 8, 2005 TO DECEMBER 31, 2005
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(in Canadian dollars)
Realized Gains on ACE Aviation Holdings Inc. shares $ 59
Increase in unrealized appreciation in value of ACE Aviation Holdings Inc. shares 229,736
Contributions (note 1(c))
Participants 6,102,559
Employer 940,976
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7,273,330
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Deductions
Benefits paid to participants 91,333
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91,333
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Net increase in net assets available for benefits 7,181,997
Net assets available for benefits - Beginning of period 0
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Net assets available for benefits - End of period $ 7,181,997
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The accompanying notes are an integral part of the financial statements.
ACE Aviation Holdings Inc. Employee Share Purchase Plan
Notes to Financial Statements
December 31, 2005
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(in Canadian dollars)
1. Description of the Plan
The following description of the ACE Aviation Holdings Inc. Employee
Share Purchase Plan (the "Plan") is provided for general information
purposes only. The plan document should be referred to for more
complete information.
a) General
The Plan was created on February 8, 2005 and is a defined
contribution savings plan for substantially all employees
of ACE Aviation Holdings Inc. and its participating
subsidiaries and affiliates (collectively, the "Company" or
the "Employer").
The Plan is administered by Computershare Trust Company of
Canada ("Computershare"), appointed as the Administrative
Agent by the Company. The Plan's assets are held, invested,
managed, administered and dealt with by Computershare
pursuant to the terms of the Plan. A trust fund was
established for all contributions made by the Company under
the Plan. The Company appointed Computershare as the
Trustee of the trust to hold, invest and administer the
trust fund. Computershare, as Administrative Agent and
Trustee shall maintain a member account to record
contributions received and shares held in respect of each
member.
Certain administrative functions are performed by employees
of ACE Aviation Holdings Inc. and its subsidiaries. No
employee receives compensation from the Plan.
b) Participation
All employees of the Company in North America are eligible
to participate, provided that the employee has completed a
six-month period or more of continuous service.
c) Contributions
Under the provisions of the Plan, employees may contribute
2%-6% of their gross annual salary. In the case of
employees whose salary is paid in a currency other than
Canadian dollars, the Canadian dollar equivalent of their
selected yearly member contributions shall be determined on
the basis of the exchange rate on the first of each month.
For any employee contributions made during the months of
March, April, and May 2005 (the "Special Member
Contributions"), the Company remitted a special
contribution (the "Special Company Contributions") equal to
50% of such Special Member Contributions to the Trustee to
be held in trust on behalf of each employee ("Member"). The
Special Company Contributions made to the Trust Fund shall
be held, invested, managed, administered and dealt with by
the Trustee in the same manner as the assets of the Plan
are to be held, invested, managed, administered and dealt
with by the Administrative Agent pursuant to the terms of
the Plan.
On the first business day of April following the end of the
Plan year, the Company will make a contribution of 33 1/3%
of the amount contributed by the Member during the Plan
year reduced by: (i) the Special Member Contributions, if
any, and (ii) any withdrawal amounts as of the first day of
April following the end of the Plan year allocated to such
year of contribution.
d) Investments
All Member contributions and Company Contributions to the
Plan as well as all dividends or other income therefrom
shall be invested solely in the acquisition of shares. For
Members who are Canadians, shares purchased shall be voting
shares (ACE.B) of the company and for members who are not
Canadians, shares purchased shall be variable voting shares
(ACE.RV) of the Company.
e) Vesting
Voluntary Member contributions, along with earnings
thereon, vest immediately. Special Company Contributions
vest on March 31st of the first calendar year after the
initial year of contribution. Company contributions
representing the 33 1/3% match of Member Contributions vest
upon payment on April 1st following the end of any plan
year.
f) Forfeitures
Upon a Member withdrawal from the Plan prior to the Special
Company Contribution's vesting date of March 31st following
the end of the plan year, such member will automatically be
deemed to have forfeited his/her entitlement to any and all
unvested shares purchased by the Trustee with such member's
Special Company Contributions (the "Forfeited Shares"). The
Forfeited Shares shall be sold by the Trustee and the
proceeds shall revert to the Company.
g) Benefits
The vested portion of a Member's account can be withdrawn
from the Plan at any time. Benefits are paid in the form of
shares, cash equal to the net proceeds of disposition of
the shares credited to the Member pursuant to the Plan, or
a combination of both, as directed by the Member.
Upon involuntary termination of employment without cause,
death or retirement, all shares acquired with the Special
Company Contributions in the Member's account vest
automatically. The Administrative Agent shall transfer and
deliver the Investments held on the Member's behalf in the
Plan to the Member or the legal representatives of the
deceased Member's estate or his/her beneficiaries, as the
case may be.
2. Summary of Significant Accounting Policies
a) Basis of accounting
The accompanying financial statements have been prepared on
the accrual basis of accounting using generally accepted
accounting principles in the United States.
b) Investment valuation
The ACE Aviation Holdings Inc. shares are recorded at
market value, which is determined by the closing price on
the Toronto Stock Exchange whereon the stock is principally
traded. For shares remaining in the Plan at year-end, the
difference between this amount and the average cost is
shown as net change in unrealized appreciation
(depreciation) in market value of ACE Aviation Holdings
Inc. shares. For shares withdrawn from the Plan during the
year, the difference between the market value at the date
the shares are withdrawn and the average cost is shown as
gains (losses) on ACE Aviation Holdings Inc. shares.
c) Investment transactions and income recognition
Investment transactions are accounted for on a trade date
basis. Dividend income is recorded on the ex-dividend date.
Realized gains and losses from investment transactions are
calculated on an average cost basis.
d) Administrative expenses
Administrative expenses of the Plan are paid directly by
the Company and are therefore not reflected in the
accompanying financial statements.
e) Benefit payments
Benefits are recorded when paid to Members.
f) Use of estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United
States of America requires management to make certain
estimates and assumptions that affect the reported amounts
of assets at the date of the financial statements and the
reported amounts of income and expenses during the
reporting period. Actual results could differ from those
estimates.
3. Investments
As of December 31, 2005, the plan held 186,316 voting common shares
(ACE.B) and 3,370 variable voting common shares (ACE.RV) of ACE
Aviation Holdings Inc. The aggregate proceeds on the disposal of
shares was $91,273 and the aggregate cost was $91,214.
4. Plan Termination
The Company has the right under the Plan to terminate the Plan at any
time. In the event of termination of the Plan, the Unvested Shares
held in the Trust Fund in trust on behalf of the Member, if any, shall
automatically become Vested Shares and the Fair Market Value of such
Vested Shares as of the date of the occurrence shall be credited to
the account of the Member and the Administrative Agent shall transfer
and deliver the Investments held on the Member's behalf in the Plan to
the Member.
5. Income taxes
The Plan is an after tax defined contributions savings plan and does
not constitute a taxpayer under the Income Tax Act (Canada). No
provision for income taxes has therefore been included in the
financial statements.
6. Subsequent Event
Special Distribution of Aeroplan Units
On February 16, 2006, ACE Aviation Holdings Inc. announced a special
distribution to its shareholders of units of Aeroplan Income Fund. The
distribution of 0.18 Aeroplan unit per Class A variable voting share,
Class B voting share, and preferred shares (on an as converted basis)
of ACE was made as a return of capital. The record date for the
purpose of the special distribution was March 3, 2006. The special
distribution will be paid on or about March 31, 2006. The
Administrative Agent will receive the special distribution in the form
of units of Aeroplan Income Fund on behalf of Members that are not
residents of the United States and in the form of cash on behalf of
Members that are residents of the United States. In accordance with
the terms of the Plan, the units of Aeroplan Income Fund received on
behalf of Members that are not residents of the United States will be
sold on the open market and the proceeds of such sale and the cash
received on behalf of Members that are residents of the United States,
will be used to acquire shares of ACE Aviation Holdings Inc. which
will be credited to the accounts of the individual Members.
******
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACE AVIATION HOLDINGS INC. EMPLOYEE
SHARE PURCHASE PLAN
By: ACE Aviation Holdings Inc.
Date: March 31, 2006 By: /s/ Robert A. Milton
--------------------------------
Name: Robert A. Milton
Title: President and Chief Executive
Officer
EXHIBIT INDEX
Exhibit
Number Description
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23 Consent of Independent Auditors
Exhibit 23
[PRICEWATERHOUSECOOPERS LLP LETTERHEAD OMITTED]
March 30, 2006
Consent of Independent Auditors
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 333-122635) of ACE Aviation Holdings
Inc. (ACE) of our report dated March 30, 2006 relating to the financial
statements of ACE Aviation Holdings Inc. Employee Share Purchase Plan, which
appear in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
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Chartered Accountants