Fourth Quarter Adjusted Net Income Increases 109.9 percent to $41.0 million
Full-Year Adjusted Net Income Increases 71.0 percent to $177.5 million
MIRAMAR, Fla., Feb. 19, 2014 (GLOBE NEWSWIRE) -- Spirit Airlines, Inc. (Nasdaq:SAVE) today reported fourth quarter and full year 2013 financial results.
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Adjusted net income for the fourth quarter 2013 increased 109.9 percent to $41.0 million ($0.56 per diluted share) compared to $19.5 million ($0.27 per diluted share) for the fourth quarter 20121. GAAP net income for the fourth quarter 2013 was $43.2 million ($0.59 per diluted share) compared to $19.6 million ($0.27 per diluted share) in the fourth quarter 2012.
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Adjusted net income for the full year 2013 increased 71.0 percent to $177.5 million ($2.43 per diluted share) compared to $103.8 million ($1.43 per diluted share) for the full year 20121. GAAP net income for the full year 2013 was $176.9 million ($2.42 per diluted share) compared to $108.5 million ($1.49 per diluted share) for the full year 2012.
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For the fourth quarter 2013, Spirit achieved an adjusted pre-tax margin of 15.4 percent, an improvement of 5.7 percentage points over the same period in 20121. On a GAAP basis, pre-tax margin for the fourth quarter 2013 was 16.2 percent, compared to 9.7 percent in the fourth quarter 2012. For the full year 2013, Spirit's adjusted pre-tax margin was 17.1 percent, compared to 12.7 percent in 20121. Pre-tax margin on a GAAP basis for the full year 2013 was 17.1 percent, compared to 13.2 percent in 2012.
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Spirit ended 2013 with $530.6 million in unrestricted cash.
- Spirit's return on invested capital (before taxes and excluding special items) for the twelve months ended December 31, 2013 was 31.8 percent. See "Calculation for Return on Invested Capital" table below for more details.
"For the full year 2013, we delivered record profitability and return as demand for our low-cost, ultra-low fare model remained very high. These strong financial results reflect our vigilance on maintaining our cost discipline and low fare strategy while executing on our growth plan and delivering high returns for our shareholders," said Ben Baldanza, Spirit's Chief Executive Officer. "I thank all our team members who helped us achieve these results."
Revenue Performance
For the fourth quarter 2013, Spirit's total operating revenue was $420.0 million, an increase of 27.9 percent compared to the fourth quarter 2012. The year-over-year increase was driven by continued strong demand and our growth in capacity. The increase was also partly attributable to the negative revenue impact in the fourth quarter 2012 related to Hurricane Sandy.
Total revenue per available seat mile ("RASM") for the fourth quarter 2013 was 11.43 cents, an increase of 3.0 percent compared to the fourth quarter 2012 as a result of both higher average passenger yields and load factors.
Passenger flight segment ("PFS") volume for the fourth quarter 2013 grew 19.4 percent year over year. Average revenue per PFS for the fourth quarter 2013 increased 7.1 percent year over year to $132.86 primarily driven by an increase in ticket revenue per PFS.
For the full year 2013, total operating revenue increased 25.5 percent to $1,654.4 million compared to the full year 2012 and total RASM increased 2.8 percent to 11.94 cents.
Cost Performance
Total operating expenses for the fourth quarter 2013 increased 18.8 percent year over year to $351.9 million on a capacity increase of 24.3 percent.
Spirit reported fourth quarter 2013 cost per available seat mile excluding special items and fuel ("Adjusted CASM ex-fuel") of 5.78 cents, a decrease of 2.5 percent compared to the same period last year. Better operational performance during the fourth quarter 2013 compared to fourth quarter 2012 helped to drive lower wage expense and lower passenger re-accommodation expense. These decreases were partially offset by higher depreciation and amortization expense related to the amortization of an increased number of heavy maintenance events.
In its Investor Update dated January 15, 2014, the Company estimated that it would record $8 million of expense related to the repair and damage of the engine and aircraft associated with the engine failure experienced in October 2013. The Company now believes it will receive insurance proceeds covering all related expenses in excess of a $750,000 deductible, which was expensed in the fourth quarter.
Total operating expense for the full year 2013 was $1,372.1 million, up 19.9 percent year over year driven primarily by fuel and other expenses associated with increased flight volume. Adjusted CASM ex-fuel for the full year 2013 decreased 1.5 percent year over year to 5.91 cents.
Selected Balance Sheet and Cash Flow Items
As of December 31, 2013, Spirit had $530.6 million in unrestricted cash and cash equivalents, no restricted cash, no debt on its balance sheet, and total shareholders' equity of $769.1 million.
For the full year 2013, Spirit incurred capital expenditures of $19.8 million. The Company paid $70.3 million in pre-delivery deposits for future deliveries of aircraft, net of refunds, and recorded an increase of $24.1 million in maintenance deposits, net of reimbursements.
Fleet
In the fourth quarter 2013, Spirit took delivery of three new A320 aircraft, ending the year with 54 aircraft in its fleet.
Full Year 2013 and Other Current Highlights
- Added/announced new service between (service start date):
| - Dallas/Fort Worth and New Orleans (1/24/13) | - Houston and Denver (6/13/13) |
| - Houston and Orlando (2/14/13) | - Houston and Detroit (6/13/13) |
| - Detroit and Denver (2/14/13) | - Phoenix Sky Harbor and Dallas/Fort Worth (10/24/13) |
| - Dallas/Fort Worth and Minneapolis-St. Paul (4/4/13) | - Phoenix Sky Harbor and Chicago/O'Hare (11/7/13)2 |
| - Dallas/Fort Worth and Philadelphia (4/5/13) | - Phoenix Sky Harbor and Denver (11/7/13) |
| - Houston and Los Angeles (4/25/13) | - Minneapolis-St. Paul and Los Angeles (11/7/13) |
| - Dallas/Fort Worth and Oakland/ | - Minneapolis-St. Paul and Orlando (11/7/13)2 |
| San Francisco (4/25/13) | - Minneapolis-St. Paul and Phoenix (11/7/13)2 |
| - Dallas/Fort Worth and Los Angeles (4/25/13) | - Minneapolis-St. Paul and Tampa (11/7/13)2 |
| - Dallas/Fort Worth and Cancun, Mexico (4/25/13) | - Minneapolis-St. Paul and Houston (5/1/14)2 |
| - Baltimore/Washington and Las Vegas (4/25/13) | - Minneapolis-St. Paul and Baltimore/ |
| - Baltimore/Washington and Myrtle Beach (4/25/13)2 | Washington (5/1/14)2 |
| - Philadelphia and Myrtle Beach (4/25/13)2 | - Chicago O'Hare and Oakland/San Francisco (5/1/14) |
| - Philadelphia and Las Vegas (4/25/13) | - Minneapolis-St. Paul and Detroit (5/22/14)2 |
| - Minneapolis-St. Paul and Denver (4/25/13)2 | - Chicago O'Hare and Baltimore/Washington (5/22/14)2 |
| - Dallas/Fort Worth and Los Cabos, Mexico (6/13/13) | - Chicago O'Hare and Portland, OR (5/22/14)2 |
| - Dallas/Fort Worth and Latrobe/Pittsburgh (6/14/13) |
- Launched service to 25 new markets in 2013.
- Ratified a new five-year contract with its dispatchers which are represented by the Transport Workers Union.
- Elected H. McIntyre (Mac) Gardner as Chairman of the Board of Directors.
- Ordered an additional 20 new A321 aircraft, converted 10 existing A320 orders to A321 orders, and converted 5 A321ceo orders to A321neo orders. These aircraft are scheduled to deliver between 2015 and 2018. The Company also advanced 4 A320 aircraft originally scheduled to deliver in 2015 to deliver in 2014, bringing its total planned aircraft deliveries in 2014 to 11.
- Maintained its commitment to offer low fares to its valued customers (average ticket revenue per passenger flight segment for the full year 2013 was $79.43).
Investors are urged to read carefully the Company's periodic reports filed with or furnished to the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, for additional information regarding the Company.
Conference Call/Webcast Detail
Spirit will conduct a conference call to discuss these results today, February 19, 2014, at 10:00 a.m. ET. A live audio webcast of the conference call will be available to the public on a listen-only basis at http://ir.spirit.com. An archive of the webcast will be available under Webcasts & Presentations for 60 days.
About Spirit Airlines
Spirit Airlines (Nasdaq:SAVE) empowers customers to save money on air travel by offering ultra low base fares with a range of optional services, allowing customers the freedom to choose only the extras they value. This innovative approach grows the traveling market and stimulates new economic activity while creating new jobs. Spirit's modern fleet, configuration and other innovations enable Spirit to burn less fuel per seat than competitors, making Spirit one of the most environmentally-friendly U.S. carriers. Spirit's all-Airbus fleet currently operates more than 250 daily flights to over 50 destinations in the U.S., Latin America and the Caribbean. Visit Spirit at www.spirit.com.
End Notes
(1) See "Reconciliation of Adjusted Net Income to GAAP Net Income" table below for additional information.
(2) Seasonal service only.
Forward-Looking Statements
Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When used in this release, the words "expects," "estimates," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "may," "will," "should," "seeks," "targets" and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe the Company's objectives, plans or goals, or actions the Company may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding the delivery schedule of aircraft on order, announced new service routes and customer savings programs. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company has no intent, nor undertakes any obligation to, publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Forward-looking statements are subject to a number of factors that could cause the Company's actual results to differ materially from the Company's expectations, including the competitive environment in the airline industry; the Company's ability to keep costs low; changes in fuel costs; the impact of worldwide economic conditions on customer travel behavior; the Company's ability to generate non-ticket revenues; and government regulation. Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
| SPIRIT AIRLINES, INC. | ||||||
| Statement of Operations (1) | ||||||
| (in thousands, except per share data) | ||||||
|
(unaudited) |
||||||
| Three Months Ended | Year Ended | |||||
| December 31, | Percent | December 31, | Percent | |||
| 2013 | 2012 | Change | 2013 | 2012 | Change | |
| Operating revenues: | ||||||
| Passenger | $ 246,503 | $ 188,721 | 30.6 | $ 986,018 | $ 782,792 | 26.0 |
| Non-ticket | 173,481 | 139,547 | 24.3 | 668,367 | 535,596 | 24.8 |
| Total operating revenues | 419,984 | 328,268 | 27.9 | 1,654,385 | 1,318,388 | 25.5 |
| Operating expenses: | ||||||
| Aircraft fuel | 139,843 | 120,789 | 15.8 | 551,746 | 471,763 | 17.0 |
| Salaries, wages and benefits | 69,392 | 58,363 | 18.9 | 262,150 | 218,919 | 19.7 |
| Aircraft rent | 44,616 | 37,103 | 20.2 | 169,737 | 143,572 | 18.2 |
| Landing fees and other rents | 22,096 | 17,128 | 29.0 | 83,604 | 68,368 | 22.3 |
| Distribution | 16,607 | 13,109 | 26.7 | 67,481 | 56,668 | 19.1 |
| Maintenance, materials and repairs | 16,253 | 12,206 | 33.2 | 60,143 | 49,460 | 21.6 |
| Depreciation and amortization | 9,544 | 5,244 | 82.0 | 31,947 | 15,256 | 109.4 |
| Other operating | 33,787 | 32,024 | 5.5 | 144,586 | 127,886 | 13.1 |
| Loss on disposal of assets | 99 | 474 | na | 525 | 956 | na |
| Special charges (credits) | (314) | (105) | na | 174 | (8,450) | na |
| Total operating expenses | 351,923 | 296,335 | 18.8 | 1,372,093 | 1,144,398 | 19.9 |
| Operating income | 68,061 | 31,933 | 113.1 | 282,292 | 173,990 | 62.2 |
| Other (income) expense: | ||||||
| Interest expense | 74 | 6 | 1,133.3 | 214 | 1,350 | (84.1) |
| Capitalized interest | (74) | (6) | 1,133.3 | (214) | (1,350) | (84.1) |
| Interest income | (93) | (159) | (41.5) | (401) | (925) | (56.6) |
| Other expense | 31 | 95 | (67.4) | 283 | 331 | (14.5) |
| Total other (income) expense | (62) | (64) | na | (118) | (594) | na |
| Income before income taxes | 68,123 | 31,997 | 112.9 | 282,410 | 174,584 | 61.8 |
| Provision for income taxes | 24,930 | 12,431 | 100.5 | 105,492 | 66,124 | 59.5 |
| Net income | $ 43,193 | $ 19,566 | 120.8 | $ 176,918 | $ 108,460 | 63.1 |
| Basic earnings per share | $ 0.59 | $ 0.27 | 118.5 | $ 2.44 | $ 1.50 | 62.7 |
| Diluted earnings per share | $ 0.59 | $ 0.27 | 118.5 | $ 2.42 | $ 1.49 | 62.4 |
| Weighted average shares, basic | 72,658 | 72,442 | 0.3 | 72,593 | 72,386 | 0.3 |
| Weighted average shares, diluted | 73,195 | 72,623 | 0.8 | 72,999 | 72,591 | 0.6 |
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(1) Certain prior period amounts have been reclassified to conform to the current year's presentation. |
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| SPIRIT AIRLINES, INC. | ||
| Balance Sheets (1) | ||
| (unaudited, in thousands) | ||
| December 31, | December 31, | |
| 2013 | 2012 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 530,631 | $ 416,816 |
| Accounts receivable, net | 23,246 | 22,740 |
| Deferred income taxes | 16,243 | 12,591 |
| Prepaid expenses and other current assets | 78,955 | 95,210 |
| Total current assets | 649,075 | 547,357 |
| Property and equipment: | ||
| Flight equipment | 9,847 | 2,648 |
| Ground and other equipment | 50,987 | 43,580 |
| Less accumulated depreciation | (25,221) | (17,825) |
| 35,613 | 28,403 | |
| Deposits on flight equipment purchase contracts | 157,669 | 96,692 |
| Aircraft maintenance deposits | 161,484 | 122,379 |
| Deferred heavy maintenance, net | 125,288 | 80,533 |
| Other long-term assets | 51,636 | 44,520 |
| Total assets | $ 1,180,765 | $ 919,884 |
| Liabilities and shareholders' equity | ||
| Current liabilities: | ||
| Accounts payable | $ 23,104 | $ 24,166 |
| Air traffic liability | 167,627 | 131,414 |
| Other current liabilities | 145,262 | 121,314 |
| Total current liabilities | 335,993 | 276,894 |
| Long-term deferred income taxes | 48,916 | 33,216 |
| Deferred credits and other long-term liabilities | 26,739 | 27,239 |
| Shareholders' equity: | ||
| Common stock | 7 | 7 |
| Additional paid-in-capital | 515,331 | 504,527 |
| Treasury stock | (2,291) | (1,151) |
| Retained earnings | 256,070 | 79,152 |
| Total shareholders' equity | 769,117 | 582,535 |
| Total liabilities and shareholders' equity | $ 1,180,765 | $ 919,884 |
| (1) Certain prior period amounts have been reclassified to conform to the current year's presentation. | ||
| SPIRIT AIRLINES, INC. | ||
| Statement of Cash Flows | ||
| (unaudited, in thousands) | ||
| Year Ended December 31, | ||
| 2013 | 2012 | |
| Operating activities: | ||
| Net income | $ 176,918 | $ 108,460 |
| Adjustments to reconcile net income to net cash provided by operations: | ||
| Changes in fair value of open fuel hedge contracts | 265 | 46 |
| Equity based stock compensation, net | 5,689 | 4,327 |
| Allowance for doubtful accounts | 143 | 78 |
| Amortization of deferred gains, losses and debt issuance costs | (558) | (830) |
| Depreciation and amortization | 31,947 | 15,256 |
| Deferred income tax benefit | 12,047 | 29,255 |
| Loss on disposal of assets | 525 | 956 |
| Gain on slot sale | — | (9,060) |
| Capitalized interest | (214) | (1,350) |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (461) | (7,393) |
| Prepaid maintenance reserves | (24,058) | (31,567) |
| Long-term deposits and other assets | (65,654) | (68,248) |
| Accounts payable | (1,674) | 8,452 |
| Air traffic liability | 36,226 | 19,134 |
| Other liabilities | 24,235 | 46,115 |
| Net cash provided by operating activities | 195,376 | 113,631 |
| Investing activities: | ||
| Proceeds from sale of property and equipment | — | 14 |
| Proceeds from sale of slots | — | 9,060 |
| Pre-delivery deposits for flight equipment, net of refunds | (70,288) | (12,626) |
| Purchase of property and equipment | (19,812) | (23,771) |
| Net cash used in investing activities | (90,100) | (27,323) |
| Financing activities: | ||
| Proceeds from options exercised | 852 | 469 |
| Proceeds from sale and leaseback transactions | 6,900 | 12,540 |
| Payments to pre-IPO shareholders pursuant to tax receivable agreement | — | (26,905) |
| Excess tax benefits from share-based compensation | 1,927 | 2,098 |
| Repurchase of common stock | (1,140) | (1,022) |
| Net cash provided by (used in) financing activities | 8,539 | (12,820) |
| Net increase in cash and cash equivalents | 113,815 | 73,488 |
| Cash and cash equivalents at beginning of period | 416,816 | 343,328 |
| Cash and cash equivalents at end of period | $ 530,631 | $ 416,816 |
| Supplemental disclosures | ||
| Cash payments for: | ||
| Interest | $ 29 | $ 303 |
| Taxes | $ 85,705 | $ 40,204 |
| Non-cash transactions: | ||
| Liability and equity related to tax receivable agreement | $ (2,336) | $ (1,497) |
| Capital expenditures funded by capital lease borrowings | $ (3,234) | — |
| SPIRIT AIRLINES, INC. | |||
| Selected Operating Statistics (unaudited) | |||
| Three Months Ended December 31, | |||
| Operating Statistics | 2013 | 2012 | Change |
| Available seat miles (ASMs) (thousands) | 3,675,972 | 2,956,150 | 24.3% |
| Revenue passenger miles (RPMs) (thousands) | 3,167,376 | 2,519,392 | 25.7% |
| Load factor (%) | 86.2 | 85.2 | 1.0 pts |
| Passenger flight segments (thousands) | 3,161 | 2,647 | 19.4% |
| Block hours | 60,596 | 49,625 | 22.1% |
| Departures | 22,957 | 19,908 | 15.3% |
| Operating revenue per ASM (RASM) (cents) | 11.43 | 11.10 | 3.0% |
| Average yield (cents) | 13.26 | 13.03 | 1.8% |
| Average ticket revenue per passenger flight segment ($) | 77.98 | 71.30 | 9.4% |
| Average non-ticket revenue per passenger flight segment ($) | 54.88 | 52.73 | 4.1% |
| Total revenue per passenger flight segment ($) | 132.86 | 124.03 | 7.1% |
| CASM (cents) | 9.57 | 10.02 | (4.5)% |
| Adjusted CASM (cents) (1) | 9.67 | 10.03 | (3.6)% |
| Adjusted CASM ex-fuel (cents) (2) | 5.78 | 5.93 | (2.5)% |
| Fuel gallons consumed (thousands) | 45,100 | 36,670 | 23.0% |
| Average economic fuel cost per gallon ($) | 3.17 | 3.31 | (4.2)% |
| Aircraft at end of period | 54 | 45 | 20.0% |
| Average daily aircraft utilization (hours) | 12.5 | 12.6 | (0.8)% |
| Average stage length (miles) | 998 | 932 | 7.1% |
| Airports served in the period (3) | 53 | 53 | —% |
| Year Ended December 31, | |||
| Operating Statistics | 2013 | 2012 | Change |
| Available seat miles (ASMs) (thousands) | 13,861,393 | 11,344,731 | 22.2% |
| Revenue passenger miles (RPMs) (thousands) | 12,001,088 | 9,663,721 | 24.2% |
| Load factor (%) | 86.6 | 85.2 | 1.4 pts |
| Passenger flight segments (thousands) | 12,414 | 10,423 | 19.1% |
| Block hours | 231,148 | 192,403 | 20.1% |
| Departures | 90,284 | 78,582 | 14.9% |
| Operating revenue per ASM (RASM) (cents) | 11.94 | 11.62 | 2.8% |
| Average yield (cents) | 13.79 | 13.64 | 1.1% |
| Average ticket revenue per passenger flight segment ($) | 79.43 | 75.11 | 5.8% |
| Average non-ticket revenue per passenger flight segment ($) | 53.84 | 51.39 | 4.8% |
| Total revenue per passenger flight segment ($) | 133.27 | 126.50 | 5.4% |
| CASM (cents) | 9.90 | 10.09 | (1.9)% |
| Adjusted CASM (cents) (1) | 9.89 | 10.15 | (2.6)% |
| Adjusted CASM ex-fuel (cents) (2) | 5.91 | 6.00 | (1.5)% |
| Fuel gallons consumed (thousands) | 171,931 | 142,991 | 20.2% |
| Average economic fuel cost per gallon ($) | 3.21 | 3.30 | (2.7)% |
| Average daily aircraft utilization (hours) | 12.7 | 12.8 | (0.8)% |
| Average stage length (miles) | 958 | 909 | 5.4% |
| Airports served in the period (3) | 56 | 55 | 1.8% |
| (1) Excludes unrealized mark-to-market gains and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table below. | |||
| (2) Excludes all components of fuel expense, including realized and unrealized mark-to-market hedge (gains) and losses, and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table below. | |||
| (3) Includes airports served during the period that had service canceled as of the end of the period. Previously, we reported only airports served during the period with continuing operations. | |||
The Company is providing a reconciliation of GAAP financial information to non-GAAP financial information as it believes that non-GAAP financial measures provide management and investors the ability to measure the performance of the Company on a consistent basis. These non-GAAP financial measures have limitations as an analytical tool. Because of these limitations, determinations of Spirit's operating performance excluding unrealized gains and losses or special items should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.
| Reconciliation of Adjusted Net Income to GAAP Net Income | ||||
|
(unaudited) |
||||
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| (in thousands, except per share data) | 2013 | 2012 | 2013 | 2012 |
| Net income, as reported | $ 43,193 | $ 19,566 | $ 176,918 | $ 108,460 |
| Add: Provision for income taxes | 24,930 | 12,431 | 105,492 | 66,124 |
| Income before income taxes, as reported | 68,123 | 31,997 | 282,410 | 174,584 |
| Pre-tax margin, GAAP | 16.2% | 9.7% | 17.1% | 13.2% |
| Add: Unrealized mark-to-market (gains) and losses(1) | (3,224) | (414) | 265 | 46 |
| Add special items (2): | ||||
| Loss on disposal of assets | 99 | 474 | 525 | 956 |
| Special charges (credits) | (314) | (105) | 174 | (8,450) |
| Income before income taxes, non-GAAP (3) | 64,684 | 31,952 | 283,374 | 167,136 |
| Pre-tax margin, non-GAAP (3) | 15.4% | 9.7% | 17.1% | 12.7% |
| Provision for income taxes (4) | 23,671 | 12,414 | 105,852 | 63,303 |
| Adjusted net income, non-GAAP (3) | $ 41,013 | $ 19,538 | $ 177,522 | $ 103,833 |
| Weighted average shares, basic | 72,658 | 72,442 | 72,593 | 72,386 |
| Weighted average shares, diluted | 73,195 | 72,623 | 72,999 | 72,591 |
| Adjusted net income per share, basic | $ 0.56 | $ 0.27 | $ 2.45 | $ 1.43 |
| Adjusted net income per share, diluted | $ 0.56 | $ 0.27 | $ 2.43 | $ 1.43 |
| (1) Unrealized mark-to-market (gains) and losses are comprised of non-cash adjustments to aircraft fuel expense. | ||||
| (2) Special items include loss on disposal of assets and special charges (credits). Special charges (credits) for 2012 include: (i) recognition of a gain on the sale of four carrier slots at Ronald Reagan National Airport, and (ii) offering costs related to the sale of 12.1 million shares of common stock by certain stockholders affiliated with Indigo Partners LLC. | ||||
| (3) Excludes unrealized mark-to-market (gains) and losses and special items. | ||||
| (4) Assumes same marginal tax rate as is applicable to GAAP net income. | ||||
| Reconciliation of Adjusted CASM ex-fuel to CASM | ||||
| (unaudited) | ||||
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| (in thousands, except CASM data in cents) | 2013 | 2012 | 2013 | 2012 |
| Total operating expenses, as reported | $ 351,923 | $ 296,335 | $ 1,372,093 | $ 1,144,398 |
| Less: Unrealized mark-to-market (gains) and losses | (3,224) | (414) | 265 | 46 |
| Less special items: | ||||
| Loss on disposal of assets | 99 | 474 | 525 | 956 |
| Special charges (credits) | (314) | (105) | 174 | (8,450) |
| Operating expenses, non-GAAP (1) | 355,362 | 296,380 | 1,371,129 | 1,151,846 |
| Less: Economic fuel expense, non-GAAP | 143,067 | 121,203 | 551,481 | 471,717 |
| Operating expenses excluding fuel, non-GAAP (1) (2) | $ 212,295 | $ 175,177 | $ 819,648 | $ 680,129 |
| Available seat miles | 3,675,972 | 2,956,150 | 13,861,393 | 11,344,731 |
| CASM (cents) | 9.57 | 10.02 | 9.90 | 10.09 |
| Adjusted CASM (cents) (1) | 9.67 | 10.03 | 9.89 | 10.15 |
| Adjusted CASM ex-fuel (cents) (2) | 5.78 | 5.93 | 5.91 | 6.00 |
| Reconciliation of Adjusted Operating Income to GAAP Operating Income | ||||
| (unaudited) | ||||
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| (in thousands) | 2013 | 2012 | 2013 | 2012 |
| Operating income, as reported | $ 68,061 | $ 31,933 | $ 282,292 | $ 173,990 |
| Operating margin, GAAP | 16.2% | 9.7% | 17.1% | 13.2% |
| Add: Unrealized mark-to-market (gains) and losses | (3,224) | (414) | 265 | 46 |
| Add special items: | ||||
| Loss on disposal of assets | 99 | 474 | 525 | 956 |
| Special charges (credits) | (314) | (105) | 174 | (8,450) |
| Operating income, non-GAAP (1) | $ 64,622 | $ 31,888 | $ 283,256 | $ 166,542 |
| Operating margin (1) | 15.4% | 9.7% | 17.1% | 12.6% |
| (1) Excludes unrealized fuel hedge (gains) and losses and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table above. | ||||
| (2) Excludes all components of fuel expense, including realized and unrealized fuel hedge (gains) and losses, and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table above. | ||||
The Company's economic fuel cost per gallon differs from GAAP results in that it only includes the cash settlements related to fuel hedge contracts that settled during the period, whereas the GAAP results also include the non-cash mark-to-market impact of all fuel hedge contracts expected to settle in future periods. The Company believes that net fuel hedge adjustments provide management and investors the ability to better assess and compare its performance.
| Reconciliation of non-GAAP Economic Fuel Expense to GAAP Fuel Expense | ||||
| (unaudited) | ||||
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| (in thousands, except per gallon data) | 2013 | 2012 | 2013 | 2012 |
| Fuel Expense | ||||
| Aircraft fuel, as reported | $ 139,843 | $ 120,789 | $ 551,746 | $ 471,763 |
| Less: Unrealized mark-to-market (gains) and losses (1) | (3,224) | (414) | 265 | 46 |
| Economic fuel expense, non-GAAP | $ 143,067 | $ 121,203 | $ 551,481 | $ 471,717 |
| Fuel gallons consumed | 45,100 | 36,670 | 171,931 | 142,991 |
| Economic fuel cost per gallon, non-GAAP | $ 3.17 | $ 3.31 | $ 3.21 | $ 3.30 |
| Calculation of Return on Invested Capital | |
| (unaudited) | |
| Twelve Months Ended | |
| (in thousands) | December 31, 2013 |
| Operating Income | $ 282,292 |
| Add: Unrealized mark-to-market losses (1) | 265 |
| Add special items: | |
| Special charges (credits) | 174 |
| Loss on disposal of assets | 525 |
| Adjustment for aircraft rent | 169,737 |
| Adjusted Operating Income (2) | $ 452,993 |
| Tax (37.4%) (3) | 169,419 |
| Adjusted Operating Income, after-tax | $ 283,574 |
| Invested Capital | |
| Total debt | $ — |
| Book equity | 769,117 |
| Less: Unrestricted cash | 530,631 |
| Add: Capitalized aircraft operating leases (7x Aircraft Rent) | 1,188,159 |
| Total Invested Capital | $ 1,426,645 |
| Return on Invested Capital (ROIC), pre-tax | 31.8% |
| Return on Invested Capital (ROIC), after-tax | 19.9% |
| (1) Unrealized mark-to-market (gains) and losses are comprised of non-cash adjustments to aircraft fuel expenses. | |
| (2) Excludes unrealized mark-to-market (gains) and losses and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table above. | |
| (3) Assumes same marginal tax rate as is applicable to GAAP net income for the year ended December 31, 2013. | |