MIRAMAR, Fla., July 25, 2018 (GLOBE NEWSWIRE) -- Spirit Airlines, Inc. (NYSE:SAVE) today reported second quarter 2018 financial results.

  • GAAP net income for the second quarter 2018 was $11.3 million ($0.16 per diluted share), or $75.7 million ($1.11 per diluted share)1 excluding special items.
     
  • GAAP operating margin for the second quarter 2018 was 12.7 percent, or 13.3 percent excluding special items1.
     
  • Spirit ended the second quarter 2018 with unrestricted cash, cash equivalents, and short-term investments of $914.1 million.

“Our team delivered excellent operational performance during the second quarter 2018, achieving a DOT on-time performance of 79.6 percent - the best second quarter performance in our Company’s history.  Despite paying materially higher fuel prices, our second quarter earnings results exceeded our expectations due to strong ancillary revenue production and better-than-expected cost performance,” said Robert Fornaro, Spirit’s Chief Executive Officer.  "Our commitment to grow ancillary revenue, deliver excellent operational reliability, and improving our overall guest experience while maintaining our low cost structure positions us well to drive returns for our shareholders."

“In addition to running a great operation during the quarter and outperforming on our cost expectations, we are excited about our upcoming network additions.  During the quarter, we announced a major international expansion from Orlando to 11 destinations in Latin America and the Caribbean that we believe will nicely complement our existing international services,” said Ted Christie, Spirit’s President and Chief Financial Officer.  "Looking ahead to the third quarter, we expect the trend of year-over-year improvement in non-ticket revenue per passenger segment to continue.  We believe this, together with a continued strong demand environment, will allow us to deliver solid year-over-year TRASM improvement in the third quarter 2018.”

Revenue Performance
For the second quarter 2018, Spirit's total operating revenue was $851.8 million, an increase of 21.6 percent compared to the second quarter 2017, driven by an 18.9 percent increase in flight volume.

Total revenue per available seat mile ("TRASM") for the second quarter 2018 decreased 6.8 percent compared to the same period last year.  An increase in average stage length and the calendar shift of Easter contributed approximately 520 basis points to the Company's second quarter 2018 TRASM decline.

On a per passenger flight segment basis, total revenue for the second quarter 2018 was $112.76, flat compared to the second quarter last year.  Non-ticket revenue per passenger flight segment increased 3.0 percent to $54.572 and fare revenue per passenger flight segment decreased 2.8 percent to $58.19.

Cost Performance
For the second quarter 2018, total GAAP operating expenses, including special items of $4.8 million3, increased 30.7 percent year over year to $743.3 million.  Adjusted operating expenses for the second quarter 2018 increased 30.1 percent year over year to $738.4 million4.  These changes were primarily driven by increases in flight volume, fuel rates, and salaries, wages and benefits.

Aircraft fuel expense increased in the second quarter 2018 by 73.0 percent, compared to the same period last year, due to a 39.8 percent increase in the cost of fuel per gallon and a 24.1 percent increase in fuel gallons consumed.

Spirit reported second quarter 2018 cost per available seat mile ("ASM"), excluding special items and fuel (“Adjusted CASM ex-fuel”), of 5.17 cents4, a decrease of 11.3 percent compared to the same period last year.  Better operational performance was a large driver of this improvement and resulted in lower passenger re-accommodation expense and lower crew disruption expense per ASM (both recorded within other operating expenses), as well as improved labor productivity and efficiency, which helped to partially offset the impact of higher wage rates.  Additionally, aircraft rent per ASM was lower year over year, primarily due to the elimination of lease expense related to the 14 aircraft the Company purchased off-lease during the quarter.

Fleet
Spirit took delivery of one new A320ceo aircraft during the second quarter 2018, ending the quarter with 119 aircraft in its fleet.

Aircraft Purchase Agreement
On March 28, 2018, the Company entered into an aircraft purchase agreement to purchase 14 A319 aircraft, which were previously operated by the Company under operating lease agreements.  Upon execution of the agreement, the lease agreements associated with these aircraft were classified as capital leases on the balance sheet at lower of cost or fair value.  The difference between the resulting capital lease obligation and the purchase price was accreted as interest expense in special charges, non-operating in the statement of operations, through the closing of each individual purchase.  All the transactions were completed prior to June 30, 2018.  The amount of special charges, non-operating recognized for the three months ending June 30, 2018 related to these agreements was $79.4 million.

New Routes
Seattle - Fort Lauderdale (04/12/2018)*
Seattle - Chicago (04/12/2018)*
Seattle - Dallas (04/12/2018)*
Seattle - Minneapolis (04/12/2018)*
Tampa - Las Vegas (04/12/2018)
Tampa - Los Angeles (04/12/2018)*
Orlando - Las Vegas (04/12/2018)
Minneapolis - Myrtle Beach (04/12/2018)*
Fort Lauderdale - Cap-Haïtien, Haiti (04/12/2018)
Fort Lauderdale - Kingston, Jamaica (04/12/2018)**
Atlantic City - New Orleans (04/13/2018)*
Detroit - San Diego (04/23/2018)*
Fort Lauderdale - St. Maarten, U.S. Virgin Islands (05/05/2018)***
Fort Lauderdale - St. Croix, U.S. Virgin Islands (05/24/2018)

* Indicates seasonal service
** Indicates expanded seasonal daily service
*** Indicates resumed service

Conference Call/Webcast Detail
Spirit will conduct a conference call to discuss these results tomorrow, July 26, 2018, at 9:30 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 (NYSE:SAVE) is committed to delivering the best value in the sky while providing an extraordinary Guest experience.  We are the leader in providing customizable travel options starting with an unbundled fare.  This allows every Guest to pay only for the options they choose - like bags, seat assignments, and refreshments - something we call Á La Smarte.  We make it possible for our Guests to venture further, travel more often, and discover more than ever before.  Our Fit Fleet® is one of the youngest and most fuel-efficient in the U.S.  We operate more than 500 daily flights to 67 destinations in the U.S., Latin America, and the Caribbean, and are dedicated to giving back and improving the communities we serve.  Come save with us at www.spirit.com.  At Spirit Airlines, we go.  We go for you.

Investors are encouraged to read the Company's periodic and current reports filed with or furnished to the Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, for additional information regarding the Company.

End Notes
(1) See "Reconciliation of Adjusted Net Income, Adjusted Pre-tax Income, and Adjusted Operating Income to GAAP Net Income" table below for more details.
(2) See "Calculation of Total Non-ticket Revenue per Passenger Segment" table below for more details.
(3)  See "Special Items" table for more details.
(4) See "Reconciliation of Adjusted Operating Expense to GAAP Operating Expense" table below for more details.

Forward-Looking Statements
Statements in this release and certain oral statements made from time to time by representatives of the Company contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts are “forward-looking statements” for purposes of these provisions. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” and similar expressions intended to identify forward-looking statements. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Furthermore, such forward-looking statements speak only as of the date of this release. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Risks or uncertainties (i) that are not currently known to us, (ii) that we currently deem to be immaterial, or (iii) that could apply to any company, could also materially adversely affect our business, financial condition, or future results. References in this report to “Spirit,” “we,” “us,” “our,” or the “Company” shall mean Spirit Airlines, Inc., unless the context indicates otherwise.  Additional information concerning certain 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, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.


SPIRIT AIRLINES, INC.
Condensed Statement of Operations
(unaudited, in thousands, except per share data)
        
 Three Months Ended   Six Months Ended  
 June 30, Percent June 30, Percent
 2018 2017 Change 2018 2017 Change
Operating revenues:           
Passenger$836,350  $680,880  22.8  $1,525,491  $1,253,167  21.7 
Other15,421  19,305  (20.1) 30,418  36,975  (17.7)
Total operating revenues851,771  700,185  21.6  1,555,909  1,290,142  20.6 
            
Operating expenses:           
Aircraft fuel246,180  142,294  73.0  450,826  282,076  59.8 
Salaries, wages and benefits

187,756  129,892  44.5  342,852  257,030  33.4 
Aircraft rent41,745  52,566  (20.6) 91,936  109,636  (16.1)
Landing fees and other rents58,602  45,592  28.5  108,232  86,040  25.8 
Depreciation and amortization45,618  35,331  29.1  84,991  66,840  27.2 
Maintenance, materials and repairs31,653  28,985  9.2  61,363  55,297  11.0 
Distribution34,997  29,835  17.3  65,628  55,607  18.0 
Special charges174    nm 89,342  4,776  nm
Loss on disposal of assets4,644  1,493  nm 5,492  2,598  nm
Other operating91,881  102,885  (10.7) 185,523  180,588  2.7 
Total operating expenses743,250  568,873  30.7  1,486,185  1,100,488  35.0 
            
Operating income108,521  131,312  (17.4) 69,724  189,654  (63.2)
            
Other (income) expense:           
Interest expense20,498  13,746  49.1  38,347  26,219  46.3 
Capitalized interest(2,296) (3,342) (31.3) (4,548) (6,922) (34.3)
Interest income(4,430) (1,828) 142.3  (8,496) (3,141) 170.5 
Other expense188  104  nm 321  107  nm
Special charges, non-operating79,412    nm 88,613    nm
Total other (income) expense93,372  8,680  975.7  114,237  16,263  602.4 
            
            
Income (loss) before income taxes15,149  122,632  (87.6) (44,513) 173,391  (125.7)
Provision (benefit) for income taxes3,895  45,391  (91.4) (10,845) 64,889  (116.7)
            
Net income (loss)$11,254  $77,241  (85.4) $(33,668) $108,502  (131.0)
Basic earnings (loss) per share$0.16  $1.11  (85.6) $(0.49) $1.56  (131.4)
Diluted earnings (loss) per share$0.16  $1.11  (85.6) $(0.49) $1.56  (131.4)
            
Weighted average shares, basic68,251  69,370  (1.6) 68,237  69,359  (1.6)
Weighted average shares, diluted68,310  69,561  (1.8) 68,237  69,576  (1.9)


SPIRIT AIRLINES, INC.
Condensed Statements of Comprehensive Income (Loss)
(unaudited, in thousands)
    
 Three Months Ended Six Months Ended
 June 30, June 30,
 2018 2017 2018 2017
Net income (loss)$11,254  $77,241  $(33,668) $108,502 
Unrealized gain (loss) on short-term investment securities, net of deferred taxes of $33, ($6), $26 and ($14)101  (11) 78  (24)
Interest rate derivative loss reclassified into earnings, net of taxes of $18, $31, $39 and $62

61  53  120  107 
Other comprehensive income$162  $42  $198  $83 
Comprehensive income (loss)$11,416  $77,283  $(33,470) $108,585 


SPIRIT AIRLINES, INC.
Condensed Balance Sheets
(unaudited, in thousands)
    
 June 30, December 31,
 2018 2017
Assets   
Current assets:   
Cash and cash equivalents$812,362  $800,849 
Short-term investment securities101,714  100,937 
Accounts receivable, net58,547  49,323 
Aircraft maintenance deposits, net107,252  175,615 
Income tax receivable70,672  69,844 
Prepaid expenses and other current assets79,788  85,542 
Total current assets1,230,335  1,282,110 
    
Property and equipment:   
Flight equipment2,911,378  2,291,110 
Ground property and equipment168,039  155,166 
Less accumulated depreciation(261,314) (207,808)
 2,818,103  2,238,468 
Deposits on flight equipment purchase contracts240,224  253,687 
Long-term aircraft maintenance deposits141,183  150,617 
Deferred heavy maintenance, net172,799  99,915 
Other long-term assets79,081  121,003 
Total assets$4,681,725  $4,145,800 
    
Liabilities and shareholders’ equity   
Current liabilities:   
Accounts payable$50,310  $22,822 
Air traffic liability357,645  263,711 
Current maturities of long-term debt and capital leases145,865  115,430 
Other current liabilities346,407  262,370 
Total current liabilities900,227  664,333 
    
Long-term debt, less current maturities1,731,766  1,387,498 
Deferred income taxes295,601  308,814 
Deferred gains and other long-term liabilities20,630  22,581 
Shareholders’ equity:   
Common stock7  7 
Additional paid-in-capital365,536  360,153 
Treasury stock, at cost(66,840) (65,854)
Retained earnings1,436,064  1,469,732 
Accumulated other comprehensive income (loss)(1,266) (1,464)
Total shareholders’ equity1,733,501  1,762,574 
Total liabilities and shareholders’ equity$4,681,725  $4,145,800 


SPIRIT AIRLINES, INC.
Condensed Statement of Cash Flows (unaudited, in thousands)
  
 Six Months Ended June 30,
 2018 2017
Operating activities:   
Net income (loss)$(33,668) $108,502 
Adjustments to reconcile net income (loss) to net cash provided by operations:   
Losses reclassified from other comprehensive income159  167 
Stock-based compensation5,381  4,671 
Allowance for doubtful accounts (recoveries)(12) (51)
Amortization of deferred gains and losses and debt issuance costs4,552  4,761 
Depreciation and amortization84,991  66,840 
Deferred income tax expense (benefit)(17,604) 64,789 
Loss on disposal of assets5,492  2,598 
Lease termination costs  4,776 
Special charges, non-operating88,613   
    
Changes in operating assets and liabilities:   
Accounts receivable(9,212) (6,808)
Aircraft maintenance deposits, net11,222  (17,940)
Prepaid income taxes  (1,598)
Long-term deposits and other assets3,003  (17,507)
Deferred heavy maintenance(94,267) (28,191)
Income tax receivable(828)  
Accounts payable25,413  16,387 
Air traffic liability93,936  108,574 
Other liabilities83,809  13,518 
Other8  239 
Net cash provided by operating activities250,988  323,727 
Investing activities:   
Purchase of available-for-sale investment securities(73,687) (68,459)
Proceeds from the maturity of available-for-sale investment securities72,964  67,857 
Proceeds from sale of property and equipment9,500   
Pre-delivery deposits for flight equipment, net of refunds(92,205) (79,357)
Capitalized interest(4,178) (6,375)
Purchase of property and equipment(323,229) (269,519)
Net cash used in investing activities(410,835) (355,853)
Financing activities:   
Proceeds from issuance of long-term debt440,340  255,827 
Proceeds from stock options exercised2  29 
Payments on debt obligations(60,649) (49,980)
Payments on capital lease obligations(205,403) (119)
Repurchase of common stock(986) (1,217)
Debt issuance costs(1,944) (4,164)
Net cash provided by financing activities171,360  200,376 
Net (decrease) increase in cash and cash equivalents11,513  168,250 
Cash and cash equivalents at beginning of period800,849  700,900 
Cash and cash equivalents at end of period$812,362  $869,150 
Supplemental disclosures   
Cash payments for:   
Interest, net of capitalized interest$16,769  $16,869 
Income taxes paid, net of refunds$3,270  $4,340 
Non-cash transactions:   
Capital expenditures funded by capital lease borrowings$(315) $(1,370)

Certain prior period amounts have been reclassified to conform to the current year's presentation.


SPIRIT AIRLINES, INC.
Selected Operating Statistics (unaudited)
    
 Three Months Ended June 30,  
Operating Statistics2018 2017 Change
Available seat miles (ASMs) (thousands)9,515,842  7,294,578  30.5%
Revenue passenger miles (RPMs) (thousands)7,961,128  6,219,638  28.0%
Load factor (%)83.7  85.3  (1.6) pts
Passenger flight segments (thousands)7,554  6,206  21.7%
Block hours136,357  109,296  24.8%
Departures49,404  41,563  18.9%
Total operating revenue per ASM (TRASM) (cents)8.95  9.60  (6.8)%
Average yield (cents)10.70  11.26  (5.0)%
Fare revenue per passenger flight segment ($)58.19  59.85  (2.8)%
Non-ticket revenue per passenger flight segment ($)54.57  52.97  3.0%
Total revenue per passenger flight segment ($)112.76  112.82  (0.1)%
CASM (cents)7.81  7.80  0.1%
Adjusted CASM (cents) (1)7.76  7.78  (0.3)%
Adjusted CASM ex-fuel (cents) (2)5.17  5.83  (11.3)%
Fuel gallons consumed (thousands)106,144  85,533  24.1%
Average economic fuel cost per gallon ($)2.32  1.66  39.8%
Aircraft at end of period119  104  14.4%
Average daily aircraft utilization (hours)12.6  11.7  7.7%
Average stage length (miles)1,051  982  7.0%


      
 Six Months Ended June 30,  
Operating Statistics2018 2017 Change
Available seat miles (ASMs) (thousands)17,924,606  14,170,478  26.5%
Revenue passenger miles (RPMs) (thousands)14,774,647  11,833,060  24.9%
Load factor (%)82.4  83.5  (1.1) pts
Passenger flight segments (thousands)14,092  11,775  19.7%
Block hours259,310  213,332  21.6%
Departures94,386  80,893  16.7%
Total operating revenue per ASM (TRASM) (cents)8.68  9.10  (4.6)%
Average yield (cents)10.53  10.90  (3.4)%
Fare revenue per passenger flight segment ($)55.51  56.94  (2.5)%
Non-ticket revenue per passenger flight segment ($)54.90  52.63  4.3%
Total revenue per passenger flight segment ($)110.41  109.57  0.8%
CASM (cents)8.29  7.77  6.7%
Adjusted CASM (cents) (1)7.76  7.71  0.6%
Adjusted CASM ex-fuel (cents) (2)5.25  5.72  (8.2)%
Fuel gallons consumed (thousands)201,147  164,597  22.2%
Average economic fuel cost per gallon ($)2.24  1.71  31.0%
Average daily aircraft utilization (hours)12.3  11.8  4.2%
Average stage length (miles)1,038  983  5.6%

(1) Excludes special items.

(2) Excludes economic fuel expense and special items.

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 analytical tools.  Because of these limitations, determinations of the Company'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.

Calculation of Total Non-Ticket Revenue per Passenger Segment
(unaudited)

 Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per segment data)2018 2017 2018 2017
Operating revenues       
Fare$439,549  $371,443  $782,244  $670,478 
Non-fare396,801  309,437  743,247  582,689 
Total passenger revenues836,350  680,880  1,525,491  1,253,167 
Other revenues15,421  19,305  30,418  36,975 
Total operating revenues$851,771  $700,185  $1,555,909  $1,290,142 
        
Non-ticket revenues (1)$412,222  $328,742  $773,665  $619,664 
        
Passenger segments7,554  6,206  14,092  11,775 
        
Non-ticket revenue per passenger segment ($)$54.57  $52.97  $54.90  $52.63 

(1)    Non-ticket revenues equals the sum of non-fare passenger revenues and other revenues.

Special Items
(unaudited)

 Three Months Ended Six Months Ended
 June 30, June 30,
(in thousands)2018 2017 2018 2017
Operating special items include the following:       
Loss on disposal of assets4,644  1,493  5,492  2,598 
Operating special charges (1)174    89,342  4,776 
Total operating special items$4,818  $1,493  $94,834  $7,374 
Non-operating special items include the following:       
Non-operating special charges (2)79,412    88,613  $ 
Total non-operating special items$79,412  $  $88,613  $ 
        
Total special items$84,230  $1,493  $183,447  $7,374 

(1) Operating special charges for 2018 include amounts primarily due to a one-time ratification incentive recognized in connection with a new pilot agreement approved in the first quarter 2018.  Operating special charges for 2017 are related to engine lease termination costs.

(2) Non-operating special charges in 2018 are related to the purchase of 14 A319 aircraft, previously operated by the Company under operating leases.  Upon execution of the purchase agreement, the lease agreements associated with these aircraft were classified as capital leases on the balance sheet at lower of cost or fair value.  The difference between the resulting capital lease obligation and the purchase price was accreted as interest expense in special charges, non-operating in the statement of operations, through the closing of each individual purchase.  All the transactions were completed prior to June 30, 2018.

Reconciliation of Adjusted Operating Expense to GAAP Operating Expense
(unaudited)

 Three Months Ended Six Months Ended
 June 30, June 30,
(in thousands, except CASM data in cents)2018 2017 2018 2017
Total operating expenses, as reported$743,250  $568,873  $1,486,185  $1,100,488 
Less operating special items4,818  1,493  94,834  7,374 
Adjusted operating expenses, non-GAAP (1)738,432  567,380  1,391,351  1,093,114 
Less: Economic fuel expense246,180  142,294  450,826  282,076 
Adjusted operating expenses excluding fuel, non-GAAP (2)$492,252  $425,086  $940,525  $811,038 
        
Available seat miles9,515,842  7,294,578  17,924,606  14,170,478 
        
CASM (cents)7.81  7.80  8.29  7.77 
Adjusted CASM (cents) (1)7.76  7.78  7.76  7.71 
Adjusted CASM ex-fuel (cents) (2)5.17  5.83  5.25  5.72 

(1) Excludes operating special items.

(2) Excludes operating special items and economic fuel expense.

Reconciliation of Adjusted Net Income, Adjusted Pre-Tax Income, and Adjusted Operating Income to GAAP Net Income
(unaudited)

 Three Months Ended Six Months Ended
 June 30, June 30,
(in thousands, except per share data) 2018  2017  2018  2017
Net income (loss), as reported$11,254  $77,241  $(33,668) $108,502 
Add: Provision (benefit) for income taxes 3,895   45,391   (10,845)  64,889 
Income (loss) before income taxes, as reported 15,149   122,632   (44,513)  173,391 
Pre-tax margin 1.8%  17.5%  (2.9)%  13.4%
Add special items (1)$84,230  $1,493  $183,447  $7,374 
Adjusted income before income taxes, non-GAAP (2) 99,379   124,125   138,934   180,765 
Adjusted pre-tax margin, non-GAAP (2) 11.7%  17.7%  8.9%  14.0%
Add:  Total other (income) expense (3) 13,960   8,680   25,624   16,263 
Adjusted operating income, non-GAAP (4) 113,339   132,805   164,558   197,028 
Adjusted operating margin, non-GAAP (4) 13.3%  19.0%  10.6%  15.3%
        
Provision for income taxes 23,645   45,939   33,257  $67,696 
Adjusted net income, non-GAAP (2)$75,734  $78,186  $105,677  $113,069 
        
Weighted average shares, diluted 68,310   69,561   68,237   69,576 
        
Adjusted net income per share, diluted (2)$ 1.11  $ 1.12  $ 1.55  $ 1.63 
        
Total operating revenues$851,771  $700,185  $1,555,909  $1,290,142 

(1) See "Special Items" for more details.

(2) Excludes operating and non-operating special items.

(3) Excludes non-operating special items.

(4) Excludes operating special items.

The Company tracks a non-GAAP calculation of Return on Invested Capital ("ROIC"), as a way of measuring our efficiency in delivering returns and in allocating capital.  We calculate ROIC as Adjusted Operating Income (non-GAAP), divided by Total Invested Capital (non-GAAP), on a pre-tax and after-tax basis, expressed as a percentage.

Because a substantial portion of our aircraft fleet is held under operating leases, which do not appear on the balance sheet, a GAAP-based calculation of our total capital deployed may be considered understated (which would have the effect of overstating ROIC, if calculated solely using GAAP line items).  Accordingly, we adjust our total capital, the denominator of the ROIC measurement, by capitalizing operating leases at a multiple of seven times our aircraft rent expense, a measure used commonly in the airline industry and by analysts.

To calculate Adjusted Operating Income (non-GAAP), we add back aircraft rent to GAAP operating income, consistent with the adjustment to total capital discussed above.  In order to remove the effects of non-recurring gains and losses that may affect GAAP operating income, we also exclude special items from Adjusted Operating Income (non-GAAP). We present Adjusted Operating Income (non-GAAP) on a pre-tax basis and present Adjusted Operating Income (non-GAAP) on an after-tax basis, using our effective tax rate for the period.

Calculation of Return on Invested Capital, non-GAAP
 (unaudited)

 Twelve Months Ended
(in thousands)June 30, 2018
Operating income, as reported$264,895 
Add operating special items (1)100,171 
Adjustment for aircraft rent192,237 
Adjusted operating income, non-GAAP557,303 
Tax (31.2%)173,879 
Adjusted operating income, after-tax, non-GAAP$383,424 
Invested capital: 
Adjusted total debt$1,877,631 
Book equity1,733,501 
Less: Unrestricted cash, cash equivalents & short-term investments914,076 
Add: Capitalized aircraft operating leases (7x Aircraft Rent)1,345,659 
Total invested capital, non-GAAP$4,042,715 
  
Return on invested capital (ROIC), pre-tax, non-GAAP13.8%
Return on invested capital (ROIC), after-tax, non-GAAP9.5%

(1) See "Special Items" for more details.

Investor Relations Contact:
DeAnne Gabel
InvestorRelations@spirit.com 
(954) 447-7920

Media Contact:
Stephen Schuler
Stephen.Schuler@spirit.com
(954) 364-0231