Alaska Airlines and Horizon Air 2014 Annual Report Download - page 116

special mileage plan revenue item of $192 million resulting from the adoption of new accounting
standards in the prior year. The increase in operating expenses was primarily due to increases in wages
and benefits, contracted services and depreciation expense as we expanded our fleet and entered into
new markets where we almost exclusively use vendors for our station operations.
See “Results of Operations” below for further discussion of changes in revenues and operating
expenses and our reconciliation of Non-GAAP measures to the most directly comparable GAAP measure.
Accomplishments and Highlights
Financial highlights from 2014 include:
‰Reported record full-year net income, excluding special items, of $571 million, or $4.18 per
diluted share, compared to $383 million, or $2.70 per diluted share in 2013.
‰Reported net income for the full year under GAAP of $605 million, or $4.42 per diluted share,
compared to net income of $508 million, or $3.58 per diluted share in 2013.
‰Declared a $0.20 per share dividend, up 60% from the prior quarter. The dividend will be paid
on March 10, to shareholders of record as of February 24, 2015.
‰Paid $0.125 per-share quarterly cash dividend on December 3, bringing total dividend payments
in 2014 to $68 million.
‰Repurchased 7,316,731 shares of common stock for an average price of $47.23 during 2014
for $348 million, or 6.9% of market capitalization at the beginning of 2014. Since 2007, Air
Group has used $827 million to repurchase 49 million shares at an average price of $16.85.
‰Grew passenger revenues by 8% compared to the fourth quarter of 2013, and by 7% compared
to full-year 2013.
‰Generated record full-year adjusted pretax margin of 17.2% in 2014 compared to 12.4% in
2013.
‰Achieved return on invested capital of 18.6% in 2014, compared to 13.6% in 2013.
‰Generated over $1.0 billion in operating cash flows and $336 million in free cash flows in
2014.
‰Lowered adjusted debt-to-total capitalization ratio to 31% as of December 31, 2014.
‰Held $1.2 billion in unrestricted cash and marketable securities as of December 31, 2014.
‰Became one of only two U.S. airlines with investment grade credit ratings.
‰Named “Top Dividend Stock of the Dow Transports” at Dividend Channel with 1.2% yield.
Year-to-date highlights of Alaska Air Group’s five-year strategic plan:
Safety & Compliance
‰Launched Ready, Safe, Go safety campaign designed to increase safety awareness across the
Air Group System.
People Focus
‰Awarded a record $116 million in incentive pay to employees for 2014, or more than one
month’s pay for most employees. Over the last five years, employees have earned more than
$473 million in incentive pay, averaging 8.7% of annual pay.
32