Southwest Airlines 2015 Annual Report Download - page 51

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Year ended December 31, Percent
2015 2014 Change
Net income per share, diluted, as reported $ 3.27 $ 1.64
Add: Net impact to net income above from fuel contracts divided by
dilutive shares (a) 0.06 0.25
Add: Impact of special items (a) 0.19 0.12
Net income per share, diluted, non-GAAP $ 3.52 $ 2.01 75.1%
Operating expenses per ASM (cents) 11.18¢ 12.50¢
Deduct: Fuel expense divided by ASMs (2.57) (4.04)
Deduct: Impact of special items (0.24) (0.10)
Operating expenses per ASM, non-GAAP, excluding fuel and special
items (cents) 8.37¢ 8.36¢ 0.1%
* As a result of prior hedge ineffectiveness and/or contracts marked to market through earnings.
(a) Amounts net of tax.
Return on Invested Capital (ROIC) (in millions) (unaudited)
Year Ended Year Ended Year Ended
December 31, 2015 December 31, 2014 December 31, 2013
Operating Income, as reported $ 4,116 $ 2,225 $ 1,278
Deduct: Special revenue adjustment (172) — —
Add: Union contract bonuses 334 9 —
Add (Deduct): Net impact from fuel
contracts (323) 28 84
Add: Acquisition and integration costs 39 126 86
Deduct: Litigation settlement (37) — —
Operating Income, non-GAAP 3,957 2,388 1,448
Net adjustment for aircraft leases (1) 114 133 143
Adjustment for fuel hedge accounting (124) (62) (60)
Adjusted Operating Income, non-GAAP $ 3,947 $ 2,459 $ 1,531
Average invested capital (2) $ 11,037 $ 11,470 $ 11,664
Equity adjustment for hedge accounting 1,027 104 50
Adjusted average invested capital $ 12,064 $ 11,574 $ 11,714
ROIC, pre-tax 32.7% 21.2% 13.1%
(1) Net adjustment related to presumption that all aircraft in fleet are owned (i.e., the impact of eliminating
aircraft rent expense and replacing with estimated depreciation expense for those same aircraft).
(2) Average invested capital is an average of the five most recent quarter end balances of debt, net present value
of aircraft leases, and equity adjusted for hedge accounting.
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