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FLY Leasing Reports Third Quarter 2012 Financial Results

November 8, 2012

DUBLIN, Nov. 8, 2012 /PRNewswire/ — FLY Leasing Limited (NYSE: FLY) (“FLY”), a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its financial results for the third quarter of 2012.

Third Quarter 2012 Highlights

  • Adjusted Net Income of $5.4 million, $0.21 per share
  • Net loss of $29.4 million or $1.15 per share, including one-time expenses related to the Term Loan of $33.9 million
  • Entered into a new $395 million Senior Secured Term Loan, reducing net leverage to 4.2x
  • Purchased two B737-800s, bringing fleet to 110 aircraft
  • Declared a dividend of $0.22 per share on October 15th
  • Closed $250 million aircraft acquisition facility on November 7(th)

“FLY is reporting a net loss of $29 million for the third quarter due to one-time charges including the termination of interest rate swaps associated with the debt refinancing completed in August,” said Colm Barrington, CEO of FLY. “The refinancing achieved several important objectives including providing long-term financing with an attractive free cash profile, reducing leverage and future interest costs, and eliminating significant refinancing requirements through 2018.”

“Our fleet generated strong revenue in the quarter,” added Barrington. “The portfolio of 49 aircraft acquired last year is now contributing significantly to our bottom line, helping to grow our Adjusted Net Income as compared to the same period of last year and demonstrating the true value of the strategic acquisition.”

“During the third quarter, we acquired two additional B737-800s, growing our fleet to 110 aircraft on lease to 53 airlines in 29 countries,” said Barrington. “We continue to see attractive opportunities for growth and FLY is well positioned to take advantage of these prospects, with $115 million of unrestricted cash and the $250 million new aircraft acquisition facility we recently closed.”

Third Quarter Financial Results

FLY is reporting a net loss for the third quarter of 2012 of $29.4 million or $1.15 per share. This compares to net income of $3.4 million and $0.13 per share for the same period of 2011. The loss is attributable to pre-tax, one-time, refinancing related expenses of $33.9 million, including a pre-tax charge of $32.3 million to terminate interest rate swaps associated with a credit facility that was fully repaid during the quarter. Operating lease revenue increased to $84.4 million for the third quarter of 2012 from $47.4 million for the same period in 2011, primarily due to growth in the aircraft portfolio following the aircraft acquisitions completed in late 2011.

Net income and diluted earnings per share for the nine months ended September 30, 2012 were $16.7 million and $0.63 per share compared to $10.3 million and $0.39 per share for the same period in 2011. The increase is due to income from the additional aircraft in the portfolio, partially offset by one-time refinancing related expenses.

Adjusted Net Income

Adjusted Net Income was $5.4 million or $0.21 per share for the third quarter of 2012 compared to $4.3 million or $0.17 per share in the third quarter of the previous year.

For the nine-months ended September 30, 2012, Adjusted Net Income was $63.1 million ($2.43 per share) compared to $15.1 million ($0.58 per share) for the same period of the previous year. The significant increase reflects the income from the increased portfolio and additional end of lease income in 2012 as compared to 2011.

A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.

Dividend

On October 15, 2012, FLY declared a dividend of $0.22 per share in respect of the third quarter of 2012. This dividend will be paid on November 20, 2012 to shareholders of record on October 30, 2012. This dividend is the 20(th) consecutive quarterly dividend declared by FLY.

Financial Position

At September 30, 2012, FLY’s total assets were $3.0 billion, including flight equipment with a net book value of $2.7 billion. Restricted and unrestricted cash at September 30, 2012 totalled $281.7 million, of which $115.0 million was unrestricted. These amounts compare to total cash of $380.5 million and unrestricted cash of $82.1 million at December 31, 2011.

FLY entered into a new $395 million senior term loan secured by 23 aircraft and maturing in 2018. The refinancing addressed all of FLY’s remaining 2012 debt maturities as well as amounts due under a facility maturing in 2013. As a result of the refinancing, FLY’s net leverage, defined as the ratio of net debt to total shareholders’ equity was reduced to 4.2x at September 30, 2012 compared to 5.1x at December 31, 2011. Net debt is defined as book value of secured borrowings, less unrestricted cash and cash equivalents.

Aircraft Portfolio

At September 30, 2012, FLY’s 110 aircraft were on lease to 53 lessees in 29 countries. The table below shows the aircraft in FLY’s portfolio on September 30, 2012 and December 31, 2011. The table does not include the four B767 aircraft owned by a joint venture in which FLY has a 57% interest.

    Portfolio at              Sept 30, 2012      Dec 31, 2011
    Airbus A319                              20                 20
    -----------                             ---                ---
    Airbus A320                              27                 29
    -----------                             ---                ---
    Airbus A330                               1                  1
    -----------                             ---                ---
    Airbus A340                               3                  3
    -----------                             ---                ---
    Boeing 717                                6                  6
    ----------                              ---                ---
    Boeing 737                               40                 37
    ----------                              ---                ---
    Boeing 747                                1                  1
    ----------                              ---                ---
    Boeing 757                               11                 11
    ----------                              ---                ---
    Boeing 767                                1                  1
    ----------                              ---                ---
          Total                             110                109
          -----                             ---                ---

At September 30, 2012, the average age of FLY’s fleet was 9.2 years, weighted by the net book value of each aircraft. The average remaining lease term was 3.1 years, also weighted by net book value. At September 30, 2012, the leases were generating annualized revenues of approximately $341 million. For the third quarter of 2012, FLY’s lease utilization factor was 96% and for the nine months ended September 30, 2012 the lease utilization factor was 98%.

Conference Call and Webcast

FLY’s senior management will host a conference call and webcast to discuss these results at 4:30 p.m. U.S. Eastern Time on Thursday, November 8, 2012. Participants should call +1-706-758-4339 (International) or 877-309-0213 (North America) and enter confirmation code 32843684 or ask an operator for the FLY Leasing earnings call. A replay will be available shortly after the call. To access the replay, please dial +1-404-537-3406 (International) or 855-859-2056 (North America) and enter confirmation code 32843684. The replay recording will be available until November 22, 2012.

A live webcast of the conference call will be also available on the Events page in the Investor Relations section of FLY’s website at www.flyleasing.com. An archived webcast will be available for one year.

About FLY

FLY acquires and leases modern, high-demand and fuel-efficient commercial jet aircraft under multi-year operating lease contracts to a diverse group of airlines throughout the world. FLY is managed and serviced by BBAM LP, one of the world’s leading aircraft lease managers with more than 20 years of experience. For more information about FLY, please visit our website at www.flyleasing.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains certain “forward – looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will,” or words of similar meaning and include, but are not limited to, statements regarding the outlook for FLY’s future business and financial performance. Forward-looking statements are based on management’s current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market, regulatory and other factors and risks. FLY expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations, or otherwise.

Contact:

Matt Dallas
FLY Leasing Limited
+1 203-769-5916
ir@flyleasing.com

    FLY Leasing Limited
    Consolidated Statements of Income
    (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
    --------------------------------------------

                                                        Three months ended          Three months ended  Nine months    Nine months
                                                Sept. 30, 2012 (Unaudited)  Sept. 30, 2011 (Unaudited)        ended          ended
                                                                                                       Sept. 30, 2012 Sept. 30, 2011
                                                                                                          (Unaudited)    (Unaudited)
                                                                                                   ---   ----------    -----------
    Revenues
    --------
       Operating lease revenue                                     $84,443                     $47,387     $285,800       $149,149
       -----------------------                                     -------                     -------     --------       --------
       Equity earnings from
        unconsolidated joint
        ventures                                                     1,852                       1,289        5,980          2,626
       ---------------------                                         -----                       -----        -----          -----
       Gain on sale of
        aircraft                                                         -                           -        8,489              -
       ---------------                                                 ---                         ---        -----            ---
       Interest and other
        income                                                         113                         761        1,556          2,502
       ------------------                                              ---                         ---        -----          -----
    Total revenues                                                  86,408                      49,437      301,825        154,277
    --------------                                                  ------                      ------      -------        -------
    Expenses
    --------
       Depreciation                                                 34,302                      21,158      102,795         62,723
       ------------                                                 ------                      ------      -------         ------
       Interest expense                                             36,045                      18,278      109,695         55,174
       ----------------                                             ------                      ------      -------         ------
       Selling, general and
        administrative                                              11,435                       5,756       30,213         19,653
       --------------------                                         ------                       -----       ------         ------
       Ineffective,
        dedesignated and
        terminated derivatives                                      32,580                           -       31,353
       -----------------------                                      ------                         ---       ------
       Maintenance and other
        costs                                                        3,478                         184        6,138          4,103
       ---------------------                                         -----                         ---        -----          -----
    Total expenses                                                 117,840                      45,376      280,194        141,653
    --------------                                                 -------                      ------      -------        -------
    Net income (loss)
     before provision for
     income taxes                                                  (31,432)                      4,061       21,631         12,624
    ---------------------                                          -------                       -----       ------         ------
       Provision for income
        taxes                                                       (1,993)                        645        4,954          2,347
       --------------------                                         ------                         ---        -----          -----
    Net income (loss)                                             $(29,439)                     $3,416      $16,677        $10,277
    ----------------                                              --------                      ------      -------        -------
    Weighted average number of shares
    ---------------------------------
    -  Basic                                                    25,769,115                  25,647,373   25,750,811     25,904,913
    --------                                                    ----------                  ----------   ----------     ----------
    -  Diluted                                                  25,769,115                  25,841,921   25,915,110     26,054,343
    ----------                                                  ----------                  ----------   ----------     ----------
    Earnings (loss) per share
    -------------------------
     -  Basic                                                       $(1.15)                      $0.13        $0.63          $0.39
     --------                                                       ------                       -----        -----          -----
    -   Diluted                                                     $(1.15)                      $0.13        $0.63          $0.39
    -----------                                                     ------                       -----        -----          -----
    Dividends declared and
     paid per share                                                  $0.22                       $0.20        $0.62          $0.60
    ----------------------                                           -----                       -----        -----          -----

    FLY Leasing Limited
    Consolidated Balance Sheets
    (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
    --------------------------------------------

                                                    Sept. 30,  Dec. 31,    2011
                                                         2012         (Audited)
                                                  (Unaudited)
                                                   ----------
    Assets
    ------
       Cash and cash equivalents                     $114,998           $82,105
       -------------------------                     --------           -------
       Restricted cash and cash
        equivalents                                   166,698           298,404
       ------------------------                       -------           -------
       Rent receivables                                   713             3,186
       ----------------                                   ---             -----
       Investment in unconsolidated
        joint ventures                                 15,921            15,141
       ----------------------------                    ------            ------
       Flight equipment held for
        operating leases, net                       2,678,305         2,762,289
       -------------------------                    ---------         ---------
       Deferred tax asset, net                              -             5,329
       -----------------------                            ---             -----
       Fair market value of derivative
        asset                                             738             4,023
       -------------------------------                    ---             -----
       Other assets, net                               30,191            28,021
       -----------------                               ------            ------
    Total assets                                   $3,007,564        $3,198,498
    ------------                                   ----------        ----------
    Liabilities
    -----------
       Accounts payable and accrued
        liabilities                                    20,493            10,429
       ----------------------------                    ------            ------
       Rentals received in advance                     14,835            15,297
       ---------------------------                     ------            ------
       Payable to related parties                       2,774             4,863
       --------------------------                       -----             -----
       Security deposits                               48,121            50,672
       -----------------                               ------            ------
       Maintenance payment liabilities                231,467           231,793
       -------------------------------                -------           -------
       Secured borrowings, net                      2,136,510         2,326,110
       -----------------------                      ---------         ---------
       Deferred tax liability, net                        986                 -
       ---------------------------                        ---               ---
       Fair market value of derivative
        liabilities                                    54,473            98,487
       -------------------------------                 ------            ------
       Other liabilities                               20,022            17,814
       -----------------                               ------            ------
    Total liabilities                               2,529,681         2,755,465
    -----------------                               ---------         ---------
    Shareholders' equity
    --------------------
    Common shares, $0.001 par value,
     499,999,900 shares authorized;
     25,769,115 and 25,685,527
     shares issued and outstanding
     at September 30, 2012 and
     December 31, 2011, respectively                       26                26
    --------------------------------                      ---               ---
       Manager shares, $0.001 par
        value; 100 shares authorized,
        issued and outstanding                              -                 -
       ------------------------------                     ---               ---
       Additional paid in capital                     458,290           455,186
       --------------------------                     -------           -------
       Retained earnings                               58,342            57,982
       -----------------                               ------            ------
       Accumulated other comprehensive
        loss, net                                     (38,775)          (70,161)
       -------------------------------                -------           -------
    Total shareholders' equity                        477,883           443,033
    --------------------------                        -------           -------
    Total liabilities and
     shareholders' equity                          $3,007,564        $3,198,498
    ---------------------                          ----------        ----------

    FLY Leasing Limited
    Reconciliation of Adjusted Net Income, a Non-GAAP Financial Measure, to Net Income
    (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
    --------------------------------------------

                                                                  Three months ended          Three months ended     Nine months             Nine months
                                                          Sept. 30, 2012 (Unaudited)  Sept. 30, 2011 (Unaudited)           ended                   ended
                                                                                                  Sept. 30, 2012  Sept. 30, 2011
                                                                                                     (Unaudited)     (Unaudited)
                                                                                                      ----------      ----------  ----------
    Net Income                                                              $(29,439)                     $3,416         $16,677                 $10,277
    ----------                                                              --------                      ------         -------                 -------
    Add (less):
    -----------
       Ineffective, dedesignated and
        terminated derivatives                                                32,580                           -          31,353                       -
       -----------------------------                                          ------                         ---          ------                     ---
                                         Non-cash share based compensation                                 1,458             733                   3,104       3,096
                                      ---------------------------------                                    -----             ---                   -----       -----
                                         Adjustments related to GAAM Portfolio
                                          acquisition:
                                      --------------------------------------
                                              Amortization of fair value adjustments
                                               recorded in purchase accounting                             5,606               -                  18,158           -
                                      --------------------------------------                               -----             ---                  ------         ---
                                             Acquisition transaction fees and
                                              expenses                                                         -             182                       -       1,929
                                      --------------------------------------                                 ---             ---                     ---       -----
                                         Income tax effects                                               (4,801)            (23)                 (6,222)       (241)
                                      ------------------                                                  ------             ---                  ------        ----
                                      Adjusted Net Income                                                 $5,404          $4,308                 $63,070     $15,061
                                      -------------------                                                 ------          ------                 -------     -------
                                       Weighted average diluted shares
                                       outstanding                                                    25,960,109      25,841,921              25,915,110  26,054,343
                                      --------------------------------                                ----------      ----------              ----------  ----------
                                      Adjusted Net Income per share                                        $0.21           $0.17                   $2.43       $0.58
                                      -----------------------------                                        -----           -----                   -----       -----

    Adjusted Net Income Plus Depreciation and Amortization, a Non-GAAP Financial Measure, to Net Income
    (DOLLARS IN THOUSANDS)
    ---------------------

                                        Three months ended          Three months ended      Nine months            Nine months
                                Sept. 30, 2012 (Unaudited)  Sept. 30, 2011 (Unaudited)            ended                  ended
                                                                        Sept. 30, 2012   Sept. 30, 2011
                                                                           (Unaudited)      (Unaudited)
                                                                            ----------       ---------- ----------
    Adjusted Net Income                             $5,404                      $4,308          $63,070                $15,061
    -------------------                             ------                      ------          -------                -------
    Add:
    ----
       Depreciation                                                             34,302           21,158                102,795  62,723
       ------------                                                             ------           ------                -------  ------
       Other amortization                                                        7,427            3,465                 14,873  10,934
       ------------------                                                        -----            -----                 ------  ------
                            Provision for deferred income
                             taxes                                               2,014              351                  9,395   1,659
                         --------------------------------                        -----              ---                  -----   -----
                          Adjusted Net Income Plus
                          Depreciation and Amortization                        $49,147          $29,282               $190,133 $90,377
                         ------------------------------                        -------          -------               -------- -------

FLY defines Adjusted Net Income as net income plus or minus the after-tax impacts of ineffective, dedesignated or terminated cash flow hedges, swap termination costs, non-cash share-based compensation, and adjustments related to the GAAM portfolio acquisition comprised of amortization of fair value adjustments recorded in purchase accounting and acquisition transaction fees and expenses. FLY believes that Adjusted Net Income provides useful information about operating performance and period over period comparisons. It also provides additional information that is useful for evaluating the underlying operating performance of our business without regard to the impacts of fair-value adjustments of debt that the company has assumed, acquired leases and derivative instruments and other non-recurring items of income and expense affecting current period results. Adjusted Net Income should be used as a supplement to and not as a substitute for financial measures determined in accordance with Generally Accepted Accounting Principles in the United States.

Adjusted Net Income Plus Depreciation and Amortization is a cash flow measure that provides investors with an additional measure for evaluating FLY’s ongoing cash earnings, from which capital investments are made, debt is serviced and dividends are paid. However, adjusted net income plus depreciation and amortization excludes certain positive and negative cash items, including principal payments, and has certain important limitations as an indicator of FLY’s ability to pay dividends and reinvest in its business. Management uses Adjusted Net Income and Adjusted Net Income Plus Depreciation and Amortization as a measure for assessing FLY’s performance. These measures should be considered in addition to, not as a substitute for net income or other financial measures determined in accordance with GAAP. Finally, FLY’s definitions may be different than those used by other companies.

SOURCE FLY Leasing Limited


Source: PR Newswire