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FLY Leasing Reports Fourth Quarter and Full Year 2012 Financial Results

March 7, 2013

DUBLIN, March 7, 2013 /PRNewswire/ — FLY Leasing Limited (NYSE: FLY) (“FLY”), a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its financial results for the fourth quarter and full year of 2012.

Fourth Quarter 2012 Highlights

  • Adjusted net income of $53.2 million, $2.04 per share
  • Net income of $31.0 million, $1.17 per share
  • Raised a $250 million revolving Acquisition Facility to fund growth
  • Re-priced $395 million Term Loan, reducing annual cash interest payments by approximately $4 million
  • Declared 21(st) consecutive quarterly dividend on January 15(th )($0.22 per share)

Additional 2012 Full Year Highlights

  • Adjusted net income of $116.3 million, $4.48 per share
  • Net income of $47.7 million, $1.80 per share
  • Sourced $1.3 billion of new secured debt financing
  • Reduced total secured borrowings by $274 million, reducing net leverage to 3.6x
  • Sold four aircraft with an average age of 13 years for a pre-tax gain of $8.4 million
  • Paid $0.84 per share in dividends

“FLY had another strong year in 2012, increasing our core operating lease revenues by 63% compared to 2011. Adjusted Net Income was $116.3 million ($4.48 per share), and Net Income was $47.7 million ($1.80 per share),” said Colm Barrington, Chief Executive Officer of FLY. “Our increased earnings in 2012 reflect the growth in our aircraft portfolio which has doubled in size over the last two years. Our earnings also reflect significant contributions from our opportunistic sale of four aircraft in 2012 and the sale of our 15% interest in BBAM. During 2012, we raised the quarterly dividend by 10% to 22 cents per share, for total dividends of 84 cents per share in the year.”

“We also completed several significant financial objectives in 2012, including reducing our net leverage from 5.1x at the start of the year to 3.6x at year end,” said Barrington. “We are now well on our way to reducing our leverage to less than 3.5x. In addition, we refinanced substantially all of our near-term debt maturities with a new $395 million senior secured term loan that matures in 2018, extended a $600 million bank facility from 2012 to 2018 and added a new and attractive $250 million acquisition facility. In addition to lowering our financial leverage, our financing activities have also lowered our weighted-average contractual interest rate on our secured borrowings to 4.7% at December 31, 2012.”

“Looking ahead, we are excited about the opportunities for FLY in 2013,” added Barrington. “We have significant firepower to grow the Company with a new $250 million revolving Acquisition Facility and $163 million of unrestricted cash. We expect to take advantage of positive industry dynamics, including strengthening air traffic and continued robust demand for the modern, fuel-efficient aircraft that make up FLY’s fleet. Aircraft leasing continues to grow in importance, becoming an increasingly important tool for airlines around the world. Against this backdrop, we are well positioned to meet our growth targets both in terms of fleet and earnings.”

Financial Results

FLY grew operating lease revenue by $145.7 million for a total of $376.4 million in 2012 compared to 2011, an increase of 63%. This increase reflects the growth in our aircraft portfolio.

FLY is reporting net income for the fourth quarter of 2012 of $31.0 million or $1.17 per diluted share. This compares to a net loss of $9.2 million or $0.37 per share for the same period of 2011. In addition to the $36.9 million pre-tax gain on the sale of FLY’s 15% ownership interest in BBAM, the fourth quarter results include an $11.4 million impairment charge on three aircraft. We recovered approximately $9.7 million of this $11.4 million from end of lease compensation payments, retained maintenance reserves and disposition proceeds in the first quarter of 2013 in respect of the impaired aircraft. The fourth quarter results also include a $7.6 million charge associated with the early repayment of debt, $4.2 million of which was related to the re-pricing of our term loan.

Net income for the year ended December 31, 2012 was $47.7 million or $1.80 per diluted share compared to $1.1 million or $0.03 per diluted share for 2011. In addition to the 4(th) quarter items, the 2012 results include a one-time, pre-tax charge of $32.3 million to terminate interest rate swaps associated with a credit facility that was fully repaid during 2012.

Adjusted Net Income

Adjusted Net Income was $53.2 million or $2.04 per share for the fourth quarter of 2012 compared to $20.7 million or $0.80 for the fourth quarter of the previous year.

For the year ended December 31, 2012, Adjusted Net Income was $116.3 million or $4.48 per share compared to $35.8 million or $1.38 per share for the year ended December 31, 2011, an increase of 225%.

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

Dividend

On January 15, 2013, FLY declared a dividend of $0.22 per share in respect of the fourth quarter of 2012. This dividend was paid on February 20, 2013 to shareholders of record on January 31, 2013. This dividend is FLY’s 21(st) consecutive quarterly dividend.

Financial Position

At December 31, 2012, FLY’s total assets were $3.0 billion, including flight equipment with a net book value of $2.6 billion. Total cash at December 31, 2012 was $300.6 million, of which $163.1 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’s net leverage, defined as the ratio of net debt to total shareholders’ equity was 3.6x at December 31, 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 December 31, 2012, FLY’s 109 aircraft were on lease to 55 lessees in 32 countries. The table below shows the aircraft in FLY’s portfolio on December 31, 2012. The table does not include the four B767 aircraft owned by a joint venture in which FLY has a 57% interest.


    Portfolio at                  Dec. 31, 2012

    Airbus A319                              19
    -----------                             ---

    Airbus A320                              27
    -----------                             ---

    Airbus A330                               1
    -----------                             ---

    Airbus A340                               3
    -----------                             ---

    Boeing 717                                6
    ----------                              ---

    Boeing 737                               40
    ----------                              ---

    Boeing 747                                1
    ----------                              ---

    Boeing 757                               11
    ----------                              ---

    Boeing 767                                1
    ----------                              ---

          Total                             109
          -----                             ---

At December 31, 2012, the average age of FLY’s fleet was 9.4 years, weighted by the net book value of each aircraft. The average remaining lease term was 3.2 years, also weighted by net book value. At December 31, 2012, the leases were generating annualized revenues of approximately $326 million. For the fourth quarter of 2012, FLY’s lease utilization factor was 93% and for the year ended December 31, 2012 the lease utilization factor was 95%.

Conference Call and Webcast

FLY’s senior management will host a conference call and webcast to discuss these results at 9:00 a.m. U.S. Eastern Time on Thursday, March 7, 2013. Participants should call +1-706-758-4339 (International) or 877-309-0213 (North America) and enter confirmation code 97063366 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 97063366. The telephone replay will be available for one week. A live webcast of the conference call will be also available in the investor 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     Year ended    Year ended

                                                        Three months ended  Dec. 31, 2011 (Unaudited)  Dec. 31, 2012 Dec. 31, 2011

                                               Dec.  31,  2012 (Unaudited)                                 (Audited)     (Audited)
                                                --------------------------                                  --------      --------

    Revenues
    --------

       Operating lease
        revenue                                                    $90,637                    $81,567       $376,437      $230,716
       ---------------                                             -------                    -------       --------      --------

       Equity earnings from
        unconsolidated joint
        ventures                                                     3,403                      3,021          9,383         5,647
       ---------------------                                         -----                      -----          -----         -----

       Gain on sale of
        investment in
        unconsolidated joint
        venture                                                     36,882                          -         36,882             -
       ---------------------                                        ------                        ---         ------           ---

       Gain (loss) on sale
        of aircraft                                                   (129)                     9,137          8,360         9,137
       -------------------                                            ----                      -----          -----         -----

       Interest and other
        income                                                          78                        787          1,634         3,289
       ------------------                                              ---                        ---          -----         -----

    Total revenues                                                 130,871                     94,512        432,696       248,789
    --------------                                                 -------                     ------        -------       -------

    Expenses
    --------

       Depreciation                                                 33,838                     32,995        136,633        95,718
       ------------                                                 ------                     ------        -------        ------

       Aircraft impairment                                          11,382                      7,500         11,382         7,500
       -------------------                                          ------                      -----         ------         -----

       Interest expense                                             32,796                     35,373        142,491        90,547
       ----------------                                             ------                     ------        -------        ------

       Debt extinguishment
        costs                                                        7,628                          -          7,628             -
       -------------------                                           -----                        ---          -----           ---

       Selling, general and
        administrative                                               9,979                      9,341         40,192        27,064
       --------------------                                          -----                      -----         ------        ------

       Ineffective,
        dedesignated and
        terminated
        derivatives                                                    518                        184         31,871           184
       -----------------                                               ---                        ---         ------           ---

       Transaction fees and
        expenses                                                         -                     16,108              -        18,038
       --------------------                                            ---                     ------            ---        ------

       Maintenance and other
        costs                                                        4,830                        297         10,968         4,400
       ---------------------                                         -----                        ---         ------         -----

    Total expenses                                                 100,971                    101,798        381,165       243,451
    --------------                                                 -------                    -------        -------       -------

    Net income (loss)
     before provision for
     income taxes                                                   29,900                     (7,286)        51,531         5,338
    ---------------------                                           ------                     ------         ------         -----

       Provision (benefit)
        for income taxes                                            (1,092)                     1,895          3,862         4,242
       -------------------                                          ------                      -----          -----         -----

    Net income (loss)                                              $30,992                    $(9,181)       $47,669        $1,096
    ----------------                                               -------                    -------        -------        ------

    Weighted average
     number of shares
    -----------------

    -  Basic                                                    25,918,379                 25,660,661     25,792,932    25,843,348
    --------                                                    ----------                 ----------     ----------    ----------

    -  Diluted                                                  26,086,467                 25,660,661     25,961,605    25,992,062
    ----------                                                  ----------                 ----------     ----------    ----------

    Earnings per share
    ------------------

     -  Basic                                                        $1.18                     $(0.37)         $1.81         $0.03
     --------                                                        -----                     ------          -----         -----

    -   Diluted                                                      $1.17                     $(0.37)         $1.80         $0.03
    -----------                                                      -----                     ------          -----         -----

    Dividends declared
     and paid per share                                              $0.22                      $0.20          $0.84         $0.80
    -------------------                                              -----                      -----          -----         -----

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

                                                    Dec. 31,  Dec. 31,    2011

                                                        2012         (Audited)

                                                   (Audited)
                                                    --------

    Assets
    ------

       Cash and cash equivalents                    $163,124           $82,105
       -------------------------                    --------           -------

       Restricted cash and cash
        equivalents                                  137,457           298,404
       ------------------------                      -------           -------

       Rent receivables                                3,124             3,186
       ----------------                                -----             -----

       Investment in unconsolidated
        joint ventures                                 6,308            15,141
       ----------------------------                    -----            ------

       Flight equipment held for
        operating leases, net                      2,616,864         2,762,289
       -------------------------                   ---------         ---------

       Deferred tax asset, net                         9,450             5,329
       -----------------------                         -----             -----

       Fair market value of derivative
        asset                                            319             4,023
       -------------------------------                   ---             -----

       Other assets, net                              32,026            28,021
       -----------------                              ------            ------

    Total assets                                  $2,968,672        $3,198,498
    ------------                                  ----------        ----------

    Liabilities
    -----------

       Accounts payable and accrued
        liabilities                                  $15,662           $10,429
       ----------------------------                  -------           -------

       Rentals received in advance                    14,402            15,297
       ---------------------------                    ------            ------

       Payable to related parties                      2,789             4,863
       --------------------------                      -----             -----

       Security deposits                              47,474            50,672
       -----------------                              ------            ------

       Maintenance payment liabilities               225,733           231,793
       -------------------------------               -------           -------

       Secured borrowings, net                     2,052,412         2,326,110
       -----------------------                     ---------         ---------

       Fair market value of derivative
        liabilities                                   48,967            98,487
       -------------------------------                ------            ------

       Other liabilities                              29,231            17,814
       -----------------                              ------            ------

    Total liabilities                              2,436,670         2,755,465
    -----------------                              ---------         ---------

    Shareholders' equity
    --------------------

    Common shares, $0.001 par value,
     499,999,900 shares authorized;
     28,040,305 and 25,685,527 shares
     issued and outstanding at
     December 31, 2012 and 2011,
     respectively                                         28                26
    ---------------------------------                    ---               ---

       Manager shares, $0.001 par value;
        100 shares authorized, issued
        and outstanding                                    -                 -
       ---------------------------------                 ---               ---

       Additional paid in capital                    482,733           455,186
       --------------------------                    -------           -------

       Retained earnings                              83,138            57,982
       -----------------                              ------            ------

       Accumulated other comprehensive
        loss, net                                    (33,897)          (70,161)
       -------------------------------               -------           -------

    Total shareholders' equity                       532,002           443,033
    --------------------------                       -------           -------

    Total liabilities and
     shareholders' equity                         $2,968,672        $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     Year ended                Year ended

                                                                Dec. 31, 2012 (Unaudited) Dec. 31, 2011 (Unaudited)  Dec. 31, 2012             Dec. 31, 2011

                                                                                                        (Unaudited)    (Unaudited)
                                                                                                         ----------     ----------  ----------

    Net Income (loss)                                                             $30,992                   $(9,181)       $47,669                    $1,096
    ----------------                                                              -------                   -------        -------                    ------

    Add (less):
    -----------

       Ineffective,
        dedesignated and
        terminated derivatives                                                                                  518            184                    31,871         184
       -----------------------                                                                                  ---            ---                    ------         ---

       Debt extinguishment
        costs                                                                       7,628                         -          7,628                         -
       -------------------                                                          -----                       ---          -----                       ---

       Aircraft impairment                                                                                   11,382          7,500                    11,382       7,500
       -------------------                                                                                   ------          -----                    ------       -----

                                                                                                                531          1,672                     3,635       4,768

       Non-cash share based compensation
       ---------------------------------                                                                                                                             ---

       Adjustments related to GAAM Portfolio acquisition:
    ---------------------------------------

                                                           Amortization of fair value
                                                           adjustments recorded in
                                                           purchase accounting                                5,453          5,838                    23,611       5,838
                                                          ---------------------------                         -----          -----                    ------       -----

                                                           Acquisition transaction fees
                                                            and expenses                                          -         16,108                         -      18,038
                                                          -----------------------------                         ---         ------                       ---      ------

                                                                                                             (3,262)        (1,412)                   (9,484)     (1,654)

       Income tax effects
       ------------------                                                                                                                                            ---

                                                                                  $53,242                   $20,709       $116,312                   $35,770

    Adjusted Net Income
    -------------------

                                                                                                         26,086,467     25,798,377                25,961,605  25,992,062

    Weighted average diluted shares
     outstanding
    -------------------------------                                                                                                                                  ---

                                                                                    $2.04                     $0.80          $4.48                     $1.38

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

                                                        Three months ended         Three months ended    Year ended    Year ended

                                                 Dec. 31, 2012 (Unaudited)  Dec. 31, 2011 (Unaudited) Dec. 31, 2012 Dec. 31, 2011

                                                                                                        (Unaudited)   (Unaudited)
                                                                                                         ----------    ----------

    Adjusted Net Income                                            $53,242                    $20,709      $116,312       $35,770
    -------------------                                            -------                    -------      --------       -------

    Add:
    ----

       Depreciation                                                 33,838                     32,995       136,633        95,718
       ------------                                                 ------                     ------       -------        ------

       Other amortization                                            4,551                      4,410        19,423        15,342
       ------------------                                            -----                      -----        ------        ------

                                                                    (8,068)                     2,556         1,303         4,216

       Provision for
        deferred income
        taxes
       ----------------

                                                                   $83,563                    $60,670      $273,671      $151,046

    Adjusted Net Income
     Plus Depreciation
     and Amortization
    -------------------

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, debt extinguishment costs, impairment, 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