Aircastle Announces Third Quarter 2013 Results Quarterly Dividend Increased 21% to $0.20 per Share PR Newswire STAMFORD, Conn., Oct. 31, 2013 STAMFORD, Conn., Oct. 31, 2013 /PRNewswire/ -- Highlights oOperating and finance lease rental revenue of $165.3 million and Adjusted EBITDA^1 of $169.2 million oNet loss of ($74.6) million, or ($0.95) per diluted common share oAdjusted net loss^1 of ($69.1) million, or ($0.88) per diluted common share oNet income^1 of $21.0 million, or $0.27 per diluted share, and adjusted net income^1 of $26.5 million, or $0.34 per diluted share, excluding Q3 pre-tax, non-cash impairment charges of $97.6 million related to our annual fleet review oInvested $980 million through Q3, and closed or secured $690 million of additional investments which are expected to close by the end of Q1 2014 oQ3 fleet utilization of 100% and aircraft portfolio yield of approximately 13.7% oIncreased the common dividend by 21% to $0.20 per common share; represents our 30^th consecutive quarterly dividend oSold 12.3 million common shares to Marubeni Corporation generating gross proceeds of $209 million during the third quarter Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported a third quarter 2013 net loss of ($74.6) million, or ($0.95) per diluted common share, and an adjusted net loss of ($69.1) million, or ($0.88) per diluted common share. The third quarter results included operating and finance lease rental revenues of $165.3 million, an increase of 1.4%, versus $163.1 million in the third quarter of 2012. The third quarter 2013 results include $106.1 million of non-cash impairment charges consisting mostly of charges related to our annual fleet review totaling $97.6 million. These impairment charges relate to six 747-400 converted freighter aircraft and one 737-700 aircraft. Excluding these charges, third quarter net income was $21.0 million or $0.27 per diluted share, and adjusted net income was $26.5 million, or $0.34 per diluted share. Also during the third quarter we recorded a non-cash impairment charge of $8.5 million related to the sale of one 23-year old 767-300ER. This charge was offset by end of lease maintenance revenue and early lease termination fees totaling $12.9 million. Commenting on the results, Ron Wainshal, Aircastle's CEO, stated: "Aircastle's operating results during the third quarter were excellent as we achieved 100% utilization for our fleet while maintaining high rental yields. The Company benefitted from strong portfolio management and favorable market conditions, with the exception of the air freight sector, where stagnant demand and increasing supply has resulted in a capacity glut and depressed lease rates. Accordingly, while all of our aircraft are on lease, we wrote down the carrying values of our 747-400 converted freighters on short term leases." Wainshal added, "Aircastle's investment activity this year has been robust. To date, we closed or secured $1.5 billion in investments for this year and an additional $210 million which we expect will close during the first quarter of 2014. These acquisitions are deploying the capital provided through our partnership with Marubeni in an accretive manner while enhancing the Company's strong and sustainable cash flows. Consistent with our philosophy to share increases in the Company's earnings base with shareholders our Board increased the quarterly dividend to $0.20 per share, an increase of 21% since last quarter and double the level since the beginning of 2011." Third Quarter Results Lease rental and finance lease revenues for the third quarter were $165.3 million, up $2.2 million, or 1.4%, period over period, due primarily to the impact of aircraft acquisitions net of sales of $9.8 million, partially offset by the impact of extensions, transitions and early lease terminations of $6.4 million and the conversion of operating leases to finance leases of $1.2 million. Total revenues for the third quarter were $170.1 million, a decrease of $2.8 million, or 1.6%, versus the previous year. This decrease reflects $2.9 million of higher lease incentive amortization primarily related to acquisition of aircraft with lease premiums, and lower other revenues of $2.8 million driven by higher early lease termination payments received in the third quarter of 2012, along with $1.3 million of interest income from an aircraft-backed debt investment acquired in March of 2012 that was repaid in the first quarter of 2013. These reductions to revenues were partially offset by $2.2 million of higher lease rental and finance lease revenues and higher maintenance revenues of $2.0 million. Adjusted EBITDA for the third quarter was $169.2 million, up $3.0 million, or 1.8%, versus the third quarter of 2012. Higher lease rental, finance lease and maintenance revenues of $4.2 million, higher gain on the sale of flight equipment of $3.1 million and lower maintenance expenses of $2.0 million were partially offset by lower interest income and lower other fees and revenues of $4.1 million and higher expenses of $2.2 million. Unrelated to the 767-300ER end of life aircraft referenced earlier, the gain on the sale of flight equipment was primarily associated with a second 767-300ER that we sold during the quarter for a gain of $3.0 million. The net loss for the third quarter was ($74.6) million versus a net loss of ($45.8) million in the third quarter of 2012. The higher net loss was primarily driven by $27.5 million of higher aircraft impairment charges taken against the total of eight aircraft in the third quarter of 2013 versus the prior year's third quarter. In addition, total revenues declined by $2.8 million while interest expense increased $3.7 million and depreciation expense rose by $2.1 million. Offsetting this were higher gains on the sale of flight equipment of $3.1 million, and lower maintenance costs and taxes of $4.3 million. Net income was $21.0 million, or $0.27 per diluted share, excluding the non-cash impairment charge related to our annual fleet review. The adjusted net loss for the quarter was ($69.1) million, versus an adjusted net loss of ($37.5) million the prior year. The $27.5 million increase in impairment charges, a $2.1 million increase in depreciation and an increase in adjusted interest and other expense of $6.3 million was partially offset by a $3.1 million gain on the sale of flight equipment and lower taxes of $2.3 million. Adjusted net income was $26.5 million, or $0.34 per diluted share, excluding the non-cash impairment charge related to our annual fleet review. Aviation Assets Thus far in 2013, we have closed or committed to acquire 25 aircraft for $1.5 billion. Approximately $525 million of these investments were closed during the third quarter and $480 million are expected to close by the end of 2013. We also secured $210 million in acquisitions which we expect to close during the first quarter of 2014. During the third quarter we sold one 767-300ER and two 757-200 aircraft and recorded gains from the sale of this flight equipment totaling $3.1 million. In addition, as discussed above, we sold a 23-year old 767-300ER, recorded an $8.5 million transactional impairment and recorded $12.9 in maintenance revenue and early termination fees. As of September 30, 2013, Aircastle owned 161 aircraft having a net book value of $5.1 billion. Of this total, 80 aircraft with a net book value of $2.7 billion are unencumbered. Including unrestricted cash, total unencumbered assets were $3.0 billion. Owned Aircraft as of September 30, 2013^(1) Flight Equipment Held for Lease ($ mils.) $ 5,086 Unencumbered Flight Equipment. ($ mils.) $ 2,712 Number of Aircraft 161 Number of Unencumbered Aircraft 80 Passenger Aircraft (% of NBV) 80% Freighter Aircraft (% of NBV) 20% Weighted Average Fleet Age – Combined (years)^(^2^) 10.0 Weighted Average Remaining Combined Lease Term (years)^(^3^) 5.1 Weighted Average Fleet Utilization for the Three Months 100% Ended^(^4^) Portfolio Yield for the Three Months Ended^(5) 13.7% (1) Calculated using net book value of flight equipment held for lease, net investment in finance leases and flight equipment held for sale at period end. (2) Weighted average age (years) by net book value. (3) Weighted average remaining lease term (years) by net book value. (4) Aircraft on-lease days as a percent of total days in period weighted by net book value. (5) Lease rental revenue for the period as a percent of the average net book value of flight equipment held for lease for the period; quarterly information is annualized. Fleet Review and Asset Impairments During the third quarter of 2013 we recorded $106.1 million of non-cash impairment charges, of which $97.6 million related to our annual fleet review. Due to sluggish market demand, increased supply, depressed lease rates and rising storage levels for large, dedicated freighter aircraft, we impaired six Boeing 747-400 converted freighter aircraft for $88.6 million to write down these aircraft to their current market value. During the quarter we also impaired one mid-age Boeing 737-700 aircraft for $8.9 million. The total net book value for these seven aircraft was $313.2 million at the end of the second quarter of 2013. All seven aircraft are currently on lease. The impairment charges taken during the quarter reflect our current estimates of future lease rates and residual values associated with these aircraft in the current market environment. We concluded that these assets will not recover from their current market levels. In addition, during the quarter we agreed to early terminate the lease and sell one 23-year old 767-300ER aircraft, and recorded an $8.5 million impairment which was offset by $12.1 million of maintenance revenue and $0.9 million of other early termination revenue. Common Dividend On October 29, 2013, Aircastle's Board of Directors declared a fourth quarter 2013 cash dividend on its common shares of $0.20 per share, payable on December 13, 2013 to shareholders of record on November 29, 2013. This is a 21% increase over the previous quarter's cash dividend. Since early 2011, we have repurchased 11.7 million common shares at an average cost of $11.87 per share, and we continue to have $30 million remaining under the current repurchase authorization. Financing Update On July 12, 2013, we successfully completed the issuance to Marubeni Corporation of 12,320,000 common shares, representing 15.25% of Aircastle's issued and outstanding common shares, after giving effect to the issuance, at a price of $17.00 per share, for gross proceeds of approximately $209 million. Combined with additional subsequent purchases of Aircastle common shares in the secondary market, as of October 28, 2013, Marubeni Corporation owned a total of 14,389,100 shares, representing approximately 17.8% of Aircastle's issued and outstanding common shares as of the end of the third quarter. In early August, we increased our unsecured revolving credit facility from $150 million to $335 million. We also expanded the bank group from four to seven global financial institutions and extended the maturity of the facility to a three year term to expire in August 2016. In August of 2013, we also issued a fixed rate ECA bond with a face value of $78.2 million. The bond is guaranteed by COFACE and the proceeds repaid an interim floating rate bank financing associated with an A330-200 aircraft that we acquired in 2012. The bond has a fixed coupon rate of 3.488% and matures in 2024. Conference Call In connection with this earnings release, management will host an earnings conference call on Thursday, October 31, 2013 at 10:00AM Eastern time. All interested parties are welcome to participate on the live call. The conference call can be accessed by dialing (800) 967-7138 (from within the U.S. and Canada) or (719) 457-2607 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode "6107583". A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available for one month following the call. In addition to this earnings release, an accompanying power point presentation has been posted to the Investor Relations section of Aircastle's website. For those who are not available to listen to the live call, a replay will be available until 12:00PM Eastern time on Saturday, November 30, 2013 by dialing (888) 203-1112 (from within the U.S. and Canada) or (719) 457-0820 (from outside of the U.S. and Canada); please reference passcode "6107583". About Aircastle Limited Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world. As of September 30, 2013, Aircastle's aircraft portfolio consisted of 161 aircraft on lease with 68 customers located in 37 countries. Safe Harbor Certain items in this press release and other information we provide from time to time, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA, Adjusted EBITDA and Adjusted Net Income and the global aviation industry and aircraft leasing sector. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this report. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from Aircastle expectations include, but are not limited to, capital markets disruption or volatility which could adversely affect our continued ability to obtain additional capital to finance new investments or our working capital needs; government fiscal or tax policies, general economic and business conditions or other factors affecting demand for aircraft or aircraft values and lease rates; our continued ability to obtain favorable tax treatment in Bermuda, Ireland and other jurisdictions; our ability to pay dividends; high or volatile fuel prices, lack of access to capital, reduced load factors and/or reduced yields, operational disruptions caused by political unrest in North Africa, the Middle East or elsewhere, and other factors affecting the creditworthiness of our airline customers and their ability to continue to perform their obligations under our leases; termination payments on our interest rate hedges; and other risks detailed from time to time in Aircastle's filings with the SEC, including as previously disclosed in Aircastle's 2012 Annual Report on Form 10-K, and elsewhere in this report. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this report. Aircastle Limited expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.  Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers. Contact: Frank Constantinople, SVP Investor Relations Tel: +1-203-504-1063 firstname.lastname@example.org The IGB Group Leon Berman Tel: +1-212-477-8438 email@example.com Aircastle Limited and Subsidiaries Consolidated Balance Sheets (Dollars in thousands, except share data) December31, September30, 2012 2013 (Unaudited) ASSETS Cash and cash equivalents $ 618,217 $ 238,150 Accounts receivable 5,625 5,127 Restricted cash and cash equivalents 111,942 191,843 Restricted liquidity facility collateral 107,000 107,000 Flight equipment held for lease, net of accumulated depreciation of $1,305,064 and 4,662,661 4,938,113 $1,424,057 Net investment in finance leases 119,951 148,005 Other assets 186,764 177,242 Total assets $ 5,812,160 $ 5,805,480 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Borrowings from secured financings (including borrowings of ACS Ireland VIEs of $207,926 and $ 1,848,034 $ 1,581,118 $168,107, respectively) Borrowings from unsecured financings 1,750,642 1,750,556 Accounts payable, accrued expenses and other 108,593 134,892 liabilities Lease rentals received in advance 53,189 48,379 Liquidity facility 107,000 107,000 Security deposits 87,707 110,410 Maintenance payments 379,391 428,615 Fair value of derivative liabilities 61,978 44,307 Total liabilities 4,396,534 4,205,277 Commitments and Contingencies SHAREHOLDERS' EQUITY Preference shares, $.01par value, 50,000,000shares authorized, no shares issued and outstanding Common shares, $.01pr value, 250,000,000shares authorized, 68,639,729 shares issued and outstanding at December31, 2012; and 80,776,975 686 808 shares issued and outstanding at September 30, 2013 Additional paid-in capital 1,360,555 1,560,509 Retained earnings 180,675 126,140 Accumulated other comprehensive loss (126,290) (87,254) Total shareholders' equity 1,415,626 1,600,203 Total liabilities and shareholders' equity $ 5,812,160 $ 5,805,480 Aircastle Limited and Subsidiaries Consolidated Statements of Operations (Dollars in thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2012 2013 2012 2013 Revenues: Lease rental revenue $ 159,547 $ 161,148 $ 465,413 $ 475,656 Finance lease revenue 3,518 4,122 4,474 12,120 Amortization of lease premiums, discounts and (6,838) (9,737) (6,392) (25,527) lease incentives Maintenance revenue 10,944 12,932 37,126 42,983 Total lease revenue 167,171 168,465 500,621 505,232 Other revenue 5,695 1,625 9,341 11,425 Total revenues 172,866 170,090 509,962 516,657 Operating expenses: Depreciation 68,413 70,469 200,024 212,448 Interest, net 54,101 57,843 167,203 183,651 Selling, general and administrative (including non-cash share based payment expense of $1,128 and $1,067 for the three months ended, 11,907 12,830 36,616 39,297 and $3,233 and $2,931 for the nine months ended September 30, 2012 and 2013, respectively) Impairment of Aircraft 78,676 106,136 88,787 112,335 Maintenance and other costs 3,926 1,914 11,943 11,464 Total expenses 217,023 249,192 504,573 559,195 Other income: Gain on sale of flight 11 3,092 3,062 25,601 equipment Other — 855 604 5,016 Total other income 11 3,947 3,666 30,617 Income (loss) from continuing operations before (44,146) (75,155) 9,055 (11,921) income taxes Income tax provision 1,701 (597) 5,976 6,719 (benefit) Net income (loss) $ (45,847) $ (74,558) $ 3,079 $ (18,640) Earnings (loss) per common share — Basic: Net income (loss) per share $ (0.65) $ (0.95) $ 0.04 $ (0.26) Earnings (loss) per common share — Diluted: Net income (loss) per share $ (0.65) $ (0.95) $ 0.04 $ (0.26) Dividends declared per share $ 0.15 $ 0.165 $ 0.45 $ 0.495 Aircastle Limited and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) (Dollars in thousands) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2012 2013 2012 2013 Net income (loss) $ (45,847) $ (74,558) $ 3,079 $ (18,640) Other comprehensive income, net of tax: Net change in fair value of derivatives, net of tax expense of $37 and $78 for the three months ended and 1,426 1,798 23,708 13,751 $465 and $389 for the nine months ended, September 30, 2012 and 2013, respectively Net derivative loss 8,966 7,300 21,903 25,285 reclassified into earnings Other comprehensive income 10,392 9,098 45,611 39,036 Total comprehensive income $ (35,455) $ (65,460) $ 48,690 $ 20,396 (loss) Aircastle Limited and Subsidiaries Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited) Nine Months Ended September 30, 2012 2013 Cash flows from operating activities: Net income (loss) $ 3,079 $ (18,640) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 200,024 212,448 Amortization of deferred financing costs 10,082 11,757 Amortization of net lease discounts and lease 6,392 25,527 incentives Deferred income taxes 3,609 3,419 Non-cash share based payment expense 3,233 2,931 Cash flow hedges reclassified into earnings 21,903 25,285 Ineffective portion of cash flow hedges 1,840 197 Security deposits and maintenance payments included in (36,312) (32,047) earnings Gain on sale of flight equipment (3,062) (25,601) Impairment of aircraft 88,787 112,335 Other 1,820 (4,481) Changes in certain assets and liabilities: Accounts receivable (9,180) 1,588 Other assets (3,278) 1,155 Accounts payable, accrued expenses and other 14,071 7,978 liabilities Lease rentals received in advance 2,948 (4,538) Net cash provided by operating activities 305,956 319,313 Cash flows from investing activities: Acquisition and improvement of flight equipment and (450,962) (837,183) lease incentives Proceeds from sale of flight equipment 54,439 285,199 Restricted cash and cash equivalents related to sale 35,762 (2,200) of flight equipment Aircraft purchase deposits and progress payments (25,155) (5,655) Net investment in finance leases (91,500) (11,595) Collections on finance leases 2,041 6,658 Purchase of debt investment (43,626) — Principal repayments on debt investment 3,245 42,001 Other (544) (852) Net cash used in investing activities (516,300) (523,627) Cash flows from financing activities: Issuance of shares net of repurchases (30,692) 197,478 Proceeds from notes and term debt financings 877,100 78,230 Securitization and term debt financing repayments (783,976) (430,482) Deferred financing costs (17,794) (2,910) Restricted secured liquidity facility collateral 3,000 — Secured liquidity facility collateral (3,000) — Restricted cash and cash equivalents related to 102,315 (77,701) financing activities Security deposits received 11,400 19,545 Security deposits returned (3,217) (3,890) Maintenance payments received 103,527 134,758 Maintenance payments returned (36,967) (54,886) Payments for terminated cash flow hedges (50,757) — Dividends paid (32,158) (35,895) Net cash (used in) provided by financing activities 138,781 (175,753) Net increase (decrease) in cash and cash equivalents (71,563) (380,067) Cash and cash equivalents at beginning of period 295,522 618,217 Cash and cash equivalents at end of period $ 223,959 $ 238,150 Aircastle Limited and Subsidiaries Supplemental Financial Information (Amount in thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2012 2013 2012 2013 Revenues $ 172,866 $ 170,090 $ 509,962 $ 516,657 EBITDA $ 85,206 $ 62,894 $ 382,674 $ 409,705 Adjusted EBITDA $ 166,258 $ 169,242 $ 475,343 $ 521,244 Adjusted net income $ (37,491) $ (69,091) $ 20,637 $ 4,361 (loss) Adjusted net income (loss) allocable to $ (37,491) $ (69,091) $ 20,466 $ 4,327 common shares Per common share - $ (0.53) $ (0.88) $ 0.29 $ 0.06 Basic Per common share - $ (0.53) $ (0.88) $ 0.29 $ 0.06 Diluted Basic common shares 70,349 78,544 71,249 71,462 outstanding Diluted common shares 70,349 78,544 71,249 71,462 outstanding Refer to the selected information accompanying this press release for a reconciliation of GAAP to Non-GAAP information. Aircastle Limited and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures Effect of Non-Cash Impairment Charges related to Annual Fleet Review on Third Quarter 2013 Financial Results (Unaudited) After-tax Adjusted Net effect of Adjusted Net Income non-cash Income Three Months Ended September calculation impairment calculation 30, 2013 including charges related excluding the ($ in thousands) non-cash to effect of impairment annual fleet non-cash charges review impairment on Q3:13 charges results Net income (loss) $( 74,558) $95,598 $21,040 Ineffective portion of cash 91 - 91 flow hedges Gain on mark to market of interest rate derivative ( 855) - ( 855 contracts Write-off of deferred 150 - 150 financing fees Stock compensation expense 1,067 - 1,067 Term Financing No. 1 4,591 - 4,591 Amortization Securitization No. 1 hedge 423 - 423 loss amortization charges Adjusted net income (loss) $( 69,091) $95,598 $26,507 Net income (loss) per share $( 0.95) $1.22 $0.27 - basic Net income (loss) per share $( 0.95) $1.22 $0.27 - diluted Adjusted net income (loss) $( 0.88) $1.22 $0.34 per share - basic Adjusted net income (loss) $( 0.88) $1.22 $0.34 per share - diluted Note: The tax effect related to the annual fleet review is $1,994 which reduces the non-cash impairment charge from $97,592 to $95,598. Per share amounts do not add due to rounding. Aircastle Limited and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures EBITDA and Adjusted EBITDA Reconciliation (Dollars in thousands) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2012 2013 2012 2013 (Dollars in thousands) Net income (loss) $ (45,847) $ (74,558) $ 3,079 $ (18,640) Depreciation 68,413 70,469 200,024 212,448 Amortization of net lease discounts and lease 6,838 9,737 6,392 25,527 incentives Interest, net 54,101 57,843 167,203 183,651 Income tax provision 1,701 (597) 5,976 6,719 EBITDA $ 85,206 $ 62,894 $ 382,674 $ 409,705 Adjustments: Impairment of aircraft 78,676 106,136 88,787 112,335 Non-cash share based payment 1,128 1,067 3,233 2,931 expense Gain on mark to market of interest rate derivative — (855) (599) (3,727) contracts Contract termination expense 1,248 — 1,248 — Adjusted EBITDA $ 166,258 $ 169,242 $ 475,343 $ 521,244 We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-USGAAP measure is helpful in identifying trends in our performance. This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieving optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed. EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure, or expenses, of the organization. EBITDA is one of the metrics used by senior management and the board of directors to review the consolidated financial performance of our business. We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes. Adjusted EBITDA is a material component of these covenants. Aircastle Limited and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures Adjusted Net Income (Loss) Reconciliation (Dollars in thousands) (Unaudited) Three Months Ended September Nine Months Ended September 30, 30, 2012 2013 2012 2013 (Dollars in thousands) Net income (loss) $ (45,847) $ (74,558) $ 3,079 $ (18,640) Loan — — — 2,954 termination fee^(1) Ineffective portion and termination of 1,474 91 1,840 2,222 hedges^(1) Gain on mark to market of interest — (855) (599) (3,727) rate derivative contracts^(2) Write-off of deferred — 150 2,914 3,975 financing fees^(1) Stock compensation 1,128 1,067 3,233 2,931 expense^(3) Term Financing No. 1 hedge loss 4,506 4,591 8,922 13,478 amortization charges^(1) Securitization No. 1 hedge loss — 423 — 1,168 amortization charges ^(1) Contract 1,248 — 1,248 — termination expense Adjusted net income $ (37,491) $ (69,091) $ 20,637 $ 4,361 (loss) (1) Included in Interest, net. (2) Included in Other income (expense). (3) Included in Selling, general and administrative expenses. Management believes that ANI, when viewed in conjunction with the Company's results under USGAAP and the below reconciliation, provides useful information about operating and period-over-period performance, and provides additional information that is useful for evaluating the underlying operating performance of our business without regard to periodic reporting elements related to interest rate derivative accounting and gains or losses related to flight equipment and debt investments. Aircastle Limited and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures Reconciliation of Net Income (Loss) Allocable to Common Shares (In thousands) (Unaudited) Three Months Ended Nine Months Ended September 30, 2013 September 30, 2013 Weighted-average shares: Shares Percent^(2) Shares Percent^(2) Common shares outstanding 78,544 99.15% 71,462 99.22% – Basic Unvested restricted common 669 0.85% 563 0.78% shares Total weighted-average 79,214 100.00% 75,025 100.00% shares outstanding Net income (loss) allocation Net income (loss) $(74,558) 100.00% $(18,640) 100.00% Distributed and undistributed earnings - (0.00%) - (0.00%) allocated to unvested restricted shares Earnings (loss) available $(73,928)) 100.00% $(18,640) 100.00% to common shares Adjusted net income (loss) allocation Adjusted net income (loss) $(69,091) 100.00% $4,361 100.00% Amounts allocated to - (0.00%) (34) (0.78%) unvested restricted shares Amounts allocated to $(69,091) 100.00% $4,327 99.22% common shares ^(1) ^For the three and nine months ended September 30, 2013 the company had no dilutive shares. ^(2) ^Percentages rounded to two decimal places. Under the two-class method, adjusted net income (loss) per common share is computed by dividing the sum of distributed adjusted net income (loss) allocated to common shareholders and undistributed adjusted net income (loss) allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, distributed and undistributed adjusted net income (loss) is allocated to both common shares and restricted common shares based on the total weighted average shares outstanding during the period. Because the holders of the participating restricted common shares were not contractually required to share in the Company's losses, in applying the two-class method to compute basic and diluted adjusted net loss per common share, no allocation to restricted common shares was made for the three months ended September 30, 2012 and 2013. Aircastle Limited and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures Reconciliation of Net Income (Loss) Allocable to Common Shares (In thousands) (Unaudited) Three Months Ended Nine Months Ended September 30, 2012 September 30, 2012 Weighted-average shares: Shares Percent^(2) Shares Percent^(2) Common shares outstanding – 70,349 99.19% 71,249 99.17% Basic Unvested restricted common 571 0.81% 597 0.83% shares Total weighted-average shares 70,921 100.00% 71,846 100.00% outstanding Net income (loss) allocation Net income (loss) $(45,847) 100.00% $3,079 100.00% Distributed and undistributed earnings allocated to - (0.00%) (25) (0.83%) unvested restricted shares Earnings (loss) available to $(45,847) 100.00% $3,054 99.17% common shares Adjusted net income (loss) allocation Adjusted net income (loss) $(37,491) 100.00% $20,637 100.00% Amounts allocated to unvested - (0.00%) (171) (0.83%) restricted shares Amounts allocated to common $(37,491) 100.00% $20,466 99.17% shares ^(1) ^For the three and nine months ended September 30, 2012 the company had no dilutive shares. ^(2) ^Percentages rounded to two decimal places. Under the two-class method, adjusted net income (loss) per common share is computed by dividing the sum of distributed adjusted net income (loss) allocated to common shareholders and undistributed adjusted net income (loss) allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, distributed and undistributed adjusted net income (loss) is allocated to both common shares and restricted common shares based on the total weighted average shares outstanding during the period. Because the holders of the participating restricted common shares were not contractually required to share in the Company's losses, in applying the two-class method to compute basic and diluted adjusted net loss per common share, no allocation to restricted common shares was made for the three months ended September 30, 2012 and 2013. SOURCE Aircastle Limited Website: http://www.aircastle.com
Aircastle Announces Third Quarter 2013 Results
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