March 1, 2016
Global Ship Lease Reports Results for the Fourth Quarter of 2015

LONDON, March 01, 2016 (GLOBE NEWSWIRE) -- Global Ship Lease, Inc. (NYSE:GSL) (the "Company"), a containership charter owner, announced today its unaudited results for the three months and year ended December 31, 2015.

Fourth Quarter and Year Highlights

- Reported revenue of $44.0 million for the fourth quarter 2015. Revenue for the year ended December 31, 2015 was $164.9 million

- Reported net income(1) of $6.2 million for the fourth quarter 2015.  For the year ended December 31, 2015, net loss was $31.9 million after a $44.7 million non-cash impairment charge booked in third quarter in respect of two vessels, both of which were sold in the fourth quarter

- Generated $30.3 million of adjusted EBITDA(2) for the fourth quarter 2015.  Adjusted EBITDA for the year ended December 31, 2015 was $108.8 million

- Normalized net income (1)(2) was the same as reported net income for the fourth quarter 2015.  Normalized net income, excluding the non-cash impairment charge, was $12.8 million for the year ended December 31, 2015

- Reduced net debt to Adjusted EBITDA from 4.6 times at end 2014 to 4.0 times at end 2015

- Completed the sale of Ville d'Aquarius on November 5, 2015, following her re-delivery from charter on October 29, 2015 for approximate net proceeds of $4.6 million

- Completed the sale of Ville d'Orion on December 8, 2015, following her re-delivery from charter on December 3, 2015 for approximate net proceeds of $4.7 million

Ian Webber, Chief Executive Officer of Global Ship Lease, stated, "In 2015, Global Ship Lease successfully advanced our growth strategy across a number of fronts. We expanded our fleet and long-term cashflows through accretive acquisitions, diversified our charter portfolio with top-tier charterers, eliminated all exposure to the spot market, and meaningfully increased our adjusted EBITDA to $108.8 million, as well as reducing our balance sheet leverage."       

Mr. Webber continued, "While we remain optimistic about the long-term prospects of our business and continue to be supported by our strategic emphasis on multi-year contracts with high-quality counterparties, we are nevertheless acutely aware of the current profound downturn across the container shipping industry.  With this in mind, our Board has made the difficult decision to eliminate the dividend and focus our capital allocation on proactively reducing our leverage while also continuing to pursue attractive acquisitions that will expand long-term contracted cashflows.  We believe that this course of action will best position us to not only operate through this industry downturn, but also to create the greatest long-term shareholder value by taking full advantage of the opportunities available to a ship owner with a strong balance sheet and growth capital in the current distressed environment."

SELECTED FINANCIAL DATA — UNAUDITED (thousands of U.S. dollars)

 ThreeThree  
 months
ended
months
ended
Year
ended
Year
ended
 DecemberDecemberDecemberDecember
  31, 2015 31, 2014 31, 2015 31, 2014
     
Revenue 44,029 36,852  164,919  138,615 
Operating Income19,413 11,608  19,253  42,274 
Net Income (Loss) (1)6,246 (929) (31,937) 4,996 
Adjusted EBITDA (2)30,348 22,559  108,812  83,333 
Normalised Net Income (Loss) (1)(2)6,246 (929) 12,763  (2,538)
     

(1) Net income (loss) and Normalized net income (loss) available to common shareholders

(2) Adjusted EBITDA and Normalized net income (loss) are non-US Generally Accepted Accounting Principles (US GAAP) measures, as explained further in this press release, and are considered by Global Ship Lease to be useful measures of its performance.  Reconciliations of such non-GAAP measures to the interim unaudited financial information are provided in this Earnings Release.

Revenue and Utilization

The fleet generated revenue from fixed rate, long-term time, charters of $44.0 million in the three months ended December 31, 2015, up $7.2 million on revenue of $36.9 million for the comparative period in 2014, due mainly to the contribution of OOCL Tianjin, purchased October 28, 2014, OOCL Qingdao, purchased March 11, 2015 and the OOCL Ningbo, purchased September 17, 2015, together with increased rates on charter renewal for Ville d'Aquarius and Ville d'Orion for the period in fourth quarter 2015 prior to their sale and reduced offhire from regulatory drydockings and idle time. There were 1,761 ownership days in the quarter, up 8.1% from 1,629 in the comparable period in 2014. In the fourth quarter 2015, there was one day of unplanned offhire and 13 days idle time between the expiry of the charters in Ville d'Aquarius and Ville d'Orion and their sales, giving an overall utilization of 99.2%.  There were 1,629 ownership days in the fourth quarter 2014 and a total of 20 days off-hire, of which one was unplanned and 19 were for planned drydockings, giving an overall utilization of 98.8%. 

For the year ended December 31, 2015, revenue was $164.9 million, up $26.3 million or 19.0% on revenue of $138.6 million in the prior year, mainly due to the contribution of the three additional vessels and reduced offhire from fewer scheduled drydockings and lower idle time on the two 4,113 TEU vessels which in the prior year were idle for 64 days pending re-deployment on new charters.

The table below shows fleet utilization for the three months and years ended December 31, 2015 and 2014 and for the years ended December 31, 2013, 2012 and 2011.

        
 Three months endedYear ended 
 Dec 31,Dec 31,Dec 31,Dec 31,Dec 31,Dec 31,Dec 31,
Days 2015  2014  2015  2014  2013  2012  2011 
        
Ownership days 1,761  1,629  6,893  6,270  6,205  6,222  6,205 
Planned offhire - scheduled drydock 0  (19) (9) (48) (21) (82) (95)
Unplanned offhire (1) (1) (7) (12) (7) (16) (11)
Idle time (13) 0  (13) (64) 0  0  0 
Operating days 1,747  1,609  6,864  6,146  6,177  6,124  6,099 
        
Utilization 99.2% 98.8% 99.6% 98.0% 99.5% 98.4% 98.3%
                      

There was one regulatory drydocking in 2015, in the first quarter. Three vessels were drydocked in the year ended December 31, 2014. Six regulatory drydockings are planned for 2016.

Vessel Operating Expenses

Vessel operating expenses, which include costs of crew, lubricating oil, spares and insurance, were $12.2 million for the three months ended December 31, 2015 compared to $12.6 million in the comparative period.  The average cost per ownership day in the quarter was $6,956 compared to $7,736 for the comparative period, down $780 per day or 10.1%.  The reduction is primarily attributable to reduced crew costs and insurance costs on renewal and a lower charge for insurance deductibles.

For the year ended December 31, 2015, vessel operating expenses were $50.1 million or an average of $7,269 per day, compared to $48.8 million in the comparative period or $7,778 per day. The $509 reduction, or 6.6%, in vessel operating expenses per day is due mainly to lower crew costs, lower insurance costs on renewal and the prior year including $0.7 million (or $104 per day) for bunker fuel consumed during repositioning vessels for the commencement of new charters.  

Depreciation

Depreciation for the three months ended December 31, 2015 was $10.9 million, compared to $11.0 million in the fourth quarter 2014 which included $0.4 million associated with the modification of the CMA CGM Thalassa bulbous bow.

Depreciation for the year ended December 31, 2015 was $44.9 million, compared to $41.1 million in the prior year; the increase being due to additional vessels.

Impairment

On September 30, 2015, the Company received notice of re-delivery for Ville d'Aquarius, the Company's oldest vessel, built in 1996; the vessel was re-delivered on October 29, 2015.   Given the Company's assessment of the vessel's re-chartering prospects and an imminent class mandated tail shaft survey, a sale of the vessel was completed on November 5, 2015 for net proceeds of approximately $4.6 million. The vessel was written down as at September 30, 2015 by $22.2 million to its estimated net realizable value, including estimated selling costs.

On November 2, 2015, the Company received notice of re-delivery for Ville d'Orion, the Company's second oldest vessel, built in 1997; the vessel was re-delivered on December 3, 2015 and similar to her sister vessel, Ville d'Aquarius, a sale of the vessel was completed on December 8, 2015 for net proceeds of approximately $4.7 million. An impairment charge of $22.5 million was booked in third quarter 2015 for this vessel.

General and Administrative Costs

General and administrative costs were $1.6 million in the three months ended December 31, 2015, compared to $1.9 million in the fourth quarter of 2014; the reduction is due mainly to lower professional fees.

For the year ended December 31, 2015, general and administrative costs were $6.5 million, compared to $7.0 million for 2014.

Other Operating Income

Other operating income in the three months ended December 31, 2015 was $0.2 million, the same as in the fourth quarter 2014.

For the year ended December 31, 2015, other operating income was $0.5 million, the same as for the prior year. 

Adjusted EBITDA

As a result of the above, Adjusted EBITDA was $30.3 million for the three months ended December 31, 2015, up from $22.6 million for the three months ended December 30, 2014.

Adjusted EBITDA for the year ended December 30, 2015 was $108.8 million, compared to $83.3 million for the prior year, an increase of 30.6%, due mainly to vessel acquisitions.

Interest Expense

Until March 19, 2014, the Company's borrowings comprised amounts outstanding under its credit facility, which carried interest at US $ LIBOR plus a margin, most recently 3.75%, and $45 million preferred shares, which carried interest at US $ LIBOR plus a margin of 2.00%.  The Company hedged its interest rate exposure by entering into derivatives that swapped floating rate debt for fixed rate debt to provide long-term stability and predictability to cash flows.

On March 19, 2014, the outstanding borrowings under the credit facility totaling $366.4 million were repaid out of the proceeds of $420.0 million aggregate principal amount of 10.0% First Priority Secured Notes due 2019 (the "Notes").  In addition, the $277.0 million nominal amount of interest rate derivatives outstanding were terminated on March 19, 2014 for a final payment of $19.3 million.

During the quarter ended March 31, 2015, $40.0 million was drawn under a Revolving Credit Facility, agreed in connection with the issuance of the Notes, to assist with the purchase of OOCL Qingdao on March 11, 2015. This facility matures on October 1, 2018. The interest rate under the facility is US $ LIBOR plus a margin of 3.25% and is payable at least quarterly. A commitment fee of 1.30% per annum is due quarterly on undrawn amounts.

On July 29, 2015, the Company entered into a $35.0 million Secured Term Loan with DVB Bank SE. The entire $35.0 million was drawn on September 10, 2015 and secured by OOCL Tianjin. This facility matures five years after drawdown, with early repayment, inter alia, if the Notes are not refinanced by November 30, 2018 or if the secured vessel ceases to be employed on a charter for a period in excess of 90 days. The interest rate under the facility is US $ LIBOR plus a margin of 2.75%, until November 30, 2018 and 3.25% thereafter, and is payable at least quarterly. The loan is repayable in 20 equal quarterly instalments, commencing three months after drawdown. The loan agreement requires an additional $1.4 million to be repaid by eight equal quarterly instalments to provide a reserve for potential enhancement expenditure on the secured vessel ahead of the expiry of the current charter to OOCL.

Interest expense for the three months ended December 31, 2015, including interest and the amortization of deferred financing costs and of the original issue discount on the Notes, interest on the $40.0 million Revolving Credit Facility and interest on the $35.0 million Secured Term Loan was $12.4 million.

Interest expense for the three months ended December 31, 2014, including interest and the amortization of deferred financing costs and of the original issue discount on the Notes and the commitment fee on the Company's undrawn $40.0 million Revolving Credit Facility, was $11.8 million.

For the year ended December 31, 2015, interest expense, including the amortization of deferred financing costs and of the original issue discount on the Notes, the commitment fee and/or interest on the $40.0 million Revolving Credit Facility and interest on the $35 million Secured Term Loan was $48.2 million.

For the year ended December 31, 2014, interest expense, including the amortization of deferred financing costs and from March 19, 2014 of the original issue discount on the Notes, on borrowings under the credit facility up to March 19, 2014, on the Notes from that date, on the $45.0 million Series A Preferred Shares until their redemption on August 22, 2014 and including the commitment fee on the undrawn $40.0 million Revolving Credit Facility was $43.9 million.  Amortization of deferred financing costs includes accelerated write off of $3.0 million in the first quarter being the balance of such costs associated with the credit facility. 

Interest income for the three months and year ended December 31, 2015 and 2014 was not material.

Change in Fair Value of Financial Instruments

In prior years, the Company hedged its interest rate exposure under its credit facility by entering into derivatives that swap floating rate debt for fixed rate debt.  These hedges did not qualify for hedge accounting under US GAAP and the outstanding hedges were marked to market at each period end with any change in the fair value being booked to the income and expenditure account. The Company's derivative hedging instruments were terminated on March 19, 2014 and consequently had no effect in the three months or year ended December 31, 2015 or in the three months ended December 31, 2014.  They gave a realized loss of $2.8 million in the year ended December 31, 2014 for settlements in the period, as US $ LIBOR rates were lower than the average fixed rates.  Further, there was a $1.9 million unrealized gain for revaluation of the balance sheet. 

Gain on Redemption of Series A Preferred Shares

On August 22, 2014, the Company repurchased all of its outstanding Series A Preferred Shares for cash of $36.4 million, a discount to their liquidation value of $45.0 million, giving rise to a non-cash gain of $8.6 million in the quarter ended September 30, 2014. 

The purchase was funded with the net proceeds from the Company's offering of $35.0 million Series B Cumulative Perpetual Preferred Shares ("Series B Preferred Shares"), which closed on August 20, 2014, and cash on hand. 

Taxation

Taxation for the three months ended December 31, 2015 was $1,000 credit, compared to a charge of $17,000 in the fourth quarter of 2014.

Taxation for the year ended December 31, 2015 was a charge of $38,000, compared to $75,000 for the prior year 2014. 

Earnings Allocated to Preferred Shares 

The Series B Preferred Shares carry a coupon of 8.75%, the cost of which for the three months ended December 31, 2015 was $0.8 million; the same as in the comparative period. 

The cost in the year ended December 31, 2015 was $3.1 million compared to $1.1 million in the prior year as the Series B Preferred Shares were issued on August 20, 2014. 

Net Income/Loss Available to Common Shareholders

Net income for the three months ended December 31, 2015 was $6.2 million.  For the three months ended December 31, 2014, net loss was $0.9 million.

Normalized net income for the three months ended December 31, 2015 and loss in the comparative period was the same as reported net income or loss.

Net loss was $31.9 million for the year ended December 31, 2015 after the $44.7 million non-cash impairment charge.  Net income was $5.0 million for the year ended December 31, 2014 after a $1.9 million non-cash mark-to-market gain on interest rate derivatives, a non-cash $3.0 million accelerated write off of deferred financing costs and the $8.6 million gain on redemption of the Series A Preferred Shares.

Normalized net income for the year ended December 31, 2015 was $12.8 million, before the impairment charge and was a loss of $2.5 million for the prior year, before the effect of the non-cash mark-to-market gain on interest rate derivatives, non-cash accelerated write off of deferred financing costs and the gain on redemption of the Series A Preferred Shares in 2014.

Dividend 

Given the severity of the current downturn in the container shipping industry, the Company's Board of Directors has decided to suspend the payment of a quarterly dividend to common shareholders, instead allocating capital to debt reduction and accretive vessel acquisition. The Company believes that this course of action will create the greatest long-term value for shareholders and position the Company to most effectively pursue acquisition opportunities in the current distressed market.

Fleet 

The following table provides information about the on-the-water fleet of 18 vessels as at December 31, 2015. 15 vessels are chartered to CMA CGM and three to OOCL.

       
    RemainingEarliestDaily
    CharterCharterCharter
VesselCapacityYearPurchaseTerm (2)ExpiryRate
Name in TEUs (1)Builtby GSL (years)Date$
CMA CGM Matisse2,2621999Dec 20074.0Sept 21, 201915,300
CMA CGM Utrillo2,2621999Dec 20074.0Sept 11, 201915,300
Delmas Keta2,2072003Dec 20072.0Sept 20, 201718,465
Julie Delmas2,2072002Dec 20072.0Sept 11, 201718,465
Kumasi2,2072002Dec 20072.0Sept 21, 201718,465
Marie Delmas2,2072002Dec 20072.0Sept 14, 201718,465
CMA CGM La Tour2,2722001Dec 20074.0Sept 20, 201915,300
CMA CGM Manet2,2722001Dec 20074.0Sept 7, 201915,300
CMA CGM Alcazar5,0892007Jan 20085.0Oct 18, 202033,750
CMA CGM Château d'If5,0892007Jan 20085.0Oct 11, 202033,750
CMA CGM Thalassa11,0402008Dec 200810.0Oct 1, 202547,200
CMA CGM Jamaica4,2982006Dec 20087.0Sept 17, 202225,350
CMA CGM Sambhar4,0452006Dec 20087.0Sept 16, 202225,350
CMA CGM America4,0452006Dec 20087.0Sept 19, 202225,350
CMA CGM Berlioz6,6212001Aug 20095.7May 28, 202134,000
OOCL Tianjin8,0632005Oct 20142.0Oct 28, 201734,500
OOCL Qingdao8,0632004Mar 20152.3Mar 11, 201834,500
OOCL Ningbo8,0632004Sep 20152.8Sep 17, 201834,500
      
(1) Twenty-foot Equivalent Units.     
(2) Plus or minus 90 days, other than (i) OOCL Tianjin which is between October 28, 2017 and January 28, 2018, (ii) OOCL Qingdao which is between March 11, 2018 and June 11, 2018, and (iii) OOCL Ningbo which is between September 17, 2018 and December 17, 2018, all at charterer's option.
                              

Conference Call and Webcast 

Global Ship Lease will hold a conference call to discuss the Company's results for the three months ended December 31, 2015 today, Tuesday March 1, 2016 at 10:30 a.m. Eastern Time. There are two ways to access the conference call:

(1) Dial-in: (877) 445-2556 or (908) 982-4670; Passcode: 54011181

Please dial in at least 10 minutes prior to 10:30 a.m. Eastern Time to ensure a prompt start to the call.

(2) Live Internet webcast and slide presentation: http://www.globalshiplease.com

If you are unable to participate at this time, a replay of the call will be available through Tuesday, March 15, 2016 at (855) 859-2056 or (404) 537-3406. Enter the code 54011181 to access the audio replay. The webcast will also be archived on the Company's website: http://www.globalshiplease.com.

Annual Report on Form 20F 

The Company's Annual Report for 2014 is on file with the Securities and Exchange Commission.  A copy of the report can be found under the Investor Relations section (Annual Reports) of the Company's website at http://www.globalshiplease.com   Shareholders may request a hard copy of the audited financial statements free of charge by contacting the Company at info@globalshiplease.com or by writing to Global Ship Lease, Inc, care of Global Ship Lease Services Limited, Portland House, Stag Place, London SW1E 5RS or by telephoning +44 (0) 207 869 8806.

About Global Ship Lease 

Global Ship Lease is a containership charter owner. Incorporated in the Marshall Islands, Global Ship Lease commenced operations in December 2007 with a business of owning and chartering out containerships under long-term, fixed rate charters to top tier container liner companies.

At December 31, 2015, Global Ship Lease owned 18 vessels with a total capacity of 82,312 TEU and an average age, weighted by TEU capacity of 11.0 years. All vessels are currently fixed on time charters, 15 with CMA CGM. The average remaining term of the charters is 4.6 years or 4.8 years on a weighted basis.

Reconciliation of Non-U.S. GAAP Financial Measures

A. Adjusted EBITDA

Adjusted EBITDA represents Net income (loss) before interest income and expense including amortization of deferred finance costs, realized and unrealized gain (loss) on derivatives, income taxes, earnings allocated to preferred shares, non-cash gains on redemption of preferred shares, depreciation, amortization and impairment charges.  Adjusted EBITDA is a non-US GAAP quantitative measure used to assist in the assessment of the Company's ability to generate cash from its operations.  We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.  Adjusted EBITDA is not defined in US GAAP and should not be considered to be an alternate to Net income (loss) or any other financial metric required by such accounting principles.

ADJUSTED EBITDA - UNAUDITED

 
(thousands of U.S. dollars)
 
  ThreeThree  
  monthsmonthsYearYear
  endedendedendedended
  Dec 31,Dec 31,Dec 31,Dec 31,
   2015  2014  2015  2014 
      
Net income (loss) available to common shareholders 6,246  (929) (31,937) 4,996 
          
Adjust:    Depreciation 10,935  10,951  44,859  41,059 
     Impairment -  -  44,700  - 
     Interest income (16) (9) (62) (64)
     Interest expense 12,419  11,764  48,152  43,872 
     Gain on redemption of preferred shares -  -  -  (8,576)
     Realized loss on interest rate derivatives -  -  -  2,801 
     Unrealized (gain) on interest rate derivatives -  -  -  (1,944)
     Earnings allocated to preferred shares 765  765  3,062  1,114 
     Income tax (1) 17  38  75 
          
Adjusted EBITDA 30,348  22,559  108,812  83,333 
 

B. Normalized net income

Normalized net income represents Net income (loss) adjusted for the unrealized gain (loss) on derivatives, the accelerated write off of a portion of deferred financing costs, impairment charges and gain of redemption of preferred shares. Normalized net income is a non-GAAP quantitative measure which we believe will assist investors and analysts who often adjust reported net income for non-operating items such as change in fair value of derivatives to eliminate the effect of non-cash non-operating items that do not affect operating performance or cash generated. Normalized net income is not defined in US GAAP and should not be considered to be an alternate to Net income (loss) or any other financial metric required by such accounting principles.

NORMALIZED NET INCOME - UNAUDITED

 
(thousands of U.S. dollars)
 
      ThreeThree  
      monthsmonthsYearYear
      endedendedendedended
      Dec 31,Dec 31,Dec 31,Dec 31,
      2015 2014  2015  2014 
          
Net income (loss) available to common shareholders6,246 (929) (31,937) 4,996 
          
Adjust:    Unrealized gain on derivatives- -  -  (1,944)
     Accelerated amortization of deferred financing costs- -  -  2,986 
     Impairment charge- -  44,700  - 
     Gain on redemption of preferred shares- -  -  (8,576)
            
Normalized net income (loss)6,246 (929) 12,763  (2,538)
 

Safe Harbor Statement 

This communication contains forward-looking statements. Forward-looking statements provide Global Ship Lease's current expectations or forecasts of future events. Forward-looking statements include statements about Global Ship Lease's expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "ongoing," "plan," "potential," "predict," "project," "will" or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements are based on assumptions that may be incorrect, and Global Ship Lease cannot assure you that these projections included in these forward-looking statements will come to pass. Actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors.
The risks and uncertainties include, but are not limited to:

  • future operating or financial results;
  • expectations regarding the future growth of the container shipping industry, including the rates of annual demand and supply growth;
  • the financial condition of our charterers, particularly CMA CGM, our principal charterer and main source of operating revenue, and their ability to pay charterhire in accordance with the charters;
  • Global Ship Lease's financial condition and liquidity, including its ability to obtain additional waivers which might be necessary under the existing credit facility or obtain additional financing to fund capital expenditures, vessel acquisitions and other general corporate purposes;
  • Global Ship Lease's ability to meet its financial covenants and repay its credit facilities;
  • Global Ship Lease's expectations relating to dividend payments and forecasts of its ability to make such payments including the availability of cash and the impact of constraints under its credit facility;
  • future acquisitions, business strategy and expected capital spending;
  • operating expenses, availability of crew, number of off-hire days, drydocking and survey requirements and insurance costs;
  • general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand; 
  • assumptions regarding interest rates and inflation; 
  • changes in the rate of growth of global and various regional economies; 
  • risks incidental to vessel operation, including piracy, discharge of pollutants and vessel accidents and damage including total or constructive total loss; 
  • estimated future capital expenditures needed to preserve its capital base; 
  • Global Ship Lease's expectations about the availability of ships to purchase, the time that it may take to construct new ships, or the useful lives of its ships; 
  • Global Ship Lease's continued ability to enter into or renew long-term, fixed-rate charters; 
  • the continued performance of existing long-term, fixed-rate time charters; 
  • Global Ship Lease's ability to capitalize on its management's and board of directors' relationships and reputations in the containership industry to its advantage; 
  • changes in governmental and classification societies' rules and regulations or actions taken by regulatory authorities; 
  • expectations about the availability of insurance on commercially reasonable terms; 
  • unanticipated changes in laws and regulations including taxation;  
  • potential liability from future litigation.

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Global Ship Lease's actual results could differ materially from those anticipated in forward-looking statements for many reasons specifically as described in Global Ship Lease's filings with the SEC.  Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this communication. Global Ship Lease undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this communication or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks Global Ship Lease describes in the reports it will file from time to time with the SEC after the date of this communication.

 
Global Ship Lease, Inc.
 
Interim Unaudited Consolidated Statements of Income
 
(Expressed in thousands of U.S. dollars except share data)
 
  Three months ended
December 31,
Year ended
December 31,
   2015  2014  2015  2014 
      
      
Operating Revenues     
Time charter revenue $  44,029 $  36,852 $  164,919 $  138,615 
                  
      
Operating Expenses
Vessel operating expenses
  12,251  12,602  50,104  48,770 
Depreciation  10,935  10,951  44,859  41,059 
Impairment of vessels  -  -  44,700  - 
General and administrative  1,594  1,891  6,478  7,022 
Other operating income  (164) (200) (475) (510)
                      
Total operating expenses  24,616  25,244  145,666  96,341 
                      
      
Operating Income  19,413  11,608  19,253  42,274 
      
Non Operating Income (Expense)     
Interest income  16  9  62  64 
Interest expense  (12,419) (11,764) (48,152) (43,872)
Gain on redemption of Series A Preferred Shares  -  -  -  8,576 
Realized loss on interest rate derivatives  -  -  -  (2,801)
Unrealized gain on interest rate derivatives  -  -  -  1,944 
                      
      
Income (Loss) before Income Taxes  7,010  (147) (28,837) 6,185 
      
Income taxes  1  (17) (38) (75)
                      
Net Income (Loss) $  7,011 $   (164)$  (28,875)$  6,110 
      
Earnings allocated to Series B Preferred Shares  (765) (765) (3,062) (1,114)
                      
Net Income (Loss) available to Common Shareholders $  6,246 $  (929)$  (31,937)$  4,996 
              
Earnings per Share     
      
Weighted average number of Class A common shares outstanding  47,841,484  47,766,484  47,785,388  47,710,313 
Basic (including RSUs without service conditions)  47,841,484  47,766,484  47,785,388  47,823,736 
Diluted     
      
Net income (loss) per Class A common share $0.13 $(0.02)$(0.67)$0.10 
Basic (including RSUs without service conditions) $0.13 $(0.02)$(0.67)$0.10 
Diluted             
              
Weighted average number of Class B common shares outstanding             
Basic and diluted  7,405,956  7,405,956  7,405,956  7,405,956 
              
Net income (loss) per Class B common share             
Basic and diluted $  nil $  nil $  nil $  nil 
              


Global Ship Lease, Inc.
 
Interim Unaudited Consolidated Balance Sheets
 
(Expressed in thousands of U.S. dollars except share data)
 
  December 31,
2015
 December 31,
2014
     
Assets

 
    
Cash and cash equivalents $  53,591  $  33,295 
Accounts receivable  1,621   1,244 
Prepaid expenses  1,101   609 
Other receivables  708   996 
Inventory  610   553 
         
Total current assets  57,631   36,697 
         
     
Vessels in operation  846,939   836,537 
Other fixed assets  5   6 
Intangible assets  39   67 
Other long term assets  306   417 
         
Total non-current assets  847,289   837,027 
         
Total Assets $  904,920  $  873,724 
         
Liabilities and Stockholders' Equity    
     
Liabilities

 
    
Current portion of long term debt $  35,160  $   - 
Intangible liability — charter agreements  2,104   2,119 
Deferred revenue  796   462 
Accounts payable  622   2,123 
Accrued expenses  14,950   15,278 
         
Total current liabilities  53,632   19,982 
         
     
Long term debt  442,913   401,879 
Intangible liability — charter agreements  11,589   13,693 
Deferred tax liability  20   34 
         
Total long-term liabilities  454,522   415,606 
         
     
Total Liabilities $  508,154  $  435,588 
         
     
Commitments and contingencies                   -   - 
     
Stockholders' Equity

 
    
Class A Common stock — authorized
214,000,000 shares with a $0.01 par value;
47,541,484 shares issued and outstanding (2014 — 47,541,484)
 $  475  $  475 
Class B Common stock — authorized
20,000,000 shares with a $0.01 par value;
7,405,956 shares issued and outstanding (2014 — 7,405,956)
  74   74 
Series B Preferred shares — authorized
16,100 shares with a $0.01 par value;
14,000 shares issued and outstanding (2014 — 14,000)
  -   - 
Additional paid in capital  386,425   386,350 
Retained earnings  9,792   51,237 
         
Total Stockholders' Equity  396,766   438,136 
         
Total Liabilities and Stockholders' Equity $  904,920  $  873,724 
         

 

Global Ship Lease, Inc.
 
Interim Unaudited Consolidated Statements of Cash Flows
 
(Expressed in thousands of U.S. dollars)
 
  Three months ended
December 31,
Year ended
December 31,
   2015  2014  2015  2014 
      
Cash Flows from Operating Activities     
Net income (loss) $  7,011 $  (164)$  (28,875)$  6,110 
      
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities      
Depreciation  10,935  10,951  44,859  41,059 
Vessel impairment  -  -  44,700  - 
Gain on sale of vessels  (93) -  (93) - 
Amortization of deferred financing costs  943  785  3,374  5,732 
Amortization of original issue discount  346  346  1,178  1,082 
Change in fair value of derivative instruments  -  -  -  (1,944)
Amortization of intangible liability  (530) (530) (2,119) (2,119)
Settlement of derivative instruments which do not qualify for hedge accounting  -  -  -  2,801 
Share based compensation  -  25  75  177 
Gain on redemption of Series A Preferred Shares  -  -  -  (8,576)
(Increase) decrease in accounts receivable and other assets  (506) 5,123  (607) 9,458 
Decrease (increase) in inventory  36  (225) (160) (553)
Increase (decrease) in accounts payable and other liabilities  9,682  10,032  (315) 7,225 
Increase in unearned revenue  204  462  334  462 
Unrealized foreign exchange (gain)  (6) (11) (14) (11)
              
Net Cash Provided by Operating Activities   28,022  26,794  62,337  60,903 
            
Cash Flows from Investing Activities      
Cash paid for vessel acquisition  (168) (55,162) (108,187) (55,162)
Net proceeds from sale of vessels  9,513  -  9,513  - 
Settlement and termination of derivative instruments which do not qualify for hedge accounting  -  -  -  (22,146)
Cash paid for other assets  -  -  (3) (7)
Cash paid for drydockings  -  (1,924) (2,548) (2,765)
              
Net Cash Provided by (Used in) Investing Activities   9,345  (57,086) (101,225) (80,080)
              
Cash Flows from Financing Activities      
Repayment of previous credit facility  -  -  -  (366,366)
Proceeds from issuance of secured notes  -  -  -  413,700 
Repurchase of secured notes  -  -  (350) - 
Proceeds from drawdown of credit facilities  -  -  75,000  - 
Repayment of credit facilities  (1,925) -  (1,925) - 
Deferred financing costs incurred  (162) -  (971) (15,779)
Net proceeds from issuance of Series B Preferred Shares  -  -  -  33,892 
Variation in restricted cash  -  -  -  3 
Redemption of Series A Preferred Shares  -  -  -  (36,400)
Class A Common Shares — dividends paid  (4,754) -  (9,508) - 
Series B Preferred Shares — dividends paid  (765) (765) (3,062) (1,114)
              
Net Cash (Used in) Provided by Financing Activities   (7,606) (765) 59,184  27,936 
              
Net Increase (Decrease) in Cash and Cash Equivalents  29,761  (31,057) 20,296  8,759 
Cash and Cash Equivalents at Start of Period  23,830  64,352  33,295  24,536 
Cash and Cash Equivalents at End of Period $  53,591  $  33,295  $  53,591 $  33,295 
              
Investor and Media Contacts: 
The IGB Group
Bryan Degnan
646-673-9701
or
Leon Berman 
212-477-8438 


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