þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) |
27-1840403 (I.R.S. Employer Identification No.) |
|
2000 Avenue of the Stars, Suite 1000N Los Angeles, California (Address of principal executive offices) |
90067 (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ (Do not check if a smaller reporting company) | Smaller reporting company o |
2
(in thousands, except share data) | March 31, 2011 | December 31, 2010 | ||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 230,313 | $ | 328,821 | ||||
Restricted cash |
62,064 | 48,676 | ||||||
Flight equipment subject to operating leases |
2,179,130 | 1,649,071 | ||||||
Less accumulated depreciation |
(37,392 | ) | (19,262 | ) | ||||
2,141,738 | 1,629,809 | |||||||
Deposits on flight equipment purchases |
268,728 | 183,367 | ||||||
Deferred debt issue costs less accumulated
amortization of $7,082 and $4,754 as of March 31,
2011 and December 31, 2010, respectively |
49,633 | 46,422 | ||||||
Deferred taxes |
7,127 | 8,875 | ||||||
Other assets |
29,055 | 30,312 | ||||||
Total assets |
$ | 2,788,658 | $ | 2,276,282 | ||||
Liabilities and Shareholders Equity |
||||||||
Accrued interest and other payables |
$ | 23,082 | $ | 22,054 | ||||
Debt financing |
1,374,820 | 911,981 | ||||||
Security
deposits and maintenance reserves on flight equipment leases |
140,182 | 109,274 | ||||||
Rentals received in advance |
11,555 | 8,038 | ||||||
Total liabilities |
1,549,639 | 1,051,347 | ||||||
Shareholders Equity |
||||||||
Preferred Stock, $0.01 par value; 50,000,000 shares
authorized; no shares issued or outstanding |
| | ||||||
Class A Common Stock, $0.01 par value; 500,000,000 shares authorized; 63,563,810 shares issued and
outstanding |
636 | 636 | ||||||
Class B Non-Voting Common Stock, $0.01 par value; 10,000,000 shares authorized; 1,829,339 shares issued
and outstanding |
18 | 18 | ||||||
Paid-in capital |
1,287,229 | 1,276,321 | ||||||
Accumulated deficit |
(48,864 | ) | (52,040 | ) | ||||
Total shareholders equity |
1,239,019 | 1,224,935 | ||||||
Total liabilities and shareholders equity |
$ | 2,788,658 | $ | 2,276,282 | ||||
3
For the three | For the period | |||||||
months ended | from Inception to | |||||||
(in thousands, except share data) | March 31, 2011 | March 31, 2010 | ||||||
Revenues |
||||||||
Rental of flight equipment |
$ | 54,612 | $ | | ||||
Interest and other |
603 | | ||||||
Total revenues |
55,215 | | ||||||
Expenses |
||||||||
Interest |
9,060 | | ||||||
Amortization of deferred debt issue costs |
2,328 | | ||||||
Interest expense |
11,388 | | ||||||
Depreciation of flight equipment |
18,130 | | ||||||
Selling, general and administrative |
9,865 | 477 | ||||||
Stock-based compensation |
10,908 | | ||||||
Total expenses |
50,291 | 477 | ||||||
Income (loss) before taxes |
4,924 | (477 | ) | |||||
Income tax (expense) benefit |
(1,748 | ) | | |||||
Net income (loss) |
$ | 3,176 | $ | (477 | ) | |||
Net income (loss) attributable to common
shareholders per share |
||||||||
Net income (loss) |
||||||||
Basic |
$ | 0.05 | $ | (1.06 | ) | |||
Diluted |
$ | 0.05 | $ | (1.06 | ) | |||
Weighted-average shares outstanding |
||||||||
Basic |
65,393,149 | 449,565 | ||||||
Diluted |
65,511,529 | 449,565 |
4
Class A | Class B Non-Voting | |||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Common Stock | ||||||||||||||||||||||||||||||||||
Paid-in | Accumulated | |||||||||||||||||||||||||||||||||||
(in thousands, except share data) | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||||||||||
Balance at January 1, 2011 |
| $ | | 63,563,810 | $ | 636 | 1,829,339 | $ | 18 | $ | 1,276,321 | $ | (52,040 | ) | $ | 1,224,935 | ||||||||||||||||||||
Stock based compensation |
| | | | | | 10,908 | | 10,908 | |||||||||||||||||||||||||||
Net income |
| | | | | | | 3,176 | 3,176 | |||||||||||||||||||||||||||
Balance at March 31, 2011 |
| $ | | 63,563,810 | $ | 636 | 1,829,339 | $ | 18 | $ | 1,287,229 | $ | (48,864 | ) | $ | 1,239,019 | ||||||||||||||||||||
5
For the three | For the period | |||||||
months ended | from Inception to | |||||||
(dollars in thousands) | March 31, 2011 | March 31, 2010 | ||||||
Operating Activities |
||||||||
Net income (loss) |
$ | 3,176 | $ | (477 | ) | |||
Adjustments to reconcile net income (loss) to net
cash provided by operating activities: |
||||||||
Depreciation of flight equipment |
18,130 | | ||||||
Stock-based compensation |
10,908 | | ||||||
Deferred taxes |
1,748 | | ||||||
Amortization of deferred debt issue costs |
2,328 | | ||||||
Changes in operating assets and liabilities: |
||||||||
Lease receivables and other assets |
(2,286 | ) | (105 | ) | ||||
Accrued interest and other payables |
1,028 | 2,392 | ||||||
Rentals received in advance |
3,517 | | ||||||
Net cash provided by operating activities |
38,549 | 1,810 | ||||||
Investing Activities |
||||||||
Acquisition of flight equipment under operating lease |
(502,550 | ) | | |||||
Payments for deposits on flight equipment purchases |
(99,737 | ) | (4,250 | ) | ||||
Acquisition of aircraft furnishings, equipment and other assets |
(9,590 | ) | | |||||
Net cash used in investing activities |
(611,877 | ) | (4,250 | ) | ||||
Financing Activities |
||||||||
Issuance of common stock |
| 1,310 | ||||||
Proceeds from debt financings |
550,414 | 251 | ||||||
Payments in reduction of debt financings |
(87,575 | ) | | |||||
Restricted cash |
(13,388 | ) | | |||||
Debt issue costs |
(5,539 | ) | (618 | ) | ||||
Changes in security deposits and maintenance reserves
on flight equipment leases |
30,908 | 1,748 | ||||||
Net cash provided by financing activities |
474,820 | 2,691 | ||||||
Net (decrease) increase in cash and cash equivalents |
(98,508 | ) | 251 | |||||
Cash and cash equivalents at beginning of period |
328,821 | | ||||||
Cash and cash equivalents at end of period |
$ | 230,313 | $ | 251 | ||||
Supplemental Disclosure of Cash Flow Information |
||||||||
Cash paid during the period for interest, excluding
capitalized interest of $1,845 and $1 at March 31,
2011 and March 31, 2010, respectively |
$ | 10,363 | $ | 1 | ||||
Supplemental Disclosure of Noncash Activities |
||||||||
Deposits on flight equipment purchases applied to
acquisition of flight equipment under operating
leases |
$ | 14,376 | $ | |
6
1. | Basis of Preparation | |
The consolidated financial statements include the accounts of Air Lease Corporation and its wholly owned subsidiaries (the Company, ALC, we, our or us). The Company consolidates financial statements of all entities in which we have a controlling financial interest, including the account of any Variable Interest Entity in which we have a controlling financial interest and for which we are determined to be the primary beneficiary. The accompanying Consolidated Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All material intercompany balances are eliminated in consolidation. | ||
The accompanying unaudited consolidated financial statements include all adjustments, including normally recurring adjustments, necessary to present fairly the Companys financial position, results of operations and cash flows at March 31, 2011, and for all periods presented. The results of operations for the three months ended March 31, 2011, are not necessarily indicative of the operating results expected for the year ending December 31, 2011. These financial statements should be read in conjunction with the financial statements and related notes included in the Companys final prospectus filed with the Securities and Exchange Commission on April 19, 2011 pursuant to Rule 424(b) under the Securities Act of 1933 (Rule 424(b)) in connection with our initial public offering. | ||
2. | Debt Financing | |
The Companys consolidated debt as of March 31, 2011 and December 31, 2010 are summarized below: |
(dollars in thousands) | March 31, 2011 | December 31, 2010 | ||||||
Warehouse facility |
$ | 604,374 | $ | 554,915 | ||||
Secured term debt financing |
434,096 | 223,981 | ||||||
Unsecured financing |
336,350 | 133,085 | ||||||
Total |
$ | 1,374,820 | $ | 911,981 | ||||
The Companys secured obligations as of March 31, 2011 and December 31, 2010 are summarized below: |
(dollars in thousands) | March 31, 2011 | December 31, 2010 | ||||||
Nonrecourse |
$ | 636,469 | $ | 573,222 | ||||
With recourse |
402,001 | 205,674 | ||||||
Total |
$ | 1,038,470 | $ | 778,896 | ||||
Number of aircraft pledged as collateral |
35 | 29 | ||||||
Net book value of aircraft pledged as collateral |
$ | 1,666,435 | $ | 1,266,762 | ||||
a. | Warehouse Facility | ||
During the first quarter of 2011, the Company drew a net $49.5 million under the Companys non-recourse, revolving credit facility (the Warehouse Facility) and incrementally pledged $86.3 million in aircraft collateral. As of March 31, 2011, the Company had borrowed $604.4 million under the Warehouse Facility and pledged 25 aircraft as collateral with a net book value of $1.0 billion. As of December 31, 2010, the Company had borrowed $554.9 million under the Warehouse Facility and pledged 23 aircraft as collateral with a net book value of $930.0 million. The Company had pledged cash collateral and lessee deposits of $61.5 million and $48.3 million at March 31, 2011 and December 31, 2010, respectively. |
7
b. | Secured Financing | |
During the first quarter of 2011, four of our wholly-owned subsidiaries entered into four separate secured term facilities aggregating $218.5 million. The four facilities consisted of a six-year $26.0 million facility at a fixed rate of 4.89%, a six-year $92.0 million facility at a fixed rate of 4.57%, an eight-year $14.5 million facility at a fixed rate of 4.58% and an eight-year $86.0 million facility with a $40.0 million tranche at a fixed rate of 4.34% and a $46.0 million tranche at a floating rate of LIBOR plus 2.35%. In connection with these facilities, the Company pledged four aircraft totaling $328.6 million in aircraft collateral. | ||
The outstanding balances on these facilities were $434.1 million and $224.0 million at March 31, 2011 and December 31, 2010, respectively. | ||
c. | Unsecured Financing | |
During the first quarter of 2011, the Company entered into three bilateral revolving unsecured credit facilities aggregating $63.0 million, each with a borrowing rate of LIBOR plus 2.00%, and increased the capacity of one existing three-year revolving unsecured credit facility from $25.0 million to $30.0 million. The Company ended the first quarter of 2011 with a total of 12 bilateral revolving unsecured credit facilities aggregating $308.0 million, each with a borrowing rate of LIBOR plus 2.00%. The total amount outstanding under our bilateral revolving unsecured credit facilities was $268.5 million and $120.0 million as of March 31, 2011 and December 31, 2010, respectively. | ||
In addition, we entered into three fixed-rate amortizing unsecured facilities aggregating $24.0 million, which consisted of a four-year $6.0 million facility at 4.15%, a five-year $12.0 million facility at 4.05% and a five-year $6.0 million facility at 3.95%, ending the first quarter of 2011 with a total of four unsecured term facilities. The total amount outstanding under our unsecured term facilities was $67.9 million and $13.1 million as of March 31, 2011 and December 31, 2010, respectively. | ||
d. | Maturities | |
Maturities of debt outstanding as of March 31, 2011 are as follows: |
(dollars in thousands) | ||||
Years ending December 31, | ||||
2011 |
$ | 75,032 | ||
2012 |
131,735 | |||
2013 |
250,958 | |||
2014 |
222,163 | |||
2015 |
181,367 | |||
Thereafter |
513,565 | |||
Total |
$ | 1,374,820 | (1) | |
(1) | Maturities of debt outstanding as of March 31, 2011, above, reflects the amortization profile of the Warehouse Facility as amended. See Note 8. Subsequent Events. |
8
3. | Commitments and Contingencies |
a. | Aircraft Acquisition | ||
As of March 31, 2011, we had commitments to acquire a total of 153 new and eight used aircraft through 2017 as follows: |
Aircraft Type | 2011(1) | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Total | ||||||||||||||||||||||||
A320/321-200(2) |
6 | 9 | 13 | 12 | 7 | | | 47 | ||||||||||||||||||||||||
A330-200/300 |
7 | 4 | | | | | | 11 | ||||||||||||||||||||||||
737-800(2) |
5 | 3 | 12 | 12 | 12 | 12 | 9 | 65 | ||||||||||||||||||||||||
767-300ER |
3 | | | | | | | 3 | ||||||||||||||||||||||||
E175/190 |
11 | 14 | | | | | | 25 | ||||||||||||||||||||||||
ATR 72-600 |
2 | 8 | | | | | | 10 | ||||||||||||||||||||||||
Total |
34 | 38 | 25 | 24 | 19 | 12 | 9 | 161 | ||||||||||||||||||||||||
(1) | Of the 34 aircraft that we will acquire in the remainder of 2011, the following eight aircraft will be used aircraft: all five Boeing 737-800s and all three Boeing 767-300ERs. | |
(2) | We have cancellation rights with respect to six of the Airbus A320/321-200 aircraft and six of the Boeing 737-800 aircraft. |
Commitments for the acquisition of these aircraft at an estimated aggregate purchase price (including adjustments for inflation) of approximately $6.6 billion at March 31, 2011 are as follows: |
(dollars in thousands) | ||||
Years ending December 31, | ||||
2011 |
$ | 1,489,375 | ||
2012 |
1,410,712 | |||
2013 |
1,034,884 | |||
2014 |
1,057,055 | |||
2015 |
818,378 | |||
Thereafter |
791,475 | |||
Total |
$ | 6,601,879 | ||
We had made non-refundable deposits on the aircraft which we have committed to purchase of $268.7 million and $183.4 million as of March 31, 2011 and December 31, 2010, respectively. If we are unable to satisfy our purchase commitments we may be forced to forfeit our deposits. Further, we would be exposed to breach of contract claims by our lessees and manufacturers. | |||
b. | Office Lease |
The Companys lease for office space provides for step rentals over the term of the lease. Those rentals are considered in the evaluation of recording rent expense on a straight-line basis over the term of the lease. Tenant improvement allowances received from the lessor are deferred and amortized in selling, general and administrative expenses against rent expense. Commitments for minimum rentals under the non-cancelable lease term at March 31, 2011 are as follows: |
(dollars in thousands) | ||||
Years ending December 31, | ||||
2011 |
$ | 59 | ||
2012 |
1,441 | |||
2013 |
2,325 | |||
2014 |
2,395 | |||
2015 |
2,467 | |||
Thereafter |
23,241 | |||
Total |
$ | 31,928 | ||
9
4. | Net Earnings Per Share |
Basic net earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock; however, potential common equivalent shares are excluded if their effect is anti-dilutive. The Companys two classes of common stock, Class A and Class B Non-Voting, have equal rights to dividends and income, and therefore, basic and diluted earnings per share are the same for each class of common stock. |
Diluted net earnings per share takes into account the potential conversion of stock options, restricted stock units and warrants using the treasury stock method. For the three months ended March 31, 2011, the Company excluded 3,225,908 shares related to stock options which are potentially dilutive securities from the computation of diluted earnings per share because they were anti-dilutive. In addition, the Company excluded 3,225,907 shares related to restricted stock units for which the performance metric had yet to be achieved. |
The following table sets forth the reconciliation of basic and diluted net income (loss) per share for the three months ended March 31, 2011 and the period from inception to March 31, 2010: |
For the three | For the period | |||||||
months ended | from Inception to | |||||||
(in thousands, except share data) | March 31, 2011 | March 31, 2010 | ||||||
Numerator: |
||||||||
Net earnings (loss) available to commons
shareholdersbasic and diluted EPS |
$ | 3,176 | $ | (477 | ) | |||
Denominator: |
||||||||
Basic earnings per shareweighted average common shares |
65,393,149 | 449,565 | ||||||
Effect of dilutive securities |
118,380 | | ||||||
Diluted earnings per shareweighted average common shares |
65,511,529 | 449,565 | ||||||
Net earnings (loss) per share: |
||||||||
Basic |
$ | 0.05 | $ | (1.06 | ) | |||
Diluted |
$ | 0.05 | $ | (1.06 | ) | |||
5. | Fair Value Measurements |
a. | Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
The Company had no assets or liabilities which are measured at fair value on a recurring basis as of March 31, 2011 or December 31, 2010. | |||
b. | Assets and Liabilities Measured at Fair Value on a Non-recurring Basis | ||
The Company measures the fair value of flight equipment on a non-recurring basis, when GAAP requires the application of fair value, including events or changes in circumstances that indicate that the carrying amounts of assets may not be recoverable. The Company principally uses the income approach to measure the fair value of these assets and liabilities when appropriate, as described below: |
10
Flight Equipment | ||
The Company records flight equipment at fair value when we determine the carrying value may not be recoverable. The fair value is measured using an income approach based on the present value of cash flows from contractual lease agreements and projected future lease payments, including contingent rentals, net of expenses, which extend to the end of the flight equipments economic life in its highest and best use configuration, as well as a disposition value, based on expectations of market participants. | ||
The Company has no assets or liabilities that were measured at fair value on a non-recurring basis as of March 31, 2011 or December 31, 2010. | ||
6. | Fair Value of Financial Instruments | |
The carrying value reported on the balance sheet for cash and cash equivalents, restricted cash and other payables approximates their fair value. | ||
The fair value of debt financing is estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities. The estimated fair value of debt financing as of March 31, 2011 was $1.40 billion compared to a book value of $1.37 billion. The estimated fair value of debt financing as of December 31, 2010 was $931.2 million compared to a book value of $912.0 million. | ||
7. | Equity Based Compensation | |
The Company recorded $10.9 million, in stock-based compensation expense from continuing operations for the three months ended March 31, 2011. |
a. | Incentive Stock Options | ||
Activity under the Companys stock option plan during the three months ended March 31, 2011 is as follows: |
Remaining | Aggregate | |||||||||||||||
Exercise | Contractual Term | Intrinsic Value | ||||||||||||||
Shares | Price | (in years) | (in thousands) | |||||||||||||
Options outstanding at January 1, 2011 |
3,225,908 | $ | 20.00 | 9.5 | | |||||||||||
Granted |
| |||||||||||||||
Exercised |
| |||||||||||||||
Cancelled |
| |||||||||||||||
Options outstanding as of March 31, 2011 |
3,225,908 | $ | 20.00 | 9.2 | $ | 20,968 | ||||||||||
Options exercisable at March 31, 2011 |
| $ | | | $ | | ||||||||||
The Company recorded stock-based compensation expense related to employee stock options of $2.8 million for the three months ended March 31, 2011. |
b. | Restricted Stock Unit Plan | ||
The Company granted 3,225,907 RSUs as of March 31, 2011. The RSUs vest ratably on a four-year schedule subject to a performance measure. The Company recorded stock-based compensation expense related to RSUs of $8.1 million for the three months ended March 31, 2011. |
11
8. | Subsequent Events | |
On April 25, 2011, we completed an initial public offering of our Class A Common Stock and listing of our shares on the New York Stock Exchange (NYSE) under the symbol AL. The offering was upsized by 20% and the underwriters exercised their over-allotment option in full, resulting in the sale of an aggregate of 34,825,470 shares of Class A Common Stock. After deducting the underwriting discounts and commissions and offering expenses payable by us, we received net proceeds of approximately $868.1 million. | ||
On April 1, 2011, the Company executed an amendment to the Warehouse Facility that took effect on April 21, 2011. This facility, as amended, provides us with financing of up to $1.25 billion, modified from the original facility size of $1.5 billion. We are able to draw on this facility, as amended, during an availability period that ends in June 2013. Prior to the amendment of the Warehouse Facility, the Warehouse Facility accrued interest during the availability period based on LIBOR plus 3.25% on drawn balances and at a rate of 1.00% on undrawn balances. Following the amendment, the Warehouse Facility accrues interest during the availability period based on LIBOR plus 2.50% on drawn balances and 0.75% on undrawn balances. Pursuant to the amendment, the advance level under the facility was increased from 65.0% of the appraised value of the pledged aircraft and 50.0% of the pledged cash to 70.0% of the appraised value of the pledged aircraft and 50.0% of the pledged cash. The outstanding drawn balance at the end of the availability period may be converted at our option to an amortizing, four-year term loan with an interest rate of LIBOR plus 3.25% for the initial three years of the term and margin step-ups during the remaining year that increase the interest to LIBOR plus 4.75%. As a result of amending the Warehouse Facility, we will record an extinguishment of debt charge of up to $4.7 million from the write-off of deferred debt issuance costs when the amendment became effective in April 2011. | ||
On April 29, 2011, the Company filed with the Securities and Exchange Commission a shelf registration statement in accordance with its obligations under the Registration Rights Agreement, dated June 4, 2010, by and between our Company and FBR Capital Markets & Co. The shelf registration statement provides for the resale of registrable shares from time to time by the holders of 65,369,649 shares of Common Stock currently outstanding and 482,625 shares of Common Stock issuable upon exercise of outstanding warrants. | ||
During the second quarter of 2011, one of our wholly-owned subsidiaries entered into a $20.3 million three-year secured term facility at a floating rate of LIBOR plus 2.75%. In connection with this facility, the Company pledged $36.4 million in aircraft collateral. In addition, we entered into two five-year unsecured term facilities totaling $16.0 million with interest rates of 4.0%. Finally, we increased the capacity of one of our existing three-year revolving unsecured credit facilities from $25.0 million to $30.0 million. |
12
13
(dollars in thousands) | March 31, 2011 | December 31, 2010 | ||||||
Fleet size |
49 | 40 | ||||||
Weighted average fleet age |
3.5 years | 3.8 years | ||||||
Weighted average remaining lease term |
5.9 years | 5.6 years | ||||||
Aggregate fleet cost |
$ | 2,179,130 | $ | 1,649,071 | ||||
March 31, 2011 | December 31, 2010 | |||||||||||||||
Number of | % of | Number of | % of | |||||||||||||
Region | aircraft | total | aircraft | total | ||||||||||||
Europe |
20 | 40.8 | % | 16 | 40.0 | % | ||||||||||
Asia/Pacific |
15 | 30.6 | 11 | 27.5 | ||||||||||||
Central America, South America and Mexico |
5 | 10.2 | 5 | 12.5 | ||||||||||||
U.S. and Canada |
6 | 12.2 | 5 | 12.5 | ||||||||||||
The Middle East and Africa |
3 | 6.2 | 3 | 7.5 | ||||||||||||
Total |
49 | 100.0 | % | 40 | 100.0 | % | ||||||||||
Number of | Number | |||||||||||
Delivery year | aircraft | leased | % Leased | |||||||||
2011(1) |
34 | 33 | 97.1 | %(1) | ||||||||
2012 |
38 | 32 | 84.2 | |||||||||
2013 |
25 | 9 | 36.0 | |||||||||
2014 |
24 | 1 | 4.2 | |||||||||
2015 |
19 | | | |||||||||
Thereafter |
21 | | | |||||||||
Total |
161 | 75 | 46.6 | % | ||||||||
(1) | Our aircraft delivering in 2011 were 100% placed subsequent to March 31, 2011. |
14
1 | This rate does not include the effect of upfront fees, undrawn fees or issuance cost amortization. |
15
(dollars in thousands) | March 31, 2011 | December 31, 2010 | ||||||
Secured debt |
$ | 1,038,470 | $ | 778,896 | ||||
Unsecured debt |
336,350 | 133,085 | ||||||
Total |
$ | 1,374,820 | $ | 911,981 | ||||
Composite interest rate (1) |
3.29 | % | 3.32 | % | ||||
(1) | This rate does not include the effect of upfront fees, undrawn fees or issuance cost amortization. |
(dollars in thousands) | 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | Total | |||||||||||||||||||||
Long-term
debt obligations (1) |
$ | 75,032 | $ | 131,735 | $ | 250,958 | $ | 222,163 | $ | 181,367 | $ | 513,565 | $ | 1,374,820 | ||||||||||||||
Interest payments on debt
outstanding
(2) |
36,489 | 39,661 | 35,451 | 28,079 | 22,662 | 36,050 | 198,392 | |||||||||||||||||||||
Operating leases |
59 | 1,441 | 2,325 | 2,395 | 2,467 | 23,241 | 31,928 | |||||||||||||||||||||
Purchase commitments |
1,489,375 | 1,410,712 | 1,034,884 | 1,057,055 | 818,378 | 791,475 | 6,601,879 | |||||||||||||||||||||
Total |
$ | 1,600,955 | $ | 1,583,549 | $ | 1,323,618 | $ | 1,309,692 | $ | 1,024,874 | $ | 1,364,331 | $ | 8,207,019 | ||||||||||||||
(1) | Maturities of debt outstanding as of March 31, 2011, above, reflects the amortization profile of the Warehouse Facility as amended. See Note 8. Subsequent Events. | |
(2) | Future interest payments on floating-rate debt are estimated using floating interest rates in effect at March 31, 2011. |
16
For the three | For the period | |||||||
months ended | from Inception to | |||||||
(in thousands, except share data) | March 31, 2011 | March 31, 2010 | ||||||
Revenues |
||||||||
Rental of flight equipment |
$ | 54,612 | $ | | ||||
Interest and other |
603 | | ||||||
Total revenues |
55,215 | | ||||||
Expenses |
||||||||
Interest |
9,060 | | ||||||
Amortization of deferred debt issue costs |
2,328 | | ||||||
Interest expense |
11,388 | | ||||||
Depreciation of flight equipment |
18,130 | | ||||||
Selling, general and administrative |
9,865 | 477 | ||||||
Stock-based compensation |
10,908 | | ||||||
Total expenses |
50,291 | 477 | ||||||
Income (loss) before taxes |
4,924 | (477 | ) | |||||
Income tax (expense) benefit |
(1,748 | ) | | |||||
Net income (loss) |
$ | 3,176 | $ | (477 | ) | |||
Other Financial Data |
||||||||
Adjusted net income (loss) (1) |
$ | 11,713 | $ | (477 | ) | |||
Adjusted EBITDA(2) |
$ | 45,249 | $ | (477 | ) | |||
(1) | Adjusted net income (loss) (defined as net income before stock-based compensation expense and non-cash interest expense, which includes the amortization of debt issuance costs) is a measure of both operating performance and liquidity that is not defined by GAAP and should not be considered as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP. Adjusted net income is presented as a supplemental disclosure because management believes that it may be a useful performance measure that is used within our industry. We believe adjusted net income provides useful information on our earnings from ongoing operations, our ability to service our long-term debt and other fixed obligations, and our ability to fund our expected growth with internally generated funds. Set forth below is additional detail as to how we use adjusted net income as a measure of both operating performance and liquidity, as well as a discussion of the limitations of adjusted net income as an analytical tool and a reconciliation of adjusted net income to our GAAP net loss and cash flow from operating activities. | |
Operating Performance: Management and our board of directors use adjusted net income in a number of ways to assess our consolidated financial and operating performance, and we believe this measure is helpful in identifying trends in our performance. We use adjusted net income as a measure of our consolidated operating performance exclusive of income and expenses that relate to the financing, income taxes, and capitalization of the business. Also, adjusted net income assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily one-time amortization of convertible debt discounts) and stock-based compensation expense from our operating results. In addition, adjusted net income helps management identify controllable expenses and make decisions designed to help us meet our current financial goals and optimize our financial performance. Accordingly, we believe this metric measures our financial performance based on operational factors that we can influence in the short term, namely the cost structure and expenses of the organization. | ||
Liquidity: In addition to the uses described above, management and our board of directors use adjusted net income as an indicator of the amount of cash flow we have available to service our debt obligations, and we believe this measure can serve the same purpose for our investors. | ||
Limitations: Adjusted net income has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Some of these limitations are as follows: |
| adjusted net income does not reflect (i) our cash expenditures or future requirements for capital expenditures or contractual commitments, or (ii) changes in or cash requirements for our working capital needs; and | ||
| our calculation of adjusted net income may differ from the adjusted net income or analogous calculations of other companies in our industry, limiting its usefulness as a comparative measure. |
17
For the three | For the period | |||||||
months ended | from Inception to | |||||||
(in thousands) | March 31, 2011 | March 31, 2010 | ||||||
Reconciliation of cash flows from operating activities to adjusted net income: |
||||||||
Net cash provided by operating activities |
$ | 38,549 | $ | 1,810 | ||||
Depreciation of flight equipment |
(18,130 | ) | | |||||
Stock-based compensation |
(10,908 | ) | | |||||
Deferred taxes |
(1,748 | ) | | |||||
Amortization of deferred debt issue costs |
(2,328 | ) | | |||||
Changes in operating assets and liabilities: |
||||||||
Lease receivables and other assets |
2,286 | 105 | ||||||
Accrued interest and other payables |
(1,028 | ) | (2,392 | ) | ||||
Rentals received in advance |
(3,517 | ) | | |||||
Net income (loss) |
3,176 | (477 | ) | |||||
Amortization of deferred debt issue costs |
2,328 | | ||||||
Stock-based compensation |
10,908 | | ||||||
Tax effect |
(4,699 | ) | | |||||
Adjusted net income (loss) |
$ | 11,713 | $ | (477 | ) | |||
For the three | For the period | |||||||
months ended | from Inception to | |||||||
(in thousands) | March 31, 2011 | March 31, 2010 | ||||||
Reconciliation of net income (loss) to adjusted net income: |
||||||||
Net income (loss) |
$ | 3,176 | $ | (477 | ) | |||
Amortization of deferred debt issue costs |
2,328 | | ||||||
Stock-based compensation |
10,908 | | ||||||
Tax effect |
(4,699 | ) | | |||||
Adjusted net income (loss) |
$ | 11,713 | $ | (477 | ) | |||
(2) | Adjusted EBITDA (defined as net income (loss) before net interest expense, stock-based compensation expense, income tax expense (benefit), and depreciation and amortization expense) is a measure of both operating performance and liquidity that is not defined by GAAP and should not be considered as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP. Adjusted EBITDA is presented as a supplemental disclosure because management believes that it may be a useful performance measure that is used within our industry. We believe adjusted EBITDA provides useful information on our earnings from ongoing operations, our ability to service our long-term debt and other fixed obligations, and our ability to fund our expected growth with internally generated funds. Set forth below is additional detail as to how we use adjusted EBITDA as a measure of both operating performance and liquidity, as well as a discussion of the limitations of adjusted EBITDA as an analytical tool and a reconciliation of adjusted EBITDA to our GAAP net loss and cash flow from operating activities. | |
Operating Performance: Management and our board of directors use adjusted EBITDA in a number of ways to assess our consolidated financial and operating performance, and we believe this measure is helpful in identifying trends in our performance. We use adjusted EBITDA as a measure of our consolidated operating performance exclusive of income and expenses that relate to the financing, income taxes, and capitalization of the business. Also, adjusted EBITDA assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure and stock-based compensation expense from our operating results. In addition, adjusted EBITDA helps management identify controllable expenses and make decisions designed to help us meet our current financial goals and optimize our financial performance. Accordingly, we believe this metric measures our financial performance based on operational factors that we can influence in the short term, namely the cost structure and expenses of the organization. | ||
Liquidity: In addition to the uses described above, management and our board of directors use adjusted EBITDA as an indicator of the amount of cash flow we have available to service our debt obligations, and we believe this measure can serve the same purpose for our investors. | ||
Limitations: Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Some of these limitations are as follows: |
| adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; | ||
| adjusted EBITDA does not reflect changes in or cash requirements for our working capital needs; | ||
| adjusted EBITDA does not reflect interest expense or cash requirements necessary to service interest or principal payments on our debt; and | ||
| other companies in our industry may calculate these measures differently from how we calculate these measures, limiting their usefulness as comparative measures. |
18
For the three | For the period | |||||||
months ended | from Inception to | |||||||
(in thousands) | March 31, 2011 | March 31, 2010 | ||||||
Reconciliation of cash flows from operating activities to adjusted EBITDA: |
||||||||
Net cash provided by operating activities |
$ | 38,549 | $ | 1,810 | ||||
Depreciation of flight equipment |
(18,130 | ) | | |||||
Stock-based compensation |
(10,908 | ) | | |||||
Deferred taxes |
(1,748 | ) | | |||||
Amortization of deferred debt issue costs |
(2,328 | ) | | |||||
Changes in operating assets and liabilities: |
||||||||
Lease receivables and other assets |
2,286 | 105 | ||||||
Accrued interest and other payables |
(1,028 | ) | (2,392 | ) | ||||
Rentals received in advance |
(3,517 | ) | | |||||
Net income (loss) |
3,176 | (477 | ) | |||||
Net interest expense |
11,287 | | ||||||
Income taxes |
1,748 | | ||||||
Depreciation |
18,130 | | ||||||
Stock-based compensation |
10,908 | | ||||||
Adjusted EBITDA |
$ | 45,249 | $ | (477 | ) | |||
For the three | For the period | |||||||
months ended | from Inception to | |||||||
(in thousands) | March 31, 2011 | March 31, 2010 | ||||||
Reconciliation of net income (loss) to adjusted EBITDA: |
||||||||
Net income (loss) |
$ | 3,176 | $ | (477 | ) | |||
Add back: |
||||||||
Net interest expense |
11,287 | | ||||||
Income taxes |
1,748 | | ||||||
Depreciation |
18,130 | $ | | |||||
Stock-based compensation |
10,908 | | ||||||
Adjusted EBITDA |
$ | 45,249 | $ | (477 | ) | |||
19
20
21
22
Votes | Votes | Broker | ||||||||||||||
Director | for | withheld | Abstentions | non-votes | ||||||||||||
Steven F. Udvar-Házy |
48,415,152 | 175,000 | | | ||||||||||||
John G. Danhakl |
48,415,152 | 175,000 | | | ||||||||||||
Matthew J. Hart |
48,415,152 | 175,000 | | | ||||||||||||
Robert A. Milton |
48,415,152 | 175,000 | | | ||||||||||||
Michel M.R.G. Péretié |
48,410,152 | 180,000 | | | ||||||||||||
John L. Plueger |
48,415,152 | 175,000 | | | ||||||||||||
Antony P. Ressler |
48,415,152 | 175,000 | | | ||||||||||||
Wilbur L. Ross |
48,415,152 | 175,000 | | | ||||||||||||
Ian M. Saines |
48,415,152 | 175,000 | | | ||||||||||||
Ronald D. Sugar |
48,415,152 | 175,000 | | | ||||||||||||
23
31.1
|
Certification of the Chairman and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2
|
Certification of the Senior Vice President and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1
|
Certification of the Chairman and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2
|
Certification of the Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
24
AIR LEASE CORPORATION |
||||
May 16, 2011 | /s/ John L. Plueger | |||
John L. Plueger | ||||
President and Chief Operating Officer | ||||
May 16, 2011 | /s/ James C. Clarke | |||
James C. Clarke | ||||
Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
||||
May 16, 2011 | /s/ Gregory B. Willis | |||
Gregory B. Willis | ||||
Vice President and Chief Accounting Officer (Principal Accounting Officer) |
25
31.1
|
Certification of the Chairman and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2
|
Certification of the Senior Vice President and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1
|
Certification of the Chairman and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2
|
Certification of the Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
26