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 FLY Leasing Reports Fourth Quarter and Full Year 2016 Financial Results
   Thursday, March 09, 2017 7:00:00 AM ET

FLY Leasing Limited (FLY ), a global leader in aircraft leasing, today announced its financial results for the fourth quarter and full year of 2016.

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Fourth Quarter 2016 Highlights

-- Net loss of $63.8 million, $1.98 per share, including a non-cash impairment charge of $92 million

-- Adjusted Net Income of $30.6 million, $0.95 per share

-- Sold eight aircraft for gains of $14.8 million

-- Acquired two aircraft

2016 Full Year Highlights

-- Net loss $29.1 million, $0.88 per share

-- Adjusted Net Income of $79.3 million, $2.38 per share

-- Completed $559 million of acquisitions

-- Sold 27 aircraft at a premium to book value

-- Repurchased 3.4 million shares, nearly 10% of shares outstanding

"In 2016 we continued to transform FLY’s fleet, which is now the youngest in the company’s history and among the youngest in the industry, at an average age of 6.2 years," said Colm Barrington, CEO of FLY. "We sold 27 aircraft during the year - primarily mid-life models - at a premium to book value. We invested in newer equipment, acquiring ten aircraft during the year. In addition, we continued to repurchase shares, buying back a total of 3.4 million shares or approximately ten percent of outstanding shares at the beginning of the year."

"We entered 2017 with ample liquidity that provides us with the opportunity to grow our portfolio and to continue our share buyback program," added Barrington. "We set a target of acquiring $750 million of new aircraft in 2017 and have the financial firepower to exceed this level if we find the right opportunities to enhance our portfolio and shareholder value."

"We are encouraged by the resilience of global air traffic and the continued profitability of the airline sector," added Barrington. "There is a continuing strong market for leased aircraft, evidenced by the fact that our fleet is fully utilized and that we have no aircraft available for lease until the end of the year."

Financial Results

FLY is reporting a net loss of $63.8 million or $1.98 per share for the fourth quarter of 2016. The loss is primarily driven by a $92 million non-cash impairment charge taken on three older, out-of-production wide-body aircraft. In the fourth quarter of 2015, FLY reported net income of $19.1 million, or $0.47 per share.

The net loss for the year ended December 31, 2016 was $29.1 million, or $0.88 per share, compared to net income of $22.8 million, or $0.52 per share for the year ended December 31, 2015.

Adjusted Net Income

Adjusted Net Income was $30.6 million for the fourth quarter of 2016 compared to $48.3 million in the same period in the previous year. On a per share basis, Adjusted Net Income was $0.95 per share for the fourth quarter of 2016 and $1.19 per share for the fourth quarter of 2015. Adjusted Net Income excludes the non-cash impairment charge and other charges not considered core to our operations.

For the year ended December 31, 2016, Adjusted Net Income was $79.3 million, or $2.38 per share compared to $132.0 million, or $3.19 per share for the year ended December 31, 2015.

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

Asset Impairments

In the fourth quarter of 2016, FLY recorded a non-cash impairment charge of $92 million. FLY wrote down two 2006 vintage Airbus A340-600s and one 2001 vintage Airbus A330-200 to their current market values. These aircraft are FLY’s oldest wide-body aircraft and the only aircraft of their type in FLY’s portfolio. FLY also evaluated the remainder of its fleet on an aircraft-by-aircraft basis for impairment.

Share Repurchases

During the year ended December 31, 2016, FLY repurchased 3.4 million shares for approximately $40 million, or $11.73 per share. At December 31, 2016, approximately $67 million remains available under the current share repurchase program. At December 31, 2016, there were 32.3 million shares outstanding.

Financial Position

At December 31, 2016, FLY’s total assets were $3.4 billion, including $2.8 billion of investment in flight equipment. Total cash at December 31, 2016 was $612.1 million, of which $518.0 million was unrestricted.

Total shareholders’ equity per share at December 31, 2016 was $18.39.

Aircraft Portfolio

At December 31, 2016, FLY’s 76 aircraft were on lease to 42 lessees in 27 countries. The table below does not include 13 aircraft that were held for sale at December 31, 2015 or the two B767 aircraft owned by a joint venture in which FLY has a 57% interest. There were no aircraft held for sale at December 31, 2016.

Portfolio at Dec. 31, Dec 31,
             2016     2015
Airbus A319  9        10
Airbus A320  12       14
Airbus A321  3        3
Airbus A330  3        4
Airbus A340  2        3
Boeing 737   38       39
Boeing 757   3        3
Boeing 767   -        1
Boeing 777   2        2
Boeing 787   4        1
Total        76       80

At December 31, 2016, the average age of FLY’s fleet, weighted by the net book value of each aircraft, was 6.2 years. The average remaining lease term, also weighted by net book value, was 6.8 years as of December 31, 2016. At December 31, 2016, the portfolio of 76 aircraft was generating annualized rents of approximately $325 million. FLY’s lease utilization factor was 100% for the fourth quarter of 2016 and for the year.

Conference Call and Webcast

FLY’s senior management will host a conference call and webcast to discuss these results at 9:00 a.m. U.S. Eastern Time on Thursday, March 9, 2017. Participants should call +1-253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 60244748 or ask an operator for the FLY Leasing earnings call. A live webcast of the conference call will be also available in the investor section of FLY’s website at www.flyleasing.com. An archived webcast will be available on the company’s website for one year.

About FLY

FLY is a global aircraft leasing company with a fleet of modern, high-demand and fuel-efficient commercial jet aircraft. FLY acquires and leases its aircraft under multi-year operating lease contracts to a diverse group of airlines throughout the world. FLY is managed and serviced by BBAM LP, a worldwide leader in aircraft lease management and financing. For more information about FLY, please visit our website at www.flyleasing.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains certain "forward - looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "expects," "intends," "anticipates," "plans," "believes," "seeks," "estimates," "will," or words of similar meaning and include, but are not limited to, statements regarding the outlook for FLY’s future business and financial performance. Forward-looking statements are based on management’s current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market, regulatory and other factors and risks. Further information on the factors and risks that may affect FLY’s business is included in filings FLY makes with the Securities and Exchange Commission from time to time, including its Annual Report on Form 20-F and its reports on Form 6-K. FLY expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations, or otherwise.

Contact:

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

FLY Leasing Limited
Consolidated Statements of Income
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                     Three months  Three months  Year ended    Year ended
                                                     ended         ended         Dec. 31, 2016 Dec. 31, 2015
                                                     Dec. 31, 2016 Dec. 31, 2015 (Audited)     (Audited)
                                                     (Unaudited)   (Unaudited)
Revenues
Operating lease revenue                              $ 81,613      $ 109,584     $  313,582    $   429,691
Finance lease income                                 64            299           2,066         299
Equity earnings from unconsolidated subsidiary       126           125           530           1,159
Gain on sale of aircraft                             17,506        12,718        27,195        28,959
Interest and other income                            1,291         908           1,666         2,289
Total revenues                                       100,600       123,634       345,039       462,397
Expenses
Depreciation                                         31,562        35,645        120,452       159,732
Aircraft impairment                                  92,000        14,268        96,122        66,093
Interest expense                                     31,774        32,724        123,161       145,448
Net loss on debt modification and extinguishment     4,100         8,116         9,246         17,491
Selling, general and administrative                  6,055         7,042         30,077        33,674
Ineffective, dedesignated and terminated derivatives (252)         (548)         91            4,134
Maintenance and other costs                          351           3,228         2,279         7,628
Total expenses                                       165,590       100,475       381,428       434,200
Net income (loss) before provision for income taxes  (64,990)      23,159        (36,389)      28,197
Provision (benefit) for income taxes                 (1,159)       4,014         (7,277)       5,399
Net income (loss)                                    $  (63,831)   $   19,145    $ (29,112)    $   22,798
Weighted average number of shares
-  Basic                                             32,277,965    40,545,100    33,239,001    41,222,690
-  Diluted                                           32,277,965    40,582,169    33,239,001    41,315,149
Earnings (loss) per share
-  Basic                                             $  (1.98)     $   0.47      $  (0.88)     $   0.52
-  Diluted                                           $  (1.98)     $   0.47      $  (0.88)     $   0.52
FLY Leasing Limited
Consolidated Balance Sheets
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                                                                                                                    Dec. 31,        Dec. 31,
                                                                                                                                                                    2016            2015
                                                                                                                                                                    (Audited)       (Audited)
Assets
Cash and cash equivalents                                                                                                                                           $   517,964     $    275,998
Restricted cash and cash equivalents                                                                                                                                94,123          174,933
Rent receivables                                                                                                                                                    419             124
Investment in unconsolidated subsidiary                                                                                                                             7,700           7,170
Flight equipment held for sale, net                                                                                                                                 --              237,262
Flight equipment held for operating lease, net                                                                                                                      2,693,821       2,585,426
Maintenance rights, net                                                                                                                                             101,969         94,493
Investment in finance lease, net                                                                                                                                    15,095          34,878
Fair market value of derivative assets                                                                                                                              1,905           241
Deferred tax asset, net                                                                                                                                             7,445           7,505
Other assets, net                                                                                                                                                   6,568           6,450
Total assets                                                                                                                                                        $ 3,447,009     $ 3,424,480
Liabilities
Accounts payable and accrued liabilities                                                                                                                            $      13,786   $      17,548
Rentals received in advance                                                                                                                                         13,123          14,560
Payable to related parties                                                                                                                                          5,042           7,170
Security deposits                                                                                                                                                   42,495          48,876
Maintenance payment liability                                                                                                                                       182,571         194,543
Unsecured borrowings, net                                                                                                                                           691,390         689,409
Secured borrowings, net                                                                                                                                             1,831,985       1,695,711
Fair market value of derivative liabilities                                                                                                                         13,281          19,327
Deferred tax liability, net                                                                                                                                         19,847          28,246
Other liabilities                                                                                                                                                   40,254          52,126
Total liabilities                                                                                                                                                   2,853,774       2,767,516
Shareholders’ equity
Common shares, $0.001 par value, 499,999,900 shares authorized; 32,256,440 and 35,671,400 shares issued and outstanding at December 31, 2016 and 2015, respectively 32              36
Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding                                                                                     --              --
Additional paid-in capital                                                                                                                                          536,922         577,290
Retained earnings                                                                                                                                                   66,026          95,138
Accumulated other comprehensive loss, net                                                                                                                           (9,745)         (15,500)
Total shareholders’ equity                                                                                                                                          593,235         656,964
Total liabilities and shareholders’ equity                                                                                                                          $ 3,447,009     $  3,424,480
FLY Leasing Limited
Consolidated Statements of Cash Flows
(DOLLARS IN THOUSANDS)
                                                                                                                             Year ended               Year ended
                                                                                                                             Dec. 31, 2016(Audited)   Dec. 31, 2015(Audited)
Cash Flows from Operating Activities
Net income                                                                                                                   $           (29,112)     $         22,798
Adjustments to reconcile net income to net cash flows provided by operating activities:
Equity earnings from unconsolidated subsidiary                                                                                           (530)                  (1,159)
Finance lease income                                                                                                                     (2,066)                (299)
Gain on sale of aircraft                                                                                                                 (27,195)               (28,959)
Depreciation                                                                                                                             120,452                159,732
Aircraft impairment                                                                                                                      96,122                 66,093
Amortization of debt discounts and issuance costs                                                                                        9,375                  11,922
Amortization of lease incentives                                                                                                         8,898                  20,527
Amortization of lease discounts, premiums and other items                                                                                388                    2,046
Amortization of fair market value adjustments associated with the GAAM acquisition                                                       1,621                  3,650
Net loss on debt modification and extinguishment                                                                                         6,094                  13,868
Share-based compensation                                                                                                                 --                     195
Unrealized foreign exchange gain                                                                                                         (437)                  (1,247)
Provision for deferred income taxes                                                                                                      (9,158)                4,919
Unrealized loss on derivative instruments                                                                                                76                     4,134
Security deposits and maintenance payment liability relieved                                                                             (3,450)                (48,658)
Security deposits and maintenance payment claims applied towards operating lease revenues                                                (684)                  --
Cash receipts in settlement of maintenance rights                                                                                        9,513                  --
Changes in operating assets and liabilities:
Rent receivables                                                                                                                         (1,034)                6,814
Other assets                                                                                                                             (1,134)                137
Payable to related parties                                                                                                               (17,163)               (19,407)
Accounts payable, accrued liabilities and other                                                                                          (10,965)               (2,183)
Net cash flows provided by operating activities                                                                                          149,611                214,923
Cash Flows from Investing Activities
Investment in unconsolidated subsidiary                                                                                                  --                     (2,009)
Rent received from finance lease                                                                                                         2,970                  424
Investment in finance lease                                                                                                              --                     (33,596)
Purchase of additional aircraft                                                                                                          (552,166)              (567,523)
Proceeds from sale of aircraft                                                                                                           430,867                1,110,046
Payment for aircraft improvement                                                                                                         (2,230)                (8,196)
Lessor contribution to maintenance                                                                                                       (2,712)                (18,609)
Net cash flows provided by (used in) investing activities                                                                                (123,271)              480,537
                                                                                                                             Year ended               Year ended
                                                                                                                             Dec. 31, 2016 (Audited)  Dec. 31, 2015      (Audited)
Cash Flows from Financing Activities
Restricted cash and cash equivalents                                                                                                     80,828                 (35,794)
Security deposits received                                                                                                               920                    13,914
Security deposits returned                                                                                                               (7,438)                (7,788)
Maintenance payment liability receipts                                                                                                   71,514                 84,491
Maintenance payment liability disbursements                                                                                              (10,951)               (38,768)
Swap termination payments, net                                                                                                           (709)                  (3,737)
Debt issuance costs                                                                                                                      (2,552)                (933)
Proceeds from secured borrowings                                                                                                         572,719                147,276
Repayment of secured borrowings                                                                                                          (448,346)              (791,385)
Repurchase of common shares                                                                                                              (40,257)               (81,432)
Dividends                                                                                                                                --                     (41,388)
Dividend equivalents                                                                                                                     --                     (1,054)
Net cash flows provided by (used in) financing activities                                                                                215,728                (756,598)
Effect of exchange rate changes on cash and cash equivalents                                                                             (102)                  (424)
Net increase (decrease) in cash                                                                                                          241,966                (61,562)
Cash at beginning of period                                                                                                              275,998                337,560
Cash at end of period                                                                                                        $           517,964              $ 275,998
Supplemental Disclosure:
Cash paid during the period for:
Interest                                                                                                                     $           110,351              $ 132,780
Taxes                                                                                                                                    460                    384
Noncash Activities:
Security deposits applied to maintenance payment liability, rent receivables, rentals received in advance, and other assets              --                     3,292
Maintenance payment liability applied to rent receivables and rentals received in advance                                                --                     2,523
Other liabilities applied to maintenance payment liability and rent receivables                                                          2,250                  240
Noncash investing activities:
Aircraft improvement                                                                                                                     5,245                  1,587
Noncash activities in connection with the purchase of aircraft                                                                           6,388                  19,382
Noncash activities in connection with sale of aircraft                                                                                   78,722                 93,819
FLY Leasing Limited
Reconciliation of Non-GAAP Measures
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                       Three months  Three months  Year ended    Year ended
                                                                       ended         ended         Dec. 31, 2016 Dec. 31, 2015
                                                                       Dec. 31, 2016 Dec. 31, 2015 (Unaudited)   (Unaudited)
                                                                       (Unaudited)   (Unaudited)
Net income (loss)                                                      $  (63,831)   $  19,145     $  (29,112)   $  22,798
Adjustments:
Aircraft impairment                                                    92,000        14,268        96,122        66,093
Amortization of debt discounts and loan issue costs                    2,170         2,842         9,375         11,922
Amortization of lease premiums, discounts and other                    88            246           388           2,046
Amortization of fair value adjustments recorded in purchase accounting 316           766           1,621         3,650
Net loss on debt modification and extinguishment                       4,100         8,116         9,246         17,491
Non-cash share based compensation                                      --            --            --            195
Professional fees related to restatement                               --            --            1,134         --
Unrealized foreign exchange gain                                       (1,187)       (554)         (437)         (1,247)
Deferred income taxes                                                  (2,854)       4,027         (9,158)       4,919
Ineffective, dedesignated and terminated derivatives                   (252)         (548)         91            4,134
Adjusted Net Income                                                    $    30,550   $   48,308    $   79,270    $   132,001
Average Shareholders’ Equity                                           $  620,937    $ 689,869     $ 632,818     $   721,715
Adjusted Return on Equity                                              19.7%         28.0%         12.5%         18.3%
Weighted average diluted shares outstanding                            32,277,965    40,582,169    33,239,001    41,315,149
Adjusted Net Income per share                                          $       0.95  $       1.19  $      2.38   $       3.19

FLY defines Adjusted Net Income as net income plus or minus (i) non-cash impairment charges; (ii) non-cash amortization of debt discounts, loan issuance costs, lease premiums and discounts, and other items; (iii) adjustments related to the GAAM portfolio acquisition comprised primarily of amortization of fair value adjustments recorded in purchase accounting; (iv) net losses from debt modification and extinguishment; (v) non-cash share-based compensation; (vi) legal and accounting expenses related to the restatement of our financial statements in 2016; (vii) unrealized foreign exchange gains; (viii) deferred income taxes; (ix) the ineffective portion and charges associated with cash flow hedges. The adjustments included within Adjusted Net Income are primarily non-cash items, one-time or non-recurring items that are not expected to continue in the future, and certain other items that we consider unrelated to the ongoing performance of our operations. Adjusted return on equity is calculated by dividing Adjusted Net Income by the average shareholders’ equity for the periods presented. For periods of less than one year, the resulting return is annualized.

FLY uses Adjusted Net Income and Adjusted Return on Equity, in addition to GAAP net income and earnings per share, to assess our core operating performance on a consistent basis from period to period. Management believes these measures are helpful in evaluating the operating performance of our ongoing operations and identifying trends in our performance, because they remove the effects of certain non-cash, one-time or non-recurring items that are not expected to continue in the future, and certain other items that are not indicative of our overall operating trends. In addition, Adjusted Net Income and Adjusted Return on Equity help us compare our performance to our competitors. These measures should be considered in addition to, and not as a substitute for net income or other financial measures determined in accordance with Accounting Principles Generally Accepted in the United States. FLY’s definitions may be different than those used by other companies.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/fly-leasing-reports-fourth-quarter-and-full-year-2016-financial-results-300421068.html

SOURCE FLY Leasing Limited

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