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Global Ship Lease Reports Results For The Second Quarter Of 2010

Interest income for the three months ended June 30, 2010 was $60,000 and was $163,000 in the comparative 2009 period. For the six months ended June 30, 2010, interest income was $95,000 and was $305,000 in the comparative 2009 period.

Change in Fair Value of Financial Instruments The Company hedges the majority of its interest rate exposure by entering into derivatives that swap floating rate debt for fixed rate debt to provide long-term stability and predictability to cash flows. As these hedges do not qualify for hedge accounting under US GAAP, the outstanding hedges are 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 gave a $16.4 million loss in the three months ended June 30, 2010, reflecting primarily movements in the forward curve for interest rates. Of this amount, $3.9 million was a realized loss for settlements of swaps in the period and $12.5 million was an unrealized loss for revaluation of the balance sheet position. This compares to a $13.9 million gain in the three months ended June 30, 2009 of which $2.8 million was a realized loss and $16.7 million was an unrealized gain. 

For the six months ended June 30, 2010, the total loss from derivative hedging instruments was $25.7 million, of which $8.3 million was realized and $17.3 million unrealized compared to a total gain in the six months ended June 30, 2009 of $16.1 million of which $4.8 million was a realized loss and $21.0 million was an unrealized gain.

At June 30, 2010, the total mark-to-market unrealized loss recognized as a liability was $46.4 million.

Unrealized mark-to-market adjustments have no impact on operating performance or cash generation in the period reported.

Net Earnings Normalized net earnings was $7.5 million, or $0.14 per Class A and B common share, for the three months ended June 30, 2010 excluding the $12.5 million non-cash interest rate derivative mark-to-market loss. Including the mark-to-market loss, the reported net loss was $5.0 million or $0.09 loss per Class A and B common share. For the three months ended June 30, 2009, normalized net earnings were $6.1 million, or $0.11 per Class A and B common share, excluding the $16.7 million non-cash interest rate derivative mark-to-market gain. Including the mark-to-market gain, reported net earnings were $22.8 million or $0.42 income per Class A and B common share. 

Normalized net earnings was $15.7 million, or $0.29 per Class A and B common share, for the six months ended June 30, 2010 excluding the $17.3 million non-cash interest rate derivative mark-to-market loss. Including the mark-to-market loss, the reported net loss was $1.7 million or $0.03 loss per Class A and B common share. For the six months ended June 30, 2009, normalized net earnings were $13.0 million, or $0.24 per Class A and B common share, excluding the $21.0 million non-cash interest rate derivative mark-to-market gain. Including the mark-to-market gain, reported net earnings were $33.9 million or $0.63 income per Class A and B common share. 

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