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Global Ship Lease Reports Results For The Third Quarter Of 2010

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 Wednesday, November 24, 2010 at (866) 932-5017 or (347) 366-9565. Enter the code 4714492 to access the audio replay. The webcast will also be archived on the Company's website: http://www.globalshiplease.com.

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 world class container liner companies. 

Global Ship Lease owns 17 vessels with a total capacity of 66,297 TEU with a weighted average age at September 30, 2010 of 6.6 years. All of the current vessels are fixed on long-term charters to CMA CGM with an average remaining term of 8.3 years.

Reconciliation of Non-U.S. GAAP Financial Measures

A. EBITDA

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, depreciation and amortization. EBITDA is a non-US GAAP quantitative measure used to assist in the assessment of the Company's ability to generate cash.  We believe that the presentation of 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.

EBITDA - UNAUDITED        
           
(thousands of U.S. dollars)        
    Three months ended Sept 30, 2010 Three months ended Sept 30, 2009 Nine months ended Sept 30, 2010 Nine months ended Sept 30, 2009
           
Net (loss) income (3,526) (3,893) (5,198) 30,026
           
Adjust: Depreciation 10,100 9,469 29,955 27,241
  Interest income (66) (178) (161) (483)
  Interest expense 5,963 7,909 17,867 18,117
  Realized and unrealized loss (gain) on interest rate derivatives 13,753 12,043 39,416 (4,104)
  Income tax 579 251 622 299
           
EBITDA 26,803 25,601 82,501 71,096

B. Adjusted Cash From Operations Adjusted cash from operations is a non-US GAAP measure and is reconciled to the financial information below. It represents net cash provided by operating activities adjusted for certain non-cash items such as deferred taxation. Movements in working capital – changes in receivables and payables – are also adjusted as these are essentially timing differences. We deduct cash paid to settle derivatives.  We also add back actual dry-dock expenditure and deduct an allowance for the estimated cost of future drydockings. This is to eliminate distortions which otherwise result from drydocking costs which are substantial and periodic. For example, there are no planned drydockings in 2010 but seven falling due in 2011. Adjusted cash from operations is a non-US GAAP quantitative measure used to assist in the assessment of the Company's ability to generate cash. Adjusted cash from operations is not defined in accounting principles generally accepted in the United States and should not be considered to be an alternate to net earnings or any other financial metric required by such accounting principles. We believe that adjusted cash from operations is a useful measure with which to assess the Company's operating performance as it adjusts for the effects of non-cash items and includes the effect of certain cash items.

ADJUSTED CASH FROM OPERATIONS - UNAUDITED    
(thousands of U.S. dollars)        
           
    Three months ended Sept 30, 2010 Three months ended Sept 30, 2009 Nine months ended Sept 30, 2010 Nine months ended Sept 30, 2009
           
Cash provided by operating activities 18,464 19,876 63,492 55,458
           
Adjust: Deferred taxation 235 171 76 (239)
  Movement in receivables 422 (478) (38) (363)
  Movement in payables 1,358 (271) 488 1,203
  Settlement of derivatives (4,054) (3,916) (12,384) (8,731)
  Costs related to dry-docks 0 909 164 909
  Allowance for future dry-docks (975) (930) (2,925) (2,730)
           
Adjusted cash from operations 15,450 15,361 48,873 45,507

C. Normalized net earnings Normalized net earnings is a non-US GAAP measure and is reconciled to the financial information below. It represents net earnings adjusted for the change in fair value of derivatives and the accelerated write off of a portion of deferred financing costs. Normalized net earnings is a non-GAAP quantitative measure which we believe will assist investors and analysts who often adjust reported net earnings 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 earnings is not defined in accounting principles generally accepted in the United States and should not be considered to be an alternate to net earnings or any other financial metric required by such accounting principles. Normalized net earnings per share is calculated based on normalized net earnings and the weighted average number of shares in the relevant period.

NORMALIZED NET EARNINGS -- UNAUDITED        
(thousands of U.S. dollars except share and per share data)        
    Three months ended Sept 30, 2010 Three months ended Sept 30, 2009 Nine months ended Sept 30, 2010 Nine months ended Sept 30, 2009
           
           
           
Net (loss) income (3,526) (3,893) (5,198) 30,026
           
Adjust: Change in value of derivatives 9,699 8,127 27,032 (12,834)
  Deferred financing costs written off (1) -- 2,015 -- 2,191
           
Normalized net earnings 6,173 6,249 21,834 19,383
           
Weighted average number of Class A and B common shares outstanding (2)        
  Basic 54,258,434 53,805,878 54,243,841 53,792,798
  Diluted 54,258,434 53,805,878 54,243,841 54,024,166
           
Net (loss) income per share on reported earnings        
  Basic (0.06) (0.07) (0.10) 0.56
  Diluted (0.06) (0.07) (0.10) 0.56
           
Normalized net income per share        
  Basic 0.11 0.12 0.40 0.36
  Diluted 0.11 0.12 0.40 0.36

(1) Following reductions in the Company's borrowing capacity under its credit faculty, a proportion of the unamortized deferred financing costs were written off. (2) The weighted average number of shares  for the three and nine months ended September 30, 2010 and the three months ended September 30, 2009 are the same for basic and diluted and excludes the effect of outstanding warrants and stock based incentives as these were antidilutive. For the nine months ended September 30, 2009 the diluted weighted average number of shares includes the incremental effect of outstanding stock based incentive awards but excludes the effect of outstanding warrants as these were antidilutive. 

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 CMA CGM, our charterer and sole source of operating revenue, and its 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, contracted and yet to be contracted vessel acquisitions and other general corporate purposes;
  • Global Ship Lease's ability to meet its financial covenants and repay its credit facility;
  • 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 team'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 September 30, Nine months ended September 30,
  2010 2009 2010 2009
Operating Revenues        
Time charter revenue $40,040 $37,623 $118,802 $108,824
                         
Operating Expenses        
Vessel operating expenses  10,936 10,285 30,684 31,517
Depreciation 10,100 9,469 29,955 27,241
General and administrative 1,924 1,981 5,843 6,561
Other operating expense (income) 377 (244) (226) (350)
                         
Total operating expenses 23,337 21,491 66,256 64,969
                         
Operating Income 16,703 16,132 52,546 43,855
         
Non Operating Income (Expense)        
Interest income 66 178 161 483
Interest expense (5,963) (7,909) (17,867) (18,117)
Realized and unrealized (loss) gain on interest rate derivatives (13,753) (12,043) (39,416) 4,104
                         
(Loss) Income before Income Taxes (2,947) (3,642) (4,476) 30,325
         
Income taxes (579) (251) (622) (299)
                       
Net (Loss) Income  ($3,526) ($3,893) ($5,198) $30,026
                 
Earnings per Share        
         
Weighted average number of Class A common shares outstanding        
Basic 46,852,478 46,399,922 46,837,885 46,386,842
Diluted 46,852,478 46,399,922 46,837,885 46,618,210
         
Net (loss) income in $ per Class A common share         
Basic $(0.08) $(0.08) $(0.11) $0.65
Diluted $(0.08) $(0.08) $(0.11) $0.64
         
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 in $ 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)
     
     
  September 30, 2010 December 31, 2009
     
Assets    
     
Cash and cash equivalents $29,335 $30,810
Restricted cash 19,261 3,026
Accounts receivable 6,576 7,838
Prepaid expenses 1,631 685
Other receivables 969 613
Deferred tax 284 285
Deferred financing costs 903 903
         
Total current assets 58,959 44,160
         
Vessels in operation 932,593 961,708
Vessel deposits 16,699 16,243
Other fixed assets 11 9
Deferred tax 86 161
Deferred financing costs 4,400 5,077
         
Total non-current assets 953,789 983,198
         
Total Assets $1,012,748 $1,027,358
         
Liabilities and Stockholders' Equity    
     
Liabilities    
     
Current portion of long term debt $53,800 $68,300
Intangible liability – charter agreements 2,119 2,119
Accounts payable 388 3,502
Accrued expenses 7,048 4,589
Derivative instruments 16,430 15,971
         
Total current liabilities 79,785 94,481
         
Long term debt 499,341 519,892
Preferred shares 48,000 48,000
Intangible liability – charter agreements 22,700 24,288
Derivative instruments 39,716 13,142
         
Total long-term liabilities 609,757 605,322
         
Total Liabilities $689,542 $699,803
         
Stockholders' Equity    
     
Class A Common stock – authorized    
214,000,000 shares with a $0.01 par value;    
47,040,467 shares issued and outstanding  $470  $467
Class B Common stock – authorized    
20,000,000 shares with a $0.01 par value;    
7,405,956 shares issued and outstanding   74  74
     
Additional paid in capital 351,165 350,319
Accumulated deficit (28,503) (23,305)
         
Total Stockholders' Equity 323,206 327,555
         
Total Liabilities and Stockholders' Equity $1,012,748 $1,027,358
 
Global Ship Lease, Inc.
         
Interim Unaudited Consolidated Statements of Cash Flows
         
(Expressed in thousands of U.S. dollars)
         
  Three months ended September 30, Nine months ended September 30,
  2010 2009 2010 2009
         
Cash Flows from Operating Activities        
Net (loss) income $(3,526) $(3,893) $(5,198) $30,026
         
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities         
Depreciation  10,100 9,469 29,955 27,241
Amortization of deferred financing costs 226 2,261 677 2,886
Change in fair value of certain derivative instruments 9,699 8,127 27,032 (12,834)
Amortization of intangible liability (529) (397) (1,588) (1,019)
Settlements of hedges which do not qualify for hedge accounting 4,054 3,916 12,384 8,731
         
Share based compensation 223 575 849 2,154
(Increase) decrease in other receivables and other assets (422) 478 38 363
(Decrease) increase in accounts payable and other liabilities (1,358) 271 (488) (1,203)
Costs relating to drydocks -- (909) (164) (909)
Unrealized foreign exchange (gain) loss  (3) (22) (5) 22
                 
Net Cash Provided by Operating Activities  18,464 19,876 63,492 55,458
                 
Cash Flows from Investing Activities         
Settlements of hedges which do not qualify for hedge accounting (4,054) (3,916) (12,384) (8,731)
         
Cash paid for purchases of vessels, vessel prepayments and vessel deposits (157) (82,328) (1,285) (83,062)
Cash paid for other fixed assets (12) -- (12) --
Variation in restricted cash (16,235) -- (16,235) --
                 
Net Cash used in Investing Activities  (20,458) (86,244) (29,916) (91,793)
                 
Cash Flows from Financing Activities         
Proceeds (repayments) of debt -- 57,000 (35,051) 57,000
Issuance costs of debt -- (1,822) -- (5,115)
Dividend payments  -- -- -- (12,371)
                 
Net Cash (used in) from Financing Activities  -- 55,178 (35,051) 39,514
                 
Net (Decrease) Increase in Cash and Cash Equivalents (1,994) (11,190) (1,475) 3,179
Cash and Cash Equivalents at start of Period 31,329 40,732 30,810 26,363
                 
Cash and Cash Equivalents at end of Period $29,335 $29,542 $29,335 $29,542
                 
Supplemental information        
         
Non cash investing and financing activities        
         
Dividend declared $ -- $ -- $ -- $12,371
Total interest paid  $6,237 $5,384 $16,806 $14,117
         
Income tax paid  $21 $62 $7 $139
CONTACT:  The IGB Group
          Investor and Media Contacts:
          Michael Cimini
          212-477-8261

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