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Global Ship Lease Reports Results For The Fourth Quarter Of 2012

Other Operating Income

Other operating income in the three months ended December 31, 2012 was $116,000, compared to $100,000 in the fourth quarter of 2011.

For the year ended December 31, 2012, other operating income was $0.3 million, the same as for the comparative period. 

Adjusted EBITDA

As a result of the above, Adjusted EBITDA was $23.3 million for the three months ended December 31, 2012 down  $3.3 million from $26.6 million for the three months ended December 31, 2011.

Adjusted EBITDA for the year ended December 31, 2012 was $102.2 million, down $1.5 million from $103.7 million in 2011.

Interest Expense

Interest expense, excluding the effect of interest rate derivatives, for the three months ended December 31, 2012 was $5.1 million.  The Company's borrowings under its credit facility averaged $436.8 million during the three months ended December 31, 2012. The average amount of preferred shares outstanding throughout the three months ended December 31, 2012 was $45.0 million, giving total average borrowings through the period of $481.7 million. Interest expense of $5.1 million in the comparative period in 2011 was due to a lower applicable margin on higher average borrowings, including the preferred shares, of $547.0 million.

For the year ended December 31, 2012, interest expense, excluding the effect of interest rate derivatives, was $21.2 million. The Company's borrowings under its credit facility and including the preferred shares, averaged $509.6 million during the year ended December 31, 2012. Interest expense for the year ended December 31, 2011 was $20.6 million based on average borrowings in that period, including the preferred shares, of $562.8 million.

Interest income for the three months and year ended December 31, 2012 and 2011 was not material.

Change in Fair Value of Financial Instruments

The Company hedges 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 realized loss of $4.7 million in the three months ended December 31, 2012 for settlements of swaps in the period, as current LIBOR rates are lower than the average fixed rates. Further, there was a $4.7 million unrealized gain for revaluation of the balance sheet position given current LIBOR and movements in the forward curve for interest rates. This compares to a realized loss of $4.8 million for the settlement of swaps and an unrealized mark-to-market gain of $4.0 million in the three months ended December 31, 2011. 

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