What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-26 compared with 2020-02-28 · 295 added, 307 removed, 1343 unchanged (31% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2020, 2019 and 2018

Consolidated Statement of Changes in Equity for the years ended December 31, 2020, 2019 and 2018

25 unchanged sentences

Description of the Matter At December 31, 2020, the Company’s goodwill was $122.7 million for the Jefferson Terminal reporting unit.

As discussed in Note 2 of the financial statements, goodwill is tested for impairment at least annually at the reporting unit level.

Auditing management’s annual goodwill impairment test was complex and highly judgmental due to the significant estimation required in determining the fair value of the Jefferson Terminal reporting unit.

In particular, the fair value estimate was sensitive to significant assumptions such as the extent and timing of future cash flows (including forecasted revenue growth rates and EBITDA margins), capital expenditures and discount rates, which are affected by expectations about the Company’s ability to secure additional contracts and increase volumes from existing contracts as well as expectations about the overall industry, market and economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including management’s review of valuation methodology and significant assumptions described above.

To test the estimated fair value of the Company’s Jefferson Terminal reporting unit for use in the goodwill impairment assessment, we performed audit procedures that included, among others, assessing the valuation methodology used and testing the significant assumptions described above and the completeness and accuracy of the underlying data used by the Company in its analysis.

As discussed in Note 2 of the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level.

Auditing the fair value of the Jefferson Terminal reporting unit used in the annual goodwill impairment test was complex and highly judgmental due to the significant estimation required in determining the fair value of the Jefferson Terminal reporting unit.

In particular, the fair value estimate was sensitive to significant assumptions such as the extent and timing of future cash flows (including forecasted revenue growth rates and EBITDA margins), capital expenditures and discount rate, which are affected by expectations about the Company’s ability to secure additional contracts and increase volumes from existing contracts as well as expectations about the overall industry, market and economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including tests of controls over management’s review of valuation methodology and significant assumptions described above.

For example, we compared the significant assumptions used by management to current industry, market and economic trends;

1 unchanged sentence

and evaluated whether changes to the Company’s business model, customer base or product mix and other relevant factors would affect the significant assumptions.

We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the Jefferson Terminal reporting unit that would result from changes in the assumptions.

We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses over significant assumptions to evaluate the changes in the fair value of the Jefferson Terminal reporting unit that would result from changes in the significant assumptions.

We also involved our valuation specialists to assist in our evaluation of the Company's valuation methodology and certain significant assumptions.

Recognition of Maintenance Revenue for Aircraft Leases

Description of the Matter As described in Note 2 to the financial statements, the Company recognizes maintenance revenue for aircraft leases related to the portion of maintenance payments received from lessees that are not expected to be reimbursed for maintenance events.

Revenue related to maintenance on leased aircraft is recorded as a component of Maintenance revenue and, as disclosed in Note 12, totaled $134.9 million for the year ended December 31, 2019.

Auditing maintenance revenue related to aircraft leases was complex and highly judgmental due to the significant estimation involved in projecting the timing and cost of future major maintenance events.

In particular, such estimates are sensitive to significant assumptions such as the mean time between removal (MTBR), the projected cost for the engine maintenance and forecasted utilization of the aircraft which are affected by historical usage patterns and overall industry, market and economic conditions.

Description of the Matter As described in Note 2 to the consolidated financial statements, the Company recognizes maintenance revenue for aircraft leases related to the portion of maintenance payments received from lessees that are not expected to be reimbursed for maintenance events.

Revenue related to maintenance on leased aircraft is recorded as a component of Maintenance revenue which totaled $101.5 million for the year ended December 31, 2020, as disclosed in Note 12.

Auditing maintenance revenue related to aircraft leases was complex and highly judgmental due to the significant estimation involved in projecting the timing of future major maintenance events.

In particular, such estimates are sensitive to significant assumptions such as the mean time between removal (MTBR) and forecasted utilization of the aircraft which are affected by historical usage patterns and overall industry, market and economic conditions.

Changes to these significant assumptions could have a material effect on the amount of revenue recognized in the period.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s maintenance revenue recognition process, including controls over management’s review of the significant assumptions used in the determining the estimated timing and projected costs of major maintenance events described above.

To test maintenance revenue for aircraft leases, we performed audit procedures that included, among others, assessing the Company’s revenue recognition methodology and testing the significant assumptions described above and the completeness and accuracy of the underlying data used by the Company in its analysis.

For example, we compared the significant assumptions used by management to the underlying customer lease agreements, historical utilization and third party estimates for MTBR and cost for engine maintenance, when available.

We tested management’s retrospective review of timing and cost of estimated maintenance events to actual results to assess the historical accuracy of significant assumptions and contrary evidence, if any.

We also performed a sensitivity analysis on utilization of the aircraft to evaluate the changes in the timing of the maintenance event from changes in utilization assumptions and the impact, if any, on maintenance revenue recognized in the period.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s maintenance revenue recognition process, including controls over management’s review of the significant assumptions used in determining the estimated timing of major maintenance events as described above.

For example, we compared the significant assumptions used by management to the underlying customer lease agreements, historical utilization and third- party estimates for MTBR, when available.

We tested management’s retrospective review of timing of estimated maintenance events to actual results to assess the historical accuracy of significant assumptions and contrary evidence, if any.

We also performed a sensitivity analysis on utilization of the aircraft to evaluate the changes in the timing of the maintenance events from changes in utilization assumptions and the impact, if any, on maintenance revenue recognized in the period.

/s/ Ernst & Young LLP

16 unchanged sentences

Other assets 2 177,928 129,105

Assets of discontinued operations 3 — 56,744

Total assets $ 3,387,977 $ 3,236,922

5 unchanged sentences

Other liabilities 23,351 41,118

Liabilities of discontinued operations 3 — 35,463

Total liabilities $ 2,288,656 $ 1,898,065

7 unchanged sentences

Additional paid in capital 1,130,106 1,110,122

Retained earnings (accumulated deficit) 190,453 ( 32,817 )

Accumulated other comprehensive income 372 —

(Accumulated deficit) retained earnings ( 28,158 ) 190,453

Accumulated other comprehensive (loss) income ( 26,237 ) 372

Shareholders' equity 1,076,658 1,301,877

16 unchanged sentences

Depreciation and amortization 4, 6, 8 172,400 169,023 133,908

Asset impairment 33,978 4,726 —

Interest expense 98,206 95,585 56,845

Total expenses 460,642 631,493 367,143

Other income (expense)

Other (expense) income

Equity in losses of unconsolidated entities 7 ( 5,039 ) ( 2,375 ) ( 1,008 )

Gain on sale of assets, net 203,250 3,911 18,593

(Loss) gain on sale of assets, net ( 308 ) 203,250 3,911

Loss on extinguishment of debt ( 11,667 ) — —

Asset impairment ( 4,726 ) — —

Interest income 162 531 488

Other income 70 3,445 3,983

Total other income 200,125 7,374 18,297

Income (loss) from continuing operations before income taxes 152,132 ( 17,657 ) ( 20,549 )

Provision for income taxes 15 17,810 2,449 1,954

Net income (loss) from continuing operations 134,322 ( 20,106 ) ( 22,503 )

Net income (loss) from discontinued operations, net of income taxes 3 73,462 4,402 ( 737 )

Net income (loss) 207,784 ( 15,704 ) ( 23,240 )

Net income (loss) attributable to non-controlling interests in consolidated subsidiaries:

Total other (expense) income ( 16,782 ) 204,851 7,374

(Loss) income from continuing operations before income taxes ( 110,928 ) 152,132 ( 17,657 )

(Benefit from) provision for income taxes 15 ( 5,905 ) 17,810 2,449

Net (loss) income from continuing operations ( 105,023 ) 134,322 ( 20,106 )

Net income from discontinued operations, net of income taxes 3 1,331 73,462 4,402

Net (loss) income ( 103,692 ) 207,784 ( 15,704 )

Net (loss) income attributable to non-controlling interests in consolidated subsidiaries:

Continuing operations ( 16,522 ) ( 17,571 ) ( 21,925 )

1 unchanged sentence

Dividends on preferred shares 17,869 1,838 —

Net income attributable to shareholders $ 223,270 $ 5,882 $ 134

Earnings (loss) per share:

Net (loss) income attributable to shareholders $ ( 105,039 ) $ 223,270 $ 5,882

(Loss) earnings per share:

Continuing operations $ ( 1.24 ) $ 1.74 $ 0.02

7 unchanged sentences

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Dollars in thousands)

1 unchanged sentence

2020 2019 2018

Net income (loss) $ 207,784 $ ( 15,704 ) $ ( 23,240 )

Other comprehensive income (loss):

Other comprehensive income related to equity method investees, net (1)

Available-for-sale securities:

Unrealized gain in available-for-sale securities — — 4,276

Reclassification of gains included in net income — — ( 11,406 )

Comprehensive income (loss) 208,156 ( 15,704 ) ( 30,370 )

Net (loss) income $ ( 103,692 ) $ 207,784 $ ( 15,704 )

Other comprehensive (loss) income:

Other comprehensive (loss) income related to equity method investees, net (1)

( 26,609 ) 372 —

Comprehensive (loss) income ( 130,301 ) 208,156 ( 15,704 )

Comprehensive (loss) income attributable to non-controlling interest:

1 unchanged sentence

Discontinued operations — 247 339

Comprehensive income (loss) attributable to shareholders $ 225,480 $ 5,882 $ ( 6,996 )

Comprehensive (loss) income attributable to shareholders $ ( 113,779 ) $ 225,480 $ 5,882

__________________________________________________

(1) Net of deferred tax expense of $ 99 for the year ended December 31, 2019.

(1) Net of deferred tax (benefit) expense of $( 7,075 ) and $ 99 for the years ended December 31, 2020 and 2019.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Common Shares Preferred Shares Additional Paid In Capital (Accumulated Deficit) Retained Earnings Accumulated Other Comprehensive Income Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

Common Shares Preferred Shares Additional Paid In Capital (Accumulated Deficit) Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

Equity - December 31, 2017 $ 758 $ — $ 985,009 $ ( 38,699 ) $ — $ 88,007 $ 1,035,075

Net income (loss) 5,882 ( 21,586 ) ( 15,704 )

Other comprehensive loss — ( 7,130 ) — ( 7,130 )

Other comprehensive income — — — —

Total comprehensive income (loss) 5,882 — ( 21,586 ) ( 15,704 )

Capital contributions 1,296 1,296

Capital distributions ( 254 ) ( 254 )

Transfer of non-controlling interest ( 2,798 ) ( 2,798 )

Settlement of equity-based compensation ( 74 ) ( 74 )

Purchase of non-controlling interest 7,225 ( 10,930 ) ( 3,705 )

Issuance of common shares 82 147,717 — 147,799

5 unchanged sentences

Total comprehensive income (loss) 225,108 372 ( 17,324 ) 208,156

Purchase of non-controlling interest 7,225 ( 10,930 ) ( 3,705 )

Settlement of equity-based compensation ( 10,483 ) ( 10,483 )

Issuance of common shares 9 384 — 393

Conversion of participating securities ( 8 ) ( 8 )

Dividends declared - common shares ( 113,541 ) — ( 113,541 )

Issuance of preferred shares 81 193,911 193,992

Dividends declared - preferred shares ( 1,838 ) ( 1,838 )

Equity-based compensation — 8,404 8,404

Equity - December 31, 2019 $ 849 $ 81 $ 1,110,122 $ 190,453 $ 372 $ 36,980 $ 1,338,857

Net income (loss) 225,108 ( 17,324 ) 207,784

Other comprehensive income — 372 — 372

Total comprehensive income (loss) 225,108 372 ( 17,324 ) 208,156

Net loss ( 87,170 ) ( 16,522 ) ( 103,692 )

Other comprehensive loss — ( 26,609 ) — ( 26,609 )

Total comprehensive loss ( 87,170 ) ( 26,609 ) ( 16,522 ) ( 130,301 )

Settlement of equity based compensation ( 120 ) ( 120 )

13 unchanged sentences

Cash flows from operating activities:

Net income (loss) $ 207,784 $ ( 15,704 ) $ ( 23,240 )

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Net (loss) income $ ( 103,692 ) $ 207,784 $ ( 15,704 )

Adjustments to reconcile net (loss) income to cash provided by operating activities:

Equity in losses of unconsolidated entities 5,039 2,375 1,008

Gain on sale of subsidiaries ( 1,331 ) ( 198,764 ) —

Gain on sale of assets, net ( 81,954 ) ( 3,911 ) ( 18,281 )

Loss (gain) on sale of assets, net 308 ( 81,954 ) ( 3,911 )

Security deposits and maintenance claims included in earnings ( 6,362 ) ( 20,385 ) ( 6,323 )

2 unchanged sentences

Depreciation and amortization 172,400 171,225 136,354

Gain on settlement of liabilities — — ( 1,093 )

Asset impairment 33,978 4,726 —

Change in current and deferred income taxes 14,495 649 227

Change in deferred income taxes ( 5,851 ) 14,495 649

Change in fair value of non-hedge derivatives 181 4,555 ( 5,523 )

20 unchanged sentences

Proceeds from sale of leasing equipment 72,175 248,454 44,062

Proceeds from sale of available-for-sale securities — — 30,238

Proceeds from sale of property, plant and equipment — — 23

20 unchanged sentences

Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs 19,694 193,992 —

Capital contributions from non-controlling interests — — 35

Capital distributions to non-controlling interests — — ( 254 )

Settlement of equity-based compensation ( 120 ) ( 8,078 ) —

3 unchanged sentences

Net cash provided by financing activities 364,918 465,873 597,867

Net increase (decrease) in cash and cash equivalents and restricted cash 121,680 28,031 ( 40,690 )

Net (decrease) increase in cash and cash equivalents and restricted cash ( 81,099 ) 121,680 28,031

Cash and cash equivalents and restricted cash, beginning of period 242,517 120,837 92,806

13 unchanged sentences

Deferred financing costs — ( 1,161 ) ( 4,500 )

Non-cash contribution of non-controlling interest — — 1,261

Equity compensation to non-controlling interest — — 892

Change in fair value of cash flow hedge 372 —

Non-cash change in equity method investment ( 26,609 ) — —

Transfer of non-controlling interest — — 7,225

10 unchanged sentences

generally accepted accounting principles (“GAAP”) and include both our accounts and those of our subsidiaries.

Principles of Consolidation — We consolidate all entities in which we have a controlling interest and in which we have control over significant operating decisions, as well as variable interest entities (“VIEs”) in which we are the primary beneficiary.

Principles of Consolidation — We consolidate all entities in which we have a controlling financial interest and control over significant operating decisions, as well as variable interest entities (“VIEs”) in which we are the primary beneficiary.

All significant intercompany transactions and balances have been eliminated.

All adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The ownership interest of other investors in consolidated subsidiaries is recorded as non-controlling interest.

We use the equity method of accounting for investments in entities in which we exercise significant influence but which do not meet the requirements for consolidation.

Under the equity method, we record our proportionate share of the underlying net income (loss) of these entities.

Under the equity method, we record our proportionate share of the underlying net income (loss) of these entities as well as the proportionate interest in adjustments to other comprehensive income (loss).

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

2 unchanged sentences

Credit risk is the risk of the inability or unwillingness of a lessee, customer, or derivative counterparty to make contractually required payments or to fulfill its other contractual obligations.

Market risk reflects the risk of a downturn or volatility in the underlying industry segments in which we operate which could adversely impact the pricing of our services or a lessee’s or customer’s ability to make payments, increase the risk of unscheduled lease terminations and depress lease rates and the value of our leasing equipment or operating assets.

Market risk reflects the risk of a downturn or volatility in the underlying industry segments in which we operate, which could adversely impact the pricing of the services offered by us or a lessee’s or customer’s ability to make payments, increase the risk of unscheduled lease terminations and depress lease rates and the value of our leasing equipment or operating assets.

Capital market risk is the risk that we are unable to obtain capital at reasonable rates to fund the growth of our business or to refinance existing debt facilities.

Through our subsidiaries, we also conduct operations outside of the United States;

We, through our subsidiaries, also conduct operations outside of the United States;

such international operations are subject to the same risks as those associated with our United States operations as well as additional risks, including unexpected changes in regulatory requirements, heightened risk of political and economic instability, potentially adverse tax consequences and the burden of complying with foreign laws.

We do not have significant exposure to foreign currency risk as all of our leasing arrangements, terminal services revenue and the majority of freight rail revenue are denominated in U.S.

We do not have significant exposure to foreign currency risk as all of our leasing arrangements and the majority of terminal services revenue are denominated in U.S.

Variable Interest Entities — The assessment of whether an entity is a VIE and the determination of whether to consolidate a VIE requires judgment.

3 unchanged sentences

During 2016, through Delaware River Partners LLC (“DRP”), a consolidated subsidiary, we purchased the assets of Repauno, which consisted primarily of land, a storage cavern, and riparian rights for the acquired land, site improvements and rights.

Currently there are no operational processes that could be applied to these assets that would result in outputs without significant green field development.

We currently hold an approximately 98 % economic interest, which includes the additional 8 % economic interest we purchased from non-controlling interest holders in DRP for $ 4.5 million in April 2019, and a 100 % voting interest in DRP.

Upon acquisition there were no operational processes that could be applied to these assets that would result in outputs without significant green field development.

We currently hold an approximately 98 % economic interest, and a 100 % voting interest in DRP.

DRP is solely reliant on us to finance its activities and therefore is a VIE.

1 unchanged sentence

Cash and Cash Equivalents — We consider all highly liquid short-term investments with a maturity of 90 days or less when purchased to be cash equivalents.

Restricted Cash —Restricted cash consists of prepaid interest and principal pursuant to the requirements of certain of our debt agreements (see Note 9) and other qualifying constructions projects at Jefferson Terminal.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

Available-For-Sale Securities — We consider listed equity securities as available-for-sale securities recorded at fair value with unrealized gains (losses) recorded in other comprehensive income (loss) and realized gains (losses) recorded in earnings.

Our basis on which the cost of the security sold or the amount reclassified out of other comprehensive income into earnings is determined using specific identification.

We realized a gain of $ 11.4 million on the sale of available-for-sale securities during the year ended December 31, 2017, recorded in Gain on sale of assets, net in our Consolidated Statements of Operations.

We did not hold any available-for-sale securities as of December 31, 2019 or 2018.

Inventory — Commodities inventory is carried at the lower of cost or net realizable value on our balance sheet.

Inventory —We hold aircraft engine modules, spare parts and used material inventory for trading and to support operations within our Aviation Leasing segment.

Aviation inventory is carried at the lower of cost or net realizable value on our balance sheet.

We had Aviation inventory of $ 58.2 million and $ 9.6 million as of December 31, 2020 and 2019, respectively, which is included in Other assets in the Consolidated Balance Sheets.

Commodities inventory is carried at the lower of cost or net realizable value on our balance sheet.

Commodities are removed from inventory based on the average cost at the time of sale.

We had commodities inventory of $ 5.6 million and $ 10.4 million as of December 31, 2019 and 2018, respectively.

We record our inventory as a component of Other assets in the Consolidated Balance Sheets.

We had commodities inventory of $ 0.1 million and $ 5.6 million as of December 31, 2020 and 2019, respectively, which is included in Other assets in the Consolidated Balance Sheets.

Property, Plant and Equipment, Leasing Equipment and Depreciation — Property, plant and equipment and leasing equipment are stated at cost (inclusive of capitalized acquisition costs, where applicable) and depreciated using the straight-line method, over estimated useful lives, to estimated residual values which are summarized as follows:

21 unchanged sentences

Major improvements and modifications incurred in connection with the acquisition of property, plant and equipment and leasing equipment that are required to get the asset ready for initial service are capitalized and depreciated over the remaining life of the asset.

Costs of major additions and betterments are capitalized and depreciation commences once it is placed into service.

Project costs of major additions and betterments, including pre-construction costs and other costs directly related to the development or construction of project, are capitalized and depreciation commences once it is placed into service.

Interest costs directly related to and incurred during the construction period of property, plant and equipment are capitalized.

7 unchanged sentences

In making these estimates, we rely upon observable market data for the same or similar types of equipment and, in the case of aviation equipment, our own estimates with respect to a lessee’s anticipated utilization of the aircraft or engine.

During the fourth quarter of 2020, we changed the estimated useful lives and residual values of certain aircraft engines based on observable market data.

This change in estimate resulted in additional depreciation expense of $ 3.8 million during the quarter and will increase annual depreciation expense by approximately $ 1.6 million.

When we acquire leasing equipment subject to an in-place lease, determining the fair value of the in-place lease requires us to make assumptions regarding the current fair values of leases for identical or similar equipment, in order to determine if the in-place lease is within a fair value range of current lease rates.

3 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

We have a working interest in various natural gas reserves located in southeastern Ohio.

We, through our equity method investment in Long Ridge, have a working interest in various natural gas reserves located in southeastern Ohio.

Our interest in this natural gas joint venture is consolidated on a proportionate basis in accordance with Accounting Standards Codification (“ASC”) Topic 932 Extractive Activities – Oil and Gas .

29 unchanged sentences

The carrying amount of goodwill was approximately $ 122.7 million and $ 122.6 million as of December 31, 2020 and 2019, respectively.

The increase relates to our purchase of the remaining 50 % interest in JGP Energy Partners LLC (“JGP”).

See Note 7 for additional details.

We review the carrying values of goodwill at least annually to assess impairment since these assets are not amortized.

8 unchanged sentences

A qualitative analysis was not elected for the years ended December 31, 2020 or 2019.

The first step of an impairment assessment compares the fair value of a respective reporting unit with its carrying amount, including goodwill.

Beginning in 2020, we adopted new guidance regarding the testing and recognition of a goodwill impairment which prior to 2020 required two steps.

A goodwill impairment assessment compares the fair value of a respective reporting unit with its carrying amount, including goodwill.

The estimate of fair value of the respective reporting unit is based on the best information available as of the date of assessment, which primarily incorporates certain factors including our assumptions about operating results, business plans, income projections, anticipated future cash flows and market data.

If the estimated fair value of the reporting unit is less than the carrying amount, a second step must be completed in order to determine the amount of goodwill impairment that should be recorded, if any.

If the estimated fair value of the reporting unit is less than the carrying amount, a goodwill impairment is recorded to the extent of any goodwill recorded in the reporting unit.

We estimate the fair value of the reporting units using an income approach, specifically a discounted cash flow analysis.

1 unchanged sentence

The estimates and assumptions used consider historical performance if indicative of future performance, and are consistent with the assumptions used in determining future profit plans for the reporting units.

We also utilize market valuation models and other financial ratios, which require us to make certain assumptions and estimates regarding the applicability of those models to our assets and businesses.

Although we believe the estimates of fair value are reasonable, the determination of certain valuation inputs is subject to management’s judgment.

Changes in these inputs, including as a result of events beyond our control, could materially affect the results of the impairment review.

If the forecasted cash flows of the Jefferson Terminal and Railroad reporting units or other key inputs are negatively revised in the future, the estimated fair value of the Jefferson Terminal and Railroad reporting units could be adversely impacted, potentially leading to an impairment in the future that could materially affect our operating results.

Specifically, as it relates to the Jefferson Terminal segment, forecasted revenue is dependent on the ramp up of volumes under current contracts and the acquisition of additional storage contracts for the heavy and light crude and refined products during 2020 subject to obtaining rail capacity for crude, permits for pipeline and movements in future oil spreads.

If the forecasted cash flows of the Jefferson Terminal reporting unit or other key inputs are negatively revised in the future, the estimated fair value of the Jefferson Terminal reporting unit could be adversely impacted, potentially leading to an impairment in the future that could materially affect our operating results.

The Jefferson Terminal segment forecasted revenue is dependent on the ramp up of volumes under current and expected future contracts for storage of heavy and light crude and refined products during 2021 and beyond subject to obtaining rail capacity for crude, expansion of refined product distribution to Mexico and movements in future oil spreads.

Jefferson Terminal was designed to reach a storage capacity of 21.7 million barrels, and 4.4 million of storage, or approximately 20.3 % of capacity, is currently operational.

If our strategy changes from planned capacity downward due to an inability to source contracts or expand volumes, the fair value of the reporting units would be negatively affected, which could lead to an impairment.

If the Company strategy changes from planned capacity downward due to an inability to source contracts or expand volumes, the fair value of the reporting units would be negatively affected, which could lead to an impairment.

The expansion of refineries in the Beaumont/Port Arthur area, as well as growing crude oil production in the U.S.

and Canada, are expected to result in increased demand for storage on the U.S.

Although we do not have significant direct exposure to volatility of crude oil prices, changes in crude oil pricing that effect long term refining planned output could impact Jefferson Terminal operations.

Other assumptions utilized in our annual impairment analysis that are significant in determination of the fair value of the reporting unit include the discount rate utilized in our discounted cash flow analysis of 13.5 % and our terminal growth rate of 2 %.

Furthermore, development of both inbound and outbound pipelines to and from the Jefferson Terminal over the next year to two years will affect our forecasted growth and therefore our estimated fair value.

We continue to expect the Jefferson Terminal segment to generate positive Adjusted EBITDA during 2020.

Although certain of our anticipated contracts or expected volumes from existing contracts for Jefferson Terminal have been delayed, we continue to believe our projected revenues are achievable and have not yet modified those projections based on ongoing negotiations with our customers and discussions with major pipeline companies.

Furthermore, both inbound and outbound pipelines projects are becoming fully operational early in 2021 to and from the Jefferson Terminal and will affect our forecasted growth and therefore our estimated fair value.

We expect the Jefferson Terminal segment to continue to generate positive Adjusted EBITDA during 2021.

Although certain of our anticipated contracts or expected volumes from existing contracts for Jefferson Terminal have been delayed, we continue to believe our projected revenues are achievable.

Further delays in executing these contracts or achieving our projections could adversely affect the fair value of the reporting unit.

However, due to strengthening macroeconomic conditions such as increased oil prices and projected increasing spreads between Western Canadian Crude and Western Texas Intermediate, we remain positive for the outlook of Jefferson Terminal’s earnings potential.

The impact of the COVID-19 global pandemic during 2020 certainly negatively affected refining volumes and therefore Jefferson Terminal crude throughput but we anticipate the impact to normalize over 2021 and ramp back to normal by 2022.

Furthermore, we anticipate strengthening macroeconomic demand for storage and the increasing spread between Western Canadian Crude and Western Texas Intermediate as Canadian crude pipeline apportionment increases and our pipeline connections become fully operational during 2021, we remain positive for the outlook of Jefferson Terminal’s earnings potential.

There were no impairments of goodwill for the years ended December 31, 2020, 2019, and 2018.

21 unchanged sentences

When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received.

Generally, under our aircraft lease and engine agreements, the lessee is required to make periodic maintenance payments calculated based on the lessee’s utilization of the leased asset.

Generally, under our aircraft lease and engine agreements, the lessee is required to make periodic maintenance payments calculated based on the lessee’s utilization of the leased asset or at the end of the lease.

Typically, under our aircraft lease agreements, the lessee is responsible for maintenance, repairs and other operating expenses throughout the term of the lease.

5 unchanged sentences

Significant changes to these estimates could have a material effect on the amount of revenue recognized in the period.

Finance Leases —From time to time we enter into finance lease arrangements that include a lessee obligation to purchase the leased equipment at the end of the lease term, include a bargain purchase option, or provides for minimum lease payments with a present value that equals or exceeds substantially all of the fair value of the leased equipment at the date of lease inception.

For purchase and lease back transactions, we account for the transaction as a single arrangement.

We allocate the consideration paid based on the fair value of the aircraft and lease.

The fair value of the lease may include a lease premium or discount.

In April 2020, the FASB Staff issued a question-and-answer document (the “Q&A”) regarding accounting for lease concessions related to the effects of the COVID-19 pandemic.

The Q&A permits an entity to elect to forgo the evaluation of the enforceable rights and obligations of a lease contract required under ASC 842, Leases , as long as the total rent payments after the lease concessions are substantially the same, or less than, the total rent payments in the existing lease.

The impact of the COVID-19 related lease concessions granted above did not have a material impact on our results of operations during the year ended December 31, 2020.

Finance Leases —From time to time we enter into finance lease arrangements that include a lessee obligation to purchase the leased equipment at the end of the lease term, a bargain purchase option, or provides for minimum lease payments with a present value that equals or exceeds substantially all of the fair value of the leased equipment at the date of lease inception.

Net investment in finance lease represents the minimum lease payments due from lessee, net of unearned income.

11 unchanged sentences

The revenues are recognized over time, i.e., as the services are rendered and the customer simultaneously receives and consumes the benefit over time.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Other Revenue —Other revenue primarily consists of revenue related to the handling, storage and sale of raw materials.

6 unchanged sentences

Finance lease ROU assets are recognized in Property, plant and equipment, net and lease liabilities are recognized in Other liabilities in our Consolidated Balance Sheets.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

All lease liabilities are measured at the present value of the unpaid lease payments, discounted using our incremental borrowing rate based on the information available at commencement date of the lease.

9 unchanged sentences

We attempt to limit our credit risk by performing ongoing credit evaluations.

We earned approximately 19 % and 16 % of our revenue from one customer in the Jefferson Terminal segment during the years ended December 31, 2019 and 2018, respectively.

There were no customers that accounted for 10% of our revenue during the year ended December 31, 2017.

Accounts receivable from one customer in the Jefferson Terminal segment represented 16 % of total accounts receivable, net as of December 31, 2019.

Accounts receivable from two customers in the Jefferson Terminal segment each represented 17 % and 15 % of total accounts receivable, net as of December 31, 2018.

We earned approximately 11 % of our revenue from one customer in the Aviation Leasing segment during the year ended December 31, 2020, and 19 % and 16 % of our revenue from one customer in the Jefferson Terminal segment during the years ended December 31, 2019, and 2018, respectively.

As of December 31, 2020, there were two customers in the Aviation segment that represented 40 % and 15 % of total accounts receivable, net.

As of December 31, 2019, accounts receivable from one customer in the Jefferson Terminal segment represented 16 % of total accounts receivable, net.

We maintain cash and restricted cash balances, which generally exceed federally insured limits, and subject us to credit risk, in high credit quality financial institutions.

We monitor the financial condition of these institutions and have not experienced any losses associated with these accounts.

Provision for Doubtful Accounts — We determine the provision for doubtful accounts based on our assessment of the collectability of our receivables on a customer-by-customer basis.

The provision for doubtful accounts was $ 1.3 million and $ 1.1 million as of December 31, 2019 and 2018, respectively.

Allowance for Doubtful Accounts — We determine the allowance for doubtful accounts based on our assessment of the collectability of our receivables on a customer-by-customer basis.

The allowance for doubtful accounts was $ 4.6 million and $ 1.3 million as of December 31, 2020 and 2019, respectively.

Bad debt expense was $ 3.6 million, $ 3.8 million and $ 1.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

2 unchanged sentences

Comprehensive Income (Loss) — Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from investments by and distributions to owners.

Our comprehensive income (loss) represents net income (loss), as presented in the Consolidated Statements of Operations, adjusted for fair value changes related to the available-for-sale securities and other comprehensive income related to our equity method investees.

Our comprehensive income (loss) represents net income (loss), as presented in the Consolidated Statements of Operations, adjusted for fair value changes related to other comprehensive income related to our equity method investees.

Derivative Financial Instruments

1 unchanged sentence

We primarily use swap derivative contracts, which are agreements to buy or sell a quantity of electricity at a predetermined future date and at a predetermined price.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Cash Flow Hedges

Certain of these derivative instruments are designated and qualify as cash flow hedges.

The derivative's gain or loss is reported as Other comprehensive income related to equity method investees in our Consolidated Statements of Comprehensive Income (Loss) and recorded in Accumulated other comprehensive income in our Consolidated Balance Sheets.

The gain or loss is subsequently reclassified into the income statement line item that is impacted by the forecasted transaction when the forecasted transaction affects net earnings in our equity method investment.

Our share of the derivative's gain or loss is reported as Other comprehensive income related to equity method investees in our Consolidated Statements of Comprehensive (Loss) Income and recorded in Accumulated other comprehensive (loss) income in our Consolidated Balance Sheets.

Derivatives Not Designated as Hedging Instruments

Certain of these derivative instruments are not designated as hedging instruments for accounting purposes.

The change in fair value of these contracts is recognized in Other income (expense) in the Consolidated Statements of Operations.

The cash flow impact of derivative contracts that are not designated as hedging instruments is recognized in Change in fair value of non-hedge derivatives in our Consolidated Statements of Cash Flows.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The change in fair value of these contracts is recognized in Equity in earnings (losses) in unconsolidated entities in the Consolidated Statements of Operations.

The cash flow impact of derivative contracts that are not designated as hedging instruments is recognized in Equity in earnings (losses) in unconsolidated entities in our Consolidated Statements of Cash Flows.

Commodity Derivatives — We also enter into short-term and long-term crude forward contracts.

2 unchanged sentences

The cash flow impact of these derivatives is recognized in Change in fair value of non-hedge derivatives in our Consolidated Statements of Cash Flows.

All of our outstanding derivatives are not used for speculative purposes.

To the extent that we have outstanding derivatives, they are not used for speculative purposes.

We record all derivative assets and liabilities on a gross basis at fair value and are included in Other assets and Other liabilities, respectively, in our Consolidated Balance Sheets.

16 unchanged sentences

Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes in the Consolidated Statements of Operations.

Other Assets — Other assets is primarily comprised of commodities inventory of $ 5.6 million and $ 10.4 million, purchase deposits for acquisitions of $ 1.2 million and $ 10.2 million, lease incentives of $ 45.3 million and $ 51.0 million, prepaid expenses of $ 4.1 million and $ 8.2 million, derivative assets of $ 0.2 million and $ 7.5 million, maintenance right assets of $ 24.5 million and $ 1.2 million and spare parts of $ 9.6 million and $ 7.0 million as of December 31, 2019 and 2018, respectively.

Other Assets — Other assets is primarily comprised of commodities inventory of $ 0.1 million and $ 5.6 million, purchase deposits for acquisitions of $ 6.1 million and $ 1.2 million, lease incentives of $ 55.1 million and $ 45.3 million, prepaid expenses of $ 10.1 million and $ 4.1 million, maintenance right assets of $ 6.4 million and $ 24.5 million and spare parts of $ 58.2 million and $ 9.6 million as of December 31, 2020 and 2019, respectively.

Dividends — Dividends are recorded if and when declared by the Board of Directors.

In both the fourth quarters ended December 31, 2019 and 2018, the Board of Directors declared a cash dividend of $ 0.33 per common share, for a total of $ 1.32 per common share for each of the years ended December 31, 2019 and 2018.

Additionally, in the fourth quarter ended December 31, 2019, the Board of Directors declared a cash dividend on the Series A Preferred Shares of $ 0.53 per share.

Recent Accounting Pronouncements — In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (and subsequently issued ASU 2018-01, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01, collectively, “ASU 2016-02”).

ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting.

On January 1, 2019, we adopted ASU 2016-02 using the modified retrospective approach.

We utilized the effective date transition method and accordingly are not required to adjust our comparative period financial information for effects of ASU 2016-02.

We adopted the package of practical expedients which permits us not to reassess under the new standard our prior conclusions about lease identification (including land easements), lease classification and initial direct costs.

The adoption of ASU 2016-02 resulted in the recognition of ROU assets and lease liabilities of approximately $ 46 million in our Consolidated Balance Sheets as of January 1, 2019.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging:

Targeted Improvements to Accounting for Hedging Activities, which improves the financial reporting of hedging relationships to better represent the economic results of an entity’s risk management activities in its financial statements and make certain improvements to simplify the application of the hedge accounting guidance.

The amendments will make more financial and nonfinancial hedging strategies eligible for hedge accounting, amend the presentation and disclosure requirements and change how entities assess effectiveness.

Entities are required to apply the amendments as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period after adoption.

On January 1, 2019, we adopted this standard and it did not have an impact on our consolidated financial statements as we did not have any hedging relationships prior to adoption.

In both the quarters ended December 31, 2020 and 2019, the Board of Directors declared a cash dividend of $ 0.33 per common share, for a total of $ 1.32 per common share for each of the years ended December 31, 2020 and 2019.

Additionally, in the quarter ended December 31, 2020, the Board of Directors declared a cash dividend on the Series A Preferred Shares and Series B Preferred Shares of $ 0.52 and $ 0.50 per share, respectively, for a total of $ 2.06 and $ 2.10 per share, respectively, for the year ended December 31, 2020.

In the quarter and year ended December 31, 2019, the Board of Directors declared a cash dividend on the Series A Preferred Shares of $ 0.53 per share.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

In June 2018, the FASB, issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions.

The new guidance expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in an entity’s own operations and supersedes the guidance in ASC 505-50.

On January 1, 2019, we adopted this standard and it did not have an impact on our consolidated financial statements.

Unadopted Accounting Pronouncements — In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):

Recent Accounting Pronouncements — In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) .

4 unchanged sentences

The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

ASU 2016-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

We do not expect adoption to have a material impact on our consolidated financial statements.

We adopted this ASU in the first quarter of 2020 and adoption did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350):

3 unchanged sentences

The new guidance does not amend the optional qualitative assessment of goodwill impairment.

ASU 2017-01 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

We do not expect adoption to have an impact on our consolidated financial statements.

We adopted this ASU in the first quarter of 2020 and adoption did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

1 unchanged sentence

This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project.

The guidance is effective for all entities in fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, and early adoption is permitted.

We do not expect adoption to have a material impact on our consolidated financial statements or disclosures.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) .

We adopted this ASU in the first quarter of 2020 and adoption did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which temporarily simplifies the accounting for contract modifications, including hedging relationships, due to the transition from LIBOR and other interbank offered rates to alternative reference interest rates.

For example, entities can elect not to remeasure the contracts at the modification date or reassess a previous accounting determination if certain conditions are met.

Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met.

The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022.

Adoption did not have a material impact on our consolidated financial statements.

Unadopted Accounting Pronouncements — In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) .

This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

6 unchanged sentences

Accordingly, the assets, liabilities and results of operations of CMQR have been reported as discontinued operations for all periods presented.

We sold CMQR for $ 130 million and recognized a gain on sale of approximately $ 77 million.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

The following table presents the carrying value of significant classes of assets and liabilities of discontinued operations as of December 31, 2018:

Accounts receivable, net $ 7,375

Property, plant and equipment, net 46,834

Intangible assets, net 15

Other assets 1,926

Total assets $ 56,744

Accounts payable and accrued liabilities $ 11,520

Debt, net 22,239

Other liabilities 1,704

Total liabilities $ 35,463

The following table presents the significant components of net income (loss) from discontinued operations:

The following table presents the significant components of net income from discontinued operations:

Year Ended December 31,

6 unchanged sentences

Total expenses — 42,001 34,399

Gain (loss) on sale of assets, net 77,468 — ( 312 )

Gain on sale of assets, net 1,331 77,468 —

Other expense — — ( 42 )

Other income (expense) 1,331 77,468 ( 42 )

Income (loss) before income taxes 74,538 3,325 ( 737 )

Income before income taxes 1,331 74,538 3,325

Provision for (benefit from) income taxes — 1,076 ( 1,077 )

Net income (loss) 73,462 4,402 ( 737 )

Net income (loss) attributable to non-controlling interests in consolidated subsidiaries 247 339 ( 70 )

Net income (loss) attributable to shareholders $ 73,215 $ 4,063 $ ( 667 )

Net income 1,331 73,462 4,402

Net income attributable to non-controlling interests in consolidated subsidiaries — 247 339

Net income attributable to shareholders $ 1,331 $ 73,215 $ 4,063

The following table presents the significant non-cash items and capital expenditures from discontinued operations:

7 unchanged sentences

Purchases of property, plant and equipment $ — $ ( 6,949 ) $ ( 8,461 )

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

LEASING EQUIPMENT, NET

3 unchanged sentences

Leasing equipment, net $ 1,635,259 $ 1,707,059

The following table presents information related to our acquisitions and dispositions of aviation leasing equipment:

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

During the year ended December 31, 2020, we evaluated our leasing equipment portfolio and identified certain assets with indicators of impairment including, but not limited to, early lease terminations and a decline in market values due to the ongoing COVID-19 pandemic for leasing equipment we have decided to sell.

For these assets, we performed a recoverability assessment at the individual asset level and determined that the carrying amounts exceeded the estimated future undiscounted net cash flows and these assets were impaired.

To determine fair value, we used both a market approach, using quoted market prices for the same or similar assets, and an income approach, using discounted cash flows and an estimated discount rate.

As a result, we adjusted the carrying value of these assets to fair value and recognized transactional impairment charges of $ 34.0 million, net of redelivery compensation.

The following table presents information related to acquisitions and dispositions of aviation leasing equipment:

Year Ended December 31,

6 unchanged sentences

Engines 25 58 13

Gain on sale of leasing equipment $ 81,954 $ 3,911 $ 7,188

Depreciation expense for leasing equipment is summarized as follows:

7 unchanged sentences

Finance leases, net $ 6,927 $ 8,315

During 2019, sales-type leases expired for three of our airframes.

Additionally, we received insurance proceeds for one of our vessels which was on nonaccrual status due to a casualty event.

During the third quarter of 2020, we entered into a 15 month sales-type lease arrangement for three engines.

During the fourth quarter of 2020, the lessee exercised its option to purchase the three engines for an amount equal to the remaining principal balance plus unpaid accrued interest per the terms of the arrangement.

Additionally, during 2019, we received insurance proceeds for a vessel which was on nonaccrual status due to a casualty event.

The insurance proceeds were in excess of the book value of the finance lease, which was written down to zero, and we recognized a gain of approximately $ 1.0 million which is included in Other income in the Consolidated Statements of Operations.

6 unchanged sentences

Construction in progress 425,261 211,110

211,110 253,176

Buildings and improvements 4,491 3,783

Terminal machinery and equipment 557,788 519,603

Proved oil and gas properties — 20,099

Track and track related assets 2,349 2,208

2 unchanged sentences

Furniture and fixtures 2,449 2,322

Vehicles 450 649

Other 5,870 1,969

1,060,916 802,044

Accumulated depreciation ( 96,553 ) ( 69,935 )

Spare parts 1,519 1,519

Property, plant and equipment, net $ 964,363 $ 732,109

______________________________________________________________________________________

(1) Includes unproved oil and gas properties of $ 0 (net of the Long Ridge Transaction, as defined in Note 7) and $ 59,930 as of December 31, 2019 and 2018, respectively.

We added property, plant and equipment of $ 85.4 million (net of the Long Ridge Transaction, as defined in Note 7) and $ 232.9 million during the years ended December 31, 2019 and 2018, respectively, which primarily consists of terminal machinery and equipment placed in service or under development at Jefferson Terminal and Repauno.

We added property, plant and equipment of $ 258.9 million and $ 85.4 million during the years ended December 31, 2020 and 2019, respectively, which primarily consists of terminal machinery and equipment placed in service or under development at Jefferson Terminal and Repauno.

Depreciation expense for property, plant and equipment is summarized as follows:

9 unchanged sentences

Advanced Engine Repair JV Equity method 25 % $ 22,721 $ 24,652

JGP Energy Partners LLC Equity method at December 31, 2018 100 % and 50 % as of December 31, 2019 and 2018, respectively

Intermodal Finance I, Ltd.

1 unchanged sentence

Long Ridge Terminal LLC Equity method 50 % 122,539 155,397

FYX Trust Holdco LLC Equity 14 % 1,255 —

$ 146,515 $ 180,550

3 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

Equity Method Investments

The following table presents our proportionate share of equity in earnings (losses):

The following table presents our proportionate share of equity in (losses) earnings:

Year Ended December 31,

6 unchanged sentences

Total $ ( 5,039 ) $ ( 2,375 ) $ ( 1,008 )

Equity Method Investments

Long Ridge Terminal LLC

12 unchanged sentences

Initially, we concluded that we were not the primary beneficiary of JGP as the members shared equally in the risks and rewards and decision making authority of the entity and, therefore, we did not consolidate JGP and instead accounted for this investment in accordance with the equity method.

In December 2019, we purchased the remaining 50 % interest in JGP from the JV partner for a purchase price of approximately $ 30 million, consolidated JGP and no longer account for this as an equity method investment.

In December 2019, we purchased the remaining 50 % interest in JGP from the joint venture partner for a purchase price of approximately $ 30 million, consolidated JGP and no longer account for this as an equity method investment.

Intermodal Finance I, Ltd.

5 unchanged sentences

We do not have a variable interest in this investment as none of the criteria of ASC 810-10-15-14 were met.

As of December 31, 2019, Intermodal owns a portfolio of approximately 3,000 shipping containers subject to multiple operating leases.

As of December 31, 2020, Intermodal owns a portfolio of approximately 1,400 sh ipping containers subject to multiple operating leases.

Equity Investments

FYX Trust Holdco LLC

In July 2020, we invested $ 1.3 million for a 14 % interest in an operating company that provides roadside assistance services for the intermodal and over-the-road trucking industries.

FYX Trust Holdco LLC (“FYX”) has developed a mobile and web-based application that connects fleet managers, owner-operators, and drivers with repair vendors to efficiently and reliably quote, dispatch, monitor, and bill roadside repair services.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

7 unchanged sentences

Leasing equipment, net 1,078 2,546

Finance leases, net — 1,479

Property, plant, and equipment, net 612,234 390,416

22 unchanged sentences

Total expenses 38,204 18,320 15,501

Other income 734 2,070 3,667

Other (expense) income ( 1,585 ) 734 2,070

Loss before income taxes ( 14,710 ) ( 8,699 ) ( 3,996 )

54 unchanged sentences

FTAI Pride Credit

Agreement (1)

$ 36,009 LIBOR + 4.50 %

9/16/2020 $ 47,743

Jefferson Revolver (2)

50,000 (i) Base Rate + 1.50 %;

(ii) Base Rate + 2.50 % (Eurodollar)

3/7/2021 49,805

$ — N/A N/A $ 36,009

Jefferson Revolver — N/A N/A 50,000

DRP Revolver (1)

1 unchanged sentence

(ii) Base Rate + 2.50 % (Eurodollar)

11/5/2021 25,000

Revolving Credit

1 unchanged sentence

(ii) Adjusted Eurodollar Rate + 3.00 %

1/31/2022 100,000

Total loans payable 25,000 111,009

1 unchanged sentence

Series 2012 Bonds (3)

41,059 8.25 % 7/1/2032 42,797

Series 2016 Bonds (5)

144,200 7.25 % 2/1/2036 144,200

— N/A N/A 41,059

Series 2016 Bonds — N/A N/A 144,200

Series 2020 Bonds 263,980 See below See below —

Senior Notes due 2022 (4)

2 unchanged sentences

845,697 6.50 % 10/1/2025 444,957

Senior Notes due 2027 400,000 9.75 % 8/1/2027 —

Total bonds payable 1,915,984 1,328,030

4 unchanged sentences

______________________________________________________________________________________

(1) Secured on a first priority basis by the offshore vessel.

(1) Requires a quarterly commitment fee at a rate of 0.875 % on the average daily unused portion, as well as customary letter of credit fees and agency fees.

(2) Requires a quarterly commitment fee at a rate of 0.50 % on the average daily unused portion, as well as customary letter of credit fees and agency fees.

(4) Includes unamortized premium of $ 1,509 and $ 1,577 as of December 31, 2019 and 2018, respectively.

(5) These bonds have a stated maturity of February 1, 2036 but are subject to mandatory tender for purchase at par, by our subsidiary, on February 13, 2020 if they have not been repurchased from proceeds of a remarketing of the bonds or redeemed prior to such date.

(3) Includes unamortized premium of $ 1,509 as of December 31, 2019.

(4) Includes unamortized discount of $ 2,230 and $ 5,429 , respectively, and an unamortized premium of $ 8,537 and $ 3,243 , respectively, as of December 31, 2020 and 2019.

(5) Includes unamortized discount of $ 4,303 and $ 5,043 as of December 31, 2020 and 2019, respectively.

DRP Revolver —On November 5, 2018, our subsidiary entered into a revolving credit facility (the “DRP Revolver”) that provides for revolving loans in the aggregate amount of $ 25 million.

The DRP Revolver is secured by the capital stock of certain of our direct subsidiaries as defined in the related credit agreement.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

In the event of a credit agreement default by our subsidiary, including bankruptcy or insolvency, financial covenant default, or the failure to make a capital call under the relevant agreement, we have agreed to contribute capital to satisfy up to 120% of the aggregate outstanding obligations.

Jefferson Revolver —On December 20, 2018, our subsidiary entered into an amendment to the Jefferson Revolver which temporarily increased the aggregate revolving commitments by $ 25 million from $ 50 million to $ 75 million.

In July 2019, we repaid $ 23 million, and the aggregate revolving commitment reverted back to $ 50 million on August 1, 2019.

Senior Notes due 2022 — On February 8, 2019, we issued an additional $ 150 million of Senior Notes (“2022 Notes”) at an offering price of 98.5 % of the principal amount plus accrued interest from September 15, 2018.

Revolving Credit Facility —On February 8, 2019, we entered into an amendment to the Revolving Credit Facility which, among other things, (i) increased the aggregate revolving commitments by $ 125 million from $ 125 million to $ 250 million, (ii) extended the maturity date of the revolving loans and commitments to January 31, 2022 and (iii) made certain modifications to the financial covenants, including an increase in the maximum ratio of debt to total equity from 1.65 :1.00 to 2.00 :1.00.

On August 6, 2019, we entered into another amendment to the Revolving Credit Facility which, among other things, makes certain modifications to the financial covenants, including an increase in the maximum ratio of debt to total equity from 2.00 :1.00 to 3.00 :1.00.

LREG Credit Agreement — On February 15, 2019, Long Ridge Energy Generation LLC and two other subsidiaries (collectively, “Co-Borrowers”) entered into certain credit agreements establishing (i) a $ 445 million construction loan and term loan, (ii) a $ 154 million letter of credit facility and (iii) a $ 143 million construction loan and term loan, all of which will be used for the purposes of funding the development, construction and completion of the power plant at Long Ridge.

The borrowings under these agreements are secured by the assets of the Co-Borrowers, are not guaranteed by the Company and are non-recourse to the Company.

This debt was deconsolidated as a result of the Long Ridge Transaction.

See Note 7 for additional detail.

Senior Notes due 2025 — On May 21, 2019, we issued an additional $ 150 million of Senior Notes (“2025 Notes”) at an offering price of 99.125 % of the principal amount plus accrued interest from April 1, 2019.

FTAI Pride Credit Agreement — On September 30, 2019, our subsidiary entered into an amendment to the FTAI Pride Credit Agreement which extended the maturity date to September 16, 2020.

We fully extinguished certain debt of $ 100.0 million and recognized a loss on extinguishment of debt of $ 2.5 million during the year ended December 31, 2017.

We did not fully extinguish any debt in 2019 or 2018.

Series 2020 Bonds — On February 11, 2020, our subsidiary (“Jefferson”) issued Series 2020 Bonds in an aggregate principal amount of $ 264.0 million (“Jefferson Refinancing”).

The Series 2020 Bonds are designated as $ 184.9 million of Series 2020A Dock and Wharf Facility Revenue Bonds (the “Tax Exempt Series 2020A Bonds”), and $ 79.1 million of Series 2020B Taxable Facility Revenue Bonds (the “Taxable Series 2020B Bonds”).

The Tax Exempt Series 2020A Bonds maturing on January 1, 2035 ($ 53.5 million aggregate principal amount) bear interest at a fixed rate of 3.625 %.

The Tax Exempt Series 2020A Bonds maturing on January 1, 2050 ($ 131.4 million aggregate principal amount) bear interest at a fixed rate of 4.00 %.

The Taxable Series 2020B Bonds will mature on January 1, 2025 and bear interest at a fixed rate of 6.00 %.

Jefferson used a portion of the net proceeds from this offering to refund, redeem and defease the Series 2012 Bonds, Series 2016 Bonds and Jefferson Revolver, and intends to use a portion of the net proceeds to pay for or reimburse the cost of development, construction and acquisition of certain facilities, to fund certain reserve and funded interest accounts related to the Series 2020 Bonds, and to pay for or reimburse certain costs of issuance of the Series 2020 Bonds.

Jefferson recognized a loss on extinguishment of debt of $ 4.7 million as a result of this transaction.

FTAI Pride Credit Agreement — During March 2020, we repaid the FTAI Pride Credit Agreement in full.

Revolving Credit Facility — On May 11, 2020, we entered into an amendment to the Revolving Credit Facility which, among other things, (i) permits the incurrence of additional secured indebtedness to finance the potential acquisition of certain aviation assets, subject to certain limitations, (ii) provides that, to the extent borrowings under the existing agreement exceed $ 150 million, we will pledge certain aviation assets as additional collateral and (iii) incorporates certain other updates, including procedures by which the parties will select a replacement benchmark interest rate in the event that LIBOR is no longer available or appropriate as a reference rate upon which to determine the interest rate under the existing agreement.

Senior Notes due 2027 — On July 28, 2020, we issued $ 400 million aggregate principal amount of senior unsecured notes due 2027 (the “2027 Notes”).

The 2027 Notes bear interest at a rate of 9.75 % per annum, payable semi-annually in arrears on February 1 and August 1 of each year, commencing on February 1, 2021.

We used a portion of the proceeds to repay $ 220 million of outstanding borrowings under the Revolving Credit Facility, and intend to use the remaining proceeds for general corporate purposes, and the funding of future acquisitions and investments, including aviation investments.

Senior Notes due 2025 — On December 23, 2020, we issued an additional $ 400 million of 2025 Notes at an offering price of 101.75 % of the principal amount plus accrued interest from and including October 1, 2020.

We used a portion of the proceeds to repay $ 300 million of outstanding 2022 Notes through the Tender Offer (as defined below), and to repay $ 50 million of borrowings under the Revolving Credit Facility.

Tender Offer for Senior Notes due 2022 — On December 9, 2020, we commenced a cash tender offer (the “Tender Offer”) for up to $ 300 million aggregate principal amount of the 2022 Notes.

On December 23, 2020, we completed the Tender Offer for the entire $ 300 million aggregate principal amount of 2022 Notes validly tendered in connection with the Tender Offer.

Holders whose notes were accepted for purchase received total consideration of $ 1,016.00 per $1,000 principal amount of 2022 Notes, including an early tender premium equal to $ 30.00 per $1,000 principal amount of 2022 Notes, plus accrued and unpaid interest on the 2022 Notes from September 15, 2020 (the most recent payment of semi-annual interest) to, but not including, December 23, 2020, subject to the terms and conditions of the Tender Offer.

We recognized a loss on extinguishment of debt of $ 6.9 million in connection with this transaction.

We were in compliance with all debt covenants as of December 31, 2020.

1 unchanged sentence

2021 2022 2023 2024 2025 Thereafter Total

FTAI Pride Credit Agreement $ 36,009 $ — $ — $ — $ — $ — $ 36,009

Jefferson Revolver — 50,000 — — — — 50,000

DRP Revolver $ 25,000 $ — $ — $ — $ — $ — $ 25,000

1 unchanged sentence

Series 2020 Bonds — — — — 79,060 184,920 263,980

Series 2016 Bonds 144,200 — — — — — 144,200

Senior Notes due 2022 — 400,000 — — — — 400,000

Senior Notes due 2025 — — — — 850,000 — 850,000

Senior Notes due 2027 — — — — — 400,000 400,000

Total principal payments on loans and bonds payable $ 25,000 $ 400,000 $ — $ — $ 929,060 $ 584,920 $ 1,938,980

19 unchanged sentences

Restricted cash 39,715 39,715 — — Market

Derivative assets 181 — — 181 Income

Total assets $ 161,418 $ 161,418 $ — $ —

6 unchanged sentences

Total assets $ 242,698 $ 242,517 $ — $ 181

Derivative liabilities $ ( 925 ) $ — $ — $ ( 925 ) Income

Our cash and cash equivalents and restricted cash consist largely of demand deposit accounts with maturities of 90 days or less when purchased that are considered to be highly liquid.

These instruments are valued using inputs observable in active markets for identical instruments and are therefore classified as Level 1 within the fair value hierarchy.

The fair value of our commodity derivative assets and liabilities classified as Level 3 measurements are estimated by applying the income approach, which is based on discounted projected future cash flows.

The valuation of our electricity derivatives within our equity method investment in Long Ridge is based on management’s best estimate of certain key assumptions, which include extrapolated power forward curves for periods with unobservable market pricing, credit valuation adjustments utilizing estimated cash flows, estimated price volatility and probability of default, and the discount rate.

The valuation of our commodity derivatives is based on management’s best estimate of certain key assumptions, which include an estimated differential factor for varying quality of commodity and the discount rate.

Except as discussed below, our financial instruments other than cash and cash equivalents, restricted cash consist principally of accounts receivable, accounts payable and accrued liabilities, loans payable, bonds payable, security deposits, maintenance deposits and management fees payable, whose fair value approximates their carrying value based on an evaluation of pricing data, vendor quotes, and historical trading activity or due to their short maturity profiles.

4 unchanged sentences

Series 2012 Bonds (1)

$ 41,450 $ 42,633

Series 2016 Bonds (1)

145,143 149,582

Series A 2020 Bonds (2)

Series B 2020 Bonds (2)

Senior Notes due 2022 403,536 731,451

Senior Notes due 2025 888,701 475,884

Senior Notes due 2027 460,340 —

______________________________________________________________________________________

(1) These bonds were defeased as part of the Jefferson Refinancing.

See Note 9 for additional details.

(2) Fair value is based upon market prices for similar municipal securities.

Due to the COVID-19 pandemic, the fair values of our notes and bonds fluctuated significantly during 2020 and may continue to fluctuate based on market conditions and other factors.

The fair value of all other items reported as debt, net in the Consolidated Balance Sheet approximate their carrying values due to their bearing market rates of interest and are classified as Level 2 within the fair value hierarchy.

7 unchanged sentences

These crude oil forward purchase and sales contracts are not designated in hedging relationships.

The following table presents information related to our outstanding derivative contracts:

Notional Amount Fair Value of Assets (1)

Fair Value of Liabilities (1)

December 31, 2019

Crude oil forwards (BBL) 150 $ 181 $ — 1 to 2 months

December 31, 2018

Crude oil forwards (BBL) 3,225 $ 7,470 $ ( 925 ) 1 to 12 months

______________________________________________________________________________________

(1) Included in Other assets and Other liabilities, respectively, in our Consolidated Balance Sheets.

The following table presents a summary of the changes in fair value for all Level 3 derivatives:

2 unchanged sentences

Beginning Balance $ 181 $ 6,545 $ 1,022

Net unrealized gains (losses) recognized in earnings ( 6,364 ) 5,523 1,022

Net (losses) gains recognized in earnings ( 181 ) ( 6,364 ) 5,523

Purchases — 314 8,473

62 unchanged sentences

Terminal services revenues — 10,108 — — 10,108

Crude marketing revenues — 60,518 — — 60,518

Other revenue — 87 15,982 644 16,713

11 unchanged sentences

We have commitments as lessees under lease agreements primarily for real estate, equipment and vehicles.

Our leases have remaining lease terms ranging from approximately 2 years to 46 years.

The following table presents lease related costs for the year ended December 31, 2019:

Our leases have remaining lease terms ranging from approximately 4 months to 42 years.

The following table presents lease related costs:

Year Ended December 31,

Operating lease expense $ 4,719 $ 5,857

23 unchanged sentences

Total lease liabilities $ 62,001

During the year ended December 31, 2019, we entered into lease agreements for real estate and office equipment that had a ROU asset value of approximately $ 3.5 million and lease terms ranging from 5 years to 46 years at commencement.

During the year ended December 31, 2020, we amended a lease agreement for real estate in connection with the Jefferson Refinancing.

The amended lease had a ROU asset value of $ 59.8 million and a lease term of approximately 43 years at commencement.

EQUITY-BASED COMPENSATION

28 unchanged sentences

Weighted average remaining contractual term (in years) 8.2 1.1 1.4

During the year ended December 31, 2020, the Manager transferred 252,472 of its options to certain of the Manager’s employees.

Stock Options

In connection with our equity offerings in 2020, 2019 and 2018 (see Note 18 for details), we granted options to the Manager related to common shares.

The fair value of these options were recorded as an increase in equity with an offsetting reduction of capital proceeds received.

The following table presents information related to the options issued in 2019 and 2018:

November 2019 September 2019 December 2018 January 2018

The fair value of these options was recorded as an increase in equity with an offsetting reduction of capital proceeds received.

The following table presents information related to the options related to our shares:

Year Ended December 31,

2020 2019 2018

Number of options 129,988 1,262,362 826,342

7 unchanged sentences

Expected term Expected term used represents the period of time the options granted are expected to be outstanding.

10 years 10 years 10 years 10 years

Restricted Shares

In June 2019, we issued 113,121 restricted shares of our subsidiary that had a grant date fair value of $ 1.5 million, of which 25,138 shares vested during the period of issuance.

The remaining shares vest over three years , subject to continued employment, and the compensation expense is recognized ratably over the vesting periods.

In May 2017, we issued 31,340 restricted shares of our subsidiary that had a grant date fair value of $ 0.5 million.

The shares vest over four years , subject to continued employment, and the compensation expense is recognized ratably over the vesting periods.

The fair value of the above awards was based on the fair value of the operating subsidiary on each grant date, which was estimated using a discounted cash flow analysis which requires the application of discount factors and terminal multiples to projected cash flows.

Discount factors and terminal multiples were based on market based inputs and transactions, as available at the measurement date.

10 years 10 years 10 years

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

Restricted Shares

We issued 545,806 and 113,121 restricted shares of our subsidiary during the years ended December 31, 2020 and 2019, respectively, that had grant date fair values of $ 4.0 million and $ 1.5 million, respectively, and generally vest over three years .

These awards are subject to continued employment, and the compensation expense is recognized ratably over the vesting periods.

The fair value of these awards was based on the fair value of the operating subsidiary on each grant date, which was estimated using a discounted cash flow analysis that requires the application of discount factors and terminal multiples to projected cash flows.

Discount factors and terminal multiples were based on market-based inputs and transactions, as available at the measurement date.

We issued 1,883,772 , 1,110,000 and 670,000 common units of our subsidiary during the years ended December 31, 2020, 2019 and 2018, respectively, that had grant date fair values of $ 2.1 million, $ 3.4 million and $ 0.7 million, respectively, and vest over three years .

2 unchanged sentences

Discount factors and terminal multiples were based on market-based inputs and transactions, as available at the measurement date.

The current and deferred components of the income tax provision included in the Consolidated Statements of Operations are as follows:

The current and deferred components of the income tax (benefit) provision included in the Consolidated Statements of Operations are as follows:

Year Ended December 31,

7 unchanged sentences

Foreign ( 4,882 ) 4,845 ( 88 )

Total deferred provision 17,144 2,061 182

Provision for (benefit from) income taxes:

Total deferred (benefit) provision ( 6,619 ) 17,144 2,061

(Benefit from) provision for income taxes:

Continuing operations ( 5,905 ) 17,810 2,449

52 unchanged sentences

In addition, the maximum annual use of net operating loss carryforwards may be limited after certain changes in stock ownership.

The TCJA significantly revises the U.S.

corporate income tax regime by, among other things, lowering corporate income tax rates.

We have accounted for the effects of the TCJA for the year ended December 31, 2017 which relates to the re-measurement of deferred tax assets and liabilities due to the reduction in the corporate income tax rate.

Due to the significant portion of our income that is not subject to entity level tax and the presence of a significant valuation allowance, the effects of the TCJA have had a minimal impact on the income tax provision for the year ended December 31, 2017.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

As of and for the period ended December 31, 2020, we had not established a liability for uncertain tax positions as no such positions existed.

3 unchanged sentences

We do not believe that it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within 12 months of the reporting date.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

MANAGEMENT AGREEMENT AND AFFILIATE TRANSACTIONS

1 unchanged sentence

In addition, the Manager may be reimbursed for various expenses incurred by the Manager on our behalf, including the costs of legal, accounting and other administrative activities.

In May 2015, in connection with our IPO, we entered into the Management Agreement which replaced our then-existing management agreement as a private fund.

In May 2015, in connection with our IPO, we entered into the Management Agreement.

Additionally, we have entered into certain incentive allocation arrangements with Master GP, which owns approximately 0.05 % of the Partnership and is the general partner of the Partnership.

The Manager is entitled to a management fee, incentive allocations (comprised of income incentive allocation and capital gains incentive allocation, defined below) and reimbursement of certain expenses.

The post-IPO management fee is determined by taking the average value of total equity (excluding non-controlling interests) determined on a consolidated basis in accordance with GAAP at the end of the two most recently completed months multiplied by an annual rate of 1.50 %, and is payable monthly in arrears in cash.

The management fee is determined by taking the average value of total equity (excluding non-controlling interests) determined on a consolidated basis in accordance with GAAP at the end of the two most recently completed months multiplied by an annual rate of 1.50 %, and is payable monthly in arrears in cash.

The income incentive allocation is calculated and distributable quarterly in arrears based on the pre-incentive allocation net income for the immediately preceding calendar quarter (the “Income Incentive Allocation”).

29 unchanged sentences

Total $ 11,633 $ 14,416 $ 16,563

________________________________________________________

(1) Due to the Aviation Restructuring (as defined in Note 17), during the years ended December 31, 2019 and 2018, $ 11,659 and $ 5,551 , respectively, was restated from the Corporate and Other segment to the Aviation Leasing segment, of which $ 3,536 and $ 1,836 , respectively, was reclassified from General and administrative to Operating expenses and $ 8,123 and $ 3,715 , respectively, remained in Acquisition and transaction expenses.

See Note 17 for additional details.

If we terminate the Management Agreement, we will generally be required to pay the Manager a termination fee.

2 unchanged sentences

The Incentive Allocation Fair Value Amount is an amount equal to the Income Incentive Allocation and the Capital Gains Incentive Allocation that would be paid to the Master GP if our assets were sold for cash at their then current fair market value (as determined by an appraisal, taking into account, among other things, the expected future value of the underlying investments).

Upon the successful completion of a post-IPO offering of our common shares or other equity securities (including securities issued as consideration in an acquisition), we will grant the Manager options to purchase common shares in an amount equal to 10 % of the number of common shares being sold in the offering (or if the issuance relates to equity securities other than our common shares, options to purchase a number of common shares equal to 10 % of the gross capital raised in the equity issuance divided by the fair market value of a common share as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a common share as of the date of the equity issuance if it relates to equity securities other than our common shares).

Any ultimate purchaser of common shares for which such options are granted may be an affiliate of Fortress.

Upon the successful completion of an offering of our common shares or other equity securities (including securities issued as consideration in an acquisition), we grant the Manager options to purchase common shares in an amount equal to 10 % of the number of common shares being sold in the offering (or if the issuance relates to equity securities other than our common shares, options to purchase a number of common shares equal to 10 % of the gross capital raised in the equity issuance divided by the fair market value of a common share as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a common share as of the date of the equity issuance if it relates to equity securities other than our common shares).

Any ultimate purchaser of common shares for which such options are granted may be an affiliate the Manager.

The following table summarizes amounts due to the Manager, which are included within accounts payable and accrued liabilities in the Consolidated Balance Sheets:

1 unchanged sentence

Other payables (1)

________________________________________________________

(1) Includes $ 21.2 million related to incentive fees, as of December 31, 2019, which we paid in 2020.

As of December 31, 2020 and 2019, no amounts were recorded as a receivable from the Manager.

9 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

In July 2020, we purchased a 14 % interest in FYX from an affiliate of our Manager, which retained a non-controlling interest in FYX subsequent to the transaction.

Additionally, other investors in FYX are also affiliates of our Manager.

See Note 7 for additional information related to FYX.

During the year ended December 31, 2020, we granted options to the Manager in connection with preferred shares sold under the ATM Program (as defined in Note 18).

See Note 18 for additional information.

In connection with the Capital Call Agreement related to the Series 2016 Bonds, we entered into a Fee and Support Agreement with an affiliate of our Manager.

1 unchanged sentence

This affiliate of the Manager received fees of $ 1.7 million, which will be amortized as interest expense to the earlier of the redemption date or February 13, 2020.

In connection with the amendment to the Jefferson Revolver, on December 20, 2018, our subsidiary and an affiliate of our Manager entered into an amended and restated Fee and Support Agreement, and our subsidiary issued a $ 0.3 million promissory note to the affiliate of our Manager, as consideration for the fee payable pursuant to the amended and restated Fee and Support Agreement.

In February 2020, the Fee and Support Agreement was terminated in connection with the Jefferson Refinancing.

On June 21, 2018, we, through a wholly owned subsidiary, completed a private offering with several third parties (the “Holders”) to tender their approximately 20 % stake in Jefferson Terminal.

3 unchanged sentences

This transaction resulted in a purchase of non-controlling interest shares.

See Note 18 for details related to conversions during the period.

In the second quarter of 2018, we purchased all shares held by the non-controlling interest holder in our Aviation Leasing segment for a purchase price of $ 3.7 million.

8 unchanged sentences

Under ASC 205-20, this disposition met the criteria to be reported as discontinued operations and the assets, liabilities and results of operations have been presented as discontinued operations for all periods presented.

Corporate and Other primarily consists of debt, unallocated company level general and administrative expenses, and management fees.

Additionally, Corporate and Other includes (i) offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas drilling and production which are typically subject to long-term operating leases, (ii) an investment in an unconsolidated entity engaged in the acquisition and leasing of shipping containers (on both an operating lease and finance lease basis) and (iii) railroad assets retained after the December 2019 sale, which consists of equipment that support a railcar cleaning business.

During 2019, we updated our segment performance measure from Adjusted Net Income to Adjusted EBITDA (see definition below) as this is the primary performance measure that our Chief Operating Decision Maker (“CODM”) utilizes to assess operational performance, as well as make resource and allocation decisions.

In connection with the change in our performance measure, in accordance with ASC 280, we also assessed our reportable segments.

We determined that our Offshore Energy and Shipping Containers segments no longer met the requirement as reportable segments.

In addition, with the December 2019 sale of substantially all of our railroad business, the Railroad segment no longer met the requirement as a reportable segment.

Accordingly, we have presented these operating segments, along with Corporate results, within Corporate and Other effective in 2019.

Additionally, in accordance with ASC 280, we assessed our reportable segments.

We determined that our retained investment of the railroad business no longer met the requirement as a reportable segment.

Accordingly, we have presented this operating segment, along with Corporate results, within Corporate and Other effective in 2019.

All prior periods have been restated for historical comparison across segments.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies (Note 2);

Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, and management fees.

Additionally, Corporate and Other includes (i) offshore energy related assets which consist of vessels and equipment that support offshore oil and gas activities and are typically subject to long-term operating leases, (ii) an investment in an unconsolidated entity engaged in the leasing of shipping containers and (iii) railroad assets retained after the December 2019 sale, which consist of equipment that support a railcar cleaning business.

Aviation Leasing Organizational Restructuring

In early 2020, we completed an organizational restructuring of the Aviation Leasing segment.

Previously, Aviation Leasing’s employees were employed by the Manager and compensation and related costs associated with these employees were reimbursed to the Manager, per the Management Agreement (see Note 16).

These costs were reported within Corporate and Other.

Effective in the first quarter of 2020, Aviation Leasing’s employees are employed by one of our subsidiaries.

Compensation and related costs incurred by this subsidiary are reported within the Aviation Leasing segment.

Prior periods have been restated for historical comparison.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following table presents our adjustments for the year ended December 31, 2019:

As Previously Reported Adjustments As Reported

Aviation Leasing Corporate and Other Aviation Leasing Corporate and Other Aviation Leasing Corporate and Other

Operating expenses $ 14,132 $ 17,544 $ 3,536 $ — $ 17,668 $ 17,544

General and administrative — 20,441 — ( 3,536 ) — 16,905

Acquisition and transaction expenses 518 12,097 8,123 ( 8,123 ) 8,641 3,974

The following table presents our adjustments for the year ended December 31, 2018:

As Previously Reported Adjustments As Reported

Aviation Leasing Corporate and Other Aviation Leasing Corporate and Other Aviation Leasing Corporate and Other

Operating expenses $ 9,149 $ 14,487 $ 1,836 $ — $ 10,985 $ 14,487

General and administrative — 17,126 — ( 1,836 ) — 15,290

Acquisition and transaction expenses 315 6,653 3,715 ( 3,715 ) 4,030 2,938

The accounting policies of the segments are the same as those described in the summary of significant accounting policies;

however, financial information presented by segment includes the impact of intercompany eliminations.

19 unchanged sentences

Depreciation and amortization 133,904 29,034 1,497 7,965 172,400

Asset impairment 33,978 — — — 33,978

Interest expense — 9,426 1,335 87,445 98,206

Total expenses 195,236 91,532 14,066 159,808 460,642

Other income (expense)

Equity in losses of unconsolidated entities ( 1,829 ) ( 292 ) ( 192 ) ( 62 ) ( 2,375 )

Gain on sale of assets, net 81,954 4,636 116,660 — 203,250

Asset impairment — — ( 4,726 ) — ( 4,726 )

Other (expense) income

Equity in (losses) earnings of unconsolidated entities ( 1,932 ) — ( 3,222 ) 115 ( 5,039 )

Loss on sale of assets, net ( 300 ) ( 8 ) — — ( 308 )

Loss on extinguishment of debt — ( 4,724 ) — ( 6,943 ) ( 11,667 )

Interest income 94 22 — 46 162

Other income — 70 — — 70

Total other income 80,229 5,096 113,840 960 200,125

Total other (expense) income ( 2,138 ) ( 4,640 ) ( 3,222 ) ( 6,782 ) ( 16,782 )

Income (loss) from continuing operations before income taxes 83,837 ( 35,889 ) ( 13,433 ) ( 145,443 ) ( 110,928 )

Provision for income taxes 2,826 284 14,700 — 17,810

(Benefit from) provision for income taxes ( 4,812 ) 278 ( 1,791 ) 420 ( 5,905 )

Net income (loss) from continuing operations 88,649 ( 36,167 ) ( 11,642 ) ( 145,863 ) ( 105,023 )

5 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders from continuing operations:

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders from continuing operations:

Year Ended December 31, 2020

13 unchanged sentences

Equity-based compensation expense ( 2,325 )

Provision for income taxes ( 17,810 )

Net income attributable to shareholders from continuing operations $ 150,055

Benefit from income taxes 5,905

Net loss attributable to shareholders from continuing operations $ ( 106,370 )

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

23 unchanged sentences

Depreciation and amortization 128,990 22,873 9,849 7,311 169,023

Asset impairment — — 4,726 — 4,726

Interest expense — 16,189 1,712 77,684 95,585

1 unchanged sentence

Other income (expense)

Equity in (losses) earnings of unconsolidated entities ( 743 ) ( 574 ) — 309 ( 1,008 )

Equity in losses of unconsolidated entities ( 1,829 ) ( 292 ) ( 192 ) ( 62 ) ( 2,375 )

Gain on sale of assets, net 81,954 4,636 116,660 — 203,250

3 unchanged sentences

Income (loss) from continuing operations before income taxes 261,605 ( 61,124 ) 94,604 ( 142,953 ) 152,132

Provision for (benefit from) income taxes 2,280 261 1 ( 93 ) 2,449

Provision for income taxes 2,826 284 14,700 — 17,810

Net income (loss) from continuing operations 258,779 ( 61,408 ) 79,904 ( 142,953 ) 134,322

51 unchanged sentences

Other income (expense)

Equity in losses of unconsolidated entities ( 1,276 ) ( 321 ) — ( 4 ) ( 1,601 )

Equity in (losses) earnings of unconsolidated entities ( 743 ) ( 574 ) — 309 ( 1,008 )

Gain on sale of assets, net 3,911 — — — 3,911

Loss on extinguishment of debt — — — ( 2,456 ) ( 2,456 )

Interest income 202 270 — 16 488

4 unchanged sentences

Net income (loss) from continuing operations 127,926 ( 55,477 ) ( 6,657 ) ( 85,898 ) ( 20,106 )

Net income (loss) from continuing operations attributable to non-controlling interests in consolidated subsidiaries 697 ( 22,991 ) ( 484 ) ( 526 ) ( 23,304 )

Dividends on preferred shares — — — — —

Net loss from continuing operations attributable to non-controlling interests in consolidated subsidiaries ( 24 ) ( 21,801 ) ( 100 ) — ( 21,925 )

Net income (loss) attributable to shareholders from continuing operations $ 127,950 $ ( 33,676 ) $ ( 6,557 ) $ ( 85,898 ) $ 1,819

66 unchanged sentences

Total liabilities and equity $ 1,694,837 $ 781,422 $ 366,402 $ 394,261 $ 3,236,922

______________________________________________________________________________________

(1) Excludes assets, liabilities and equity from discontinued operations.

December 31, 2019

9 unchanged sentences

EARNINGS PER SHARE AND EQUITY

Basic earnings per common share (“EPS”) is calculated by dividing net income attributable to shareholders by the weighted average number of shares of common stock outstanding, plus any participating securities.

Diluted EPS is calculated by dividing net income attributable to shareholders by the weighted average number of shares of common stock outstanding, plus potentially dilutive securities.

Basic earnings per common share (“EPS”) is calculated by dividing net income attributable to shareholders by the weighted average number of common shares outstanding, plus any participating securities.

Diluted EPS is calculated by dividing net income attributable to shareholders by the weighted average number of common shares outstanding, plus any participating securities and potentially dilutive securities.

Potentially dilutive securities are calculated using the treasury stock method.

5 unchanged sentences

(in thousands, except share and per share data) 2020 2019 2018

Net income (loss) from continuing operations $ 134,322 $ ( 20,106 ) $ ( 22,503 )

Net income (loss) from discontinued operations, net of income taxes 73,462 4,402 ( 737 )

Net income (loss) 207,784 ( 15,704 ) ( 23,240 )

Net income (loss) attributable to non-controlling interests in consolidated subsidiaries:

Net (loss) income from continuing operations $ ( 105,023 ) $ 134,322 $ ( 20,106 )

Net income from discontinued operations, net of income taxes 1,331 73,462 4,402

Net (loss) income ( 103,692 ) 207,784 ( 15,704 )

Net (loss) income attributable to non-controlling interests in consolidated subsidiaries:

Continuing operations ( 16,522 ) ( 17,571 ) ( 21,925 )

1 unchanged sentence

Dividends on preferred shares 17,869 1,838 —

Net income attributable to shareholders $ 223,270 $ 5,882 $ 134

Net (loss) income attributable to shareholders $ ( 105,039 ) $ 223,270 $ 5,882

Weighted average shares outstanding:

6 unchanged sentences

The calculation of Diluted EPS excludes 24,652 , 150,981 and 57,069 shares for the years ended December 31, 2020, 2019 and 2018, respectively, because the impact would be anti-dilutive.

Certain holders of Class B Units (see Note 16) converted 1,134,806 Class B Units in exchange for 840,434 common shares during the year December 31, 2019.

Certain holders of Class B Units (see Note 16) converted 911,448 and 1,134,806 Class B Units, respectively, in exchange for 675,015 and 840,434 common shares, respectively, during the years ended December 31, 2020 and 2019.

We issued 24,683 common shares to certain directors as compensation during the year December 31, 2020.

At the Market Program

On June 30, 2020, we entered into an At Market Issuance Sales Agreement with a third party to sell shares of our Series A Preferred Shares and Series B Preferred Shares (collectively, the “ATM Shares”), having an aggregate offering price of up to $ 100 million, from time to time, through an “at-the market” equity offering program (the “ATM Program”).

We sold 1,070,000 ATM Shares at a weighted average price of $ 19.54 per share for net proceeds of $ 20.6 million during the year December 31, 2020.

In connection with the shares sold under the ATM Program, we granted options to the Manager relating to 129,988 common shares, which had a grant date fair value of $ 0.7 million.

Preferred Shares

7 unchanged sentences

We believe the risk of loss in connection with such arrangements is remote.

We have also entered into an arrangement with our non-controlling interest holder of Repauno, whereby the non-controlling interest holder may receive additional payments contingent upon the achievement of certain service conditions, not to exceed $ 15.0 million.

We will account for such amounts when and if such service conditions are achieved.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

W e recorded $ 1.0 million of related expense during the year ended December 31, 2020.

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

4 unchanged sentences

Total expenses 111,125 111,367 107,847 130,303 460,642

Total other (expense) income ( 1,178 ) 27,630 37,338 136,335 200,125

(Loss) income from continuing operations before income taxes ( 9,687 ) 12,680 20,608 128,531 152,132

Provision for (benefit from) income taxes 267 ( 2,328 ) 872 18,999 17,810

Net (loss) income from continuing operations ( 9,954 ) 15,008 19,736 109,532 134,322

Total other expense ( 6,204 ) ( 2,420 ) ( 3,557 ) ( 4,601 ) ( 16,782 )

Loss from continuing operations before income taxes ( 4,489 ) ( 19,478 ) ( 27,695 ) ( 59,266 ) ( 110,928 )

(Benefit from) provision for income taxes ( 98 ) ( 3,750 ) ( 2,486 ) 429 ( 5,905 )

Net loss from continuing operations ( 4,391 ) ( 15,728 ) ( 25,209 ) ( 59,695 ) ( 105,023 )

Net income from discontinued operations, net of income taxes 1,331 — — — 1,331

Net (loss) income ( 9,796 ) 15,793 20,676 181,111 207,784

Net (loss) income attributable to non-controlling interests in consolidated subsidiaries:

Net loss ( 3,060 ) ( 15,728 ) ( 25,209 ) ( 59,695 ) ( 103,692 )

Net loss attributable to non-controlling interests in consolidated subsidiaries:

Continuing operations ( 4,736 ) ( 4,112 ) ( 3,876 ) ( 3,798 ) ( 16,522 )

1 unchanged sentence

Dividends on preferred shares 4,539 4,079 4,625 4,626 17,869

Net (loss) income attributable to shareholders $ ( 6,380 ) $ 20,332 $ 25,671 $ 183,647 $ 223,270

Net loss attributable to shareholders $ ( 2,863 ) $ ( 15,695 ) $ ( 25,958 ) $ ( 60,523 ) $ ( 105,039 )

(Loss) earnings per share:

13 unchanged sentences

Total expenses 123,403 164,798 169,430 173,862 631,493

Total other income 431 5,983 621 339 7,374

Total other (expense) income ( 1,178 ) 27,630 37,338 141,061 204,851

(Loss) income from continuing operations before income taxes ( 9,687 ) 12,680 20,608 128,531 152,132

Provision for income taxes 495 534 551 869 2,449

Provision for (benefit from) income taxes 267 ( 2,328 ) 872 18,999 17,810

Net (loss) income from continuing operations ( 9,954 ) 15,008 19,736 109,532 134,322

Net income (loss) from discontinued operations, net of income taxes 2,706 253 ( 134 ) 1,577 4,402

Net income from discontinued operations, net of income taxes 158 785 940 71,579 73,462

Net (loss) income ( 9,796 ) 15,793 20,676 181,111 207,784

14 unchanged sentences

In January 2021, we issued 6,594 common shares to certain directors as compensation.

Certain holders of Class B Units converted 85,794 Class B Units in exchange for 63,538 common shares during the first quarter of 2020.

Series 2020 Bonds

On February 11, 2020, our subsidiary (“Jefferson”) issued Series 2020 Bonds in an aggregate principal amount of approximately $ 264.0 million.

The Series 2020 Bonds are designated as $ 184.9 million of Series 2020A Dock and Wharf Facility Revenue Bonds (the “Series 2020A Bonds”), and $ 79.1 million of Series 2020B Taxable Facility Revenue Bonds (the “Taxable Series 2020B Bonds”).

The Series 2020A Bonds maturing on January 1, 2035 ($ 53.5 million aggregate principal amount) bear interest at a fixed rate of 3.625 %.

The Series 2020A Bonds maturing on January 1, 2050 ($ 131.4 million aggregate principal amount) bear interest at a fixed rate of 4.00 %.

The Taxable Series 2020B Bonds will mature on January 1, 2025 and bear interest at a fixed rate of 6.00 %.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

On February 25, 2021, our Board of Directors declared a cash dividend on our common shares and eligible participating securities of $ 0.33 per share for the quarter ended December 31, 2020, payable on March 23, 2021 to the holders of record on March 12, 2021.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data