FTAI Aviation Ltd. 10-K

Item 8. Financial Statements and Supplementary Data Index to Financial Statements: Consolidated Financial Statements of Fortress Transportation and Infrastructure Investors LLC: Report of Independent Registered Public Accounting Firm 61 Consolidated Balance Sheets as of December 31, 2020 and 2019 63 Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 64 Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2020, 2019 and 2018 65 Consolidated Statement of Changes in Equity for the years ended December 31, 2020, 2019 and 2018 66 Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 67 Notes to Consolidated Financial Statements 69 60 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Fortress Transportation and Infrastructure Investors LLC Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Fortress Transportation and Infrastructure Investors LLC (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2021 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 61 Valuation of Goodwill-Jefferson Terminal Reporting Unit 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 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. 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 impairment test. For example, we compared the significant assumptions used by management to current industry, market and economic trends; to the historical results of the reporting unit and other guideline companies within the same industry; 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 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 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 determining the estimated timing of major maintenance events as 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 analyses. 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 We have served as the Company’s auditor since 2016. New York, New York February 26, 2021 62 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share and per share data) Notes December 31, 2020 2019 Assets Cash and cash equivalents 2 $ 121,703 $ 226,512 Restricted cash 2 39,715 16,005 Accounts receivable, net 91,691 49,470 Leasing equipment, net 4 1,635,259 1,707,059 Operating lease right-of-use assets, net 13 62,355 37,466 Finance leases, net 5 6,927 8,315 Property, plant, and equipment, net 6 964,363 732,109 Investments 7 146,515 180,550 Intangible assets, net 8 18,786 27,692 Goodwill 122,735 122,639 Other assets 2 177,928 129,105 Total assets $ 3,387,977 $ 3,236,922 Liabilities Accounts payable and accrued liabilities $ 113,185 $ 144,855 Debt, net 9 1,904,762 1,420,928 Maintenance deposits 2 148,293 208,944 Security deposits 2 37,064 45,252 Operating lease liabilities 13 62,001 36,968 Other liabilities 23,351 41,118 Total liabilities $ 2,288,656 $ 1,898,065 Commitments and contingencies 19 Equity Common shares ($ 0.01 par value per share; 2,000,000,000 shares authorized; 85,617,146 and 84,917,448 shares issued and outstanding as of December 31, 2020 and 2019, respectively) $ 856 $ 849 Preferred shares ($ 0.01 par value per share; 200,000,000 shares authorized; 9,120,000 and 8,050,000 shares issued and outstanding as of December 31, 2020 and 2019, respectively) 91 81 Additional paid in capital 1,130,106 1,110,122 (Accumulated deficit) retained earnings ( 28,158 ) 190,453 Accumulated other comprehensive (loss) income ( 26,237 ) 372 Shareholders' equity 1,076,658 1,301,877 Non-controlling interest in equity of consolidated subsidiaries 22,663 36,980 Total equity $ 1,099,321 $ 1,338,857 Total liabilities and equity $ 3,387,977 $ 3,236,922 See accompanying notes to consolidated financial statements. 63 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share data) Year Ended December 31, Notes 2020 2019 2018 Revenues Equipment leasing revenues $ 297,934 $ 349,322 $ 253,039 Infrastructure revenues 68,562 229,452 89,073 Total revenues 12 366,496 578,774 342,112 Expenses Operating expenses 109,512 291,572 138,406 General and administrative 18,159 16,905 15,290 Acquisition and transaction expenses 9,868 17,623 6,968 Management fees and incentive allocation to affiliate 16 18,519 36,059 15,726 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 (expense) income Equity in losses of unconsolidated entities 7 ( 5,039 ) ( 2,375 ) ( 1,008 ) (Loss) gain on sale of assets, net ( 308 ) 203,250 3,911 Loss on extinguishment of debt ( 11,667 ) — — Interest income 162 531 488 Other income 70 3,445 3,983 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 ) Less: Net (loss) income attributable to non-controlling interests in consolidated subsidiaries: Continuing operations ( 16,522 ) ( 17,571 ) ( 21,925 ) Discontinued operations 3 — 247 339 Less: Dividends on preferred shares 17,869 1,838 — Net (loss) income attributable to shareholders $ ( 105,039 ) $ 223,270 $ 5,882 (Loss) earnings per share: Basic 18 Continuing operations $ ( 1.24 ) $ 1.74 $ 0.02 Discontinued operations $ 0.02 $ 0.85 $ 0.05 Diluted 18 Continuing operations $ ( 1.24 ) $ 1.74 $ 0.02 Discontinued operations $ 0.02 $ 0.85 $ 0.05 Weighted average shares outstanding: Basic 86,015,702 85,992,019 83,654,068 Diluted 86,015,702 86,029,363 83,664,833 See accompanying notes to consolidated financial statements. 64 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Dollars in thousands) Year Ended December 31, 2020 2019 2018 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: Continuing operations ( 16,522 ) ( 17,571 ) ( 21,925 ) Discontinued operations — 247 339 Comprehensive (loss) income attributable to shareholders $ ( 113,779 ) $ 225,480 $ 5,882 __________________________________________________ (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. 65 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Dollars in thousands) 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 income — — — — Total comprehensive income (loss) 5,882 — ( 21,586 ) ( 15,704 ) Purchase of non-controlling interest 7,225 ( 10,930 ) ( 3,705 ) Issuance of common shares 82 147,717 — 147,799 Dividends declared - common shares ( 110,584 ) — ( 110,584 ) Equity-based compensation 9 892 901 Equity - December 31, 2018 $ 840 $ — $ 1,029,376 $ ( 32,817 ) $ — $ 56,383 $ 1,053,782 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 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 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 ) Issuance of common shares 7 304 311 Conversion of participating securities ( 7 ) ( 7 ) Dividends declared - common shares ( 113,572 ) ( 113,572 ) Issuance of preferred shares 10 19,687 19,697 Dividends declared - preferred shares ( 17,869 ) ( 17,869 ) Equity-based compensation — 2,325 2,325 Equity - December 31, 2020 $ 856 $ 91 $ 1,130,106 $ ( 28,158 ) $ ( 26,237 ) $ 22,663 $ 1,099,321 See accompanying notes to consolidated financial statements. 66 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Year Ended December 31, 2020 2019 2018 Cash flows from 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 ) — 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 ) Loss on extinguishment of debt 11,667 — — Equity-based compensation 2,325 8,404 901 Depreciation and amortization 172,400 171,225 136,354 Asset impairment 33,978 4,726 — Change in deferred income taxes ( 5,851 ) 14,495 649 Change in fair value of non-hedge derivatives 181 4,555 ( 5,523 ) Amortization of lease intangibles and incentives 30,346 30,162 26,659 Amortization of deferred financing costs 7,315 8,333 5,430 Bad debt expense 3,595 3,986 1,771 Other 1,502 827 ( 4 ) Change in: Accounts receivable ( 59,734 ) ( 22,622 ) ( 23,340 ) Other assets 3,660 ( 17,890 ) ( 26,212 ) Accounts payable and accrued liabilities ( 5,258 ) 31,543 30,471 Management fees payable to affiliate ( 20,622 ) 19,080 1,820 Other liabilities ( 6,360 ) ( 14,837 ) 9,651 Net cash provided by operating activities 63,106 151,043 133,697 Cash flows from investing activities: Investment in notes receivable — — ( 912 ) Investment in unconsolidated entities and available for sale securities ( 4,690 ) ( 13,500 ) ( 1,115 ) Principal collections on finance leases 13,823 13,398 1,981 Acquisition of leasing equipment ( 321,606 ) ( 568,569 ) ( 497,988 ) Acquisition of property, plant and equipment ( 264,829 ) ( 331,171 ) ( 229,963 ) Acquisition of lease intangibles 1,997 606 ( 11,396 ) Acquisition of remaining interest in JV investment — ( 28,828 ) — Purchase deposit for aircraft and aircraft engines ( 8,343 ) ( 1,000 ) ( 10,150 ) Proceeds from sale of subsidiaries — 183,819 — Proceeds from sale of leasing equipment 72,175 248,454 44,062 Proceeds from sale of property, plant and equipment — — 23 Proceeds from deposit on sale of leasing equipment — — 240 Return of deposit on sale of leasing equipment 2,350 — ( 400 ) Return of capital distributions from unconsolidated entities — 1,555 2,085 Net cash used in investing activities $ ( 509,123 ) $ ( 495,236 ) $ ( 703,533 ) See accompanying notes to consolidated financial statements. 67 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Year Ended December 31, 2020 2019 2018 Cash flows from financing activities: Proceeds from debt $ 1,340,981 $ 788,829 $ 750,980 Repayment of debt ( 852,197 ) ( 405,131 ) ( 218,819 ) Payment of deferred financing costs ( 28,243 ) ( 34,218 ) ( 3,055 ) Receipt of security deposits 3,242 7,887 9,264 Return of security deposits ( 4,655 ) ( 368 ) ( 1,775 ) Receipt of maintenance deposits 33,369 65,279 53,645 Release of maintenance deposits ( 15,712 ) ( 26,940 ) ( 25,582 ) Proceeds from issuance of common shares, net of underwriter's discount — — 148,318 Common shares issuance costs — — ( 820 ) Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs 19,694 193,992 — Settlement of equity-based compensation ( 120 ) ( 8,078 ) — Purchase of non-controlling interest shares — — ( 3,705 ) Cash dividends - common shares ( 113,572 ) ( 113,541 ) ( 110,584 ) Cash dividends - preferred shares ( 17,869 ) ( 1,838 ) — Net cash provided by financing activities 364,918 465,873 597,867 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 Cash and cash equivalents and restricted cash, end of period $ 161,418 $ 242,517 $ 120,837 Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest $ 71,637 $ 83,164 $ 43,636 Cash paid for taxes — 1,072 721 Supplemental disclosure of non-cash investing and financing activities: Proceeds from borrowings of debt $ — $ — $ 511 Repayment and settlement of debt — ( 24,250 ) — Acquisition of leasing equipment 141,478 ( 24,530 ) ( 14,263 ) Acquisition of property, plant and equipment ( 13,237 ) ( 47,520 ) ( 17,587 ) Investment in Long Ridge JV — 155,589 — Settled and assumed security deposits ( 5,825 ) ( 239 ) 3,793 Settlement of equity based compensation — ( 2,405 ) — Billed, assumed and settled maintenance deposits ( 58,906 ) 15,117 24,518 Deferred financing costs — ( 1,161 ) ( 4,500 ) 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 Issuance of common shares 304 385 301 See accompanying notes to consolidated financial statements. 68 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 1. ORGANIZATION Fortress Transportation and Infrastructure Investors LLC (“we”, “us”, “our” or the “Company”) is a Delaware limited liability company which, through its subsidiary, Fortress Worldwide Transportation and Infrastructure General Partnership (the “Partnership”), owns and leases aviation equipment and also owns and operates (i) a multi-modal crude oil and refined products terminal in Beaumont, Texas (“Jefferson Terminal”), (ii) a deep-water port located along the Delaware River with an underground storage cavern and multiple industrial development opportunities (“Repauno”) and (iii) an equity method investment in a multi-modal terminal located along the Ohio River with multiple industrial development opportunities, including a power plant under construction (“Long Ridge”). Additionally, we own and lease offshore energy equipment and shipping containers. We have three reportable segments, (i) Aviation Leasing, (ii) Jefferson Terminal and (iii) Ports and Terminals, which operate in two primary businesses, Equipment Leasing and Infrastructure (see Note 17). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting —The accompanying consolidated financial statements are prepared in accordance with U.S. 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 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. 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 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. Actual results could differ from those estimates. Risks and Uncertainties — In the normal course of business, we encounter several significant types of economic risk including credit, market, and capital market risks. 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 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. 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 and the majority of terminal services revenue are denominated in U.S. dollars. Variable Interest Entities — The assessment of whether an entity is a VIE and the determination of whether to consolidate a VIE requires judgment. VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated by its primary beneficiary, and only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Delaware River Partners LLC 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. 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. We concluded that we are the primary beneficiary and, accordingly, DRP has been presented on a consolidated basis in the accompanying financial statements. 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. 69 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 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 $ 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: Asset Range of Estimated Useful Lives Residual Value Estimates Aircraft 25 years from date of manufacture Generally not to exceed 15% of manufacturer’s list price when new Aircraft engines 2 - 6 years, based on maintenance adjusted service life Sum of engine core salvage value plus the estimated fair value of life limited parts Offshore energy vessels 25 years from date of manufacture 10% of new build cost Railcars 40 - 50 years from date of manufacture Scrap value at end of useful life Track and track related assets 15 - 50 years from date of manufacture Scrap value at end of useful life Buildings and site improvements 20 - 30 years Scrap value at end of useful life Railroad equipment 3 - 15 years from date of manufacture Scrap value at end of useful life Terminal machinery and equipment 15 - 25 years from date of manufacture Scrap value at end of useful life Vehicles 5 - 7 years from date of manufacture Scrap value at end of useful life Furniture and fixtures 3 - 6 years from date of purchase None Computer hardware and software 3 - 5 years from date of purchase None 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. 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. Significant spare parts are depreciated in conjunction with the underlying property, plant and equipment asset when placed in service. We review our depreciation policies on a regular basis to determine whether changes have taken place that would suggest that a change in our depreciation policies, useful lives of our equipment or the assigned residual values is warranted. For planned major maintenance or component overhaul activities for aviation equipment off lease, the cost of such major maintenance or component overhaul event is capitalized and depreciated on a straight-line basis over the period until the next maintenance or component overhaul event is required. Our offshore energy vessels are required to be drydocked periodically for recertifications or major repairs and maintenance that cannot be performed while the vessels are operating. Normal repairs and maintenance are expensed as incurred. We capitalize the costs associated with the drydockings and amortize them on a straight-line basis over the period between drydockings, usually between 30 and 60 months. In accounting for leasing equipment, we make estimates about the expected useful lives, residual values and the fair value of acquired in-place leases and acquired maintenance liabilities (for aviation equipment). 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. If a lease is below or above the range of current lease rates, the resulting lease discount or premium is recognized as a lease intangible and amortized into lease income over the remaining term of the lease. 70 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 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 . We follow the successful efforts method of accounting for costs incurred in oil and gas producing activities. Capitalized costs are amortized using the unit-of-production method based on total proved reserves. Capitalized Interest — The interest cost associated with major development, construction projects and tax exempt bonds is capitalized and included in the cost of the project. Interest capitalization ceases once a project is substantially complete or no longer undergoing construction activities to prepare it for its intended use. We capitalized interest of $ 20.9 million, $ 11.9 million and $ 10.7 million during the years ended December 31, 2020, 2019 and 2018, respectively. Repairs and Maintenance —Repair and maintenance costs that do not extend the lives of the assets are expensed as incurred. Our repairs and maintenance expense was $ 4.1 million, $ 5.0 million and $ 8.3 million during the years ended December 31, 2020, 2019 and 2018, respectively, and are included in Operating expenses in the Consolidated Statements of Operations. Impairment of Long-Lived Assets — We perform a recoverability assessment of each of our long-lived assets whenever events or changes in circumstances, or indicators, indicate that the carrying amount or net book value of an asset may not be recoverable. Indicators may include, but are not limited to, a significant lease restructuring or early lease termination; significant traffic decline; or the introduction of newer technology aircraft, vessels, engines or railcars. When performing a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the asset exceeds its net book value. The undiscounted cash flows consist of cash flows from currently contracted leases and terminal services contracts, future projected leases, terminal service and freight rail rates, transition costs, estimated down time and estimated residual or scrap values. In the event that an asset does not meet the recoverability test, the carrying value of the asset will be adjusted to fair value resulting in an impairment charge. Management develops the assumptions used in the recoverability analysis based on its knowledge of active contracts, current and future expectations of the global demand for a particular asset and historical experience in the leasing markets, as well as information received from third party industry sources. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in contracted lease rates, terminal service, and freight rail rates, residual values, economic conditions, technology, demand for a particular asset type and other factors. Security Deposits — Our operating leases generally require the lessee to pay a security deposit or provide a letter of credit. Security deposits are held until specified return dates stipulated in the lease or lease expiration. Maintenance Payments —Typically, under an operating lease of aircraft, the lessee is responsible for performing all maintenance and is generally required to make maintenance payments to us for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft or engine. These maintenance payments are based on hours or cycles of utilization or on calendar time, depending on the component, and are generally required to be made monthly in arrears. If a lessee is making monthly maintenance payments, we would typically be obligated to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components to the extent of maintenance payments received in respect of the specific maintenance event, usually shortly following the completion of the relevant work. We record the portion of maintenance payments paid by the lessee that are expected to be reimbursed as maintenance deposit liabilities in the Consolidated Balance Sheets. Reimbursements made to the lessee upon the receipt of evidence of qualifying maintenance work are recorded against the maintenance deposit liability. In certain acquired leases, we or the lessee may be obligated to make a payment to the other party at lease termination based on redelivery conditions stipulated at the inception of the lease. When the lessee is required to return the aircraft in an improved maintenance condition, we record a maintenance right asset, as a component of other assets, for the estimated value of the end-of-life maintenance payment at acquisition. We recognize payments received as end-of-lease compensation adjustments, within lease revenue or as a reduction to the maintenance right asset, when payment is received or collectability is assured. In the event we are required to make payments at the end of the lease for redelivery conditions, amounts are accrued as additional maintenance liability and expensed when we are obligated and can reasonably estimate such payment. Lease Incentives and Amortization —Lease incentives, which include lease acquisition costs related to reconfiguration of the aircraft cabin, other lessee specific modifications and other direct costs, are capitalized and amortized as a reduction of lease income over the primary term of the lease, assuming no lease renewals. Goodwill — Goodwill includes the excess of the purchase price over the fair value of the net tangible and intangible assets associated with the acquisition of Jefferson Terminal. The carrying amount of goodwill was approximately $ 122.7 million and $ 122.6 million as of December 31, 2020 and 2019, respectively. We review the carrying values of goodwill at least annually to assess impairment since these assets are not amortized. An annual impairment review is conducted as of October 1st of each year. Additionally, we review the carrying value of goodwill whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The determination of fair value involves significant management judgment. 71 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) For an annual goodwill impairment assessment, an optional qualitative analysis may be performed. If the option is not elected or if it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a two-step goodwill impairment test is performed to identify potential goodwill impairment and measure an impairment loss. A qualitative analysis was not elected for the years ended December 31, 2020 or 2019. 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 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. This analysis requires us to make significant assumptions and estimates about the extent and timing of future cash flows (including forecasted revenue growth rates and EBITDA margins), capital expenditures and discount rates. 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. 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 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 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. Gulf Coast. 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, 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. 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. Intangibles and amortization — Intangibles include the value of acquired favorable and unfavorable leases and existing customer relationships acquired in connection with the acquisition of Jefferson Terminal. In accounting for acquired leasing equipment, we make estimates about the fair value of the acquired leases. In determining the fair value of these leases, we make assumptions regarding the current fair values of leases for identical or similar equipment in order to determine if the acquired lease is within a fair value range of current lease rates. If a lease is below or above the range of current lease rates, the resulting lease discount or premium is recognized as a lease intangible and amortized into rental income over the remaining term of the lease. Acquired lease intangibles are amortized on a straight-line basis over the remaining lease terms, which collectively had a weighted-average remaining amortization period of approximately 20 months as of December 31, 2020, and are recorded as a component of equipment leasing revenues in the accompanying Consolidated Statements of Operations. Customer relationship intangible assets are amortized on a straight-line basis over their useful lives as the pattern in which the asset’s economic benefits are consumed cannot reliably be determined. Customer relationship intangible assets have useful lives ranging from 5 to 10 years, no estimated residual value, and amortization is recorded as a component of Depreciation and amortization in the Consolidated Statements of Operations. The weighted-average remaining amortization period was approximately 43 months as of December 31, 2020. 72 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) Deferred Financing Costs —Costs incurred in connection with obtaining long term financing are capitalized and amortized to interest expense over the term of the underlying loans. Unamortized deferred financing costs of $ 36.2 million and $ 18.1 million as of December 31, 2020 and 2019, respectively, are included in Debt, net in the Consolidated Balance Sheets. We also have unamortized deferred revolver fees related to our revolving debt of $ 1.6 million and $ 1.7 million as of December 31, 2020 and 2019, respectively, which are included in Other assets in the Consolidated Balance Sheets. Amortization expense was $ 7.3 million, $ 8.1 million and $ 5.1 million for the years ended December 31, 2020, 2019 and 2018, respectively, and is included in Interest expense in the Consolidated Statements of Operations. Discontinued Operations — A disposal of an entity or component of an entity is reported in discontinued operations if the disposal represents a strategic shift that has or will have a material impact on our operations and financial results. See Note 3 for additional information related to our discontinued operations. Equipment Leasing Revenues Operating Leases — We lease equipment pursuant to net operating leases. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the lease, assuming no renewals. Revenue is not recognized when collection is not reasonably assured. 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 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. These periodic maintenance payments accumulate over the term of the lease to fund major maintenance events, and we are contractually obligated to return maintenance payments to the lessee up to the amount paid by the lessee. In the event the total cost of maintenance events over the term of a lease is less than the cumulative maintenance payments, we are not required to return any unused or excess maintenance payments to the lessee. Maintenance payments received for which we expect to repay to the lessee are presented as Maintenance Deposits in our Consolidated Balance Sheets. All excess maintenance payments received that we do not expect to repay to the lessee are recorded as Maintenance revenues. Estimates in recognizing revenue include mean time between removal, projected costs for engine maintenance and forecasted utilization of aircraft which are affected by historical usage patterns and overall industry, market and economic conditions. Significant changes to these estimates could have a material effect on the amount of revenue recognized in the period. 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. The lease payments are segregated into principal and interest components similar to a loan. Unearned income is recognized on an effective interest method over the lease term and is recorded as finance lease income. The principal component of the lease payment is reflected as a reduction to the net investment in finance leases. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received. Infrastructure Revenues Terminal Services Revenues —Terminal services are provided to customers for the receipt and redelivery of various commodities. These revenues are recognized over time, i.e., as the services are rendered and the customer simultaneously receives and consumes the benefit over time. Lease Income —Lease income consists of rental income from tenants for storage space. Lease income is recognized on a straight-line basis over the terms of the relevant lease agreement. Crude Marketing Revenues —Crude marketing revenues consist of marketing revenue related to Canadian crude oil. The revenues are recognized over time, i.e., as the services are rendered and the customer simultaneously receives and consumes the benefit over time. 73 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. Other revenue consists of two performance obligations: handling and storage of raw materials. The revenues are recognized over time, i.e., as the services are rendered and the customer simultaneously receives and consumes the benefit over time. Payment terms for Infrastructure Revenues are generally short term in nature. Leasing Arrangements —At contract inception, we evaluate whether an arrangement is or contains a lease for which we are the lessee (that is, arrangements which provide us with the right to control a physical asset for a period of time). Operating lease right-of-use (“ROU”) assets and lease liabilities are recognized in Operating lease right-of-use assets, net and Operating lease liabilities in our Consolidated Balance Sheets, respectively. 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. 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. ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for prepaid rent and lease incentives. ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for prepaid or accrued lease payments and lease incentives. The finance lease ROU assets are subsequently amortized using the straight-line method. Operating lease expenses are recognized on a straight-line basis over the lease term. With respect to finance leases, amortization of the ROU asset is presented separately from interest expense related to the finance lease liability. Variable lease payments, which are primarily based on usage, are recognized when the associated activity occurs. We have elected to combine lease and non-lease components for all lease contracts where we are the lessee. Additionally, for arrangements with lease terms of 12 months or less, we do not recognize ROU assets, and lease liabilities and lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred. Concentration of Credit Risk — We are subject to concentrations of credit risk with respect to amounts due from customers on our finance leases and operating leases. We attempt to limit our credit risk by performing ongoing credit evaluations. 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. 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. Expense Recognition —Expenses are recognized on an accrual basis as incurred. Acquisition and Transaction expenses —Acquisition and transaction expense is comprised of costs related to completed business combinations, dispositions and terminated deal costs related to abandoned pursuits, including advisory, legal, accounting, valuation and other professional or consulting fees. 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 other comprehensive income related to our equity method investees. Derivative Financial Instruments Electricity Derivatives — Through our equity method investment in Long Ridge, we enter into derivative contracts as part of a risk management program to mitigate price risk associated with certain electricity price exposures. 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. 74 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. 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 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. Gains and losses related to our crude sales and purchase derivatives are recorded on a gross basis and are included in Crude marketing revenues and Operating expenses, respectively, in our Consolidated Statements of Operations. See Note 11 for additional details. 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. 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. Foreign Currency — Our functional and reporting currency is the U.S. dollar. Purchases and sales of assets and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. Net realized foreign currency gains or losses relating to the differences between these recorded amounts and the U.S. dollar equivalent actually received or paid are reported as a component of operating expenses within the Consolidated Statement of Operations. Income Taxes — A portion of our income earned by our corporate subsidiaries is subject to U.S. federal and state income taxation, taxed at prevailing rates. The remainder of our income is allocated directly to our partners and is not subject to a corporate level of taxation. Certain subsidiaries of ours are subject to income tax in the foreign countries in which they conduct business. We account for these taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is established when management believes it is more likely than not that a deferred tax asset will not be realized. We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions and in certain foreign jurisdictions. The income tax returns filed by us and our subsidiaries are subject to examination by the U.S. federal, state and foreign tax authorities. We recognize tax benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its technical merits. 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 $ 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 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. 75 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 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”) . For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this ASU requires that credit losses be presented as an allowance rather than as a write-down. This ASU affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. 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. 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): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 addresses concerns over the cost and complexity of the two-step goodwill impairment test by removing the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. 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): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement . This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. 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. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted. We are currently assessing the impact this guidance will have on our consolidated financial statements. 3. DISCONTINUED OPERATIONS In December 2019, we completed the sale of substantially all of our railroad business (“CMQR”), which was previously reported as our Railroad segment. Under ASC 205-20, this disposition met the criteria to be reported as discontinued operations. Accordingly, the assets, liabilities and results of operations of CMQR have been reported as discontinued operations for all periods presented. 76 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) The following table presents the significant components of net income from discontinued operations: Year Ended December 31, 2020 2019 2018 Revenues Total revenues $ — $ 39,071 $ 37,766 Expenses Operating expense — 32,815 30,944 Acquisition and transaction expenses — 5,526 — Depreciation and amortization — 2,202 2,446 Interest expense — 1,458 1,009 Total expenses — 42,001 34,399 Gain on sale of assets, net 1,331 77,468 — Other expense — — ( 42 ) Other income (expense) 1,331 77,468 ( 42 ) Income before income taxes 1,331 74,538 3,325 Provision for (benefit from) income taxes — 1,076 ( 1,077 ) Net income 1,331 73,462 4,402 Less: 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: Year Ended December 31, 2020 2019 2018 Operating activities: Depreciation and amortization $ — $ 2,202 $ 2,446 Amortization of deferred financing costs — 256 282 Share-based compensation expense — 3,114 184 Investing activities: Purchases of property, plant and equipment $ — $ ( 6,949 ) $ ( 8,461 ) 4. LEASING EQUIPMENT, NET Leasing equipment, net is summarized as follows: December 31, 2020 2019 Leasing equipment $ 2,042,404 $ 2,019,773 Less: Accumulated depreciation ( 407,145 ) ( 312,714 ) Leasing equipment, net $ 1,635,259 $ 1,707,059 77 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, 2020 2019 2018 Acquisitions: Aircraft 20 31 29 Engines 37 31 34 Dispositions: Aircraft — 5 1 Engines 25 58 13 Depreciation expense for leasing equipment is summarized as follows: Year Ended December 31, 2020 2019 2018 Depreciation expense for leasing equipment $ 142,266 $ 137,004 $ 110,012 5. FINANCE LEASES, NET Finance leases, net are summarized as follows: December 31, 2020 2019 Finance leases $ 9,389 $ 12,388 Unearned revenue ( 2,462 ) ( 4,073 ) Finance leases, net $ 6,927 $ 8,315 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. 78 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 6. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net is summarized as follows: December 31, 2020 2019 Land, site improvements and rights $ 52,047 $ 51,901 Construction in progress 425,261 211,110 Buildings and improvements 4,491 3,783 Terminal machinery and equipment 557,788 519,603 Track and track related assets 2,349 2,208 Railroad equipment 5,560 4,823 Computer hardware and software 5,101 4,325 Furniture and fixtures 2,449 2,322 Other 5,870 1,969 1,060,916 802,044 Less: Accumulated depreciation ( 96,553 ) ( 69,935 ) Property, plant and equipment, net $ 964,363 $ 732,109 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: Year Ended December 31, 2020 2019 2018 Depreciation expense for property, plant and equipment: Continuing operations $ 26,581 $ 28,466 $ 20,343 Discontinued operations — 2,187 2,401 Total $ 26,581 $ 30,653 $ 22,744 7. INVESTMENTS The following table presents the ownership interests and carrying values of our investments: Carrying Value Investment Ownership Percentage December 31, 2020 December 31, 2019 Advanced Engine Repair JV Equity method 25 % $ 22,721 $ 24,652 Intermodal Finance I, Ltd. Equity method 51 % — 501 Long Ridge Terminal LLC Equity method 50 % 122,539 155,397 FYX Trust Holdco LLC Equity 14 % 1,255 — $ 146,515 $ 180,550 We did not recognize any other-than-temporary impairments for the year ended December 31, 2020. 79 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) The following table presents our proportionate share of equity in (losses) earnings: Year Ended December 31, 2020 2019 2018 Advanced Engine Repair JV $ ( 1,931 ) $ ( 1,829 ) $ ( 743 ) JGP Energy Partners LLC — ( 292 ) ( 574 ) Intermodal Finance I, Ltd. 114 ( 62 ) 309 Long Ridge Terminal LLC ( 3,222 ) ( 192 ) — Total $ ( 5,039 ) $ ( 2,375 ) $ ( 1,008 ) Equity Method Investments Long Ridge Terminal LLC In December 2019, Ohio River Shareholder LLC (“ORP”) contributed its equity interests in Long Ridge into Long Ridge Terminal LLC and sold a 49.9 % interest (the “Long Ridge Transaction”) for $ 150 million in cash, plus an earn out. We no longer have a controlling interest in Long Ridge but still maintain significant influence through our retained interest and, therefore, now account for this investment in accordance with the equity method. Following the sale we deconsolidated ORP, which held the assets of Long Ridge. Advanced Engine Repair JV In 2016, we invested $ 15 million for a 25 % interest in an advanced engine repair joint venture. We focus on developing new costs savings programs for engine repairs. We exercise significant influence over this investment and account for this investment as an equity method investment. In August 2019, we expanded the scope of our joint venture and invested an additional $ 13.5 million and maintained a 25 % interest. JGP Energy Partners LLC In 2016, we initiated activities in a 50 % non-controlling interest in JGP, a joint venture. JGP was governed by a designated operating committee selected by the members in proportion to their equity interests. JGP was solely reliant on its members to finance its activities and therefore was a VIE. 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 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. In 2012, we acquired a 51 % non-controlling interest in Intermodal Finance I, Ltd. (“Intermodal”), a joint venture. Intermodal is governed by a board of directors, and its shareholders have voting rights through their equity interests. As such, Intermodal is not within the scope of ASC 810-20 and should be evaluated for consolidation under the voting interest model. Due to the existence of substantive participating rights of the 49 % equity investor, including the joint approval of material operating and capital decisions, such as material contracts and capital expenditures consistent with ASC 810-10-25-11, we do not have unilateral rights over this investment and, therefore, we do not consolidate Intermodal but account for this investment in accordance with the equity method. 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, 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. 80 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) The tables below present summarized financial information for our equity method investments: December 31, Balance Sheet 2020 2019 Assets Cash and cash equivalents $ 11,791 $ 16,812 Restricted cash 27,000 30,917 Accounts receivable, net 5,803 12,219 Leasing equipment, net 1,078 2,546 Property, plant, and equipment, net 612,234 390,416 Intangible assets, net 90,820 123,638 Goodwill 89,390 89,294 Other assets 10,777 6,667 Total assets $ 848,893 $ 672,509 Liabilities Accounts payable and accrued liabilities $ 30,464 $ 37,437 Debt, net 456,448 186,953 Other liabilities 36,700 530 Total liabilities 523,612 224,920 Equity Shareholders’ equity 348,402 465,461 Accumulated deficit ( 23,121 ) ( 17,872 ) Total equity 325,281 447,589 Total liabilities and equity $ 848,893 $ 672,509 Year Ended December 31, Income Statement 2020 2019 2018 Revenue $ 25,079 $ 8,887 $ 9,435 Total revenue 25,079 8,887 9,435 Expenses Research and development cost 6,663 6,323 2,134 Operating expenses 16,987 7,669 8,435 General and administrative 1,191 1,550 1,437 Management fees and incentive allocation to affiliate 11,004 142 400 Depreciation and amortization 92 2,351 2,158 Interest expense 2,267 285 937 Total expenses 38,204 18,320 15,501 Other (expense) income ( 1,585 ) 734 2,070 Loss before income taxes ( 14,710 ) ( 8,699 ) ( 3,996 ) Provision for income taxes — — — Net loss $ ( 14,710 ) $ ( 8,699 ) $ ( 3,996 ) 81 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 8. INTANGIBLE ASSETS AND LIABILITIES, NET Our intangible assets and liabilities, net are summarized as follows: December 31, 2020 Aviation Leasing Jefferson Terminal Total Intangible assets Acquired favorable lease intangibles $ 35,349 $ — $ 35,349 Less: Accumulated amortization ( 29,591 ) — ( 29,591 ) Acquired favorable lease intangibles, net 5,758 — 5,758 Customer relationships — 35,513 35,513 Less: Accumulated amortization — ( 22,485 ) ( 22,485 ) Acquired customer relationships, net — 13,028 13,028 Total intangible assets, net $ 5,758 $ 13,028 $ 18,786 Intangible liabilities Acquired unfavorable lease intangibles $ 7,151 $ — $ 7,151 Less: Accumulated amortization ( 4,604 ) — ( 4,604 ) Acquired unfavorable lease intangibles, net $ 2,547 $ — $ 2,547 December 31, 2019 Aviation Leasing Jefferson Terminal Total Intangible assets Acquired favorable lease intangibles $ 49,762 $ — $ 49,762 Less: Accumulated amortization ( 38,652 ) — ( 38,652 ) Acquired favorable lease intangibles, net 11,110 — 11,110 Customer relationships — 35,513 35,513 Less: Accumulated amortization — ( 18,931 ) ( 18,931 ) Acquired customer relationships, net — 16,582 16,582 Total intangible assets, net $ 11,110 $ 16,582 $ 27,692 Intangible liabilities Acquired unfavorable lease intangibles $ 5,170 $ — $ 5,170 Less: Accumulated amortization ( 3,014 ) — ( 3,014 ) Acquired unfavorable lease intangibles, net $ 2,156 $ — $ 2,156 Intangible liabilities relate to unfavorable lease intangibles and are included as a component of Other liabilities in the accompanying Consolidated Balance Sheets. Amortization of intangible assets and liabilities is recorded as follows: Classification in Consolidated Statements of Operations Year Ended December 31, 2020 2019 2018 Lease intangibles Equipment leasing revenues $ 3,747 $ 7,181 $ 8,588 Customer relationships: Depreciation and amortization Continuing operations 3,553 3,553 3,553 Discontinued operations — 15 45 Total $ 7,300 $ 10,749 $ 12,186 82 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) As of December 31, 2020, estimated net annual amortization of intangibles is as follows: 2021 $ 6,330 2022 4,330 2023 3,343 2024 2,236 2025 — Thereafter — Total $ 16,239 9. DEBT, NET Our debt, net is summarized as follows: December 31, 2020 December 31, 2019 Outstanding Borrowings Stated Interest Rate Maturity Date Outstanding Borrowings Loans payable FTAI Pride Credit Agreement $ — N/A N/A $ 36,009 Jefferson Revolver — N/A N/A 50,000 DRP Revolver (1) 25,000 (i) Base Rate + 1.50 %; or (ii) Base Rate + 2.50 % (Eurodollar) 11/5/2021 25,000 Revolving Credit Facility (2) — (i) Base Rate + 2.00 %; or (ii) Adjusted Eurodollar Rate + 3.00 % 1/31/2022 — Total loans payable 25,000 111,009 Bonds payable Series 2012 Bonds (3) — 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) 406,307 6.75 % 3/15/2022 697,814 Senior Notes due 2025 (5) 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 Debt 1,940,984 1,439,039 Less: Debt issuance costs ( 36,222 ) ( 18,111 ) Total debt, net $ 1,904,762 $ 1,420,928 Total debt due within one year $ 25,000 $ 182,019 ______________________________________________________________________________________ (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. (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. 83 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 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. As of December 31, 2020, scheduled principal repayments under our debt agreements for the next five years and thereafter are summarized as follows: 2021 2022 2023 2024 2025 Thereafter Total DRP Revolver $ 25,000 $ — $ — $ — $ — $ — $ 25,000 Revolving Credit Facility — — — — — — — Series 2020 Bonds — — — — 79,060 184,920 263,980 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 84 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 10. FAIR VALUE MEASUREMENTS Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows: • Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs. • Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants price the asset or liability. The valuation techniques that may be used to measure fair value are as follows: • Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. • Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts. • Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). The following tables set forth our financial assets measured at fair value on a recurring basis by level within the fair value hierarchy. Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. Fair Value as of Fair Value Measurements Using Fair Value Hierarchy as of December 31, 2020 December 31, 2020 Total Level 1 Level 2 Level 3 Valuation Technique Assets Cash and cash equivalents $ 121,703 $ 121,703 $ — $ — Market Restricted cash 39,715 39,715 — — Market Total assets $ 161,418 $ 161,418 $ — $ — Fair Value as of Fair Value Measurements Using Fair Value Hierarchy as of December 31, 2019 December 31, 2019 Total Level 1 Level 2 Level 3 Valuation Technique Assets Cash and cash equivalents $ 226,512 $ 226,512 $ — $ — Market Restricted cash 16,005 16,005 — — Market Derivative assets 181 — — 181 Income Total assets $ 242,698 $ 242,517 $ — $ 181 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. 85 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) The fair value of our bonds and notes payable reported as debt, net in the Consolidated Balance Sheets are presented in the table below: December 31, 2020 2019 Series 2012 Bonds (1) $ — $ 41,450 Series 2016 Bonds (1) — 145,143 Series A 2020 Bonds (2) 186,306 — Series B 2020 Bonds (2) 79,723 — 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. We measure the fair value of certain assets and liabilities on a non-recurring basis when GAAP requires the application of fair value, including events or changes in circumstances that indicate that the carrying amounts of assets may not be recoverable. Assets subject to these measurements include goodwill, intangible assets, property, plant and equipment and leasing equipment. We record such assets at fair value when it is determined the carrying value may not be recoverable. Fair value measurements for assets subject to impairment tests are based on an income approach which uses Level 3 inputs, which include our assumptions as to future cash flows from operation of the underlying businesses and the leasing and eventual sale of assets. 11. DERIVATIVE FINANCIAL INSTRUMENTS Commodity Derivatives Depending on market conditions, we source crude oil from producers in Canada, arranging logistics to Jefferson Terminal and marketing crude oil to third parties. These crude oil forward purchase and sales contracts are not designated in hedging relationships. The following table presents a summary of the changes in fair value for all Level 3 derivatives: Year Ended December 31, 2020 2019 2018 Beginning Balance $ 181 $ 6,545 $ 1,022 Net (losses) gains recognized in earnings ( 181 ) ( 6,364 ) 5,523 Purchases — 314 8,473 Sales — ( 674 ) ( 178 ) Settlements — 360 ( 8,295 ) Ending Balance $ — $ 181 $ 6,545 There were no transfers into or out of Level 3 during the periods presented. 86 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 12. REVENUES We disaggregate our revenue from contracts with customers by products and services provided for each of our segments, as we believe it best depicts the nature, amount, timing and uncertainty of our revenue. Revenues attributed to our Equipment Leasing business unit are within the scope of ASC 840 prior to January 1, 2019 and ASC 842 after January 1, 2019, while revenues attributed to our Infrastructure business unit are within the scope of ASC 606, unless otherwise noted. Under the provisions of ASC 842, we have elected to exclude sales and other similar taxes from lease payments in arrangements where we are a lessor. Year Ended December 31, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Equipment leasing revenues Lease income $ 166,331 $ — $ — $ 11,145 $ 177,476 Maintenance revenue 101,462 — — — 101,462 Finance lease income 2,260 — — — 2,260 Other revenue 11,158 — — 5,578 16,736 Total equipment leasing revenues 281,211 — — 16,723 297,934 Infrastructure revenues Lease income — 1,186 — — 1,186 Terminal services revenues — 50,887 — — 50,887 Crude marketing revenues — 8,210 — — 8,210 Other revenue — — 3,855 4,424 8,279 Total infrastructure revenues — 60,283 3,855 4,424 68,562 Total revenues $ 281,211 $ 60,283 $ 3,855 $ 21,147 $ 366,496 Year Ended December 31, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Equipment leasing revenues Lease income $ 197,305 $ — $ — $ 9,796 $ 207,101 Maintenance revenue 134,914 — — — 134,914 Finance lease income 2,648 — — — 2,648 Other revenue 1,808 — — 2,851 4,659 Total equipment leasing revenues 336,675 — — 12,647 349,322 Infrastructure revenues Lease income — 2,306 1,056 — 3,362 Terminal services revenues — 35,908 7,057 — 42,965 Crude marketing revenues — 166,134 — — 166,134 Other revenue — — 14,074 2,917 16,991 Total infrastructure revenues — 204,348 22,187 2,917 229,452 Total revenues $ 336,675 $ 204,348 $ 22,187 $ 15,564 $ 578,774 87 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) Year Ended December 31, 2018 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Equipment leasing revenues Lease income $ 151,531 $ — $ — $ 5,659 $ 157,190 Maintenance revenue 89,870 — — — 89,870 Finance lease income 1,895 — — 1,454 3,349 Other revenue 974 — — 1,656 2,630 Total equipment leasing revenues 244,270 — — 8,769 253,039 Infrastructure revenues Lease income — 272 1,462 — 1,734 Terminal services revenues — 10,108 — — 10,108 Crude marketing revenues — 60,518 — — 60,518 Other revenue — 87 15,982 644 16,713 Total infrastructure revenues — 70,985 17,444 644 89,073 Total revenues $ 244,270 $ 70,985 $ 17,444 $ 9,413 $ 342,112 Presented below are the contracted minimum future annual revenues to be received under existing operating and finance leases across several market sectors as of December 31, 2020: Operating leases Finance leases 2021 $ 160,039 $ 1,291 2022 112,256 897 2023 79,049 274 2024 53,367 — 2025 30,205 — Thereafter 22,532 — Total $ 457,448 $ 2,462 13. LEASES We have commitments as lessees under lease agreements primarily for real estate, equipment and vehicles. 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, 2020 2019 Operating lease expense $ 4,719 $ 5,857 Short-term lease expense 778 3,605 Variable lease expense 1,379 3,263 Sublease income — ( 1,032 ) Lease expense from continuing operations 6,876 11,693 Finance lease expense — 304 Operating lease expense — 3,705 Lease expense from discontinued operations — 4,009 Total lease expense $ 6,876 $ 15,702 88 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) The following table presents information related to our operating leases as of and for the year ended December 31, 2020: Right-of-use assets, net $ 62,355 Lease liabilities $ 62,001 Weighted average remaining lease term 40.0 years Weighted average incremental borrowing rate 6.2 % Cash paid for amounts included in the measurement of operating lease liabilities Continuing operations $ 4,723 Discontinued operations $ — The following table presents future minimum lease payments under non-cancellable operating leases as of December 31, 2020: 2021 $ 4,759 2022 4,632 2023 4,585 2024 4,354 2025 4,224 Thereafter 145,769 Total undiscounted lease payments 168,323 Less: Imputed interest 106,322 Total lease liabilities $ 62,001 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. 14. EQUITY-BASED COMPENSATION In 2015, we established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) which provides for the ability to award equity compensation awards in the form of stock options, stock appreciation rights, restricted stock, and performance awards to eligible employees, consultants, directors, and other individuals who provide services to us, each as determined by the Compensation Committee of the Board of Directors. As of December 31, 2020, the Incentive Plan provides for the issuance of up to 29.9 million shares. We account for equity-based compensation expense in accordance with ASC 718 Compensation-Stock Compensation and is reported within operating expenses and general and administrative in the Consolidated Statements of Operations. The following table presents our stock-based compensation expense: Year Ended December 31, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met 2020 2019 2018 Stock options $ — $ — $ 9 $ — Restricted shares 1,676 1,054 359 3,375 Common units 649 455 349 2,150 Total - continuing operations $ 2,325 $ 1,509 $ 717 $ 5,525 Common units - discontinued operations $ — $ 3,114 $ 184 89 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) The following tables present information for our stock options, restricted shares and common units: Stock Options Restricted Shares Common Units Options Weighted Average Exercise Price Shares Weighted Average Issuance Price Units Weighted Average Issuance Price Outstanding as of December 31, 2019 2,113,704 $ 16.85 104,225 $ 14.23 956,668 $ 1.18 Granted 129,988 16.09 545,806 7.26 1,883,772 1.14 Less: exercised / vested — 71,229 14.40 393,332 1.06 Less: forfeited and canceled — — — Outstanding as of December 31, 2020 2,243,692 578,802 2,447,108 Stock Options Restricted Shares Common Units As of December 31, 2020: Weighted average exercise / issuance price (per share) $ 16.81 $ 7.64 $ 1.13 Aggregate intrinsic value (in thousands) $ 13,534 $ 4,420 $ 2,758 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 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 Fair value ($ millions) $ 0.7 $ 1.8 $ 2.1 Ranges Expected volatility The expected stock volatility is based on an assessment of the volatility of our publicly traded common shares 61.27 % - 62.12 % 21.89 % - 21.45 % 18.71 % - 27.73 % Risk free interest rate The risk-free rate is determined using the implied yield currently available on U.S. government bonds with a term consistent with the expected term on the date of grant. 0.51 % - 0.76 % 1.67 % - 1.45 % 2.98 % - 2.52 % Expected dividend yield The expected dividend yield is based on management’s current expected dividend rate. 6.23 % - 11.79 % 6.58 % - 8.02 % 6.81 % - 5.45 % Expected term Expected term used represents the period of time the options granted are expected to be outstanding. 10 years 10 years 10 years 90 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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. Common Units 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 . These awards are subject to continued employment and compensation expense is recognized ratably over the vesting periods. The fair value was based on the fair value of the operating subsidiary on the grant date, which is 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. 15. INCOME TAXES 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, 2020 2019 2018 Current: Federal $ ( 110 ) $ 55 $ 75 State and local 328 423 250 Foreign 496 188 63 Total current provision 714 666 388 Deferred: Federal ( 1,750 ) 12,937 1,528 State and local 13 ( 638 ) 621 Foreign ( 4,882 ) 4,845 ( 88 ) Total deferred (benefit) provision ( 6,619 ) 17,144 2,061 (Benefit from) provision for income taxes: Continuing operations ( 5,905 ) 17,810 2,449 Discontinued operations — 1,076 ( 1,077 ) Total $ ( 5,905 ) $ 18,886 $ 1,372 We are taxed as a flow-through entity for U.S. income tax purposes and our taxable income or loss generated is the responsibility of our owners. Taxable income or loss generated by our corporate subsidiaries is subject to U.S. federal, state and foreign corporate income tax in locations where they conduct business. The difference between our reported total provision for income taxes and the U.S. federal statutory rate of 21 % is as follows: Year Ended December 31, 2020 2019 2018 U.S. federal tax at statutory rate 21.0 % 21.0 % 21.0 % Income not subject to tax at statutory rate ( 7.9 ) % ( 21.7 ) % 121.9 % State and local taxes ( 0.3 ) % ( 0.1 ) % ( 6.1 ) % Foreign taxes 4.0 % 2.7 % 7.7 % Branch profit tax — % — % ( 0.5 ) % Change in tax rates — % — % — % Other 0.1 % ( 0.6 ) % ( 0.2 ) % Change in valuation allowance ( 11.5 ) % 7.0 % ( 153.3 ) % Provision for income taxes 5.4 % 8.3 % ( 9.5 ) % 91 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) Significant components of our deferred tax assets and liabilities are as follows: December 31, 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 105,184 $ 74,555 Accrued expenses 468 1,252 Interest expense 26,531 25,306 Operating lease liabilities 10,119 6,104 Other 2,895 2,041 Total deferred tax assets 145,197 109,258 Less valuation allowance ( 98,091 ) ( 79,176 ) Net deferred tax assets 47,106 30,082 Deferred tax liabilities: Investment in partnerships ( 13,759 ) ( 22,250 ) Fixed assets and goodwill ( 29,448 ) ( 21,592 ) Operating lease right-of-use assets ( 10,062 ) ( 6,032 ) Net deferred tax liabilities $ ( 6,163 ) $ ( 19,792 ) Current and deferred tax assets and liabilities are reported net in Other assets or Other liabilities in the Consolidated Balance Sheets. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. We have analyzed our deferred tax assets and have determined, based on the weight of available evidence, that it is more likely than not that a significant portion will not be realized. Accordingly, valuation allowances have been recognized as of December 31, 2020 and 2019 of $ 98.1 million and $ 79.2 million, respectively, related to certain deductible temporary differences and net operating loss carryforwards. A summary of the changes in the valuation allowance is as follows: December 31, 2020 2019 Valuation allowance at beginning of period $ 79,176 $ 68,294 Change due to current year losses 18,915 19,330 Change due to current year releases — ( 8,448 ) Valuation allowance at end of period $ 98,091 $ 79,176 As of December 31, 2020, certain of our corporate subsidiaries had U.S. federal net operating loss carryforwards of approximately $ 357.8 million that are available to offset future taxable income. If not utilized, $ 169.0 million of these carryforwards will begin to expire in the year 2034, with $ 188.8 million of these carryforwards having no expiration date. As of December 31, 2020, we also had net operating loss carryforwards for Irish income tax purposes of $ 210.2 million, which can be carried forward indefinitely against future business income, and $ 3.2 million of net operating loss carryforwards for Malaysian income tax purposes, which will begin to expire in the year 2025. The utilization of the net operating loss carryforwards to reduce future income taxes will depend on the relevant corporate subsidiary's ability to generate sufficient taxable income prior to the expiration of the carryforward period, if any. In addition, the maximum annual use of net operating loss carryforwards may be limited after certain changes in stock ownership. 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. In general, our tax returns and the tax returns of our corporate subsidiaries are subject to U.S. federal, state, local and foreign income tax examinations by tax authorities. Generally, we are not subject to examination by taxing authorities for tax years prior to 2017. 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. 92 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 16. MANAGEMENT AGREEMENT AND AFFILIATE TRANSACTIONS The Manager is paid annual fees in exchange for advising us on various aspects of our business, formulating our investment strategies, arranging for the acquisition and disposition of assets, arranging for financing, monitoring performance, and managing our day-to-day operations, inclusive of all costs incidental thereto. 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. 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 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”). For this purpose, pre-incentive allocation net income means, with respect to a calendar quarter, net income attributable to shareholders during such quarter calculated in accordance with GAAP excluding our pro rata share of (1) realized or unrealized gains and losses, and (2) certain non-cash or one-time items, and (3) any other adjustments as may be approved by our independent directors. Pre-incentive allocation net income does not include any Income Incentive Allocation or Capital Gains Incentive Allocation (described below) paid to the Master GP during the relevant quarter. One of our subsidiaries allocates and distributes to the Master GP an Income Incentive Allocation with respect to its pre-incentive allocation net income in each calendar quarter as follows: (1) no Income Incentive Allocation in any calendar quarter in which pre-incentive allocation net income, expressed as a rate of return on the average value of our net equity capital (excluding non-controlling interests) at the end of the two most recently completed calendar quarters, does not exceed 2 % for such quarter ( 8 % annualized); (2) 100 % of pre-incentive allocation net income with respect to that portion of such pre-incentive allocation net income, if any, that is equal to or exceeds 2 % but does not exceed 2.2223 % for such quarter; and (3) 10 % of the amount of pre-incentive allocation net income, if any, that exceeds 2.2223 % for such quarter. These calculations will be prorated for any period of less than three months. Capital Gains Incentive Allocation is calculated and distributable in arrears as of the end of each calendar year and is equal to 10 % of our pro rata share of cumulative realized gains from the date of the IPO through the end of the applicable calendar year, net of our pro rata share of cumulative realized or unrealized losses, the cumulative non-cash portion of equity-based compensation expenses and all realized gains upon which prior performance-based Capital Gains Incentive Allocation payments were made to the Master GP. The following table summarizes the management fees, income incentive allocation and capital gains incentive allocation: Year Ended December 31, 2020 2019 2018 Management fees $ 18,519 $ 14,828 $ 15,319 Income incentive allocation — — — Capital gains incentive allocation — 21,231 407 Total $ 18,519 $ 36,059 $ 15,726 We pay all of our operating expenses, except those specifically required to be borne by the Manager under the Management Agreement. The expenses required to be paid by us include, but are not limited to, issuance and transaction costs incident to the acquisition, disposition and financing of our assets, legal and auditing fees and expenses, the compensation and expenses of our independent directors, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of ours (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings of ours, costs and expenses incurred in contracting with third parties (including affiliates of the Manager), the costs of printing and mailing proxies and reports to our shareholders, costs incurred by the Manager or its affiliates for travel on our behalf, costs associated with any computer software or hardware that is used by us, costs to obtain liability insurance to indemnify our directors and officers and the compensation and expenses of our transfer agent. 93 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) We will pay or reimburse the Manager and its affiliates for performing certain legal, accounting, due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, provided that such costs and reimbursements are no greater than those which would be paid to outside professionals or consultants. The Manager is responsible for all of its other costs incident to the performance of its duties under the Management Agreement, including compensation of the Manager’s employees, rent for facilities and other “overhead” expenses; we will not reimburse the Manager for these expenses. The following table summarizes our reimbursements to the Manager: Year Ended December 31, 2020 2019 (1) 2018 (1) Classification in the Consolidated Statements of Operations: General and administrative expenses $ 9,552 $ 11,017 $ 9,910 Acquisition and transaction expenses 2,081 3,399 6,653 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. The termination fee is equal to the amount of the management fee during the 12 months immediately preceding the date of the termination. In addition, an Incentive Allocation Fair Value Amount will be distributable to the Master GP if the Master GP is removed due to the termination of the Management Agreement in certain specified circumstances. 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 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: December 31, 2020 2019 Accrued management fees $ 1,461 $ 1,410 Other payables (1) 1,317 21,992 ________________________________________________________ (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. Other Affiliate Transactions As of December 31, 2020 and 2019, an affiliate of our Manager owns an approximately 20 % interest in Jefferson Terminal which has been accounted for as a component of non-controlling interest in consolidated subsidiaries in the accompanying consolidated financial statements. The carrying amount of this non-controlling interest at December 31, 2020 and 2019 was $ 17.2 million and $ 33.7 million, respectively. The following table presents the amount of this non-controlling interest share of net loss: Year Ended December 31, 2020 2019 2018 Non-controlling interest share of net loss $ 16,483 $ 17,357 $ 13,436 94 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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. The Fee and Support Agreement provides that the affiliate of the Manager is compensated for its guarantee of a portion of the obligations under the Standby Bond Purchase Agreement. 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. We increased our majority interest in Jefferson Terminal in exchange for Class B Units of another wholly owned subsidiary, which provide the right to convert such Class B Units to a fixed amount of our shares, equivalent to approximately 1.9 million shares, at a Holder’s request. We have the option to satisfy any exchange request by delivering either common shares or cash. The Holders are entitled to receive distributions equivalent to the distributions paid to our shareholders. 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. 17. SEGMENT INFORMATION Our reportable segments represent strategic business units comprised of investments in different types of transportation and infrastructure assets. We have three reportable segments which operate in the Equipment Leasing and Infrastructure businesses across several market sectors. Our reportable segments are (i) Aviation Leasing, (ii) Jefferson Terminal and (iii) Ports and Terminals. The Aviation Leasing segment consists of aircraft and aircraft engines held for lease and are typically held long-term. The Jefferson Terminal segment consists of a multi-modal crude oil and refined products terminal and other related assets. The Ports and Terminals segment consists of Repauno, which is a 1,630 acre deep-water port located along the Delaware River with an underground storage cavern and multiple industrial development opportunities, and an equity method investment in Long Ridge, which is a 1,660 acre multi-modal port located along the Ohio River with rail, dock, and multiple industrial development opportunities, including a power plant under construction. In December 2019, we completed the sale of substantially all of our railroad business, which was formerly reported as our Railroad segment. 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. 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. 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. 95 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. We evaluate investment performance for each reportable segment primarily based on net income attributable to shareholders and Adjusted EBITDA. Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, and interest expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA. We believe that net income (loss) attributable to shareholders, as defined by GAAP, is the most appropriate earnings measurement with which to reconcile Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net income (loss) attributable to shareholders as determined in accordance with GAAP. 96 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) The following tables set forth certain information for each reportable segment: I. For the Year Ended December 31, 2020 Year Ended December 31, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Revenues Equipment leasing revenues $ 281,211 $ — $ — $ 16,723 $ 297,934 Infrastructure revenues — 60,283 3,855 4,424 68,562 Total revenues 281,211 60,283 3,855 21,147 366,496 Expenses Operating expenses 20,667 53,072 10,327 25,446 109,512 General and administrative — — — 18,159 18,159 Acquisition and transaction expenses 6,687 — 907 2,274 9,868 Management fees and incentive allocation to affiliate — — — 18,519 18,519 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 (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 (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 ) (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 ) Less: Net loss from continuing operations attributable to non-controlling interests in consolidated subsidiaries — ( 16,483 ) ( 39 ) — ( 16,522 ) Less: Dividends on preferred shares — — — 17,869 17,869 Net income (loss) attributable to shareholders from continuing operations $ 88,649 $ ( 19,684 ) $ ( 11,603 ) $ ( 163,732 ) $ ( 106,370 ) 97 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders from continuing operations: Year Ended December 31, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Adjusted EBITDA $ 288,752 $ 16,118 $ ( 2,600 ) $ ( 58,964 ) $ 243,306 Add: Non-controlling share of Adjusted EBITDA 9,637 Add: Equity in losses of unconsolidated entities ( 5,039 ) Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 1,208 ) Less: Interest expense ( 98,206 ) Less: Depreciation and amortization expense ( 202,746 ) Less: Incentive allocations — Less: Asset impairment charges ( 33,978 ) Less: Changes in fair value of non-hedge derivative instruments ( 181 ) Less: Losses on the modification or extinguishment of debt and capital lease obligations ( 11,667 ) Less: Acquisition and transaction expenses ( 9,868 ) Less: Equity-based compensation expense ( 2,325 ) Less: 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: Year Ended December 31, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Revenues Africa $ 10,259 $ — $ — $ — $ 10,259 Asia 110,057 — — 16,637 126,694 Europe 124,670 — — — 124,670 North America 32,961 60,283 3,855 4,510 101,609 South America 3,264 — — — 3,264 Total revenues $ 281,211 $ 60,283 $ 3,855 $ 21,147 $ 366,496 98 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) II. For the Year Ended December 31, 2019 Year Ended December 31, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Revenues Equipment leasing revenues $ 336,675 $ — $ — $ 12,647 $ 349,322 Infrastructure revenues — 204,348 22,187 2,917 229,452 Total revenues 336,675 204,348 22,187 15,564 578,774 Expenses Operating expenses 17,668 231,506 24,854 17,544 291,572 General and administrative — — — 16,905 16,905 Acquisition and transaction expenses 8,641 — 5,008 3,974 17,623 Management fees and incentive allocation to affiliate — — — 36,059 36,059 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 Total expenses 155,299 270,568 46,149 159,477 631,493 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 Interest income 104 118 289 20 531 Other income — 634 1,809 1,002 3,445 Total other income 80,229 5,096 118,566 960 204,851 Income (loss) from continuing operations before income taxes 261,605 ( 61,124 ) 94,604 ( 142,953 ) 152,132 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 Less: Net loss from continuing operations attributable to non-controlling interests in consolidated subsidiaries — ( 17,356 ) ( 215 ) — ( 17,571 ) Less: Dividends on preferred shares — — — 1,838 1,838 Net income (loss) attributable to shareholders from continuing operations $ 258,779 $ ( 44,052 ) $ 80,119 $ ( 144,791 ) $ 150,055 99 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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: Year Ended December 31, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Adjusted EBITDA $ 429,398 $ ( 6,160 ) $ 114,760 $ ( 34,590 ) $ 503,408 Add: Non-controlling share of Adjusted EBITDA 9,859 Add: Equity in losses of unconsolidated entities ( 2,375 ) Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities 1,387 Less: Interest expense ( 95,585 ) Less: Depreciation and amortization expense ( 199,185 ) Less: Incentive allocations ( 21,231 ) Less: Asset impairment charges ( 4,726 ) Less: Changes in fair value of non-hedge derivative instruments ( 4,555 ) Less: Losses on the modification or extinguishment of debt and capital lease obligations — Less: Acquisition and transaction expenses ( 17,623 ) Less: Equity-based compensation expense ( 1,509 ) Less: Provision for income taxes ( 17,810 ) Net income attributable to shareholders from continuing operations $ 150,055 Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows: Year Ended December 31, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Revenues Africa $ 14,542 $ — $ — $ — $ 14,542 Asia 119,289 — — 12,647 131,936 Europe 157,942 — — — 157,942 North America 36,391 204,348 22,187 2,917 265,843 South America 8,511 — — — 8,511 Total revenues $ 336,675 $ 204,348 $ 22,187 $ 15,564 $ 578,774 100 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) III. For the Year Ended December 31, 2018 Year Ended December 31, 2018 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Revenues Equipment leasing revenues $ 244,270 $ — $ — $ 8,769 $ 253,039 Infrastructure revenues — 70,985 17,444 644 89,073 Total revenues 244,270 70,985 17,444 9,413 342,112 Expenses Operating expenses 10,985 94,622 18,312 14,487 138,406 General and administrative — — — 15,290 15,290 Acquisition and transaction expenses 4,030 — — 2,938 6,968 Management fees and incentive allocation to affiliate — — — 15,726 15,726 Depreciation and amortization 102,419 19,745 5,139 6,605 133,908 Interest expense — 15,513 649 40,683 56,845 Total expenses 117,434 129,880 24,100 95,729 367,143 Other income (expense) Equity in (losses) earnings of unconsolidated entities ( 743 ) ( 574 ) — 309 ( 1,008 ) Gain on sale of assets, net 3,911 — — — 3,911 Interest income 202 270 — 16 488 Other income — 3,983 — — 3,983 Total other income 3,370 3,679 — 325 7,374 Income (loss) from continuing operations before income taxes 130,206 ( 55,216 ) ( 6,656 ) ( 85,991 ) ( 17,657 ) Provision for (benefit from) income taxes 2,280 261 1 ( 93 ) 2,449 Net income (loss) from continuing operations 127,926 ( 55,477 ) ( 6,657 ) ( 85,898 ) ( 20,106 ) Less: 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 ) $ 1,819 101 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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: Year Ended December 31, 2018 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Adjusted EBITDA $ 263,166 $ ( 11,645 ) $ ( 615 ) $ ( 35,034 ) $ 215,872 Add: Non-controlling share of Adjusted EBITDA 9,744 Add: Equity in losses of unconsolidated entities ( 1,008 ) Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 359 ) Less: Interest expense ( 56,845 ) Less: Depreciation and amortization expense ( 160,567 ) Less: Incentive allocations ( 407 ) Less: Asset impairment charges — Less: Changes in fair value of non-hedge derivative instruments 5,523 Less: Losses on the modification or extinguishment of debt and capital lease obligations — Less: Acquisition and transaction expenses ( 6,968 ) Less: Equity-based compensation expense ( 717 ) Less: Provision for income taxes ( 2,449 ) Net income attributable to shareholders from continuing operations $ 1,819 Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows: Year Ended December 31, 2018 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Revenues Africa $ 10,053 $ — $ — $ — $ 10,053 Asia 78,374 — — 7,315 85,689 Europe 121,546 — — — 121,546 North America 30,701 70,985 17,444 2,098 121,228 South America 3,596 — — — 3,596 Total revenues $ 244,270 $ 70,985 $ 17,444 $ 9,413 $ 342,112 102 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) IV. Balance Sheet and location of long-lived assets The following tables sets forth summarized balance sheet information and the geographic location of property, plant and equipment and leasing equipment, net: December 31, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Total assets $ 1,704,205 $ 989,928 $ 400,217 $ 293,627 $ 3,387,977 Debt, net — 253,473 25,000 1,626,289 1,904,762 Total liabilities 219,692 365,629 38,242 1,665,093 2,288,656 Non-controlling interests in equity of consolidated subsidiaries — 20,785 1,354 524 22,663 Total equity 1,484,513 624,299 361,975 ( 1,371,466 ) 1,099,321 Total liabilities and equity $ 1,704,205 $ 989,928 $ 400,217 $ 293,627 $ 3,387,977 December 31, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Property, plant and equipment and leasing equipment, net Africa $ — $ — $ — $ — $ — Asia 445,566 — — 56,702 502,268 Europe 774,300 — — — 774,300 North America 208,190 702,393 269,680 117,782 1,298,045 South America 25,009 — — — 25,009 Total property, plant and equipment and leasing equipment, net $ 1,453,065 $ 702,393 $ 269,680 $ 174,484 $ 2,599,622 103 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) December 31, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Total assets $ 1,694,837 $ 781,422 $ 366,402 $ 394,261 $ 3,236,922 Debt, net — 233,077 25,000 1,162,851 1,420,928 Total liabilities 285,099 324,509 63,930 1,224,527 1,898,065 Non-controlling interests in equity of consolidated subsidiaries — 35,671 785 524 36,980 Total equity 1,409,738 456,913 302,472 ( 830,266 ) 1,338,857 Total liabilities and equity $ 1,694,837 $ 781,422 $ 366,402 $ 394,261 $ 3,236,922 December 31, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Property, plant and equipment and leasing equipment, net Africa $ 43,348 $ — $ — $ — $ 43,348 Asia 487,913 — — 37,548 525,461 Europe 647,029 — — — 647,029 North America 311,185 560,059 200,319 123,067 1,194,630 South America 28,700 — — — 28,700 Total property, plant and equipment and leasing equipment, net $ 1,518,175 $ 560,059 $ 200,319 $ 160,615 $ 2,439,168 18. 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 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. 104 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) The calculation of basic and diluted EPS is presented below. Year Ended December 31, (in thousands, except share and per share data) 2020 2019 2018 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 ) Less: Net (loss) income attributable to non-controlling interests in consolidated subsidiaries: Continuing operations ( 16,522 ) ( 17,571 ) ( 21,925 ) Discontinued operations — 247 339 Less: Dividends on preferred shares 17,869 1,838 — Net (loss) income attributable to shareholders $ ( 105,039 ) $ 223,270 $ 5,882 Weighted average shares outstanding: Basic 86,015,702 85,992,019 83,654,068 Diluted 86,015,702 86,029,363 83,664,833 Basic EPS: Continuing operations $ ( 1.24 ) $ 1.74 $ 0.02 Discontinued operations $ 0.02 $ 0.85 $ 0.05 Diluted EPS: Continuing operations $ ( 1.24 ) $ 1.74 $ 0.02 Discontinued operations $ 0.02 $ 0.85 $ 0.05 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 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 In September 2019, in a public offering, we issued 3,450,000 shares of 8.25 % Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares (“Series A Preferred Shares”), par value $ 0.01 per share, with a liquidation preference of $ 25.00 per share for net proceeds of approximately $ 82.9 million. In November 2019, in a public offering, we issued 4,600,000 shares of 8.00 % Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares (“Series B Preferred Shares”), par value $ 0.01 per share, with a liquidation preference of $ 25.00 per share for net proceeds of approximately $ 111.1 million. See Note 14 for information related to options issued to the Manager in connection with these offerings. 19. COMMITMENTS AND CONTINGENCIES In the normal course of business the Company and its subsidiaries may be involved in various claims, legal proceedings, or may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. Within our offshore energy business, a lessee did not fulfill their obligation under their charter arrangement, therefore we are pursuing rights afforded to us under the charter and the range of potential losses against the obligation is $ 0.0 million to $ 3.3 million. Our maximum exposure under other arrangements is unknown as no additional claims have been made. We believe the risk of loss in connection with such arrangements is remote. 105 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 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. W e recorded $ 1.0 million of related expense during the year ended December 31, 2020. 20. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following table presents unaudited summary information for our quarterly operations: 2020 Quarter Ended Year Ended December 31 (in thousands except share and per share data) March 31 June 30 September 30 December 31 Total revenues $ 112,840 $ 94,309 $ 83,709 $ 75,638 $ 366,496 Total expenses 111,125 111,367 107,847 130,303 460,642 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 ( 3,060 ) ( 15,728 ) ( 25,209 ) ( 59,695 ) ( 103,692 ) Less: Net loss attributable to non-controlling interests in consolidated subsidiaries: Continuing operations ( 4,736 ) ( 4,112 ) ( 3,876 ) ( 3,798 ) ( 16,522 ) Discontinued operations — — — — — Less: Dividends on preferred shares 4,539 4,079 4,625 4,626 17,869 Net loss attributable to shareholders $ ( 2,863 ) $ ( 15,695 ) $ ( 25,958 ) $ ( 60,523 ) $ ( 105,039 ) (Loss) earnings per share: Basic Continuing operations $ ( 0.05 ) $ ( 0.18 ) $ ( 0.30 ) $ ( 0.70 ) $ ( 1.24 ) Discontinued operations $ 0.02 $ 0.00 $ 0.00 $ 0.00 $ 0.02 Diluted Continuing operations $ ( 0.05 ) $ ( 0.18 ) $ ( 0.30 ) $ ( 0.70 ) $ ( 1.24 ) Discontinued operations $ 0.02 $ 0.00 $ 0.00 $ 0.00 $ 0.02 Weighted Average Shares Outstanding: Basic 86,008,099 86,009,959 86,022,302 86,022,302 86,015,702 Diluted 86,008,099 86,009,959 86,022,302 86,022,302 86,015,702 106 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, unless otherwise noted) 2019 Quarter Ended Year Ended December 31 (in thousands except share and per share data) March 31 June 30 September 30 December 31 Total revenues $ 114,894 $ 149,848 $ 152,700 $ 161,332 $ 578,774 Total expenses 123,403 164,798 169,430 173,862 631,493 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 (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 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 Less: Net (loss) income attributable to non-controlling interests in consolidated subsidiaries: Continuing operations ( 3,360 ) ( 4,580 ) ( 5,111 ) ( 4,520 ) ( 17,571 ) Discontinued operations ( 56 ) 41 116 146 247 Less: Dividends on preferred shares — — — 1,838 1,838 Net (loss) income attributable to shareholders $ ( 6,380 ) $ 20,332 $ 25,671 $ 183,647 $ 223,270 (Loss) earnings per share: Basic Continuing operations $ ( 0.07 ) $ 0.23 $ 0.29 $ 1.30 $ 1.74 Discontinued operations $ 0.00 $ 0.01 $ 0.01 $ 0.83 $ 0.85 Diluted Continuing operations $ ( 0.07 ) $ 0.23 $ 0.29 $ 1.30 $ 1.74 Discontinued operations $ 0.00 $ 0.01 $ 0.01 $ 0.83 $ 0.85 Weighted Average Shares Outstanding: Basic 85,986,453 85,987,769 85,996,067 85,997,619 85,992,019 Diluted 85,986,453 85,989,029 86,005,604 86,090,207 86,029,363 21. SUBSEQUENT EVENTS In January 2021, we issued 6,594 common shares to certain directors as compensation. Dividends 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. Additionally, on February 25, 2021, our Board of Directors declared cash dividends on the Series A Preferred Shares and Series B Preferred Shares of $ 0.52 and $ 0.50 per share, respectively, for the quarter ended December 31, 2020, payable on March 15, 2021 to the holders of record on March 8, 2021. 107 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.