What changed in this filing

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Item 1. Financial Statements

2021-04-30 compared with 2020-10-30 · 251 added, 564 removed, 759 unchanged (52% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share and per share data)

Notes September 30, 2020 December 31, 2019

Notes March 31, 2021 December 31, 2020

Cash and cash equivalents 2 $ 160,252 $ 121,703

20 unchanged sentences

2,000,000,000 shares authorized;

85,617,146 and 84,917,448 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively)

85,630,753 and 85,617,146 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively)

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 September 30, 2020 and December 31, 2019, respectively)

13,320,000 and 9,120,000 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively)

Additional paid in capital 1,198,386 1,130,106

Retained earnings 60,760 190,453

Accumulated other comprehensive (loss) income ( 16,450 ) 372

Accumulated deficit ( 58,073 ) ( 28,158 )

Accumulated other comprehensive loss ( 16,283 ) ( 26,237 )

Shareholders' equity 1,125,019 1,076,658

6 unchanged sentences

(Dollars in thousands, except share and per share data)

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Notes 2021 2020

10 unchanged sentences

Total expenses 114,507 111,125

Other (expense) income

Equity in losses of unconsolidated entities 7 ( 2,501 ) ( 974 ) ( 5,445 ) ( 1,527 )

(Loss) gain on sale of assets, net ( 1,114 ) 37,060 ( 2,165 ) 61,400

Other income (expense)

Equity in earnings of unconsolidated entities 7 1,374 265

Gain (loss) on sale of assets, net 811 ( 1,819 )

Loss on extinguishment of debt 9 — ( 4,724 )

1 unchanged sentence

Other income 181 33

Total other (expense) income ( 3,557 ) 37,338 ( 12,181 ) 63,790

(Loss) income from continuing operations before income taxes ( 27,695 ) 20,608 ( 51,662 ) 23,601

(Benefit from) provision for income taxes 15 ( 2,486 ) 872 ( 6,334 ) ( 1,189 )

Net (loss) income from continuing operations ( 25,209 ) 19,736 ( 45,328 ) 24,790

Total other income (expense) 2,651 ( 6,204 )

Loss from continuing operations before income taxes ( 34,707 ) ( 4,489 )

Provision for (benefit from) income taxes 15 169 ( 98 )

Net loss from continuing operations ( 34,876 ) ( 4,391 )

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

Net (loss) income ( 25,209 ) 20,676 ( 43,997 ) 26,673

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

Continuing operations ( 3,876 ) ( 5,111 ) ( 12,724 ) ( 13,051 )

Discontinued operations — 116 — 101

Net loss ( 34,876 ) ( 3,060 )

Net loss attributable to non-controlling interests in consolidated subsidiaries ( 4,961 ) ( 4,736 )

Dividends on preferred shares 4,625 4,539

Net (loss) income attributable to shareholders $ ( 25,958 ) $ 25,671 $ ( 44,516 ) $ 39,623

Net loss attributable to shareholders $ ( 34,540 ) $ ( 2,863 )

(Loss) earnings per share:

10 unchanged sentences

(Dollars in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net (loss) income $ ( 25,209 ) $ 20,676 $ ( 43,997 ) $ 26,673

Other comprehensive (loss) income:

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

( 13,468 ) ( 8,584 ) ( 16,822 ) 25,474

Three Months Ended March 31,

Net loss $ ( 34,876 ) $ ( 3,060 )

Other comprehensive income:

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

Comprehensive (loss) income ( 24,922 ) 5,698

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

Continuing operations ( 3,876 ) ( 5,111 ) ( 12,724 ) ( 13,051 )

Discontinued operations — 116 — 101

Comprehensive loss attributable to non-controlling interest ( 4,961 ) ( 4,736 )

Comprehensive (loss) income attributable to shareholders $ ( 19,961 ) $ 10,434

________________________________________________________

(1) Net of deferred tax (benefit) expense of $( 3,580 ) and $( 2,282 ) for the three months ended September 30, 2020 and 2019, respectively, and $( 4,474 ) and $ 3,904 for the nine months ended September 30, 2020 and 2019, respectively.

(1) Net of deferred tax expense of $ 2,646 and $ 2,326 for the three months ended March 31, 2021 and 2020, respectively.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Three and Nine Months Ended September 30, 2020

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

Three Months Ended March 31, 2021

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

Equity - December 31, 2020 $ 856 $ 91 $ 1,130,106 $ ( 28,158 ) $ ( 26,237 ) $ 22,663 $ 1,099,321

Net loss ( 29,915 ) ( 4,961 ) ( 34,876 )

Other comprehensive loss — ( 3,354 ) — ( 3,354 )

Total comprehensive loss ( 9,940 ) ( 3,354 ) ( 8,848 ) ( 22,142 )

Other comprehensive income — 9,954 — 9,954

Total comprehensive (loss) income ( 29,915 ) 9,954 ( 4,961 ) ( 24,922 )

Settlement of equity-based compensation ( 183 ) ( 183 )

Issuance of common shares 150 150

Conversion of participating securities ( 7 ) ( 7 )

Dividends declared - common shares ( 28,383 ) ( 28,383 )

Issuance costs of preferred shares ( 788 ) ( 788 )

Dividends declared - preferred shares ( 8,618 ) ( 8,618 )

Equity-based compensation 702 702

Equity - June 30, 2020 $ 856 $ 81 $ 1,109,631 $ 115,113 $ ( 2,982 ) $ 28,792 $ 1,251,491

Net loss ( 21,333 ) ( 3,876 ) ( 25,209 )

Other comprehensive loss — ( 13,468 ) — ( 13,468 )

Total comprehensive loss ( 21,333 ) ( 13,468 ) ( 3,876 ) ( 38,677 )

Settlement of equity-based compensation ( 68 ) ( 68 )

Dividends declared - common shares ( 28,395 ) ( 28,395 )

Issuance of preferred shares 42 101,138 101,180

1 unchanged sentence

Equity-based compensation 1,114 1,114

Equity - September 30, 2020 $ 856 $ 91 $ 1,130,121 $ 60,760 $ ( 16,450 ) $ 25,469 $ 1,200,847

Three and Nine Months Ended September 30, 2019

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 - March 31, 2021 $ 856 $ 133 $ 1,198,386 $ ( 58,073 ) $ ( 16,283 ) $ 18,633 $ 1,143,652

Three Months Ended March 31, 2020

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

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

5 unchanged sentences

Dividends declared - common shares ( 28,391 ) — ( 28,391 )

Equity-based compensation — 928 928

Equity - June 30, 2019 $ 848 $ — $ 972,836 $ ( 18,865 ) $ 34,058 $ 49,356 $ 1,038,233

Net income (loss) 25,671 ( 4,995 ) 20,676

Other comprehensive loss — ( 8,584 ) — ( 8,584 )

Total comprehensive income (loss) 25,671 ( 8,584 ) ( 4,995 ) 12,092

Issuance of common shares 1 150 — 151

Conversion of participating securities ( 1 ) ( 1 )

Dividends declared - common shares ( 28,387 ) — ( 28,387 )

Issuance of preferred shares 35 82,853 82,888

Issuance costs of preferred shares ( 246 ) ( 246 )

Dividends declared - preferred shares ( 4,539 ) ( 4,539 )

Equity-based compensation — 291 291

Equity - September 30, 2019 $ 849 $ 35 $ 1,027,451 $ 6,806 $ 25,474 $ 45,037 $ 1,105,652

Equity - March 31, 2020 $ 851 $ 81 $ 1,110,028 $ 159,199 $ 9,130 $ 32,535 $ 1,311,824

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net (loss) income $ ( 43,997 ) $ 26,673

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

Equity in losses of unconsolidated entities 5,445 1,527

Net loss $ ( 34,876 ) $ ( 3,060 )

Adjustments to reconcile net loss to net cash used in operating activities:

Equity in earnings of unconsolidated entities ( 1,374 ) ( 265 )

Gain on sale of subsidiaries — ( 1,331 )

Loss (gain) on sale of assets, net 2,165 ( 61,416 )

(Gain) loss on sale of assets, net ( 811 ) 1,819

Security deposits and maintenance claims included in earnings ( 2,836 ) 8,844

3 unchanged sentences

Asset impairment 2,100 —

Change in current and deferred income taxes ( 7,374 ) ( 1,906 )

Change in deferred income taxes — 3,822

Change in fair value of non-hedge derivative ( 7,964 ) 181

8 unchanged sentences

Other liabilities ( 322 ) ( 8,057 )

Net cash provided by operating activities 28,393 92,713

Net cash used in operating activities ( 48,932 ) ( 11,806 )

Cash flows from investing activities:

6 unchanged sentences

Proceeds from sale of leasing equipment 4,574 28,568

Proceeds from sale of property, plant and equipment — 7

Return of capital distributions from unconsolidated entities — 1,424

Return of purchase deposit for aircraft and aircraft engines 4,600 —

Return of deposit on sale of engine 1,010 2,350

4 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from financing activities:

7 unchanged sentences

Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs 101,180 ( 246 )

Purchase of non-controlling interest ( 110 ) —

Settlement of equity-based compensation ( 183 ) —

Cash dividends - common shares ( 28,383 ) ( 28,391 )

Cash dividends - preferred shares ( 4,625 ) ( 4,539 )

Net cash provided by financing activities $ 299,689 $ 346,887

Net (decrease) increase in cash and cash equivalents and restricted cash ( 79,111 ) 29,747

Net cash provided by (used in) financing activities $ 235,408 $ ( 16,198 )

Net increase (decrease) in cash and cash equivalents and restricted cash 32,058 ( 119,129 )

Cash and cash equivalents and restricted cash, beginning of period 161,418 242,517

5 unchanged sentences

Billed, assumed and settled maintenance deposits ( 4,541 ) ( 13,860 )

Change in fair value of cash flow hedge — 25,474

Non-cash change in equity method investment 9,954 8,758

40 unchanged sentences

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 construction projects at Jefferson Terminal.

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

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

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

We had Aviation inventory of $ 64.7 million and $ 58.2 million as of March 31, 2021 and December 31, 2020, 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 $ 1.5 million and $ 5.6 million as of September 30, 2020 and December 31, 2019, respectively, which is included in Other assets in the Consolidated Balance Sheets.

We had commodities inventory of $ 0.1 million as of both March 31, 2021 and December 31, 2020, which is included in Other assets in the Consolidated Balance Sheets.

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 $ 31.3 million and $ 18.1 million as of September 30, 2020 and December 31, 2019, respectively, are recorded as a component of debt in the Consolidated Balance Sheets.

We also have unamortized deferred revolver fees related to our revolving debt of $ 2.0 million and $ 1.7 million as of September 30, 2020 and December 31, 2019, respectively, which are included in Other assets in the Consolidated Balance Sheets.

Amortization expense was $ 2.1 million an d $ 1.9 million for the three months ended September 30, 2020 and 2019, respectively, and $ 6.2 million and $ 6.0 million for the nine months ended September 30, 2020 and 2019, respectively, and is included in interest expense in the Consolidated Statements of Operations.

Unamortized deferred financing costs of $34.9 million and $36.2 million as of March 31, 2021 and December 31, 2020, respectively, are recorded as a component of debt in the Consolidated Balance Sheets.

We also have unamortized deferred revolver fees related to our revolving debt of $ 1.2 million and $ 1.6 million as of March 31, 2021 and December 31, 2020, respectively, which are included in Other assets in the Consolidated Balance Sheets.

Amortization expense was $ 2.3 million an d $ 2.1 million for the three months ended March 31, 2021 and 2020, respectively, and is included in interest expense in the Consolidated Statements of Operations.

Revenue Recognition

10 unchanged sentences

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.

3 unchanged sentences

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 three and nine months ended September 30, 2020.

The impact of the COVID-19 related lease concessions granted above did not have a material impact on our results of operations during the three months ended March 31, 2021.

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.

Net investment in finance leases 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.

3 unchanged sentences

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

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.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

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 term s of the relevant lease agreement.

Crude Marketing Revenues —Crude marketing revenues consists of marketing revenue related to Canadian crude oil.

Lease income is recognized on a straight-line basis over the term 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.

3 unchanged sentences

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

Additionally, other revenue consists of revenue related to derivative trading activities.

See Commodity Derivatives below for additional information.

Payment terms for Infrastructure Revenues are generally short term in nature.

12 unchanged sentences

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.

During the three months ended September 30, 2020, one customer in the Aviation Leasing segment accounted for approximately 11 % of total revenue.

During the three months ended September 30, 2019, one customer in the Jefferson Terminal segment accounted for approximately 17 % of total revenue.

During the nine months ended September 30, 2020, one customer in the Aviation segment accounted for approximately 11 % of total revenue.

During the nine months ended September 30, 2019, one customer in the Jefferson Terminal segment accounted for approximately 19 % of total revenue.

As of September 30, 2020, there were two customers in the Aviation Leasing segment that represented 32 % and 14 % of total accounts receivable, net, respectively.

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

We attempt to limit our credit risk by performing ongoing credit evaluations and, when deemed necessary, enter into collateral arrangements.

During the three months ended March 31, 2021, one customer in the Aviation Leasing segment accounted for approximately 11 % of total revenue.

During the three months ended March 31, 2020, one customer in the Jefferson Terminal segment and one customer in the Aviation Leasing segment accounted for approximately 16 % and 11 % of total revenue, respectively.

As of March 31, 2021, there were two customers in the Aviation Leasing segment that represented 43 % and 15 % of total accounts receivable, net.

As of December 31, 2020, accounts receivable from two customers in the Aviation Leasing segment represented 40 % and 15 % 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.

1 unchanged sentence

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 $ 2.8 million and $ 1.3 million as of September 30, 2020 and December 31, 2019, respectively.

Bad debt expense was $ 0.2 million and $ 0.0 million for the three months ended September 30, 2020 and 2019, respectively, and $ 2.0 million and $ 3.0 million for the nine months ended September 30, 2020 and 2019, respectively, and is included in operating expenses in the Consolidated Statements of Operations.

The allowance for doubtful accounts was $ 4.0 million and $ 4.6 million as of March 31, 2021 and December 31, 2020, respectively.

There was a bad debt reversal of $ 0.5 million and bad debt expense of $ 0.6 million for the three months ended March 31, 2021 and 2020, respectively, and is included in operating expenses in the Consolidated Statements of Operations.

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.

8 unchanged sentences

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.

Our share of the derivative's gain or loss is reported as Other comprehensive income (loss) 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

1 unchanged sentence

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 Investment in unconsolidated entities in our Consolidated Statements of Cash Flows.

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.

Other Assets— Other assets is primarily comprised of lease incentives of $ 48.5 million and $ 45.3 million, prepaid expenses of $ 6.0 million and $ 4.1 million, notes receivable of $ 7.8 million and $ 2.4 million and maintenance right assets of $ 13.6 million and $ 24.5 million as of September 30, 2020 and December 31, 2019, respectively.

Additionally, depending on market conditions, we enter into short-term forward purchase and sales contracts for butane.

Gains and losses related to our butane derivatives are recorded on a net basis and are included in Other revenue in our Consolidated Statements of Operations, as these contracts are considered part of central operating activities.

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.

See Note 11 for additional details related to our commodity derivatives.

Some of our derivatives are used for speculative purposes.

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

Other Assets— Other assets is primarily comprised of lease incentives of $ 52.6 million and $ 55.1 million, purchase deposits of $ 10.7 million and $ 6.1 million, prepaid expenses of $ 24.5 million and $ 10.1 million, notes receivable of $ 6.4 million and $ 2.4 million, maintenance right assets of $ 13.6 million and $ 6.4 million and aircraft engine modules, spare parts and used material inventory of $ 64.7 million and $ 58.2 million as of March 31, 2021 and December 31, 2020, respectively.

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

For both the three and nine months ended September 30, 2020 and 2019, the Board of Directors declared a cash dividend of $ 0.33 and $ 0.99 per common share.

Additionally, in the quarter ended September 30, 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.

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.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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 both the three months ended March 31, 2021 and 2020, the Board of Directors declared a cash dividend of $ 0.33 per common share.

Additionally, in the quarter ended March 31, 2021, 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.

Recent Accounting Pronouncements — In March 2020 and January 2021, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU 2021-01, Reference Rate Reform:

Scope , respectively.

Together, the ASU’s temporarily simplify 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.

2 unchanged sentences

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) .

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.

1 unchanged sentence

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.

We adopted this guidance in the first quarter of 2021, which did not have a material impact on our consolidated financial statements.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

DISCONTINUED OPERATIONS

2 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Total revenues $ — $ 9,521 $ — $ 28,411

Operating expense — 7,398 — 23,280

Acquisition and transaction expenses — 275 — 275

Depreciation and amortization — 479 — 1,697

Interest expense — 298 — 945

Total expenses — 8,450 — 26,197

Gain on sale of assets, net — 1 1,331 16

Other income — 1 1,331 16

Income before income taxes — 1,072 1,331 2,230

Provision for income taxes — 132 — 347

Net income — 940 1,331 1,883

Net income (loss) attributable to non-controlling interests in consolidated subsidiaries — 116 — 101

Net income attributable to shareholders $ — $ 824 $ 1,331 $ 1,782

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

Nine Months Ended September 30,

Operating activities:

Depreciation and amortization $ — $ 1,697

Bad debt expense — 156

Share-based compensation expense — 438

Investing activities:

Purchases of property, plant and equipment $ — $ 4,500

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

During the three months ended March 31, 2020, we recognized a gain on sale of $ 1.3 million which is reported in Net income from discontinued operations, net of income taxes in the Consolidated Statements of Operations.

There were no non-cash items or capital expenditures during the three months ended March 31, 2020.

LEASING EQUIPMENT, NET

Leasing equipment, net is summarized as follows:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Leasing equipment $ 2,114,590 $ 2,042,404

1 unchanged sentence

Leasing equipment, net $ 1,684,816 $ 1,635,259

During the nine months ended September 30, 2020, we performed impairment analyses over certain of our leasing equipment and determined that the carrying amount of certain assets were not recoverable.

During the three months ended March 31, 2021, we evaluated our leasing equipment portfolio and identified certain assets with indicators of impairment, including, but not limited to, the redelivery of unserviceable leasing equipment 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 $ 2.1 million, net of redelivery compensation.

The following table presents information related to our acquisitions and dispositions of aviation leasing equipment during the nine months ended September 30, 2020:

The following table presents information related to our acquisitions and dispositions of aviation leasing equipment during the three months ended March 31, 2021:

Acquisitions:

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Depreciation expense for leasing equipment is summarized as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Depreciation expense for leasing equipment $ 34,695 $ 34,724

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Finance leases, net are summarized as follows:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Finance leases $ 16,994 $ 9,389

1 unchanged sentence

Finance leases, net $ 13,966 $ 6,927

We entered into a 15 month sales-type lease agreement for three of our engines during the nine months ended September 30, 2020.

During the first quarter of 2021, we entered into 52-month sales-type lease arrangements for four airframes.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

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Property, plant and equipment, net is summarized as follows:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Land, site improvements and rights $ 59,184 $ 52,047

10 unchanged sentences

Property, plant and equipment, net $ 1,000,988 $ 964,363

During the nine months ended September 30, 2020, we added property, plant and equipment of $ 205.6 million, which primarily consists of terminal machinery and equipment placed in service or under development at Jefferson Terminal and Repauno.

During the three months ended March 31, 2021, we added property, plant and equipment of $ 45.6 million, 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:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Depreciation expense for property, plant and equipment:

Continuing operations $ 6,634 $ 6,343 $ 19,757 $ 18,435

Discontinued operations — 479 — 1,682

Total $ 6,634 $ 6,822 $ 19,757 $ 20,117

Three Months Ended March 31,

Depreciation expense $ 8,952 $ 6,585

The following table presents the ownership interests and carrying values of our investments:

Carrying Value

Investment Ownership Percentage September 30, 2020 December 31, 2019

Investment Ownership Percentage March 31, 2021 December 31, 2020

Advanced Engine Repair JV Equity method 25 % $ 22,381 $ 22,721

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Investments $ 161,767 $ 146,515

We did not recognize any other-than-temporary impairments for the three and nine months ended September 30, 2020 or 2019.

We did not recognize any other-than-temporary impairments for the three months ended March 31, 2021 or 2020.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Advanced Engine Repair JV $ ( 340 ) $ ( 591 )

JGP Energy Partners LLC — ( 162 ) — ( 290 )

Intermodal Finance I, Ltd.

32 73 ( 51 ) 91

Long Ridge Terminal LLC 1,542 906

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Advanced Engine Repair JV

In December 2016, we invested $ 15 million for 25 % interest in an advanced engine repair joint venture.

In December 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.

1 unchanged sentence

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;

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 September 30, 2020, Intermodal owns a portfolio of approximately 2,000 shipping containers subject to multiple operating leases.

Equity Investments

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

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

INTANGIBLE ASSETS AND LIABILITIES, NET

Intangible assets and liabilities, net are summarized as follows:

September 30, 2020

March 31, 2021

Aviation Leasing Jefferson Terminal Total

11 unchanged sentences

Acquired unfavorable lease intangibles, net $ 1,824 $ — $ 1,824

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

December 31, 2020

13 unchanged sentences

Intangible liabilities relate to unfavorable lease intangibles and are included as a component of Other liabilities in the Consolidated Balance Sheets.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Amortization of intangible assets and liabilities is as follows:

Classification in Consolidated Statements of Operations Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Classification in Consolidated Statements of Operations Three Months Ended March 31,

Lease intangibles Equipment leasing revenues $ 752 $ 1,132

Customer relationships:

Depreciation and amortization

Continuing operations 888 888 2,665 2,665

Discontinued operations — — — 15

Customer relationships Depreciation and amortization 888 888

Total $ 1,640 $ 2,020

As of September 30, 2020, estimated net annual amortization of intangibles is as follows:

As of March 31, 2021, estimated net annual amortization of intangibles is as follows:

Remainder of 2021 $ 5,068

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Our debt, net is summarized as follows:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Outstanding Borrowings Stated Interest Rate Maturity Date Outstanding Borrowings

Loans payable

FTAI Pride Credit Agreement $ — N/A N/A $ 36,009

Revolving Credit

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(ii) Adjusted Eurodollar Rate + 3.00 %

Jefferson Revolver — N/A N/A 50,000

1/31/2022 $ —

DRP Revolver (2)

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11/5/2021 25,000

EB-5 Loan Agreement 21,600 5.75 % 1/25/2026 —

Total loans payable 196,600 25,000

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 —

Series 2020 Bonds 263,980 (i) Tax Exempt Series 2020A Bonds:

(ii) Tax Exempt Series 2020A Bonds:

(iii) Taxable Series 2020B Bonds:

(ii) 1/1/2050

(iii) 1/1/2025

Senior Notes due

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(2) 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.

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

(4) Includes unamortized discount of $ 3,790 and $ 5,429 at September 30, 2020 and December 31, 2019, respectively, and an unamortized premium of $ 2,203 and $ 3,243 at September 30, 2020 and December 31, 2019, respectively.

(5) Includes unamortized discount of $ 4,493 and $ 5,043 at September 30, 2020 and December 31, 2019, respectively.

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

(3) Includes unamortized discount of $ 1,834 and $ 2,230 at March 31, 2021 and December 31, 2020, respectively, and an unamortized premium of $ 998 and $ 1,561 at March 31, 2021 and December 31, 2020, respectively.

(4) Includes unamortized discount of $ 4,110 and $ 4,303 at March 31, 2021 and December 31, 2020, respectively, and an unamortized premium of $ 6,671 and $ 6,976 at March 31, 2021 and December 31, 2020, respectively.

On January 25, 2021, Jefferson entered into a non-recourse loan agreement under the U.S.

Citizenship and Immigration Services EB-5 Program (“EB-5 Loan Agreement”) to pay for the development, construction and acquisition of certain facilities at Jefferson Terminal.

The maximum aggregate principal amount available under the EB-5 Loan Agreement is $ 61.2 million, of which $ 26.1 million is available under the first tranche and $ 35.1 million is available under the second tranche.

The loans mature in five years from the funding of each individual tranche with an option to extend the maturity for both tranches by two one -year periods.

If the option to extend the maturity is exercised, the interest rate will increase to 6.25 % from 5.75 % for the extension period.

We were in compliance with all debt covenants as of March 31, 2021.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

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(Dollars in tables in thousands, unless otherwise noted)

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 Credit 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 Credit 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.

We were in compliance with all debt covenants as of September 30, 2020.

FAIR VALUE MEASUREMENTS

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• Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following tables set forth our financial assets measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, by level within the fair value hierarchy.

The following tables set forth our financial assets measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020, 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

September 30, 2020 September 30, 2020

March 31, 2021 March 31, 2021

Total Level 1 Level 2 Level 3 Valuation Technique

1 unchanged sentence

Restricted cash 33,224 33,224 — — Market

Derivative assets 7,964 — 7,964 — Income

Total assets $ 201,440 $ 193,476 $ 7,964 $ —

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Restricted cash 39,715 39,715 — — Market

Derivative assets 181 — — 181 Income

Total $ 161,418 $ 161,418 $ — $ —

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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 and 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 values approximate their carrying values based on an evaluation of pricing data, vendor quotes, and historical trading activity or due to their short maturity profiles.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(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:

September 30, 2020 December 31, 2019

Series 2012 Bonds (1)

Series 2016 Bonds (1)

March 31, 2021 December 31, 2020

Series A 2020 Bonds (1)

$ 190,540 $ 186,306

Series B 2020 Bonds (1)

80,992 79,723

Senior Notes due 2022 400,824 403,536

2 unchanged sentences

________________________________________________________

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

See Note 9 for additional details.

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

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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.

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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.

We record such assets at fair value at acquisition or 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.

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

Depending on market conditions, Repauno enters into forward purchase and sales contracts for butane.

These derivatives are short-term in nature and are used for trading purposes.

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

March 31, 2021 December 31, 2020

Notional Amount (BBL in thousands)

Fair Value of Assets (1)

Term 5 to 12 months

________________________________________________________

(1) Included in Other assets in the Consolidated Balance Sheets.

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

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

Crude Oil Forwards Electricity Swaps (1)

Crude Oil Forwards Crude Oil Forwards Electricity Swaps (1)

Crude Oil Forwards

Three Months Ended March 31,

Beginning Balance $ — $ 181

Net unrealized gains (losses) recognized in earnings — ( 181 )

(Losses) gains recognized in other comprehensive income — ( 10,866 ) — — 29,378 —

Purchases — — — — 314

Sales — — — — ( 854 )

Settlements — — — — — 539

Ending Balance $ — $ —

________________________________________________________

(1) These derivatives were deconsolidated in December 2019 due to the Long Ridge Transaction.

See Note 7 for additional details.

There were no transfers into or out of Level 3 during the periods presented.

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 842, 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.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

Three Months Ended September 30, 2020

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total

Equipment leasing revenues

Lease income $ 38,537 $ — $ — $ 1,903 $ 40,440

Maintenance revenue 25,609 — — — 25,609

Finance lease income 591 — — — 591

Other revenue 1,754 — — 1,405 3,159

Total equipment leasing revenues 66,491 — — 3,308 69,799

Infrastructure revenues

Lease income — 368 — — 368

Terminal services revenues — 11,329 — — 11,329

Crude marketing revenues — — — — —

Other revenue — — 1,242 971 2,213

Total infrastructure revenues — 11,697 1,242 971 13,910

Total revenues $ 66,491 $ 11,697 $ 1,242 $ 4,279 $ 83,709

Three Months Ended September 30, 2019

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total

Equipment leasing revenues

Lease income $ 50,169 $ — $ — $ 666 $ 50,835

Maintenance revenue 35,426 — — — 35,426

Finance lease income 496 — — — 496

Other revenue 214 — — 288 502

Total equipment leasing revenues 86,305 — — 954 87,259

Infrastructure revenues

Lease income — 627 249 — 876

Terminal services revenues — 9,505 2,330 — 11,835

Crude marketing revenues — 50,405 — — 50,405

Other revenue — — 1,595 730 2,325

Total infrastructure revenues — 60,537 4,174 730 65,441

Total revenues $ 86,305 $ 60,537 $ 4,174 $ 1,684 $ 152,700

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Nine Months Ended September 30, 2020

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.

Three Months Ended March 31, 2021

Equipment Leasing Infrastructure

13 unchanged sentences

Total revenues $ 56,101 $ 10,719 $ 8,096 $ 2,233 $ 77,149

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Equipment Leasing Infrastructure

16 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

Presented below are the contracted minimum future annual revenues to be received under existing operating and finance leases across several market sectors as of September 30, 2020:

Presented below are the contracted minimum future annual revenues to be received under existing operating and finance leases across several market sectors as of March 31, 2021:

Operating Leases Finance Leases

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

Our leases have remaining lease terms ranging from approximately 1 to 42 years.

Our leases have remaining lease terms ranging from approximately one month to 41 years.

The following table presents lease related costs:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Operating lease expense $ 1,259 $ 1,135

1 unchanged sentence

Variable lease expense 211 840

Sublease income — ( 279 ) — ( 833 )

Lease expense from continuing operations 1,425 2,529 5,343 7,803

Finance lease expense — 76 — 234

Operating lease expense — 938 — 2,788

Lease expense from discontinued operations — 1,014 — 3,022

Total lease expense $ 1,721 $ 2,265

The following table presents information related to our operating leases as of and for the nine months ended September 30, 2020:

The following table presents information related to our operating leases as of and for the three months ended March 31, 2021:

Right-of-use assets, net $ 64,801

3 unchanged sentences

Cash paid for amounts included in the measurement of operating lease liabilities $ 1,252

Continuing operations $ 3,594

Discontinued operations $ —

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table presents future minimum lease payments under non-cancellable operating leases as of September 30, 2020:

The following table presents future minimum lease payments under non-cancellable operating leases as of March 31, 2021:

Remainder of 2021 $ 3,856

3 unchanged sentences

Total lease liabilities $ 64,231

During the nine months ended September 30, 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.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

During the three months ended March 31, 2021, we entered into a new lease for real estate, which had a ROU asset value of $ 2.7 million and a lease term of approximately five years at commencement.

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 September 30, 2020, the Incentive Plan provides for the issuance of up to 29.9 million shares.

As of March 31, 2021, 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 Consolidated Statements of Operations includes the following expense related to our stock-based compensation arrangements:

Three Months Ended September 30, Nine Months Ended September 30, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met Weighted Average Remaining Contractual Term (in years)

2020 2019 2020 2019

Three Months Ended March 31, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met Weighted Average Remaining Contractual Term (in years)

Restricted Shares $ 841 $ 215 $ 7,816 1.7

Common Units 273 76 1,877 1.6

Total - continuing operations $ 621 $ 405 $ 1,323 $ 1,166 $ 5,327

Total - discontinued operations $ — $ 271 $ — $ 438

During the nine months ended September 30, 2020, FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC, transferred 252,472 of its options to certain of the Manager’s employees.

Total $ 1,114 $ 291 $ 9,693

During the three months ended March 31, 2021, FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC, transferred 25,998 of its options to certain of the Manager’s employees.

In connection with our March 2021 offering of preferred shares (see Note 18), we granted options to the Manager related to 355,932 common shares at an exercise price of $29.50, which had a grant date fair value of $ 3.7 million.

The assumptions used in valuing the options were:

a 1.70 % risk-free rate, a 3.16 % dividend yield, a 45.60 % volatility and a ten-year term.

During the three months ended March 31, 2021, we issued 1,052,632 common units of our subsidiary that had a grant date fair value of $ 1.2 million and 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 the 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.

Restricted Shares

During the nine months ended September 30, 2020, we issued 545,806 restricted shares of our subsidiary that had a grant date fair value of $ 4.0 million and vest over three years .

During the three months ended March 31, 2021, we issued restricted shares of our subsidiary that had a grant date fair value of $ 5.3 million and 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.

2 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

During the nine months ended September 30, 2020, we issued 831,140 common units of our subsidiaries that had a grant date fair value of $ 0.9 million and vest over three years .

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

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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

Three Months Ended March 31,

Federal $ 19 $ 37

State and local 71 168

Foreign ( 27 ) ( 17 ) 295 143

Total current provision 98 275

2 unchanged sentences

Foreign ( 84 ) ( 92 )

Total deferred provision ( 2,503 ) 786 ( 6,992 ) ( 1,613 )

(Benefit from) provision for income taxes:

Continuing operations ( 2,486 ) 872 ( 6,334 ) ( 1,189 )

Discontinued operations — 132 — 347

Total $ ( 2,486 ) $ 1,004 $ ( 6,334 ) $ ( 842 )

Total deferred benefit 71 ( 373 )

Benefit from income taxes $ 169 $ ( 98 )

We are taxed as a flow-through entity for U.S.

5 unchanged sentences

corporate tax rates, or being deemed to be foreign sourced and thus either not taxable or taxable at effectively lower tax rates.

As of and for the nine months ended September 30, 2020, we had not established a liability for uncertain tax positions as no such positions existed.

As of and for the three months ended March 31, 2021, 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.

1 unchanged sentence

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 of September 30, 2020.

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 of March 31, 2021.

MANAGEMENT AGREEMENT AND AFFILIATE TRANSACTIONS

4 unchanged sentences

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.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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”).

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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.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

A subsidiary of ours 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:

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The following table summarizes the management fees, income incentive allocation and capital gains incentive allocation:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Management fees $ 3,990 $ 4,766

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The following table summarizes our reimbursements to the Manager:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 (1)

Three Months Ended March 31,

Classification in the Consolidated Statements of Operations:

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Total $ 2,650 $ 2,786

________________________________________________________

(1) Due to the Aviation Restructuring (as defined in Note 17), during the three and nine months ended September 30, 2019, $ 1,742 and $ 4,971 , respectively, was restated from the Corporate and Other segment to the Aviation Leasing segment, of which $ 749 and $ 2,043 , respectively, was reclassified from General and administrative to Operating expenses and $ 993 and $ 2,928 , respectively, remained in Acquisition and transaction expenses.

See Note 17 for additional details.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

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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).

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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).

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Accrued management fees $ 1,342 $ 1,461

Other payables 835 1,317

________________________________________________________

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

As of September 30, 2020 and December 31, 2019, there were no receivables from the Manager.

As of March 31, 2021 and December 31, 2020, there were no receivables from the Manager.

Other Affiliate Transactions

As of September 30, 2020 and December 31, 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 consolidated financial statements.

The carrying amount of this non-controlling interest at September 30, 2020 and December 31, 2019 was $ 21.2 million and $ 33.7 million, respectively.

As of March 31, 2021 and December 31, 2020 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 consolidated financial statements.

The carrying amount of this non-controlling interest at March 31, 2021 and December 31, 2020 was $ 12.2 million and $ 17.2 million, respectively.

The following table presents the amount of this non-controlling interest share of net loss:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Non-controlling interest share of net loss $ 5,016 $ 4,661

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

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 are 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.

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See Note 7 for additional information related to FYX.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

During the three months ended September 30, 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

During the three months ended March 31, 2021, we granted options to the Manager in connection with the offering of the Series C Preferred Shares (as defined in Note 18).

See Notes 14 and 18 for additional information.

SEGMENT INFORMATION

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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 company level general and administrative expenses, and management fees.

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

Aviation Leasing Organizational Restructuring

We recently 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 will be reported within the Aviation Leasing segment.

Prior periods have been restated for historical comparison.

The following table presents our adjustments for the three months ended September 30, 2019.

As Previously Reported Adjustments As Reported

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

Operating expenses $ 2,473 $ 4,381 $ 749 $ — $ 3,222 $ 4,381

General and administrative — 6,284 — ( 749 ) — 5,535

Acquisition and transaction expenses 65 5,278 993 ( 993 ) 1,058 4,285

The following table presents our adjustments for the nine months ended September 30, 2019.

As Previously Reported Adjustments As Reported

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

Operating expenses $ 11,272 $ 11,088 $ 2,043 $ — $ 13,315 $ 11,088

General and administrative — 15,313 — ( 2,043 ) — 13,270

Acquisition and transaction expenses 78 9,047 2,928 ( 2,928 ) 3,006 6,119

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

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

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The following tables set forth certain information for each reportable segment:

For the Three Months Ended September 30, 2020

Three Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

Three Months Ended March 31, 2021

Equipment Leasing Infrastructure

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Other (expense) income

Equity in (losses) income of unconsolidated entities ( 247 ) — ( 2,285 ) 31 ( 2,501 )

Loss on sale of assets, net ( 1,114 ) — — — ( 1,114 )

Equity in (losses) earnings of unconsolidated entities ( 340 ) — 1,542 172 1,374

Gain on sale of assets, net 811 — — — 811

Interest income 267 — — 18 285

Total other (expense) income ( 1,320 ) — ( 2,285 ) 48 ( 3,557 )

Other income — 181 — — 181

Total other income 738 181 1,542 190 2,651

Income (loss) from continuing operations before income taxes 16,730 ( 9,742 ) 4,046 ( 45,741 ) ( 34,707 )

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Net income (loss) from continuing operations 16,772 ( 9,799 ) 3,892 ( 45,741 ) ( 34,876 )

Net loss from continuing operations attributable to non-controlling interests in consolidated subsidiaries — ( 3,809 ) ( 67 ) — ( 3,876 )

Net (loss) income attributable to non-controlling interests in consolidated subsidiaries — ( 5,016 ) 55 — ( 4,961 )

Dividends on preferred shares — — — 4,625 4,625

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

Three Months Ended September 30, 2020

Three Months Ended March 31, 2021

Equipment Leasing Infrastructure

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Non-controlling share of Adjusted EBITDA 2,029

Equity in losses of unconsolidated entities ( 2,501 )

Equity in earnings of unconsolidated entities 1,374

Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 2,402 )

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Equity-based compensation expense ( 1,114 )

Benefit from income taxes 2,486

Provision for income taxes ( 169 )

Net loss attributable to shareholders from continuing operations $ ( 34,540 )

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

Three Months Ended September 30, 2020

Three Months Ended March 31, 2021

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total

Africa $ 1,781 $ — $ — $ — $ 1,781

Asia $ 25,024 $ — $ — $ 506 $ 25,530

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(Dollars in tables in thousands, unless otherwise noted)

For the Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2020

For the Three Months Ended March 31, 2020

Three Months Ended March 31, 2020

Equipment Leasing Infrastructure

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Depreciation and amortization 32,631 7,226 376 1,964 42,197

Asset impairment 14,391 — — — 14,391

Interest expense — 3,428 393 19,040 22,861

Total expenses 39,426 32,597 3,551 35,551 111,125

Other (expense) income

Equity in losses of unconsolidated entities ( 1,432 ) — ( 3,961 ) ( 52 ) ( 5,445 )

Other income (expense)

Equity in (losses) earnings of unconsolidated entities ( 591 ) — 906 ( 50 ) 265

Loss on sale of assets, net ( 1,819 ) — — — ( 1,819 )

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Other income — 33 — — 33

Total other expense ( 3,520 ) ( 4,677 ) ( 3,961 ) ( 23 ) ( 12,181 )

Total other (expense) income ( 2,398 ) ( 4,669 ) 906 ( 43 ) ( 6,204 )

Income (loss) from continuing operations before income taxes 41,168 ( 12,525 ) ( 2,331 ) ( 30,801 ) ( 4,489 )

(Benefit from) provision for income taxes ( 5,255 ) 212 ( 1,534 ) 243 ( 6,334 )

Provision for (benefit from) income taxes 45 135 ( 281 ) 3 ( 98 )

Net income (loss) from continuing operations 41,123 ( 12,660 ) ( 2,050 ) ( 30,804 ) ( 4,391 )

Net loss from continuing operations attributable to non-controlling interests in consolidated subsidiaries — ( 12,490 ) ( 234 ) — ( 12,724 )

Net loss attributable to non-controlling interests in consolidated subsidiaries — ( 4,661 ) ( 75 ) — ( 4,736 )

Dividends on preferred shares — — — 4,539 4,539

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

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2020

Equipment Leasing Infrastructure

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Non-controlling share of Adjusted EBITDA 3,350

Equity in losses of unconsolidated entities ( 5,445 )

Equity in earnings of unconsolidated entities 265

Pro-rata share of Adjusted EBITDA from unconsolidated entities 413

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

Nine Months Ended September 30, 2020

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total

Africa $ 10,254 $ — $ — $ — $ 10,254

Asia 86,799 — — 11,340 98,139

Europe 99,870 — — — 99,870

North America 24,980 49,519 1,556 3,701 79,756

South America 2,839 — — — 2,839

Total $ 224,742 $ 49,519 $ 1,556 $ 15,041 $ 290,858

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

For the Three Months Ended September 30, 2019

Three Months Ended September 30, 2019

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total

Equipment leasing revenues $ 86,305 $ — $ — $ 954 $ 87,259

Infrastructure revenues — 60,537 4,174 730 65,441

Total revenues 86,305 60,537 4,174 1,684 152,700

Operating expenses 3,222 69,712 5,404 4,381 82,719

General and administrative — — — 5,535 5,535

Acquisition and transaction expenses 1,058 — — 4,285 5,343

Management fees and incentive allocation to affiliate — — — 7,378 7,378

Depreciation and amortization 33,911 5,717 1,687 1,950 43,265

Interest expense — 3,927 469 20,794 25,190

Total expenses 38,191 79,356 7,560 44,323 169,430

Other income (expense)

Equity in (losses) earnings of unconsolidated entities ( 885 ) ( 162 ) — 73 ( 974 )

Gain on sale of assets, net 37,060 — — — 37,060

Interest income 31 26 47 17 121

Other income (expense) — 772 ( 644 ) 1,003 1,131

Total other income (expense) 36,206 636 ( 597 ) 1,093 37,338

Income (loss) from continuing operations before income taxes 84,320 ( 18,183 ) ( 3,983 ) ( 41,546 ) 20,608

Provision for income taxes 816 56 — — 872

Net income (loss) from continuing operations 83,504 ( 18,239 ) ( 3,983 ) ( 41,546 ) 19,736

Net loss from continuing operations attributable to non-controlling interests in consolidated subsidiaries — ( 5,031 ) ( 80 ) — ( 5,111 )

Net income (loss) from continuing operations attributable to shareholders $ 83,504 $ ( 13,208 ) $ ( 3,903 ) $ ( 41,546 ) $ 24,847

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(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:

Three Months Ended September 30, 2019

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total

Adjusted EBITDA $ 126,009 $ ( 2,112 ) $ ( 927 ) $ ( 10,967 ) $ 112,003

Non-controlling share of Adjusted EBITDA 2,928

Equity in losses of unconsolidated entities ( 974 )

Pro-rata share of Adjusted EBITDA from unconsolidated entities 801

Interest expense ( 25,190 )

Depreciation and amortization expense ( 49,985 )

Incentive allocations ( 3,736 )

Asset impairment charges —

Changes in fair value of non-hedge derivative instruments ( 4,380 )

Losses on the modification or extinguishment of debt and capital lease obligations —

Acquisition and transaction expenses ( 5,343 )

Equity-based compensation expense ( 405 )

Benefit from income taxes ( 872 )

Net income attributable to shareholders from continuing operations $ 24,847

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

Three Months Ended September 30, 2019

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total

Africa $ 4,470 $ — $ — $ — $ 4,470

Asia 28,777 — — 954 29,731

Europe 43,217 — — — 43,217

North America 8,278 60,537 4,174 730 73,719

South America 1,563 — — — 1,563

Total $ 86,305 $ 60,537 $ 4,174 $ 1,684 $ 152,700

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

For the Nine Months Ended September 30, 2019

Nine Months Ended September 30, 2019

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total

Equipment leasing revenues $ 231,697 $ — $ — $ 7,214 $ 238,911

Infrastructure revenues — 164,053 12,154 2,324 178,531

Total revenues 231,697 164,053 12,154 9,538 417,442

Operating expenses 13,315 183,346 15,063 11,088 222,812

General and administrative — — — 13,270 13,270

Acquisition and transaction expenses 3,006 — — 6,119 9,125

Management fees and incentive allocation to affiliate — — — 16,926 16,926

Depreciation and amortization 97,183 16,392 5,240 5,365 124,180

Interest expense — 12,375 1,113 57,830 71,318

Total expenses 113,504 212,113 21,416 110,598 457,631

Other income (expense)

Equity in (losses) earnings of unconsolidated entities ( 1,328 ) ( 290 ) — 91 ( 1,527 )

Gain on sale of assets, net 61,388 12 — — 61,400

Interest income 85 97 241 29 452

Other income — 589 1,873 1,003 3,465

Total other income 60,145 408 2,114 1,123 63,790

Income (loss) from continuing operations before income taxes 178,338 ( 47,652 ) ( 7,148 ) ( 99,937 ) 23,601

(Benefit from) provision for income taxes ( 1,373 ) 180 — 4 ( 1,189 )

Net income (loss) from continuing operations 179,711 ( 47,832 ) ( 7,148 ) ( 99,941 ) 24,790

Net loss from continuing operations attributable to non-controlling interests in consolidated subsidiaries — ( 12,885 ) ( 166 ) — ( 13,051 )

Net income (loss) from continuing operations attributable to shareholders $ 179,711 $ ( 34,947 ) $ ( 6,982 ) $ ( 99,941 ) $ 37,841

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(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:

Nine Months Ended September 30, 2019

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total

Adjusted EBITDA $ 302,535 $ ( 5,965 ) $ ( 2,242 ) $ ( 24,874 ) $ 269,454

Non-controlling share of Adjusted EBITDA 7,866

Equity in losses of unconsolidated entities ( 1,527 )

Pro-rata share of Adjusted EBITDA from unconsolidated entities 895

Interest expense ( 71,318 )

Depreciation and amortization expense ( 148,188 )

Incentive allocations ( 6,109 )

Asset impairment charges —

Changes in fair value of non-hedge derivative instruments ( 4,130 )

Losses on the modification or extinguishment of debt and capital lease obligations —

Acquisition and transaction expenses ( 9,125 )

Equity-based compensation expense ( 1,166 )

Benefit from income taxes 1,189

Net income attributable to shareholders from continuing operations $ 37,841

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

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Equipment Leasing Infrastructure

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The following tables sets forth summarized balance sheet information and the geographic location of property, plant and equipment and leasing equipment, net:

September 30, 2020

March 31, 2021

Equipment Leasing Infrastructure

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Total liabilities and equity $ 1,806,730 $ 995,107 $ 446,449 $ 343,761 $ 3,592,047

September 30, 2020

March 31, 2021

Equipment Leasing Infrastructure

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Property, plant and equipment and leasing equipment, net

Africa $ 13,466 $ — $ — $ — $ 13,466

Asia $ 416,084 $ — $ — $ 61,386 $ 477,470

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Total $ 1,504,901 $ 726,264 $ 276,997 $ 177,642 $ 2,685,804

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

December 31, 2020

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Total liabilities and equity $ 1,704,205 $ 989,928 $ 400,217 $ 293,627 $ 3,387,977

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

December 31, 2020

2 unchanged sentences

Property, plant and equipment and leasing equipment, net

Africa $ 43,348 $ — $ — $ — $ 43,348

Asia $ 445,566 $ — $ — $ 56,702 $ 502,268

3 unchanged sentences

Total $ 1,453,065 $ 702,393 $ 269,680 $ 174,484 $ 2,599,622

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

EARNINGS PER SHARE AND EQUITY

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The calculation of basic and diluted EPS is presented below:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except share and per share data) 2021 2020

Net (loss) income from continuing operations $ ( 25,209 ) $ 19,736 $ ( 45,328 ) $ 24,790

Net loss from continuing operations $ ( 34,876 ) $ ( 4,391 )

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

Net (loss) income ( 25,209 ) 20,676 ( 43,997 ) 26,673

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

Continuing operations ( 3,876 ) ( 5,111 ) ( 12,724 ) ( 13,051 )

Discontinued operations — 116 — 101

Net loss ( 34,876 ) ( 3,060 )

Net loss attributable to non-controlling interests in consolidated subsidiaries ( 4,961 ) ( 4,736 )

Dividends on preferred shares 4,625 4,539

Net (loss) income attributable to shareholders $ ( 25,958 ) $ 25,671 $ ( 44,516 ) $ 39,623

Net loss attributable to shareholders $ ( 34,540 ) $ ( 2,863 )

Weighted Average Common Shares Outstanding - Basic (1)

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________________________________________________________

(1) The three and nine months ended September 30, 2020 and 2019 includes participating securities which can be converted into a fixed amount of our shares.

For the three months ended September 30, 2020 and 2019, 228,934 and 165,232 shares, respectively, and for the nine months ended September 30, 2020 and 2019, 401,604 and 140,313 shares, respectively, have been excluded from the calculation of Diluted EPS because the impact would be anti-dilutive.

During the nine months ended September 30, 2020, we issued 24,683 common shares to certain directors as compensation.

During the nine months ended September 30, 2020, certain holders of Class B Units (see Note 16) converted 911,448 Class B Units in exchange for 675,015 common shares.

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”).

During the three months ended September 30, 2020, we sold 1,070,000 ATM Shares at a weighted average price of $ 19.54 per share for net proceeds of $ 20.6 million.

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.

(1) The three months ended March 31, 2021 and 2020 includes participating securities which can be converted into a fixed amount of our shares.

For the three months ended March 31, 2021 and 2020, 803,800 and 60,838 shares, respectively, have been excluded from the calculation of Diluted EPS because the impact would be anti-dilutive.

During the three months ended March 31, 2021, we issued 6,594 common shares to certain directors as compensation.

During the three months ended March 31, 2021, certain holders of Class B Units (see Note 16) converted 9,470 Class B Units in exchange for 7,013 common shares.

Preferred Shares

In March 2021, in a public offering, we issued 4,200,000 shares of 8.25 % Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares (“Series C Preferred Shares”), par value $ 0.01 per share, with a liquidation preference of $ 25.00 per share for net proceeds of approximately $ 101.2 million.

See Note 14 for information related to options issued to the Manager in connection with such offering.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

COMMITMENTS AND CONTINGENCIES

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

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

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

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

The contingency related to $ 5.0 million of the total $ 15.0 million was resolved during the quarter ended March 31, 2021.

The $ 5.0 million payment was recorded as a payable and included in the cost of the asset acquisition.

Jefferson entered into a two -year pipeline capacity agreement for a recently completed pipeline.

Under the agreement, which will take effect in the second quarter of 2021, Jefferson is obligated to pay fixed marketing fees over the two -year agreement, which totals a minimum of $ 10.2 million per year.

SUBSEQUENT EVENTS

On October 29, 2020, 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 September 30, 2020, payable on November 30, 2020 to the holders of record on November 16, 2020.

Additionally, on October 29, 2020, our Board of Directors also declared a cash dividend on the Series A Preferred Shares and Series B Preferred Shares of $ 0.52 per share and $ 0.50 per share, respectively, payable on December 15, 2020 to the holders of record on December 1, 2020.

Senior Notes due 2028

On April 12, 2021, we issued $ 500 million aggregate principal amount of senior unsecured notes due 2028 (the “Senior Notes due 2028”).

The Senior Notes due 2028 bear interest at a rate of 5.50 % per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2021.

On May 7, 2021, we intend to use a portion of the net proceeds to redeem in full the Senior Notes due 2022, which total $ 400 million aggregate principal plus accrued and unpaid interest.

On April 29, 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 March 31, 2021, payable on May 25, 2021 to the holders of record on May 14, 2021.

Additionally, on April 29, 2021, our Board of Directors also declared a cash dividend on the Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares of $ 0.52 per share, $ 0.50 per share and $0.46 per share, respectively, payable on June 15, 2021 to the holders of record on June 1, 2021.

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

What changed 10-Q

Item 1. Financial Statements