Global Ship Lease Reports Results for the Second Quarter of 2009

LONDON, ENGLAND--(Marketwire - Aug. 10, 2009) - Global Ship Lease, Inc. GSLGSLGSL, a containership charter owner, announced today its unaudited results for the three months ended June 30, 2009. Second Quarter and Year-to-Date 2009 Highlights - Generated $14.8 million of cash in the second quarter of 2009 and $30.1 million six months ended June 30, 2009 - Reported revenue of $36.2 million for the second quarter of 2009 up 58% on $22.9 million for the second quarter 2008 due to the purchase of four additional vessels in December 2008 and $71.2 million for the six months ended June 30, 2009 up 59% on $44.8 million for the six months ended June 30, 2008 - Reported normalized net earnings of $6.1 million, or $0.11 per share, for the second quarter of 2009, excluding a $16.7 million non-cash interest rate derivative mark-to-market gain. For the six months ended June 30, 2009 normalized net earnings were $13.0 million excluding $21.0 million non-cash mark-to-market gain - Including the non-cash mark-to-market gain, reported net income of $22.8 million, or $0.42 per share, for the second quarter of 2009 and $33.9 million, or $0.63 per share, for the six months ended June 30, 2009 - Extended until August 31, 2009 the suspension of loan-to-value tests under the $800 million credit facility whilst a longer term amendment regarding loan-to-value covenants is finalized. No common dividends can be declared or paid during the waiver period - Paid a fourth quarter 2008 dividend of $0.23 per share on March 5, 2009 to Class A common shareholders and unit holders and Class B common shareholders of record as of February 20, 2009 Ian Webber, Chief Executive Officer of Global Ship Lease, stated, "During a difficult time for the container shipping industry, Global Ship Lease's long-term time charters continue to perform as expected. With our entire 16 vessel operating fleet on non cancelable time charters with an average remaining term of 10 years, the Company posted strong and consistent revenue and cash flow in the second quarter. We are also pleased to have once again maintained our ship operating costs under the capped amount for the fourth consecutive quarter. As previously disclosed, we continue to work closely with our lenders and expect to finalize an amendment to our $800 million credit facility during August." Results for Three And Six Months Ended June 30, 2009 Comparative financial information for the three and six months ended June 30, 2008 is prepared under predecessor accounting rules and includes the results of operations of two of the Company's vessels for a part of January 2008 when they were owned by CMA CGM, a privately owned French container shipping company, and operated in CMA CGM's business of earning revenue from carrying cargo. Global Ship Lease commenced its business of time chartering out vessels in December 2007 when it purchased 10 container vessels from CMA CGM. The Company purchased the two additional vessels from CMA CGM in January 2008. The predecessor and Global Ship Lease business models are not comparable. Further, there were significant changes to the Company's legal and capital structure arising from the merger on August 14, 2008, which resulted in the Company being listed on the New York Stock Exchange. Accordingly, selected comparative information is presented. /T/ SELECTED FINANCIAL DATA - UNAUDITED (thousands of U.S. dollars except per share data) Three Three Six Six months months months months ended ended ended ended June 30, June 30, June 30, June 30, ------------------------------------------------------------------------- 2009 2008 2009 2008 ------------------------------------------------------------------------- Revenue (1) 36,193 22,939 71,201 44,761 Operating Income (1) 14,304 10,301 27,723 19,534 Net income (1) 22,762 9,140 33,918 10,426 Earnings per A and B share (2) 0.42 - 0.63 - Normalised net earnings (2)(3) 6,110 - 12,957 - Normalised earnings per A and B share (2)(3) 0.11 - 0.24 - Cash available for distribution (2)(3) 14,796 - 30,101 - /T/ (1) Comparative data for the three and six months ended June 30, 2008 relates to the Company's time charter business only and therefore excludes the results from containerized transportation undertaken by the predecessor group. (2) Comparative data is not presented due to the significant changes to the legal and capital structure arising from the merger on August 14, 2008 resulting in the Company being listed on the New York Stock Exchange. (3) Normalized net earnings, normalized earnings per share, and cash available for distribution are non-U.S. Generally Accepted Accounting Principles (US GAAP) measures, as explained further in this press release, and reconciliation is provided to the interim unaudited financial information. Revenue and Utilization Global Ship Lease owned sixteen vessels throughout the first half of 2009. The fleet generated revenue from fixed rate long-term time charters of $36.2 million in the three months ended June 30, 2009, up 58% on revenue of $22.9 million for the comparative period in 2008 due to the purchase of four additional ships in December 2008. These four vessels have an average daily charter rate of $30,800 compared to an average daily charter rate of $22,685 for the previous fleet of 12 vessels. During the three months ended June 30, 2009 there were 1,456 ownership days, up 364 or 33% on 1,092 ownership days in the comparable period. There were four unplanned off-hire days in the three months ended June 30, 2009 giving utilization of 99.7% . In the comparable period of 2008, there were seven unplanned off-hire days, giving utilization of 99.4% . For the six months ended June 30, 2009 revenue was $71.2 million, an increase of 59% compared to time charter revenue of $44.8 million in the comparative period. Ownership days at 2,896 were up 737, or 34%, on 2,159 in the comparative period. Utilization in the six months ended June 30, 2009 was 98.7% and was the same in the comparative period. Vessel Operating Expenses Vessel operating expenses, which include costs of crew, lubricating oil, spares and insurance, were $10.5 million for the three months ended June 30, 2009. The average cost per ownership day was $7,217 up 2% from the average daily cost of $7,076 for the previous quarter, and up 15% from the average daily cost of $6,246 for the comparative period in 2008. The increase on prior year is primarily due to increased crew costs in the intervening period, the incremental average costs of the four larger vessels that joined the fleet in December 2008, including, for example, additional lubricating oil consumption and $400,000 of spend in second quarter 2009 on crane jib improvements and replacing radars and turbo charger grids. Vessel operating expenses were $21.2 million for the six months ended June 30, 2009 equivalent to $7,331 per ownership day. This compares to $14.0 million vessel operating expenses associated with the time charter business in the comparative period or $6,477 per ownership day. Vessel operating expenses include regular ship operating costs under Global Ship Lease's ship management agreements and are at less than the capped amounts included in these agreements. Depreciation Depreciation was $9.0 million for the three months ended June 30, 2009, including the effect of the purchase during December 2008 of four additional vessels, compared to $4.8 million for the comparative period. In the six months to June 30, 2009 depreciation was $17.8 million, up from $9.6 million for the time charter business in the comparative period in 2008. General and Administrative Costs General and administrative costs incurred were $2.4 million in the three months ended June 30, 2009 compared to $1.2 million for the time charter business in the comparable period in 2008 when the Company was a wholly-owned subsidiary of CMA CGM. In the six months ended June 30, 2009 general and administrative costs were $4.6 million compared to $1.8 million in the comparative period. Interest Expense Net interest expense, excluding the effect of interest rate derivatives which do not qualify for hedge accounting, for the three months ended June 30, 2009 was $5.4 million based on the Company's borrowings under its credit facility of $542.1 million and $48.0 million preferred shares throughout the period. Net interest expense in the comparative period in 2008 was $6.3 million based on borrowings of $578.0 million, including a loan of $176.9 million from the then shareholder, throughout the quarter. For the six months ended June 30, 2009 net interest expense was $9.9 million based on total borrowings as above of $590.1 million compared to $14.2 million net interest expense for the comparative period in 2008 based on total borrowings of $578.0 million throughout the comparative period and which was adversely affected by substantially higher prevailing interest rates in the first quarter. Change in Fair Value of Financial Instruments The Company hedges the majority of its interest rate exposure by entering into derivatives that swap floating rate debt for fixed rate debt to provide long-term stability and predictability to cash flows. As these hedges do not qualify for hedge accounting under US GAAP, the outstanding hedges are marked to market at each period end with any change in the fair value being booked to the income and expenditure account. The change in the fair value caused a $13.9 million gain in the three months ended June 30, 2009, reflecting movements in the forward curve for interest rates. Of this amount, a $2.8 million charge is for settlements of swaps in the period and $16.7 million gain is unrealized revaluation of the balance sheet position. This compares to a $5.2 million gain in the three months ended June 30, 2008 of which $0.1 million charge was realized and $5.3 million gain was unrealized. For the six months ended June 30, 2009 the reported gain was $16.1 million of which $4.8 million charge was realized and $21.0 million gain was unrealized. For the six months ended June 30, 2008 the reported gain was $5.2 million of which $0.1 million charge was realized and $5.3 million gain was unrealized. Mark-to-market adjustments have no impact on operating performance or cash generation and do not affect the Company's ability to make distributions to shareholders. Net Earnings Normalized net earnings was $6.1 million, or $0.11 per Class A and B common share, for the three months ended June 30, 2009 excluding the $16.7 million non-cash interest rate derivative mark-to-market gain. Including the mark-to-market gain, net income was $22.8 million or $0.42 per Class A and B common share. Normalized net earnings was $13.0 million, or $0.24 per Class A and B common share, for the six months ended June 30, 2009 excluding the $21.0 million non-cash interest rate derivative mark-to-market gain. Including the mark-to-market gain, net income was $33.9 million or $0.63 per Class A and B common share. Normalized net earnings and normalized earnings per share are non-US GAAP measures and are reconciled to the financial information included in this press release. We believe that they are useful measures with which to assess the Company's financial performance as they adjust for non-cash and other items that do not affect the Company's ability to make distributions on common shares. Credit Facility On April 29, 2009, due to current challenges in the ship valuation environment, Global Ship Lease agreed with its lenders under its $800 million credit agreement, to waive for two months the requirement under the credit facility to submit vessel valuations and undertake the consequent loan-to-value test. Valuations were otherwise due by April 30, 2009. In June, the waiver was extended to July 31, 2009 and recently was further extended to August 31, 2009 to allow the Company to finalize discussions with its lenders on an amendment to the credit facility to address loan to value. The facility bears an interest margin of 2.75% over LIBOR during this waiver period and no dividend to common shareholders may be declared or paid. Management expects that an agreement will be reached with the Company's lenders and, accordingly, the interim unaudited combined financial information have been prepared on a going concern basis. In the event that the Company does not successfully amend the facility agreement by August 31, 2009 or obtain a further waiver of the need to perform loan to value tests, and its loan to value ratio is above 100%, the lenders may declare an event of default and accelerate some or all of the debt. Any amount of the long term debt which is declared to be immediately repayable will be reclassified as current. Dividend Global Ship Lease has agreed with its lenders that it will not declare or pay any dividend to common shareholders during the waiver period noted above. The board of directors will review the dividend policy once an amendment to the credit facility has been agreed upon with the bank group. Cash Available for Common Dividends Cash available for common dividends was $14.8 million for the three months ended June 30, 2009 and was $30.1 million for the six months ended June 30, 2008. Cash available for common dividends is a non-US GAAP measure and is reconciled to the financial information further in this press release. We believe that it is a useful measure with which to assess the Company's operating performance as it adjusts for the effects of non-cash items that do not affect the Company's ability to make distributions on common shares. Fleet Utilization The table below shows vessel utilization for the three and six months to June 30 2009 and 2008. Unplanned offhire in the six months ended June 30, 2009 includes 18 days in first quarter for drydock and associated repairs following a grounding and a seven day deviation to land a sick crew member. /T/ Three months ended Six months ended -------------------------------------------------------------------------- Days 30-Jun-09 30-Jun-08 Increase 30-Jun-09 30-Jun-08 Increase -------------------------------------------------------------------------- Ownership days 1,456 1,092 33% 2,896 2,159 34% Planned offhire - scheduled drydock - - - (15) Unplanned offhire - other (4) (7) (38) (12) -------------------------------------------------------------------------- Operating days 1,452 1,085 34% 2,858 2,132 34% Utilization 99.7% 99.4% 98.7% 98.7% Fleet The following table provides information about the on-the-water fleet of 16 vessels chartered to CMA CGM. Charter Daily Remaining Charter Capacity Year Purchase Date Duration Rate ($) Vessel Name in TEUs (1) Built by GSL (years) -------------------------------------------------------------------------- Ville d'Orion 4,113 1997 December 2007 3.5 $28,500 Ville d'Aquarius 4,113 1996 December 2007 3.5 $28,500 CMA CGM Matisse 2,262 1999 December 2007 7.5 $18,465 CMA CGM Utrillo 2,262 1999 December 2007 7.5 $18,465 Delmas Keta 2,207 2003 December 2007 8.5 $18,465 Julie Delmas 2,207 2002 December 2007 8.5 $18,465 Kumasi 2,207 2002 December 2007 8.5 $18,465 Marie Delmas 2,207 2002 December 2007 8.5 $18,465 CMA CGM La Tour 2,272 2001 December 2007 7.5 $18,465 CMA CGM Manet 2,272 2001 December 2007 7.5 $18,465 CMA CGM Alcazar 5,100 2007 January 2008 11.5 $33,750 CMA CGM Chateau d'If 5,100 2007 January 2008 11.5 $33,750 CMA CGM Thalassa 10,960 2008 December 2008 16.5 $47,200 CMA CGM Jamaica 4,298 2006 December 2008 13.5 $25,350 CMA CGM Sambhar 4,045 2006 December 2008 13.5 $25,350 CMA CGM America 4,045 2006 December 2008 13.5 $25,350 (1) Twenty-foot Equivalent Units. The following table provides information about the contracted fleet. Estimated Charter Daily Vessel Capacity Year Delivery Date Duration Charter Name in TEUs (1) Built to GSL Charterer (years) Rate ($) -------------------------------------------------------------------------- CMA CGM Berlioz (2) 6,627 2001 By Sept CMA CGM 12 $34,000 30, 2009 Hull 789 (3) 4,250 2010 October 2010 ZISS 7-8(4) $28,000 Hull 790 (3) 4,250 2010 December 2010 ZISS 7-8(4) $28,000 (1) Twenty-foot Equivalent Units. (2) Contracted to be purchased from CMA CGM. (3) Contracted to be purchased from German interests. (4) Seven-year charter that could be extended to eight years at charterer's option. /T/ Conference Call and Webcast Global Ship Lease will hold a conference call to discuss the Company's results for the three months ended June 30, 2009 today, Monday, August 10, 2009 at 10:30 a.m. Eastern Time. There are two ways to access the conference call: (1) Dial-in: (877) 741-4249 or (719) 325-4817; Passcode: 3471820 Please dial in at least 10 minutes prior to 10:30 a.m. Eastern Time to ensure a prompt start to the call. (2) Live Internet webcast and slide presentation: http://www.globalshiplease.com If you are unable to participate at this time, a replay of the call will be available through Monday, August 24, 2009 at (888) 203-1112 or (719) 457-0820. Enter the code 3471820 to access the audio replay. The webcast will also be archived on the Company's website: http://www.globalshiplease.com. About Global Ship Lease Global Ship Lease is a containership charter owner. Incorporated in the Marshall Islands, Global Ship Lease commenced operations in December 2007 with a business of owning and chartering out containerships under long-term, fixed rate charters to world class container liner companies. Global Ship Lease currently owns 16 vessels and has contracted to purchase an additional three vessels. The Company has a contract in place to purchase by September 30, 2009 an additional vessel for $82 million from CMA CGM, contingent on financing. The Company also has contracts in place to purchase two newbuildings from German interests for approximately $77 million each which are scheduled to be delivered in the fourth quarter of 2010. Once all of the contracted vessels have been delivered by the end of 2010, Global Ship Lease will have a 19 vessel fleet with total capacity of 74,797 TEU and a weighted average age at that time of 6.1 years and an average remaining charter term of approximately eight years. All of the vessels including those contracted for future delivery are fixed on long-term charters. Reconciliation of Non-U.S. GAAP Financial Measures A. Cash Available for Common Dividends Cash available for common dividends is a non-US GAAP measure and is reconciled to the financial information below. It represents net earnings adjusted for non-cash items including depreciation, amortization of deferred financing charges, accretion of earnings for intangible liabilities, charge for equity based incentive awards and change in fair value of derivatives. We also deduct an allowance for the cost of future drydockings, which due to their substantial and periodic nature could otherwise distort quarterly cashflow available for common dividends. Cash available for common dividends is a non-US GAAP quantitative measure used to assist in the assessment of the Company's ability to pay common dividends. Cash available for common dividends is not defined in accounting principles generally accepted in the United States and should not be considered to be an alternate to net earnings or any other financial metric required by such accounting principles. We believe that cash available for common dividends is a useful measure with which to assess the Company's operating performance as it adjusts for the effects of non-cash items that do not affect the Company's ability to make distributions on common shares. /T/ CASH AVAILABLE FOR COMMON DIVIDENDS - UNAUDITED (thousands of U.S. dollars) Three Six months months ended ended June 30, 2009 June 30, 2009 -------------------------------------------------------------------------- Net income 22,762 33,918 Add: Depreciation 8,986 17,772 Charge for equity incentive awards 863 1,579 Amortization of deferred financing fees 251 625 Less: Change in value of derivatives (16,652) (20,961) Allowance for future dry-docks (900) (1,800) Revenue accretion for intangible liabilities (311) (622) Deferred taxation (203) (410) -------------------------------------------------------------------------- Cash from operations available for common dividends 14,796 30,101 -------------------------------------------------------------------------- -------------------------------------------------------------------------- /T/ B. Normalized net earnings Normalized net earnings is a non-US GAAP measure and is reconciled to the financial information below. It represents net earnings adjusted for the change in fair value of derivatives. Normalized net earnings is a non-GAAP quantitative measure which we believe will assist investors and analysts who often adjust reported net earnings for non-operating items such as change in fair value of derivatives to eliminate the effect of non-cash non-operating items that do not affect operating performance or cash for distribution as dividends. Normalized net earnings is not defined in accounting principles generally accepted in the United States and should not be considered to be an alternate to net earnings or any other financial metric required by such accounting principles. Normalized net earnings per share is calculated based on normalized net earnings and the weighted average number of shares in the relevant period. /T/ NORMALIZED NET EARNINGS - UNAUDITED (thousands of U.S. dollars except share and per share data) Three months Six months ended ended June 30, 2009 June 30, 2009 ---------------------------------------------------------------------- Net income as reported 22,762 33,918 Adjust: Change in value of derivatives (16,652) (20,961) ---------------------------------------------------------------------- Normalized net earnings 6,110 12,957 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Weighted average number of Class A and B common shares outstanding (1) Basic 53,786,150 53,786,150 Diluted 53,786,150 53,922,780 Net income per share on reported earnings Basic 0.42 0.63 Diluted 0.42 0.63 Normalized net income per share Basic 0.11 0.24 Diluted 0.11 0.24 /T/ (1) The weighted average number of shares (basic and diluted) for the three months ended June 30, 2009 excludes the effect of outstanding warrants and stock based incentive awards as these were anti dilutive. For the six months ended June 30, 2009 the diluted weighted average number of shares includes the effect of outstanding restricted stock units but excludes the effect of outstanding warrants as these were anti dilutive. Safe Harbor Statement This communication contains forward-looking statements. Forward-looking statements provide Global Ship Lease's current expectations or forecasts of future events. Forward-looking statements include statements about Global Ship Lease's expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "ongoing," "plan," "potential," "predict," "project," "will" or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements are based on assumptions that may be incorrect, and Global Ship Lease cannot assure you that these projections included in these forward-looking statements will come to pass. Actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. The risks and uncertainties include, but are not limited to: - future operating or financial results; - expectations regarding the strength of the future growth of the shipping industry, including the rate of annual demand growth in the international containership industry; - future payments of dividends and the availability of cash for payment of dividends; - Global Ship Lease's expectations relating to dividend payments and forecasts of its ability to make such payments; - future acquisitions, business strategy and expected capital spending; - operating expenses, availability of crew, number of off-hire days, drydocking and survey requirements and insurance costs; - general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand; - Global Ship Lease's ability to repay its credit facility and grow using the available funds under its credit facility; - assumptions regarding interest rates and inflation; - change in the rate of growth of global and various regional economies; - risks incidental to vessel operation, including discharge of pollutants and vessel collisions; - Global Ship Lease's financial condition and liquidity, including its ability to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities; - estimated future capital expenditures needed to preserve its capital base; - Global Ship Lease's expectations about the availability of ships to purchase, the time that it may take to construct new ships, or the useful lives of its ships; - Global Ship Lease's continued ability to enter into long-term, fixed-rate charters; - Global Ship Lease's ability to capitalize on its management team's and board of directors' relationships and reputations in the containership industry to its advantage; - changes in governmental and classification societies' rules and regulations or actions taken by regulatory authorities; - expectations about the availability of insurance on commercially reasonable terms; - unanticipated changes in laws and regulations; and - potential liability from future litigation. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Global Ship Lease's actual results could differ materially from those anticipated in forward-looking statements for many reasons specifically as described in Global Ship Lease's filings with the SEC. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this communication. Global Ship Lease undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this communication or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks Global Ship Lease describes in the reports it will file from time to time with the SEC after the date of this communication. /T/ Global Ship Lease, Inc. Interim Unaudited Combined Balance Sheets The interim unaudited combined financial statements up to June 30, 2009 include two distinct reporting periods (i) before August 15, 2008 ("Predecessor") and (ii) from August 15, 2008 ("Successor"), which relate to the period preceding the merger with Marathon Acquisition Corp. and the period succeeding the merger, respectively. (Expressed in thousands of U.S. dollars) June 30, December 31, 2009 2008 Successor Successor ----------------------------------------------------------------------- Assets Cash and cash equivalents $40,733 $26,363 Restricted cash 3,026 3,026 Accounts receivable 1,005 638 Prepaid expenses 513 734 Other receivables 955 1,420 Deferred tax asset 420 176 Deferred financing costs 1,008 526 ----------------------------------------------------------------------- Total current assets 47,660 32,883 ----------------------------------------------------------------------- Vessels in operation 889,066 906,896 Vessel deposits 15,935 15,720 Other fixed assets 15 21 Intangible assets - purchase agreement 7,840 7,840 Deferred tax asset 283 117 Deferred financing costs 5,316 3,131 ----------------------------------------------------------------------- Total non-current assets 918,455 933,725 ----------------------------------------------------------------------- Total Assets $966,115 $966,608 ----------------------------------------------------------------------- ----------------------------------------------------------------------- Liabilities and Stockholders' Equity Liabilities Intangible liability - charter agreements $2,045 $1,608 Accounts payable 54 36 Accrued expenses 4,383 6,436 Derivative instruments 15,256 10,940 ----------------------------------------------------------------------- Total current liabilities 21,738 19,020 ----------------------------------------------------------------------- Long term debt 542,100 542,100 Preferred shares 48,000 48,000 Intangible liability - charter agreements 25,289 26,348 Derivative instruments 10,823 36,101 ----------------------------------------------------------------------- Total long-term liabilities 626,212 652,549 ----------------------------------------------------------------------- Total Liabilities $647,950 $671,569 ----------------------------------------------------------------------- Commitments and contingencies - - Global Ship Lease, Inc. Interim Unaudited Combined Balance Sheets (continued) The interim unaudited combined financial statements up to June 30, 2009 include two distinct reporting periods (i) before August 15, 2008 ("Predecessor") and (ii) from August 15, 2008 ("Successor"), which relate to the period preceding the merger with Marathon Acquisition Corp. and the period succeeding the merger, respectively. (Expressed in thousands of U.S. dollars) June 30, December 31, 2009 2008 Successor Successor ----------------------------------------------------------------------- Stockholders' Equity Class A Common stock - authorized 214,000,000 shares with a $.01 par value; 46,380,194 shares issued and outstanding 464 339 Class B Common stock - authorized 20,000,000 shares with a $.01 par value; 7,405,956 shares issued and outstanding 74 74 Class C Common stock - authorized 15,000,000 shares with a $.01 par value; 12,375,000 shares issued, converted to Class A common shares on January 1, 2009 - 124 Retained earnings (deficit) (65,679) (9,338) Net income (loss) for the period 33,918 (43,970) Additional paid in capital 349,388 347,810 ----------------------------------------------------------------------- Total Stockholders' Equity 318,165 295,039 ----------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $966,115 $966,608 ----------------------------------------------------------------------- ----------------------------------------------------------------------- Global Ship Lease, Inc. Interim Unaudited Combined Statements of Income The interim unaudited combined financial statements up to June 30, 2009 include two distinct reporting periods (i) before August 15, 2008 ("Predecessor") and (ii) from August 15, 2008 ("Successor"), which relate to the period preceding the merger with Marathon Acquisition Corp. and the period succeeding the merger, respectively. (Expressed in thousands of U.S. dollars except share data) Three months ended June 30, Six months ended June 30, 2009 2008 2009 2008 Successor Predecessor Successor Predecessor ------------------------------------------------------------------------ Operating Revenues Voyage revenue $- $- $- $2,072 Time charter revenue 36,193 22,939 71,201 44,761 ------------------------------------------------------------------------ 36,193 22,939 71,201 46,833 ------------------------------------------------------------------------ Operating Expenses Voyage expenses - - - 1,944 Vessel operating expenses 10,508 6,821 21,231 14,166 Depreciation 8,986 4,814 17,772 9,834 General and administrative 2,445 2,595 4,581 3,318 Other operating (income) expense (50) (152) (106) 128 ------------------------------------------------------------------------ Total operating expenses 21,889 14,078 43,478 29,390 ------------------------------------------------------------------------ Operating Income 14,304 8,861 27,723 17,443 Non Operating Income (Expense) Interest income 163 37 305 339 Interest expense (5,554) (6,344) (10,208) (14,577) Realized and unrealized gain on interest rate derivatives 13,872 5,153 16,146 5,153 ------------------------------------------------------------------------ Income before Income Taxes 22,785 7,707 33,966 8,358 Income taxes (23) (7) (48) (23) ------------------------------------------------------------------------ Net Income $ 22,762 $ 7,700 $ 33,918 $ 8,335 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Weighted average number of common shares outstanding basic and diluted n/a 100 n/a 100 Net income per share in $ per share basic and diluted n/a 77 n/a 83 Weighted average number of Class A common shares outstanding Basic 46,380,194 n/a 46,380,194 n/a Diluted 46,380,194 46,516,824 Net income in $ per share amount Basic 0.42 n/a 0.63 n/a Diluted 0.42 0.63 Weighted average number of Class B common shares outstanding Basic and diluted 7,405,956 n/a 7,405,956 n/a Net income in $ per n/a n/a share amount Basic and diluted 0.42 0.63 Global Ship Lease, Inc. Interim Unaudited Combined Statements of Cash Flows The interim unaudited combined financial statements up to June 30, 2009 include two distinct reporting periods (i) before August 15, 2008 ("Predecessor") and (ii) from August 15, 2008 ("Successor"), which relate to the period preceding the merger with Marathon Acquisition Corp. and the period succeeding the merger, respectively. (Expressed in thousands of U.S. dollars) Three months ended June 30, Six months ended June 30, 2009 2008 2009 2008 Successor Predecessor Successor Predecessor ------------------------------------------------------------------------ Cash Flows from Operating Activities Net income $22,762 $7,700 $33,918 $8,335 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Unrealized foreign exchange 44 - 44 - Depreciation 8,986 4,814 17,772 9,834 Amortization of deferred financing costs 251 194 625 384 Change in fair value of certain financial derivative instruments (16,652) (5,341) (20,961) (5,230) Intangible liability amortization (311) - (622) - Settlements of hedges which do not qualify for hedge accounting 2,781 141 4,815 141 Share-based compensation 863 - 1,579 - Decrease / (increase) in accounts receivable and other assets (506) 731 (123) (1,212) Increase /(decrease) in amounts payable and other liabilities 67 2,647 (1,464) 1,325 Decrease in inventories - - - 1,613 Periodic costs relating to drydocks - (859) - (1,269) ------------------------------------------------------------------------ Net Cash Provided by Operating Activities 18,285 10,027 35,583 13,921 ------------------------------------------------------------------------ Cash Flows from Investing Activities Settlements of hedges which do not qualify for hedge accounting (2,781) (4,871) (4,815) (4,871) Cash paid for purchases of vessels, vessel prepayments and vessel deposits (154) - (734) - ------------------------------------------------------------------------ Net Cash Used in Investing Activities (2,935) (4,871) (5,549) (4,871) ------------------------------------------------------------------------ Cash Flows from Financing Activities Variation in restricted cash - - - 188,000 Issuance costs of debt - - (3,293) (276) Dividend payments - - (12,371) - (Decrease) in amount due to CMA CGM - - - (188,716) Deemed distribution to CMA CGM - - - (505) ------------------------------------------------------------------------ Net Cash Used in Financing Activities - - (15,664) (1,497) ------------------------------------------------------------------------ Net Increase in Cash and Cash Equivalents 15,350 5,156 14,370 7,553 Cash and Cash Equivalents at start of Period 25,383 4,288 26,363 1,891 ------------------------------------------------------------------------ Cash and Cash Equivalents at end of Period $40,733 $9,444 $40,733 $9,444 ------------------------------------------------------------------------ ------------------------------------------------------------------------ /T/ Operating Segments Segment information reported below has been prepared on the same basis that it is reported internally to the Company's chief operating decision maker. The Company operated under two business models from which it derives its revenues reported within this summary financial information: (i) the provision of vessels by the Company under time charters to container shipping companies and (ii) freight revenues generated by the containerized transportation of a broad range of industrial and consumer goods by the Predecessor group. There are no transactions between reportable segments. Following the delivery of the initial 12 vessels in December 2007 and January 2008, the activity consists solely of the ownership and provision of vessels for container shipping under time charters. The "Adjustment" columns in the table below includes (i) the elimination of the Containerized Transportation activity performed by the Predecessor up to June 30, 2008, and (ii) IPO and merger costs expensed by the Predecessor. During the three and six months ended June 30, 2009 and 2008 the activities can be analyzed as follows: /T/ Three months ended June, 30 ------------------------------------------------------------------------ 2009 2008 Successor Predecessor ------------------------------------------------------------------------ Time Time Charter Charter Adjustment Total ------------------------------------------------------------------------ Operating revenues $36,193 $22,939 $- $22,939 ------------------------------------------------------------------------ Operating expenses Voyage expenses - - - - Vessel operating expenses 10,508 6,821 - 6,821 Depreciation 8,986 4,814 - 4,814 General and administrative 2,445 1,155 1,440 2,595 Other operating (income) expense (50) (152) - (152) ------------------------------------------------------------------------ Total operating expenses 21,889 12,638 1,440 14,078 Operating income (loss) 14,304 10,301 (1,440) 8,861 Interest income 163 37 - 37 Interest expense (5,554) (6,344) - (6,344) Realized and unrealized gain on derivatives 13,872 5,153 - 5,153 ------------------------------------------------------------------------ Income (expense) before income taxes 22,785 9,147 (1,440) 7,707 Income taxes (23) (7) - (7) ------------------------------------------------------------------------ Net income (expense) $22,762 $9,140 $(1,440) $7,700 ------------------------------------------------------------------------ Six months ended June, 30 ------------------------------------------------------------------------ 2009 2008 Successor Predecessor ------------------------------------------------------------------------ Time Time Charter Charter Adjustment Total ------------------------------------------------------------------------ Operating revenues $71,201 $44,761 $2,072 $46,833 ------------------------------------------------------------------------ Operating expenses Voyage expenses - - 1,944 1,944 Vessel operating expenses 21,231 13,985 181 14,166 Depreciation 17,772 9,573 261 9,834 General and administrative 4,581 1,821 1,497 3,318 Other operating (income) expense (106) (152) 280 128 ------------------------------------------------------------------------ Total operating expenses 43,478 25,227 4,163 29,390 Operating income (loss) 27,723 19,534 (2,091) 17,443 Interest income 305 339 - 339 Interest expense (10,208) (14,577) - (14,577) Realized and unrealized gain on derivatives 16,146 5,153 - 5,153 ------------------------------------------------------------------------ Income (expense) before income taxes 33,966 10,449 (2,091) 8,358 Income taxes (48) (23) - (23) ------------------------------------------------------------------------ Net income (expense) $33,918 $10,426 $(2,091) $8,335 ------------------------------------------------------------------------ /T/