UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

 of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): March 1, 2016

 

Fortress Transportation and Infrastructure Investors LLC

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   001-37386   32-0434238

(State or Other Jurisdiction

of Incorporation)

 

 

(Commission 

File Number)

 

 

(IRS Employer

Identification No.)

 

1345 Avenue of the Americas, 45th Floor, New York, New York 10105

 (Address of Principal Executive Offices) (Zip Code)

 

(212) 798-6100

 (Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Item 2.02. Results of Operations and Financial Condition.
   

On March 1, 2016, the Company issued a press release announcing the Company’s results for its fiscal quarter and year ended December 31, 2015. A copy of the Company’s press release is attached to this Current Report on Form 8-K (the “Current Report”) as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 2.02 disclosure.

 

This Current Report, including the exhibit attached hereto, is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly set forth as being incorporated by reference into such filing.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. 

     

Exhibit

Number 

 

Description 

   
99.1   Press release, dated March 1, 2016, issued by Fortress Transportation and Infrastructure Investors LLC

 
 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 

       
  FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
     
  By:  

/s/ Jonathan G. Atkeson 

  Name:   Jonathan G. Atkeson
  Title:   Chief Financial Officer and Chief Operating Officer
       

Date: March 1, 2016

 

 
 

EXHIBIT INDEX

 

     

Exhibit 

Number 

 

Description 

   
99.1   Press release, dated March 1, 2016, issued by Fortress Transportation and Infrastructure Investors LLC

 
 

Exhibit 99.1

 

 

 

PRESS RELEASE

 

FTAI Announces Fourth Quarter and Full Year 2015 Results, Dividend of $0.33 per Common Share 

 

 

NEW YORK, March 1, 2016 - Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI) (the “Company”) today reported financial results for the quarter and full year ended December 31, 2015. The Company’s consolidated comparative financial statements and key performance measures are attached as an exhibit to this press release.

 

Financial Overview

 

($ in 000s, except per share data)  
Selected Financial Results(1) Q4’15 FY15
Funds Available for Distribution ("FAD") $ 10,073   $ 48,088  
Adjusted Net Income $ (2,563 ) $ 7,787  
Adjusted Net Income per Share $ (0.03 ) $ 0.12  
Adjusted EBITDA $ 21,679   $ 107,262  
     
Net Income (Loss) Attributable to Shareholders $ (4,699 ) $ (11,826 )
Basic and Diluted Earnings (Loss) per Share $ (0.06 ) $ (0.18 )

 

1) For definitions and reconciliations of Non-GAAP measures, please refer to the exhibit to this press release.

 

For the fourth quarter of 2015, our total FAD was $10.1 million. This amount includes $24.2 million from equipment leasing activities, offset by $(5.4) million and $(8.7) million from infrastructure and corporate activities, respectively.

 

Fourth Quarter 2015 Dividend

 

The Company’s Board of Directors declared a cash dividend of $0.33 per common share, payable on March 28, 2016, to holders of record on March 18, 2016.

 

Other Matters

 

On February 29, 2016, the Company agreed to sell approximately 39,000 shipping containers that are subject to a direct finance lease with a major Asian shipping line for a modest gain. We anticipate that the closing of this transaction will occur in the near future. After the payoff of debt, we expect to receive net proceeds of approximately $25 million.

 

The Company currently expects that, early next week, the Port of Beaumont Navigation District of Jefferson County, Texas will consummate the issuance of $144.2 million of tax exempt bonds. In connection with the closing of such issuance, which is being made on a best efforts basis, the Company expects that all amounts outstanding under Jefferson Terminal’s existing $100 million credit agreement will be repaid. In the event such issuance is not consummated, or is materially delayed, then the Company may elect to fund a portion of Jefferson Terminal’s short-term liquidity needs with cash-on-hand.

 

Additional Information

 

For additional information that management believes to be useful for investors, please refer to the presentation posted on the Investor Relations section of the Company’s website, www.ftandi.com, and the Company’s Annual Report on Form 10-K, when available on the Company’s website. Nothing on the Company’s website is included or incorporated by reference herein.

 

1
 

Conference Call

 

The Company will host a conference call on March 2, 2016 at 8:00 A.M. Eastern Time. The conference call may be accessed by dialing 1-855-548-8666 (from within the U.S.) or 1-412-455-6183 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “FTAI Fourth Quarter Earnings Call.” A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.ftandi.com.

 

Following the call, a replay of the conference call will be available after 12:00 P.M. on March 2, 2016 through midnight Wednesday, March 9, 2016 at 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.), Passcode: 48757391.

 

About Fortress Transportation and Infrastructure Investors LLC

 

Fortress Transportation and Infrastructure Investors LLC owns and acquires high quality infrastructure and equipment that is essential for the transportation of goods and people globally. FTAI targets assets that, on a combined basis, generate strong and stable cash flows with the potential for earnings growth and asset appreciation. FTAI is externally managed by an affiliate of Fortress Investment Group LLC, a leading, diversified global investment firm.

 

Cautionary Note Regarding Forward-Looking Statements

 

Certain statements in this press release, including without limitation statements as to the amount, timing and manner of the expected disposition of shipping containers or the issuance of bonds by the Port of Beaumont Navigation District of Jefferson County, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond the Company’s control. The Company can give no assurance that its expectations will be attained and such differences may be material. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” incorporated by reference in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on the Company’s website (www.ftandi.com). In addition, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. This release shall not constitute an offer to sell or the solicitation of an offer to buy any securities.

 

For further information, please contact:

 

Alan Andreini 

Investor Relations

Fortress Transportation and Infrastructure Investors LLC 

(212) 798-6128

aandreini@fortress.com

 

2
 

U.S. FEDERAL INCOME TAX IMPLICATIONS OF DIVIDEND

 

This announcement is intended to be a qualified notice as provided in the Internal Revenue Code (the “Code”) and the Regulations thereunder. For U.S. federal income tax purposes, the dividend declared in March 2016 will be treated as a partnership distribution. The per share distribution components are as follows:

 

Distribution Components  
U.S. Long Term Capital Gain (1) $0.0000
Non-U.S. Long Term Capital Gain $0.0000
U.S. Portfolio Interest Income (2) $0.0700
U.S. Dividend Income (3) $0.0000
Income Not from U.S. Sources(4) / Return of Capital $0.2600
Distribution Per Share $0.3300

 

1) U.S. Long Term Capital Gain realized on the sale of a United States Real Property Holding Corporation. As a result, the gain from the sale will be treated as income that is effectively connected with a U.S. trade or business.

 

2) Eligible for the U.S. portfolio interest exemption for any holder not considered a 10-Percent shareholder under §871(h)(3)(B) of the Code.

 

3) This income is subject to withholding under §1441 of the Code.

 

4) This income is not subject to withholding under §1441 or §1446 of the Code.

 

It is possible that a common shareholder’s allocable share of FTAI’s taxable income may differ from the distribution amounts reflected above.

 

3
 

Exhibit - Financial Statements

 

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

 

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollar amounts in thousands, except share and per share data)

 

    Three Months Ended December 31,   Year Ended December 31,
    2015   2014   2015   2014
Revenues                
Equipment leasing revenues   $ 22,712     $ 15,966     $ 92,743     $ 43,984  
Infrastructure revenues   11,086     7,453     43,825     13,946  
Total revenues   33,798     23,419     136,568     57,930  
                 
Expenses                
Operating expenses   18,595     14,518     68,793     27,223  
General and administrative   2,663     658     7,568     2,007  
Acquisition and transaction expenses   1,511     169     5,683     11,450  
Management fees and incentive allocation to affiliate   4,513     1,928     15,018     5,463  
Depreciation and amortization   12,433     7,257     45,308     15,998  
Interest expense   5,071     2,952     19,311     5,872  
Total expenses   44,786     27,482     161,681     68,013  
                 
Other income (expense)                
Equity in (loss) earnings of unconsolidated entities   162     1,262     (6,956 )   6,093  
Gain on sale of equipment, net   1,382     3,512     3,419     7,576  
Interest income   117     120     579     186  
Other income, net   20     (114 )   26     20  
Total other income (expense)   1,681     4,780     (2,932 )   13,875  
                 
(Loss) Income before income taxes   (9,307 )   717     (28,045 )   3,792  
Provision for income taxes   (60 )   160     586     874  
Net (loss) income   (9,247 )   557     (28,631 )   2,918  
Less: Net (loss) income attributable to non-controlling interests in consolidated subsidiaries     (4,548 )   (3,118 )   (16,805 )   (4,862 )
Net (loss) income attributable to shareholders   $ (4,699 )   $ 3,675     $ (11,826 )   $ 7,780  
                 
(Loss) Earnings per Share:                
Basic and Diluted   $ (0.06 )   $ 0.07     $ (0.18 )   $ 0.15  
Weighted Average Shares Outstanding:                
Basic   75,718,183     53,502,873     67,039,439     53,502,873  
Diluted   75,718,183     53,502,873     67,039,439     53,502,873  

4
 

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

 

CONSOLIDATED BALANCE SHEETS (Unaudited)

 (Dollar amounts in thousands, except share and per share data)

 

    December 31, 2015   December 31, 2014
Assets        
Cash and cash equivalents   $ 381,703     $ 22,125  
Restricted cash   21,610     21,084  
Accounts receivable, net   14,466     9,588  
Leasing equipment, net   636,681     509,379  
Finance leases, net   82,521     102,813  
Property, plant, and equipment, net   299,678     227,381  
Investment in and advances to unconsolidated entity   10,675     21,569  
Tendered bonds       298,000  
Intangible assets, net   44,129     52,169  
Goodwill   116,584     116,584  
Other assets   41,594     24,048  
Total assets   $ 1,649,641     $ 1,404,740  
         
Liabilities        
Accounts payable and accrued liabilities   $ 34,995     $ 43,174  
Debt   271,057     592,867  
Maintenance deposits   30,494     35,575  
Security deposits   15,990     13,622  
Other liabilities   6,419     6,005  
Total liabilities   358,955     691,243  
         
Equity        
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 75,718,183 and 53,502,873 shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively)   757     535  
Additional paid in capital   1,184,198     613,683  
Accumulated deficit   (18,769 )    
Accumulated other comprehensive income   97     214  
Shareholders' equity   1,166,283     614,432  
Non-controlling interest in equity of consolidated subsidiaries   124,403     99,065  
Total equity   1,290,686     713,497  
Total liabilities and equity   $ 1,649,641     $ 1,404,740  

5
 

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands, unless otherwise noted)

 

    Year Ended December 31,
    2015   2014
Cash flows from operating activities:        
Net (loss) income   $ (28,631 )   $ 2,918  
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Equity in loss (earnings) of unconsolidated entities   6,956     (6,093 )
Gain on sale of equipment   (3,419 )   (7,576 )
Security deposits and maintenance claims included in earnings   (439 )    
Equity-based compensation   4,662     1,265  
Depreciation and amortization   45,308     15,998  
Change in current and deferred income taxes   61     626  
Change in fair value of non-hedge derivative   14     25  
Amortization of lease intangibles and incentives   7,016     2,694  
Amortization of deferred financing costs   1,469     576  
Operating distributions from unconsolidated entities   209     8,207  
Bad debt expense   676     281  
Other   (250 )   (32 )
Change in:        
Accounts receivable   (5,940 )   (7,212 )
Other assets   (5,057 )   (2,654 )
Accounts payable and accrued liabilities   3,180     (45,900 )
Management fees payable to affiliate   (1,168 )   2,362  
Other liabilities   (1,119 )   2,964  
Net cash provided by (used in) operating activities   23,528     (31,551 )
         
Cash flows from investing activities:        
Change in restricted cash   (526 )   (7,306 )
Investment in notes receivable   (14,869 )    
Construction deposit related to vessel       (7,450 )
Principal collections on finance leases   20,292     11,931  
Acquisition of leasing equipment   (165,090 )   (387,118 )
Acquisition of property plant and equipment   (96,028 )   (49,441 )
Acquisition of lease intangibles   (2,446 )   (20,435 )
Collection of notes receivable       4,500  
Acquisition of CMQR       (11,308 )
Acquisition of Jefferson Terminal       (47,811 )
Acquisition of pre-existing debt relationships       (97,616 )
Proceeds from sale of leasing equipment   13,625     31,597  
Proceeds from sale of property, plant and equipment   893     842  
Proceeds from sale of equipment held for sale       135  
Proceeds from deposit on sale of engine   500      
Escrow funding for the purchase of aircraft       (1,000 )
Return of capital distributions from unconsolidated entities   3,728     9,064  
Net cash used in investing activities   $ (239,921 )   $ (571,416 )

6
 

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands, unless otherwise noted)

 

    Year Ended December 31,
    2015   2014
Cash flows from financing activities:        
Proceeds from debt   $ 200     $ 179,569  
Repayment of debt   (23,761 )   (31,131 )
Payment of deferred financing costs   (136 )   (4,793 )
Receipt of security deposits   2,060     2,389  
Return of security deposits   (960 )   (500 )
Receipt of maintenance deposits   10,149     3,324  
Release of maintenance deposits   (14,764 )   (3,026 )
Proceeds from issuance of common shares, net of underwriter's discount   354,057      
Common shares issuance costs   (2,998 )    
Capital contributions from shareholders   295,879     490,747  
Capital distributions to shareholders   (44,917 )   (75,999 )
Capital contributions from non-controlling interests   37,826     57,841  
Capital distributions to non-controlling interests   (321 )   (565 )
Cash dividends paid   (36,343 )    
Net cash provided by financing activities   575,971     617,856  
         
Net increase in cash and cash equivalents   359,578     14,889  
Cash and cash equivalents, beginning of period   22,125     7,236  
Cash and cash equivalents, end of period   $ 381,703     $ 22,125  
         
Supplemental disclosure of cash flow information:        
Cash paid for interest   $ 18,566     $ 3,627  
Cash paid for taxes   $ 507     $ 274  
         
Supplemental disclosure of non-cash investing and financing activities:        
Acquisition of leasing equipment   $ (5,408 )   $ (52,556 )
Acquisition of CMQR   $     $ (2,991 )
Acquisition of Jefferson   $     $ (38,207 )
Acquisition of property, plant and equipment   $ (203 )   $ (22,454 )
Settled and assumed security deposits   $ 2,388     $ 8,317  
Billed, assumed and settled maintenance deposits   $ (1,146 )   $ 34,461  
Non-cash contribution of non-controlling interest   $     $ 38,207  
Equity compensation to non-controlling interest   $ 4,638     $ 1,265  
Loan receivable from non-controlling interest   $     $ 3,725  
Distribution payable   $     $ (411 )
Common share issuance costs   $ (1,908 )   $  
Change in fair value of cash flow hedge   $ (117 )   $ (114 )

7
 

Key Performance Measures

 

Management utilizes Adjusted Net Income and Adjusted EBITDA as performance measures. Adjusted Net Income is the key performance measure and reflects the current management of our businesses and provides us with the information necessary to assess operational performance as well as make resource and allocation decisions. Adjusted Net Income should not be considered as an alternative to net income attributable to shareholders as determined in accordance with Generally Accepted Accounting Principles (“GAAP”).

 

Adjusted Net Income is defined as net income attributable to shareholders, adjusted (a) to exclude the impact of provision for income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, and equity in earnings of unconsolidated entities; (b) to include the impact of cash income tax payments, our pro-rata share of the Adjusted Net Income from unconsolidated entities (collectively “Adjusted Net Income”), and (c) to exclude the impact of the non-controlling share of Adjusted Net Income. We evaluate investment performance for each reportable segment primarily based on Adjusted Net Income. We believe that net income attributable to shareholders as defined by GAAP is the most appropriate earnings measurement with which to reconcile Adjusted Net Income.

 

The following table presents our consolidated reconciliation of Net Income attributable to shareholders to Adjusted Net Income for the periods ended December 31, 2015 and December 31, 2014:

 

      Three Months Ended December 31,   Year Ended December 31,
    2015   2014   2015   2014
      (in thousands)
Net (loss) income attributable to shareholders   $ (4,699 )   $ 3,675     $ (11,826 )   $ 7,780  
Add: Provision for income taxes   (60 )   160     586     874  
Add: Equity-based compensation expense   968     981     4,662     1,265  
Add: Acquisition and transaction expenses   1,511     169     5,683     11,450  
Add: Losses on the modification or extinguishment of debt and capital lease obligations                
Add: Changes in fair value of non-hedge derivative instruments       6     14     25  
Add: Asset impairment charges                
Add: Pro-rata share of Adjusted Net Income from unconsolidated entities (1)   162     1,262     3,552     6,155  
Add: Incentive allocations                
Less: Cash payments for income taxes       (274 )   (507 )   (274 )
Less: Equity in earnings of unconsolidated entities   (162 )   (1,262 )   6,956     (6,093 )
Less: Non-controlling share of Adjusted Net Income (2)   (283 )   (292 )   (1,333 )   (525 )
Adjusted Net Income   $ (2,563 )   $ 4,425     $ 7,787     $ 20,657  

 

 
(1)Pro-rata share of Adjusted Net Income from unconsolidated entities includes the Company’s proportionate share of the unconsolidated entities’ net income adjusted for asset impairment charges of $10,508 for the twelve months ended December 31, 2015. Pro-rata share of Adjusted Net Income from unconsolidated entities includes the Company’s proportionate share of the unconsolidated entities’ net income adjusted for loss on extinguishment of debt of $62 for the twelve months ended December 31, 2014.

 

(2)The Company's non-controlling share of Adjusted Net Income is comprised of the following for the three months ended December 31, 2015 and 2014, respectively: (i) equity-based compensation of $288 and $340, (ii) provision for income tax of $(5) and $(48), and (iii) cash tax payments of $0 and $0. The Company's non-controlling share of Adjusted Net Income is comprised of the following for the twelve months ended December 31, 2015 and 2014, respectively: (i) equity-based compensation of $1,387 and $454, (ii) provision for income tax of $16 and $71, and (iii) cash tax payments of $(70) and $0.

 

In addition, we view Adjusted EBITDA as a secondary measurement to Adjusted Net Income, which serves as a useful supplement to investors, analysts and management to measure operating performance of deployed assets and to compare the Company’s operating results to the operating results of our peers and between periods on a consistent basis. Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other entities may not calculate Adjusted EBITDA in the same manner.

 

8
 

Adjusted EBITDA is defined as net income attributable to shareholders, adjusted (a) to exclude the impact of provision for income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, and interest expense; (b) to include the impact of principal collections on direct finance leases (collectively, “Adjusted EBITDA”) and our pro-rata share of Adjusted EBITDA from unconsolidated entities; and (c) to exclude the impact of equity in earnings of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

 

The following table sets forth a reconciliation of Net Income attributable to shareholders to Adjusted EBITDA for the periods ended December 31, 2015 and December 31, 2014:

 

    Three Months Ended December 31,   Year Ended December 31,
    2015   2014   2015   2014
    (in thousands)
Net (loss) income attributable to shareholders   $ (4,699 )   $ 3,675     $ (11,826 )   $ 7,780  
Add: Provision for income taxes   (60 )   160     586     874  
Add: Equity-based compensation expense   968     981     4,662     1,265  
Add: Acquisition and transaction expenses   1,511     169     5,683     11,450  
Add: Losses on the modification or extinguishment of debt and capital lease obligations                
Add: Changes in fair value of non-hedge derivative instruments       6     14     25  
Add: Asset impairment charges                
Add: Incentive allocations                
Add: Depreciation & amortization expense (3)   14,069     8,299     52,324     18,692  
Add: Interest expense   5,071     2,952     19,311     5,872  
Add: Principal collections on direct finance leases   2,880     2,903     20,292     11,931  
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (4)   5,135     6,068     21,335     40,014  
Less: Equity in earnings of unconsolidated entities   (162 )   (1,262 )   6,956     (6,093 )
Less: Non-controlling share of Adjusted EBITDA (5)   (3,034 )   (1,519 )   (12,075 )   (2,497 )
Adjusted EBITDA   $ 21,679     $ 22,432     $ 107,262     $ 89,313  

 

 

(3)The Company's depreciation and amortization expense includes $12,433 and $7,257 of depreciation and amortization expense, $1,576 and $1,042 of lease intangible amortization, and $60 and $0 of amortization for lease incentives in the three months ended December 31, 2015 and 2014, respectively. The Company's depreciation and amortization expense includes $45,308 and $15,998 of depreciation and amortization expense, $6,774 and $2,694 of lease intangible amortization, and $242 and $0 of amortization for lease incentives in the twelve months ended December 31, 2015 and 2014, respectively.

 

(4)The Company's pro-rata share of Adjusted EBITDA from unconsolidated entities includes the following items for the three months ended December 31, 2015 and 2014: (i) net income of $113 and $1,262, (ii) interest expense of $356 and $495, (iii) depreciation and amortization expense of $956 and $310, (iv) principal collections of finance leases of $3,710 and $4,001, and (v) asset impairment charges of $0 and $0, respectively. The Company’s pro-rata share of Adjusted EBITDA from unconsolidated entities includes the following items for the twelve months ended December 31, 2015 and 2014: (i) net income of $(7,165) and $5,876, (ii) interest expense of $1,778 and $2,561, (iii) depreciation and amortization expense of $1,866 and $1,232, (iv) principal collections of finance leases of $14,348 and $30,345, and (v) asset impairment charges of $10,508 and $0, respectively.

 

(5)The Company's non-controlling share of Adjusted EBITDA is comprised of the following items for the three months ended December 31, 2015 and 2014: (i) equity based compensation of $288 and $340, (ii) provision for income taxes of $(5) and $(48), (iii) interest expense of $1,296 and $365, and (iv) depreciation and amortization expense of $1,455 and $862, respectively. The Company's non-controlling share of Adjusted EBITDA is comprised of the following items for the twelve months ended December 31, 2015 and 2014: (i) equity based compensation of $1,387 and $454, (ii) provision for income taxes of $16 and $71, (iii) interest expense of $4,926 and $642, and (iv) depreciation and amortization expense of $5,746 and $1,330, respectively.

 

The Company uses Funds Available for Distribution (“FAD”) in evaluating its ability to meet its stated dividend policy. FAD is not a financial measure in accordance with GAAP. The GAAP measure most directly comparable to FAD is net cash provided by operating activities. The Company believes FAD will be a useful metric for investors and analysts for similar purposes. The Company defines FAD as: net cash provided by (used in) operating activities plus principal collections on finance leases, proceeds from sale of assets, and return of capital distributions from unconsolidated entities, less required payments on debt obligations and capital distributions to non-controlling interest, and excluding changes in working capital.

 

9
 

The following table sets forth a reconciliation of net cash provided by operating activities to FAD for the periods ended December 31, 2015 and 2014:

 

    Three Months Ended December 31,   Year Ended December 31,
    2015     2014     2015     2014    
    (in thousands)
Net Cash Provided by (Used in) Operating Activities   $ (3,342 )   $ (3,765 )   $ 23,528     $ (31,551 )  
Add: Principal Collections on Finance Leases   2,880     2,903     20,292     11,931    
Add: Proceeds from sale of assets   5,265     17,536     14,518     37,074    
Add: Return of Capital Distributions from Unconsolidated Entities   807     2,757     3,728     9,064    
Less: Required Payments on Debt Obligations   (3,997 )   (4,245 )   (23,761 )   (31,131 )  
Less: Capital Distributions to Non-Controlling Interest   (12 )   (143 )   (321 )   (565 )  
Exclude: Changes in Working Capital   8,472     10,482     10,104     50,440    
Funds Available for Distribution (FAD)   $ 10,073     $ 25,525     $ 48,088     $ 45,262    
                                     

The following tables set forth a reconciliation of net cash provided by operating activities to FAD for the periods ended December 31, 2015:

 

  Three Months Ended December 31, 2015
  (in thousands)
  Equipment Leasing   Infrastructure   Corporate   Total
Funds Available for Distribution (FAD) $ 24,149     $ (5,377 )   $ (8,699 )   $ 10,073  
Less: Principal Collections on Finance Leases             (2,880 )
Less: Proceeds from sale of assets             (5,265 )
Less: Return of Capital Distributions from Unconsolidated Entities             (807 )
Add: Required Payments on Debt Obligations             3,997  
Add: Capital Distributions to Non-Controlling Interest             12  
Include: Changes in Working Capital             (8,472 )
Net Cash from Operating Activities             $ (3,342 )
                               
  Year Ended December 31, 2015
  (in thousands)
  Equipment Leasing   Infrastructure   Corporate   Total
Funds Available for Distribution (FAD) $ 102,326     $ (25,974 )   $ (28,264 )   $ 48,088  
Less: Principal Collections on Finance Leases             (20,292 )
Less: Proceeds from sale of assets             (14,518 )
Less: Return of Capital Distributions from Unconsolidated Entities             (3,728 )
Add: Required Payments on Debt Obligations             23,761  
Add: Capital Distributions to Non-Controlling Interest             321  
Include: Changes in Working Capital             (10,104 )
Net Cash from Operating Activities             $ 23,528  
                               

10
 

FAD is subject to a number of limitations and assumptions and there can be no assurance that the Company will generate FAD sufficient to meet its intended dividends. FAD has material limitations as a liquidity measure of the Company because such measure excludes items that are required elements of the Company’s net cash provided by operating activities as described below. FAD should not be considered in isolation nor as a substitute for analysis of the Company’s results of operations under GAAP and it is not the only metric that should be considered when evaluating the Company’s ability to meet its stated dividend policy. Specifically: (i) FAD does not include equity capital raised, proceeds from any debt issuance or future equity offering, historical cash and cash equivalents and expected investments in the Company’s operations; (ii) FAD does not give pro forma effect to prior acquisitions, certain of which cannot be quantified; (iii) While FAD reflects the cash inflows from sale of certain assets, FAD does not reflect the cash outflows to acquire assets as the Company relies on alternative sources of liquidity to fund such purchases; (iv) FAD does not reflect expenditures related to capital expenditures, acquisitions and other investments as the Company has multiple sources of liquidity and intends to fund these expenditures with future incurrences of indebtedness, additional capital contributions and/or future issuances of equity; (v) FAD does not reflect any maintenance capital expenditures necessary to maintain the same level of cash generation from our capital investments; (vi) FAD does not reflect changes in working capital balances as management believes that changes in working capital are primarily driven by short term timing differences which are not meaningful to the Company’s distribution decisions; and (vii) Management has significant discretion to make distributions and the Company is not bound by any contractual provision that requires it to use cash for distributions. If such factors were included in FAD, there can be no assurance that the results would be consistent with the Company’s presentation of FAD.

11