FLY Leasing Reports Fourth Quarter and Full Year 2013 Financial Results

Dublin, Ireland, March 6, 2014 – FLY Leasing Limited (NYSE: FLY) (“FLY”), a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its financial results for the fourth quarter and full year of 2013.

Fourth Quarter 2013 Highlights
• Net income of $13.4 million, $0.32 per share
• Purchased six aircraft for $210.9 million, increasing portfolio to 113 aircraft • Executed inaugural $300 million Senior Notes offering
• Upsized T erm Loan by $105 million
• Increased unrestricted cash to $404.5 million
• Increased quarterly dividend by 14% to $0.25 per share

2013 Full Year Highlights
• Net income of $52.5 million, $1.50 per share
• Adjusted net income of $57.4 million, $1.68 per share • Added 14 aircraft to portfolio at a cost of $642.2 million • Sold ten older aircraft for net gain of $6.3 million
• Raised $172.6 million of new equity capital
• Raised $1.1 billion in debt financing
• Paid four quarterly dividends totaling $0.88 per share

“2013 was a year of strong growth with the acquisition of 14 aircraft, primarily brand new models from Boeing,” said Colm Barrington, CEO of FLY. “We also disposed of ten aircraft with an average age of 13.6 years. As a result of these transactions we have increased both the size and value of our fleet and have lowered its average age. Having raised more than $1.2 billion in new debt and equity funding last year, FLY is now well positioned to achieve its target of growing the fleet by 15% in 2014.”

“Our net income increased 10% over last year, and we expect to see a positive impact on our EPS going forward from the aircraft we acquired late in 2013,” added Barrington. “Resulting from the growth in our cash flow, we increased the quarterly dividend by 14% to $0.25 per share in Q4, which equates to an annual dividend of $1.00 per share. FLY has started 2014 in a very strong position.”

Financial Results
FLY is reporting net income of $13.4 million or $0.32 per diluted share for the fourth quarter of 2013. This compares to net income of $31.0 million or $1.17 per diluted share for the same period of 2012.

The fourth quarter 2013 results include a transactional impairment charge of $8.8 million associated with an aircraft that will be sold in 2014. The Company anticipates that this impairment charge will be largely offset by end of lease revenue associated with this aircraft in the second half of 2014. Fourth quarter 2013 operating lease revenue includes no end of lease revenue, whereas there was $14.0 million of end of lease revenue in the fourth quarter of 2012. In addition, the fourth quarter 2013 results include $18.6 million in net gains associated with refinancing transactions.

The fourth quarter 2012 results include a one-time, pre-tax gain of $36.9 million associated with the sale of FLY’s 15% ownership interest in BBAM, a transactional impairment charge of $11.4 million on aircraft which have been sold, and $7.6 million of expenses associated with refinancing transactions.

In addition to the fourth quarter items discussed above, the 2012 results include a one-time, pre- tax charge of $32.3 million related to the termination of interest rate swaps associated with a credit facility that was fully repaid during 2012.

Net income for the year ended December 31, 2013 was $52.5 million or $1.50 per share compared to $47.7 million or $1.80 per diluted share for 2012. 2013 operating lease revenue of $359.4 million includes $47.6 million of end of lease revenue as compared to 2012 operating lease revenue of $376.4 million which included $49.8 million of end of lease revenue.

Adjusted Net Income
Adjusted Net Income was $4.9 million or $0.12 per share for the fourth quarter of 2013 and excludes the gain recognized in connection with the restructuring of one of our debt facilities. This compares to Adjusted Net Income of $53.2 million or $2.04 for the fourth quarter of the previous year. 2012 Adjusted Net Income included the $36.9 million pre-tax gain from the sale of FLY’s 15% ownership interest in BBAM.

For the year ended December 31, 2013, Adjusted Net Income was $57.4 million or $1.68 per share compared to $116.3 million or $4.48 per share for the year ended December 31, 2012.

A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.

Dividend
On January 9, 2014, FLY declared a dividend of $0.25 per share in respect of the fourth quarter of 2013. This represents a 14% increase from the previous quarterly dividend. This dividend was paid on February 20, 2014 to shareholders of record on January 31, 2014. This dividend is FLY’s 25th consecutive quarterly dividend totaling $6.37 per share.

Financial Position
At December 31, 2013, FLY’s total assets were $3.7 billion, including flight equipment with a net book value of $3.0 billion. Total cash at December 31, 2013 was $579.3 million, of which $404.5 million was unrestricted. These amounts compare to total cash of $300.6 million and unrestricted cash of $163.1 million at December 31, 2012.

In July 2013, FLY completed an underwritten public offering of 13,142,856 common shares in the form of ADSs at a price of $14.00 per share, generating net proceeds of approximately $172.6 million.

During 2013, FLY’s Term Loan was re-priced for a second time, reducing the interest rate margin over LIBOR to 3.5% and the LIBOR floor to 1.0%. The original margin was 5.5% and the LIBOR floor was 1.25%. The Term Loan was also upsized by $105 million, and the maturity date extended by one year to August 2019.

In July 2013, total commitments under our aircraft acquisition facility were increased to $450 million and the availability term was extended to July 2015. This facility was used to purchase approximately $274 million worth of aircraft during 2013. Certain of the aircraft financed in this facility have been refinanced with long term, secured financing, and at December 31, 2013, there was approximately $325 million of availability under the facility.

Also during 2013, a limited recourse debt facility with a September 30, 2013 outstanding principal balance of $209 million was amended and restructured. The lenders extinguished approximately $29 million of debt, and FLY made a principal repayment of approximately $20 million. Two of the aircraft secured by this facility will be sold with the proceeds paid to the lenders in full satisfaction of amounts outstanding. A pre-tax gain of approximately $22.2 million was recognized in connection with the extinguishment of debt in 2013. FLY anticipates that it will recognize a further gain on debt extinguishment of more than $3 million when the remaining two aircraft are sold in 2014.

In December 2013, the Company entered the unsecured bond market for the first time with the sale of $300 million aggregate principal amount of 6.75% Senior Notes due 2020. As of December 31, 2013, the Company owned two unencumbered aircraft with an aggregate book value of $75.4 million.

During 2013, more than $440 million of debt was repaid or refinanced. At December 31, 2013 FLY’s net leverage, defined as the ratio of net debt to total shareholders’ equity, was 2.9x, compared to 3.6x at December 31, 2012. Net debt is defined as book value of outstanding debt, less unrestricted cash and cash equivalents.

Aircraft Portfolio
At December 31, 2013, FLY’s 113 aircraft, shown in the table below, were on lease to 62 lessees in 34 countries. The table does not include the four B767 aircraft owned by a joint venture in which FLY has a 57% interest.

At December 31, 2013, the average age of FLY’s fleet, weighted by the net book value of each aircraft, was 8.6 years compared to 9.4 years at December 31, 2012. The average remaining lease term was 4.3 years as of December 31, 2013, also weighted by net book value, an increase of approximately 13 months from the prior year. At December 31, 2013, the leases were generating annualized revenues of approximately $371 million. FLY’s lease utilization factor was 98% in the fourth quarter of 2013 and 96% for the year ended December 31, 2013.