EX-99.1 3 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1

UNAUDITED PRO FORMA FINANCIAL INFORMATION

On December 30, 2019, Fortress Transportation and Infrastructure Investors LLC (the “Company”) completed the previously announced disposition (the “Transaction”) of the Central Maine & Quebec Railway (“CMQR”) to Canadian Pacific Railway (“Purchaser”), as contemplated by the agreement and plan of merger, dated as of November 19, 2019, by and among Fortress Transportation and Infrastructure General Partnership, a subsidiary of the Company (“Holdco”), Railroad Acquisition Holdings LLC, a subsidiary of Holdco, Soo Line Corporation (“Parent”), a wholly-owned subsidiary of Purchaser, and Black Bear Acquisition LLC, a wholly-owned subsidiary of Parent.  The aggregate purchase price for the Transaction was $130,000,000 in cash paid at closing.

The following unaudited pro forma consolidated financial statements have been prepared by applying certain pro forma adjustments to our historical consolidated financial statements. The pro forma adjustments give effect to the Transaction.

The unaudited pro forma consolidated balance sheet as of September 30, 2019 is presented as if the disposition occurred on September 30, 2019. The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2019 and for each of the years ended December 31, 2018, 2017 and 2016 are presented as if the disposition occurred on January 1, 2016.

The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are not intended to represent what our results of operations or financial position would actually have been had this disposition occurred on the dates noted above, or project our results of operations or financial position for any future periods. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable and are expected to have a continuing impact on our results of operations. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma consolidated financial statements have been made. The actual results may differ materially from the estimates and assumptions within the accompanying unaudited pro forma consolidated financial statements.

The unaudited pro forma consolidated financial statements and the accompanying notes are based upon and should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019, and the Quarterly Report on Form 10-Q for the nine month period ended September 30, 2019, filed with the SEC on November 1, 2019.
Unaudited Pro Forma Consolidated Balance Sheet
As of September 30, 2019
(in thousands, except per share data)

 
  
As Reported
    
CMQR (a)
    
Additional
Pro Forma
Adjustments
    
Pro Forma
  
Assets
                        
Cash and cash equivalents
  
$
99,343
     $
(2,613
)
  
$
84,375
 (b)
  
$
181,105
  
Restricted cash
    
51,241
      
-
              
51,241
  
Accounts receivable, net
    
61,970
      
(6,473
)
            
55,497
  
Leasing equipment, net
    
1,498,679
      
-
              
1,498,679
  
Operating lease right-of-use assets, net
    
42,590
      
(6,083
)
            
36,507
  
Finance leases, net
    
8,620
      
-
              
8,620
  
Property, plant, and equipment, net
    
945,052
      
(49,620
)
            
895,432
  
Investments in and advances to unconsolidated entities
    
51,109
      
-
              
51,109
  
Intangible assets, net
    
30,182
      
-
              
30,182
  
Goodwill
    
116,584
      
(594
)
            
115,990
  
Other assets
    
229,643
      
(1,900
)
            
227,743
  
Total assets
  
$
3,135,013
    
$
(67,283
)
  
$
84,375
    
$
3,152,105
  
 
                                
Liabilities
                                
Accounts payable and accrued liabilities
  
$
135,155
    
$
(10,649
)
          
$
124,506
  
Debt, net
    
1,582,262
      
(22,832
)
            
1,559,430
  
Maintenance deposits
    
197,989
      
-
              
197,989
  
Security deposits
    
42,761
      
-
              
42,761
  
Operating lease liabilities
    
43,036
      
(6,083
)
            
36,953
  
Other liabilities
    
28,158
      
(2,108
)
            
26,050
  
Total liabilities
   $
2,029,361
     $
(41,672
)
   $
-
     $
1,987,689
  
 
                                
Equity
                                
Common shares
   $
849
      
-
             $
849
  
Preferred shares
    
35
      
-
              
35
  
Additional paid in capital
    
1,027,451
      
-
              
1,027,451
  
Retained earnings
    
6,806
      
(21,815
)
    
84,375
 (b)
    
69,366
  
Accumulated other comprehensive income
    
25,474
      
-
              
25,474
  
Shareholders' equity
    
1,060,615
      
(21,815
)
    
84,375
      
1,123,175
  
Non-controlling interest in equity of consolidated subsidiaries
    
45,037
      
(3,796
)
            
41,241
  
Total equity
   $
1,105,652
     $
(25,611
)
   $
84,375
     $
1,164,416
  
 
                                
Total liabilities and equity
  
$
3,135,013
    
$
(67,283
)
  
$
84,375
    
$
3,152,105
  

See notes to unaudited pro forma consolidated financial statements

Unaudited Pro Forma Consolidated Statements of Operations
For the Nine Months Ended September 30, 2019
(in thousands, except per share data)

   
As Reported
    
Pro Forma
Adjustments (c)
    
Pro Forma
  
Revenues
                  
Equipment leasing revenues
  
$
238,911
    
$
-
    
$
238,911
  
Infrastructure revenues
    
206,942
      
(28,411
)
    
178,531
  
Total revenues
    
445,853
      
(28,411
)
    
417,442
  
                         
                         
Expenses
                        
Operating expenses
    
244,049
      
(23,280
)
    
220,769
  
General and administrative
    
15,313
      
-
      
15,313
  
Acquisition and transaction expenses
    
9,400
      
(275
)
    
9,125
  
Management fees and incentive allocation to affiliate
    
16,926
      
(131
) (d)
    
16,795
  
Depreciation and amortization
    
125,877
      
(1,696
)
    
124,181
  
Interest expense
    
72,263
      
(945
)
    
71,318
  
Total expenses
    
483,828
      
(26,327
)
    
457,501
  
                         
                         
Other income
                        
Equity in losses of unconsolidated entities
    
(1,527
)
    
-
      
(1,527
)
Gain on sale of assets, net
    
61,416
      
(16
)
    
61,400
  
Interest income
    
452
      
-
      
452
  
Other income
    
3,465
      
-
      
3,465
  
Total other income
    
63,806
      
(16
)
    
63,790
  
                         
Income before income taxes
    
25,831
      
(2,100
)
    
23,731
  
                         
Benefit from income taxes
    
(842
)
    
(347
)
    
(1,189
)
Net income
    
26,673
      
(1,753
)
    
24,920
  
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries
    
(12,950
)
    
(101
)
    
(13,051
)
Net income attributable to shareholders
  
$
39,623
    
$
(1,652
)
  
$
37,971
  
 
                        
Earnings per common share:
                        
Basic
  
$
0.46
            
$
0.44
  
Diluted
  
$
0.46
            
$
0.44
  
 
                        
Weighted average common shares outstanding:
                        
Basic
    
85,990,131
              
85,990,131
  
Diluted
    
86,013,539
              
86,013,539
  

See notes to unaudited pro forma consolidated financial statements

Unaudited Pro Forma Consolidated Statements of Operations
For the Year Ended December 31, 2018
(in thousands, except per share data)

   
As Reported
    
Pro Forma
Adjustments (c)
    
Pro Forma
  
Revenues
                  
Equipment leasing revenues
  
$
253,039
    
$
-
    
$
253,039
  
Infrastructure revenues
    
126,839
      
(37,766
)
    
89,073
  
Total revenues
    
379,878
      
(37,766
)
    
342,112
  
                         
                         
Expenses
                        
Operating expenses
    
167,514
      
(30,944
)
    
136,570
  
General and administrative
    
17,126
      
-
      
17,126
  
Acquisition and transaction expenses
    
6,968
      
-
      
6,968
  
Management fees and incentive allocation to affiliate
    
15,726
      
(177
) (d)
    
15,549
  
Depreciation and amortization
    
136,354
      
(2,446
)
    
133,908
  
Interest expense
    
57,854
      
(1,009
)
    
56,845
  
Total expenses
    
401,542
      
(34,576
)
    
366,966
  
                         
                         
Other income
                        
Equity in losses of unconsolidated entities
    
(1,008
)
    
-
      
(1,008
)
Gain on sale of assets, net
    
3,911
      
-
      
3,911
  
Interest income
    
488
      
-
      
488
  
Other income
    
3,941
      
42
      
3,983
  
Total other income
    
7,332
      
42
      
7,374
  
                         
Loss before income taxes
    
(14,332
)
    
(3,148
)
    
(17,480
)
                         
Provision for income taxes
    
1,372
      
1,077
      
2,449
  
Net loss
    
(15,704
)
    
(4,225
)
    
(19,929
)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries
    
(21,586
)
    
(339
)
    
(21,925
)
Net income attributable to shareholders
  
$
5,882
    
$
(3,886
)
  
$
1,996
  
 
                        
Earnings per common share:
                        
Basic
  
$
0.07
            
$
0.02
  
Diluted
  
$
0.07
            
$
0.02
  
 
                        
Weighted average common shares outstanding:
                        
Basic
    
83,654,068
              
83,654,068
  
Diluted
    
83,664,833
              
83,664,833
  

See notes to unaudited pro forma consolidated financial statements

Unaudited Pro Forma Consolidated Statements of Operations
For the Year Ended December 31, 2017
(in thousands, except per share data)

   
As Reported
    
Pro Forma
Adjustments (c)
    
Pro Forma
  
Revenues
                  
Equipment leasing revenues
  
$
170,000
    
$
-
    
$
170,000
  
Infrastructure revenues
    
47,659
      
(32,607
)
    
15,052
  
Total revenues
    
217,659
      
(32,607
)
    
185,052
  
                         
                         
Expenses
                        
Operating expenses
    
92,385
      
(29,966
)
    
62,419
  
General and administrative
    
14,570
      
-
      
14,570
  
Acquisition and transaction expenses
    
7,306
      
-
      
7,306
  
Management fees and incentive allocation to affiliate
    
15,732
      
(205
) (d)
    
15,527
  
Depreciation and amortization
    
88,110
      
(2,037
)
    
86,073
  
Interest expense
    
38,827
      
(1,029
)
    
37,798
  
Total expenses
    
256,930
      
(33,237
)
    
223,693
  
                         
                         
Other income
                        
Equity in losses of unconsolidated entities
    
(1,601
)
    
-
      
(1,601
)
Gain on sale of assets, net
    
18,281
      
312
      
18,593
  
Loss on extinguishment of debt
    
(2,456
)
    
-
      
(2,456
)
Interest income
    
688
      
-
      
688
  
Other income
    
3,073
      
-
      
3,073
  
Total other income
    
17,985
      
312
      
18,297
  
                         
Loss before income taxes
    
(21,286
)
    
942
      
(20,344
)
                         
Provision for income taxes
    
1,954
      
-
      
1,954
  
Net loss
    
(23,240
)
    
942
      
(22,298
)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries
    
(23,374
)
    
70
      
(23,304
)
Net income attributable to shareholders
  
$
134
    
$
872
    
$
1,006
  
 
                        
Earnings per common share:
                        
Basic
  
$
 -            
$
0.01
  
Diluted
  
$
 -            
$
0.01
  
 
                        
Weighted average common shares outstanding:
                        
Basic
    
75,766,811
              
75,766,811
  
Diluted
    
75,766,811
              
75,766,811
  

See notes to unaudited pro forma consolidated financial statements

Unaudited Pro Forma Consolidated Statements of Operations
For the Year Ended December 31, 2016
(in thousands, except per share data)

   
As Reported
    
Pro Forma
Adjustments (c)
    
Pro Forma
  
Revenues
                  
Equipment leasing revenues
  
$
101,949
    
$
-
    
$
101,949
  
Infrastructure revenues
    
46,771
      
(30,837
)
    
15,934
  
Total revenues
    
148,720
      
(30,837
)
    
117,883
  
                         
                         
Expenses
                        
Operating expenses
    
66,169
      
(27,975
)
    
38,194
  
General and administrative
    
12,314
      
-
      
12,314
  
Acquisition and transaction expenses
    
6,316
      
-
      
6,316
  
Management fees and incentive allocation to affiliate
    
16,742
      
(218
) (d)
    
16,524
  
Depreciation and amortization
    
60,210
      
(1,926
)
    
58,284
  
Interest expense
    
18,957
      
(754
)
    
18,203
  
Total expenses
    
180,708
      
(30,873
)
    
149,835
  
                         
                         
Other income
                        
Equity in losses of unconsolidated entities
    
(5,992
)
    
-
      
(5,992
)
Gain on sale of assets, net
    
5,941
      
(423
)
    
5,518
  
Loss on extinguishment of debt
    
(1,579
)
    
-
      
(1,579
)
Asset impairment
    
(7,450
)
    
-
      
(7,450
)
Interest income
    
136
      
-
      
136
  
Other income
    
602
      
-
      
602
  
Total other expense
    
(8,342
)
    
(423
)
    
(8,765
)
                         
Loss before income taxes
    
(40,330
)
    
(387
)
    
(40,717
)
                         
Provision for income taxes
    
268
      
-
      
268
  
Net loss
    
(40,598
)
    
(387
)
    
(40,985
)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries
    
(20,534
)
    
(23
)
    
(20,557
)
Net loss attributable to shareholders
  
$
(20,064
)
  
$
(364
)
  
$
(20,428
)
 
                        
Loss per common share:
                        
Basic
  
$
(0.26
)
          
$
(0.27
)
Diluted
  
$
(0.26
)
          
$
(0.27
)
 
                        
Weighted average common shares outstanding:
                        
Basic
    
75,738,698
              
75,738,698
  
Diluted
    
75,738,698
              
75,738,698
  

See notes to unaudited pro forma consolidated financial statements

Notes to Unaudited Pro Forma Consolidated Financial Statements


 (a)
Reflects the elimination of the respective assets and liabilities of CMQR.


(b)
The estimated net increase in cash and cash equivalents and retained earnings and the estimated gain on sale is comprised of the following:

Gross sales price
  
$
130,000
  
Repayment of debt and other
    
(23,935
)
Estimated transaction costs
    
(5,967
)
Estimated working capital adjustments
    
2,385
  
Stock compensation payments
    
(10,399
)
Estimated capital gains incentive payable to affiliate*
    
(7,709
)
Net cash proceeds / Retained earnings
  
$
84,375
  
         
Vested stock compensation expense*
    
7,994
  
Estimated capital gains incentive allocation to affiliate*
    
7,709
  
Net assets sold
    
(23,329
)
Estimated gain on sale
  
$
76,749
  

*The gain on sale and these balances were not recorded as adjustments to the unaudited pro forma condensed consolidated statements of operations, as they are non-recurring charges related to the disposition and will not have a continuing impact on the operations.

Actual net increase in cash will differ from net increase in cash reflected in the pro forma financial statements due to (1) the settlement of estimated transaction costs, (2) the settlement of estimated working capital adjustments and (3) the actual closing date of December 30, 2019, as compared to the assumed closing date of September 30, 2019.


 (c)
Reflects the elimination of the operations of CMQR.


(d)
Reflects CMQR’s portion of the management fee which was previously reported within the Corporate and Other segment.