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DISCONTINUED OPERATIONS | 9 Months Ended
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Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS | 3. DISCONTINUED OPERATIONS FTAI Infrastructure Inc. (“FTAI Infrastructure”) Spin-Off On April 28, 2022, the Board of Directors of the Company unanimously approved the previously announced spin-off of the Company’s infrastructure business held by FTAI Infrastructure (a wholly owned subsidiary of the Company). The spin-off was effected as a distribution of all of the shares owned by the Company of common stock of FTAI Infrastructure to the holders of the Company’s common shares as of July 21, 2022. The distribution was completed on August 1, 2022. Under ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the spin-off met the criteria to be reported as a discontinued operation. Therefore, FTAI Infrastructure is presented as a discontinued operation within FTAI’s financial statements for all periods prior to August 1, 2022. FTAI Infrastructure is a corporation for U.S. federal income tax purposes and holds, among other things, the Company’s previously held interests in the (i) Jefferson Terminal business, (ii) Repauno business, (iii) Long Ridge investment, and (iv) Transtar business. FTAI Infrastructure retained all related project-level debt of those entities. In connection with the spin-off, FTAI Infrastructure paid a dividend of $730.3 million to the Company. The Company used these proceeds to repay all outstanding borrowings under its 2021 bridge loans, $200.0 million of its 6.50% senior unsecured notes due 2025, and approximately $175.0 million of the outstanding borrowings under its revolving credit facility. FTAI retained the aviation business and certain other assets, and FTAI’s remaining outstanding corporate indebtedness. In connection with the spin-off, the Company and FIG LLC (the “Manager”) assigned the Company’s then-existing management agreement to FTAI Infrastructure, and FTAI Infrastructure and the Manager executed an amended and restated agreement. The Company and certain of its subsidiaries executed a new management agreement with the Manager. The new management agreement has an initial term of six years. The Manager is entitled to a management fee and reimbursement of certain expenses on substantially similar terms as the previous arrangements with the Manager, which were assigned to FTAI Infrastructure. Prior to the merger described below, our Manager will remain entitled to incentive allocations (comprised of income incentive allocation and capital gains incentive allocation) on the same terms as they exist today. Following the merger, the Company will enter into a Services and Profit Sharing Agreement (the “Services and Profit Sharing Agreement”), with a subsidiary of the Company and Fortress Worldwide Transportation and Infrastructure Master GP LLC (“Master GP”), pursuant to which Master GP will be entitled to incentive allocations on substantially similar terms as the previous arrangements. The Company is pursuing a merger transaction with a subsidiary of the Company pursuant to which the Company will become a wholly-owned subsidiary of a company organized under the laws of the Cayman Islands and shareholders of the Company would become shareholders of the Cayman Islands entity. This merger transaction will be subject to approval by holders of the Company’s common shares. Critical Accounting Policies Revenue Recognition Revenues of discontinued operations consist of the following revenue streams: Terminal Services Revenues—Terminal services are provided to customers for the receipt and redelivery of various commodities. These revenues relate to performance obligations that are recognized over time using the right to invoice practical expedient, i.e., invoiced as the services are rendered and the customer simultaneously receives and consumes the benefit over the contract term. The Company’s performance of service and right to invoice corresponds with the value delivered to our customers. Revenues are typically invoiced and paid on a monthly basis. Rail Revenues—Rail revenues generally consist of the following performance obligations: industrial switching, interline services, demurrage and storage. Switching revenues are derived from the performance of switching services, which involve the movement of cars from one point to another within the limits of an individual plant, industrial area, or a rail yard. Switching revenues are recognized as the services are performed, and the services are generally completed on the same day they are initiated. Interline revenues are derived from transportation services for railcars that originate or terminate at our railroads and involve one or more other carriers. We record revenue related to interline traffic for transportation service segments provided by carriers along railroads that are not owned or controlled by us on a net basis. Interline revenues are recognized as the transportation movements occur. Ancillary services revenue primarily relates to demurrage and storage services. Demurrage represents charges assessed by railroads for the detention of cars by shippers or receivers of freight beyond a specified free time and is recognized on a per day basis. Storage services revenue is earned for the provision of storage of shippers’ railcars and is generally recognized on a per day, per car basis, as the storage services are provided. Lease Income—Lease income consists of rental income from tenants for storage space. Lease income is recognized on a straight-line basis over the terms of the relevant lease agreement. Other Revenue—Other revenue primarily consists of revenue related to the handling, storage and sale of raw materials. Revenues for the handling and storage of raw materials relate to performance obligations that are recognized over time using the right to invoice practical expedient, i.e., invoiced as the services are rendered and the customer simultaneously receives and consumes the benefit over the contract term. Our performance of service and right to invoice corresponds with the value delivered to our customers. Revenues for the sale of raw materials relate to contracts that contain performance obligations to deliver the product over the term of the contract. The revenues are recognized when the control of the product is transferred to the customer, based on the volume delivered and the price within the contract. Other revenues are typically invoiced and paid on a monthly basis. Additionally, other revenue consists of revenue related to derivative trading activities and also includes revenue related to providing roadside assistance services to customers in the intermodal and over-the-road trucking industries. Revenue is recognized when a performance obligation is satisfied by completing a repair service at a point in time. Revenues are typically invoiced for each repair and generally have 30-day payment terms. Variable Interest Entity At December 31, 2021, we held an approximately 98% economic interest, and a 100% voting interest in Delaware River Partners LLC (“DRP”). DRP was solely reliant on us to finance its activities and therefore was a VIE. We concluded that we were the primary beneficiary; and accordingly, DRP has been presented on a consolidated basis in the tables below. Total VIE assets of DRP were $316.5 million and total VIE liabilities were $32.6 million as of December 31, 2021. Financial Information of Discontinued Operations The following table summarizes the significant line items pertaining to discontinued operations included in Net loss attributable to shareholders for the three and nine months ended September 30, 2022 and 2021, respectively, in the Consolidated Statements of Operations:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2022 |  | 2021 |  | 2022 |  | 2021
Revenues |  |  |  |  |  |  |  |
Total revenues |  | $ | 27,993 |  |  | $ | 36,788 |  |  | $ | 140,009 |  |  | $ | 72,674 |
Expenses |  |  |  |  |  |  |  |
Operating expenses |  | 12,365 |  |  | 30,865 |  |  | 92,478 |  |  | 64,747 |
Cost of sales |  | 4,920 |  |  | 1,222 |  |  | 12,732 |  |  | 1,459 |
General and administrative expenses |  | 466 |  |  | 743 |  |  | 2,694 |  |  | 2,711 |
Acquisition and transaction expenses |  | 3,813 |  |  | 547 |  |  | 13,971 |  |  | 546 |
Management fees and incentive allocation to affiliate |  | 908 |  |  | 3,829 |  |  | 8,134 |  |  | 11,244 |
Depreciation and amortization |  | 6,004 |  |  | 17,131 |  |  | 40,319 |  |  | 38,900 |
Interest expense |  | 2,160 |  |  | 4,404 |  |  | 15,105 |  |  | 9,396 |
Other expense |  | 7,641 |  |  | 9,957 |  |  | 47,765 |  |  | 15,625 |
Losses before income taxes |  | (10,284) |  |  | (31,910) |  |  | (93,189) |  |  | (71,954) |
Provision for (benefit from) income taxes |  | 4,498 |  |  | (979) |  |  | 8,227 |  |  | (2,789) |
Net loss from discontinued operations, net of income taxes |  | (14,782) |  |  | (30,931) |  |  | (101,416) |  |  | (69,165) |
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries |  | (2,871) |  |  | (7,363) |  |  | (18,817) |  |  | (18,949) |
Net loss attributable to shareholders |  | (11,911) |  |  | (23,568) |  |  | (82,599) |  |  | (50,216) |
The following table summarizes the carrying value of the major classes of assets and liabilities of discontinued operations as of December 31, 2021:
|  | December 31, 2021
Assets |  |
Cash and cash equivalents |  | $ | 49,872 |
Restricted cash |  | 251,983 |
Accounts receivable, net |  | 50,301 |
Leasing equipment, net |  | 36,012 |
Operating lease right-of-use assets, net |  | 71,547 |
Property, plant and equipment, net |  | 1,517,594 |
Investments |  | 54,408 |
Intangible assets, net |  | 67,737 |
Goodwill |  | 257,137 |
Other assets |  | 85,710 |
Total assets of discontinued operations |  | 2,442,301 |
Liabilities |  |
Accounts payable and accrued liabilities |  | 115,634 |
Debt, net |  | 718,624 |
Operating lease liabilities |  | 70,404 |
Other liabilities |  | 75,593 |
Total liabilities of discontinued operations |  | 980,255 |
The cash flows related to discontinued operations have not been segregated, and are included in the Consolidated Statements of Cash Flows for all periods presented. The following table summarizes depreciation and amortization, capital expenditures, and other significant operating and investing noncash items of discontinued operations for each period presented:
|  |  | Nine Months Ended September 30,
|  |  | 2022 |  | 2021
Operating activities: |  |  |  |  |
Equity in losses of unconsolidated entities |  |  | $ | 46,601 |  |  | $ | 8,810 |
Depreciation and amortization |  |  | 40,319 |  |  | 38,900 |
Equity-based compensation |  |  | 2,623 |  |  | 3,281 |
Investing activities: |  |  |  |  |
Acquisition of property, plant and equipment |  |  | $ | (129,920) |  |  | $ | (97,506) |
Acquisition of business, net of cash acquired |  |  | (3,819) |  |  | (627,399) |
Investment in unconsolidated entities |  |  | 7,954 |  |  | (54,499) |
Proceeds from sale of property, plant and equipment |  |  | 5,289 |  |  | — |
Non-cash change in equity method investment |  |  | (182,963) |  |  | (77,518) |
Conversion of interests in unconsolidated entities |  |  | (21,302) |  |  | — |
The Company accounted for Long Ridge Terminal LLC, included in liabilities of discontinued operations at December 31, 2021 included above, using the equity method of accounting. Summarized financial data for Long Ridge Terminal LLC are shown in the following tables for the periods in which the Company held the equity investment.
|  |  | December 31, 2021
Balance Sheet |  |  |
Assets |  |  |
Cash and cash equivalents |  |  | $ | 2,932 |
Restricted cash |  |  | 32,469 |
Accounts receivable, net |  |  | 17,896 |
Property, plant, and equipment, net |  |  | 764,607 |
Intangible assets, net |  |  | 4,940 |
Goodwill |  |  | 89,390 |
Inventory, net |  |  | 1,691 |
Other assets |  |  | 12,750 |
Total assets |  |  | $ | 926,675 |
Liabilities |  |  |
Accounts payable and accrued liabilities |  |  | $ | 16,121 |
Debt, net |  |  | 604,261 |
Derivative liabilities |  |  | 339,033 |
Other liabilities |  |  | 2,246 |
Total liabilities |  |  | 961,661 |
Equity |  |  |
Shareholders’ equity |  |  | (1,035) |
Accumulated deficit |  |  | (33,951) |
Total equity |  |  | (34,986) |
Total liabilities and equity |  |  | $ | 926,675 |
| Three Months Ended September 30, |  | Nine Months Ended September 30,
Income Statement | 2022 |  | 2021 |  | 2022 |  | 2021
Total revenues | $ | 156 |  |  | $ | 21,071 |  |  | $ | 15,199 |  |  | $ | 38,341 |
Expenses |  |  |  |  |  |  |
Operating expenses | 4,337 |  |  | 5,581 |  |  | 36,693 |  |  | 16,568 |
Depreciation and amortization | 4,383 |  |  | 5,891 |  |  | 29,381 |  |  | 13,327 |
Interest expense | 4,580 |  |  | 547 |  |  | 30,622 |  |  | 1,493 |
Total expenses | 13,300 |  |  | 12,019 |  |  | 96,696 |  |  | 31,388 |
Total other expense | (21) |  |  | (16,614) |  |  | (234) |  |  | (25,440) |
Net loss | $ | (13,165) |  |  | $ | (7,562) |  |  | $ | (81,731) |  |  | $ | (18,487) |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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