Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 4-May-15 | |
Document and Entity Information | ||
Entity Registrant Name | WILLIS LEASE FINANCE CORP | |
Entity Central Index Key | 1018164 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 8,259,658 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
ASSETS | ||
Cash and cash equivalents | $15,635 | $13,493 |
Restricted cash | 45,616 | 51,258 |
Equipment held for operating lease, less accumulated depreciation of $295,515 and $281,087 at March 31, 2015 and December 31, 2014, respectively | 1,050,922 | 1,066,448 |
Equipment held for sale | 17,600 | 18,114 |
Operating lease related receivables, net of allowances of $282 and $215 at March 31, 2015 and December 31, 2014, respectively | 14,596 | 8,912 |
Spare parts inventory | 18,288 | 18,593 |
Investments | 42,574 | 41,590 |
Property, equipment & furnishings, less accumulated depreciation of $9,726 and $9,420 at March 31, 2015 and December 31, 2014, respectively | 21,311 | 17,955 |
Intangible assets, net | 1,106 | 1,164 |
Equipment purchase deposits | 6,817 | |
Other assets | 25,261 | 24,099 |
Total assets | 1,259,726 | 1,261,626 |
Liabilities: | ||
Accounts payable and accrued expenses | 12,636 | 21,614 |
Deferred income taxes | 91,866 | 90,510 |
Notes payable | 842,177 | 840,956 |
Maintenance reserves | 69,672 | 66,474 |
Security deposits | 20,771 | 20,869 |
Unearned lease revenue | 3,381 | 4,342 |
Total liabilities | 1,040,503 | 1,044,765 |
Shareholders' equity: | ||
Common stock ($0.01 par value, 20,000,000 shares authorized; 8,293,377 and 8,346,304 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively) | 83 | 83 |
Paid-in capital in excess of par | 42,140 | 42,076 |
Retained earnings | 177,000 | 174,702 |
Total shareholders' equity | 219,223 | 216,861 |
Total liabilities and shareholders' equity | $1,259,726 | $1,261,626 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Consolidated Balance Sheets | ||
Equipment held for operating lease, accumulated depreciation (in dollars) | $295,515 | $281,087 |
Operating lease related receivable, allowances (in dollars) | 282 | 215 |
Property, equipment & furnishings, accumulated depreciation (in dollars) | $9,726 | $9,420 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 8,293,377 | 8,346,304 |
Common stock, shares outstanding | 8,293,377 | 8,346,304 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
REVENUE | ||
Lease rent revenue | $25,097 | $26,900 |
Maintenance reserve revenue | 14,148 | 14,030 |
Spare parts sales | 2,151 | 418 |
Gain on sale of leased equipment | 662 | 231 |
Other revenue | 756 | 1,761 |
Total revenue | 42,814 | 43,340 |
EXPENSES | ||
Depreciation and amortization expense | 17,705 | 15,710 |
Cost of spare parts sales | 1,480 | 340 |
Write-down of equipment | 24 | 295 |
General and administrative | 9,972 | 9,685 |
Technical expense | 1,832 | 1,520 |
Net finance costs: | ||
Interest expense | 9,567 | 9,359 |
Gain on debt extinguishment | -1,151 | |
Net finance costs | 8,416 | 9,359 |
Total expenses | 39,429 | 36,909 |
Earnings from operations | 3,385 | 6,431 |
Earnings (loss) from joint ventures | 354 | 305 |
Income (loss) before income taxes | 3,739 | 6,736 |
Income tax (expense) benefit | -1,441 | -2,405 |
Net income | $2,298 | $4,331 |
Basic earnings per common share: (in dollars per share) | $0.29 | $0.55 |
Diluted earnings per common share: (in dollars per share) | $0.29 | $0.53 |
Average common shares outstanding (in shares) | 7,848 | 7,914 |
Diluted average common shares outstanding (in shares) | 8,044 | 8,129 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Consolidated Statements of Comprehensive Income | ||
Net income (loss) | $2,298 | $4,331 |
Derivative instruments | ||
Reclassification adjustment for losses (gains) included in net income | -125 | |
Net gain (loss) recognized in other comprehensive income | -125 | |
Tax benefit (expense) related to items of other comprehensive income | 46 | |
Other comprehensive income (loss) | -79 | |
Total comprehensive income | $2,298 | $4,252 |
Consolidated_Statements_of_Sha
Consolidated Statements of Shareholders' Equity (USD $) | Common Stock | Paid-in Capital in Excess of par | Accumulated Other Comprehensive Income/(Loss) | Retained Earnings | Total |
In Thousands, unless otherwise specified | |||||
Balances at Dec. 31, 2013 | $84 | $44,741 | $325 | $167,455 | $212,605 |
Balances (in shares) at Dec. 31, 2013 | 8,400 | ||||
Increase (Decrease) in Shareholders' Equity | |||||
Net income | 4,331 | 4,331 | |||
Unrealized gain from derivative instruments, net of tax expense of $46 | -79 | -79 | |||
Shares issued under stock compensation plans | 1 | 211 | 212 | ||
Shares issued under stock compensation plans (in shares) | 63 | ||||
Cancellation of restricted stock in satisfaction of withholding tax | -1 | -269 | -270 | ||
Cancellation of restricted stock in satisfaction of withholding tax (in shares) | -16 | ||||
Stock-based compensation, net of forfeitures | 758 | 758 | |||
Balances at Mar. 31, 2014 | 84 | 45,441 | 246 | 171,786 | 217,557 |
Balances (in shares) at Mar. 31, 2014 | 8,447 | ||||
Balances at Dec. 31, 2014 | 83 | 42,076 | 174,702 | 216,861 | |
Balances (in shares) at Dec. 31, 2014 | 8,346 | ||||
Increase (Decrease) in Shareholders' Equity | |||||
Net income | 2,298 | 2,298 | |||
Shares repurchased | -724 | -724 | |||
Shares repurchased (in shares) | -38 | ||||
Shares issued under stock compensation plans | 85 | 85 | |||
Shares issued under stock compensation plans (in shares) | 10 | ||||
Cancellation of restricted stock in satisfaction of withholding tax | -514 | -514 | |||
Cancellation of restricted stock in satisfaction of withholding tax (in shares) | -25 | ||||
Stock-based compensation, net of forfeitures | 1,074 | 1,074 | |||
Tax benefit on disqualified disposition of shares | 143 | 143 | |||
Balances at Mar. 31, 2015 | $83 | $42,140 | $177,000 | $219,223 | |
Balances (in shares) at Mar. 31, 2015 | 8,293 |
Consolidated_Statements_of_Sha1
Consolidated Statements of Shareholders' Equity (Parenthetical) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 |
Consolidated Statements of Shareholders' Equity | |
Net unrealized gain (loss) from derivative instruments, tax expense (benefit) | $46 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities: | ||
Net income | $2,298 | $4,331 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 17,705 | 15,710 |
Write-down of equipment | 24 | 295 |
Stock-based compensation expenses | 1,074 | 758 |
Amortization of deferred costs | 1,072 | 1,036 |
Amortization of interest rate derivative cost | -125 | |
Allowances and provisions | 67 | 2 |
Gain on sale of leased equipment | -662 | -231 |
Gain on debt extinguishment | -1,151 | |
Income from joint ventures | 354 | 305 |
Deferred income taxes | 1,357 | 2,405 |
Changes in assets and liabilities: | ||
Receivables | -5,751 | -366 |
Spare parts inventory | 305 | -428 |
Other assets | -2,237 | -501 |
Accounts payable and accrued expenses | -917 | 1,734 |
Restricted cash | 5,642 | -8,068 |
Maintenance reserves | 3,198 | 2,416 |
Security deposits | -98 | -357 |
Unearned lease revenue | -961 | 493 |
Net cash provided by operating activities | 20,611 | 18,799 |
Cash flows from investing activities: | ||
Proceeds from sale of equipment (net of selling expenses) | 2,405 | 5,688 |
Restricted cash for investing activities | 5,487 | |
Capital contribution to joint ventures | -630 | |
Purchase of equipment held for operating lease and for sale | -17,944 | -7,915 |
Purchase of property, equipment and furnishings | -3,667 | -156 |
Net cash used in investing activities | -19,836 | 3,104 |
Cash flows from financing activities: | ||
Proceeds from issuance of notes payable | 31,000 | 5,000 |
Debt issuance cost | -27 | |
Interest bearing security deposits | 1,518 | |
Proceeds from shares issued under stock compensation plans | 85 | 212 |
Cancellation of restricted stock units in satisfaction of withholding tax | -514 | -270 |
Excess tax benefit from stock-based compensation | 143 | |
Repurchase of common stock | -724 | |
Principal payments on notes payable | -28,623 | -25,506 |
Net cash provided by (used in) financing activities | 1,367 | -19,073 |
Increase (decrease) in cash and cash equivalents | 2,142 | 2,830 |
Cash and cash equivalents at beginning of period | 13,493 | 12,801 |
Cash and cash equivalents at end of period | 15,635 | 15,631 |
Net cash paid for: | ||
Interest | 8,753 | 8,811 |
Income Taxes | 5 | 55 |
Supplemental disclosures of non-cash investing activities: | ||
Purchase of aircraft and engines, liability incurred but not paid | 169 | 802 |
Engines and equipment, transferred from Held for Operating Lease to Held for Sale but not settled | $86 | $10,924 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | ||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies | ||||||||||||||||||||||||||||||
(a) Basis of Presentation: Our unaudited consolidated financial statements include the accounts of Willis Lease Finance Corporation and its subsidiaries (“we” or the “Company”) and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q. Pursuant to such rules and regulations, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. | |||||||||||||||||||||||||||||||
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal and recurring adjustments) necessary to present fairly our financial position as of March 31, 2015 and December 31, 2014, and the results of our operations for the three months ended March 31, 2015 and 2014, and our cash flows for the three months ended March 31, 2015 and 2014. The results of operations and cash flows for the period ended March 31, 2015 are not necessarily indicative of the results of operations or cash flows which may be reported for the remainder of 2015. | |||||||||||||||||||||||||||||||
(b) Fair Value Measurements: | |||||||||||||||||||||||||||||||
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. We use a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value which are the following: | |||||||||||||||||||||||||||||||
Level 1 - Quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||||||||||||||||
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||||||||||||||||||||||||
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |||||||||||||||||||||||||||||||
Assets Measured and Recorded at Fair Value on a Nonrecurring Basis | |||||||||||||||||||||||||||||||
We determine fair value of long-lived assets held and used, such as Equipment held for operating lease and Equipment held for sale, by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. | |||||||||||||||||||||||||||||||
The following table shows by level, within the fair value hierarchy, the Company’s assets measured at fair value on a nonrecurring basis as of March 31, 2015 and 2014, and the gains (losses) recorded during the three months ended March 31, 2015 and 2014 on those assets: | |||||||||||||||||||||||||||||||
Assets at Fair Value | Total Losses | ||||||||||||||||||||||||||||||
March 31, 2015 | March 31, 2014 | Three Months Ended March 31, | |||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | 2015 | 2014 | ||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||||
Equipment held for sale | $ | 17,600 | $ | — | $ | 14,833 | $ | 2,767 | $ | 30,376 | $ | — | $ | 19,844 | $ | 10,532 | $ | -24 | $ | -295 | |||||||||||
Total | $ | 17,600 | $ | — | $ | 14,833 | $ | 2,767 | $ | 30,376 | $ | — | $ | 19,844 | $ | 10,532 | $ | -24 | $ | -295 | |||||||||||
At March 31, 2015, the Company used Level 2 inputs to measure the fair value of certain engines and equipment held for sale. Due to the absence of quoted market prices of certain engines that were held for sale and not consigned to third parties, the fair values of these assets are categorized as Level 3. The fair value of these assets were based on management’s estimate considering projected future sales proceeds at March 31, 2015 and March 31, 2014. | |||||||||||||||||||||||||||||||
An impairment charge is recorded when the carrying value of the asset exceeds its fair value. A write-down of equipment totaling $24,000 was recorded in the three months ended March 31, 2015 based upon a comparison of the asset net book value with the net proceeds expected from part sales arising from part-out of an engine. An asset write-down of $0.3 million was recorded in the three months ended March 31, 2014 based upon a comparison of the asset net book value with the net proceeds expected from part sales arising from part-out of an engine. | |||||||||||||||||||||||||||||||
(c) Recent Accounting Pronouncements: | |||||||||||||||||||||||||||||||
In May 2014, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update, Revenue from Contracts with Customers, which supersedes previous revenue recognition guidance. The new standard requires that a company recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. Companies will need to use more judgment and estimates than under the guidance currently in effect, including estimating the amount of variable revenue to recognize over each identified performance obligation. Additional disclosures will be required to help users of financial statements understand the nature, amount and timing of revenue and cash flows arising from contracts. In April 2015, the FASB voted for a one-year deferral of the effective date of the new revenue recognition standard. If approved, the new standard will become effective for the Company beginning with the first quarter 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements. | |||||||||||||||||||||||||||||||
Management_Estimates
Management Estimates | 3 Months Ended |
Mar. 31, 2015 | |
Management Estimates | |
Management Estimates | 2. Management Estimates |
These financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. | |
The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to residual values, estimated asset lives, impairments and bad debts. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. | |
Management believes that the accounting policies on revenue recognition, maintenance reserves and expenditures, useful life of equipment, asset residual values, asset impairment and allowance for doubtful accounts are critical to the results of operations. | |
If the useful lives or residual values are lower than those estimated by us, upon sale of the asset a loss may be realized. Significant management judgment is required in the forecasting of future operating results, which are used in the preparation of projected undiscounted cash-flows and should different conditions prevail, material impairment write-downs may occur. | |
Commitments_Contingencies_Guar
Commitments, Contingencies, Guarantees and Indemnities | 3 Months Ended |
Mar. 31, 2015 | |
Commitments, Contingencies, Guarantees and Indemnities | |
Commitments, Contingencies, Guarantees and Indemnities | 3. Commitments, Contingencies, Guarantees and Indemnities |
We have made a purchase commitment to secure the purchase of an engine and related equipment for a gross purchase price of $23.1 million, for delivery in 2015. As of March 31, 2015, a non-refundable deposit paid related to this purchase commitment was $6.8 million. | |
Investments
Investments | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Investments | ||||||||||
Investments | 4. Investments | |||||||||
On May 25, 2011, we entered into an agreement with Mitsui & Co., Ltd. to participate in a joint venture formed as a Dublin-based Irish limited company — Willis Mitsui & Company Engine Support Limited (“WMES”) for the purpose of acquiring and leasing jet engines. Each partner holds a fifty percent interest in the joint venture. The initial capital contribution by the Company for its investment in WMES was $8.0 million. The Company provided the initial lease portfolio by transferring 7 engines to the joint venture in June 2011. In addition, the Company made $20.4 million capital contributions to WMES in from 2011 through 2014 for the purchase of 21 engines from third parties, increasing the number of engines in the lease portfolio to 28. The Company made $0.6 million of capital contributions to WMES and recorded $0.4 million as a result of the Company’s share of WMES reported earnings during the three months ended March 31, 2015. | ||||||||||
On June 3, 2014 we entered into an agreement with China Aviation Supplies Import & Export Corporation Limited (“CASC”) to participate in a joint venture named CASC Willis Engine Lease Company Limited (“CASC Willis”), a new joint venture based in Shanghai, China. Each partner holds a fifty percent interest in the joint venture. In October 2014, each partner made a $15.0 million initial capital contribution representing the up-front funding for the new joint venture. The new company will acquire and lease jet engines to Chinese airlines and will concentrate on meeting the fast growing demand for leased commercial aircraft engines and aviation assets in the People’s Republic of China. | ||||||||||
Three Months Ended March 31, 2015 | WMES | CASC | Total | |||||||
(in thousands) | ||||||||||
Investment in joint ventures as of December 31, 2014 | $ | 26,672 | $ | 14,918 | $ | 41,590 | ||||
Capital contribution | 630 | — | 630 | |||||||
Earnings (loss) from joint venture | 361 | -7 | 354 | |||||||
Distribution | — | — | — | |||||||
Investment in joint ventures as of March 31, 2015 | $ | 27,663 | $ | 14,911 | $ | 42,574 | ||||
Long_Term_Debt
Long Term Debt | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Long Term Debt. | ||||
Long Term Debt | 5. Long Term Debt | |||
At March 31, 2015, notes payable consists of loans totaling $842.2 million, payable over periods of approximately 2.5 to 9.3 years with interest rates varying between approximately 2.4% and 5.5%. | ||||
At March 31, 2015, we had a revolving credit facility to finance the acquisition of aircraft engines for lease as well as for general working capital purposes, with the amounts drawn under the facility not to exceed that which is allowed under the borrowing base as defined by the credit agreement. On June 4, 2014, we entered into a Second Amended and Restated Credit Agreement which increased this revolving credit facility to $700.0 million from $450.0 million and extended the maturity date by five years to June 2019. Debt issuance costs totaling $4.9 million were incurred related to the new facility. As of March 31, 2015 and December 31, 2014, $239.0 million and $270.0 million were available under this facility, respectively. On a quarterly basis, the interest rate is adjusted based on the Company’s leverage ratio, as calculated under the terms of the revolving credit facility. Based on the Company’s leverage ratio of 4.20 at December 31, 2014, the interest rate on this facility is one-month LIBOR plus 2.75% as of March 31, 2015. Under the revolving credit facility, all subsidiaries except WEST II and WOLF jointly and severally guarantee payment and performance of the terms of the loan agreement. The guarantee would be triggered by a default under the agreement. | ||||
On September 17, 2012, we closed an asset-backed securitization (“ABS”) through a newly-created, bankruptcy-remote, Delaware statutory trust, Willis Engine Securitization Trust II, or “WEST II”, of which the Company is the sole beneficiary. WEST II issued and sold $390 million aggregate principal amount of Class 2012-A Term Notes (the “Notes”) and received $384.9 million in net proceeds. We used these funds, net of transaction expenses and swap termination costs, in combination with our revolving credit facility to pay off the prior WEST notes totaling $435.9 million. At closing, 22 engines were pledged as collateral from WEST to the Company’s revolving credit facility, which provided the remaining funds to pay off the WEST notes. | ||||
The assets and liabilities of WEST II will remain on the Company’s balance sheet. The current portfolio of 68 commercial jet aircraft engines and leases thereof secures the obligations of WEST II under the ABS. The Notes have no fixed amortization and are payable solely from revenue received by WEST II from the engines and the engine leases, after payment of certain expenses of WEST II. The Notes bear interest at a fixed rate of 5.50% per annum. The Notes may be accelerated upon the occurrence of certain events, including the failure to pay interest for five business days after the due date thereof. The Notes are expected to be paid 10 years from the issuance date by September 17, 2022. The legal final maturity of the Notes is September 15, 2037. | ||||
In connection with the transactions described above, effective September 17, 2012, the Company entered into a Servicing Agreement and Administrative Agency Agreement with WEST II to provide certain engine, lease management and reporting functions for WEST II in return for fees based on a percentage of collected lease revenues and asset sales. Because WEST II is consolidated for financial statement reporting purposes, all fees eliminate upon consolidation. | ||||
At March 31, 2015 and December 31, 2014, $346.9 million and $351.9 million of WEST II term notes were outstanding, respectively. The assets of WEST II are not available to satisfy our obligations or any of our affiliates other than the obligations specific to WEST II. WEST II is consolidated for financial statement presentation purposes. WEST II’s ability to make distributions and pay dividends to the Company is subject to the prior payments of its debt and other obligations and WEST II’s maintenance of adequate reserves and capital. Under WEST II, cash is collected in a restricted account, which is used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of maintenance reserve payments and all lease security deposits are accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. Cash from maintenance reserve payments are held in the restricted cash account equal to the maintenance obligations projected for the subsequent six months, and are subject to a minimum balance of $9.0 million. | ||||
On March 25, 2015, we paid off the remaining balance of the two term notes, associated with the WOLF assets, of $23.1 million at a discount. This transaction resulting in a $1.2 million gain recorded for the extinguishment of debt included in our statement of operations for the three months ended March 31, 2015. | ||||
On July 16, 2014, we closed on a loan for a ten year term totaling $13.4 million. Interest is payable at a fixed rate of 2.83% for the initial five years of the loan and principal and interest is paid monthly. The loan provided 100% of the funding for the purchase of a corporate aircraft. The balance outstanding on this loan is $12.6 million and $12.9 million as of March 31, 2015 and December 31, 2014, respectively. | ||||
On January 10, 2014, we extended the term of an existing loan that was scheduled to mature on January 11, 2014. The loan has a term of 4 years with a maturity date of January 11, 2018. Interest is payable at one-month LIBOR plus 2.25% and principal and interest is paid quarterly. The loan is secured by three engines. The balance outstanding on this loan is $14.1 million and $14.5 million as of March 31, 2015 and December 31, 2014, respectively. | ||||
On September 28, 2012, we closed on a loan for a five year term totaling $8.7 million. Interest is payable at a fixed rate of 5.50% and principal and interest is paid quarterly. The loan is secured by one engine. The funds were used to purchase the engine secured under the loan. The balance outstanding on this loan is $7.6 million and $7.7 million as of March 31, 2015 and December 31, 2014, respectively. | ||||
One-month LIBOR was 0.18% and 0.17% at March 31, 2015 and December 31, 2014, respectively. | ||||
The following is a summary of the aggregate maturities of notes payable at March 31, 2015: | ||||
Year | (in thousands) | |||
2015 | $ | 17,716 | ||
2016 | 24,809 | |||
2017 | 32,004 | |||
2018 | 35,099 | |||
2019 | 486,266 | |||
Thereafter | 246,283 | |||
$ | 842,177 | |||
Derivative_Instruments
Derivative Instruments | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Derivative Instruments | ||||||||||
Derivative Instruments | 6. Derivative Instruments | |||||||||
We have periodically held interest rate derivative instruments to mitigate exposure to changes in interest rates, in particular one-month LIBOR, with $475.1 million and $468.5 million of our borrowings at March 31, 2015 and December 31, 2014, respectively, at variable rates. As a matter of policy, we do not use derivatives for speculative purposes. We currently have no interest rate swap agreements in place. During 2013 we were a party to one interest rate swap agreement with a notional outstanding amount of $100.0 million with a fixed rate of 2.10%. The swap agreement expired in November 2013. The remaining effective portion of these hedges at the swap expiration date is being amortized into earnings over the term of the underlying borrowings. We recorded a $0.1 million benefit to net finance costs during the three months ended March 31, 2014. | ||||||||||
The Company estimates the fair value of derivative instruments using a discounted cash flow technique and uses creditworthiness inputs that can be corroborated by observable market data evaluating the Company’s and counterparties’ risk of non-performance. Valuation of the derivative instruments requires certain assumptions for underlying variables and the use of different assumptions would result in a different valuation. We apply hedge accounting and account for the change in fair value of our cash flow hedges through other comprehensive income for all derivative instruments. | ||||||||||
Earnings Effects of Derivative Instruments on the Consolidated Statements of Income | ||||||||||
The following table provides information about the income effects of our cash flow hedging relationships for the three months ended March 31, 2015 and 2014: | ||||||||||
Amount of (Gain) Loss Recognized | ||||||||||
on Derivatives in the | ||||||||||
Statements of Income | ||||||||||
Location of (Gain) Loss | Three Months Ended | |||||||||
Derivatives in Cash Flow | Recognized on Derivatives in the | March 31, | ||||||||
Hedging Relationships | Statements of Income | 2015 | 2014 | |||||||
(in thousands) | ||||||||||
Interest rate contracts | Interest expense | $ | — | $ | -125 | |||||
Total | $ | — | $ | -125 | ||||||
Our derivatives are designated in a cash flow hedging relationship with the effective portion of the change in fair value of the derivative reported in the cash flow hedges subaccount of accumulated other comprehensive income. | ||||||||||
Effect of Derivative Instruments on Cash Flow Hedging | ||||||||||
The following tables provide additional information about the financial statement effects related to our cash flow hedges for the three months ended March 31, 2015 and 2014: | ||||||||||
Location of Gain | Amount of Gain Reclassified from | |||||||||
Reclassified | Accumulated OCI into Income | |||||||||
from Accumulated OCI into | (Effective Portion) | |||||||||
Income | Three Months Ended March 31, | |||||||||
(Effective Portion) | 2015 | 2014 | ||||||||
(in thousands) | ||||||||||
Interest expense | $ | — | $ | 125 | ||||||
Total | $ | — | $ | 125 | ||||||
The effective portion of the change in fair value on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period during which the transaction being hedged affects earnings or it is probable that the forecasted transaction will not occur. The ineffective portion of the hedges is recorded in earnings in the current period. However, these are highly effective hedges and no significant ineffectiveness occurred in either of the periods presented. | ||||||||||
Counterparty Credit Risk | ||||||||||
The Company evaluates the creditworthiness of the counterparties under its hedging agreements. The swap counterparty for the interest rate swap in place during the first eleven months of 2013 was a large financial institution in the United States that possessed an investment grade credit rating. Based on this rating, the Company believes that the counterparty was creditworthy and that their continuing performance under the hedging agreement was probable, and had not required the counterparty to provide collateral or other security to the Company. | ||||||||||
StockBased_Compensation_Plans
Stock-Based Compensation Plans | 3 Months Ended | ||
Mar. 31, 2015 | |||
Stock-Based Compensation Plans | |||
Stock-Based Compensation Plans | 7. Stock-Based Compensation Plans | ||
Our 2007 Stock Incentive Plan (the 2007 Plan) was adopted on May 24, 2007. Under this 2007 Plan, a total of 2,000,000 shares are authorized for stock based compensation in the form of either restricted stock or stock options. 2,122,272 shares of restricted stock were granted under the 2007 Stock Incentive Plan by March 31, 2015. Of this amount, 135,368 shares of restricted stock were withheld or forfeited and returned to the pool of shares which could be granted under the 2007 Stock Incentive Plan resulting in a net number of 13,096 shares which were available as of March 31, 2015 for future issuance under the 2007 Incentive Plan. The fair value of the restricted stock awards equaled the stock price at the date of grants. The following table summarizes restricted stock activity during the years ended December 31, 2013, December 31, 2014 and the three months ended March 31, 2015. | |||
Shares | |||
Restricted stock at December 31, 2012 | 682,654 | ||
Granted in 2013 (vesting over 4 years) | 130,000 | ||
Granted in 2013 (vesting on first anniversary from date of issuance) | 21,408 | ||
Cancelled in 2013 | -60,110 | ||
Vested in 2013 | -258,822 | ||
Restricted stock at December 31, 2013 | 515,130 | ||
Granted in 2014 (vesting over 3 years) | 174,500 | ||
Granted in 2014 (vesting over 4 years) | 13,000 | ||
Granted in 2014 (vesting on first anniversary from date of issuance) | 50,208 | ||
Cancelled in 2014 | -5,750 | ||
Vested in 2014 | -221,732 | ||
Restricted stock at December 31, 2014 | 525,356 | ||
Granted in 2015 (vesting over 4 years) | 5,000 | ||
Vested in 2015 | -78,302 | ||
Restricted stock at March 31, 2015 | 452,054 | ||
All cancelled shares have reverted to the share reserve and are available for issuance at a later date, in accordance with the 2007 Plan. | |||
Our accounting policy is to recognize the associated expense of such awards on a straight-line basis over the vesting period. At March 31, 2015, the stock compensation expense related to the restricted stock awards that will be recognized over the average remaining vesting period of 1.9 years totals $5.1 million. At March 31, 2015, the intrinsic value of unvested restricted stock awards is $8.4 million. The 2007 Plan terminates on May 24, 2017. | |||
In the three months ended March 31, 2015, no options under the 1996 Stock Options/Stock Issuance Plan (the 1996 Plan) were exercised. As of March 31, 2015, there are 49,000 stock options remaining under the 1996 Plan which have an intrinsic value of $0.5 million. | |||
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Taxes | |
Income Taxes | 8. Income Taxes |
Income tax expense for the three months ended March 31, 2015 and 2014 was $1.4 million and $2.4 million, respectively. The effective tax rate for the three months ended March 31, 2015 and 2014 was 38.5% and 35.7%, respectively. It is more likely than not that the income from our investment in WMES will be in a liability position in 2015. This resulted in the effective tax rate for the three months ended March 31, 2015 increasing. | |
The Company records tax expense or benefit for unusual or infrequent items discretely in the period in which they occur. Our tax rate is subject to change based on changes in the mix of assets leased to domestic and foreign lessees, the proportions of revenue generated within and outside of California, the amount of executive compensation exceeding $1.0 million as defined in IRS code 162(m) and numerous other factors, including changes in tax law. | |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2015 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 9. Fair Value of Financial Instruments |
The carrying amount reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, operating lease related receivable, notes receivable and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. | |
The carrying amount of the Company’s outstanding balance on its Notes Payable as of March 31, 2015 and December 31, 2014 was estimated to have a fair value of approximately $852.4 million and $847.0 million, respectively, based on the fair value of estimated future payments calculated using the prevailing interest rates at each year end. | |
Operating_Segments
Operating Segments | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Operating Segments | |||||||||||||
Operating Segments | 10. Operating Segments | ||||||||||||
The Company operates in two business segments: (i) Leasing and Related Operations which involves acquiring and leasing, primarily pursuant to operating leases, commercial aircraft, aircraft engines and other aircraft equipment and the selective purchase and resale of commercial aircraft engines and other aircraft equipment and (ii) Spare Parts Sales which involves the purchase and resale of after-market engine and airframe parts, whole engines, engine modules and portable aircraft components and leasing of engines destined for disassembly and sale of parts. | |||||||||||||
The Company evaluates the performance of each of the segments based on profit or loss after general and administrative expenses and inter-company allocation of interest expense. While the Company believes there are synergies between the two business segments, the segments are managed separately because each requires different business strategies. | |||||||||||||
The following tables present a summary of the operating segments (amounts in thousands): | |||||||||||||
Leasing and | |||||||||||||
For the three months ended March 31, 2015 | Related Operations | Spare Parts Sales | Eliminations (1) | Total | |||||||||
Revenue: | |||||||||||||
Lease rent revenue | $ | 25,097 | $ | — | $ | — | $ | 25,097 | |||||
Maintenance reserve revenue | 14,148 | — | — | 14,148 | |||||||||
Spare parts sales | — | 2,151 | — | 2,151 | |||||||||
Gain on sale of leased equipment | 662 | — | — | 662 | |||||||||
Other revenue | 617 | 295 | -156 | 756 | |||||||||
Total revenue | 40,524 | 2,446 | -156 | 42,814 | |||||||||
Expenses: | |||||||||||||
Depreciation and amortization expense | 17,633 | 72 | — | 17,705 | |||||||||
Cost of spare parts sales | — | 1,480 | — | 1,480 | |||||||||
General and administrative | 9,337 | 635 | — | 9,972 | |||||||||
Net finance costs | 8,326 | 90 | — | 8,416 | |||||||||
Other expense | 1,856 | — | — | 1,856 | |||||||||
Total expenses | 37,152 | 2,277 | — | 39,429 | |||||||||
Earnings from operations | $ | 3,372 | $ | 169 | $ | -156 | $ | 3,385 | |||||
(1) Represents revenue generated between our | |||||||||||||
operating segments | |||||||||||||
Leasing and | |||||||||||||
For the three months ended March 31, 2014 | Related Operations | Spare Parts Sales | Eliminations | Total | |||||||||
Revenue: | |||||||||||||
Lease rent revenue | $ | 26,900 | $ | — | $ | — | $ | 26,900 | |||||
Maintenance reserve revenue | 14,030 | — | — | 14,030 | |||||||||
Spare parts sales | — | 418 | — | 418 | |||||||||
Gain on sale of leased equipment | 231 | — | — | 231 | |||||||||
Other revenue | 1,046 | 715 | — | 1,761 | |||||||||
Total revenue | 42,207 | 1,133 | — | 43,340 | |||||||||
Expenses: | |||||||||||||
Depreciation and amortization expense | 15,638 | 72 | — | 15,710 | |||||||||
Cost of spare parts sales | — | 340 | — | 340 | |||||||||
General and administrative | 9,021 | 664 | — | 9,685 | |||||||||
Net finance costs | 9,359 | — | — | 9,359 | |||||||||
Other expense | 1,815 | — | — | 1,815 | |||||||||
Total expenses | 35,833 | 1,076 | — | 36,909 | |||||||||
Earnings from operations | $ | 6,374 | $ | 57 | $ | — | $ | 6,431 | |||||
Total assets as of March 31, 2015 | $ | 1,240,865 | $ | 18,861 | $ | — | $ | 1,259,726 | |||||
Total assets as of December 31, 2014 | $ | 1,241,837 | $ | 19,789 | $ | — | $ | 1,261,626 | |||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||||||||||||||||
Basis of Presentation: | (a) Basis of Presentation: Our unaudited consolidated financial statements include the accounts of Willis Lease Finance Corporation and its subsidiaries (“we” or the “Company”) and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q. Pursuant to such rules and regulations, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. | ||||||||||||||||||||||||||||||
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal and recurring adjustments) necessary to present fairly our financial position as of March 31, 2015 and December 31, 2014, and the results of our operations for the three months ended March 31, 2015 and 2014, and our cash flows for the three months ended March 31, 2015 and 2014. The results of operations and cash flows for the period ended March 31, 2015 are not necessarily indicative of the results of operations or cash flows which may be reported for the remainder of 2015. | |||||||||||||||||||||||||||||||
Fair Value Measurements | (b) Fair Value Measurements: | ||||||||||||||||||||||||||||||
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. We use a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value which are the following: | |||||||||||||||||||||||||||||||
Level 1 - Quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||||||||||||||||
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||||||||||||||||||||||||
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |||||||||||||||||||||||||||||||
Assets Measured and Recorded at Fair Value on a Nonrecurring Basis | |||||||||||||||||||||||||||||||
We determine fair value of long-lived assets held and used, such as Equipment held for operating lease and Equipment held for sale, by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. | |||||||||||||||||||||||||||||||
The following table shows by level, within the fair value hierarchy, the Company’s assets measured at fair value on a nonrecurring basis as of March 31, 2015 and 2014, and the gains (losses) recorded during the three months ended March 31, 2015 and 2014 on those assets: | |||||||||||||||||||||||||||||||
Assets at Fair Value | Total Losses | ||||||||||||||||||||||||||||||
March 31, 2015 | March 31, 2014 | Three Months Ended March 31, | |||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | 2015 | 2014 | ||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||||
Equipment held for sale | $ | 17,600 | $ | — | $ | 14,833 | $ | 2,767 | $ | 30,376 | $ | — | $ | 19,844 | $ | 10,532 | $ | -24 | $ | -295 | |||||||||||
Total | $ | 17,600 | $ | — | $ | 14,833 | $ | 2,767 | $ | 30,376 | $ | — | $ | 19,844 | $ | 10,532 | $ | -24 | $ | -295 | |||||||||||
At March 31, 2015, the Company used Level 2 inputs to measure the fair value of certain engines and equipment held for sale. Due to the absence of quoted market prices of certain engines that were held for sale and not consigned to third parties, the fair values of these assets are categorized as Level 3. The fair value of these assets were based on management’s estimate considering projected future sales proceeds at March 31, 2015 and March 31, 2014. | |||||||||||||||||||||||||||||||
An impairment charge is recorded when the carrying value of the asset exceeds its fair value. A write-down of equipment totaling $24,000 was recorded in the three months ended March 31, 2015 based upon a comparison of the asset net book value with the net proceeds expected from part sales arising from part-out of an engine. An asset write-down of $0.3 million was recorded in the three months ended March 31, 2014 based upon a comparison of the asset net book value with the net proceeds expected from part sales arising from part-out of an engine. | |||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | (c) Recent Accounting Pronouncements: | ||||||||||||||||||||||||||||||
In May 2014, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update, Revenue from Contracts with Customers, which supersedes previous revenue recognition guidance. The new standard requires that a company recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. Companies will need to use more judgment and estimates than under the guidance currently in effect, including estimating the amount of variable revenue to recognize over each identified performance obligation. Additional disclosures will be required to help users of financial statements understand the nature, amount and timing of revenue and cash flows arising from contracts. In April 2015, the FASB voted for a one-year deferral of the effective date of the new revenue recognition standard. If approved, the new standard will become effective for the Company beginning with the first quarter 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements | |||||||||||||||||||||||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||||||||||||||||
Schedule of fair value hierarchy of assets measured on nonrecurring basis and gain (losses) recorded | |||||||||||||||||||||||||||||||
Assets at Fair Value | Total Losses | ||||||||||||||||||||||||||||||
March 31, 2015 | March 31, 2014 | Three Months Ended March 31, | |||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | 2015 | 2014 | ||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||||
Equipment held for sale | $ | 17,600 | $ | — | $ | 14,833 | $ | 2,767 | $ | 30,376 | $ | — | $ | 19,844 | $ | 10,532 | $ | -24 | $ | -295 | |||||||||||
Total | $ | 17,600 | $ | — | $ | 14,833 | $ | 2,767 | $ | 30,376 | $ | — | $ | 19,844 | $ | 10,532 | $ | -24 | $ | -295 | |||||||||||
Investments_Tables
Investments (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Investments | ||||||||||
Schedule of investments | ||||||||||
Three Months Ended March 31, 2015 | WMES | CASC | Total | |||||||
(in thousands) | ||||||||||
Investment in joint ventures as of December 31, 2014 | $ | 26,672 | $ | 14,918 | $ | 41,590 | ||||
Capital contribution | 630 | — | 630 | |||||||
Earnings (loss) from joint venture | 361 | -7 | 354 | |||||||
Distribution | — | — | — | |||||||
Investment in joint ventures as of March 31, 2015 | $ | 27,663 | $ | 14,911 | $ | 42,574 | ||||
Long_Term_Debt_Tables
Long Term Debt (Tables) | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Long Term Debt. | ||||
Summary of the aggregate maturities of notes payable | ||||
Year | (in thousands) | |||
2015 | $ | 17,716 | ||
2016 | 24,809 | |||
2017 | 32,004 | |||
2018 | 35,099 | |||
2019 | 486,266 | |||
Thereafter | 246,283 | |||
$ | 842,177 | |||
Derivative_Instruments_Tables
Derivative Instruments (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Derivative Instruments | ||||||||||
Schedule of income effects of cash flow hedging relationships | ||||||||||
Amount of (Gain) Loss Recognized | ||||||||||
on Derivatives in the | ||||||||||
Statements of Income | ||||||||||
Location of (Gain) Loss | Three Months Ended | |||||||||
Derivatives in Cash Flow | Recognized on Derivatives in the | March 31, | ||||||||
Hedging Relationships | Statements of Income | 2015 | 2014 | |||||||
(in thousands) | ||||||||||
Interest rate contracts | Interest expense | $ | — | $ | -125 | |||||
Total | $ | — | $ | -125 | ||||||
Schedule of information about financial statement effects related to cash flow hedges | ||||||||||
Location of Gain | Amount of Gain Reclassified from | |||||||||
Reclassified | Accumulated OCI into Income | |||||||||
from Accumulated OCI into | (Effective Portion) | |||||||||
Income | Three Months Ended March 31, | |||||||||
(Effective Portion) | 2015 | 2014 | ||||||||
(in thousands) | ||||||||||
Interest expense | $ | — | $ | 125 | ||||||
Total | $ | — | $ | 125 | ||||||
StockBased_Compensation_Plans_
Stock-Based Compensation Plans (Tables) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Stock-Based Compensation Plans | |||
Summary of activity under the 2007 Plan | |||
Shares | |||
Restricted stock at December 31, 2012 | 682,654 | ||
Granted in 2013 (vesting over 4 years) | 130,000 | ||
Granted in 2013 (vesting on first anniversary from date of issuance) | 21,408 | ||
Cancelled in 2013 | -60,110 | ||
Vested in 2013 | -258,822 | ||
Restricted stock at December 31, 2013 | 515,130 | ||
Granted in 2014 (vesting over 3 years) | 174,500 | ||
Granted in 2014 (vesting over 4 years) | 13,000 | ||
Granted in 2014 (vesting on first anniversary from date of issuance) | 50,208 | ||
Cancelled in 2014 | -5,750 | ||
Vested in 2014 | -221,732 | ||
Restricted stock at December 31, 2014 | 525,356 | ||
Granted in 2015 (vesting over 4 years) | 5,000 | ||
Vested in 2015 | -78,302 | ||
Restricted stock at March 31, 2015 | 452,054 | ||
Operating_Segments_Tables
Operating Segments (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Operating Segments | |||||||||||||
Summary of the operating segments | |||||||||||||
Leasing and | |||||||||||||
For the three months ended March 31, 2015 | Related Operations | Spare Parts Sales | Eliminations (1) | Total | |||||||||
Revenue: | |||||||||||||
Lease rent revenue | $ | 25,097 | $ | — | $ | — | $ | 25,097 | |||||
Maintenance reserve revenue | 14,148 | — | — | 14,148 | |||||||||
Spare parts sales | — | 2,151 | — | 2,151 | |||||||||
Gain on sale of leased equipment | 662 | — | — | 662 | |||||||||
Other revenue | 617 | 295 | -156 | 756 | |||||||||
Total revenue | 40,524 | 2,446 | -156 | 42,814 | |||||||||
Expenses: | |||||||||||||
Depreciation and amortization expense | 17,633 | 72 | — | 17,705 | |||||||||
Cost of spare parts sales | — | 1,480 | — | 1,480 | |||||||||
General and administrative | 9,337 | 635 | — | 9,972 | |||||||||
Net finance costs | 8,326 | 90 | — | 8,416 | |||||||||
Other expense | 1,856 | — | — | 1,856 | |||||||||
Total expenses | 37,152 | 2,277 | — | 39,429 | |||||||||
Earnings from operations | $ | 3,372 | $ | 169 | $ | -156 | $ | 3,385 | |||||
(1) Represents revenue generated between our | |||||||||||||
operating segments | |||||||||||||
Leasing and | |||||||||||||
For the three months ended March 31, 2014 | Related Operations | Spare Parts Sales | Eliminations | Total | |||||||||
Revenue: | |||||||||||||
Lease rent revenue | $ | 26,900 | $ | — | $ | — | $ | 26,900 | |||||
Maintenance reserve revenue | 14,030 | — | — | 14,030 | |||||||||
Spare parts sales | — | 418 | — | 418 | |||||||||
Gain on sale of leased equipment | 231 | — | — | 231 | |||||||||
Other revenue | 1,046 | 715 | — | 1,761 | |||||||||
Total revenue | 42,207 | 1,133 | — | 43,340 | |||||||||
Expenses: | |||||||||||||
Depreciation and amortization expense | 15,638 | 72 | — | 15,710 | |||||||||
Cost of spare parts sales | — | 340 | — | 340 | |||||||||
General and administrative | 9,021 | 664 | — | 9,685 | |||||||||
Net finance costs | 9,359 | — | — | 9,359 | |||||||||
Other expense | 1,815 | — | — | 1,815 | |||||||||
Total expenses | 35,833 | 1,076 | — | 36,909 | |||||||||
Earnings from operations | $ | 6,374 | $ | 57 | $ | — | $ | 6,431 | |||||
Total assets as of March 31, 2015 | $ | 1,240,865 | $ | 18,861 | $ | — | $ | 1,259,726 | |||||
Total assets as of December 31, 2014 | $ | 1,241,837 | $ | 19,789 | $ | — | $ | 1,261,626 | |||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Assets at fair value and gains (losses) recorded | |||
Equipment held for sale | $17,600,000 | $18,114,000 | |
Total losses on assets | -24,000 | -295,000 | |
Total losses on equipment held for sale | -24,000 | -295,000 | |
Asset write-down | 24,000 | 295,000 | |
Nonrecurring | Total | |||
Assets at fair value and gains (losses) recorded | |||
Equipment held for sale | 17,600,000 | 30,376,000 | |
Assets at fair value | 17,600,000 | 30,376,000 | |
Nonrecurring | Level 2 | |||
Assets at fair value and gains (losses) recorded | |||
Equipment held for sale | 14,833,000 | 19,844,000 | |
Assets at fair value | 14,833,000 | 19,844,000 | |
Nonrecurring | Level 3 | |||
Assets at fair value and gains (losses) recorded | |||
Equipment held for sale | 2,767,000 | 10,532,000 | |
Assets at fair value | 2,767,000 | 10,532,000 | |
Nonrecurring | Engines and related equipment | |||
Assets at fair value and gains (losses) recorded | |||
Asset Write Down After Adjustments | $300,000 |
Commitments_Contingencies_Guar1
Commitments, Contingencies, Guarantees and Indemnities (Details 2) (Engines Aircraft and Related Equipment [Member], USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 |
Engines Aircraft and Related Equipment [Member] | |
Purchase commitments | |
Purchase price | $23.10 |
Non-refundable deposits paid | $6.80 |
Investments_Details
Investments (Details) (USD $) | 3 Months Ended | 1 Months Ended | 46 Months Ended | 1 Months Ended | |||
Mar. 31, 2015 | Jun. 30, 2011 | Mar. 31, 2015 | Oct. 31, 2014 | Dec. 31, 2014 | 25-May-11 | Jun. 03, 2014 | |
engine | engine | ||||||
Investments | |||||||
Investment in joint venture | $42,574,000 | $42,574,000 | $41,590,000 | ||||
Capital contribution to joint ventures | -630,000 | ||||||
WMES | |||||||
Investments | |||||||
Ownership interest (as a percent) | 50.00% | 50.00% | |||||
Initial capital contribution | 8,000,000 | ||||||
Number of engines transferred to the joint venture | 7 | ||||||
Number of engines purchased | 21 | ||||||
Capital contributions to date | 20,400,000 | 20,400,000 | |||||
Investment in joint venture | 27,663,000 | 27,663,000 | 26,672,000 | ||||
Number of engines in lease portfolio | 28 | ||||||
Capital contribution to joint ventures | -630,000 | ||||||
CASC | |||||||
Investments | |||||||
Ownership interest (as a percent) | 50.00% | ||||||
Investment in joint venture | 14,911,000 | 14,911,000 | 14,918,000 | ||||
Capital contribution to joint ventures | $15,000,000 |
Investments_Details_2
Investments (Details 2) (USD $) | 3 Months Ended | 1 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Oct. 31, 2014 |
Investments | |||
Investment in WMES joint ventures at beginning of the period | $41,590 | ||
Capital contribution | 630 | ||
Earnings from joint ventures | 354 | 305 | |
Investment in WMES joint ventures at end of the period | 42,574 | ||
WMES | |||
Investments | |||
Investment in WMES joint ventures at beginning of the period | 26,672 | ||
Capital contribution | 630 | ||
Earnings from joint ventures | 361 | ||
Investment in WMES joint ventures at end of the period | 27,663 | ||
CASC | |||
Investments | |||
Investment in WMES joint ventures at beginning of the period | 14,918 | ||
Capital contribution | -15,000 | ||
Earnings from joint ventures | -7 | ||
Investment in WMES joint ventures at end of the period | $14,911 |
Long_Term_Debt_Details
Long Term Debt (Details) (USD $) | 0 Months Ended | 3 Months Ended | ||
In Millions, unless otherwise specified | Jun. 04, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Jun. 04, 2014 |
Notes payable Member | ||||
Long Term Debt | ||||
Interest rate, minimum (as a percent) | 2.40% | |||
Interest rate, maximum (as a percent) | 5.50% | |||
Notes payable Member | Minimum | ||||
Long Term Debt | ||||
Maturity term | 2 years 6 months | |||
Notes payable Member | Maximum | ||||
Long Term Debt | ||||
Maturity term | 9 years 3 months 18 days | |||
Revolving credit facility | ||||
Long Term Debt | ||||
Maximum borrowing capacity under credit facility | $700 | $700 | ||
Maximum borrowing capacity under credit facility before amendment | 450 | 450 | ||
Extended maturity term | 5 years | |||
Debt issuance costs | 4.9 | |||
Remaining borrowing capacity available | $239 | $270 | ||
Leverage ratio | 4.2 | |||
Variable rate of debt | one-month LIBOR | |||
Basis spread on variable rate (as a percent) | 2.75% |
Long_Term_Debt_Details_2
Long Term Debt (Details 2) (USD $) | 3 Months Ended | 0 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Sep. 17, 2012 | Dec. 31, 2014 | |
engine | ||||
Long Term Debt | ||||
Net proceeds received from notes issued and sold | $31,000,000 | $5,000,000 | ||
Total notes payable | 842,177,000 | 840,956,000 | ||
WEST II Series 2012-A term notes payable at a fixed rate of interest maturing in September 2037. Secured by engines | WEST II | ||||
Long Term Debt | ||||
Face amount | 390,000,000 | |||
Net proceeds received from notes issued and sold | 384,900,000 | |||
Debt Instrument Expected Payoff Period | 10 years | |||
Total notes payable | 346,900,000 | 351,900,000 | ||
Number of engines pledged as collateral | 68 | 22 | ||
Fixed amortization of notes payable | 0 | |||
Fixed rate (as a percent) | 5.50% | |||
Number of business days to pay interest | 5 days | |||
Period of time over which maintenance obligations are projected | 6 months | |||
WEST II Series 2012-A term notes payable at a fixed rate of interest maturing in September 2037. Secured by engines | WEST II | Minimum | ||||
Long Term Debt | ||||
Minimum amount of cash from maintenance reserve payments required to be held in restricted cash account | 9,000,000 | |||
Prior WEST notes | ||||
Long Term Debt | ||||
Total notes payable | $435,900,000 |
Long_Term_Debt_Details_3
Long Term Debt (Details 3) (USD $) | 3 Months Ended | 0 Months Ended | ||||||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 25, 2015 | Jul. 17, 2014 | Jan. 10, 2014 | Sep. 28, 2012 | Dec. 31, 2014 | Sep. 17, 2012 | |
item | engine | |||||||
Long Term Debt | ||||||||
Remaining balance on notes paid off | $28,623,000 | $25,506,000 | ||||||
Total notes payable | 842,177,000 | 840,956,000 | ||||||
One-month LIBOR rate (as a percent) | 0.18% | 0.17% | ||||||
WOLF | ||||||||
Long Term Debt | ||||||||
Number of term notes paid | 2 | |||||||
Remaining balance on notes paid off | 23,100,000 | |||||||
Prior WEST notes | ||||||||
Long Term Debt | ||||||||
Total notes payable | 435,900,000 | |||||||
Secured Debt 2.83 Percent Ten Year Member | ||||||||
Long Term Debt | ||||||||
Face amount | 13,400,000 | |||||||
Maturity term | 10 years | |||||||
Fixed rate (as a percent) | 2.83% | |||||||
Initial term for interest payment | 5 years | |||||||
Percentage of the funding for the purchase of a corporate aircraft | 100.00% | |||||||
Total notes payable | 12,600,000 | 12,900,000 | ||||||
Variable rate of debt | one-month LIBOR | |||||||
Note payable at a fixed interest rate of 5.50%, maturing in September 2017. Secured by one engine. | ||||||||
Long Term Debt | ||||||||
Face amount | 8,700,000 | |||||||
Maturity term | 5 years | |||||||
Fixed rate (as a percent) | 5.50% | |||||||
Total notes payable | 7,600,000 | 7,700,000 | ||||||
Number of engines pledged as collateral | 1 | |||||||
Note payable at a fixed interest rate of 2.25%, maturing in January 2018, secured by three engines | ||||||||
Long Term Debt | ||||||||
Maturity term | 4 years | |||||||
Total notes payable | $14,100,000 | $14,500,000 | ||||||
Basis spread on variable rate (as a percent) | 2.25% | |||||||
Number of engines pledged as collateral | 3 |
Long_Term_Debt_Details_4
Long Term Debt (Details 4) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Principal outstanding repayable | ||
2015 | $17,716 | |
2016 | 24,809 | |
2017 | 32,004 | |
2018 | 35,099 | |
2019 | 486,266 | |
Thereafter | 246,283 | |
Notes payable | $842,177 | $840,956 |
Derivative_Instruments_Details
Derivative Instruments (Details) (Interest rate contracts, USD $) | 3 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
agreement | agreement | agreement | |
Interest rate contracts | |||
Derivative instruments | |||
Variable rate of debt | one-month LIBOR | one-month LIBOR | |
Borrowings at variable interest rates | $475.10 | $468.50 | |
Number of interest rate swap agreements | 0 | 0 | |
Number of interest rate swap agreements during the period | 1 | ||
Notional amount outstanding | 100 | ||
Fixed interest rate (as a percent) | 2.10% | ||
(Benefit) expense recorded to net finance costs | $0.10 |
Derivative_Instruments_Income_
Derivative Instruments -Income effects of our cash flow hedging-(Details 2) (Cash Flow Hedging, Designated as Hedging Instruments, USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 |
Effects of derivative instruments | |
Amount of Loss (Gain) Recognized on Derivatives in the Statements of Income | ($125) |
Interest rate contracts | Interest expense Member | |
Effects of derivative instruments | |
Amount of Loss (Gain) Recognized on Derivatives in the Statements of Income | ($125) |
StockBased_Compensation_Plans_1
Stock-Based Compensation Plans (Details) (The 2007 plan) | 3 Months Ended | |
Mar. 31, 2015 | 24-May-07 | |
Stock-based compensation plans | ||
Number of shares authorized | 2,000,000 | |
Restricted stock | ||
Stock-based compensation plans | ||
Number of shares awarded | 2,122,272 | |
Number of shares available | 135,368 | |
Restricted stock, forfeited, and returned to pool | 13,096 |
StockBased_Compensation_Plans_2
Stock-Based Compensation Plans (Details2) (USD $) | 3 Months Ended | 12 Months Ended | |
In Millions, except Share data, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
The 2007 plan | Restricted stock | |||
Number Outstanding | |||
Balance at the beginning of the period (in shares) | 525,356 | 515,130 | 682,654 |
Shares cancelled | -5,750 | -60,110 | |
Shares vested | -78,302 | -221,732 | -258,822 |
Balance at the end of the period (in shares) | 452,054 | 525,356 | 515,130 |
Remaining average vesting period for recognition of unrecognized compensation expense | 1 year 10 months 24 days | ||
Unrecognized compensation expense (in dollars) | $5.10 | ||
Intrinsic value of unvested awards (in dollars) | 8.4 | ||
The 2007 plan | Restricted stock | Awards vesting over four years | |||
Number Outstanding | |||
Vesting period | 4 years | 4 years | 4 years |
The 2007 plan | Restricted stock | Awards Vesting Over Three Years [Member] | |||
Number Outstanding | |||
Shares granted | 174,500 | ||
Vesting period | 3 years | ||
The 2007 plan | Restricted Stock Four Year Vesting [Member] | |||
Number Outstanding | |||
Shares granted | 5,000 | 13,000 | 130,000 |
The 2007 plan | Restricted Stock One Year Vesting [Member] | |||
Number Outstanding | |||
Shares granted | 50,208 | 21,408 | |
1996 Plan | |||
Number Outstanding | |||
Stock options outstanding (in shares) | 49,000 | ||
Intrinsic value of outstanding stock options (in dollars) | $0.50 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2013 |
Income Taxes | |||
Income tax expense (benefit) | $1,441 | $2,405 | |
Effective tax rate (as a percent) | 38.50% | 35.70% |
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Details) (Level 3, USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Level 3 | ||
Fair value of financial instruments | ||
Fair value of notes payable | $852.40 | $847 |
Operating_Segments_Details
Operating Segments (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Revenue: | |||
Lease rent revenue | $25,097 | $26,900 | |
Maintenance reserve revenue | 14,148 | 14,030 | |
Spare parts sales | 2,151 | 418 | |
Gain on sale of leased equipment | 662 | 231 | |
Other revenue | 756 | 1,761 | |
Total revenue | 42,814 | 43,340 | |
Expenses: | |||
Depreciation and amortization expense | 17,705 | 15,710 | |
Cost of spare parts sales | 1,480 | 340 | |
General and administrative | 9,972 | 9,685 | |
Net finance costs | 8,416 | 9,359 | |
Other expense | 1,856 | 1,815 | |
Total expenses | 39,429 | 36,909 | |
Interest expense | 9,567 | 9,359 | |
Earnings from operations | 3,385 | 6,431 | |
Total assets | 1,259,726 | 1,261,626 | |
Operating Segments [Member] | Leasing and Related Operations | |||
Revenue: | |||
Lease rent revenue | 25,097 | 26,900 | |
Maintenance reserve revenue | 14,148 | 14,030 | |
Gain on sale of leased equipment | 662 | 231 | |
Other revenue | 617 | 1,046 | |
Total revenue | 40,524 | 42,207 | |
Expenses: | |||
Depreciation and amortization expense | 17,633 | 15,638 | |
General and administrative | 9,337 | 9,021 | |
Net finance costs | 8,326 | 9,359 | |
Other expense | 1,856 | 1,815 | |
Total expenses | 37,152 | 35,833 | |
Earnings from operations | 3,372 | 6,374 | |
Total assets | 1,240,865 | 1,241,837 | |
Operating Segments [Member] | Spare Parts Sales | |||
Revenue: | |||
Spare parts sales | 2,151 | 418 | |
Other revenue | 295 | 715 | |
Total revenue | 2,446 | 1,133 | |
Expenses: | |||
Depreciation and amortization expense | 72 | 72 | |
Cost of spare parts sales | 1,480 | 340 | |
General and administrative | 635 | 664 | |
Net finance costs | 90 | ||
Total expenses | 2,277 | 1,076 | |
Earnings from operations | 169 | 57 | |
Total assets | 18,861 | 19,789 | |
Intersegment Eliminations [Member] | |||
Revenue: | |||
Other revenue | -156 | ||
Total revenue | -156 | ||
Expenses: | |||
Earnings from operations | ($156) |