Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 09, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | WILLIS LEASE FINANCE CORP | ||
Entity Central Index Key | 1,018,164 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 90.9 | ||
Entity Common Stock, Shares Outstanding | 6,419,169 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||||
Cash and cash equivalents | $ 7,052 | $ 10,076 | ||
Restricted cash | 40,272 | 22,298 | ||
Equipment held for operating lease, less accumulated depreciation of $368,683 and $351,553 at December 31, 2017 and 2016, respectively | 1,342,571 | 1,136,603 | ||
Maintenance rights | 14,763 | 17,670 | ||
Equipment held for sale | 34,172 | 30,710 | ||
Operating lease related receivables, net of allowances of $949 and $787 at December 31, 2017 and 2016, respectively | 18,848 | 16,484 | ||
Spare parts inventory | 16,379 | 25,443 | ||
Investments | 50,641 | 45,406 | ||
Property, equipment & furnishings, less accumulated depreciation of $7,374 and $5,858 at December 31, 2017 and 2016, respectively | 26,074 | 16,802 | ||
Intangible assets, net | 1,727 | 2,182 | ||
Other assets | 50,932 | 14,213 | ||
Total assets | 1,603,431 | 1,337,887 | $ 1,294,285 | |
Liabilities: | ||||
Accounts payable and accrued expenses | 22,072 | 17,792 | ||
Deferred income taxes | 78,280 | 104,978 | ||
Debt obligations | 1,085,405 | 900,255 | ||
Maintenance reserves | 75,889 | 71,602 | ||
Security deposits | 25,302 | 21,417 | ||
Unearned revenue | 8,102 | 5,823 | ||
Total liabilities | 1,295,050 | 1,121,867 | ||
Redeemable preferred stock ($0.01 par value, 2,500 shares authorized; 2,500 and 1,000 shares issued and outstanding at December 31, 2017 and 2016, respectively) | 49,471 | 19,760 | ||
Shareholders' equity: | ||||
Common stock ($0.01 par value, 20,000 shares authorized; 6,419 and 6,402 shares issued and outstanding at December 31, 2017 and 2016, respectively) | 64 | 64 | ||
Paid-in capital in excess of par | 2,319 | 2,512 | ||
Retained earnings | 256,301 | 194,729 | ||
Accumulated other comprehensive income (loss), net of income tax expense (benefit) of $(83) and $551 at December 31, 2017 and December 31, 2016, respectively. | 226 | (1,045) | ||
Total shareholders' equity | 258,910 | 196,260 | $ 209,223 | $ 216,648 |
Total liabilities, redeemable preferred stock and shareholders' equity | $ 1,603,431 | $ 1,337,887 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Equipment held for operating lease, accumulated depreciation (in dollars) | $ 368,683 | $ 351,553 |
Operating lease related receivable, allowances (in dollars) | 949 | 787 |
Property, equipment & furnishings, accumulated depreciation (in dollars) | $ 7,374 | $ 5,858 |
Par value | $ 0.01 | $ 0.01 |
Shares authorized | 2,500 | 2,500 |
Shares outstanding | 2,500 | 1,000 |
Shares issued | 2,500 | 1,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000 | 20,000 |
Common stock, shares issued | 6,419 | 6,402 |
Common stock, shares outstanding | 6,419 | 6,402 |
Accumulated other comprehensive loss, income tax benefit (in dollars) | $ (83) | $ 551 |
Restricted cash | 40,272 | 22,298 |
Other assets | 50,932 | 14,213 |
Debt obligations | 1,085,405 | 900,255 |
Variable Interest Entity [Member] | ||
Cash | 130 | 257 |
Restricted cash | 40,272 | 22,298 |
Equipment | 657,333 | 309,815 |
Other assets | 20,090 | 4,139 |
Debt obligations | $ 577,056 | $ 273,380 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
REVENUE | |||||||||||||||
Lease rent revenue | $ 130,369 | $ 119,895 | $ 108,046 | ||||||||||||
Maintenance reserve revenue | 80,189 | 57,091 | 53,396 | ||||||||||||
Spare parts and equipment sales | 51,423 | 17,783 | 25,582 | ||||||||||||
Gain on sale of leased equipment | 4,929 | 3,482 | 8,320 | ||||||||||||
Other revenue | 7,930 | 9,023 | 2,718 | ||||||||||||
Total revenue | $ 63,189 | $ 65,861 | $ 67,844 | $ 77,946 | $ 55,476 | $ 51,461 | $ 49,618 | $ 50,719 | $ 55,186 | $ 57,730 | $ 43,810 | $ 41,336 | 274,840 | 207,274 | 198,062 |
EXPENSES | |||||||||||||||
Depreciation and amortization expense | 66,023 | 66,280 | 69,424 | ||||||||||||
Cost of spare parts and equipment sales | 40,848 | 13,293 | 17,849 | ||||||||||||
Write-down of equipment | 24,930 | 9,514 | 9,181 | ||||||||||||
General and administrative | 55,737 | 47,780 | 42,744 | ||||||||||||
Technical expense | 9,729 | 6,993 | 9,403 | ||||||||||||
Net finance costs: | |||||||||||||||
Interest expense | 48,720 | 41,144 | 39,012 | ||||||||||||
Loss (gain) on debt extinguishment | (137) | 1,151 | |||||||||||||
Total net finance costs | 48,720 | 41,281 | 37,861 | ||||||||||||
Total expenses | 245,987 | 185,141 | 186,462 | ||||||||||||
Earnings from operations | 28,853 | 22,133 | 11,600 | ||||||||||||
Earnings from joint ventures | 7,158 | 1,813 | 1,175 | ||||||||||||
Income before income taxes | 36,011 | 23,946 | 12,775 | ||||||||||||
Income tax (benefit) expense | (26,147) | 9,877 | 6,315 | ||||||||||||
Net income | 62,158 | 14,069 | 6,460 | ||||||||||||
Preferred stock dividends | 1,813 | 281 | |||||||||||||
Accretion of preferred stock issuance costs | 46 | 8 | |||||||||||||
Net income attributable to common shareholders | $ 41,864 | $ 4,939 | $ 5,657 | $ 7,839 | $ 2,418 | $ 3,985 | $ 3,366 | $ 4,011 | $ 3,037 | $ 2,551 | $ (486) | $ 1,358 | $ 60,299 | $ 13,780 | $ 6,460 |
Basic earnings per common share: (in dollars per share) | $ 6.87 | $ 0.82 | $ 0.94 | $ 1.28 | $ 0.40 | $ 0.63 | $ 0.50 | $ 0.57 | $ 0.39 | $ 0.33 | $ (0.06) | $ 0.17 | $ 9.93 | $ 2.10 | $ 0.83 |
Diluted earnings per common share: (in dollars per share) | $ 6.75 | $ 0.80 | $ 0.92 | $ 1.25 | $ 0.39 | $ 0.62 | $ 0.49 | $ 0.55 | $ 0.38 | $ 0.32 | $ (0.06) | $ 0.17 | $ 9.69 | $ 2.05 | $ 0.81 |
Basic weighted average common shares outstanding | 6,090 | 6,055 | 6,036 | 6,114 | 6,149 | 6,307 | 6,685 | 7,149 | 7,739 | 7,839 | 7,841 | 7,848 | 6,074 | 6,570 | 7,817 |
Diluted average common shares outstanding (in shares) | 6,201 | 6,173 | 6,142 | 6,240 | 6,275 | 6,448 | 6,819 | 7,272 | 7,872 | 7,963 | 7,841 | 8,044 | 6,220 | 6,714 | 7,987 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 62,158 | $ 14,069 | $ 6,460 |
Other comprehensive income: | |||
Currency translation adjustment | 1,061 | (868) | (796) |
Unrealized gains on derivative instruments | 896 | 69 | |
Net gain (loss) recognized in other comprehensive income | 1,957 | (799) | (796) |
Tax (expense) benefit related to items of other comprehensive income | (686) | 275 | 275 |
Other comprehensive income (loss) | 1,271 | (524) | (521) |
Total comprehensive income | $ 63,429 | $ 13,545 | $ 5,939 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock | Paid-in Capital in Excess of par | Retained Earnings | Accumulated Other Comprehensive Income | Total |
Balances at Dec. 31, 2014 | $ 83 | $ 42,076 | $ 174,489 | $ 216,648 | ||
Balances (in shares) at Dec. 31, 2014 | 8,346,000 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 6,460 | 6,460 | ||||
Net unrealized gain from derivative instruments, net of tax expense | $ (521) | (521) | ||||
Shares repurchased | $ (9) | (16,491) | (16,500) | |||
Shares repurchased (in shares) | (912,000) | |||||
Shares issued under stock compensation plans | $ 2 | 516 | 518 | |||
Shares issued under stock compensation plans (in shares) | 205,000 | |||||
Cancellation of restricted stock units in satisfaction of withholding tax | $ (1) | (1,557) | (1,558) | |||
Cancellation of restricted stock units in satisfaction of withholding tax (in shares) | (91,000) | |||||
Stock-based compensation, net of forfeitures | 4,150 | 4,150 | ||||
Tax benefit on disqualified disposition of shares | 26 | 26 | ||||
Balances at Dec. 31, 2015 | $ 75 | 28,720 | 180,949 | (521) | 209,223 | |
Balances (in shares) at Dec. 31, 2015 | 7,548,000 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 14,069 | 14,069 | ||||
Net unrealized loss from currency translation adjustment, net of tax benefit | (568) | (568) | ||||
Net unrealized gain from derivative instruments, net of tax expense | 44 | 44 | ||||
Shares repurchased | $ (12) | (28,946) | (28,958) | |||
Shares repurchased (in shares) | (1,212,000) | |||||
Shares issued under stock compensation plans | $ 1 | 154 | 155 | |||
Shares issued under stock compensation plans (in shares) | 127,000 | |||||
Cancellation of restricted stock units in satisfaction of withholding tax | (1,369) | (1,369) | ||||
Cancellation of restricted stock units in satisfaction of withholding tax (in shares) | (61,000) | |||||
Stock-based compensation, net of forfeitures | 3,717 | 3,717 | ||||
Issuance of preferred stock | $ 19,752 | |||||
Accretion of preferred stock issuance costs | 8 | (8) | (8) | |||
Preferred stock dividends paid | (281) | (281) | ||||
Tax benefit on disqualified disposition of shares | 236 | 236 | ||||
Balances at Dec. 31, 2016 | $ 19,760 | $ 64 | 2,512 | 194,729 | (1,045) | $ 196,260 |
Balances (in shares) at Dec. 31, 2016 | 1,000,000 | 6,402,000 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Issuance of preferred stock (in shares) | 1,000,000 | 1,000 | ||||
Net income | 62,158 | $ 62,158 | ||||
Net unrealized loss from currency translation adjustment, net of tax benefit | 584 | 584 | ||||
Net unrealized gain from derivative instruments, net of tax expense | 687 | 687 | ||||
Shares repurchased | $ (2) | (3,544) | (3,546) | |||
Shares repurchased (in shares) | (155,000) | |||||
Shares issued under stock compensation plans | $ 2 | 175 | 177 | |||
Shares issued under stock compensation plans (in shares) | 216,000 | |||||
Cancellation of restricted stock units in satisfaction of withholding tax | (1,094) | (1,094) | ||||
Cancellation of restricted stock units in satisfaction of withholding tax (in shares) | (44,000) | |||||
Stock-based compensation, net of forfeitures | 4,270 | 4,270 | ||||
Issuance of preferred stock | $ 29,665 | |||||
Accretion of preferred stock issuance costs | 46 | (46) | (46) | |||
Preferred stock dividends paid | (1,813) | (1,813) | ||||
Other | 1,273 | 1,273 | ||||
Balances at Dec. 31, 2017 | $ 49,471 | $ 64 | $ 2,319 | $ 256,301 | $ 226 | $ 258,910 |
Balances (in shares) at Dec. 31, 2017 | 2,500,000 | 6,419,000 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Issuance of preferred stock (in shares) | 1,500,000 | 2,500 |
Consolidated Statements of Sha7
Consolidated Statements of Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements of Shareholders' Equity | |||
Net unrealized loss from derivative instruments, tax benefit | $ (312) | $ 25 | $ 275 |
Net unrealized loss from currency translation adjustment, tax benefit | $ 374 | $ 300 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 62,158 | $ 14,069 | $ 6,460 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization expense | 66,023 | 66,280 | 69,424 |
Write-down of equipment | 24,930 | 9,514 | 9,181 |
Stock-based compensation expenses | 4,270 | 3,717 | 4,150 |
Excess tax benefit from stock-based compensation | 236 | 26 | |
Amortization of deferred costs | 5,183 | 4,271 | 4,307 |
Allowances and provisions | 162 | (571) | 697 |
Gain on sale of leased equipment | (4,929) | (3,482) | (8,320) |
Gain on insurance settlement | (1,288) | ||
Income from joint ventures | (7,158) | (1,813) | (1,175) |
Loss (gain) on debt extinguishment | 137 | (1,151) | |
Deferred income taxes | (26,393) | 9,100 | 6,027 |
Changes in assets and liabilities: | |||
Receivables | (2,525) | (2,287) | (5,769) |
Spare parts inventory | (1,855) | (5,093) | 3,828 |
Intangibles | (1,511) | ||
Other assets | (970) | (1,707) | (2,635) |
Accounts payable and accrued expenses | 1,129 | 2,329 | 1,677 |
Maintenance reserves | 7,994 | 548 | 4,580 |
Security deposits | 6,246 | (4,048) | 5,747 |
Unearned lease revenue | 2,279 | 732 | 748 |
Net cash provided by operating activities | 135,256 | 90,421 | 97,802 |
Cash flows from investing activities: | |||
Proceeds from sale of equipment (net of selling expenses) | 43,791 | 62,525 | 41,608 |
Proceeds from insurance settlement | 14,886 | ||
Capital contribution to joint ventures | (5,545) | (630) | |
Distributions received from joint ventures | 1,880 | 1,167 | 1,304 |
Maintenance rights payments received | 5,802 | ||
Purchase of equipment held for operating lease and for sale | (373,483) | (173,662) | (174,772) |
Purchase of maintenance rights | (5,530) | (8,844) | |
Purchase of property, equipment and furnishings | (10,788) | (1,006) | (3,988) |
Net cash used in investing activities | (323,714) | (122,051) | (139,520) |
Cash flows from financing activities: | |||
Proceeds from issuance of notes payable | 686,200 | 149,000 | 192,700 |
Debt issuance cost | (8,262) | (3,808) | (13) |
Principal payments on notes payable | (496,160) | (113,981) | (153,816) |
Interest bearing security deposit | (2,261) | 455 | (1,606) |
Proceeds from shares issued under stock compensation plans | 177 | 155 | 518 |
Repurchase of common stock | (3,546) | (28,958) | (16,500) |
Proceeds from issuance of preferred stock | 29,665 | 19,752 | |
Preferred stock dividends | (1,311) | ||
Cancellation of restricted stock units in satisfaction of withholding tax | (1,094) | (1,369) | (1,558) |
Net cash used in financing activities | 203,408 | 21,246 | 19,725 |
Increase/(decrease) in cash, cash equivalents and restricted cash | 14,950 | (10,384) | (21,993) |
Cash, cash equivalents and restricted cash at beginning of period | 32,374 | 42,758 | 64,751 |
Cash, cash equivalents and restricted cash at end of period | 47,324 | 32,374 | 42,758 |
Net cash paid for: | |||
Interest | 42,817 | 37,319 | 35,568 |
Income Taxes | 440 | 459 | 353 |
Supplemental disclosures of non-cash investing activities: | |||
Purchase of aircraft and engines | 2,696 | 5,337 | 4,662 |
Transfers from Equipment held for operating lease to Equipment held for sale | 45,018 | 28,560 | 22,079 |
Transfers from Equipment held for sale to Spare parts inventory | 210 | $ 6,061 | |
Transfers from Property, equipment and furnishings to Equipment held for lease | 2,925 | ||
Accrued preferred stock dividends | 783 | 281 | |
Accretion of preferred stock issuance costs | $ 46 | $ 8 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | (1) Organization and Summary of Significant Accounting Policies (a) Organization Willis Lease Finance Corporation with its subsidiaries (the “Company”) is a provider of aviation services whose primary focus is providing operating leases of commercial aircraft, aircraft engines and other aircraft-related equipment to air carriers, manufacturers and overhaul/repair facilities worldwide. The Company also engages in the selective purchase and resale of commercial aircraft engines. WLFC (Ireland) Limited, WLFC Funding (Ireland) Limited and WLFC Lease (Ireland) Limited are wholly-owned Irish subsidiaries of the Company formed to facilitate certain of the Company’s international leasing activities. Willis Aviation Finance Limited in Ireland is a wholly-owned subsidiary formed to facilitate the leasing and technical support of worldwide activities. Willis Lease France is a wholly-owned French subsidiary of the Company formed to facilitate sales and marketing activities in Europe. Willis Lease (China) Limited is a wholly-owned subsidiary of the Company formed to facilitate the acquisition and leasing of assets in China. Willis Engine Securitization Trust II (“WEST II” or the “WEST II Notes”) is a bankruptcy remote special purpose vehicle which was established for the purpose of financing aircraft engines through an asset-backed securitization (“ABS”). WEST Engine Acquisition LLC and Facility Engine Acquisition LLC are wholly-owned subsidiaries of WEST II and own the engines which secure the notes issued by WEST II. Willis Engine Securitization (Ireland) Limited is another wholly-owned subsidiary of WEST II and was established to facilitate certain international leasing activities by WEST II. WEST II is a variable interest entity which the Company owns 100% of the equity and consolidates in its financial statements. Willis Aeronautical Services, Inc. (“Willis Aero”) is a wholly-owned subsidiary whose primary focus is the sale of aircraft engine parts and materials through the acquisition or consignment from third parties of aircraft and engines. In 2016, the Company purchased, through a wholly owned subsidiary Willis Asset Management Limited (“Willis Asset Management”), the business and assets of Total Engine Support Limited (“TES”). TES had been the engine management and consulting business of the TES Aviation Group. Willis Asset Management has 393 engines, excluding WLFC engines, under management as of December 31, 2017. On August 4, 2017, the Company closed an asset-backed securitization through a newly-created, bankruptcy-remote, Delaware statutory trust, Willis Engine Structured Trust III (“WEST III” or the “WEST III Notes”), of which the Company is the sole beneficiary. The WEST III Notes were issued in two series, with the Series A Notes issued in an aggregate principal amount of $293.7 million and the Series B Notes in an aggregate principal amount of $42.0 million. The WEST III Notes are secured by a portfolio of 56 engines from the revolving credit facility. The Company used these funds, net of transaction expenses, to pay off part of its revolving credit facility totaling $491.0 million. WEST III is a variable interest entity which the Company owns 100% of the equity and consolidates in its financial statements. The assets and liabilities of WEST III will remain on the Company’s balance sheet. A portfolio of 56 commercial jet aircraft engines and leases thereof secures the obligations of WEST III under the ABS. The WEST III Notes have a scheduled amortization and are payable solely from revenue received by WEST III from the engines and the engine leases, after payment of certain expenses of WEST III. Series A Notes bear interest at a fixed rate of 4.69% per annum and Series B Notes bear interest at a fixed rate of 6.36% per annum. The WEST III 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 WEST III Notes are expected to be paid in 10 years. The legal final maturity of the Notes is August 15, 2042. In connection with the transactions described above, the Company entered into a Servicing Agreement and Administrative Agency Agreement with WEST III to provide certain engine, lease management and reporting functions for WEST III in return for fees based on a percentage of collected lease revenues and asset sales. Because WEST III is consolidated for financial statement reporting purposes, all fees eliminate upon consolidation. The assets of WEST III are not available to satisfy the Company’s obligations other than the obligations specific to WEST III. WEST III is consolidated for financial statement presentation purposes. WEST III’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 III’s maintenance of adequate reserves and capital. Under WEST III, 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 lease security deposits are formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. Minimum maintenance reserve payments and security deposits of $10.0 million and $1.0 million, respectively, are held in restricted cash accounts. (b) Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of Willis Lease Finance Corporation and its wholly owned subsidiaries, including variable interest entities (“VIEs”) where the Company is the primary beneficiary in accordance with consolidation guidance. The Company evaluates all entities in which it has an economic interest firstly to determine whether for accounting purposes the entity is a variable interest entity or voting interest entity. If the entity is a variable interest entity the Company consolidates the financial statements of that entity if it is the primary beneficiary of the entities’ activities. If the entity is a voting interest entity the Company consolidates the entity when it has a majority of voting interests. Intercompany transactions and balances have been eliminated in consolidation. The condensed parent company financial statements should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes herein. (c) Revenue Recognition Revenue from leasing of aircraft equipment is recognized as operating lease revenue on a straight-line basis over the terms of the applicable lease agreements. Revenue is not recognized when cash collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received. The Company regularly sells equipment from its lease portfolio. This equipment may or may not be subject to a lease at the time of sale. The gain or loss on such sales is recognized as revenue and consists of proceeds associated with the sale less the net book value of the asset sold and any direct costs associated with the sale. To the extent that deposits associated with the engine are not included in the sale, any such amount is included in the calculation of gain or loss. The Company evaluates sales arrangements under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition: Multiple Element Arrangements (“FASB ASC 605-25”), which addresses accounting for multiple element arrangements. The Company has determined that two deliverables, the sale of equipment and the management services, are separate units of accounting. Therefore, revenue is recognized in accordance with FASB ASC 605-10-S99, Revenue Recognition: Overall: SEC Materials, formerly SAB 104, for each unit. For multiple deliverable revenue arrangements, the Company allocates revenue to equipment sales and management services using the relative selling price method to recognize revenue when the revenue recognition criteria for each deliverable are met. The selling price of a deliverable is based on a hierarchy and if the Company is unable to establish vendor-specific objective evidence of selling price (“VSOE”) it uses third-party evidence of selling price (“TPE”), and if no such data is available, it uses a best estimated selling price (“BSP”). The objective of BSP is to determine the price at which the Company would transact a sale if the equipment or service were sold on a stand-alone basis. For management services, the selling price is based on TPE and is determined by reviewing information from management agreements entered into by other parties on a standalone basis which is then compared to the management agreements entered into with the investor group. The Company has determined that the fees charged on a standalone basis are comparable to the fees charged when the Company enters into the management agreements concurrent with the sale of a portfolio of engines. Accordingly, the Company determined that the fees charged for its management services are comparable to those charged by other asset managers for the same service. The Company recognizes revenue from management fees under equipment management agreements as earned on a monthly basis. Management fees are based upon a percentage of net lease rents of the investor group’s engine portfolio calculated on an accrual basis and recorded in Other revenue. Under the terms of some of the Company’s leases, the lessees pay use fees (also known as maintenance reserves) to the Company based on usage of the leased asset, which are designed to cover expected future maintenance costs. Some of these amounts are reimbursable to the lessee if they make specifically defined maintenance expenditures. Use fees received are recognized in revenue as maintenance reserve revenue if they are not reimbursable to the lessee. Use fees that are reimbursable are recorded as a maintenance reserve liability until they are reimbursed to the lessee or the lease terminates, at which time they are recognized in revenue as maintenance reserve revenue. Certain lessees may be significantly delinquent in their rental payments and may default on their lease obligations. As of December 31, 2017, the Company had an aggregate of approximately $8.3 million in lease rent and $5.6 million in maintenance reserve receivables more than 30 days past due. Inability to collect receivables or to repossess engines or other leased equipment in the event of a default by a lessee could have a material adverse effect on the Company. The Company estimates an allowance for doubtful accounts for lease receivables it does not consider fully collectible. The allowance for doubtful accounts includes the following: (1) specific reserves for receivables which are impaired for which management believes full collection is doubtful; and (2) a general reserve for estimated losses based on historical experience. The Company recognizes sales of spare parts upon shipping and the amount reported as cost of sales is recorded at specific cost. The Company recognizes service revenue from fees earned under engine maintenance service agreements as earned on a monthly basis. No customer accounted for greater than 10% of total lease rent revenue in 2017, 2016 and 2015. (d) Other Revenue Other revenue consists primarily of management fee income, lease administration fees, third party consignment commissions earned by Willis Aero and other discrete revenue items. During the year ended December 31, 2017, other revenue included a net gain on an insurance settlement of $1.3 million related to a leased aircraft, fees earned related to engines managed on behalf of third parties and service fee revenue earned by Willis Asset Management. During the year ended December 31, 2016, other revenue included $4.0 million of security payments for aircraft upon default of a lessee. (e) Equipment Held for Operating Lease Aircraft assets held for operating lease are stated at cost, less accumulated depreciation. Certain costs incurred in connection with the acquisition of aircraft assets are capitalized as part of the cost of such assets. Major overhauls paid for by the Company, which improve functionality or extend the original useful life, are capitalized and depreciated over the shorter of the estimated period to the next overhaul (“deferral method”) or the remaining useful life of the equipment. The Company does not accrue for planned major maintenance. The cost of overhauls of aircraft assets under long term leases, for which the lessee is responsible for maintenance during the period of the lease, are paid for by the lessee or from reimbursable maintenance reserves paid to the Company in accordance with the lease, and are not capitalized. Based on specific aspects of the equipment, the Company generally depreciates engines on a straight-line basis over a 15-year period from the acquisition date to a 55% residual value. This methodology is believed to accurately reflect the Company’s typical holding period for the engine assets and, that the residual value assumption reasonably approximates the selling price of the assets 15 years from date of acquisition. The typical 15 year holding period is the estimated useful life of the Company’s engines based on its business model and plans, and represents how long the Company anticipates holding a newly acquired engine. The technical useful life of a new engine can be in excess of 25 years. The Company reviews the useful life and residual values of all engines periodically as demand changes to accurately depreciate the cost of equipment over the useful life of the engines. The aircraft owned by the Company are depreciated on a straight-line basis over an estimated useful life of 13 to 20 years to a 15% to 17% residual value. The spare parts packages owned by the Company are depreciated on a straight-line basis over an estimated useful life of 14 to 15 years to a 25% residual value. For engines or aircraft that are unlikely to be repaired at the end of the current expected useful lives, the Company depreciates the engines or aircraft over their estimated lives to a residual value based on an estimate of the wholesale value of the parts after disassembly. The useful life of older generation engines and aircraft may be significantly less based upon the technical status of the engine, as well as supply and demand factors. For these older generation engines and aircraft, the remaining useful life and the remaining expected holding period are typically the same. For older generation engines or aircraft that are unlikely to be repaired at the end of the current expected useful lives, the Company depreciates the engines or aircraft over their estimated lives to a residual value based on an estimate of the wholesale value of the parts after disassembly. As of December 31, 2017, 48 engines and 3 aircraft having a net book value of $80.1 million were depreciated under this policy with estimated useful lives ranging from 1 to 82 months. The Company adjusts its estimates annually for these older generation assets, including updating estimates of an engine’s or aircraft’s remaining operating life as well as future residual value expected from part-out based on the current technical status of the engine or aircraft. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets to be disposed are reported at the lower of carrying amount or fair value less cost to sell. Impairment is identified by comparison of undiscounted forecasted cash flows, including estimated sales proceeds, over the life of the asset with the assets’ book value. If the forecasted undiscounted cash flows are less than the book value the asset is written down to its fair value. Fair value is determined per individual asset by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors considered relevant by the Company. The Company conducts a formal annual review of the carrying value of long-lived assets and also evaluates assets during the year if a triggering event is identified indicating impairment is possible. Such annual review resulted in an impairment charge of $4.4 million, $1.8 million and $0.6 million in 2017, 2016, and 2015, respectively (included in “Write-down of equipment” in the Consolidated Statements of income). (f) Equipment Held for Sale Equipment held for sale includes engines being marketed for sale as well as engines removed from the lease portfolio to be parted out, with the investment in the long lived asset being recovered through the sale of spare parts. The assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell. (g) Debt Issuance Costs and Related Fees Fees paid in order to secure debt are capitalized, included in Debt obligations on the Consolidate Balance Sheets, and amortized over the life of the related loan using the effective interest method. (h) Interest Rate Hedging The Company enters into various derivative instruments periodically to mitigate the exposure on variable rate borrowings. The derivative instruments are fixed-rate interest swaps that are recorded at fair value as either an asset or liability. While substantially all of the Company’s derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria have been met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective. The hedging instrument’s effectiveness is assessed utilizing regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. All of the transactions that the Company has designated as hedges are cash flow hedges. 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. The ineffective portion of the hedges is recorded in earnings in the current period. (i) Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in the tax rates is recognized in income in the period that includes the enactment date. The Company recognizes in the financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs (see Note 6). The Company files income tax returns in various states and countries which may have different statutes of limitations. The Company records penalties and accrued interest related to uncertain tax positions in income tax expense. Such adjustments have historically been minimal and immaterial to our financial results. (j) Property, Equipment and Furnishings Property, equipment and furnishings are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets, which range from three to fifteen years. Leasehold improvements are recorded at cost and depreciated by the straight-line method over the shorter of the lease term or useful life of the leasehold. (k) Cash and Cash Equivalents The Company considers highly liquid investments readily convertible into known amounts of cash, with original maturities of 90 days or less, as cash equivalents. (l) Restricted Cash The Company has certain bank accounts that are subject to restrictions in connection with our WEST II and WEST III borrowings. Under both borrowings, cash is collected in restricted accounts, which are 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 some or all of the lease security deposits are accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. Under WEST II, cash from maintenance reserve payments is held in a restricted cash account equal to the maintenance obligations projected for the subsequent six months, and is subject to a minimum balance of $9.0 million. Under WEST III, cash from maintenance reserve payments is held in a restricted cash account equal to a portion of the maintenance obligations projected for the subsequent nine months, and is subject to a minimum balance of $10.0 million. Under WEST II, all security deposits are held in a restricted cash account until the end of the lease. Under WEST III, security deposits are held in a restricted cash account equal to a portion of the security deposits for leases scheduled to terminate over the subsequent four months, subject to a minimum balance of $1.0 million. Provided lease return conditions have been met, these deposits will be returned to the lessee. To the extent return conditions are not met, these deposits may be retained by the Company. (m) Spare Parts Inventory Inventory consists of spare aircraft and engine parts and is stated at lower of cost or net realizable value. An impairment charge for excess or inactive inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns, future sales expectations and salvage value. (n) Intangible Assets Intangible assets include customer relationships and goodwill arising from the Company’s acquisitions of J.T. Power and TES. Intangible assets are accounted for in accordance with FASB ASC 350, “Intangibles — Goodwill and Other.” Customer relationships are amortized on a straight line basis over their estimated useful life of five years. The Company has no intangible assets with indefinite useful lives. Goodwill is assessed for impairment annually. (o) Other assets Other assets typically include prepaid deposits, capitalized costs relating to engine shop visits that remain in process at year end, and other prepaid expenses. As of December 31, 2017, other assets included prepaid deposits of $36.5 million relating to a commitment to purchase engines. (p) 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 management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Management evaluates estimates on an ongoing basis, including those related to residual values, estimated asset lives, impairments and bad debts. Estimates are based 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, 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. (q) Earnings per share information Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding, adjusted for the dilutive effect of stock options and unvested restricted stock awards. See Note 8 for more information on the computation of earnings per share. (r) Investments The Company’s investments are joint ventures, where it owns 50% of the equity of the ventures and are accounted for using the equity method of accounting. The investments are recorded at the amount invested plus or minus our 50% share of net income or loss, less any distributions or return of capital received from the entities. (s) Stock Based Compensation The Company recognizes stock based compensation expense in the financial statements for share-based awards based on the grant-date fair value of those awards. Stock based compensation expense is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term. Additionally, the Company implemented ASU 2016-09 in the first quarter of 2017, using the modified retrospective approach, and elected to account for forfeitures as they occur. As such, a $1.3 million cumulative effect adjustment was recorded to the opening balance of Retained earnings for the impact in tax benefits as well as the differential between the amount of compensation cost previously recorded and the amount that would have been recorded without assuming forfeitures. (t) Initial Direct Costs associated with Leases The Company accounts for the initial direct costs, including sales commissions and legal fees, incurred in obtaining a new lease by deferring and amortizing those costs over the term of the lease. The amortization of these costs is recorded under General and administrative expenses in the Consolidated Statements of income. The amounts amortized were $1.8 million, $1.6 million and $1.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. (u) Maintenance Rights The Company identifies, measure and accounts for maintenance right assets and liabilities associated with acquisitions of equipment with in-place leases. A maintenance right asset represents the fair value of the contractual right under a lease to receive equipment in an improved maintenance condition as compared to the maintenance condition on the acquisition date. A maintenance right liability represents the Company's obligation to pay the lessee for the difference between the lease-end contractual maintenance condition of the equipment and the actual maintenance condition of the equipment on the acquisition date. The equipment condition at the end of the lease term may result in either overhaul work being performed by the lessee to meet the required return condition or a financial settlement. When a capital event is performed on the equipment by the lessee, which satisfies their maintenance right obligation, the maintenance rights are added to the equipment basis and depreciated to the next capital event. When equipment is sold before the end of the pre-existing lease, the maintenance rights are applied against any accumulated maintenance reserves, if paid by the lessee, and the remaining balance is applied to the disposition gain or loss. When a lease terminates, an end of lease true-up is performed and the maintenance right is applied against the accumulated maintenance reserves or, for non-reserve lessees the final settlement payment, and any remaining net maintenance right is recorded in the income statement. (v) Foreign Currency Translation The Company’s foreign investments have been converted at rates of exchange in effect at the balance sheet dates. The changes in exchange rates in our foreign investments reported under the equity method are included in stockholders’ equity as accumulated other comprehensive income. (w) Risk Concentrations Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash deposits, lease receivables and interest rate swaps. The Company places our cash deposits with financial institutions and other creditworthy institutions such as money market funds and limits the amount of credit exposure to any one party. Management opts for security of principal as opposed to yield. Concentrations of credit risk with respect to lease receivables are limited due to the large number of customers comprising the customer base, and their dispersion across different geographic areas. Some lessees are required to make payments for maintenance reserves at the end of the lease however, this risk is considered limited due to the relatively few lessees which have this provision in the lease. The Company enters into interest rate swap agreements with counterparties that are investment grade financial institutions. (x) Recent Accounting Pronouncements Recent Accounting Pronouncements Adopted by the Company In July 2015, the FASB issued Accounting Standards Update ("ASU") 2015-11, Simplifying the Measurement of Inventory, which simplifies the measurement of inventory by requiring certain inventory to be measured at the lower of cost or net realizable value. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016 and for interim periods therein. The Company adopted ASU 2015-11 on January 1, 2017 and it did not have a material impact on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. The Company adopted ASU 2016-09 on January 1, 2017, the standard’s effective date, on a modified retrospective method through a cumulative adjustment to retained earnings of $1.3 million. During the the year ended December 31, 2017, excess tax benefits from stock-based compensation of approximately $91,000 were reflected in the Consolidated Statements of Income as income taxes, whereas they previously were recognized in equity. Additionally, the Consolidated Statements of Cash Flows now present excess tax benefits as an operating activity, with the prior periods adjusted accordingly. The Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures. As a result of the adoption of ASU 2016-09, the Consolidated Statement of Cash Flows for the years ended December 31, 2016 and 2015 were adjusted as follows: a $0.2 million and Nil, respectively, increase to net cash provided by operating activities and a $0.2 million and Nil, respectively, decrease to net cash provided by financing activities. In November 2016, the FASB issued ASU 2016-18, Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-08 is effective for fiscal years beginning after December 15, 2017 (including interim periods within those periods) using a retrospective transition method to each period presented. The Company adopted this standard during on January 1, 2017 and included $64.1 million and $22.3 million of restricted cash in the total of cash, cash equivalents and restricted cash in its statements of consolidated cash flows for the year ended December 31, 2016 and 2015, respectively. The adoption of this standard also resulted in an decrease in cash provided by operating activities, cash used in investing activities and cash provided by financing activities of $10.7 million, $1.3 million and $1.3 million, respectively, for the year ended December 31, 2016 and $9.6 million, $16.8 millio |
Equipment Held for Operating Le
Equipment Held for Operating Lease | 12 Months Ended |
Dec. 31, 2017 | |
Equipment Held for Operating Lease | |
Equipment Held for Operating Lease | (2) Equipment Held for Operating Lease As of December 31, 2017, the Company had a total lease portfolio of 225 aircraft engines and related equipment, 16 aircraft and 7 other leased parts and equipment with a net book value of $1,342.6 million. As of December 31, 2016, the Company had a total lease portfolio of 208 aircraft engines and related equipment, 11 aircraft and 5 other leased parts and equipment, with a net book value of $1,136.6 million. A majority of the equipment is leased and operated internationally. Substantially all leases relating to this equipment are denominated and payable in U.S. dollars. The Company leasees equipment to lessees domiciled in eight geographic regions. The tables below set forth geographic information about the leased equipment grouped by domicile of the lessee (which is not necessarily indicative of the asset’s actual location): Years Ended December 31, Lease rent revenue 2017 2016 2015 (in thousands) Region Europe $ 50,789 $ 44,650 $ 43,703 Asia 34,169 34,524 31,569 South America 11,958 11,504 9,688 United States 20,307 13,395 9,177 Mexico 5,409 6,251 6,886 Canada 4,355 4,049 2,828 Middle East 3,360 3,674 2,223 Africa 22 1,848 1,972 Totals $ 130,369 $ 119,895 $ 108,046 As of December 31, Net book value of equipment held for operating lease 2017 2016 (in thousands) Region Europe $ 444,938 $ 384,661 Asia 258,501 265,736 South America 111,999 112,268 United States 251,959 148,208 Mexico 34,399 55,114 Canada 28,977 35,199 Middle East 61,606 8,971 Africa 2,959 42,949 Off-lease and other 147,233 83,497 Totals $ 1,342,571 $ 1,136,603 As of December 31, 2017, the lease status of the equipment held for operating lease (in thousands) was as follows: Lease Term Net Book Value Off-lease and other $ 147,233 Month-to-month leases 89,795 Leases expiring 2018 528,225 Leases expiring 2019 236,080 Leases expiring 2020 158,264 Leases expiring 2021 57,268 Leases expiring 2022 33,181 Leases expiring thereafter 92,525 $ 1,342,571 As of December 31, 2017, minimum future payments under non-cancelable leases were as follows: Year (in thousands) 2018 $ 110,666 2019 54,245 2020 31,913 2021 16,757 2022 10,652 Thereafter 13,242 $ 237,475 |
Investments
Investments | 12 Months Ended |
Dec. 31, 2017 | |
Investments | |
Investments | (3) Investments In 2011, the Company 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 and the Company uses the equity method in recording investment activity. WMES owned a lease portfolio of 32 engines with a net book value of $230.3 million as of December 31, 2017. In 2014, the Company entered into an agreement with China Aviation Supplies Import & Export Corporation (“CASC”) to participate in a joint venture named CASC Willis Engine Lease Company Limited (“CASC Willis”), a joint venture based in Shanghai, China. Each partner holds a fifty percent interest in the joint venture. The Company made a $15.0 million initial capital contribution, representing the fifty percent, up-front funding contribution to the new joint venture. CASC Willis acquires and leases jet engines to Chinese airlines and concentrates on the demand for leased commercial aircraft engines and aviation assets in the People’s Republic of China. During 2016, CASC was reorganized, with portions of its partnership interest in CASC Willis being transferred to three Chinese airlines and another government-owned entity. The 2016 CASC reorganization resulted in no voting structure change to the joint venture. CASC Willis owned a lease portfolio of 4 engines with a net book value of $58.8 million as of December 31, 2017. Years Ending December 31, 2017, 2016 and 2015 (in thousands) WMES CASC Total Investment in joint ventures as of December 31, 2014 $ 26,672 $ 14,918 $ 41,590 Investment 630 — 630 Earnings (losses) from joint ventures 1,274 (99) 1,175 Distribution (1,304) — (1,304) Foreign Currency Translation Adjustment — (796) (796) Investment in joint ventures as of December 31, 2015 $ 27,272 $ 14,023 $ 41,295 Investment 5,545 — 5,545 Earnings (losses) from joint ventures 2,032 (219) 1,813 Deferred gain on engines sale (1,212) — (1,212) Distribution (1,167) — (1,167) Foreign Currency Translation Adjustment — (868) (868) Investment in joint ventures as of December 31, 2016 $ 32,470 $ 12,936 $ 45,406 Investment — — — Earnings from joint ventures 5,867 1,291 7,158 Deferred gain on engine sale (443) (496) (939) Distribution (1,880) — (1,880) Foreign Currency Translation Adjustment — 896 896 Investment in joint ventures as of December 31, 2017 $ 36,014 $ 14,627 $ 50,641 “Other revenue” on the Consolidated Statements of Income includes management fees earned of $2.4 million, $2.1 million and $1.7 million during the years ended December 31, 2017, 2016 and 2015, respectively, related to the servicing of engines for the WMES lease portfolio. During 2015, WMES consigned an engine for part out and sale to Willis Aero. The value of the engine is $0.1 million as of December 31, 2017. Summarized financial information for 100% of WMES is presented in the following table: Years Ended December 31, 2017 2016 2015 (in thousands) Revenue $ 40,211 $ 35,463 $ 26,909 Expenses 28,754 31,669 24,574 WMES net income $ 11,457 $ 3,794 $ 2,335 December 31, 2017 2016 (in thousands) Total assets $ 246,309 $ 293,299 Total liabilities 165,228 219,881 Total WMES net equity $ 81,081 $ 73,418 |
Debt Obligations
Debt Obligations | 12 Months Ended |
Dec. 31, 2017 | |
Debt Obligations | |
Debt Obligations | (4) Debt Obligations Debt obligations consisted of the following: As of December 31, 2017 2016 (in thousands) Credit facility at a floating rate of interest of one-month LIBOR plus 1.50% at December 31, 2017, secured by engines. The facility has a committed amount of $890.0 million at December 31, 2017, which revolves until the maturity date of April 2021 $ 491,000 $ 608,000 WEST III Series A 2017-1 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042, secured by engines 289,295 — WEST III Series B 2017-1 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042, secured by engines 41,370 — WEST II Series 2012-A term notes payable at a fixed rate of interest of 5.50%, maturing in September 2037, secured by engines 259,022 279,541 Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024, secured by an aircraft 12,720 14,453 Note payable at a variable interest rate of one-month LIBOR plus 2.25%, maturing in January 2018, secured by engines 10,336 11,709 1,103,743 913,703 Less: unamortized debt issuance costs (18,338) (13,448) Total debt obligations $ 1,085,405 $ 900,255 One-month LIBOR was 1.57% and 0.77% as of December 31, 2017 and December 31, 2016, respectively. Principal outstanding at December 31, 2017, is repayable as follows: Year (in thousands) 2018 $ 48,401 2019 38,537 2020 38,137 2021 (includes $491.0 million outstanding on revolving credit facility) 529,374 2022 190,889 Thereafter 258,405 $ 1,103,743 Virtually all of the above debt requires ongoing compliance with the covenants of each financing, including debt/equity ratios, minimum tangible net worth and minimum interest coverage ratios, and other eligibility criteria including customer and geographic concentration restrictions. The Company also has certain negative financial covenants such as liens, advances, change in business, sales of assets, dividends and stock repurchases. These covenants are tested either monthly or quarterly and the Company was in full compliance with all covenant requirements at December 31, 2017. At December 31, 2017, the Company had a revolving credit facility to finance the acquisition of equipment 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. In April 2016, the Company entered into a Third Amended and Restated Credit Agreement which increased the revolving credit facility to $890.0 million from $700.0 million and extended the term to April 2021. This $890 million revolving credit facility has an accordion feature which would expand the entire credit facility up to $1 billion. As of December 31, 2017 and 2016, $399.0 million and $282.0 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. Under the revolving credit facility, all subsidiaries except WEST II and WEST III 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. At December 31, 2017, $330.7 million of WEST III term notes were outstanding. The assets of WEST III are not available to satisfy the Company’s obligations other than the obligations specific to WEST III. WEST III is consolidated for financial statement presentation purposes. WEST III’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 III’s maintenance of adequate reserves and capital. Under WEST III, 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 lease security deposits are formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. The WEST III indenture requires that a minimum threshold of maintenance reserve and security deposit balances be held in restricted cash accounts. At December 31, 2017 and 2016, $259.0 million and $279.5 million of WEST II term notes were outstanding, respectively. The assets of WEST II are not available to satisfy the Company’s obligations 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, the WEST II indenture requires that a portion of maintenance reserve payments and all lease security deposits be held in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. In September 2016, the Company entered into an amendment (the “Amendment No. 2”) to the Amended and Restated Trust Agreement of WEST II, as amended by Trust Amendment No. 1, dated as of September 14, 2012. The Amendment No. 2 allows the Company to make additional equity contributions to fund engine maintenance expenses, to make up shortfalls in required net sale proceeds from engine dispositions and to provide additional funds in the acquisition of replacement engines for WEST II. These potential future equity contributions by the Company are voluntary. The Amendment No. 2 also increases the percentage of WEST II engines subject to disposition and modifies certain concentration limits. In July 2014, the Company closed on a loan with a ten year term totaling $13.4 million. During the second quarter of 2016, the Company closed on two additional loans totaling $4.7 million, repayable over the same initial ten year term. The interest is payable at fixed rates ranging from 2.60% to 2.97% for the initial five years of the loan term and principal and interest is paid monthly. The loans provided 100% of the funding for the purchase of a corporate aircraft and subsequent modifications and upgrades. The balance outstanding on these loans was $12.7 million and $14.5 million as December 31, 2017 and December 31, 2016, respectively. In January 2014, the Company extended the term of an existing loan that was scheduled to mature in January 2015. The loan had a term of 4 years and was subsequently repaid at the maturity date in January 2018. Interest was payable at one-month LIBOR plus 2.25% and principal and interest was paid quarterly. The loan was secured by three engines. The balance outstanding on this loan was $10.3 million and $11.7 million as of December 31, 2017 and December 31, 2016, respectively. In March 2015, the Company paid off the $23.1 million balance of two term notes at a 5% discount. This transaction resulted in the recording of a $1.2 million gain on debt extinguishment which has been included in the Consolidated Statement of Income for the year ended December 31, 2015. |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments | |
Derivative Instruments | (5) Derivative Instruments The Company periodically holds interest rate derivative instruments to mitigate exposure to changes in interest rates, in particular one-month LIBOR, with $501.3 million and $619.7 million of borrowings at December 31, 2017 and 2016, respectively, at variable rates. As a matter of policy, management does not use derivatives for speculative purposes. During 2016, the Company entered into one interest rate swap agreement which has notional outstanding amount of $100.0 million, with remaining terms of 40 months as of December 31, 2017. The fair value of the swap at December 31, 2017 and 2016 was $1.1 million and $68,000, respectively, representing a net asset. The Company recorded a $0.6 million, $25,000 and nil expense to net finance costs during the three years ended December 31, 2017, respectively from derivative investments. The Company estimates the fair value of derivative instruments using a discounted cash flow technique and has used creditworthiness inputs that corroborate 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. Management believes it has applied assumptions consistently during the period. The Company applies hedge accounting and accounts for the change in fair value of its cash flow hedges through other comprehensive income for all derivative instruments. Effect of Derivative Instruments on Earnings in the Statements of Income and on Comprehensive Income The following tables provide additional information about the financial statement effects related to the cash flow hedges for the three years ended December 31, 2017: Amount of Gain (Loss) Recognized Location of Loss (Gain) Amount of Loss (Gain) Reclassified in OCI on Derivatives Reclassified from from Accumulated OCI into Income Derivatives in (Effective Portion) Accumulated OCI into (Effective Portion) Cash Flow Hedging Years Ended December 31, Income Years Ended December 31, Relationships 2017 2016 2015 (Effective Portion) 2017 2016 2015 (in thousands) (in thousands) Interest rate contracts $ 896 $ 69 $ — Interest expense $ 621 $ 25 $ — Total $ 896 $ 69 $ — Total $ 621 $ 25 $ — The derivatives were 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. 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 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 entered into during 2016 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 did not require the counterparty to provide collateral or other security to the Company. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Income Taxes | (6) Income Taxes The components of income before income taxes are as follows Years ended December 31, 2017 2016 2015 (in thousands) United States $ 35,050 $ 21,634 $ 11,319 Foreign 961 2,312 1,456 Income before income taxes $ 36,011 $ 23,946 $ 12,775 The components of income tax (benefit) expense for the three years ended December 31, 2017 were as follows: Federal State Foreign Total (in thousands) 2017 Current $ (58) $ 284 $ 20 $ 246 Deferred (31,198) 4,805 — (26,393) Total $ (31,256) $ 5,089 $ 20 $ (26,147) 2016 Current $ 324 $ 14 $ 440 $ 778 Deferred 8,807 292 — 9,099 Total $ 9,131 $ 306 $ 440 $ 9,877 2015 Current $ (208) $ 13 $ 476 $ 281 Deferred 4,871 1,163 — 6,034 Total $ 4,663 $ 1,176 $ 476 $ 6,315 The following is a reconciliation of the federal income tax (benefit) expense at the statutory rate of 34% to the effective income tax expense: Years Ended December 31, 2017 2016 2015 (in thousands) Statutory federal income tax expense $ 12,244 $ 8,142 $ 4,343 State taxes, net of federal benefit 3,360 202 776 Foreign tax paid 20 440 476 Change in federal tax rate (43,643) — — Tax consequences of the sale of engines to WMES 164 — (306) Uncertain tax positions — (40) (195) Permanent differences-nondeductible executive compensation 1,238 1,201 1,117 Permanent differences and other 470 (68) 104 Effective income tax (benefit) expense $ (26,147) $ 9,877 $ 6,315 The Company records tax expense or benefit for unusual or infrequent items discretely in the period in which they occur. The following table summarizes the activity related to the Company’s unrecognized tax benefits: (in thousands) Balance as of December 31, 2014 $ 464 Increases related to current year tax positions 5 Decreases due to tax positions released (195) Balance as of December 31, 2015 274 Increases related to current year tax positions 4 Decreases due to tax positions released (72) Balance as of December 31, 2016 206 Increases related to current year tax positions 4 Decreases due to tax positions expired (19) Balance as of December 31, 2017 $ 191 No reserve was established as of December 31, 2017 and December 31, 2016 for the exposure in Europe. If the Company is able to eventually recognize these uncertain tax positions, all of the unrecognized benefit would reduce the Company’s effective tax rate. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below: As of December 31, 2017 2016 (in thousands) Deferred tax assets: Unearned lease revenue $ 1,754 $ 1,839 State taxes 1,653 1,035 Reserves and allowances 2,531 1,659 Other accruals 643 2,501 Alternative minimum tax credit — 335 Foreign tax credit 42 42 Net operating loss carry forward 29,874 35,693 Charitable contributions 22 52 Total deferred tax assets 36,519 43,156 Less: valuation allowance (806) (1,280) Net deferred tax assets 35,713 41,876 Deferred tax liabilities: Depreciation and impairment on aircraft engines and equipment (114,347) (147,827) Other deferred tax assets (liabilities) 437 422 Net deferred tax liabilities (113,910) (147,405) Other comprehensive loss deferred tax asset (83) 551 Net deferred tax liabilities $ (78,280) $ (104,978) As of December 31, 2017, the Company had net operating loss carry forwards of approximately $138.0 million for federal tax purposes and $1.0 million for state tax purposes. The federal net operating loss carry forwards will expire at various times from 2023 to 2037 and the state net operating loss carry forwards will expire at various times from 2023 to 2037. During 2014, a valuation allowance of $1.3 million was established for the net operating losses expiring in California for the periods 2017 to 2024. The Company’s ability to utilize the net operating loss and tax credit carry forwards in the future may be subject to restriction in the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax law. As of December 31, 2017, the Company included the alternative minimum tax credit of approximately $0.4 million for federal income tax purposes as a tax receivable and will recognize this credit between 2-4 years to offset future regular tax liabilities. Management believes that no valuation allowance is required on deferred tax assets related to federal net operating loss carry forwards, as it is more likely than not that all amounts are recoverable through future taxable income. The open tax years for federal and state tax purposes are from 2014-2017 and 2013-2017, respectively. The decrease in the Company’s valuation allowance is related to the increase in California’s state apportionment percentage due to the Company’s increased leases with US airlines, in particular to the 2015 spare engine support of Southwest’s fleet of Boeing 737NG aircraft. As a result of this increase, the Company is able to utilize the California net operating losses (“NOL’s”) and reduce the valuation allowance. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Company has calculated the impact of the Act in the year end income tax provision in accordance with management’s understanding of the Act and guidance available as of the date of this filing and as a result have recorded a $39.6 million income tax benefit in the fourth quarter of 2017, the period in which the legislation was enacted. The amount related to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future, was $43.6 million, which reduced the fourth quarter tax expense of $4 million to a benefit of $39.6 million. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | (7) Fair Value Measurements The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision. Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value: 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. The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: · Cash and cash equivalents, restricted cash, operating lease related receivables, and accounts payable : The amounts reported in the accompanying Consolidated Balance Sheets approximate fair value due to their short-term nature. · Debt obligations : The carrying amount of the Company’s outstanding balance on its Debt obligations as of December 31, 2017 and 2016 was estimated to have a fair value of approximately $1,090.0 million and $864.0 million, respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each year end. Assets Measured and Recorded at Fair Value on a Recurring Basis As of December 31, 2017 and 2016, the Company measured the fair value of its interest rate swap of $100.0 million (notional amount) based on Level 2 inputs, due to the usage of inputs that can be corroborated by observable market data. The Company estimates the fair value of derivative instruments using a discounted cash flow technique and has used creditworthiness inputs that corroborate observable market data evaluating the Company’s and counterparties’ risk of non-performance. The interest rate swap agreement had a net fair value of $1.1 million and $68,000 as of December 31, 2017 and 2016, respectively. In 2017, 2016 and 2015, $0.6 million, $25,000 and nil, respectively, was realized through the income statement as an increase in interest expense. The following table shows by level, within the fair value hierarchy, the Company’s assets and liabilities at fair value as of: Assets and (Liabilities) at Fair Value December 31, 2017 December 31, 2016 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (in thousands) (in thousands) Derivatives $ — $ 1,129 $ — $ 1,129 $ — $ 69 $ — $ 69 Total $ — $ 1,129 $ — $ 1,129 $ — $ 69 $ — $ 69 Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company determines 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. At December 31, 2017 and 2016, the Company used Level 2 inputs to measure write down of equipment held for lease, equipment held for sale, and spare parts inventory. Assets at Fair Value Total Losses December 31, 2017 December 31, 2016 December 31, Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 2017 2016 (in thousands) (in thousands) Equipment held for lease $ — $ 23,255 $ — $ 23,255 $ — $ 1,196 $ — $ 1,196 $ (12,879) $ (3,674) Equipment held for sale — 39,261 — 39,261 — 8,976 — 8,976 (8,708) (5,365) Spare parts inventory — 5,336 — 5,336 — 1,538 — 1,538 (3,343) (475) Total $ — $ 67,852 $ — $ 67,852 $ — $ 11,710 $ — $ 11,710 $ $ (9,514) Write-downs of equipment to their estimated fair values totaled $24.9 million for the year ended December 31, 2017 which included write-downs of $16.9 million for the adjustment of the carrying value of nine impaired engines and $4.7 million to adjust the carrying value of five impaired aircraft within the portfolio to reflect estimated market value. A writedown of $5.5 million was recorded due to the adjustment of the carrying value for six impaired engines and one impaired aircraft within the portfolio to reflect estimated market value. A further write-down of equipment totaling $2.0 million was recorded in the year ended December 31, 2016 due to a management decision to consign one engine for part-out and sale, in which the asset’s net book value exceeded the estimated proceeds. An additional writedown of $2.0 million was recorded in year ended December 31, 2016 to adjust the carrying value of engine parts held on consignment for which market conditions for the sale of parts has changed. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share | |
Earnings Per Share | (8) Earnings Per Share Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed exercise of common stock options and the vesting of restricted stock using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. Additionally, redeemable preferred stock is not convertible and does not affect dilutive shares. The computations of diluted weighted average earnings per common do not include approximately 700, Nil and 4,300 restricted shares for the year ended December 31, 2017, 2016, and 2015, respectively, as the effect of their inclusion would have been antidilutive to earnings per share. The following table presents the calculation of basic and diluted EPS: Years Ended December 31, 2017 2016 2015 (in thousands) Net income attributable to common shareholders $ 60,299 $ 13,780 $ 6,460 Basic weighted average common shares outstanding 6,074 6,570 7,817 Potentially dilutive common shares 146 144 170 Diluted weighted average common shares outstanding 6,220 6,714 7,987 Basic weighted average earnings per common share $ 9.93 $ 2.10 $ 0.83 Diluted weighted average earnings per common share $ 9.69 $ 2.05 $ 0.81 The difference between average common shares outstanding to calculate basic and assuming full dilution is due to options outstanding under the 1996 Stock Option/Stock Issuance Plan and restricted stock issued under the 2007 Stock Incentive Plan. |
Commitments, Contingencies, Gua
Commitments, Contingencies, Guarantees and Indemnities | 12 Months Ended |
Dec. 31, 2017 | |
Commitments, Contingencies, Guarantees and Indemnities | |
Commitments, Contingencies, Guarantees and Indemnities | (9) Commitments, Contingencies, Guarantees and Indemnities Future minimum payments under operating lease agreements are as follows: Years Ending December 31, (in thousands) 2018 $ 1,023 2019 425 2020 — 2021 — 2022 — Thereafter — Total $ 1,448 Other obligations Other obligations, such as certain purchase obligations are not recognized as liabilities in the consolidated financial statements but are required to be disclosed in the footnotes to the financial statements. These funding commitments could potentially require the Company’s performance in the event of demands by third parties or contingent events. As of December 31, 2017, the Company had $124.0 million in purchase commitments of engines that will be satisified within one fiscal year. The purchase obligations are subject to escalation based on the closing date of each transaction. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity | |
Equity | (10) Equity Common Stock Repurchase On September 27, 2012, the Company announced that its Board of Directors authorized a plan to repurchase up to $100.0 million of its common stock over the next 5 years. The Board of Directors reaffirmed the repurchase plan on April 21, 2016. During 2017, the Company repurchased 155,312 shares of common stock for approximately $3.5 million under this program, at a weighted average price of $22.83 per share. During 2016, the Company repurchased 1,212,230 shares of common stock for approximately $29.0 million under this program, at a weighted average price of $23.71 per share. The repurchased shares were subsequently retired. Redeemable Preferred Stock On October 11, 2016, the Company entered into a stock purchase agreement with Development Bank of Japan Inc. (“DBJ”), relating to the sale and issuance of an aggregate of 1,000,000 shares of the Company’s 6.5% Series A Preferred Stock, $0.01 par value per share (the “Series A Preferred Stock”) at a purchase price of $20.00 per share. The purchase and sale of the Series A Preferred Stock closed on October 14, 2016. The net proceeds to the Company after deducting investor fees were $19.8 million. On September 22, 2017, the Company entered into a second stock purchase agreement with DBJ relating to the sale and issuance of an aggregate of 1,500,000 shares of the Company’s 6.5% Series A-2 Preferred Stock, $0.01 par value per share (the “Series A-2 Preferred Stock”) at a purchase price of $20.00 per share. The purchase and sale of the Series A-2 Preferred Stock closed on September 27, 2017. The net proceeds to the Company after deducting issuance costs were $29.7 million. The rights and privileges of the Preferred Stock are described below: Voting Rights: Holders of the Preferred Stock do not have general voting rights. Dividends: The Series A Preferred Stock and Series A-2 Preferred Stock carry quarterly dividends at the rate per annum of 6.5% per share. During 2017, the Series A Preferred Stock paid total dividends of $1.3 million. The first dividend for the Series A-2 Preferred Stock totaled $0.6 million and was paid on January 15, 2018. Liquidation Preference: The holders of the Preferred Stock have preference in the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the corporation, including a merger or consolidation. Upon such liquidation event, the Preferred Stockholders are entitled to be paid out of the assets of the Company available for distribution to its stockholders after payment of all the Company’s indebtedness and other obligations and before any payment shall be made to the holders of common stock or any other class or series of stock ranking on liquidation junior to the Preferred Stock an amount equal to the greater of $20.00 per share, plus any declared but unpaid dividends. Redemption: The Preferred Stock has no stated maturity date, however the holders of the Preferred Stock have the option to require the Company to redeem all or any portion of the Preferred Stock for cash upon occurrence of any significant changes in operating results, ownership structure, or liqudity events as defined in the Preferred Stock purchase agreements. The redemption price is $20.00 per share plus dividends accrued but not paid. The Company is accreting the Preferred Stock to redemption value over the period from the date of issuance to the date first callable by the Preferred Stockholders (October 2023 for the Series A Preferred Stock and September 2024 for the Series A-2 Preferred Stock), such that the carrying amounts of the securities will equal the redemption amounts at the earliest redemption dates. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 12 Months Ended |
Dec. 31, 2017 | |
Stock-Based Compensation Plans | |
Stock-Based Compensation Plans | (11) Stock-Based Compensation Plans The components of stock compensation expense for the three years ended December 31, 2017 were as follows: 2017 2016 2015 (in thousands) 2007 Stock Incentive Plan $ 4,207 $ 3,681 $ 4,102 Employee Stock Purchase Plan 63 36 48 Total Stock Compensation Expense $ 4,270 $ 3,717 $ 4,150 The significant stock compensation plans are described below. The 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 available in the form of either restricted stock awards (“RSA’s”) or stock options. On May 28, 2015, the Company’s shareholders authorized an increase in the number of shares of Common Stock available for grant by 800,000 shares bringing the total to 2,800,000 shares authorized. The RSA’s are subject to service-based vesting, typically between one and four years, where a specific period of continued employment must pass before an award vests. With the modified retrospective adoption of ASU 2016-09 on January 1, 2017, the Company no longer reduces stock-based compensation by estimated forfeitures and instead accounts for forfeitures when they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant‑date fair value of the award tranche that is actually vested at that date. As of December 31, 2017, the Company has granted 2,615,960 RSA’s under the 2007 Plan. Of this amount, 166,744 shares were cancelled and returned to the pool of shares which could be granted under the 2007 Plan resulting in a net number of 350,784 shares available as of December 31, 2017 for future issuance. The fair value of the restricted stock awards equaled the stock price at the date of grants. The following table summarizes restricted stock acitivty under the 2007 Plan for the three years ended December 31, 2017: Weighted Average Aggregate Grant Number Outstanding Grant Date Fair Value Date Fair Value Balance as of December 31, 2014 525,356 $ 13.71 $ 8,786,611 Shares granted 146,440 18.53 2,713,159 Shares forfeited — — — Shares vested (275,201) 15.87 (4,368,570) Balance as of December 31, 2015 396,595 $ 17.98 $ 7,131,200 Shares granted 136,645 21.55 2,944,941 Shares forfeited (20,377) 17.79 (362,536) Shares vested (213,528) 17.12 (3,655,269) Balance as of December 31, 2016 299,335 $ 20.24 $ 6,058,336 Shares granted 215,603 24.89 5,365,731 Shares forfeited (10,999) 24.38 (268,200) Shares vested (175,817) 19.61 (3,448,628) Balance as of December 31, 2017 328,122 $ 23.49 $ 7,707,239 At December 31, 2017 the stock compensation expense related to the restricted stock awards that will be recognized over the average remaining vesting period of 1.7 years totalled $5.1 million. At December 31, 2017, the intrinsic value of unvested restricted stock awards is $8.2 million. The 2007 Plan was extend in May 2015 for 5 years until May 2020. Under the Employee Stock Purchase Plan (“ESPP”), as amended and restated effective May 20, 2010, 250,000 shares of common stock have been reserved for issuance. Eligible employees may designate not more than 10% of their cash compensation to be deducted each pay period for the purchase of common stock under the Purchase Plan. Participants may purchase not more than 1,000 shares or $25,000 of common stock in any one calendar year. Each January 31 and July 31 shares of common stock are purchased with the employees’ payroll deductions from the immediately preceding six months at a price per share of 85% of the lesser of the market price of the common stock on the purchase date or the market price of the common stock on the date of entry into an offering period. In 2017, 2016, and 2015, 11,485, 11,014, and 10,374 shares of common stock, respectively, were issued under the ESPP. The Company issues new shares through its transfer agent upon employee stock purchase. The weighted average per share fair value of the employee’s purchase rights under the Purchase Plan for the rights granted was $7.39, $6.35 and $6.17 for 2017, 2016 and 2015, respectively. The Company granted stock options under its 1996 Stock Option/Stock Issuance Plan (the “1996 Plan”), as amended and restated as of March 1, 2003, until the plan terminated in June 2006. In the year ended December 31, 2015, 49,000 options were exercised with a total intrinsic value at exercise date of approximately $0.3 million. There are no options remaining under the 1996 Plan. |
Employee 401(k) Plan
Employee 401(k) Plan | 12 Months Ended |
Dec. 31, 2017 | |
Employee 401(k) Plan | |
Employee 401(k) Plan | (12) Employee 401(k) Plan The Company adopted The Willis 401(k) Plan (the 401(k) Plan) effective as of January 1997. The 401(k) Plan provides for deferred compensation as described in Section 401(k) of the Internal Revenue Code. The 401(k) Plan is a contributory plan available to all full-time and part-time employees in the United States. In 2017, employees who participated in the 401(k) Plan could elect to defer and contribute to the 401(k) Plan up to 20% of pretax salary or wages up to $18,000 (or $24,000 for employees at least 50 years of age). The Company matches 50% of employee contributions up to 8% of the employee’s salary and capped at $12,000, which totaled $0.4 million for the three years ended December, 31, 2017, 2016, and 2015, respectively. |
Quarterly Consolidated Financia
Quarterly Consolidated Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Consolidated Financial Information (Unaudited) | |
Quarterly Consolidated Financial Information (Unaudited) | (13) Quarterly Consolidated Financial Information (Unaudited) The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2017, 2016, and 2015 (in thousands, except per share data). 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ 77,946 $ 67,844 $ 65,861 $ 63,189 $ 274,840 Net income attributable to common shareholders $ 7,839 $ 5,657 $ 4,939 $ 41,864 $ 60,299 Basic earnings per common share $ $ $ $ $ Diluted earnings per common share (1) $ $ $ $ $ Basic weighted average common shares outstanding 6,114 6,036 6,055 6,090 6,074 Diluted weighted average common shares outstanding (1) 6,240 6,142 6,173 6,201 6,220 (1) Diluted earnings per common share and diluted weighted average common shares outstanding have been adjusted to properly exclude the effects of income tax benefits on unvested restricted stock in accordance with ASU 2016-09. The adjustment impacted diluted earnings per common share and diluted weighted average common shares outstanding for the first quarter of 2017 by $0.01 and approximately 23,000 shares, respectively. 2016 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ 50,719 $ 49,618 $ 51,461 $ 55,476 $ 207,274 Net income attributable to common shareholders $ 4,011 $ 3,366 $ 3,985 $ 2,418 $ 13,780 Basic earnings per common share $ $ $ $ $ Diluted earnings per common share $ $ $ $ $ Basic weighted average common shares outstanding 7,149 6,685 6,307 6,149 6,570 Diluted weighted average common shares outstanding 7,272 6,819 6,448 6,275 6,714 2015 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ 41,336 $ 43,810 $ 57,730 $ 55,186 $ 198,062 Net income (loss) attributable to common shareholders $ 1,358 $ (486) $ 2,551 $ 3,037 $ 6,460 Basic earnings (loss) per common share $ $ $ $ $ 0.83 Diluted earnings (loss) per common share $ $ $ $ $ 0.81 Basic weighted average common shares outstanding 7,848 7,841 7,839 7,739 7,817 Diluted weighted average common shares outstanding 8,044 7,841 7,963 7,872 7,987 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions | |
Related Party Transactions | ( 14) Related Party Transactions Stock Buybacks On April 1, 2016, in a transaction approved by a Special Committee of the Board of Directors, the Company purchased 60,000 shares of its common stock directly from the Company’s Chief Executive Officer, Charles F. Willis. The purchase price was $21.59 per share, the closing price of the Company’s common stock as of March 31, 2016. On December 8, 2016, in a transaction approved by a Special Committee of the Board of Directors, the Company purchased 40,000 shares of its common stock directly from the Company’s Chief Executive Officer, Charles F. Willis. The purchase price was $24.95 per share, a 2% discount to the closing price of the Company’s common stock as of December 8, 2016 of $25.46. Joint Ventures “Other revenue” on the Consolidated Statement of Income includes management fees earned of $2.4 million, $2.1 million and $1.7 million during the years ended December 31, 2017, 2016 and 2015, respectively, related to the servicing of engines for the WMES lease portfolio. During 2017, the Company sold two engines to WMES for $14.8 million. During 2017, the Company sold one engine to CASC Willis for $11.2 million. Other During 2017, the Company accrued approximately $80,000 of expenses payable to Mikchalk Lake, LLC, an entity in which the Company’s Chief Executive Officer retains an ownership interest. These expenses were for lodging and other business related services. These transactions were approved by the Board’s independent Directors. |
Reportable Segments
Reportable Segments | 12 Months Ended |
Dec. 31, 2017 | |
Reportable Segments | |
Reportable Segments | (15) Reportable Segments The Company operates in two reportable 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, the selective purchase and resale of commercial aircraft engines and other aircraft equipment, and engine management 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 reportable segments (in thousands): Leasing and Intercompany For the year ended December 31, 2017 Related Operations Spare Parts Sales Eliminations Total Revenue: Lease rent revenue $ 130,369 $ — $ — $ 130,369 Maintenance reserve revenue 80,189 — — 80,189 Spare parts and equipment sales 22,285 29,138 — 51,423 Gain on sale of leased equipment 4,929 — — 4,929 Other revenue 7,702 1,601 (1,373) 7,930 Total revenue 245,474 30,739 (1,373) 274,840 Expenses: Depreciation and amortization expense 65,677 346 — 66,023 Cost of spare parts and equipment sales 17,344 23,504 — 40,848 General and administrative 52,024 3,713 — 55,737 Net finance costs 48,720 — — 48,720 Other expense 34,659 — — 34,659 Total expenses 218,424 27,563 — 245,987 Earnings from operations $ 27,050 $ 3,176 $ (1,373) $ 28,853 Leasing and Intercompany For the year ended December 31, 2016 Related Operations Spare Parts Sales Eliminations Total Revenue: Lease rent revenue $ 119,895 $ — $ — $ 119,895 Maintenance reserve revenue 57,091 — — 57,091 Spare parts and equipment sales 3,335 14,448 — 17,783 Gain on sale of leased equipment 3,482 — — 3,482 Other revenue 8,711 1,947 (1,635) 9,023 Total revenue 192,514 16,395 (1,635) Expenses: Depreciation and amortization expense 65,939 341 — 66,280 Cost of spare parts and equipment sales 2,394 10,899 — 13,293 General and administrative 44,703 3,077 — 47,780 Net finance costs 40,813 468 — 41,281 Other expense 16,507 — — 16,507 Total expenses 170,356 14,785 — Earnings from operations $ 22,158 $ 1,610 $ (1,635) $ 22,133 Leasing and Intercompany For the year ended December 31, 2015 Related Operations Spare Parts Sales Eliminations Total Revenue: Lease rent revenue $ 108,046 $ — $ — $ 108,046 Maintenance reserve revenue 53,396 — — 53,396 Spare parts and equipment sales 9,975 15,607 — 25,582 Gain on sale of leased equipment 8,320 — — 8,320 Other revenue 2,517 659 (458) 2,718 Total revenue 182,254 16,266 (458) 198,062 Expenses: Depreciation and amortization expense 69,135 289 — 69,424 Cost of spare parts and equipment sales 5,734 12,115 — 17,849 General and administrative 39,974 2,770 — 42,744 Net finance costs 37,474 387 — 37,861 Other expense 18,584 — — 18,584 Total expenses 170,901 15,561 — 186,462 Earnings from operations $ 11,353 $ 705 $ (458) $ 11,600 Total assets as of December 31, 2017 $ 1,580,094 $ 23,337 $ — $ 1,603,431 Total assets as of December 31, 2016 $ 1,307,460 $ 30,427 $ — $ 1,337,887 Total assets as of December 31, 2015 $ 1,267,414 $ 26,871 $ — $ 1,294,285 |
SCHEDULE I - Parent Company Inf
SCHEDULE I - Parent Company Information | 12 Months Ended |
Dec. 31, 2017 | |
SCHEDULE I - Parent Company Information | |
SCHEDULE I - Parent Company Information | WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES SCHEDULE I — CONDENSED BALANCE SHEETS Parent Company Information (In thousands, except share data) December 31, December 31, 2017 2016 ASSETS Cash and cash equivalents $ 2,860 $ 4,574 Equipment held for operating lease, less accumulated depreciation 662,162 811,091 Maintenance rights 3,296 16,468 Equipment held for sale 34,084 22,446 Operating lease related receivables, net of allowances 7,980 7,853 Spare parts inventory 11,643 17,554 Due from affiliates, net 18,439 24,723 Investments 50,641 45,406 Investment in subsidiaries 50,047 (2,879) Property, equipment & furnishings, less accumulated depreciation 15,238 16,096 Intangible assets, net 271 1,021 Prepaid deposits 36,455 4,399 Other assets, net 8,385 7,890 Total assets $ 901,501 $ 976,642 LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY Liabilities: Accounts payable and accrued expenses $ 15,686 $ 13,428 Due to affiliates, net 2,300 — Deferred income taxes 7,456 43,265 Debt obligations 508,350 626,876 Maintenance reserves 36,809 54,655 Security deposits 17,795 18,555 Unearned revenue 4,724 3,843 Total liabilities 593,120 760,622 Redeemable preferred stock ($0.01 par value, 2,500 shares authorized; 2,500 and 1,000 shares issued and outstanding at December 31, 2017 and 2016, respectively) 49,471 19,760 Shareholders’ equity: Common stock ($0.01 par value, 20,000 shares authorized; 6,419 and 6,402 shares issued and outstanding at December 31, 2017 and 2016, respectively) 64 64 Paid-in capital in excess of par 2,319 2,512 Retained earnings 256,301 194,729 Accumulated other comprehensive income (loss), net of income tax (expense) benefit 226 (1,045) Total shareholders’ equity 258,910 196,260 Total liabilities, redeemable preferred stock and shareholders' equity $ 901,501 $ 976,642 WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES SCHEDULE I — CONDENSED STATEMENTS OF INCOME Parent Company Information (In thousands) Years Ended December 31, 2017 2016 2015 REVENUE Lease rent revenue $ 72,580 $ 76,283 $ 63,443 Maintenance reserve revenue 46,163 30,742 29,937 Spare parts and equipment sales 35,903 8,404 20,210 Gain on sale of leased equipment 3,696 3,322 2,420 Other revenue 9,881 10,660 7,017 Total revenue 168,223 129,411 123,027 EXPENSES Depreciation and amortization expense 40,560 43,451 40,623 Cost of spare parts and equipment sales 29,705 6,591 13,559 Write-down of equipment 17,881 5,989 6,764 General and administrative 42,004 39,201 35,898 Technical expense 7,058 4,637 6,805 Net finance costs 25,215 23,358 18,448 Total expenses 162,423 123,227 122,097 Earnings from operations 5,800 6,184 930 Earnings from joint ventures 7,158 1,813 1,175 Income before income taxes 12,958 7,997 2,105 Income tax expense 4,843 4,710 2,277 Equity in income of subsidiaries, net of tax of $(30,990), $5,168, and $4,037 at December 31, 2017, 2016 and 2015, respectively 54,043 10,782 6,632 Net income 62,158 14,069 6,460 Preferred stock dividends 1,813 281 — Accretion of preferred stock issuance costs 46 8 — Net income attributable to common shareholders $ 60,299 $ 13,780 $ 6,460 WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES SCHEDULE I — CONDENSED STATEMENTS OF COMPREHENSIVE INCOME Parent Company Information (In thousands) Years Ended December 31, 2017 2016 2015 Net income $ 62,158 $ 14,069 $ 6,460 Other comprehensive income: Currency translation adjustment 1,061 (868) (796) Unrealized gains on derivative instruments 896 69 — Net gain (loss) recognized in other comprehensive income 1,957 (799) (796) Tax (expense) benefit related to items of other comprehensive income (686) 275 275 Other comprehensive income (loss) 1,271 (524) (521) Total comprehensive income $ 63,429 $ 13,545 $ 5,939 WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES SCHEDULE I — CONDENSED STATEMENTS OF CASH FLOWS Parent Company Information (In thousands) Years Ended December 31, 2017 2016 2015 Cash flows from operating activities: Net income $ 62,158 $ 14,069 $ 6,460 Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of subsidiaries (54,043) (10,782) (6,632) Depreciation expense 40,560 43,451 40,623 Write-down of equipment 17,881 5,989 6,764 Stock-based compensation expenses 4,270 3,717 4,150 Excess tax benefit from stock-based compensation — 236 26 Amortization of deferred costs 3,085 2,704 2,646 Allowances and provisions 76 (1) (17) Gain on sale of leased equipment (3,696) (3,322) (2,420) Gain on insurance settlement (1,288) — — Income from joint ventures (7,158) (1,813) (1,175) Loss on extinguishment of debt — 137 — Deferred income taxes 4,843 4,710 1,806 Changes in assets and liabilities: Receivables 5,366 (4,884) (865) Spare parts inventory 5,612 (1,608) 4,547 Intangibles — (750) — Other assets (4,259) (2,648) (2,420) Accounts payable and accrued expenses 2,370 3,723 4,471 Due to / from subsidiaries 8,584 (4,437) (1,242) Maintenance reserves 7,906 16,583 5,227 Security deposits 6,876 (2,283) 5,354 Unearned lease revenue 906 878 817 Net cash provided by operating activities 100,049 63,669 68,120 Cash flows from investing activities: Increase in investment in subsidiaries (45,609) (2,329) (23,923) Distributions received from subsidiaries 347,626 15,500 3,791 Proceeds from sale of equipment held for operating lease (net of selling expenses) 33,118 60,893 18,792 Capital contribution to joint venture — (5,545) (630) Proceeds from insurance settlement 14,886 — — Distributions received from joint venture 1,880 1,167 1,304 Maintenance rights payments received — — 5,802 Purchase of equipment held for operating lease (354,918) (167,874) (161,888) Purchase of maintenance rights — (5,530) (8,844) Purchase of property, equipment and furnishings (268) (443) (3,736) Net cash used in investing activities (3,285) (104,161) (169,332) Cash flows from financing activities: Proceeds from issuance of notes payable 350,500 149,000 192,700 Debt issuance cost — (3,808) (13) Principal payments on notes payable (470,606) (93,055) (71,846) Interest bearing security deposits (2,261) 455 (1,606) Proceeds from shares issued under stock compensation plans 177 155 518 Repurchase of common stock (3,546) (28,958) (16,500) Proceeds from issuance of preferred stock 29,663 19,752 — Preferred stock dividends (1,311) — — Cancellation of restricted stock units in satisfaction of withholding tax (1,094) (1,369) (1,558) Net cash (used in) provided by financing activities (98,478) 42,172 101,695 (Decrease)/Increase in cash and cash equivalents (1,714) 1,680 483 Cash and cash equivalents at beginning of period 4,574 2,894 2,411 Cash and cash equivalents at end of period $ 2,860 $ 4,574 $ 2,894 Supplemental disclosures of cash flow information: Net cash paid for: Interest $ 21,761 $ 20,619 $ 16,462 Income Taxes $ 180 $ 20 $ 75 Supplemental disclosures of non-cash investing and financing activities: Engines and equipment transferred to the parent from its subsidiaries $ 17,910 $ 229 $ 41,410 Transfers from Equipment held for operating lease to Equipment held for sale $ 31,571 $ 18,194 $ 21,786 Transfers from Equipment held for sale to Spare parts inventory $ — $ — $ 6,061 Transfers from Property, equipment and furnishings to Equipment held for lease $ — $ 2,925 $ — Accrued preferred stock dividends $ 783 $ 281 $ — Accretion of preferred stock issuance costs $ 46 $ 8 $ — |
SCHEDULE II - VALUATION ACCOUNT
SCHEDULE II - VALUATION ACCOUNTS | 12 Months Ended |
Dec. 31, 2017 | |
SCHEDULE II - VALUATION ACCOUNTS | |
SCHEDULE II - VALUATION ACCOUNTS | WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES SCHEDULE II — VALUATION ACCOUNTS (In thousands) Additions Balance at Charged Net Beginning (Credited) (Deductions) Balance at of Period to Expense Recoveries End of Period Year Ended December 31, 2015 Accounts receivable, allowance for doubtful accounts $ 215 $ 697 $ — $ 912 Deferred tax valuation allowance $ 898 $ 382 $ — $ 1,280 Year Ended December 31, 2016 Accounts receivable, allowance for doubtful accounts $ 912 $ (125) $ — $ 787 Deferred tax valuation allowance $ 1,280 $ — $ — $ 1,280 Year Ended December 31, 2017 Accounts receivable, allowance for doubtful accounts $ 787 $ 162 $ — $ 949 Deferred tax valuation allowance $ 1,280 $ (474) $ — $ 806 Deductions in allowance for doubtful accounts represent uncollectible accounts written off, net of recoveries. |
Organization and Summary of S26
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Organization and Summary of Significant Accounting Policies | |
Organization | (a) Organization Willis Lease Finance Corporation with its subsidiaries (the “Company”) is a provider of aviation services whose primary focus is providing operating leases of commercial aircraft, aircraft engines and other aircraft-related equipment to air carriers, manufacturers and overhaul/repair facilities worldwide. The Company also engages in the selective purchase and resale of commercial aircraft engines. WLFC (Ireland) Limited, WLFC Funding (Ireland) Limited and WLFC Lease (Ireland) Limited are wholly-owned Irish subsidiaries of the Company formed to facilitate certain of the Company’s international leasing activities. Willis Aviation Finance Limited in Ireland is a wholly-owned subsidiary formed to facilitate the leasing and technical support of worldwide activities. Willis Lease France is a wholly-owned French subsidiary of the Company formed to facilitate sales and marketing activities in Europe. Willis Lease (China) Limited is a wholly-owned subsidiary of the Company formed to facilitate the acquisition and leasing of assets in China. Willis Engine Securitization Trust II (“WEST II” or the “WEST II Notes”) is a bankruptcy remote special purpose vehicle which was established for the purpose of financing aircraft engines through an asset-backed securitization (“ABS”). WEST Engine Acquisition LLC and Facility Engine Acquisition LLC are wholly-owned subsidiaries of WEST II and own the engines which secure the notes issued by WEST II. Willis Engine Securitization (Ireland) Limited is another wholly-owned subsidiary of WEST II and was established to facilitate certain international leasing activities by WEST II. WEST II is a variable interest entity which the Company owns 100% of the equity and consolidates in its financial statements. Willis Aeronautical Services, Inc. (“Willis Aero”) is a wholly-owned subsidiary whose primary focus is the sale of aircraft engine parts and materials through the acquisition or consignment from third parties of aircraft and engines. In 2016, the Company purchased, through a wholly owned subsidiary Willis Asset Management Limited (“Willis Asset Management”), the business and assets of Total Engine Support Limited (“TES”). TES had been the engine management and consulting business of the TES Aviation Group. Willis Asset Management has 393 engines, excluding WLFC engines, under management as of December 31, 2017. On August 4, 2017, the Company closed an asset-backed securitization through a newly-created, bankruptcy-remote, Delaware statutory trust, Willis Engine Structured Trust III (“WEST III” or the “WEST III Notes”), of which the Company is the sole beneficiary. The WEST III Notes were issued in two series, with the Series A Notes issued in an aggregate principal amount of $293.7 million and the Series B Notes in an aggregate principal amount of $42.0 million. The WEST III Notes are secured by a portfolio of 56 engines from the revolving credit facility. The Company used these funds, net of transaction expenses, to pay off part of its revolving credit facility totaling $491.0 million. WEST III is a variable interest entity which the Company owns 100% of the equity and consolidates in its financial statements. The assets and liabilities of WEST III will remain on the Company’s balance sheet. A portfolio of 56 commercial jet aircraft engines and leases thereof secures the obligations of WEST III under the ABS. The WEST III Notes have a scheduled amortization and are payable solely from revenue received by WEST III from the engines and the engine leases, after payment of certain expenses of WEST III. Series A Notes bear interest at a fixed rate of 4.69% per annum and Series B Notes bear interest at a fixed rate of 6.36% per annum. The WEST III 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 WEST III Notes are expected to be paid in 10 years. The legal final maturity of the Notes is August 15, 2042. In connection with the transactions described above, the Company entered into a Servicing Agreement and Administrative Agency Agreement with WEST III to provide certain engine, lease management and reporting functions for WEST III in return for fees based on a percentage of collected lease revenues and asset sales. Because WEST III is consolidated for financial statement reporting purposes, all fees eliminate upon consolidation. The assets of WEST III are not available to satisfy the Company’s obligations other than the obligations specific to WEST III. WEST III is consolidated for financial statement presentation purposes. WEST III’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 III’s maintenance of adequate reserves and capital. Under WEST III, 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 lease security deposits are formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. Minimum maintenance reserve payments and security deposits of $10.0 million and $1.0 million, respectively, are held in restricted cash accounts. |
Basis of Presentation and Principles of Consolidation | (b) Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of Willis Lease Finance Corporation and its wholly owned subsidiaries, including variable interest entities (“VIEs”) where the Company is the primary beneficiary in accordance with consolidation guidance. The Company evaluates all entities in which it has an economic interest firstly to determine whether for accounting purposes the entity is a variable interest entity or voting interest entity. If the entity is a variable interest entity the Company consolidates the financial statements of that entity if it is the primary beneficiary of the entities’ activities. If the entity is a voting interest entity the Company consolidates the entity when it has a majority of voting interests. Intercompany transactions and balances have been eliminated in consolidation. The condensed parent company financial statements should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes herein. |
Revenue Recognition | (c) Revenue Recognition Revenue from leasing of aircraft equipment is recognized as operating lease revenue on a straight-line basis over the terms of the applicable lease agreements. Revenue is not recognized when cash collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received. The Company regularly sells equipment from its lease portfolio. This equipment may or may not be subject to a lease at the time of sale. The gain or loss on such sales is recognized as revenue and consists of proceeds associated with the sale less the net book value of the asset sold and any direct costs associated with the sale. To the extent that deposits associated with the engine are not included in the sale, any such amount is included in the calculation of gain or loss. The Company evaluates sales arrangements under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition: Multiple Element Arrangements (“FASB ASC 605-25”), which addresses accounting for multiple element arrangements. The Company has determined that two deliverables, the sale of equipment and the management services, are separate units of accounting. Therefore, revenue is recognized in accordance with FASB ASC 605-10-S99, Revenue Recognition: Overall: SEC Materials, formerly SAB 104, for each unit. For multiple deliverable revenue arrangements, the Company allocates revenue to equipment sales and management services using the relative selling price method to recognize revenue when the revenue recognition criteria for each deliverable are met. The selling price of a deliverable is based on a hierarchy and if the Company is unable to establish vendor-specific objective evidence of selling price (“VSOE”) it uses third-party evidence of selling price (“TPE”), and if no such data is available, it uses a best estimated selling price (“BSP”). The objective of BSP is to determine the price at which the Company would transact a sale if the equipment or service were sold on a stand-alone basis. For management services, the selling price is based on TPE and is determined by reviewing information from management agreements entered into by other parties on a standalone basis which is then compared to the management agreements entered into with the investor group. The Company has determined that the fees charged on a standalone basis are comparable to the fees charged when the Company enters into the management agreements concurrent with the sale of a portfolio of engines. Accordingly, the Company determined that the fees charged for its management services are comparable to those charged by other asset managers for the same service. The Company recognizes revenue from management fees under equipment management agreements as earned on a monthly basis. Management fees are based upon a percentage of net lease rents of the investor group’s engine portfolio calculated on an accrual basis and recorded in Other revenue. Under the terms of some of the Company’s leases, the lessees pay use fees (also known as maintenance reserves) to the Company based on usage of the leased asset, which are designed to cover expected future maintenance costs. Some of these amounts are reimbursable to the lessee if they make specifically defined maintenance expenditures. Use fees received are recognized in revenue as maintenance reserve revenue if they are not reimbursable to the lessee. Use fees that are reimbursable are recorded as a maintenance reserve liability until they are reimbursed to the lessee or the lease terminates, at which time they are recognized in revenue as maintenance reserve revenue. Certain lessees may be significantly delinquent in their rental payments and may default on their lease obligations. As of December 31, 2017, the Company had an aggregate of approximately $8.3 million in lease rent and $5.6 million in maintenance reserve receivables more than 30 days past due. Inability to collect receivables or to repossess engines or other leased equipment in the event of a default by a lessee could have a material adverse effect on the Company. The Company estimates an allowance for doubtful accounts for lease receivables it does not consider fully collectible. The allowance for doubtful accounts includes the following: (1) specific reserves for receivables which are impaired for which management believes full collection is doubtful; and (2) a general reserve for estimated losses based on historical experience. The Company recognizes sales of spare parts upon shipping and the amount reported as cost of sales is recorded at specific cost. The Company recognizes service revenue from fees earned under engine maintenance service agreements as earned on a monthly basis. No customer accounted for greater than 10% of total lease rent revenue in 2017, 2016 and 2015. |
Other Revenue | (d) Other Revenue Other revenue consists primarily of management fee income, lease administration fees, third party consignment commissions earned by Willis Aero and other discrete revenue items. During the year ended December 31, 2017, other revenue included a net gain on an insurance settlement of $1.3 million related to a leased aircraft, fees earned related to engines managed on behalf of third parties and service fee revenue earned by Willis Asset Management. During the year ended December 31, 2016, other revenue included $4.0 million of security payments for aircraft upon default of a lessee. |
Equipment Held for Operating Lease | (e) Equipment Held for Operating Lease Aircraft assets held for operating lease are stated at cost, less accumulated depreciation. Certain costs incurred in connection with the acquisition of aircraft assets are capitalized as part of the cost of such assets. Major overhauls paid for by the Company, which improve functionality or extend the original useful life, are capitalized and depreciated over the shorter of the estimated period to the next overhaul (“deferral method”) or the remaining useful life of the equipment. The Company does not accrue for planned major maintenance. The cost of overhauls of aircraft assets under long term leases, for which the lessee is responsible for maintenance during the period of the lease, are paid for by the lessee or from reimbursable maintenance reserves paid to the Company in accordance with the lease, and are not capitalized. Based on specific aspects of the equipment, the Company generally depreciates engines on a straight-line basis over a 15-year period from the acquisition date to a 55% residual value. This methodology is believed to accurately reflect the Company’s typical holding period for the engine assets and, that the residual value assumption reasonably approximates the selling price of the assets 15 years from date of acquisition. The typical 15 year holding period is the estimated useful life of the Company’s engines based on its business model and plans, and represents how long the Company anticipates holding a newly acquired engine. The technical useful life of a new engine can be in excess of 25 years. The Company reviews the useful life and residual values of all engines periodically as demand changes to accurately depreciate the cost of equipment over the useful life of the engines. The aircraft owned by the Company are depreciated on a straight-line basis over an estimated useful life of 13 to 20 years to a 15% to 17% residual value. The spare parts packages owned by the Company are depreciated on a straight-line basis over an estimated useful life of 14 to 15 years to a 25% residual value. For engines or aircraft that are unlikely to be repaired at the end of the current expected useful lives, the Company depreciates the engines or aircraft over their estimated lives to a residual value based on an estimate of the wholesale value of the parts after disassembly. The useful life of older generation engines and aircraft may be significantly less based upon the technical status of the engine, as well as supply and demand factors. For these older generation engines and aircraft, the remaining useful life and the remaining expected holding period are typically the same. For older generation engines or aircraft that are unlikely to be repaired at the end of the current expected useful lives, the Company depreciates the engines or aircraft over their estimated lives to a residual value based on an estimate of the wholesale value of the parts after disassembly. As of December 31, 2017, 48 engines and 3 aircraft having a net book value of $80.1 million were depreciated under this policy with estimated useful lives ranging from 1 to 82 months. The Company adjusts its estimates annually for these older generation assets, including updating estimates of an engine’s or aircraft’s remaining operating life as well as future residual value expected from part-out based on the current technical status of the engine or aircraft. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets to be disposed are reported at the lower of carrying amount or fair value less cost to sell. Impairment is identified by comparison of undiscounted forecasted cash flows, including estimated sales proceeds, over the life of the asset with the assets’ book value. If the forecasted undiscounted cash flows are less than the book value the asset is written down to its fair value. Fair value is determined per individual asset by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors considered relevant by the Company. The Company conducts a formal annual review of the carrying value of long-lived assets and also evaluates assets during the year if a triggering event is identified indicating impairment is possible. Such annual review resulted in an impairment charge of $4.4 million, $1.8 million and $0.6 million in 2017, 2016, and 2015, respectively (included in “Write-down of equipment” in the Consolidated Statements of income). |
Equipment Held for Sale | (f) Equipment Held for Sale Equipment held for sale includes engines being marketed for sale as well as engines removed from the lease portfolio to be parted out, with the investment in the long lived asset being recovered through the sale of spare parts. The assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell. |
Debt Issuance Costs and Related Fees | (g) Debt Issuance Costs and Related Fees Fees paid in order to secure debt are capitalized, included in Debt obligations on the Consolidate Balance Sheets, and amortized over the life of the related loan using the effective interest method. |
Interest Rate Hedging | (h) Interest Rate Hedging The Company enters into various derivative instruments periodically to mitigate the exposure on variable rate borrowings. The derivative instruments are fixed-rate interest swaps that are recorded at fair value as either an asset or liability. While substantially all of the Company’s derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria have been met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective. The hedging instrument’s effectiveness is assessed utilizing regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. All of the transactions that the Company has designated as hedges are cash flow hedges. 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. The ineffective portion of the hedges is recorded in earnings in the current period. |
Income Taxes | (i) Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in the tax rates is recognized in income in the period that includes the enactment date. The Company recognizes in the financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs (see Note 6). The Company files income tax returns in various states and countries which may have different statutes of limitations. The Company records penalties and accrued interest related to uncertain tax positions in income tax expense. Such adjustments have historically been minimal and immaterial to our financial results. |
Property, Equipment and Furnishings | (j) Property, Equipment and Furnishings Property, equipment and furnishings are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets, which range from three to fifteen years. Leasehold improvements are recorded at cost and depreciated by the straight-line method over the shorter of the lease term or useful life of the leasehold. |
Cash and Cash Equivalents | (k) Cash and Cash Equivalents The Company considers highly liquid investments readily convertible into known amounts of cash, with original maturities of 90 days or less, as cash equivalents. |
Restricted Cash | (l) Restricted Cash The Company has certain bank accounts that are subject to restrictions in connection with our WEST II and WEST III borrowings. Under both borrowings, cash is collected in restricted accounts, which are 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 some or all of the lease security deposits are accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. Under WEST II, cash from maintenance reserve payments is held in a restricted cash account equal to the maintenance obligations projected for the subsequent six months, and is subject to a minimum balance of $9.0 million. Under WEST III, cash from maintenance reserve payments is held in a restricted cash account equal to a portion of the maintenance obligations projected for the subsequent nine months, and is subject to a minimum balance of $10.0 million. Under WEST II, all security deposits are held in a restricted cash account until the end of the lease. Under WEST III, security deposits are held in a restricted cash account equal to a portion of the security deposits for leases scheduled to terminate over the subsequent four months, subject to a minimum balance of $1.0 million. Provided lease return conditions have been met, these deposits will be returned to the lessee. To the extent return conditions are not met, these deposits may be retained by the Company. |
Spare Parts Inventory | (m) Spare Parts Inventory Inventory consists of spare aircraft and engine parts and is stated at lower of cost or net realizable value. An impairment charge for excess or inactive inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns, future sales expectations and salvage value. |
Intangible Assets | (n) Intangible Assets Intangible assets include customer relationships and goodwill arising from the Company’s acquisitions of J.T. Power and TES. Intangible assets are accounted for in accordance with FASB ASC 350, “Intangibles — Goodwill and Other.” Customer relationships are amortized on a straight line basis over their estimated useful life of five years. The Company has no intangible assets with indefinite useful lives. Goodwill is assessed for impairment annually. |
Other assets | (o) Other assets Other assets typically include prepaid deposits, capitalized costs relating to engine shop visits that remain in process at year end, and other prepaid expenses. As of December 31, 2017, other assets included prepaid deposits of $36.5 million relating to a commitment to purchase engines. |
Management Estimates | (p) 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 management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Management evaluates estimates on an ongoing basis, including those related to residual values, estimated asset lives, impairments and bad debts. Estimates are based 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, 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. |
Earnings per share information | (q) Earnings per share information Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding, adjusted for the dilutive effect of stock options and unvested restricted stock awards. See Note 8 for more information on the computation of earnings per share. |
Investments | (r) Investments The Company’s investments are joint ventures, where it owns 50% of the equity of the ventures and are accounted for using the equity method of accounting. The investments are recorded at the amount invested plus or minus our 50% share of net income or loss, less any distributions or return of capital received from the entities. |
Stock Based Compensation | (s) Stock Based Compensation The Company recognizes stock based compensation expense in the financial statements for share-based awards based on the grant-date fair value of those awards. Stock based compensation expense is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term. Additionally, the Company implemented ASU 2016-09 in the first quarter of 2017, using the modified retrospective approach, and elected to account for forfeitures as they occur. As such, a $1.3 million cumulative effect adjustment was recorded to the opening balance of Retained earnings for the impact in tax benefits as well as the differential between the amount of compensation cost previously recorded and the amount that would have been recorded without assuming forfeitures. |
Initial Direct Costs associated with Leases | (t) Initial Direct Costs associated with Leases The Company accounts for the initial direct costs, including sales commissions and legal fees, incurred in obtaining a new lease by deferring and amortizing those costs over the term of the lease. The amortization of these costs is recorded under General and administrative expenses in the Consolidated Statements of income. The amounts amortized were $1.8 million, $1.6 million and $1.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
Maintenance Rights | (u) Maintenance Rights The Company identifies, measure and accounts for maintenance right assets and liabilities associated with acquisitions of equipment with in-place leases. A maintenance right asset represents the fair value of the contractual right under a lease to receive equipment in an improved maintenance condition as compared to the maintenance condition on the acquisition date. A maintenance right liability represents the Company's obligation to pay the lessee for the difference between the lease-end contractual maintenance condition of the equipment and the actual maintenance condition of the equipment on the acquisition date. The equipment condition at the end of the lease term may result in either overhaul work being performed by the lessee to meet the required return condition or a financial settlement. When a capital event is performed on the equipment by the lessee, which satisfies their maintenance right obligation, the maintenance rights are added to the equipment basis and depreciated to the next capital event. When equipment is sold before the end of the pre-existing lease, the maintenance rights are applied against any accumulated maintenance reserves, if paid by the lessee, and the remaining balance is applied to the disposition gain or loss. When a lease terminates, an end of lease true-up is performed and the maintenance right is applied against the accumulated maintenance reserves or, for non-reserve lessees the final settlement payment, and any remaining net maintenance right is recorded in the income statement. |
Foreign Currency Translation | (v) Foreign Currency Translation The Company’s foreign investments have been converted at rates of exchange in effect at the balance sheet dates. The changes in exchange rates in our foreign investments reported under the equity method are included in stockholders’ equity as accumulated other comprehensive income. |
Risk Concentrations | (w) Risk Concentrations Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash deposits, lease receivables and interest rate swaps. The Company places our cash deposits with financial institutions and other creditworthy institutions such as money market funds and limits the amount of credit exposure to any one party. Management opts for security of principal as opposed to yield. Concentrations of credit risk with respect to lease receivables are limited due to the large number of customers comprising the customer base, and their dispersion across different geographic areas. Some lessees are required to make payments for maintenance reserves at the end of the lease however, this risk is considered limited due to the relatively few lessees which have this provision in the lease. The Company enters into interest rate swap agreements with counterparties that are investment grade financial institutions. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements To Be Adopted by the Company: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 amends the accounting guidance on revenue recognition. The amendments in this accounting standard update are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices, and improve disclosure requirements. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The principles in the standard should be applied using a five-step model that includes 1) identifying the contract(s) with a customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations in the contract, and 5) recognizing revenue when (or as) the performance obligations are satisfied. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In addition, the standard amends the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, sales of real estate) to be consistent with the standard’s guidance on recognition and measurement (including the constraint on revenue). The FASB also subsequently issued several amendments to the standard, including clarification on principal versus agent guidance, identifying performance obligations, and immaterial goods and services in a contract. This accounting standard update is effective for reporting periods beginning after December 15, 2017. The Company adopted this accounting standard update effective January 1, 2018. The amendments in this accounting standard update must be applied using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which requires additional footnote disclosures). Effective January 1, 2018, the Company adopted the standard using the modified retrospective approach applied only to contracts not completed as of the date of adoption, with no restatement of comparative periods and a cumulative effect adjustment recognized as of the date of adoption. While only a portion of the Company’s revenues are impacted by this guidance as it does not apply to contracts falling under the leasing standard, as part of the implementation process the Company performed an analysis to identify accounting policies that needed to change and additional disclosures that will be required. The Company considered factors such as customer contracts with unique revenue recognition considerations, the nature and type of goods and services offered, the degree to which contracts include multiple performance obligations or variable consideration, and the pattern in which revenue is currently recognized, among other things. All revenue streams applicable to the new standard (Spare parts and equipment sales and Other revenue) were evaluated, and similar performance obligations will result under the new standard as compared with deliverables and separate units of accounting currently identified. In addition the Company considered recognition under the new standard and concluded the timing of the Company’s revenue recognition will remain the same. The Company has also evaluated the changes in controls and processes that are necessary to implement the new standard, and no material changes were required. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, lessors will account for leases using an approach that is substantially equivalent to existing U.S. GAAP for sales-type leases, direct financing leases and operating leases. Unlike current guidance, however, a lease with collectability uncertainties may be classified as a sales-type lease. If collectability of lease payments, plus any amount necessary to satisfy a lessee residual value guarantee, is not probable, lease payments received will be recognized as a deposit liability and the underlying assets will not be derecognized until collectability of the remaining amounts becomes probable. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company plans to adopt this guidance on January 1, 2019, that standard’s effective date, and is currently in the process of determining the impact that the updated accounting guidance will have on the consolidated financial statements and related disclosures. See Note 9 for a summary of undiscounted minimum rental commitments under operating leases as of December 31, 2017. In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” that eliminates “Step 2” from the goodwill impairment test. The new standard is effective in the first quarter of fiscal 2020, and early adoption is permitted. The new guidance must be applied on a prospective basis. The Company does not anticipate that the adoption of this standard will have a significant impact on the consolidated financial statements or the related disclosures. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” that provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The new guidance becomes effective for the Company in the first quarter of fiscal 2018. The new guidance must be applied on a prospective basis. The Company does not anticipate that the adoption of this standard will have a significant impact on the consolidated financial statements or the related disclosures . In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” to address stakeholder concerns about the guidance in current U.S. GAAP that requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. The amendments in this Update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company is currently evaluating the timing, methods and impact of adopting this new standard on the consolidated financial statements. |
Equipment Held for Operating 27
Equipment Held for Operating Lease (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equipment Held for Operating Lease | |
Schedule of geographic information about the entity's leased aircraft equipment grouped by domicile of the lessee | Years Ended December 31, Lease rent revenue 2017 2016 2015 (in thousands) Region Europe $ 50,789 $ 44,650 $ 43,703 Asia 34,169 34,524 31,569 South America 11,958 11,504 9,688 United States 20,307 13,395 9,177 Mexico 5,409 6,251 6,886 Canada 4,355 4,049 2,828 Middle East 3,360 3,674 2,223 Africa 22 1,848 1,972 Totals $ 130,369 $ 119,895 $ 108,046 As of December 31, Net book value of equipment held for operating lease 2017 2016 (in thousands) Region Europe $ 444,938 $ 384,661 Asia 258,501 265,736 South America 111,999 112,268 United States 251,959 148,208 Mexico 34,399 55,114 Canada 28,977 35,199 Middle East 61,606 8,971 Africa 2,959 42,949 Off-lease and other 147,233 83,497 Totals $ 1,342,571 $ 1,136,603 |
Schedule of lease status of the equipment held for operating lease | Lease Term Net Book Value Off-lease and other $ 147,233 Month-to-month leases 89,795 Leases expiring 2018 528,225 Leases expiring 2019 236,080 Leases expiring 2020 158,264 Leases expiring 2021 57,268 Leases expiring 2022 33,181 Leases expiring thereafter 92,525 $ 1,342,571 |
Schedule of minimum future payments under non-cancelable leases | Year (in thousands) 2018 $ 110,666 2019 54,245 2020 31,913 2021 16,757 2022 10,652 Thereafter 13,242 $ 237,475 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments | |
Schedule of investments | Years Ending December 31, 2017, 2016 and 2015 (in thousands) WMES CASC Total Investment in joint ventures as of December 31, 2014 $ 26,672 $ 14,918 $ 41,590 Investment 630 — 630 Earnings (losses) from joint ventures 1,274 (99) 1,175 Distribution (1,304) — (1,304) Foreign Currency Translation Adjustment — (796) (796) Investment in joint ventures as of December 31, 2015 $ 27,272 $ 14,023 $ 41,295 Investment 5,545 — 5,545 Earnings (losses) from joint ventures 2,032 (219) 1,813 Deferred gain on engines sale (1,212) — (1,212) Distribution (1,167) — (1,167) Foreign Currency Translation Adjustment — (868) (868) Investment in joint ventures as of December 31, 2016 $ 32,470 $ 12,936 $ 45,406 Investment — — — Earnings from joint ventures 5,867 1,291 7,158 Deferred gain on engine sale (443) (496) (939) Distribution (1,880) — (1,880) Foreign Currency Translation Adjustment — 896 896 Investment in joint ventures as of December 31, 2017 $ 36,014 $ 14,627 $ 50,641 |
Summarized financial information | Years Ended December 31, 2017 2016 2015 (in thousands) Revenue $ 40,211 $ 35,463 $ 26,909 Expenses 28,754 31,669 24,574 WMES net income $ 11,457 $ 3,794 $ 2,335 December 31, 2017 2016 (in thousands) Total assets $ 246,309 $ 293,299 Total liabilities 165,228 219,881 Total WMES net equity $ 81,081 $ 73,418 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Obligations | |
Schedule of notes payable | As of December 31, 2017 2016 (in thousands) Credit facility at a floating rate of interest of one-month LIBOR plus 1.50% at December 31, 2017, secured by engines. The facility has a committed amount of $890.0 million at December 31, 2017, which revolves until the maturity date of April 2021 $ 491,000 $ 608,000 WEST III Series A 2017-1 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042, secured by engines 289,295 — WEST III Series B 2017-1 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042, secured by engines 41,370 — WEST II Series 2012-A term notes payable at a fixed rate of interest of 5.50%, maturing in September 2037, secured by engines 259,022 279,541 Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024, secured by an aircraft 12,720 14,453 Note payable at a variable interest rate of one-month LIBOR plus 2.25%, maturing in January 2018, secured by engines 10,336 11,709 1,103,743 913,703 Less: unamortized debt issuance costs (18,338) (13,448) Total debt obligations $ 1,085,405 $ 900,255 |
Schedule or principal outstanding | Year (in thousands) 2018 $ 48,401 2019 38,537 2020 38,137 2021 (includes $491.0 million outstanding on revolving credit facility) 529,374 2022 190,889 Thereafter 258,405 $ 1,103,743 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments | |
Schedule of information about financial statement effects related to cash flow hedges | Amount of Gain (Loss) Recognized Location of Loss (Gain) Amount of Loss (Gain) Reclassified in OCI on Derivatives Reclassified from from Accumulated OCI into Income Derivatives in (Effective Portion) Accumulated OCI into (Effective Portion) Cash Flow Hedging Years Ended December 31, Income Years Ended December 31, Relationships 2017 2016 2015 (Effective Portion) 2017 2016 2015 (in thousands) (in thousands) Interest rate contracts $ 896 $ 69 $ — Interest expense $ 621 $ 25 $ — Total $ 896 $ 69 $ — Total $ 621 $ 25 $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Schedule of components of income (loss) from continuing operation before income taxes | Years ended December 31, 2017 2016 2015 (in thousands) United States $ 35,050 $ 21,634 $ 11,319 Foreign 961 2,312 1,456 Income before income taxes $ 36,011 $ 23,946 $ 12,775 |
Schedule of components of income tax expense | Federal State Foreign Total (in thousands) 2017 Current $ (58) $ 284 $ 20 $ 246 Deferred (31,198) 4,805 — (26,393) Total $ (31,256) $ 5,089 $ 20 $ (26,147) 2016 Current $ 324 $ 14 $ 440 $ 778 Deferred 8,807 292 — 9,099 Total $ 9,131 $ 306 $ 440 $ 9,877 2015 Current $ (208) $ 13 $ 476 $ 281 Deferred 4,871 1,163 — 6,034 Total $ 4,663 $ 1,176 $ 476 $ 6,315 |
Schedule of reconciliation of the federal income tax expense at the statutory rate to the effective income tax expense | Years Ended December 31, 2017 2016 2015 (in thousands) Statutory federal income tax expense $ 12,244 $ 8,142 $ 4,343 State taxes, net of federal benefit 3,360 202 776 Foreign tax paid 20 440 476 Change in federal tax rate (43,643) — — Tax consequences of the sale of engines to WMES 164 — (306) Uncertain tax positions — (40) (195) Permanent differences-nondeductible executive compensation 1,238 1,201 1,117 Permanent differences and other 470 (68) 104 Effective income tax (benefit) expense $ (26,147) $ 9,877 $ 6,315 |
Summary of activity related to the Company's unrecognized tax benefits | (in thousands) Balance as of December 31, 2014 $ 464 Increases related to current year tax positions 5 Decreases due to tax positions released (195) Balance as of December 31, 2015 274 Increases related to current year tax positions 4 Decreases due to tax positions released (72) Balance as of December 31, 2016 206 Increases related to current year tax positions 4 Decreases due to tax positions expired (19) Balance as of December 31, 2017 $ 191 |
Schedule of tax effects of temporary differences of the deferred tax assets and liabilities | As of December 31, 2017 2016 (in thousands) Deferred tax assets: Unearned lease revenue $ 1,754 $ 1,839 State taxes 1,653 1,035 Reserves and allowances 2,531 1,659 Other accruals 643 2,501 Alternative minimum tax credit — 335 Foreign tax credit 42 42 Net operating loss carry forward 29,874 35,693 Charitable contributions 22 52 Total deferred tax assets 36,519 43,156 Less: valuation allowance (806) (1,280) Net deferred tax assets 35,713 41,876 Deferred tax liabilities: Depreciation and impairment on aircraft engines and equipment (114,347) (147,827) Other deferred tax assets (liabilities) 437 422 Net deferred tax liabilities (113,910) (147,405) Other comprehensive loss deferred tax asset (83) 551 Net deferred tax liabilities $ (78,280) $ (104,978) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements | |
Schedule of fair value hierarchy of assets and liabilities measured on recurring basis | Assets and (Liabilities) at Fair Value December 31, 2017 December 31, 2016 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (in thousands) (in thousands) Derivatives $ — $ 1,129 $ — $ 1,129 $ — $ 69 $ — $ 69 Total $ — $ 1,129 $ — $ 1,129 $ — $ 69 $ — $ 69 |
Schedule of fair value hierarchy of assets measured on nonrecurring basis and gain (losses) recorded | Assets at Fair Value Total Losses December 31, 2017 December 31, 2016 December 31, Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 2017 2016 (in thousands) (in thousands) Equipment held for lease $ — $ 23,255 $ — $ 23,255 $ — $ 1,196 $ — $ 1,196 $ (12,879) $ (3,674) Equipment held for sale — 39,261 — 39,261 — 8,976 — 8,976 (8,708) (5,365) Spare parts inventory — 5,336 — 5,336 — 1,538 — 1,538 (3,343) (475) Total $ — $ 67,852 $ — $ 67,852 $ — $ 11,710 $ — $ 11,710 $ $ (9,514) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share | |
Basic and Diluted EPS | Years Ended December 31, 2017 2016 2015 (in thousands) Net income attributable to common shareholders $ 60,299 $ 13,780 $ 6,460 Basic weighted average common shares outstanding 6,074 6,570 7,817 Potentially dilutive common shares 146 144 170 Diluted weighted average common shares outstanding 6,220 6,714 7,987 Basic weighted average earnings per common share $ 9.93 $ 2.10 $ 0.83 Diluted weighted average earnings per common share $ 9.69 $ 2.05 $ 0.81 |
Commitments, Contingencies, G34
Commitments, Contingencies, Guarantees and Indemnities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments, Contingencies, Guarantees and Indemnities | |
Schedule of future minimum payments under operating lease agreements | Future minimum payments under operating lease agreements are as follows: Years Ending December 31, (in thousands) 2018 $ 1,023 2019 425 2020 — 2021 — 2022 — Thereafter — Total $ 1,448 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock-Based Compensation Plans | |
Schedule of components of stock compensation expense | 2017 2016 2015 (in thousands) 2007 Stock Incentive Plan $ 4,207 $ 3,681 $ 4,102 Employee Stock Purchase Plan 63 36 48 Total Stock Compensation Expense $ 4,270 $ 3,717 $ 4,150 |
Summary of restricted stock activity under the 2007 Plan | Weighted Average Aggregate Grant Number Outstanding Grant Date Fair Value Date Fair Value Balance as of December 31, 2014 525,356 $ 13.71 $ 8,786,611 Shares granted 146,440 18.53 2,713,159 Shares forfeited — — — Shares vested (275,201) 15.87 (4,368,570) Balance as of December 31, 2015 396,595 $ 17.98 $ 7,131,200 Shares granted 136,645 21.55 2,944,941 Shares forfeited (20,377) 17.79 (362,536) Shares vested (213,528) 17.12 (3,655,269) Balance as of December 31, 2016 299,335 $ 20.24 $ 6,058,336 Shares granted 215,603 24.89 5,365,731 Shares forfeited (10,999) 24.38 (268,200) Shares vested (175,817) 19.61 (3,448,628) Balance as of December 31, 2017 328,122 $ 23.49 $ 7,707,239 |
Quarterly Consolidated Financ36
Quarterly Consolidated Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Consolidated Financial Information (Unaudited) | |
Summary of the unaudited quarterly results of operations | The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2017, 2016, and 2015 (in thousands, except per share data). 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ 77,946 $ 67,844 $ 65,861 $ 63,189 $ 274,840 Net income attributable to common shareholders $ 7,839 $ 5,657 $ 4,939 $ 41,864 $ 60,299 Basic earnings per common share $ $ $ $ $ Diluted earnings per common share (1) $ $ $ $ $ Basic weighted average common shares outstanding 6,114 6,036 6,055 6,090 6,074 Diluted weighted average common shares outstanding (1) 6,240 6,142 6,173 6,201 6,220 (1) Diluted earnings per common share and diluted weighted average common shares outstanding have been adjusted to properly exclude the effects of income tax benefits on unvested restricted stock in accordance with ASU 2016-09. The adjustment impacted diluted earnings per common share and diluted weighted average common shares outstanding for the first quarter of 2017 by $0.01 and approximately 23,000 shares, respectively. 2016 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ 50,719 $ 49,618 $ 51,461 $ 55,476 $ 207,274 Net income attributable to common shareholders $ 4,011 $ 3,366 $ 3,985 $ 2,418 $ 13,780 Basic earnings per common share $ $ $ $ $ Diluted earnings per common share $ $ $ $ $ Basic weighted average common shares outstanding 7,149 6,685 6,307 6,149 6,570 Diluted weighted average common shares outstanding 7,272 6,819 6,448 6,275 6,714 2015 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ 41,336 $ 43,810 $ 57,730 $ 55,186 $ 198,062 Net income (loss) attributable to common shareholders $ 1,358 $ (486) $ 2,551 $ 3,037 $ 6,460 Basic earnings (loss) per common share $ $ $ $ $ 0.83 Diluted earnings (loss) per common share $ $ $ $ $ 0.81 Basic weighted average common shares outstanding 7,848 7,841 7,839 7,739 7,817 Diluted weighted average common shares outstanding 8,044 7,841 7,963 7,872 7,987 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Reportable Segments | |
Summary of the reportable segments | The following tables present a summary of the reportable segments (in thousands): Leasing and Intercompany For the year ended December 31, 2017 Related Operations Spare Parts Sales Eliminations Total Revenue: Lease rent revenue $ 130,369 $ — $ — $ 130,369 Maintenance reserve revenue 80,189 — — 80,189 Spare parts and equipment sales 22,285 29,138 — 51,423 Gain on sale of leased equipment 4,929 — — 4,929 Other revenue 7,702 1,601 (1,373) 7,930 Total revenue 245,474 30,739 (1,373) 274,840 Expenses: Depreciation and amortization expense 65,677 346 — 66,023 Cost of spare parts and equipment sales 17,344 23,504 — 40,848 General and administrative 52,024 3,713 — 55,737 Net finance costs 48,720 — — 48,720 Other expense 34,659 — — 34,659 Total expenses 218,424 27,563 — 245,987 Earnings from operations $ 27,050 $ 3,176 $ (1,373) $ 28,853 Leasing and Intercompany For the year ended December 31, 2016 Related Operations Spare Parts Sales Eliminations Total Revenue: Lease rent revenue $ 119,895 $ — $ — $ 119,895 Maintenance reserve revenue 57,091 — — 57,091 Spare parts and equipment sales 3,335 14,448 — 17,783 Gain on sale of leased equipment 3,482 — — 3,482 Other revenue 8,711 1,947 (1,635) 9,023 Total revenue 192,514 16,395 (1,635) Expenses: Depreciation and amortization expense 65,939 341 — 66,280 Cost of spare parts and equipment sales 2,394 10,899 — 13,293 General and administrative 44,703 3,077 — 47,780 Net finance costs 40,813 468 — 41,281 Other expense 16,507 — — 16,507 Total expenses 170,356 14,785 — Earnings from operations $ 22,158 $ 1,610 $ (1,635) $ 22,133 Leasing and Intercompany For the year ended December 31, 2015 Related Operations Spare Parts Sales Eliminations Total Revenue: Lease rent revenue $ 108,046 $ — $ — $ 108,046 Maintenance reserve revenue 53,396 — — 53,396 Spare parts and equipment sales 9,975 15,607 — 25,582 Gain on sale of leased equipment 8,320 — — 8,320 Other revenue 2,517 659 (458) 2,718 Total revenue 182,254 16,266 (458) 198,062 Expenses: Depreciation and amortization expense 69,135 289 — 69,424 Cost of spare parts and equipment sales 5,734 12,115 — 17,849 General and administrative 39,974 2,770 — 42,744 Net finance costs 37,474 387 — 37,861 Other expense 18,584 — — 18,584 Total expenses 170,901 15,561 — 186,462 Earnings from operations $ 11,353 $ 705 $ (458) $ 11,600 Total assets as of December 31, 2017 $ 1,580,094 $ 23,337 $ — $ 1,603,431 Total assets as of December 31, 2016 $ 1,307,460 $ 30,427 $ — $ 1,337,887 Total assets as of December 31, 2015 $ 1,267,414 $ 26,871 $ — $ 1,294,285 |
Organization and Summary of S38
Organization and Summary of Significant Accounting Policies (Organization and Revenue Recognition) (Details) $ in Thousands | Aug. 04, 2017USD ($)engineitem | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)engine |
Organizations [Line Items] | |||
Number of engines | engine | 393 | ||
Total | $ 1,103,743 | $ 913,703 | |
Number of business days to pay interest | 5 days | ||
Maturity term | 10 years | ||
Maintenance Reserves | 75,889 | 71,602 | |
Security Deposit Liability | 25,302 | 21,417 | |
Revenue Recognition | |||
Lease rent to be received, more than 30 days past due | 8,300 | ||
Maintenance reserve payments to be received, more than 30 days past due | $ 5,600 | ||
Minimum number of days for which lease rent and maintenance reserve payments are past due | 30 days | ||
Other Revenue, Net | $ 1,300 | $ 4,000 | |
Credit facility at a floating rate of interest of LIBOR plus 2.75%, secured by engines | |||
Organizations [Line Items] | |||
Total | 491,000 | ||
WEST III Series A 2017-1 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042. Secured by engines | |||
Organizations [Line Items] | |||
Total | 289,295 | ||
WEST III Series B 2017-1 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042. Secured by engines | |||
Organizations [Line Items] | |||
Total | 41,370 | ||
WEST III | |||
Organizations [Line Items] | |||
Number of series notes | item | 2 | ||
Maintenance Reserves | 10,000 | ||
Security Deposit Liability | $ 1,000 | ||
WEST III | Revolving credit facility | |||
Organizations [Line Items] | |||
Number of engines | engine | 56 | ||
WEST III | WEST III Series A 2017-1 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042. Secured by engines | |||
Organizations [Line Items] | |||
Aggregate principal amount | $ 293,700 | ||
Fixed rate (as a percent) | 4.69% | ||
WEST III | WEST III Series B 2017-1 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042. Secured by engines | |||
Organizations [Line Items] | |||
Aggregate principal amount | $ 42,000 | ||
Fixed rate (as a percent) | 6.36% | ||
WOLF | |||
Organizations [Line Items] | |||
Previously held interest (as a percent) | 50.00% | ||
Acquisition of the remaining outstanding shares (as a percent) | 100.00% |
Organization and Summary of S39
Organization and Summary of Significant Accounting Policies (Equipment Held of Operating Lease) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)engineitem | Dec. 31, 2016USD ($)engine | Dec. 31, 2015USD ($) | |
Equipment Held for Operating Lease | |||
Number of engines | engine | 393 | ||
Impairment charge | $ 24,930 | $ 9,514 | $ 9,181 |
Minimum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 3 years | ||
Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 15 years | ||
Engines and related equipment | |||
Equipment Held for Operating Lease | |||
Number of engines | engine | 48 | ||
Aircraft | |||
Equipment Held for Operating Lease | |||
Number of aircraft | item | 3 | ||
Aircraft | Minimum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 13 years | ||
Residual value (as a percent) | 15.00% | ||
Aircraft | Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 20 years | ||
Residual value (as a percent) | 17.00% | ||
Engines and aircraft | |||
Equipment Held for Operating Lease | |||
Equipment net book value | $ 80,100 | ||
Engines and aircraft | Minimum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 1 year | ||
Engines and aircraft | Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 82 years | ||
New engine [Member] | Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 25 years | ||
Equipment held for lease Member | |||
Equipment Held for Operating Lease | |||
Impairment charge | $ 4,400 | $ 1,800 | |
Equipment held for lease Member | Engines and related equipment | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 15 years | ||
Residual value (as a percent) | 55.00% | ||
Equipment held for lease Member | Spare part packages | |||
Equipment Held for Operating Lease | |||
Residual value (as a percent) | 25.00% | ||
Equipment held for lease Member | Spare part packages | Minimum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 14 years | ||
Equipment held for lease Member | Spare part packages | Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 15 years | ||
Equipment held for lease Member | Engines and aircraft | |||
Equipment Held for Operating Lease | |||
Impairment charge | $ 600 |
Organization and Summary of S40
Organization and Summary of Significant Accounting Policies (Property, Equipment and Furnishings and Restricted Cash) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Restricted Cash | ||
Security deposits | $ 25,302 | $ 21,417 |
Minimum | ||
Property, Equipment and Furnishings | ||
Useful life of property, equipment and furnishings | 3 years | |
Maximum | ||
Property, Equipment and Furnishings | ||
Useful life of property, equipment and furnishings | 15 years | |
Parent Company | ||
Restricted Cash | ||
Security deposits | $ 17,795 | $ 18,555 |
WEST III | ||
Restricted Cash | ||
Minimum amount of cash from maintenance reserve payments required to be held in restricted cash account | $ 10,000 | |
Projected maintenance obligation period | 9 months | |
Security deposits | $ 1,000 | |
Projected maintenance obligation period for security deposit | 4 months | |
WEST III | Minimum | ||
Restricted Cash | ||
Security deposits | $ 1,000 | |
WEST II | ||
Restricted Cash | ||
Minimum amount of cash from maintenance reserve payments required to be held in restricted cash account | $ 9,000 | |
Projected maintenance obligation period | 6 months |
Organization and Summary of S41
Organization and Summary of Significant Accounting Policies (Intangibles and Earnings Per Share Information) (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Indefinite lived intangible assets | |
Intangible Assets | |
Intangible assets with indefinite useful lives | $ 0 |
Customer relationships | |
Intangible Assets | |
Useful life | 5 years |
Organization and Summary of S42
Organization and Summary of Significant Accounting Policies (Investments and Lease Costs) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | May 25, 2017 | |
Investments | ||||
Ownership interest (as a percent) | 50.00% | |||
Initial Direct Costs associated with Leases | ||||
Amortization of initial direct costs associated with leases | $ 1.8 | $ 1.6 | $ 1.6 | |
WOLF | ||||
Investments | ||||
Previously held interest (as a percent) | 50.00% | |||
WMES | ||||
Investments | ||||
Ownership interest (as a percent) | 100.00% | 50.00% |
Organization and Summary of S43
Organization and Summary of Significant Accounting Policies (Recent Accounting Pronouncements) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Restricted cash | $ 22,298 | $ 40,272 | |
Retained earnings | 194,729 | 256,301 | |
Accounting Standards Update 2016-18 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Restricted cash | 64,100 | $ 22,300 | |
Increase to net cash flows from operating activities | 10,700 | 9,600 | |
Increase Decrease In Cash Flows From Investing Activities | 1,300 | 16,800 | |
Increase Decrease In Cash Flows From Financing Activities | 1,300 | 25,400 | |
Accounting Standards Update 2016-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase to net cash flows from operating activities | 200 | 0 | |
Increase Decrease In Cash Flows From Financing Activities | $ 200 | $ 0 | |
Retained earnings | $ 1,300 |
Equipment Held for Operating 44
Equipment Held for Operating Lease (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)aircraftitemregion | Dec. 31, 2016USD ($)aircraftitem | Dec. 31, 2015USD ($) | |
Equipment Held for Lease | |||
Number of geographic regions in which aircraft lessees are domiciled in | region | 8 | ||
Lease rent revenue | $ 130,369 | $ 119,895 | $ 108,046 |
Net book value of equipment held for operating lease | 1,342,571 | 1,136,603 | |
Minimum future payments under non-cancelable leases | |||
2,018 | 110,666 | ||
2,019 | 54,245 | ||
2,020 | 31,913 | ||
2,021 | 16,757 | ||
2,022 | 10,652 | ||
Thereafter | 13,242 | ||
Minimum future payments | 237,475 | ||
Europe | |||
Equipment Held for Lease | |||
Lease rent revenue | 50,789 | 44,650 | 43,703 |
Net book value of equipment held for operating lease | 444,938 | 384,661 | |
Asia | |||
Equipment Held for Lease | |||
Lease rent revenue | 34,169 | 34,524 | 31,569 |
Net book value of equipment held for operating lease | 258,501 | 265,736 | |
South America | |||
Equipment Held for Lease | |||
Lease rent revenue | 11,958 | 11,504 | 9,688 |
Net book value of equipment held for operating lease | 111,999 | 112,268 | |
United States | |||
Equipment Held for Lease | |||
Lease rent revenue | 20,307 | 13,395 | 9,177 |
Net book value of equipment held for operating lease | 251,959 | 148,208 | |
Mexico | |||
Equipment Held for Lease | |||
Lease rent revenue | 5,409 | 6,251 | 6,886 |
Net book value of equipment held for operating lease | 34,399 | 55,114 | |
Canada | |||
Equipment Held for Lease | |||
Lease rent revenue | 4,355 | 4,049 | 2,828 |
Net book value of equipment held for operating lease | 28,977 | 35,199 | |
Middle East | |||
Equipment Held for Lease | |||
Lease rent revenue | 3,360 | 3,674 | 2,223 |
Net book value of equipment held for operating lease | 61,606 | 8,971 | |
Africa | |||
Equipment Held for Lease | |||
Lease rent revenue | 22 | 1,848 | $ 1,972 |
Net book value of equipment held for operating lease | 2,959 | 42,949 | |
Off-lease and other | |||
Equipment Held for Lease | |||
Net book value of equipment held for operating lease | $ 147,233 | $ 83,497 | |
Equipment held for lease Member | Engines and related equipment | |||
Equipment Held for Lease | |||
Number of equipments held for lease | aircraft | 225 | 208 | |
Equipment held for lease Member | Other leased parts and equipment | |||
Equipment Held for Lease | |||
Number of equipments held for lease | item | 7 | 5 | |
Equipment held for lease Member | Aircrafts | |||
Equipment Held for Lease | |||
Number of equipments held for lease | aircraft | 16 | 11 | |
Month-to-month leases | |||
Equipment Held for Lease | |||
Net book value of equipment held for operating lease | $ 89,795 | ||
Leases expiring 2018 | |||
Equipment Held for Lease | |||
Net book value of equipment held for operating lease | 528,225 | ||
Leases expiring 2019 | |||
Equipment Held for Lease | |||
Net book value of equipment held for operating lease | 236,080 | ||
Leases expiring 2020 | |||
Equipment Held for Lease | |||
Net book value of equipment held for operating lease | 158,264 | ||
Leases expiring 2021 | |||
Equipment Held for Lease | |||
Net book value of equipment held for operating lease | 57,268 | ||
Leases expiring 2022 | |||
Equipment Held for Lease | |||
Net book value of equipment held for operating lease | 33,181 | ||
Leases expiring thereafter | |||
Equipment Held for Lease | |||
Net book value of equipment held for operating lease | $ 92,525 |
Investments (Details)
Investments (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Oct. 31, 2014USD ($) | Dec. 31, 2017USD ($)engine | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | May 25, 2017 | Jun. 03, 2014 | |
Investments | ||||||
Net book value of equipment held for operating lease | $ 1,342,571 | $ 1,136,603 | ||||
Ownership interest (as a percent) | 50.00% | |||||
Investment in WMES joint ventures at beginning of the period | $ 45,406 | 41,295 | $ 41,590 | |||
Investment | 5,545 | 630 | ||||
Earnings from joint venture | 7,158 | 1,813 | 1,175 | |||
Deferred gain on engine sale | (939) | (1,212) | ||||
Distribution | (1,880) | (1,167) | (1,304) | |||
Foreign Currency Translation Adjustment | (896) | (868) | (796) | |||
Investment in WMES joint ventures at end of the period | 50,641 | 45,406 | 41,295 | |||
Property Subject to or Available for Operating Lease, Net | 1,342,571 | 1,136,603 | ||||
Sale of engines | $ 43,791 | 62,525 | 41,608 | |||
WMES | ||||||
Investments | ||||||
Number of engines in lease portfolio | engine | 32 | |||||
Net book value of equipment held for operating lease | $ 230,300 | |||||
Ownership interest (as a percent) | 100.00% | 50.00% | ||||
Investment in WMES joint ventures at beginning of the period | $ 32,470 | 27,272 | 26,672 | |||
Investment | 5,545 | 630 | ||||
Earnings from joint venture | 5,867 | 2,032 | 1,274 | |||
Deferred gain on engine sale | (443) | (1,212) | ||||
Distribution | (1,880) | (1,167) | (1,304) | |||
Investment in WMES joint ventures at end of the period | 36,014 | 32,470 | 27,272 | |||
Property Subject to or Available for Operating Lease, Net | 230,300 | |||||
Engine Value | 100 | |||||
Consolidated Statements of Income | ||||||
Revenue | 40,211 | 35,463 | 26,909 | |||
Expenses | 28,754 | 31,669 | 24,574 | |||
WMES net income | 11,457 | 3,794 | 2,335 | |||
Consolidated Balance Sheets | ||||||
Total assets | 246,309 | 293,299 | ||||
Total liabilities | 165,228 | 219,881 | ||||
Total WMES net equity | 81,081 | 73,418 | ||||
WMES | Other Revenue | ||||||
Investments | ||||||
Management fees | $ 2,400 | 2,100 | 1,700 | |||
CASC Willis | ||||||
Investments | ||||||
Number of engines in lease portfolio | engine | 4 | |||||
Net book value of equipment held for operating lease | $ 58,800 | |||||
Investment in WMES joint ventures at beginning of the period | 12,936 | 14,023 | 14,918 | |||
Earnings from joint venture | 1,291 | (219) | (99) | |||
Deferred gain on engine sale | (496) | |||||
Foreign Currency Translation Adjustment | (896) | (868) | (796) | |||
Investment in WMES joint ventures at end of the period | 14,627 | $ 12,936 | $ 14,023 | |||
Property Subject to or Available for Operating Lease, Net | $ 58,800 | |||||
CASC | ||||||
Investments | ||||||
Ownership interest (as a percent) | 50.00% | |||||
Investment | $ 15,000 |
Debt Obligations (Details)
Debt Obligations (Details) $ in Thousands | Aug. 04, 2017USD ($)item | Mar. 25, 2015USD ($) | Jul. 16, 2014USD ($) | Jan. 10, 2014engine | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2016USD ($)item | Apr. 30, 2016USD ($) |
Long Term Debt | |||||||||
Maturity term | 10 years | ||||||||
Maintenance Reserves | $ 75,889 | $ 71,602 | |||||||
Percentage of the funding for the purchase of a corporate aircraft | 100.00% | ||||||||
Principal outstanding repayable | |||||||||
2,018 | $ 48,401 | ||||||||
2,019 | 38,537 | ||||||||
2,020 | 38,137 | ||||||||
2,021 | 529,374 | ||||||||
2,022 | 190,889 | ||||||||
Thereafter | 258,405 | ||||||||
Total | 1,103,743 | 913,703 | |||||||
Less: unamortized debt issuance costs | (18,338) | (13,448) | |||||||
Notes payable | $ 1,085,405 | 900,255 | |||||||
Gains (Losses) on Extinguishment of Debt | $ (137) | $ 1,151 | |||||||
One-month LIBOR | |||||||||
Long Term Debt | |||||||||
One-month LIBOR rate (as a percent) | 1.57% | 0.77% | |||||||
WEST III | |||||||||
Long Term Debt | |||||||||
Number of series notes | item | 2 | ||||||||
Maintenance Reserves | $ 10,000 | ||||||||
Credit facility at a floating rate of interest of one-month LIBOR plus 1.50% and maturity date of April 2021 | |||||||||
Long Term Debt | |||||||||
Maximum borrowing capacity under credit facility | $ 890,000 | ||||||||
Fixed rate (as a percent) | 1.50% | ||||||||
Principal outstanding repayable | |||||||||
Total | $ 491,000 | $ 608,000 | |||||||
WEST III | |||||||||
Long Term Debt | |||||||||
Line of credit facility outstanding amount | 330,700 | ||||||||
WEST III Series A 2017-1 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042. Secured by engines | |||||||||
Principal outstanding repayable | |||||||||
Total | $ 289,295 | ||||||||
WEST III Series A 2017-1 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042. Secured by engines | WEST III | |||||||||
Long Term Debt | |||||||||
Fixed rate (as a percent) | 4.69% | ||||||||
Aggregate principal amount | $ 293,700 | ||||||||
WEST III Series B 2017-1 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042. Secured by engines | |||||||||
Principal outstanding repayable | |||||||||
Total | $ 41,370 | ||||||||
WEST III Series B 2017-1 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042. Secured by engines | WEST III | |||||||||
Long Term Debt | |||||||||
Fixed rate (as a percent) | 6.36% | ||||||||
Aggregate principal amount | $ 42,000 | ||||||||
WEST II Series 2012-A term notes payable at a fixed rate of interest of 5.50%, maturing in September 2037, secured by engines | |||||||||
Principal outstanding repayable | |||||||||
Total | $ 259,022 | 279,541 | |||||||
WEST II Series 2012-A term notes payable at a fixed rate of interest of 5.50%, maturing in September 2037, secured by engines | WEST II | |||||||||
Long Term Debt | |||||||||
Fixed rate (as a percent) | 5.50% | ||||||||
Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024. Secured by an aircraft | |||||||||
Long Term Debt | |||||||||
Number of series notes | item | 2 | ||||||||
Aggregate principal amount | $ 13,400 | $ 4,700 | |||||||
Maturity term | 10 years | ||||||||
Initial term for interest payment | 5 years | ||||||||
Principal outstanding repayable | |||||||||
Total | $ 12,720 | 14,453 | |||||||
Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024. Secured by an aircraft | Minimum | |||||||||
Long Term Debt | |||||||||
Fixed rate (as a percent) | 2.60% | ||||||||
Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024. Secured by an aircraft | Maximum | |||||||||
Long Term Debt | |||||||||
Fixed rate (as a percent) | 2.97% | ||||||||
Note payable at a variable interest rate of 2.25%, maturing in January 2018, secured by engines | |||||||||
Long Term Debt | |||||||||
Fixed rate (as a percent) | 2.25% | ||||||||
Maturity term | 4 years | ||||||||
Principal outstanding repayable | |||||||||
Total | $ 10,336 | 11,709 | |||||||
Number of engines pledged as collateral | engine | 3 | ||||||||
Note payable at a variable interest rate of 2.25%, maturing in January 2018, secured by engines | One-month LIBOR | |||||||||
Long Term Debt | |||||||||
Fixed rate (as a percent) | 2.25% | ||||||||
Revolving credit facility | |||||||||
Long Term Debt | |||||||||
Maximum borrowing capacity under credit facility | $ 890,000 | ||||||||
Amount of debt available under accordion feature | 1,000,000 | ||||||||
Line of credit facility outstanding amount | 491,000 | ||||||||
Principal outstanding repayable | |||||||||
Remaining borrowing capacity available | $ 399,000 | $ 282,000 | |||||||
Maximum borrowing capacity under credit facility before amendment | $ 700,000 | ||||||||
Term notes | WOLF | |||||||||
Principal outstanding repayable | |||||||||
Loan Paid off | $ 23,100 | ||||||||
Discount (in percentage) | 5.00% | ||||||||
Gains (Losses) on Extinguishment of Debt | $ 1,200 |
Derivative Instruments - Intere
Derivative Instruments - Interest rate swap agreement (Details) - Interest rate contracts | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Derivative instruments | |||
Borrowings at variable interest rates | $ 501,300,000 | $ 619,700,000 | |
Number of interest rate swap agreements | item | 1 | ||
Notional amount outstanding | $ 100,000,000 | $ 100,000,000 | |
Remaining maturity term | 40 months | ||
(Benefit) expense recorded to net finance costs | $ 600,000 | 25,000 | $ 0 |
Net fair value of swap liability | $ 1,100,000 | $ 68,000 |
Derivative Instruments - Cash f
Derivative Instruments - Cash flow hedges (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Effects of derivative instruments | |||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | $ 1,957,000 | $ (799,000) | $ (796,000) |
Cash Flow Hedging | |||
Effects of derivative instruments | |||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | 896,000 | 69,000 | |
Amount of Loss (Gain) Reclassified from Accumulated OCI into Income (Effective Portion) | 621,000 | 25,000 | |
Significant ineffectiveness on held hedges | 0 | ||
Cash Flow Hedging | Interest rate contracts | Interest expense Member | |||
Effects of derivative instruments | |||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | 896,000 | 69,000 | |
Amount of Loss (Gain) Reclassified from Accumulated OCI into Income (Effective Portion) | $ 621,000 | $ 25,000 |
Income Taxes (Components of Inc
Income Taxes (Components of Income Before Taxes and of Income Tax Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes | |||
United States | $ 35,050 | $ 21,634 | $ 11,319 |
Foreign | 961 | 2,312 | 1,456 |
Income before income taxes | 36,011 | 23,946 | 12,775 |
Federal | |||
Current | (58) | 324 | (208) |
Deferred | (31,198) | 8,807 | 4,871 |
Total | (31,256) | 9,131 | 4,663 |
State | |||
Current | 284 | 14 | 13 |
Deferred | 4,805 | 292 | 1,163 |
Total | 5,089 | 306 | 1,176 |
Foreign | |||
Current | 20 | 440 | 476 |
Total | 20 | 440 | 476 |
Total | |||
Current | 246 | 778 | 281 |
Deferred | (26,393) | 9,099 | 6,034 |
Total | (26,147) | 9,877 | 6,315 |
Reconciliation of the federal income tax expense at the statutory rate to the effective income tax expense | |||
Statutory federal income tax expense | 12,244 | 8,142 | 4,343 |
State taxes, net of federal benefit | 3,360 | 202 | 776 |
Foreign tax paid | 20 | 440 | 476 |
Change in federal tax rate | (43,643) | ||
Tax consequences of the sale of engines to WMES | 164 | (306) | |
Uncertain tax positions | (40) | (195) | |
Permanent differences-nondeductible executive compensation | 1,238 | 1,201 | 1,117 |
Permanent differences and other | 470 | (68) | 104 |
Total | $ (26,147) | $ 9,877 | $ 6,315 |
Reconciliation of the federal income tax expense | |||
Statutory federal income tax expense (as a percent) | 35.00% |
Income Taxes (Summary of Unreco
Income Taxes (Summary of Unrecognized Tax Benefits and Temporary Differences) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Unrecognized tax benefits | ||||||
Balance at the beginning of the period | $ 191,000 | $ 206,000 | $ 274,000 | $ 464,000 | ||
Increases related to current year tax positions | 4,000 | 4,000 | 5,000 | |||
Decreases due to tax positions expired | (19,000) | (72,000) | (195,000) | |||
Balance at the end of the period | $ 191,000 | 191,000 | 206,000 | $ 274,000 | ||
Uncertain tax positions, reserved for tax exposure in Europe | 0 | 0 | 0 | |||
Deferred tax assets: | ||||||
Unearned lease revenue | 1,754,000 | 1,754,000 | 1,839,000 | |||
State taxes | 1,653,000 | 1,653,000 | 1,035,000 | |||
Reserves and allowances | 2,531,000 | 2,531,000 | 1,659,000 | |||
Other accruals | 643,000 | 643,000 | 2,501,000 | |||
Alternative minimum tax credit | 335,000 | |||||
Foreign tax credit | 42,000 | 42,000 | 42,000 | |||
Net operating loss carry forward | 29,874,000 | 29,874,000 | 35,693,000 | |||
Charitable contributions | 22,000 | 22,000 | 52,000 | |||
Total deferred tax assets | 36,519,000 | 36,519,000 | 43,156,000 | |||
Less: valuation allowance | (806,000) | (806,000) | (1,280,000) | |||
Net deferred tax assets | 35,713,000 | 35,713,000 | 41,876,000 | |||
Deferred tax liabilities: | ||||||
Depreciation and impairment on aircraft engines and equipment | (114,347,000) | (114,347,000) | (147,827,000) | |||
Other deferred tax assets (liabilities) | 437,000 | 437,000 | 422,000 | |||
Net deferred tax liabilities | (113,910,000) | (113,910,000) | (147,405,000) | |||
Other comprehensive income, deferred tax asset | (83,000) | (83,000) | 551,000 | |||
Net deferred tax liabilities | (78,280,000) | $ (78,280,000) | $ (104,978,000) | |||
Valuation allowance of net operating loss | $ 1,300,000 | |||||
Statutory federal income tax expense (as a percent) | 35.00% | |||||
Additional income tax benefit | 39,600,000 | |||||
Provisional amount | 43,600,000 | |||||
Reduction in tax expenses | 4,000,000 | |||||
Scenario, Forecast [Member] | ||||||
Deferred tax liabilities: | ||||||
Statutory federal income tax expense (as a percent) | 21.00% | |||||
Federal | ||||||
Deferred tax assets: | ||||||
Alternative minimum tax credit | 400,000 | $ 400,000 | ||||
Deferred tax liabilities: | ||||||
Operating loss carryforwards | 138,000,000 | 138,000,000 | ||||
Valuation allowance of net operating loss | 0 | $ 0 | ||||
Federal | Minimum | ||||||
Deferred tax liabilities: | ||||||
Alternative minimum tax credit period | 2 years | |||||
Federal | Maximum | ||||||
Deferred tax liabilities: | ||||||
Alternative minimum tax credit period | 4 years | |||||
State | ||||||
Deferred tax liabilities: | ||||||
Operating loss carryforwards | $ 1,000,000 | $ 1,000,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Fair value of notes payable | $ 1,090,000,000 | $ 864,000,000 |
Assets at fair value | 1,100,000 | 68,000 |
Interest rate contracts | ||
Derivative, Notional Amount | $ 100,000,000 | $ 100,000,000 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis( (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets and (Liabilities) at Fair Value | |||
Change in fair value recorded in earnings | $ 600,000 | $ 25,000 | $ 0 |
Recurring | |||
Assets and (Liabilities) at Fair Value | |||
Derivatives | 1,129,000 | 69,000 | |
Total | 1,129,000 | 69,000 | |
Recurring | Level 2 | |||
Assets and (Liabilities) at Fair Value | |||
Derivatives | 1,129,000 | 69,000 | |
Total | $ 1,129,000 | $ 69,000 |
Fair Value Measurements -Nonrec
Fair Value Measurements -Nonrecurring Basis (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($)engineaircraft | Dec. 31, 2016USD ($)engineaircraft | Dec. 31, 2015USD ($) | |
Assets at fair value and gains (losses) recorded | |||
Equipment held for sale | $ 34,172,000 | $ 30,710,000 | |
Assets at fair value | 1,100,000 | $ 68,000 | |
Number of engines | engine | 393 | ||
Asset write-down | $ 24,930,000 | $ 9,514,000 | $ 9,181,000 |
Equipment | |||
Assets at fair value and gains (losses) recorded | |||
Asset write-down | $ 2,000,000 | ||
Engine Parts | |||
Assets at fair value and gains (losses) recorded | |||
Number of engines | engine | 9 | 6 | |
Number of engines for which impairment is recorded earlier due to part out and sale | engine | 1 | ||
Additional write-down | $ 2,000,000 | ||
Engine and aircraft | |||
Assets at fair value and gains (losses) recorded | |||
Additional write down to reflect the estimated market value | $ 5,500,000 | ||
Aircrafts | |||
Assets at fair value and gains (losses) recorded | |||
Number of aircraft | aircraft | 5 | 1 | |
Asset write-down | $ 4,700,000 | ||
Nonrecurring | |||
Assets at fair value and gains (losses) recorded | |||
Equipment held for lease | 23,255,000 | $ 1,196,000 | |
Equipment held for sale | 39,261,000 | 8,976,000 | |
Spare parts inventory | 5,336,000 | 1,538,000 | |
Assets at fair value | 67,852,000 | 11,710,000 | |
Total losses on equipment held for lease | (12,879,000) | (3,674,000) | |
Total losses on equipment held for sale | (8,708,000) | (5,365,000) | |
Total losses on spare parts inventory | (3,343,000) | (475,000) | |
Total losses on assets | (24,930,000) | (9,514,000) | |
Nonrecurring | Engine Parts | |||
Assets at fair value and gains (losses) recorded | |||
Asset write-down | 16,900,000 | ||
Nonrecurring | Level 2 | |||
Assets at fair value and gains (losses) recorded | |||
Equipment held for lease | 23,255,000 | 1,196,000 | |
Equipment held for sale | 39,261,000 | 8,976,000 | |
Spare parts inventory | 5,336,000 | 1,538,000 | |
Assets at fair value | $ 67,852,000 | $ 11,710,000 | |
Engines and related equipment | |||
Assets at fair value and gains (losses) recorded | |||
Number of engines | engine | 48 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share | |||||||||||||||
Shares not included in computation of diluted weighted average earnings per common | 700 | 0 | 4,300 | ||||||||||||
Net income (loss) attributable to common shareholders | $ 41,864 | $ 4,939 | $ 5,657 | $ 7,839 | $ 2,418 | $ 3,985 | $ 3,366 | $ 4,011 | $ 3,037 | $ 2,551 | $ (486) | $ 1,358 | $ 60,299 | $ 13,780 | $ 6,460 |
Basic weighted average common shares outstanding | 6,090,000 | 6,055,000 | 6,036,000 | 6,114,000 | 6,149,000 | 6,307,000 | 6,685,000 | 7,149,000 | 7,739,000 | 7,839,000 | 7,841,000 | 7,848,000 | 6,074,000 | 6,570,000 | 7,817,000 |
Potentially dilutive common shares | 146,000 | 144,000 | 170,000 | ||||||||||||
Diluted weighted average common shares outstanding | 6,201,000 | 6,173,000 | 6,142,000 | 6,240,000 | 6,275,000 | 6,448,000 | 6,819,000 | 7,272,000 | 7,872,000 | 7,963,000 | 7,841,000 | 8,044,000 | 6,220,000 | 6,714,000 | 7,987,000 |
Basic earnings per common share: (in dollars per share) | $ 6.87 | $ 0.82 | $ 0.94 | $ 1.28 | $ 0.40 | $ 0.63 | $ 0.50 | $ 0.57 | $ 0.39 | $ 0.33 | $ (0.06) | $ 0.17 | $ 9.93 | $ 2.10 | $ 0.83 |
Diluted earnings (loss) per common share (in dollars per share) | $ 6.75 | $ 0.80 | $ 0.92 | $ 1.25 | $ 0.39 | $ 0.62 | $ 0.49 | $ 0.55 | $ 0.38 | $ 0.32 | $ (0.06) | $ 0.17 | $ 9.69 | $ 2.05 | $ 0.81 |
Commitments, Contingencies, G55
Commitments, Contingencies, Guarantees and Indemnities (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments, Contingencies, Guarantees and Indemnities | |
2,018 | $ 1,023 |
2,019 | 425 |
Total | 1,448 |
Purchase commitments | $ 124,000 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 15, 2018 | Sep. 22, 2017 | Oct. 11, 2016 | Sep. 27, 2012 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Common Stock Repurchase | |||||||
Repurchase of common stock authorized by Board of Directors | $ 100,000 | ||||||
Number of years for repurchase of common stock | 5 years | ||||||
Common stock repurchased, value | $ 3,546 | $ 28,958 | $ 16,500 | ||||
Shares issued | 2,500 | 1,000 | |||||
Temporary Equity, Par or Stated Value Per Share | $ 0.01 | $ 0.01 | |||||
Liquidation preference | 20 | ||||||
Redemption price | $ 20 | ||||||
Common Stock | |||||||
Common Stock Repurchase | |||||||
Common stock repurchased (in shares) | 155,000 | 1,212,000 | 912,000 | ||||
Common stock repurchased, value | $ 2 | $ 12 | $ 9 | ||||
Preferred Stock [Member] | |||||||
Common Stock Repurchase | |||||||
Shares issued | 1,500,000 | 1,000,000 | |||||
Redeemable Preferred Stock | |||||||
Common Stock Repurchase | |||||||
Shares issued | 1,000,000 | ||||||
Dividend rate (as a percent) | 6.50% | ||||||
Temporary Equity, Par or Stated Value Per Share | $ 0.01 | ||||||
Purchase price | $ 20 | ||||||
Net proceeds after deducting investor fees | $ 19,800 | ||||||
Preferred stock dividends paid | 1,300 | ||||||
Series A-2 Preferred Stock | |||||||
Common Stock Repurchase | |||||||
Shares issued | 1,500,000 | ||||||
Dividend rate (as a percent) | 6.50% | ||||||
Temporary Equity, Par or Stated Value Per Share | $ 0.01 | ||||||
Purchase price | $ 20 | ||||||
Net proceeds after deducting investor fees | $ 29,700 | ||||||
Preferred stock dividends paid | $ 600 | ||||||
Dutch Auction [Member] | |||||||
Common Stock Repurchase | |||||||
Weighted average price per share (in dollars per share) | $ 22.83 | $ 23.71 |
Stock-Based Compensation Plan57
Stock-Based Compensation Plans - Stock compensation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock compensation expense | $ 4,270 | $ 3,717 | $ 4,150 |
The 2007 plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock compensation expense | 4,207 | 3,681 | 4,102 |
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock compensation expense | $ 63 | $ 36 | $ 48 |
Stock-Based Compensation Plan58
Stock-Based Compensation Plans - 2007 Stock Incentive Plan (Details) - shares | May 28, 2015 | Dec. 31, 2017 | May 20, 2010 | May 24, 2007 |
The 2007 plan | ||||
Stock-based compensation plans | ||||
Number of shares authorized | 2,800,000 | 2,000,000 | ||
Additional shares authorized | 800,000 | |||
Restricted stock, forfeited, and returned to pool | 166,744 | |||
Number of shares available | 350,784 | |||
Employee Stock Purchase Plan | ||||
Stock-based compensation plans | ||||
Number of shares authorized | 250,000 | |||
Restricted stock | The 2007 plan | ||||
Stock-based compensation plans | ||||
Number of shares awarded | 2,615,960 | |||
Minimum | Restricted stock | The 2007 plan | ||||
Stock-based compensation plans | ||||
Vesting period | 1 year | |||
Maximum | Restricted stock | The 2007 plan | ||||
Stock-based compensation plans | ||||
Vesting period | 4 years |
Stock-Based Compensation Plan59
Stock-Based Compensation Plans - Restricted stock activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
The 2007 plan | |||
Number Outstanding | |||
Balance at the beginning of the period (in shares) | 299,335 | 396,595 | 525,356 |
Shares granted | 215,603 | 136,645 | 146,440 |
Shares forfeited | (10,999) | (20,377) | |
Shares vested | (175,817) | (213,528) | (275,201) |
Balance at the end of the period (in shares) | 328,122 | 299,335 | 396,595 |
Weighted Average Grant Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 20.24 | $ 17.98 | $ 13.71 |
Shares granted (in dollars per share) | 24.89 | 21.55 | 18.53 |
Shares cancelled (in dollars per share) | 24.38 | 17.79 | |
Shares vested (in dollars per share) | 19.61 | 17.12 | 15.87 |
Balance at the end of the period (in dollars per share) | $ 23.49 | $ 20.24 | $ 17.98 |
Aggregate Value | |||
Balance at the beginning of the period (in dollars) | $ 6,058,336 | $ 7,131,200 | $ 8,786,611 |
Shares granted (in dollars) | 5,365,731 | 2,944,941 | 2,713,159 |
Shares forfeited (in dollars) | (268,200) | (362,536) | |
Shares vested (in dollars) | (3,448,628) | (3,655,269) | (4,368,570) |
Balance at the end of the period (in dollars) | $ 7,707,239 | $ 6,058,336 | $ 7,131,200 |
Number of shares available | 350,784 | ||
The 2007 plan | Restricted stock | |||
Aggregate Value | |||
Balance at the end of the period (in dollars) | $ 8,200,000 | ||
Remaining average vesting period for recognition of unrecognized compensation expense | 1 year 8 months 12 days | ||
Unrecognized compensation expense (in dollars) | $ 5,100,000 | ||
Extended expiration period | 5 years | ||
Employee Stock Purchase Plan | |||
Weighted Average Grant Date Fair Value | |||
Shares granted (in dollars per share) | $ 7.39 | $ 6.35 | $ 6.17 |
Aggregate Value | |||
Shares issued | 11,485 | 11,014 | 10,374 |
Maximum percentage of cash compensation allowed to be deducted for the purchase of common stock by eligible employees | 10.00% | ||
Maximum number of shares to be purchased by employee in one calendar year | 1,000 | ||
Maximum amount of shares to be purchased by employee in one calendar year (in dollars) | $ 25,000 | ||
Purchase price expressed as a percentage of the market price of the common stock on the purchase date or on the date of entry | 85.00% | ||
1996 Plan | |||
Aggregate Value | |||
Stock options exercised (in shares) | 49,000 | ||
Total intrinsic value of options exercised (in dollars) | $ 300,000 | ||
Number of shares available | 0 |
Employee 401(k) Plan (Details)
Employee 401(k) Plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee 401(k) Plan | |||
Maximum percentage of pretax salary, which can be deferred by employees | 20.00% | ||
Maximum amount of wages, which can be deferred by employees | $ 18,000 | ||
Maximum amount of wages, which can be deferred by employees at least 50 years of age | $ 24,000 | ||
Minimum age of employees for a specified contribution amount of wages | 50 years | ||
Percentage of employee's salary for which the company contributes a matching contribution | 50.00% | 50.00% | 50.00% |
Maximum percentage of employee's salary for which the company contributes a matching contribution | 8.00% | 8.00% | 8.00% |
Maximum amount of employee's salary for which the company contributes a matching contribution | $ 12,000,000 | $ 12,000,000 | $ 12,000,000 |
Amount of employer contribution | $ 400,000 | $ 400,000 | $ 400,000 |
Quarterly Consolidated Financ61
Quarterly Consolidated Financial Information - Unaudited (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Consolidated Financial Information (Unaudited) | |||||||||||||||
Total revenue | $ 63,189 | $ 65,861 | $ 67,844 | $ 77,946 | $ 55,476 | $ 51,461 | $ 49,618 | $ 50,719 | $ 55,186 | $ 57,730 | $ 43,810 | $ 41,336 | $ 274,840 | $ 207,274 | $ 198,062 |
Net income (loss) attributable to common shareholders | $ 41,864 | $ 4,939 | $ 5,657 | $ 7,839 | $ 2,418 | $ 3,985 | $ 3,366 | $ 4,011 | $ 3,037 | $ 2,551 | $ (486) | $ 1,358 | $ 60,299 | $ 13,780 | $ 6,460 |
Basic earnings (loss) per common share (in dollars per share) | $ 6.87 | $ 0.82 | $ 0.94 | $ 1.28 | $ 0.40 | $ 0.63 | $ 0.50 | $ 0.57 | $ 0.39 | $ 0.33 | $ (0.06) | $ 0.17 | $ 9.93 | $ 2.10 | $ 0.83 |
Diluted earnings (loss) per common share (in dollars per share) | $ 6.75 | $ 0.80 | $ 0.92 | $ 1.25 | $ 0.39 | $ 0.62 | $ 0.49 | $ 0.55 | $ 0.38 | $ 0.32 | $ (0.06) | $ 0.17 | $ 9.69 | $ 2.05 | $ 0.81 |
Basic weighted average common shares outstanding | 6,090,000 | 6,055,000 | 6,036,000 | 6,114,000 | 6,149,000 | 6,307,000 | 6,685,000 | 7,149,000 | 7,739,000 | 7,839,000 | 7,841,000 | 7,848,000 | 6,074,000 | 6,570,000 | 7,817,000 |
Diluted average common shares outstanding (in shares) | 6,201,000 | 6,173,000 | 6,142,000 | 6,240,000 | 6,275,000 | 6,448,000 | 6,819,000 | 7,272,000 | 7,872,000 | 7,963,000 | 7,841,000 | 8,044,000 | 6,220,000 | 6,714,000 | 7,987,000 |
Adjustment impacted diluted earnings per common share | $ 0.01 | ||||||||||||||
Adjustment impacted diluted weighted average common shares outstanding | 23,000 |
Related Party Transactions (Det
Related Party Transactions (Details) | Dec. 08, 2016USD ($)$ / shares | Dec. 31, 2017USD ($)engine | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Apr. 01, 2016USD ($) | Mar. 31, 2016$ / shares |
Related Party and Similar Transactions | ||||||
Repurchased price | $ / shares | $ 24.95 | $ 21.59 | ||||
Number of shares repurchased | $ 40,000 | |||||
Percentage of difference in repurchase and closing price | 2.00% | |||||
Closing price | $ / shares | $ 25.46 | |||||
WMES | ||||||
Related Party and Similar Transactions | ||||||
Number of engines sold to third party | engine | 2 | |||||
Proceeds from sale of engine | $ 14,800,000 | |||||
WMES | Other Revenue | ||||||
Related Party and Similar Transactions | ||||||
Asset Management Fees | $ 2,400,000 | $ 2,100,000 | $ 1,700,000 | |||
CASC Willis | ||||||
Related Party and Similar Transactions | ||||||
Number of engines sold to third party | engine | 1 | |||||
Proceeds from sale of engine | $ 11,200,000 | |||||
Chief Executive Officer [Member] | ||||||
Related Party and Similar Transactions | ||||||
Number of shares repurchased | $ 60,000 | |||||
Mikchalk Lake LLC | ||||||
Related Party and Similar Transactions | ||||||
Expenses payable | $ 80,000 |
Reportable Segments (Details)
Reportable Segments (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Reportable Segments | |||||||||||||||
Number of operating segments | item | 2 | ||||||||||||||
Revenue: | |||||||||||||||
Lease rent revenue | $ 130,369 | $ 119,895 | $ 108,046 | ||||||||||||
Maintenance reserve revenue | 80,189 | 57,091 | 53,396 | ||||||||||||
Spare parts and equipment sales | 51,423 | 17,783 | 25,582 | ||||||||||||
Gain on sale of leased equipment | 4,929 | 3,482 | 8,320 | ||||||||||||
Other revenue | 7,930 | 9,023 | 2,718 | ||||||||||||
Total revenue | $ 63,189 | $ 65,861 | $ 67,844 | $ 77,946 | $ 55,476 | $ 51,461 | $ 49,618 | $ 50,719 | $ 55,186 | $ 57,730 | $ 43,810 | $ 41,336 | 274,840 | 207,274 | 198,062 |
Expenses: | |||||||||||||||
Depreciation expense | 66,023 | 66,280 | 69,424 | ||||||||||||
Cost of spare parts and equipment sales | 40,848 | 13,293 | 17,849 | ||||||||||||
General and administrative | 55,737 | 47,780 | 42,744 | ||||||||||||
Net finance costs | 37,861 | ||||||||||||||
Net finance costs | 48,720 | 41,281 | 37,861 | ||||||||||||
Other expense | 34,659 | 16,507 | 18,584 | ||||||||||||
Total expenses | 245,987 | 185,141 | 186,462 | ||||||||||||
Earnings from operations | 28,853 | 22,133 | 11,600 | ||||||||||||
Total assets | 1,603,431 | 1,337,887 | 1,294,285 | 1,603,431 | 1,337,887 | 1,294,285 | |||||||||
Intersegment Eliminations [Member] | |||||||||||||||
Revenue: | |||||||||||||||
Other revenue | (1,373) | (1,635) | (458) | ||||||||||||
Total revenue | (1,373) | (1,635) | (458) | ||||||||||||
Expenses: | |||||||||||||||
Earnings from operations | (1,373) | (1,635) | (458) | ||||||||||||
Leasing and Related Operations | Operating Segments [Member] | |||||||||||||||
Revenue: | |||||||||||||||
Lease rent revenue | 130,369 | 119,895 | 108,046 | ||||||||||||
Maintenance reserve revenue | 80,189 | 57,091 | 53,396 | ||||||||||||
Spare parts and equipment sales | 22,285 | 3,335 | 9,975 | ||||||||||||
Gain on sale of leased equipment | 4,929 | 3,482 | 8,320 | ||||||||||||
Other revenue | 7,702 | 8,711 | 2,517 | ||||||||||||
Total revenue | 245,474 | 192,514 | 182,254 | ||||||||||||
Expenses: | |||||||||||||||
Depreciation expense | 65,677 | 65,939 | 69,135 | ||||||||||||
Cost of spare parts and equipment sales | 17,344 | 2,394 | 5,734 | ||||||||||||
General and administrative | 52,024 | 44,703 | 39,974 | ||||||||||||
Net finance costs | 37,474 | ||||||||||||||
Net finance costs | 48,720 | 40,813 | |||||||||||||
Other expense | 34,659 | 16,507 | 18,584 | ||||||||||||
Total expenses | 218,424 | 170,356 | 170,901 | ||||||||||||
Earnings from operations | 27,050 | 22,158 | 11,353 | ||||||||||||
Total assets | 1,580,094 | 1,307,460 | 1,267,414 | 1,580,094 | 1,307,460 | 1,267,414 | |||||||||
Spare Parts Sales | Operating Segments [Member] | |||||||||||||||
Revenue: | |||||||||||||||
Spare parts and equipment sales | 29,138 | 14,448 | 15,607 | ||||||||||||
Other revenue | 1,601 | 1,947 | 659 | ||||||||||||
Total revenue | 30,739 | 16,395 | 16,266 | ||||||||||||
Expenses: | |||||||||||||||
Depreciation expense | 346 | 341 | 289 | ||||||||||||
Cost of spare parts and equipment sales | 23,504 | 10,899 | 12,115 | ||||||||||||
General and administrative | 3,713 | 3,077 | 2,770 | ||||||||||||
Net finance costs | 387 | ||||||||||||||
Net finance costs | 468 | ||||||||||||||
Total expenses | 27,563 | 14,785 | 15,561 | ||||||||||||
Earnings from operations | 3,176 | 1,610 | 705 | ||||||||||||
Total assets | $ 23,337 | $ 30,427 | $ 26,871 | $ 23,337 | $ 30,427 | $ 26,871 |
SCHEDULE I - Parent Company I64
SCHEDULE I - Parent Company Information - Condensed Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||||
Cash and cash equivalents | $ 7,052 | $ 10,076 | ||
Equipment held for operating lease, less accumulated depreciation | 1,342,571 | 1,136,603 | ||
Equipment held for sale | 34,172 | 30,710 | ||
Maintenance Rights | 14,763 | 17,670 | ||
Operating lease related receivable, net of allowances | 18,848 | 16,484 | ||
Spare parts inventory | 16,379 | 25,443 | ||
Investments | 50,641 | 45,406 | ||
Property, equipment & furnishings, less accumulated depreciation | 26,074 | 16,802 | ||
Intangible assets, net | 1,727 | 2,182 | ||
Other assets, net | 50,932 | 14,213 | ||
Total assets | 1,603,431 | 1,337,887 | $ 1,294,285 | |
Liabilities: | ||||
Accounts payable and accrued expenses | 22,072 | 17,792 | ||
Deferred income taxes | 113,910 | 147,405 | ||
Debt obligations | 1,085,405 | 900,255 | ||
Maintenance reserves | 75,889 | 71,602 | ||
Security deposits | 25,302 | 21,417 | ||
Unearned lease revenue | 8,102 | 5,823 | ||
Total liabilities | 1,295,050 | 1,121,867 | ||
Redeemable preferred stock ($0.01 par value, 2,500 shares authorized; 2,500 and 1,000 shares issued and outstanding at December 31, 2017 and 2016, respectively) | 49,471 | 19,760 | ||
Shareholders' equity: | ||||
Common stock ($0.01 par value, 20,000 shares authorized; 6,419 and 6,402 shares issued and outstanding at December 31, 2017 and 2016, respectively) | 64 | 64 | ||
Paid-in capital in excess of par | 2,319 | 2,512 | ||
Retained earnings | 256,301 | 194,729 | ||
Accumulated other comprehensive loss, net of income tax benefit | 226 | (1,045) | ||
Total shareholders' equity | 258,910 | 196,260 | 209,223 | $ 216,648 |
Total liabilities, redeemable preferred stock and shareholders' equity | 1,603,431 | 1,337,887 | ||
Parent Company | ||||
ASSETS | ||||
Cash and cash equivalents | 2,860 | 4,574 | $ 2,894 | $ 2,411 |
Equipment held for operating lease, less accumulated depreciation | 662,162 | 811,091 | ||
Equipment held for sale | 3,296 | 16,468 | ||
Maintenance Rights | 34,084 | 22,446 | ||
Operating lease related receivable, net of allowances | 7,980 | 7,853 | ||
Spare parts inventory | 11,643 | 17,554 | ||
Due from affiliate | 18,439 | 24,723 | ||
Investments | 50,641 | 45,406 | ||
Investment in subsidiaries | 50,047 | (2,879) | ||
Property, equipment & furnishings, less accumulated depreciation | 15,238 | 16,096 | ||
Intangible assets, net | 271 | 1,021 | ||
Prepaid deposits | 36,455 | 4,399 | ||
Other assets, net | 8,385 | 7,890 | ||
Total assets | 901,501 | 976,642 | ||
Liabilities: | ||||
Accounts payable and accrued expenses | 15,686 | 13,428 | ||
Due to affiliates, net | 2,300 | |||
Deferred income taxes | 7,456 | 43,265 | ||
Debt obligations | 508,350 | 626,876 | ||
Maintenance reserves | 36,809 | 54,655 | ||
Security deposits | 17,795 | 18,555 | ||
Unearned lease revenue | 4,724 | 3,843 | ||
Total liabilities | 593,120 | 760,622 | ||
Redeemable preferred stock ($0.01 par value, 2,500 shares authorized; 2,500 and 1,000 shares issued and outstanding at December 31, 2017 and 2016, respectively) | 49,471 | 19,760 | ||
Shareholders' equity: | ||||
Common stock ($0.01 par value, 20,000 shares authorized; 6,419 and 6,402 shares issued and outstanding at December 31, 2017 and 2016, respectively) | 64 | 64 | ||
Paid-in capital in excess of par | 2,319 | 2,512 | ||
Retained earnings | 256,301 | 194,729 | ||
Accumulated other comprehensive loss, net of income tax benefit | 226 | (1,045) | ||
Total shareholders' equity | 258,910 | 196,260 | ||
Total liabilities, redeemable preferred stock and shareholders' equity | $ 901,501 | $ 976,642 |
SCHEDULE I - Parent Company I65
SCHEDULE I - Parent Company Information - Condensed Balance Sheets - Additional Information (Details) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Par value | $ 0.01 | $ 0.01 |
Temporary Equity, Shares Authorized | 2,500 | 2,500 |
Temporary Equity, Shares Issued | 2,500 | 1,000 |
Temporary Equity, Shares Outstanding | 2,500 | 1,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000 | 20,000 |
Common stock, shares issued | 6,419 | 6,402 |
Common stock, shares outstanding | 6,419 | 6,402 |
Parent Company | ||
Par value | $ 0.01 | $ 0.01 |
Temporary Equity, Shares Authorized | 2,500 | 2,500 |
Temporary Equity, Shares Issued | 2,500 | 1,000 |
Temporary Equity, Shares Outstanding | 2,500 | 1,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000 | 20,000 |
Common stock, shares issued | 6,419 | 6,402 |
Common stock, shares outstanding | 6,419 | 6,402 |
SCHEDULE I - Parent Company I66
SCHEDULE I - Parent Company Information - Condensed Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
REVENUE | |||||||||||||||
Lease rent revenue | $ 130,369 | $ 119,895 | $ 108,046 | ||||||||||||
Maintenance reserve revenue | 80,189 | 57,091 | 53,396 | ||||||||||||
Spare parts and equipment sales | 51,423 | 17,783 | 25,582 | ||||||||||||
Gain on sale of leased equipment | 4,929 | 3,482 | 8,320 | ||||||||||||
Other revenue | 7,930 | 9,023 | 2,718 | ||||||||||||
Total revenue | $ 63,189 | $ 65,861 | $ 67,844 | $ 77,946 | $ 55,476 | $ 51,461 | $ 49,618 | $ 50,719 | $ 55,186 | $ 57,730 | $ 43,810 | $ 41,336 | 274,840 | 207,274 | 198,062 |
EXPENSES | |||||||||||||||
Cost Of Spare Parts and Equipment Sales | 40,848 | 13,293 | 17,849 | ||||||||||||
Write-down of equipment | 24,930 | 9,514 | 9,181 | ||||||||||||
General and administrative | 55,737 | 47,780 | 42,744 | ||||||||||||
Technical expense | 9,729 | 6,993 | 9,403 | ||||||||||||
Interest expense | 48,720 | 41,144 | 39,012 | ||||||||||||
Total expenses | 245,987 | 185,141 | 186,462 | ||||||||||||
Earnings from operations | 28,853 | 22,133 | 11,600 | ||||||||||||
Earnings from joint ventures | 7,158 | 1,813 | 1,175 | ||||||||||||
Income before income taxes | 36,011 | 23,946 | 12,775 | ||||||||||||
Income tax (benefit) expense | 26,147 | (9,877) | (6,315) | ||||||||||||
Net income | 62,158 | 14,069 | 6,460 | ||||||||||||
Preferred stock dividends | 1,813 | 281 | |||||||||||||
Accretion of preferred stock issuance costs | 46 | 8 | |||||||||||||
Net income attributable to common shareholders | $ 41,864 | $ 4,939 | $ 5,657 | $ 7,839 | $ 2,418 | $ 3,985 | $ 3,366 | $ 4,011 | $ 3,037 | $ 2,551 | $ (486) | $ 1,358 | 60,299 | 13,780 | 6,460 |
Parent Company | |||||||||||||||
REVENUE | |||||||||||||||
Lease rent revenue | 72,580 | 76,283 | 63,443 | ||||||||||||
Maintenance reserve revenue | 46,163 | 30,742 | 29,937 | ||||||||||||
Spare parts and equipment sales | 35,903 | 8,404 | 20,210 | ||||||||||||
Gain on sale of leased equipment | 3,696 | 3,322 | 2,420 | ||||||||||||
Other revenue | 9,881 | 10,660 | 7,017 | ||||||||||||
Total revenue | 168,223 | 129,411 | 123,027 | ||||||||||||
EXPENSES | |||||||||||||||
Depreciation expense | 40,560 | 43,451 | 40,623 | ||||||||||||
Cost Of Spare Parts and Equipment Sales | 29,705 | 6,591 | 13,559 | ||||||||||||
Write-down of equipment | 17,881 | 5,989 | 6,764 | ||||||||||||
General and administrative | 42,004 | 39,201 | 35,898 | ||||||||||||
Technical expense | 7,058 | 4,637 | 6,805 | ||||||||||||
Interest expense | 25,215 | 23,358 | 18,448 | ||||||||||||
Total expenses | 162,423 | 123,227 | 122,097 | ||||||||||||
Earnings from operations | 5,800 | 6,184 | 930 | ||||||||||||
Earnings from joint ventures | 7,158 | 1,813 | 1,175 | ||||||||||||
Income before income taxes | 12,958 | 7,997 | 2,105 | ||||||||||||
Income tax (benefit) expense | 4,843 | 4,710 | 2,277 | ||||||||||||
Equity in income of subsidiaries, net of tax of $30,990, $5,168, and $4,037 at December 31, 2017, 2016 and 2015, respectively | 54,043 | 10,782 | 6,632 | ||||||||||||
Net income | 62,158 | 14,069 | 6,460 | ||||||||||||
Preferred stock dividends | 1,813 | 281 | |||||||||||||
Accretion of preferred stock issuance costs | 46 | 8 | |||||||||||||
Net income attributable to common shareholders | $ 60,299 | $ 13,780 | $ 6,460 |
SCHEDULE I - Parent Company I67
SCHEDULE I - Parent Company Information - Condensed Statements of Income - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Parent Company | |||
Equity in income of subsidiaries | |||
Equity in income of subsidiaries, tax | $ (30,990) | $ 5,168 | $ 4,037 |
SCHEDULE I - Parent Company I68
SCHEDULE I - Parent Company Information - Condensed Statements of Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Financial Statements, Captions [Line Items] | |||
Net income | $ 62,158 | $ 14,069 | $ 6,460 |
Other comprehensive income: | |||
Currency translation adjustment | 1,061 | (868) | (796) |
Derivative instruments | |||
Unrealized gains on derivative instruments | 896 | 69 | |
Tax (expense) benefit related to items of other comprehensive income | (686) | 275 | 275 |
Total comprehensive income | 63,429 | 13,545 | 5,939 |
Parent Company | |||
Condensed Financial Statements, Captions [Line Items] | |||
Net income | 62,158 | 14,069 | 6,460 |
Other comprehensive income: | |||
Currency translation adjustment | 1,061 | (868) | (796) |
Derivative instruments | |||
Unrealized gains on derivative instruments | 896 | 69 | |
Net gain (loss) recognized in other comprehensive income | 1,957 | (799) | (796) |
Tax (expense) benefit related to items of other comprehensive income | (686) | 275 | 275 |
Other comprehensive income from (loss) | 1,271 | (524) | (521) |
Total comprehensive income | $ 63,429 | $ 13,545 | $ 5,939 |
SCHEDULE I - Parent Company I69
SCHEDULE I - Parent Company Information - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 62,158 | $ 14,069 | $ 6,460 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation expense | 66,023 | 66,280 | 69,424 |
Write-down of equipment | 24,930 | 9,514 | 9,181 |
Stock-based compensation expenses | 4,270 | 3,717 | 4,150 |
Excess tax benefit from stock-based compensation | 236 | 26 | |
Amortization of deferred costs | 5,183 | 4,271 | 4,307 |
Allowances and provisions | 162 | (571) | 697 |
Gain on sale of leased equipment | (4,929) | (3,482) | (8,320) |
Gain on insurance settlement | (1,288) | ||
Income from joint ventures | (7,158) | (1,813) | (1,175) |
Loss on extinguishment of debt | 137 | (1,151) | |
Deferred income taxes | (26,393) | 9,100 | 6,027 |
Changes in assets and liabilities: | |||
Receivables | (2,525) | (2,287) | (5,769) |
Spare parts inventory | (1,855) | (5,093) | 3,828 |
Intangibles | (1,511) | ||
Other assets | (970) | (1,707) | (2,635) |
Accounts payable and accrued expenses | 1,129 | 2,329 | 1,677 |
Maintenance reserves | 7,994 | 548 | 4,580 |
Security deposits | 6,246 | (4,048) | 5,747 |
Unearned lease revenue | 2,279 | 732 | 748 |
Net cash provided by operating activities | 135,256 | 90,421 | 97,802 |
Cash flows from investing activities: | |||
Proceeds from sale of equipment held for operating lease (net of selling expenses) | 43,791 | 62,525 | 41,608 |
Capital contribution to joint ventures | (5,545) | (630) | |
Proceeds from Insurance Settlement, Investing Activities | 14,886 | ||
Distributions received from joint venture | 1,880 | 1,167 | 1,304 |
Maintenance rights payments received | 5,802 | ||
Purchase of equipment held for operating lease | (373,483) | (173,662) | (174,772) |
Purchase of maintenance rights | (5,530) | (8,844) | |
Purchase of property, equipment and furnishings | (10,788) | (1,006) | (3,988) |
Net cash used in investing activities | (323,714) | (122,051) | (139,520) |
Cash flows from financing activities: | |||
Proceeds from issuance of notes payable | 686,200 | 149,000 | 192,700 |
Debt issuance cost | (8,262) | (3,808) | (13) |
Proceeds from shares issued under stock compensation plans | 177 | 155 | 518 |
Preferred stock dividends | (1,311) | ||
Cancellation of restricted stock units in satisfaction of withholding tax | (1,094) | (1,369) | (1,558) |
Security deposit | (2,261) | 455 | (1,606) |
Repurchase of common stock | (3,546) | (28,958) | (16,500) |
Proceeds from issuance of preferred stock | 29,665 | 19,752 | |
Principal payments on notes payable | (496,160) | (113,981) | (153,816) |
Net cash used in financing activities | 203,408 | 21,246 | 19,725 |
Increase/(decrease) in cash, cash equivalents and restricted cash | 14,950 | (10,384) | (21,993) |
Cash and cash equivalents at beginning of period | 10,076 | ||
Cash and cash equivalents at end of period | 7,052 | 10,076 | |
Net cash paid for: | |||
Interest | 42,817 | 37,319 | 35,568 |
Income Taxes | 440 | 459 | 353 |
Supplemental disclosures of non-cash investing activities: | |||
Engines and equipment transferred from Held for operating Lease to Held for sale | 45,018 | 28,560 | 22,079 |
Engines and equipment transferred from Held for sale to Spare parts inventory | 210 | 6,061 | |
Aircraft transferred from Property, equipment and furnishings to Assets held for lease | 2,925 | ||
Accrued Preferred Stock Dividends | 783 | 281 | |
Accretion of preferred stock issuance costs | 46 | 8 | |
Parent Company | |||
Cash flows from operating activities: | |||
Net income | 62,158 | 14,069 | 6,460 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Equity in income of subsidiaries | (54,043) | (10,782) | (6,632) |
Depreciation expense | 40,560 | 43,451 | 40,623 |
Write-down of equipment | 17,881 | 5,989 | 6,764 |
Stock-based compensation expenses | 4,270 | 3,717 | 4,150 |
Excess tax benefit from stock-based compensation | 236 | 26 | |
Amortization of deferred costs | 3,085 | 2,704 | 2,646 |
Allowances and provisions | 76 | (1) | (17) |
Gain on sale of leased equipment | (3,696) | (3,322) | (2,420) |
Gain on insurance settlement | (1,288) | ||
Income from joint ventures | (7,158) | (1,813) | (1,175) |
Loss on extinguishment of debt | 137 | ||
Deferred income taxes | 4,843 | 4,710 | 1,806 |
Changes in assets and liabilities: | |||
Receivables | 5,366 | (4,884) | (865) |
Spare parts inventory | 5,612 | (1,608) | 4,547 |
Intangibles | (750) | ||
Other assets | (4,259) | (2,648) | (2,420) |
Accounts payable and accrued expenses | 2,370 | 3,723 | 4,471 |
Due to / from subsidiaries | 8,584 | (4,437) | (1,242) |
Maintenance reserves | 7,906 | 16,583 | 5,227 |
Security deposits | 6,876 | (2,283) | 5,354 |
Unearned lease revenue | 906 | 878 | 817 |
Net cash provided by operating activities | 100,049 | 63,669 | 68,120 |
Cash flows from investing activities: | |||
Increase in investment in subsidiaries | (45,609) | (2,329) | (23,923) |
Distributions received from subsidiaries | 347,626 | 15,500 | 3,791 |
Proceeds from sale of equipment held for operating lease (net of selling expenses) | 33,118 | 60,893 | 18,792 |
Capital contribution to joint ventures | (5,545) | (630) | |
Proceeds from Insurance Settlement, Investing Activities | 14,886 | ||
Distributions received from joint venture | 1,880 | 1,167 | 1,304 |
Maintenance rights payments received | 5,802 | ||
Purchase of equipment held for operating lease | (354,918) | (167,874) | (161,888) |
Purchase of maintenance rights | (5,530) | (8,844) | |
Purchase of property, equipment and furnishings | (268) | (443) | (3,736) |
Net cash used in investing activities | (3,285) | (104,161) | (169,332) |
Cash flows from financing activities: | |||
Proceeds from issuance of notes payable | 350,500 | 149,000 | 192,700 |
Debt issuance cost | (3,808) | (13) | |
Proceeds from shares issued under stock compensation plans | 177 | 155 | 518 |
Preferred stock dividends | (1,311) | ||
Cancellation of restricted stock units in satisfaction of withholding tax | (1,094) | (1,369) | (1,558) |
Security deposit | (2,261) | 455 | (1,606) |
Repurchase of common stock | (3,546) | (28,958) | (16,500) |
Proceeds from issuance of preferred stock | 29,663 | 19,752 | |
Principal payments on notes payable | (470,606) | (93,055) | (71,846) |
Net cash used in financing activities | (98,478) | 42,172 | 101,695 |
Increase/(decrease) in cash, cash equivalents and restricted cash | (1,714) | 1,680 | 483 |
Cash and cash equivalents at beginning of period | 4,574 | 2,894 | 2,411 |
Cash and cash equivalents at end of period | 2,860 | 4,574 | 2,894 |
Net cash paid for: | |||
Interest | 21,761 | 20,619 | 16,462 |
Income Taxes | 180 | 20 | 75 |
Supplemental disclosures of non-cash investing activities: | |||
Engines and equipment transferred to the parent from its subsidiaries | 17,910 | 229 | 41,410 |
Engines and equipment transferred from Held for operating Lease to Held for sale | 31,571 | 18,194 | 21,786 |
Engines and equipment transferred from Held for sale to Spare parts inventory | $ 6,061 | ||
Aircraft transferred from Property, equipment and furnishings to Assets held for lease | 2,925 | ||
Transferred from property, equipment and furnishings to Equipment held for Lease | 783 | 281 | |
Accrued Preferred Stock Dividends | 46 | 8 | |
Accretion of preferred stock issuance costs | $ 46 | $ 8 |
SCHEDULE II - VALUATION ACCOU70
SCHEDULE II - VALUATION ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounts receivable, allowance for doubtful accounts | |||
Valuation accounts | |||
Balance at Beginning of Period | $ 787 | $ 912 | $ 215 |
Additions Charged (Credited) to Expense | 162 | (125) | 697 |
Balance at End of Period | 949 | 787 | 912 |
Deferred tax valuation allowance | |||
Valuation accounts | |||
Balance at Beginning of Period | 1,280 | 1,280 | 898 |
Additions Charged (Credited) to Expense | (474) | 382 | |
Balance at End of Period | $ 806 | $ 1,280 | $ 1,280 |