SCHEDULE I - Parent Company Information

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]

SCHEDULE I - Parent Company Information

WILLIS LEASE FINANCE CORPORATION

SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF PARENT

Condensed Balance Sheets

(In thousands, except per share data)

	December 31, 2019			December 31, 2018
ASSETS
Cash and cash equivalents	$	1,187		$	5,302
Equipment held for operating lease, less accumulated depreciation	612,808			618,167
Maintenance rights	—			3,296
Equipment held for sale	120			701
Receivables, net of allowances	3,015			3,468
Spare parts inventory	3,466			483
Due from affiliates, net	5,410			14,877
Deferred income taxes	5,607			13,896
Investments	57,936			47,941
Investment in subsidiaries	156,664			141,792
Property, equipment & furnishings, less accumulated depreciation	15,998			15,077
Intangible assets, net	271			271
Notes receivable	38,145			238
Prepaid deposits	9,134			1,383
Other assets, net	13,398			10,528
Total assets	$	923,159		$	877,420
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued expenses	$	33,182		$	27,128
Due to affiliates, net	62,170			40,187
Debt obligations	400,725			434,053
Maintenance reserves	18,464			27,329
Security deposits	6,399			10,692
Unearned revenue	2,243			1,690
Total liabilities	523,183			541,079
Redeemable preferred stock ($0.01 par value, 2,500 shares authorized; 2,500 shares issued and outstanding at December 31, 2019 and 2018, respectively)	49,638			49,554
Shareholders’ equity:
Common stock ($0.01 par value, 20,000 shares authorized;  6,356 and 6,176 shares issued and outstanding at December 31, 2019 and 2018, respectively)	64			62
Paid-in capital in excess of par	4,557			—
Retained earnings	348,965			286,623
Accumulated other comprehensive (loss) income, net of income tax benefit	(3,248		)	102
Total shareholders’ equity	350,338			286,787
Total liabilities, redeemable preferred stock and shareholders' equity	$	923,159		$	877,420

The accompanying note is an integral part of the Consolidated financial statements.

WILLIS LEASE FINANCE CORPORATION

SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF PARENT

Condensed Statements of Income

(In thousands)

	Years Ended December 31,
	2019		2018
REVENUE
Lease rent revenue	$	64,566	$	70,269
Maintenance reserve revenue	48,500		27,407
Spare parts and equipment sales	18,561		35,388
Gain on sale of leased equipment	12,269		6,183
Other revenue	29,644		13,624
Total revenue	173,540		152,871
EXPENSES
Depreciation and amortization expense	30,934		34,795
Cost of spare parts and equipment sales	17,108		32,331
Write-down of equipment	4,425		2,567
General and administrative	71,522		52,896
Technical expense	8,294		9,858
Net finance costs	18,898		25,210
Total expenses	151,181		157,657
Earnings from operations	22,359		(4,786		)
Earnings from joint ventures	8,578		3,800
Income before income taxes	30,937		(986		)
Income tax expense (benefit)	9,456		(280		)
Equity in income of subsidiaries, net of tax of $12,504 and $13,323 at December 31, 2019 and 2018, respectively	45,441		43,937
Net income	66,922		43,231
Preferred stock dividends	3,250		3,250
Accretion of preferred stock issuance costs	84		83
Net income attributable to common shareholders	$	63,588	$	39,898

The accompanying note is an integral part of the Consolidated financial statements.

WILLIS LEASE FINANCE CORPORATION

SCHEDULE I —CONDENSED FINANCIAL INFORMATION OF PARENT

Condensed Statements of Comprehensive Income

(In thousands)

	Years Ended December 31,
	2019			2018
Net income	$	66,922		$	43,231
Other comprehensive loss:
Currency translation adjustment	(222		)	(770		)
Unrealized (loss) gain on derivative instruments	(3,331		)	533
Unrealized loss on derivative instruments at joint venture	(774		)	—
Net loss recognized in other comprehensive income	(4,327		)	(237		)
Tax benefit related to items of other comprehensive income	977			54
Other comprehensive loss	(3,350		)	(183		)
Total comprehensive income	$	63,572		$	43,048

The accompanying note is an integral part of the Consolidated financial statements.

WILLIS LEASE FINANCE CORPORATION

SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF PARENT

Condensed Statements of Cash Flows

(In thousands)

	Years Ended December 31,
	2019			2018
Cash flows from operating activities:
Net income	$	66,922		$	43,231
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of subsidiaries	(45,441		)	(43,937		)
Depreciation expense	30,934			34,795
Write-down of equipment	4,425			2,567
Stock-based compensation expenses	7,787			5,410
Amortization of deferred costs	2,748			3,324
Allowances and provisions	(365		)	439
Gain on sale of leased equipment	(12,269		)	(6,183		)
Income from joint ventures	(8,578		)	(3,800		)
Loss on debt extinguishment	220			—
Loss on disposal of property, equipment and furnishings	19			41
Deferred income taxes	9,554			(434		)
Changes in assets and liabilities:
Receivables	818			4,073
Distributions received from joint ventures	3,300			5,730
Inventory	8,195			7,320
Other assets	(3,640		)	(3,983		)
Accounts payable and accrued expenses	2,946			19,459
Due to / from subsidiaries	31,449			41,449
Maintenance reserves	(6,062		)	(9,500		)
Security deposits	(123		)	(6,773		)
Unearned revenue	553			(3,034		)
Net cash provided by operating activities	93,392			90,194
Cash flows from investing activities:
Increase in investment in subsidiaries	—			(9,104		)
Distributions received from subsidiaries	32,066			388,910
Proceeds from sale of equipment (net of selling expenses)	145,117			48,049
Issuance of notes receivable	(42,857		)	—
Payments received on notes receivable	4,950			—
Capital contributions to joint ventures	(5,713		)	—
Purchase of equipment held for operating lease and for sale	(184,505		)	(417,857		)
Purchase of property, equipment and furnishings	(2,607		)	(1,104		)
Net cash (used in) provided by investing activities	(53,549		)	8,894
Cash flows from financing activities:
Proceeds from issuance of debt obligations	332,000			386,000
Debt issuance cost	(3,142		)	—
Principal payments on debt obligations	(363,813		)	(462,119		)
Interest bearing security deposits	(1,046		)	—
Proceeds from shares issued under stock compensation plans	335			245
Repurchase of common stock	(3,567		)	(16,136		)
Preferred stock dividends	(3,250		)	(3,348		)
Cancellation of restricted stock units in satisfaction of withholding tax	(1,475		)	(1,288		)
Net cash used in financing activities	(43,958		)	(96,646		)
(Decrease)/Increase in cash and cash equivalents	(4,115		)	2,442
Cash and cash equivalents at beginning of period	5,302			2,860
Cash and cash equivalents at end of period	$	1,187		$	5,302
Supplemental disclosures of cash flow information:
Net cash paid for:
Interest	$	17,891		$	23,525
Income Taxes	$	(341	)	$	795
Supplemental disclosures of non-cash investing and financing activities:
Engines and equipment transferred to the subsidiaries from the parent	$	—		$	42,456
Transfers from Equipment held for lease to Equipment held for sale	$	6,681		$	—
Transfers from Equipment held for sale to Spare parts inventory	$	13,805		$	26,387
Accrued preferred stock dividends	$	686		$	686
Accretion of preferred stock issuance costs	$	84		$	83

The accompanying note is an integral part of the Consolidated financial statements.

1. Organization and Summary of Presentation

The accompanying condensed financial statements include the activity of the Parent Company. These condensed financial statements have been presented for the parent company only and should be read in conjunction with the Consolidated Financial Statements and notes thereto of the Company set forth in Part II, Item 8 “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.