-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PKnwcmHvphyJ6HtzSEYolA/30nmESmjIuquniFu18KE8EM5jqPcNfbNm2pR7Lu83 64Gm4q8GizjucWgwh4PqbQ== 0001104659-07-061952.txt : 20070813 0001104659-07-061952.hdr.sgml : 20070813 20070813171738 ACCESSION NUMBER: 0001104659-07-061952 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20070630 FILED AS OF DATE: 20070813 DATE AS OF CHANGE: 20070813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILLIS LEASE FINANCE CORP CENTRAL INDEX KEY: 0001018164 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080] IRS NUMBER: 680070656 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-15369 FILM NUMBER: 071050033 BUSINESS ADDRESS: STREET 1: 2320 MARINSHIP WAY STREET 2: STE 300 CITY: SAUSALITO STATE: CA ZIP: 94965 BUSINESS PHONE: 4153315281 MAIL ADDRESS: STREET 1: 2320 MARINSHIP WAY STREET 2: SUITE 300 CITY: SAUSALITO STATE: CA ZIP: 94965 10-Q 1 a07-18889_110q.htm 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2007

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-28774

WILLIS LEASE FINANCE CORPORATION
(Exact name of registrant as specified in its charter)

Delaware		68-0070656
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2320 Marinship Way, Suite 300 Sausalito, CA		94965
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (415) 275-5100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

o Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Title of Each Class		Outstanding at August 9, 2007
Common Stock, $0.01 Par Value		8,171,772

WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES

INDEX

PART I		FINANCIAL INFORMATION

Item 1.		Consolidated Financial Statements (Unaudited)

		Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006

		Consolidated Statements of Income for the Three and Six months ended June 30, 2007 and 2006

		Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the Six months ended June 30, 2007 and 2006

		Consolidated Statements of Cash Flows for the Six months ended June 30, 2007 and 2006

		Notes to Consolidated Financial Statements

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.		Quantitative and Qualitative Disclosures About Market Risk

Item 4.		Controls and Procedures

PART II.		OTHER INFORMATION

Item 5.		Exhibits

Item 1. Consolidated Financial Statements (Unaudited)

WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets

(In thousands, except share data, unaudited)

	June 30, 2007		As Adjusted December 31, 2006
ASSETS
Cash and cash equivalents	$	2,974	$	387
Restricted cash	77,425		72,759
Equipment held for operating lease, less accumulated depreciation of $122,326 and $110,410 at June 30, 2007 and December 31, 2006, respectively	643,748		602,278
Equipment held for sale	11,576		9,802
Operating lease related receivable, net of allowances of $67 and $86 at June 30, 2007 and December 31, 2006, respectively	3,849		5,002
Notes receivable	—		12
Investments	10,299		10,602
Assets under derivative instruments	3,368		1,508
Property, equipment & furnishings, less accumulated depreciation of $2,253 and $2,013 at June 30, 2007 and December 31, 2006, respectively	7,048		7,272
Other assets	18,578		20,397
Total assets	$	778,865	$	730,019

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued expenses	$	12,345	$	14,755
Liabilities under derivative instruments	—		96
Deferred income taxes	46,232		40,480
Notes payable, net of discount of $2,189 and $2,391 at June 30, 2007 and December 31, 2006, respectively	495,165		465,249
Maintenance reserves	40,315		36,628
Security deposits	5,149		4,848
Unearned lease revenue	6,032		3,961
Total liabilities	605,238		566,017

Shareholders’ equity:
Preferred stock ($0.01 par value, 5,000,000 shares authorized; 3,475,000 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively)	31,915		31,915
Common stock, ($0.01 par value, 22,000,000 shares authorized; 8,142,445 and 8,010,299 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively)	81		80
Paid-in capital in excess of par	54,969		53,820
Accumulated other comprehensive income/(loss), net of income tax expense/(benefit) of $158 and ($558) at June 30, 2007 and December 31, 2006, respectively	273		(967		)
Retained earnings	86,389		79,154
Total shareholders’ equity	173,627		164,002
Total liabilities and shareholders’ equity	$	778,865	$	730,019

See accompanying notes to the unaudited consolidated financial statements

WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Income

(In thousands, except share data, unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			As Adjusted 2006			2007			As Adjusted 2006
REVENUE
Lease revenue	$	29,604		$	22,559		$	56,278		$	54,925
Gain/(Loss) on sale of leased equipment	1,239			(1,634		)	1,300			(158		)
Other income	124			2			505			6
Total revenue	30,967			20,927			58,083			54,773

EXPENSES
Depreciation expense	7,946			7,071			14,389			13,832
Write-down of equipment	2,142			—			2,142			—
General and administrative	5,872			4,628			11,769			8,961
Net finance costs:
Interest expense	9,218			7,781			17,999			14,877
Interest income	(909		)	(760		)	(1,759		)	(1,389		)
Realized and unrealized (gains) and losses on derivative instruments	—			—			—			(153		)
Total net finance costs	8,309			7,021			16,240			13,335
Total expenses	24,269			18,720			44,540			36,128

Earnings from operations	6,698			2,207			13,543			18,645

Earnings from joint venture	205			114			292			226

Income before income taxes	6,903			2,321			13,835			18,871
Income tax expense	(2,509		)	(722		)	(5,036		)	(6,740		)
Net income	$	4,394		$	1,599		$	8,799		$	12,131

Preferred stock dividends paid and accumulated-Series A	782			782			1,564			1,250

Net income attributable to common shareholders	$	3,612		$	817		$	7,235		$	10,881

Basic earnings per common share:	$	0.44		$	0.09		$	0.90		$	1.18

Diluted earnings per common share:	$	0.42		$	0.08		$	0.84		$	1.13

Average common shares outstanding	8,118			9,223			8,066			9,189
Diluted average common shares outstanding	8,636			9,698			8,589			9,643

See accompanying notes to the unaudited consolidated financial statements

WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity and Comprehensive Income
Six Months Ended June 30, 2007 and 2006

(In thousands, unaudited)

	Preferred Stock		Issued and Outstanding Shares of Common Stock	Common Stock		Paid-in Capital in Excess of par		Accumulated Other Comprehensive Income/(Loss)			Retained Earnings			Total Shareholders’ Equity
Balances at December 31, 2005 (as adjusted)	$	—	9,152	$	92	$	63,618	$	(161	)	$	64,212		$	127,761

Net income (as adjusted)	—		—	—		—		—			12,131			12,131

Unrealized gain from derivative instruments, net of tax expenses of $735	—		—	—		—		1,273			—			1,273

Total comprehensive income														13,404

Preferred stock dividends paid	—		—	—		—		—			(1,121		)	(1,121		)

Issuance of 3,475 shares of Series A preferred stock, net of expenses	31,915		—	—		—		—			—			31,915

Shares issued under stock compensation plans	—		123	1		626		—			—			627

Stock-based compensation expenses	—		—	—		355		—			—			355

Balances at June 30, 2006 (as adjusted)	$	31,915	9,275	$	93	$	64,599	$	1,112		$	75,222		$	172,941

Balances at December 31, 2006 (as adjusted)	$	31,915	8,010	$	80	$	53,820	$	(967	)	$	79,154		$	164,002

Net income	—		—	—		—		—			8,799			8,799

Unrealized gain from derivative instruments, net of tax expenses of $716	—		—	—		—		1,240			—			1,240

Total comprehensive income											—			10,039

Preferred stock dividends paid	—		—	—		—		—			(1,564		)	(1,564		)

Shares issued under stock compensation plans	—		132	1		895		—			—			896

Stock-based compensation expenses	—		—	—		254		—			—			254

Balances at June 30, 2007	$	31,915	8,142	$	81	$	54,969	$	273		$	86,389		$	173,627

See accompanying notes to the unaudited consolidated financial statements

WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows

(In thousands, unaudited)

	Six Months ended June 30,
	2007			As Adjusted 2006
Cash flows from operating activities:
Net income	$	8,799		$	12,131
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	14,389			13,832
Write-down of equipment	2,142			—
Amortization of deferred costs	1,563			2,053
Amortization of loan discount	202			212
Allowances and provisions	(19		)	(77		)
Stock-based compensation expenses	254			355
Change in fair value of derivative instruments	—			(169		)
(Gain)/Loss on sale of leased equipment	(1,300		)	158
Earnings from joint venture	(292		)	(226		)
Changes in assets and liabilities:
Receivables	1,172			171
Other assets	(376		)	(365		)
Accounts payable and accrued expenses	(7,737		)	(7,104		)
Deferred income taxes	5,036			6,714
Restricted cash	(15,875		)	(2,920		)
Maintenance reserves	5,187			(4,148		)
Security deposits	301			(495		)
Unearned lease revenue	2,071			463
Net cash provided by operating activities	15,517			20,585
Cash flows from investing activities:
Proceeds from sale of equipment held for operating lease (net of selling expenses)	7,926			16,009
Proceeds from principal payment of notes receivable	12			131
Distributions from joint venture	1,190			275
Investment in joint venture	(595		)	(213		)
Purchase of equipment held for operating lease	(61,703		)	(82,088		)
Restricted cash for investing activities	11,209			—
Purchase of property, equipment and furnishings	(15		)	(65		)
Net cash used in investing activities	(41,976		)	(65,951		)
Cash flows from financing activities:
Proceeds from issuance of notes payable	49,568			65,746
Proceeds from the issuance of preferred stock, net	—			31,915
Distributions to preferred stockholders	(1,564		)	(1,121		)
Debt issuance cost	—			(842		)
Proceeds from issuance of common stock	896			627
Principal payments on notes payable	(19,854		)	(55,227		)
Net cash provided by financing activities	29,046			41,098
Increase/(decrease) in cash and cash equivalents	2,587			(4,268		)
Cash and cash equivalents at beginning of period	387			6,346

Cash and cash equivalents at end of period	$	2,974		$	2,078
Supplemental disclosures of cash flow information:
Net cash paid for:
Interest	$	17,116		$	15,179
Income Taxes	$	44		$	12

See accompanying notes to the unaudited consolidated financial statements.

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

(a) Basis of Presentation: Our unaudited consolidated financial statements include the accounts of Willis Lease Finance Corporation and its subsidiaries (“we” or the “Company”) and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q. Pursuant to such rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal and recurring adjustments) necessary to present fairly our financial position as of June 30, 2007, and December 31, 2006, and the results of our operations for the three and six month periods ended June 30, 2007 and 2006, and our cash flows for the six months ended June 30, 2007 and 2006. The results of operations and cash flows for the period ended June 30, 2007 are not necessarily indicative of the results of operations or cash flows which may be reported for the remainder of 2007.

Management considers the operations of our company to operate in one reportable segment.

(b) Repair and Maintenance: On September 8, 2006 the FASB posted the FSP AUG AIR-1 “Accounting for Planned Major Maintenance Activities” (FSP). The FSP amends certain provisions in the AICPA Industry Audit Guide, “Audits of Airlines,” and APB Opinion No. 28, “Interim Financial Reporting.” The FSP prohibits the use of the previously allowed accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial statements. This guidance was effective for our first quarter of 2007 beginning after January 1, 2007, and was applied retrospectively for all financial statements presented.

Under the terms of some of our leases, the lessees pay amounts to us based on usage, which are designed to cover the expected maintenance cost. Some of these amounts are reimbursable to the lessee if they make specifically defined maintenance expenditures. Through 2006, all such fees received were recorded in maintenance reserves until such time as maintenance costs were reimbursed to the lessee or incurred by us after the end of the lease. If our expenditures exceeded the reserve and, under our capitalization policy, the expenditure extended the original life or improved the functionality of the asset, the incremental expenditure was capitalized. The maintenance reserves were considered in our impairment analysis. In the analysis, carrying value was determined by deducting maintenance reserves from the asset’s book value.

Commencing in 2007 and applied retroactively, use fees received are recognized in revenue if they are not reimbursable to the lessee. Use fees that are reimbursable are included in maintenance reserves until they are reimbursed to the lessee or the lease terminates, at which time they are recognized in revenue. Our expenditures for maintenance are expensed as incurred. Expenditures that meet the criteria for capitalization are recorded as an addition to equipment recorded on the balance sheet. The change in accounting policy resulted in a revision of depreciation estimates for some engines. The change in policy also resulted in a revised impairment analysis being performed without maintenance reserves included as part of the calculation of lease assets carrying value. We recognized additional impairment charges in prior periods based on this analysis. Income taxes increase or decrease depending on the recognized revenue and expenses associated with the adoption of the accounting change.

We adopted FSP AUG AIR-1 effective January 1, 2007. Accordingly, we retroactively adjusted our Consolidated Financial Statements to reflect this change in policy and have marked previously reported comparative information “As Adjusted” to indicate that upon adoption of the FSP the previously reported financial statements have been adjusted. The effect of adopting this FSP on our previously reported Consolidated Financial Statements is summarized in the tables below (in thousands):

Increase (decrease) in:	Three Months ended June 30, 2006			Six Months ended June 30, 2006
Statement of Income:
Lease revenue	$	5,019		$	21,004
Gain on sale of leased equipment	(4,032		)	(4,098		)
Total revenue	987			16,906
Depreciation expense	173			346
General and administrative	(54		)	(133		)
Total expenses	119			213
Earnings from operations	868			16,693
Income before income taxes	868			16,693
Income tax expense	317			6,079
Net income	551			10,614
Net income attributable to common shareholders	551			10,614

	January 1, 2006		December 31, 2006
Balance Sheet:
Equipment held for operating lease	(8,994	)	(7,614	)
Equipment held for sale	(231	)	(231	)
Total assets	(9,225	)	(7,845	)
Deferred income taxes	3,579		9,667
Maintenance reserves	(19,092	)	(34,433	)
Total liabilities	(15,513	)	(24,766	)
Retained earnings	6,288		16,921
Total shareholders’ equity	6,288		16,921
Total liabilities and shareholders’ equity	(9,225	)	(7,845	)

c) Income Tax: In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (FIN 48). FIN 48, which became effective for us on January 1, 2007, clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes”. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006 and we adopted this interpretation effective January 1, 2007. We did not carry any specified tax reserves at December 31, 2006. Upon adopting FIN 48 we have evaluated income tax uncertainty risk areas and exposures and have determined that no reserves are necessary as of January 1, 2007 or June 30, 2007.

2. Management Estimates

These financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States.

The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate its estimates, including those related to residual values, estimated asset lives, bad debts, income taxes, contingencies and litigation. In evaluating these estimates for the quarter ended June 30, 2007, we adjusted the depreciation for certain older engine types within the portfolio, with the result being an increase in depreciation expense of $1.2 million in the period. We base our estimate 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 useful life of equipment, residual values and asset impairment are critical to the results of operations. If the useful lives or residual values are lower than those estimated by us, upon sale of an 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.

3. Commitments, Contingencies, Guarantees and Indemnities

We have commitments to purchase, during the remainder of 2007 and 2008, 23 engines for a gross purchase price of $198.5 million, for delivery from July 2007 to November 2008. As at June 30, 2007, non-refundable deposits paid related to this purchase commitment were $8 million. In October 2006, we entered into an agreement with CFM International (“CFM”) to purchase up to $540 million of new spare aircraft engines. The agreement specifies that, subject to availability, we may purchase up to a total of 45 CFM56-7B and CFM56-5B spare engines over the next five years, with options to acquire up to an additional 30 engines. Our 2007 and 2008 purchase orders have been accepted by CFM and are included in our commitments to purchase.

4. Investments

In July 1999, we entered into an agreement to participate in a joint venture formed as a limited company — Sichuan Snecma Aero-engine Maintenance Co. Ltd. (“Sichuan Snecma”) for the purpose of providing airlines in the Asia Pacific area with modern maintenance, leased engines and spare parts. Sichuan Snecma focuses on providing maintenance services for CFM56 series engines and is located in Chengdu, China. Our investment of $1.48 million initially represented a 7% interest in the joint venture, for which we account using the cost accounting method. In 2005, we elected not to make a capital call agreed to by the other investors, Air China International Company and Snecma Services (France). When this $10.9 million capital call was funded in April 2006, our investment in the joint venture was diluted to a 4.6% interest.

We hold a fifty percent membership interest in a joint venture, WOLF A340, LLC, a Delaware limited liability company, (“WOLF”). On December 30, 2005, WOLF completed the purchase of two Airbus A340-313 aircraft from Boeing Aircraft Holding Company for a purchase price of $96 million. The purchase was funded by four term notes with one financial institution totaling $76.8 million, with interest payable at LIBOR plus 1.0% to 2.5% and maturing in 2013. These aircraft are currently on lease to Emirates until 2013. Our investment in the joint venture is $8.8 million as of June 30, 2007.

Six Months Ending June 30, 2007 (in thousands)

Investment as of December 31, 2006	$	9,122

Investment	595
Earnings from joint venture	292
Distribution	(1,190		)
Investment as of June 30, 2007	$	8,819

5. Long Term Debt

At June 30, 2007, notes payable consists of loans totaling $495.2 million payable (net of discount of $2.2 million) over periods of eight months to 13 years with interest rates varying between approximately 6.6% and 11.3% (excluding the effect of our interest rate derivative instruments). At June 30, 2007, we had revolving and warehouse credit facilities totaling approximately $388.4 million with $94.8 million in funds available to us as discussed below.

At June 30, 2007, we had a $217.0 million revolving credit facility with $163.5 million outstanding. On June 7, 2007, an amendment lowered pricing by 0.5%, extended the maturity date of the facility by one year and increased the accordion feature to $300 million. This facility is used to finance the acquisition of aircraft engines for lease as well as for general working capital purposes. The revolving period ends in June 2009 and the final maturity is June 2010. The interest rate on this facility at June 30, 2007 was LIBOR plus 1.75%. Under the revolver facility, all subsidiaries except WLFC-AC1 and WEST Engine Funding LLC jointly and severally guarantee payment and performance of the terms of the loan agreement. At June 30, 2007, $53.5 million was available under this facility.

At June 30, 2007, we had $195.2 million of WEST term notes and $130.1 million of WEST warehouse notes. The term notes are divided into $170.5 million Series A1 notes and $24.7 million Series B1 notes. The warehouse notes are divided into $114.7 million Series A2 notes and $15.4 million Series B2 notes. On April 16, 2007, the warehouse notes were increased by an aggregate of $57.9 million to $171.4 million. At June 30, 2007 approximately $41.3 million was available under these warehouse notes. The assets of WEST, WEST Engine Funding and any associated Owner Trust are not available to satisfy the obligations of ours or any of our affiliates. WEST is consolidated for financial statement presentation purposes. At June 30, 2007, interest on the Series A1 notes and Series A2 notes is one-month LIBOR plus a margin of 1.25% and 1.50%, respectively. At June 30, 2007, interest on the Series B1 notes and the Series B2 notes is one-month LIBOR plus a margin of 3.00% and a supplemental margin of 3.00%, for a total margin of 6.00%. On July 25, 2007, the A2 margin was reduced from 1.50% to 1.25% and the B2 margin was reduced from 6.00% to 2.75%, respectively.

At June 30, 2007 and 2006, one-month LIBOR was 5.32% and 5.33%, respectively.

The following is a summary of the aggregate maturities of notes payable on June 30, 2007 (dollars in thousands):

Year Ending December 31,

2007	$	13,482
2008	29,024
2009	27,415
2010 (includes $163.5 million outstanding on revolving credit facility)	190,926
2011	32,423
2012 and thereafter	204,084
	$	497,354

6. Derivative Instruments

We hold a number of interest rate derivative instruments to mitigate exposure to changes in interest rates, in particular one-month LIBOR, as 99% of our borrowings are at variable rates. In addition, WEST is required under its credit agreement to hedge a portion of its borrowings. At June 30, 2007, we were a party to interest rate swap agreements with notional outstanding amounts of $291.0 million, remaining terms of between 6 and 57 months and fixed rates of between 3.32% and 5.05%. The fair value of these swaps at June 30, 2007 was positive $3.4 million, and represented the estimated amount we would receive if we terminated the swaps.

We use an external provider to ascertain the fair value of the interest-rate derivative contracts as of the balance sheet date. 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 and has not changed its method of valuation during the period.

Prior to December 1, 2005 changes in the fair value of derivatives were recorded in earnings. Commencing December 1, 2005 we applied hedge accounting and accounted for the change in fair value of our cash flow hedges through other comprehensive income. The fair value of those derivative instruments is measured at each balance sheet date and recorded on the balance sheet as assets or liabilities under derivative instruments. The change in fair value for derivative not qualifying for hedge accounting is recorded in the income statement as part of realized and unrealized (gains) and losses on derivative instruments in net finance costs. The changes to the components of realized and unrealized (gains) and losses on derivative instruments for each of the three and six months ended June 30, 2007 and 2006 are shown in the following table (dollars in thousands):

	Three Months Ending June 30,			Six Months Ending June 30,
Increase (decrease) to net finance costs	2007		2006	2007	2006
Change in fair value of derivative instruments	$	—	—	—	(169	)
Cash settlement expense	—		—	—	16
Total realized and unrealized (gains) and losses from derivative instruments	$	—	—	—	(153	)

Based on the estimated forward rate of LIBOR at June 30, 2007, we anticipate that net finance costs will be decreased by approximately $0.4 million for the 12 months ending June 30, 2008 due to the interest rate derivative contracts in place.

7. Stock-Based Compensation Plan

Our 2007 Stock Incentive Plan (the Plan) was adopted on May 24, 2007. Under this Plan, a total of 2,000,000 shares are authorized for stock based compensation (e.g. restricted stock or stock options). Two types of restricted stock were granted: 10,000 shares vesting over 4 years and 15,452 shares vesting on the first anniversary date from date of issuance. Our accounting policy is to recognize the associated expense of such awards on a straight-line basis over the vesting period. The fair value of the awards equaled the stock price at the date of grant, $11.39 per share. The Plan terminates on May 24, 2017.

8. Preferred Stock

On February 7, 2006 we completed a public offering of 3,475,000 shares of our 9.0% Series A Cumulative Redeemable Preferred Stock with a liquidation preference of $10 per share, or approximately $34.8 million in total. After underwriting commissions and expenses of issuance, we received net proceeds of approximately $32.9 million. Total net proceeds of the issuance after direct costs were $31.9 million. The preferred stock accrues cash dividends from the date of issuance at a rate of 9.0% per annum, or approximately $260,625 per month. The first dividend payment was paid March 15, 2006. The payment of dividends is at the discretion of our board of directors. The Series A Preferred Stock is traded on the NASDAQ National Market under the symbol WLFCP.

Holders of the Series A Preferred Stock will generally have no voting rights, but may elect two directors if we fail to pay dividends for an aggregate of 18 or more months (consecutive or nonconsecutive) and also may vote in certain other limited circumstances. The Series A Preferred Stock has no stated maturity date and is not convertible into any of our property or other securities. On or after February 11, 2011 we may, at our option, redeem the shares. Accordingly, the Series A Preferred Stock will remain outstanding indefinitely, unless we decide to redeem them, or they are otherwise cancelled or exchanged.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Our core business is acquiring and leasing, primarily pursuant to operating leases, commercial aircraft engines and related aircraft equipment; and the selective purchase and sale of commercial aircraft engines (collectively “equipment”).

Critical Accounting Policies and Estimates

Except as noted below, there have been no other material changes to our critical accounting policies and estimates from the information provided in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates included in our 2006 Form 10-K.

On September 8, 2006 the FASB posted the FSP AUG AIR-1 “Accounting for Planned Major Maintenance Activities” (FSP). The FSP amends certain provisions in the AICPA Industry Audit Guide, “Audits of Airlines,” and APB Opinion No. 28, “Interim Financial Reporting.” The FSP prohibits the use of the currently allowed accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial statements. This guidance is effective for the first fiscal period beginning after December 15, 2006, and shall be applied retrospectively for all financial statements presented, unless impracticable to do so.

Results of Operations

Three months ended June 30, 2007, compared to the three months ended June 30, 2006:

Leasing Related Activities. Lease related revenue for the quarter ended June 30, 2007, increased 31.2% to $29.6 million from $22.6 million for the comparable period in 2006. Lease rents increased by $3.8 million or 21.7% due to an increase in the amount of equipment on lease and a further strengthening in lease rates. Use fee revenues increased $3.2 million or 64.4% due to an increase in equipment on lease and associated lease rents as well as the termination of several long term leases in the period. At June 30, 2007 and 2006, approximately 94% and 92% of equipment held for lease by book value were on-lease respectively. The aggregate of net book value of leased equipment at June 30, 2007 and 2006, was $643.7 million and $571.4 million, respectively.

During the quarter ended June 30, 2007, we added $29.8 million of equipment and capitalized costs to the lease portfolio and sold one engine and other related equipment generating a net gain of $1.2 million.

During the quarter ended June 30, 2006, we added $52.9 million of equipment and capitalized costs to the lease portfolio and sold two engines and other related equipment generating a loss of $1.6 million.

Depreciation Expense. Depreciation expense increased 12.4% to $7.9 million for the quarter ended June 30, 2007 from the comparable period in 2006, due to increased lease portfolio value and changes in estimates of useful life and residual values on certain older engine types. It is our policy to review estimates of useful life and residual values on certain older engine types regularly to better estimate the rate of depreciation over the useful life of these engines. This change in depreciation estimate resulted in a $1.2 million increase in depreciation during the three month period ended June 30, 2007.

Write-down of Equipment. Write-down of equipment to their estimated fair values totaled $2.1 million for the quarter ended June 30, 2007, due to management’s decision to consign four engines for part out and sale. Of the four engines, two engines were consigned to third parties in June 2007, with the other two scheduled for part out in July and August.

Net finance costs. Net finance costs include interest expense, interest income and realized and unrealized (gains) and losses on derivative instruments. Interest expense increased 18.5% to $9.2 million for the quarter ended June 30, 2007, from the comparable period in 2006, due to increases in interest rates and average debt outstanding for the quarter ended June 30, 2007, from the comparable period in 2006. Interest income increased 19.6% to $0.9 million for the quarter ended June 30, 2007, from the comparable period in 2006, due to increases in interest rates and deposit balances.

General and Administrative Expenses. General and administrative expenses increased 26.9% to $5.9 million for the quarter ended June 30, 2007, from the comparable period in 2006, mainly due to increased technical services costs related to increased lease activity resulting in higher engine freight, inspection and testing costs as well as higher personnel related costs.

Income Taxes. Income tax expense for the quarters ended June 30, 2007 and 2006, was $2.5 million and $0.7 million, respectively. The effective tax rates for the quarters ended June 30, 2007 and 2006, were 36.3% and 31.1%, respectively. The change in effective tax rate was due primarily to a decrease in the estimated amount of benefit obtained under the Extraterritorial Income Exclusion as a percentage of pre-tax income in 2007 compared to 2006. This income tax regime allows an exclusion from income for certain qualifying income for the lease of engines overseas. However, in 2007, it has been phased out completely, leaving only grandfathered transactions eligible for the benefit exclusion. Because the company’s portion of grandfathered leases to total foreign leases is rather small, there is a significant reduction in the benefit from the prior year. This has been offset by the application of the statutory rate of 36.4% to the change in earnings for 2006 related to the FSP changes noted below, which resulted in an increase in the effective tax rate from 27.9% to 31.1% for the three months ending June 30, 2006.

Six months ended June 30, 2007, compared to the six months ended June 30, 2006:

Leasing Related Activities. Lease related revenue for the six months ended June 30, 2007, increased 2.5% to $56.3 million from $54.9 million for the comparable period in 2006 with an increase in lease rents offsetting a drop in use fee revenues. Lease rents increased by $6.8 million or 20.1% due to an increase in the amount of equipment on lease and a further strengthening in lease rates. Use fee revenues decreased $5.5 million or 26.1% from the prior period due to the recording in 2006 of $13.7 million of use fees related to eight long term leases terminated with a single customer in March, April and May of 2006. For the six months ending June 30, 2007 and 2006, respectively, approximately 94% and 91% of equipment held for lease by book value was on-lease respectively. The aggregate of net book value of leased equipment at June 30, 2007 and 2006, was $643.7 million and $571.4 million, respectively.

During the six months ended June 30, 2007, we added $64.2 million of equipment and capitalized costs to our lease portfolio and sold two engines and other related equipment generating a net gain of $1.3 million.

During the six months ended June 30, 2006, we added $68.9 million of equipment and capitalized costs to our lease portfolio and sold four engines and other related equipment generating a net loss of $0.2 million.

Depreciation Expense. Depreciation expense increased 4.0% to $14.4 million for the six months ended June 30, 2007 from the comparable period in 2006, due to increased lease portfolio value and changes in estimates of residual values on certain older engine types. Beginning April 1, 2007, we changed the depreciation estimate related to certain older engine types in our portfolio. It is our policy to review estimates regularly to more accurately expense the cost of equipment over the useful life of these engines. This change in depreciation estimate resulted in a $1.2 million increase in depreciation during the six months ended June 30, 2007.

General and Administrative Expenses. General and administrative expenses increased 31.3% to $11.8 million for the six months ended June 30, 2007, from the comparable period in 2006, mainly due to higher personnel costs and increased technical service costs related to increased lease activity resulting in higher freight, inspection and testing costs as well as increased accounting and consulting costs.

Net Finance Costs. Net finance costs include interest expense, interest income and realized and unrealized (gains) and losses on derivative instruments. Interest expense increased 21.0% to $18.0 million for the six months ended June 30, 2007, from the comparable period in 2006, due to increases in interest rates and increased average debt outstanding for the six months ended June 30, 2007, from the comparable period in 2006. Interest income increased 26.6% to $1.8 million for the six months ended June 30, 2007, from the comparable period in 2006, due to an increase in deposit balances. Realized and unrealized gains on derivative instruments decreased net finance costs by $0.2 million for the six months ended June 30, 2006 and had no impact on finance costs in the six months ended June 30, 2007.

Income Taxes. Income tax expense for the six months ended June 30, 2007 and 2006, was $5.0 million and $6.7 million, respectively. The effective tax rate for the six months ended June 30, 2007 and 2006, was 36.4% and 35.7%, respectively.

With the adoption of FASB Staff position AUG AIR-1 (FSP) effective January 1, 2007 the impact of implementing the FSP on prior year financial statements is to reduce maintenance reserve liability by $34.4 million and increase shareholders’ equity by $16.9 million as of December 31, 2006. The resulting change to the income statement for the years ended December 31, 2006 and 2005 is as follows:

Increase (decrease)	2006			2005
	(In thousands)
REVENUE
Lease revenue	$	32,744		$	15,983
Gain on sale of leased equipment	(11,963		)	(8,905		)
Total Revenue	$	20,781		$	7,078

EXPENSES
Depreciation expense	$	693		$	495
Write-down of equipment	2,788			6,700
Other operating expenses	578			724
Total expenses	$	4,060		$	7,919

Earnings from operations	$	16,721		$	(842	)

Income before income taxes	$	16,721		$	(842	)
Income tax expense	(6,089		)	305
Net income	$	10,632		$	(536	)

Net income applicable to common shareholders	$	10,632		$	(536	)

The above amounts differ from the estimated changes that were previously described in the 2006 Form 10-K. The impact to income before income taxes for 2006 and 2005 was previously estimated and reported in the 2006 Form 10-K as $15,689 and $(3,433) respectively. The impact to Net Income for 2006 and 2005 was previously estimated and reported as $11,112 and $(2,591) respectively.

The FSP changes have resulted in an increase in capital expenditures and impairment charges related to prior periods. As at December 31, 2006, the Company recorded a cumulative increase in capital expenditures of $16.3 million and recorded impairment expense totaling $28.8 million in prior periods.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective for our 2008 fiscal year. In February 2007, the FASB issued SFAS No. 159. “The Fair Value Option for Financial Assets and Financial Liabilities”. This Statement provides entities upon election to measure financial instruments and certain other items at fair value. We are in the process of assessing the effect SFAS No. 157 and 159 may have on our consolidated financial statements.

Liquidity and Capital Resources

Historically, we have financed our growth through borrowings secured by our equipment lease portfolio. Cash of approximately $49.6 million and $65.7 million, in the six-month periods ended June 30, 2007 and 2006, respectively, was derived from this activity. In these same time periods $19.9 million and $55.2 million, respectively, was used to pay down related debt. Cash flow from operating activities provided $15.5 million and $20.6 million in the six-month periods ended June 30, 2007 and 2006, respectively.

On February 7, 2006, we completed our public offering of 3,475,000 shares of our 9.0% Series A Cumulative Redeemable Preferred Stock with a liquidation preference of $10 per share, or approximately $34.8 million in total. After underwriting commissions and expenses of issuance, net proceeds were approximately $31.9 million. The preferred stock accrues cash dividends from the date of issuance at a rate of 9.0% per annum, or approximately $260,625 per month. The first dividend payment date was March 15, 2006. The payment of dividends, including with respect to the Series A Preferred Stock, is at the discretion of our board of directors. The Series A Preferred Stock, is traded on the NASDAQ National Market.

Our primary use of funds is for the purchase of equipment for lease. Purchases of equipment (including capitalized costs) totaled $61.7 million and $82.1 million for the six-month periods ended June 30, 2007 and 2006, respectively.

Cash flows from operations are driven significantly by payments made under our lease agreements, which comprise lease revenue, maintenance reserves and interest expense. Note that cash received from reserves arrangements is restricted per our debt arrangements. While we have experienced increased lease rates, these have been offset by increases in interest rates such that the spread between lease rates and interest rates continues to narrow in 2007. The lease revenue stream, in the short-term, is at fixed rates while a substantial amount of our debt is at variable rates. If interest rates increase, it is unlikely we could increase lease rates in the short term and this would cause a reduction in our earnings. Revenue and maintenance reserves are also affected by the amount of equipment off lease. Approximately 94%, by book value, of our assets were on-lease at June 30, 2007, compared to approximately 92% at June 30, 2006, and the average utilization rate for the six-month period ended June 30, 2007, was 94% compared to 91% in the prior year. If there is any increase in off-lease rates or deterioration in lease rates that are not offset by reductions in interest rates, there will be a negative impact on earnings and cash flows from operations.

At June 30, 2007, notes payable consists of loans totaling $495.2 million payable over periods of eight months to 13 years with interest rates varying between approximately 6.6% and 11.3% (excluding the effect of our interest rate derivative instruments). The significant facilities are described below.

At June 30, 2007, we had a $217.0 million revolving credit facility to finance the acquisition of aircraft engines for lease as well as for general working capital purposes. As of June 30, 2007, $53.5 million was available under this facility. The revolving facility was amended on June 7, 2007 and ends in June 2009 with a final maturity in June 2010. The interest rate on this facility at June 30, 2007, was 1-month LIBOR plus 1.75%. Under the revolver facility, all subsidiaries except WLFC-AC1 and WEST Engine Funding LLC jointly and severally guarantee payment and performance of the terms of the loan agreement. The maximum guarantee is $217.0 million plus any accrued and unpaid interest, fees or reimbursements but is limited at any given time to the sum of the principal outstanding plus accrued interest and fees. The guarantee would be triggered by a default under the agreement.

At June 30, 2007, we had $195.2 million of WEST term notes and $130.1 million of WEST warehouse notes. The term notes are divided into $170.5 million Series A1 notes and $24.7 million Series B1 notes. The warehouse notes are divided into $114.7 million Series A2 notes and $15.4 million Series B2 notes. The assets of WEST, WEST Engine Funding and any associated Owner Trust are not available to satisfy the obligations of ours or any of our affiliates. WEST is consolidated for financial statement presentation purposes. At June 30, 2007, interest on the Series A1 notes and Series A2 notes is one-month LIBOR plus a margin of 1.25% and 1.50%, respectively. At June 30, 2007, interest on the Series B1 notes and the Series B2 notes is one-month LIBOR plus a margin of 3.00% and a supplemental margin of 3.00%, for a total margin of 6.00%. At June 30, 2007 approximately $41.3 million was available under these warehouse notes. On July 25, 2007, the A2 margin was reduced from 1.50% to 1.25% and the B2 margin was reduced from 6.00% to 2.75%, respectively.

At June 30, 2007 and December 31, 2006, we had warehouse and revolving credit facilities totaling approximately $388.4 million and $330.6 million, respectively. At June 30, 2007, and December 31, 2006, respectively, approximately $94.8 million and $76.0 million were available under these combined facilities. Included in the $94.8 million available at June 30, 2007 is $53.5 million available under the revolving credit facility that ends as of June 30, 2009.

At June 30, 2007, one-month LIBOR was 5.32%, unchanged from December 31, 2006.

Approximately $488.8 million of the above debt is subject to our continuing to comply 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. In addition, we can typically borrow 80% of an engine purchase and only between 50% to 80% of an aircraft or spare parts purchase under these facilities, so we must have other available funds for the balance of the purchase price of any new equipment to be purchased or it will not be permitted to draw on these facilities. The facilities are also cross-defaulted. If we do not comply with the covenants or eligibility requirements, we may not be permitted to borrow additional funds and accelerated payments may become necessary. Additionally, debt is secured by engines on lease to customers and to the extent that engines are returned from lease early or are sold, repayment of that portion of the debt could be accelerated. We were in compliance with all covenants at June 30, 2007.

We have commitments to purchase, during the remainder of 2007 and 2008, 23 engines for a gross purchase price of $198.5 million, for delivery from July 2007 to November 2008.

The lease of our office premises in Sausalito expires on December 31, 2007. The sub-lease of our premises in San Diego expires in October 2008. Our Shanghai, China office lease expires in December 2007.

We believe our equity base, internally generated funds and existing debt facilities are sufficient to maintain our level of operations through 2007. A decline in the level of internally generated funds, such as could result if off-lease rates increase or there is a decrease in availability under our existing debt facilities, would impair our ability to sustain our level of operations. We are discussing additions to our capital base with our commercial and investment banks. If we are not able to access additional capital, our ability to continue to grow our asset base consistent with historical trends will be impaired and our future growth limited to that which can be funded from internally generated capital.

Management of Interest Rate Exposure

At June 30, 2007, $495.1 million of our borrowings are on a variable rate basis tied to one-month LIBOR. Our equipment leases are generally structured at fixed rental rates for specified terms. Increases in interest rates could narrow or eliminate the spread, or result in a negative spread, between the rental revenue we realize under our leases and the interest rate that we pay under our borrowings.

To mitigate exposure to interest rate changes, we have entered into interest rate swap agreements, which have notional outstanding amounts of $291.0 million, with remaining terms of between 6 and 57 months and fixed rates of between 3.32% and 5.05%.

The cash settlements on these derivative instrument arrangements reduced expense by $1.2 million for the six month period ended June 30, 2007 and reduced expense by $0.3 million for the six month period ended June 30, 2006. This incremental benefit for the swaps effective for hedge accounting was included in interest expense for the six month period ended June 30, 2007. For further information see Note 6 to the consolidated financial statements. We will be exposed to risk in the event of non-performance of the interest rate derivative instrument counter-parties. We plan to hedge additional amounts of floating rate debt during the remainder of 2007.

Related Party and Similar Transactions

Gavarnie Holding, LLC, a Delaware Limited Liability Company (“Gavarnie”) owned by Charles F. Willis, IV, purchased the stock of Aloha Island Air, Inc., a Delaware Corporation, (“Island Air”) from Aloha AirGroup, Inc. (“Aloha”) on May 11, 2004. Charles F. Willis, IV is the President, CEO and Chairman of our Board of Directors and owns approximately 37% of our common stock as of December 31, 2006. Island Air leases four DeHaviland DHC-8-100 aircraft and two spare engines from us, under non-cancelable leases which will generate lease revenue of approximately $2.0 million in 2007 and $1.2 million in 2008. These aircraft and engines have a net book value of $10.8 million at December 31, 2006. In 2006, in response to a fare war commenced by a competitor, Island Air requested a reduction in lease rent payments by a deferral of 5 months lease rent totaling $260,000 ($52,000 per month) which was approved by the Board of Directors. The deferral was accounted for as a reduction in lease revenue in the period. The deferred amount will be added to the lease rents charged for two of the aircraft in 2008, upon the expiry of those leases. The rent deferral has been extended through September 2007, totaling $468,000. Any further rent deferral requests from Island Air will be considered by the Board of Directors. After taking into account the deferred amounts, Island Air remains current on all obligations and no provision has been made for any loss.

We entered into a Consignment Agreement dated May 26, 2006, with J.T. Power LLC (“J.T. Power”), an entity whose majority shareholder, Austin Willis, is the son of our President and Chief Executive Officer, and directly and indirectly, a shareholder of ours. During the six months ended June 30, 2007, sales were $34,000. The book value for the parts consigned to J.T. Power as of June 30, 2007 was $0. On July 27, 2006, we entered into an Aircraft Engine Agency Agreement with J.T. Power, LLC, in which we will, on a non-exclusive basis, provide engine lease opportunities with respect to J.T. Power available spare engines. J.T. Power will pay us a fee equal to a percentage of the rent collected by J.T. Power for the duration of the lease including renewals thereof. We earned revenue of $51,000 during the six months ended June 30, 2007, and paid $16,000 in commission under this program.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our primary market risk exposure is that of interest rate risk. A change in the LIBOR rates would affect our cost of borrowing. Increases in interest rates to us, which may cause us to raise the implicit rates charged to our customers, could result in a reduction in demand for our leases. Alternatively, we may price our leases based on market rates so as to keep the fleet on-lease and suffer a decrease in our operating margin due to interest costs that we are unable to pass on to our customers. Approximately $495.1 million (99%) of our outstanding debt is variable rate debt. We estimate that for every one percent increase or decrease in our variable rate debt (net of derivative instruments), annual interest expense would increase or decrease $2.1 million (in 2006, $2.2 million per annum).

We hedge a portion of our borrowings, effectively fixing the rate of these borrowings. This hedging activity helps protect us against getting squeezed by longer term fixed rate leases. Based on the implied forward rates for 1-month LIBOR, we expect interest expenses will be reduced by approximately $1.8 million for the year ending December 31, 2007, as a result of our hedges. Such hedging activities may limit our ability to participate in the benefits of any decrease in interest rates, but may also protect us from increases in interest rates. Furthermore, since lease rates tend to vary with interest rate levels, it is possible that we can adjust lease rates for the effect of change in interest rates at the termination of leases. Other financial assets and liabilities are at fixed rates.

We are also exposed to currency devaluation risk. During the six-month period ended June 30, 2007, 84% of our total lease revenues came from non-United States domiciled lessees. All of our leases require payment in US dollars. If these lessees’ currency devalues against the US dollar, the lessees could potentially encounter difficulty in making their lease payments.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. As of June 30, 2007, our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has conducted an evaluation of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that as of June 30, 2007, our disclosure controls and procedures are effective in ensuring that all material information required to be filed in this annual report has been made known to them in a timely manner.

(b) Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during our fiscal quarter ended June 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 5. Exhibits

(a) Exhibits

EXHIBITS

Exhibit Number		Description
3.1		Certificate of Incorporation, dated March 12, 1998 together with Certificate of Amendment of Certificate of Incorporation, dated May 6, 1998 (incorporated by reference to Exhibits 4.01 and 4.02 on Form 8-K filed on June 23, 1998, SEC File No. 000-28774).
3.2		Bylaws, dated April 18, 2001 (incorporated by reference to Exhibit 3.2 on Form 10-K filed on March 31, 2005).
3.3		Amendment to Bylaws, dated November 13, 2001 (incorporated by reference to Exhibit 3.3 on Form 10-K filed on March 31, 2005).
4.1		Specimen of Series A Preferred Stock Certificate (incorporated by reference to Exhibit 4.1 on Form S-1 Registration Statement Amendment No. 2 filed on January 27, 2006).
4.2		Form of Certificate of Designations of the Registrant with respect to the Series A Preferred Stock (incorporated by reference to Exhibit 4.2 on Form S-1 Registration Statement Amendment No. 2 filed on January 27, 2006).
10.1		Form of Indemnification Agreement entered into between the Company and its directors and officers (incorporated by reference to Exhibit 10.3 to Registration Statement No. 333-5126-LA filed on June 21, 1996).
10.2		Stockholders’ Agreement, dated as of November 7, 2000, by and among the Company, Charles F. Willis, IV, CFW Partners, L.P., Austin Chandler Willis 1995 Irrevocable Trust and FlightTechnics LLC (incorporated by reference to Exhibit 10.8 on Form 8-K filed on November 13, 2000, SEC File No. 000-28774).
10.3		Our 1996 Stock Option/Stock Issuance Plan, as amended and restated as of March 30, 2001 (incorporated by reference to Exhibit A of our Proxy Statement filed on April 27, 2001).
10.4		Our 1996 Stock Option/Stock Issuance Plan, as amended and restated as of March 1, 2003 (incorporated by reference to Exhibit 99.1 of our Form S-8 filed on September 26, 2003).
10.5		Employment Agreement between the Company and Charles F. Willis IV dated November 7, 2000 (incorporated by reference to Exhibit 10.2 of our report on Form 10-K for the year ended December 31, 2000).
10.6		Employment Agreement between the Company and Donald A. Nunemaker dated November 21, 2000 (incorporated by reference to Exhibit 10.3 of our report on Form 10-K for the year ended December 31, 2000).
10.8		Employment Agreement between the Company and Thomas C. Nord dated September 19, 2005 (incorporated by reference to Exhibit 10.1 to our report on Form 8-K filed on September 23, 2005).
10.11		Deferred Compensation Plan Effective as of July 1, 2001 (incorporated by reference to Exhibit 10.45 to our report on Form 10-K/A for the year ended December 31, 2004).
10.12		Eighth Amendment to the Note Purchase Agreement, dated as of May 3, 2002, by and among the Company, WLFC Funding Corporation and Variable Funding Capital Corporation (incorporated by reference to Exhibit 10.24 to our report on Form 10-Q for the quarter ended June 30, 2002).
10.13		Class A Note Purchase Agreement among Willis Engine Funding LLC, the Company, Sheffield Receivables Corporation and Barclay’s Bank PLC dated as of September 12, 2002 (incorporated by reference to Exhibit 10.29 to our report on Form 10-Q for the quarter ended September 30, 2002).
10.14		Class B Note Purchase Agreement among Willis Engine Funding LLC, the Company, Fortis Bank (Nederland) N.V., and Barclay’s Bank PLC dated as of September 12, 2002 (incorporated by reference to Exhibit 10.30 to our report on Form 10-Q for the quarter ended September 30, 2002).
10.15		Custodial Agreement by and among BNY Midwest Trust Company, Willis Engine Funding LLC, the Company, The Bank of New York and Barclay’s Bank PLC dated as of September 12, 2002 (incorporated by reference to Exhibit 10.32 to our report on Form 10-Q for the quarter ended September 30, 2002).
10.16*		Amended and Restated Contribution and Sale Agreement between the Company and Willis Engine Funding LLC dated as of December 13, 2002 (incorporated by reference to Exhibit 10.27 to our report on Form 10-K for the year ended December 31, 2002).

10.17*		Amended and Restated Series 2002-1 Supplement between Willis Engine Funding LLC and The Bank of New York dated as of December 13, 2002 (incorporated by reference to Exhibit 10.28 to our report on Form 10-K for the year ended December 31, 2002).
10.18		Amended and Restated Guaranty between the Company, Barclays Bank PLC and Fortis Bank (Nederland) N.V. dated as of December 13, 2002 (incorporated by reference to Exhibit 10.29 to our report on Form 10-K for the year ended December 31, 2002).
10.19*		Amended and Restated Administration Agreement among Willis Engine Funding LLC, the Company, Barclays Bank PLC and The Bank of New York dated as of December 13, 2002 (incorporated by reference to Exhibit 10.30 to our report on Form 10-K for the year ended December 31, 2002).
10.20		Amended and Restated Subclass A-1 Note Purchase Agreement among Willis Engine Funding LLC, the Company, Sheffield Receivables Corporation and Barclays Bank PLC dated as of December 13, 2002 (incorporated by reference to Exhibit 10.31 to our report on Form 10-K for the year ended December 31, 2002).
10.21		Subclass A-2 Note Purchase Agreement among Willis Engine Funding LLC, the Company, Sheffield Receivables Corporation and Barclays Bank PLC dated as of December 13, 2002 (incorporated by reference to Exhibit 10.32 to our report on Form 10-K for the year ended December 31, 2002).
10.22		Amended and Restated Subclass B-1 Note Purchase Agreement among Willis Engine Funding LLC, the Company, Fortis Bank (Nederland) N.V. and Barclays Bank PLC dated as of December 13, 2002 (incorporated by reference to Exhibit 10.33 to our report on Form 10-K for the year ended December 31, 2002).
10.23		Subclass B-2 Note Purchase Agreement among Willis Engine Funding LLC, the Company and Barclays Bank PLC dated as of December 13, 2002 (incorporated by reference to Exhibit 10.34 to our report on Form 10-K for the year ended December 31, 2002).
10.24		Amended and Restated Indenture between Willis Engine Funding LLC, and The Bank of New York dated as of December 13, 2002 (incorporated by reference to Exhibit 10.35 to our report on Form 10-K for the year ended December 31, 2002).
10.25		Amended and Restated Servicing Agreement between the Company and Willis Engine Funding LLC dated as of December 13, 2002 (incorporated by reference to Exhibit 10.36 to our report on Form 10-K for the year ended December 31, 2002).
10.26*		First Supplemental Indenture between Willis Engine Funding LLC and the Bank of New York dated October 10, 2003 (incorporated by reference to Exhibit 10.33 to our report on Form 10-Q for the quarter ended September 30, 2003).
10.27*		First Amendment to Series Supplement between Willis Engine Funding LLC and the Bank of New York dated October 10, 2003 (incorporated by reference to Exhibit 10.34 to our report on Form 10-Q for the quarter ended September 30, 2003).
10.28		Amendment No. 1 to Note Purchase Agreements between Willis Lease Finance Corporation, Willis Engine Funding LLC, Sheffield Receivables Corporation, Fortis Bank (Nederland) N.V., and Barclays Bank plc dated October 10, 2003 (incorporated by reference to Exhibit 10.35 to our report on Form 10-Q for the quarter ended September 30, 2003).
10.29*		Amended and Restated Credit Agreement, dated as of June 29, 2004 among Willis Lease Finance Corporation, and Certain Banking Institutions Named Herein with National City Bank and Fortis Bank (Nederland) N.V. (incorporated by reference to Exhibit 10.39 of our Form 10-Q for the quarter ended June 30, 2004).
10.30		First Amendment to Amended and Restated Credit Agreement dated as of September 24, 2004 among the Company, National City Bank, Fortis Bank (Nederland) N.V. and CDC Finance—CDC IXIS (incorporated by reference to Exhibit 10.41 of our Form 10-Q for the quarter ended September 30, 2004).
10.31		Letter Agreement dated September 30, 2004 between the Company, Willis Engine Funding LLC, The Bank of New York, Sheffield Receivables Corporation, Barclays Bank PLC and Fortis Bank (Nederland) N.V. to extend our warehouse facility (incorporated by reference to Exhibit 10.42 of the Company’ Form 10-Q for the quarter ended September 30, 2004).
10.32		Loan and Aircraft Security Agreement dated October 29, 2004 between Fleet Capital Corporation and Willis Lease Finance Corporation (incorporated by reference to Exhibit 10.42 of our report in Form 10-K for the year ended December 31, 2004).

10.33		Second Amendment to Amended and Restated Credit Agreement dated as of December 9, 2004 among Willis Lease Finance Corporation, National City Bank, Certain Named Banking Institutions and Fortis Bank (Nederland) N.V. (incorporated by reference to Exhibit 10.43 of our report in Form 10-K for the year ended December 31, 2004).
10.34		Amendment No. 1 to Loan and Aircraft Security Agreement dated as of December 9, 2004 between Fleet Capital Corporation and Willis Lease Finance Corporation (incorporated by reference to Exhibit 10.44 of our report in Form 10-K for the year ended December 31, 2004).
10.35		Third Amendment to Amended and Restated Credit Agreement dated as November 29, 2005 among Willis Lease Finance Corporation, National City Bank, Certain Named Banking Institutions and Fortis Bank (Nederland) N.V. (incorporated by reference to Exhibit 10.35 on Form S-1 Registration Statement filed on December 20, 2005).
10.36		Fourth Amendment to Amended and Restated Credit Agreement dated as December 13, 2005 among Willis Lease Finance Corporation, National City Bank, Certain Named Banking Institutions and Fortis Bank (Nederland) N.V. (incorporated by reference to Exhibit 10.36 on Form S-1 Registration Statement Amendment No. 1 filed on January 9, 2006).
10.37*		Asset Transfer Agreement, dated as of August 9, 2005, among the Company, Willis Engine Securitization Trust, and WEST Engine Funding LLC (incorporated by reference to Exhibit 10.34 of our report in Form 10-Q filed on November 29, 2005).
10.38		Series A1 Note Purchase Agreement, dated as of July 28, 2005, among the Company, Willis Engine Securitization Trust, UBS Securities LLC and UBS Limited (incorporated by reference to Exhibit 10.35 of our report in Form 10-Q filed on November 29, 2005).
10.39		Series 2005 B1 Note Purchase Agreement, dated as of August 9, 2005, among the Company, Willis Engine Securitization Trust, Fortis Capital and HSH Nordbank AG (incorporated by reference to Exhibit 10.36 of our report in Form 10-Q filed on November 29, 2005).
10.40*		Series A2 Note Purchase Agreement, dated as of August 9, 2005, among the Company, Willis Engine Securitization Trust, Fortis Capital and HSH Nordbank AG (incorporated by reference to Exhibit 10.37 of our report in Form 10-Q filed on November 29, 2005).
10.41*		Series B2 Note Purchase Agreement, dated as of August 9, 2005 among the Company, Willis Engine Securitization Trust, Fortis Capital and HSH Nordbank AG (incorporated by reference to Exhibit 10.38 of our report in Form 10-Q filed on November 29, 2005).
10.42*		Indenture, dated August 9, 2005, by and between Willis Engine Securitization Trust and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 10.39 of our report in Form 10-Q filed on November 29, 2005).
10.43		Series A1 Indenture Supplement, dated August 9, 2005, by and between Willis Engine Securitization Trust and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 10.40 of our report in Form 10-Q filed on November 29, 2005).
10.44		Series B1 Indenture Supplement, dated August 9, 2005, by and between Willis Engine Securitization Trust and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 10.41 of our report in Form 10-Q filed on November 29, 2005).
10.45*		Series A2 Indenture Supplement, dated August 9, 2005, by and between Willis Engine Securitization Trust and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 10.42 of our report in Form 10-Q filed on November 29, 2005).
10.46*		Series B2 Indenture Supplement, dated August 9, 2005, by and between Willis Engine Securitization Trust and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 10.43 of our report in Form 10-Q filed on November 29, 2005).
10.47		Servicing Agreement, dated as of August 9, 2005, among the Company, Willis Engine Securitization Trust, WEST Engine Funding and 59 engine owning trusts named therein (incorporated by reference to Exhibit 10.44 of our report in Form 10-Q filed on November 29, 2005).
10.48		Administrative Agency Agreement, dated as of August 9, 2005, among the Company, Willis Engine Securitization Trust, WEST Engine Funding and 59 engine owning trusts named therein (incorporated by reference to Exhibit 10.45 of our report in Form 10-Q filed on November 29, 2005).

10.49		Limited Liability Company Agreement of WOLF A340 LLC, dated as of December 8, 2005, between Oasis International Leasing (USA), Inc. and the Company (incorporated by reference to Exhibit 10.49 on Form S-1 Registration Statement Amendment No. 1 filed on January 9, 2006).
10.50		Sale and Purchase Agreement (139), dated as of December 9, 2005, between Boeing Aircraft Holding Company and WOLF A340 LLC (incorporated by reference to Exhibit 10.50 on Form S-1 Registration Statement Amendment No. 1 filed on January 9, 2006).
10.51		Sale and Purchase Agreement (149), dated as of December 9, 2005, between Boeing Aircraft Holding Company and WOLF A340 LLC (incorporated by reference to Exhibit 10.51 on Form S-1 Registration Statement Amendment No. 1 filed on January 9, 2006).
10.52*		Second Amended and Restated Credit Agreement, dated as of June 30, 2006 among Willis Lease Finance Corporation, and Certain Banking Institutions named therein with National City Bank and Fortis Bank (Nederland) N.V. (incorporated by reference to Exhibit 10.52 of our report in Form 10-Q filed on August 14, 2006).
10.53		Fifth Amendment to Amended and Restated Credit Agreement dated as of May 30, 2006 among Willis Lease Finance Corporation, National City Bank, Certain Named Banking Institutions and Fortis (Nederland) N.V. (incorporated by reference to Exhibit 10.52 of our report in Form 10-Q filed on August 14, 2006).
10.54		Employment Agreement between the Company and Lee G. Beaumont dated February 20, 2007 (incorporated by reference to Exhibit 10.1 of our report on Form 8-K filed on February 21, 2007).
10.55		Employment Agreement between the Company and Bradley S. Forsyth February 20, 2007 (incorporated by reference to Exhibit 10.2 of our report on Form 8-K filed on February 21, 2007).
10.56		Stock Purchase Agreement dated as of December 8, 2006 between FlightTechnics LLC as the Seller and the Company as the Buyer (incorporated by reference to our report on Form 10-K filed on April 2, 2007).
10.57		2007 Stock Incentive Plan (incorporated by reference to our Proxy statement for 2007 Annual Meeting of Stockholders filed on April 30, 2007.
10.58		Second Amendment to Second Amended and Restated Credit Agreement, dated as of June 7, 2007 among Willis Lease Finance Corporation, National City Bank and Certain Banking Institutions.
11.1		Statement re Computation of Per Share Earnings
14.1		Code of Ethics (incorporated by reference to our report on Form 10-K filed on March 31, 2006).
21.1		Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 on Form S-1 Registration Statement filed on December 20, 2005).
31.1		Certification of Charles F. Willis, IV, pursuant to Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Bradley S. Forsyth, pursuant to Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Portions of these exhibits have been omitted pursuant to a request for confidential treatment and the redacted material has been filed separately with the Commission.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 13, 2007

	Willis Lease Finance Corporation

	By:	/s/ Bradley S. Forsyth

		Bradley S. Forsyth
		Senior Vice President Chief Financial Officer
		(Principal Accounting Officer)

EX-10.58 2 a07-18889_1ex10d58.htm EX-10.58

Exhibit 10.58

EXECUTION COPY

SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

This SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is entered into as of June 7, 2007 and amends in certain respects that certain Second Amended and Restated Credit Agreement, dated as of June 29, 2006, by and among WILLIS LEASE FINANCE CORPORATION, a Delaware corporation (the “Borrower”), each of the financial institutions that is, or pursuant to the terms thereof may become, a party as a Bank thereto (individually, a “Bank”, and collectively, the “Banks”), NATIONAL CITY BANK (“NatCity”), in its capacity as Administrative Agent for the Banks (the “Administrative Agent”) and as Security Agent for the Banks (as successor to Fortis Bank (Nederland) N.V., the “Security Agent”), as amended by that certain First Amendment to Second Amended and Restated Credit Agreement and Joinder Agreement, dated as of December 13, 2006, by and among the Borrower, the Banks, the Administrative Agent and the Security Agent (as the same may from time to time be amended, supplemented or otherwise modified, the “Credit Agreement”).

W I T N E S S E T H:

WHEREAS, pursuant to a memorandum from the Borrower dated April 27, 2007 (the “Amendment Request”), a copy of which is annexed here to as Exhibit A, the Borrower has requested the consent of the Agents and the Banks to reduce the rate of interest on the Loans provided under the Credit Agreement and extend the maturity date on the Loans, as well as certain other matters; and

WHEREAS, the Agents and the Banks are willing to provide such consent, subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Defined Terms. Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Credit Agreement.

Section 2. Amendments to Credit Agreement. Pursuant to section 11.05 of the Credit Agreement, and subject to the terms and conditions of this Amendment, including, without limitation, Section 3 and Section 4 hereof, the Agents and the Banks by their signatures below hereby agree that the Credit Agreement shall be amended as follows:

Section 2.1. Amendment to Certain Defined Terms. Section 1.01 of the Credit Agreement is hereby amended as follows:

(a) With respect to the definition of “Applicable Margin,” by amending and restating the table therein to read in its entirety as follows:

	Base Rate Loans		LIBOR Loans
If the Total Leverage Ratio is less than 4.0	0.0	%	1.75	%
If the Total Leverage Ratio is equal to or greater than 4.0	0.25	%	2.25	%

(b) With respect to the definition of “Commitment Termination Date,” by deleting “June 30, 2008” and inserting in lieu thereof “June 30, 2009”.

(c) With respect to the definition of “LIBOR,” by deleting the parenthetical “(rounded upwards, if necessary, to the nearest 1/16 of 1%)” in each instance where it appears therein.

(d) With respect to the definition of “LIBOR Loan,” by deleting “LIBOR Rate” and inserting in lieu thereof “Adjusted LIBOR Rate”.

(e) With respect to the definition of “LIBOR Reserve Percentage,” by deleting “LIBOR Rate” and inserting in lieu thereof “Adjusted LIBOR Rate”.

(f) With respect to the definition of “Post-Default Rate,” by deleting “LIBOR Rate” and inserting in lieu thereof “Adjusted LIBOR Rate”.

Section 2.2. Addition of Certain Defined Terms. Section 1.01 of the Credit Agreement is hereby amended by inserting in the appropriate alphabetical order the following defined term:

“‘Adjusted LIBOR Rate’ shall mean, with respect to any LIBOR Loan, LIBOR divided by one minus the LIBOR Reserve Percentage.”

Section 2.3. Amendment relating to Revolving Loans; Commitment; Term Loans. Section 2.01(a) is hereby amended by deleting “two hundred fifty million ($250,000,000)” and inserting in lieu thereof “three hundred million ($300,000,000)”.

Section 2.4. Amendment relating to Fees. Section 2.05(a) is hereby amended by deleting “0.50% per annum” and inserting in lieu thereof “(i) 0.50% per annum, if the Unused Commitment is equal to or less than 50%, or (ii) 0.25% per annum, in the Unused Commitment is greater than 50%,”.

Section 2.5. Amendment relating to Interest. Clause (i) of Section 2.10(a) is hereby amended by deleting “LIBOR Rate” and inserting in lieu thereof “Adjusted LIBOR Rate”.

Section 2.6. Amendment relating to Indebtedness. Section 7.01(d) of the Credit Agreement is hereby amended by deleting “$342,000,000” and inserting in lieu thereof “$600,000,000”.

Section 2.7. Amendment relating to Redemptions; Dividends. The proviso in Section 7.07(a) of the Credit Agreement is hereby amended by adding “its issued and outstanding shares of Preferred Stock, at an aggregate cost to the Borrower for such repurchase in any calendar year (commencing with the calendar year 2007) not to exceed $5,000,000, or” immediately following the reference to “repurchase” in the first line thereof.

Section 2.8. Amendment relating to Additional Banks. Section 10.01 of the Credit Agreement is hereby amended by adding “To the extent permitted by Section 2.01(a),” at the beginning of the first sentence thereof.

Section 2.9. Amendment relating to Modifications, Consents and Waivers; Entire Agreement. Section 11.05(a) of the Credit Agreement is hereby amended by deleting “Section 2.01” and inserting in lieu thereof “Section 2.01(a)” in the first proviso therein.

Section 2.10. Amendment relating to Schedules. Schedule 1.01(c) of the Credit Agreement is hereby amended as follows:

(a) With respect to clause (a) thereof, by adding “, Mexico” immediately following the reference therein to “United States”.

(b) With respect to clause (d) thereof, by (i) deleting the parenthetical “(including Mexico),” (ii) deleting each other reference therein to “Mexico” and (iii) deleting “25%” and inserting in lieu thereof “30%”.

(i) by adding “in Mexico or” immediately following the reference to “chief executive offices are” in the third line thereof.

(ii) by amending and restating the first proviso therein to read in its entirety as follows:

“provided that the aggregate amount includible in the Asset Base of Net Book Value of Eligible Engines and Eligible Equipment subject to Eligible Leases to Lessees domiciled or whose chief executive offices are located in (A) any one of the following countries shall not exceed 20% of the Asset Base: (I) the People’s Republic of China or (II) Brazil and (B) any one of the following countries shall not exceed 15% of the Asset Base: (I) Mexico, (II) Republic of India or (III) South Korea.”

Section 3. Representations and Warranties. In order to induce the Agents and the Banks to execute this Amendment, the Borrower hereby represents and warrants to the Agents and the Banks as follows, which representations and warranties shall survive the execution and delivery of this Amendment:

(a) The information provided in the Amendment Request is true and complete.

(b) All representations and warranties of the Borrower set forth in the Credit Agreement are true and correct in all material respects as if made on and as of the date hereof and will be true and correct after giving effect to Section 2 hereof as if restated at and as of the date thereof (except in each case for representations and warranties which by their terms are expressly applicable to an earlier date, in which event such representations and warranties shall be true and correct as of such earlier date).

(c) It has power, and is duly authorized, to execute and deliver this Amendment, and to perform its obligations hereunder.

(d) It has taken all necessary action (corporate or otherwise) to authorize this Amendment, and the execution, delivery and performance by it of this Amendment will not (i) violate or conflict with any provision of law or any rule or regulation, (ii) violate or conflict with any provision of its certificate of incorporation, or its by-laws or operating agreement, (iii) violate or conflict with or result in a breach of any order, writ, injunction, ordinance, resolution, decree, or other similar document or instrument of any court or Governmental Authority, bureau or agency, domestic or foreign, or create (with or without the giving of notice or lapse of time, or both) a default under or breach of any agreement, bond, note or indenture to which it is a party, or by which it is bound or any of its properties or assets are affected or (iv) result in the imposition of any Lien of any nature whatsoever upon any of its properties or assets owned by or used in connection with its business, except for the Liens created and granted pursuant to the Security Documents.

(e) This Amendment has been duly executed and delivered by the Borrower and constitutes the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with its terms.

(f) No consent or approval of any Person (including, without limitation, any stockholder of the Borrower), other than any such consent or approval a copy of which has been delivered in form and substance satisfactory to the Administrative Agent, no filing with, action by, consent or approval of any landlord or mortgagee, no waiver of any Lien or right of distraint or other similar right and no filing with, action by, consent, license, approval, authorization or declaration of any Governmental Authority, bureau or agency, is or will be required in connection with the execution, delivery or performance by the Borrower or the validity, enforcement or priority, of this Amendment (or any Lien created and granted or reaffirmed hereunder).

(g) No Default or Event of Default has occurred and is continuing, or, after giving effect to this Amendment, shall exist.

(h) No Material Adverse Change has occurred in the condition (financial or otherwise, determined pursuant to GAAP), operations, assets, income or prospects of the Borrower or its Subsidiaries since June 30, 2006.

Section 4. Effectiveness. The effectiveness of the amendments set forth in Section 2 of this Amendment shall be conditioned upon the fulfillment to the satisfaction of the Administrative Agent of each of the following conditions:

(a) The Administrative Agent shall have received counterparts of this Amendment executed by each of the parties required to execute the same pursuant to the Credit Agreement and the other Loan Documents.

(b) The Administrative Agent shall have received certificates of the Secretary or an Assistant Secretary of the Borrower certifying (i) that attached thereto is a true and complete copy of resolutions adopted by the its Board of Directors authorizing the execution, delivery and performance of this Amendment and any other instrument, agreement or document to be executed by it in connection herewith, and (ii) as to the incumbency and genuineness of the signature of the officer of the Borrower executing this Amendment and any other instrument, agreement or documents executed in connection herewith, in form and substance satisfactory to the Administrative Agent.

(c) Each of the Banks, or the Administrative Agent on behalf of each Bank, shall have received the fee to which such Bank is entitled in accordance with Annex A hereto.

Section 5. Reference to and Effect on Loan Documents. On and after the effective date of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each reference in the other Loan Documents to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended hereby. This Amendment shall constitute a Loan Document within the definition thereof in the Credit Agreement.

Section 6. Miscellaneous Provisions.

Section 6.1 Reaffirmation of Security Interest. The Borrower hereby reaffirms as of the date hereof each and every security interest and Lien granted in favor of the Security Agent and the Banks under the Loan Documents, and agrees and acknowledges that such security interests and Liens shall continue from and after the date hereof and shall remain in full force and effect from and after the date hereof, in each case after giving effect to the Credit Agreement as amended by this Amendment, and the Obligations secured thereby and thereunder shall include the Borrower’s obligations under the Credit Agreement as amended by this Amendment. Each such reaffirmed security interest and Lien remains and shall continue to remain in full force and effect and is hereby in all respects ratified and confirmed.

Section 6.2. Further Assurances. Each of the parties hereto hereby agrees, at the sole cost and expense of the Borrower, to do such further acts and things and to execute, deliver and acknowledge such additional agreements, powers and instruments as any party hereto may reasonably require to carry into effect the purposes of this Amendment.

Section 6.3. Costs and Expenses. The Borrower hereby agrees to pay all costs and expenses of the Agents (including attorneys’ fees and expenses) incurred in connection with the negotiation, preparation, execution and delivery of this Amendment.

Section 6.4. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

Section 6.5. Severability. The invalidity, illegality or unenforceability in any jurisdiction of any provision in or obligation under this Amendment shall not affect or impair the validity, legality or enforceability of the remaining provisions or obligations under this Amendment or of such provision or obligation in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

Section 6.6. Counterparts. This Amendment may be executed in two or more counterparts

(and by different parties on separate counterparts), each of which shall be an original, but all of which together shall constitute one and the same instrument. Execution and delivery of this Amendment by facsimile transmission shall constitute execution and delivery of this Amendment for all purposes, with the same force and effect as execution and delivery of an originally manually signed copy thereof.

Section 6.7. Headings; Binding Effect. The headings of the several sections of this Amendment are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Amendment. The provisions of this Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective permitted successors and assigns.

Section 6.8. Consultation with Advisors. The Borrower acknowledges that it has consulted with counsel and with such other experts and advisors as it has deemed necessary in connection with the negotiation, execution and delivery of this Amendment. This Amendment shall be construed without regard to any presumption or any rule requiring that it be construed against the party causing this Amendment or any part hereof to be drafted.

Section 6.9. Entire Agreement. This Amendment sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. None of the terms or conditions of this Amendment may be changed, modified, waived or canceled, orally or otherwise, except as provided in the Credit Agreement.

[Remainder of page intentionally left blank; signatures on following pages]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first above written.

BORROWER:

WILLIS LEASE FINANCE CORPORATION,


By:	/s/ Brad Forsyth
	Name:	Brad Forsyth
	Title:	Senior Vice President
		Chief Financial Officer