WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

SCHEDULE I — CONDENSED BALANCE SHEETS

Parent Company Information

December 31, 2014 and 2013

(In thousands, except share data)


	December 31,		December 31,
	2014		2013
ASSETS
Cash and cash equivalents	$	2,411	$	1,520
Equipment held for operating lease, less accumulated depreciation		628,341		464,912
Equipment held for sale		15,768		26,382
Operating lease related receivable, net of allowances		3,379		1,911
Spare parts inventory		14,906		—
Due from affiliate		19,044		1,393
Investments		41,590		23,485
Investment in subsidiaries		6,054		97,869
Property, equipment & furnishings, less accumulated depreciation		17,867		4,868
Intangible assets, net		271		271
Equipment purchase deposits		—		1,369
Other assets, net		13,528		9,774
Total assets	$	763,159	$	633,754

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued expenses	$	10,820	$	8,813
Deferred income taxes		26,132		6,993
Notes payable		457,364		378,828
Maintenance reserves		32,845		15,282
Security deposits		16,864		10,008
Unearned lease revenue		2,273		1,225
Total liabilities		546,298		421,149

Shareholders’ equity:
Preferred stock ($0.01 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2014 and 2013)		—		—
Common stock ($0.01 par value, 20,000,000 shares authorized; 8,346,304 and 8,399,739 shares issued and outstanding at December 31, 2014 and 2013, respectively)		83		84
Paid-in capital in excess of par		42,076		44,741
Retained earnings		174,702		167,455
Accumulated other comprehensive income, net of income tax expense		—		325
Total shareholders’ equity		216,861		212,605
Total liabilities and shareholders’ equity	$	763,159	$	633,754

WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

SCHEDULE I — CONDENSED STATEMENTS OF INCOME (LOSS)

Parent Company Information

Years Ended December 31, 2014, 2013, and 2012

(In thousands)


	Years Ended December 31,
	2014		2013		2012
REVENUE
Lease rent revenue	$	50,749	$	36,593	$	30,564
Maintenance reserve revenue		22,270		14,046		13,139
Spare parts sales		7,588		—		—
Gain on sale of leased equipment		2,147		3,472		3,605
Other revenue		5,227		8,022		10,809
Total revenue		87,981		62,133		58,117

EXPENSES
Depreciation expense		29,555		19,699		18,764
Cost of spare parts sales		6,354		—		—
Write-down of equipment		4,681		4,204		2,621
General and administrative		29,546		29,907		30,565
Technical expense		4,455		5,478		3,336
Net finance costs:
Interest expense		13,500		15,030		11,471
Loss on debt extinguishment		—		—		94
Total net finance costs		13,500		15,030		11,565
Total expenses		88,091		74,318		66,851

Loss from operations		(110)		(12,185)		(8,734)

Earnings from joint ventures		1,329		3,526		1,759

Income (loss) before income taxes		1,219		(8,659)		(6,975)
Income tax benefit/(expense)		(1,708)		4,525		2,196

Equity in income of subsidiaries, net of tax of $3,553, $199, and $3,357 at December 31, 2014, 2013 and 2012, respectively		7,736		19,760		6,314

Net income	$	7,247	$	15,626	$	1,535

Preferred stock dividends		—		—		2,493
Preferred stock redemption costs		—		—		2,835

Net income (loss) attributable to common shareholders	$	7,247	$	15,626	$	(3,793)

WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

SCHEDULE I — CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Parent Company Information

Years Ended December 31, 2014, 2013, and 2012

(In thousands)



	Years Ended December 31,
	2014		2013		2012
Net income	$	7,247	$	15,626	$	1,535

Other comprehensive income (loss):
Derivative instruments
Unrealized losses on derivative instruments		—		(187)		(1,039)
Reclassification adjustment for losses (gains) included in net income		(499)		1,485		1,511
Net gain (loss) recognized in other comprehensive income		(499)		1,298		472
Tax benefit (expense) related to items of other comprehensive income (loss)		174		(435)		(16)

Other comprehensive income from parent		(325)		863		456

Other comprehensive income from subsidiaries		—		—		7,205
Total other comprehensive income (loss)		(325)		863		7,661

Total comprehensive income	$	6,922	$	16,489	$	9,196

WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

SCHEDULE I — CONDENSED STATEMENTS OF CASH FLOWS

Parent Company Information

Years Ended December 31, 2014, 2013, and 2012

(In thousands)


	Years Ended December 31,
	2014		2013		2012
Cash flows from operating activities:
Net income	$	7,247	$	15,626	$	1,535
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of subsidiaries		(7,736)		(19,760)		(6,314)
Depreciation expense		29,555		19,699		18,764
Write-down of equipment		4,681		4,204		2,621
Stock-based compensation expenses		3,509		3,439		3,144
Amortization of deferred costs		2,391		2,286		2,215
Amortization of interest rate derivative cost		(499)		(404)		(236)
Allowances and provisions		34		(94)		34
Gain on sale of leased equipment		(2,147)		(3,472)		(3,605)
Gain on insurance settlement		—		(351)		(173)
Income from joint ventures		(1,329)		(3,526)		(957)
Non-cash portion of loss on debt extinguishment		—		—		94
Deferred income taxes		1,383		(4,072)		(2,408)
Changes in assets and liabilities:
Receivables		(1,502)		1,871		(292)
Spare parts inventory		(5,533)		—		—
Notes receivable		—		—		5
Other assets		(942)		(2,165)		(1,329)
Accounts payable and accrued expenses		322		(943)		(2,209)
Due to / from subsidiaries		(2,208)		(4,041)		4,946
Maintenance reserves		8,693		3,495		2,898
Security deposits		(1,616)		426		(641)
Unearned lease revenue		919		(575)		335
Net cash provided by operating activities		35,222		11,643		18,427

Cash flows from investing activities:
Increase in investment in subsidiaries		(9,666)		(34,098)		(100,649)
Distributions received from subsidiaries		17,582		69,548		106,183
Proceeds from sale of equipment held for operating lease (net of selling expenses)		21,360		21,644		21,371
Capital contribution to joint venture		(17,623)		(11,219)		(5,636)
Distributions received from joint venture		847		—		—
Acquisition of J.T. Power, net of cash acquired		—		(4,171)		—
Acquisition of WOLF, net of cash acquired		—		(1,000)		—
Purchase of equipment held for operating lease		(104,904)		(132,140)		(40,465)
Purchase of property, equipment and furnishings		(13,767)		(450)		(1,219)
Net cash used in investing activities		(106,171)		(91,886)		(20,415)

Cash flows from financing activities:
Proceeds from issuance of notes payable		154,395		130,000		236,392
Debt issuance cost		(5,074)		(637)		(516)
Preferred stock dividends		—		—		(2,493)
Proceeds from shares issued under stock compensation plans		410		680		1,725
Cancellation of restricted stock units in satisfaction of withholding tax		(1,544)		(1,248)		(1,194)
Redemption of preferred stock		—		—		(34,750)
Security deposit		4,553		7,588		—
Repurchase of common stock		(5,352)		(5,918)		(12,736)
Cash settlement of stock options		—		—		—
Excess tax benefit from stock-based compensation		311		—		—
Principal payments on notes payable		(75,859)		(52,844)		(186,727)
Net cash provided by (used in) financing activities		71,840		77,621		(299)
Increase/(Decrease) in cash and cash equivalents		891		(2,622)		(2,287)
Cash and cash equivalents at beginning of period		1,520		4,142		6,429
Cash and cash equivalents at end of period	$	2,411	$	1,520	$	4,142
Supplemental disclosures of cash flow information:
Net cash paid for:
Interest	$	11,110	$	11,903	$	8,105
Income Taxes	$	76	$	111	$	101

Supplemental disclosures of non-cash investing activities:
During the years ended December 31, 2014, 2013, 2012, engines and equipment totaling $3,071, $422 and $14,156, respectively, were transferred from Held for Operating Lease to Held for Sale but not settled.
During the years ended December 31, 2014, 2013, 2012, engines and equipment totaling $120,880, $116,020 and $(56,562), respectively, were transferred to (from) the parent to its subsidiaries.
During the year ended December 31, 2014, engines and equipment totaling $3,261 were transferred from Held for sales to spare parts inventory.