Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 06, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | WILLIS LEASE FINANCE CORP | ||
Entity Central Index Key | 1,018,164 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 81.9 | ||
Entity Common Stock, Shares Outstanding | 6,399,767 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 10,076,000 | $ 9,732,000 |
Restricted cash | 22,298,000 | 33,026,000 |
Equipment held for operating lease, less accumulated depreciation of $351,553 and $316,366 at December 31, 2016 and 2015, respectively | 1,136,603,000 | 1,109,168,000 |
Maintenance rights | 17,670,000 | 12,140,000 |
Equipment held for sale | 30,710,000 | 23,454,000 |
Operating lease related receivables, net of allowances of $787 and $912 at December 31, 2016 and 2015, respectively | 16,484,000 | 13,626,000 |
Spare parts inventory | 25,443,000 | 20,826,000 |
Investments | 45,406,000 | 41,295,000 |
Property, equipment & furnishings, less accumulated depreciation of $5,858 and $11,102 at December 31, 2016 and 2015, respectively | 16,802,000 | 20,247,000 |
Intangible assets, net | 2,182,000 | 932,000 |
Other assets | 14,213,000 | 9,839,000 |
Total assets | 1,337,887,000 | 1,294,285,000 |
Liabilities: | ||
Accounts payable and accrued expenses | 17,792,000 | 21,665,000 |
Deferred income taxes | 104,978,000 | 96,154,000 |
Notes payable | 900,255,000 | 866,089,000 |
Maintenance reserves | 71,602,000 | 71,054,000 |
Security deposits | 21,417,000 | 25,010,000 |
Unearned revenue | 5,823,000 | 5,090,000 |
Total liabilities | 1,121,867,000 | 1,085,062,000 |
Derivatives | 0 | |
Redeemable preferred stock ($0.01 par value, 1,000,000 shares authorized; 1,000,000 and nil shares issued and outstanding at December 31, 2016 and 2015, respectively) | 19,760,000 | |
Shareholders' equity: | ||
Common stock ($0.01 par value, 20,000,000 shares authorized; 6,401,929 and 7,548,395 shares issued and outstanding at December 31, 2016 and 2015, respectively) | 64,000 | 75,000 |
Paid-in capital in excess of par | 2,512,000 | 28,720,000 |
Retained earnings | 194,729,000 | 180,949,000 |
Accumulated other comprehensive loss, net of income tax benefit of $551 and $275 at December 31, 2016 and December 31, 2015, respectively. | (1,045,000) | (521,000) |
Total shareholders' equity | 196,260,000 | 209,223,000 |
Total liabilities, redeemable preferred stock and shareholders' equity | $ 1,337,887,000 | $ 1,294,285,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Equipment held for operating lease, accumulated depreciation (in dollars) | $ 351,553 | $ 316,366 |
Operating lease related receivable, allowances (in dollars) | 787 | 912 |
Property, equipment & furnishings, accumulated depreciation (in dollars) | $ 5,858 | $ 11,102 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 6,401,929 | 7,548,395 |
Common stock, shares outstanding | 6,401,929 | 7,548,395 |
Accumulated other comprehensive loss, income tax benefit (in dollars) | $ 551 | $ 275 |
Other assets | 14,213 | 9,839 |
Notes payable | $ 900,255 | $ 866,089 |
Par value | $ 0.01 | $ 0.01 |
Shares authorized | 1,000,000 | 1,000,000 |
Shares issued | 1,000,000 | 0 |
Shares outstanding | 1,000,000 | 0 |
Variable Interest Entity [Member] | ||
Cash | $ 257 | $ 750 |
Equipment | 22,298 | 33,026 |
Other assets | 309,815 | 328,118 |
Notes payable | $ 273,380 | $ 293,331 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
REVENUE | |||||||||||||||
Lease rent revenue | $ 119,895 | $ 108,046 | $ 101,431 | ||||||||||||
Maintenance reserve revenue | 57,091 | 53,396 | 53,322 | ||||||||||||
Spare parts and equipment sales | 17,783 | 25,582 | 8,917 | ||||||||||||
Gain on sale of leased equipment | 3,482 | 8,320 | 5,882 | ||||||||||||
Other revenue | 9,023 | 2,718 | 4,506 | ||||||||||||
Total revenue | $ 55,476 | $ 51,461 | $ 49,618 | $ 50,719 | $ 55,186 | $ 57,730 | $ 43,810 | $ 41,336 | $ 41,205 | $ 45,519 | $ 43,994 | $ 43,340 | 207,274 | 198,062 | 174,058 |
EXPENSES | |||||||||||||||
Depreciation and amortization expense | 66,280 | 69,424 | 65,314 | ||||||||||||
Cost of spare parts and equipment sales | 13,293 | 17,849 | 7,474 | ||||||||||||
Write-down of equipment | 9,514 | 9,181 | 5,602 | ||||||||||||
General and administrative | 47,780 | 42,744 | 35,859 | ||||||||||||
Technical expense | 6,993 | 9,403 | 12,336 | ||||||||||||
Net finance costs: | |||||||||||||||
Interest expense | 41,144 | 39,012 | 37,062 | ||||||||||||
Loss (gain) on debt extinguishment | 137 | (1,151) | |||||||||||||
Total net finance costs | 41,281 | 37,861 | 37,062 | ||||||||||||
Total expenses | 185,141 | 186,462 | 163,647 | ||||||||||||
Earnings from operations | 22,133 | 11,600 | 10,411 | ||||||||||||
Earnings from joint ventures | 1,813 | 1,175 | 1,329 | ||||||||||||
Income before income taxes | 23,946 | 12,775 | 11,740 | ||||||||||||
Income tax expense | 9,877 | 6,315 | 4,560 | ||||||||||||
Net income | 14,069 | 6,460 | 7,180 | ||||||||||||
Preferred stock dividends | 281 | ||||||||||||||
Accretion of preferred stock issuance costs | 8 | ||||||||||||||
Net income attributable to common shareholders | $ 2,418 | $ 3,985 | $ 3,366 | $ 4,011 | $ 3,037 | $ 2,551 | $ (486) | $ 1,358 | $ (491) | $ 1,000 | $ 2,319 | $ 4,352 | $ 13,780 | $ 6,460 | $ 7,180 |
Basic earnings per common share: (in dollars per share) | $ 0.40 | $ 0.63 | $ 0.50 | $ 0.57 | $ 0.39 | $ 0.33 | $ (0.06) | $ 0.17 | $ (0.06) | $ 0.13 | $ 0.29 | $ 0.55 | $ 2.10 | $ 0.83 | $ 0.91 |
Diluted earnings per common share: (in dollars per share) | $ 0.39 | $ 0.62 | $ 0.49 | $ 0.55 | $ 0.38 | $ 0.32 | $ (0.06) | $ 0.17 | $ (0.06) | $ 0.12 | $ 0.28 | $ 0.54 | $ 2.05 | $ 0.81 | $ 0.88 |
Average common shares outstanding (in shares) | 6,149 | 6,307 | 6,685 | 7,149 | 7,739 | 7,839 | 7,841 | 7,848 | 7,839 | 7,938 | 7,976 | 7,914 | 6,570 | 7,817 | 7,917 |
Diluted average common shares outstanding (in shares) | 6,275 | 6,448 | 6,819 | 7,272 | 7,872 | 7,963 | 7,841 | 8,044 | 8,037 | 8,123 | 8,179 | 8,129 | 6,714 | 7,987 | 8,141 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 14,069 | $ 6,460 | $ 7,180 |
Other comprehensive income (loss): | |||
Currency translation adjustment | (868) | (796) | |
Unrealized losses on derivative instruments | 69 | ||
Reclassification adjustment for losses (gains) included in net income | (499) | ||
Net gain (loss) recognized in other comprehensive income | (799) | (796) | (499) |
Tax benefit (expense) related to items of other comprehensive income | 275 | 275 | 174 |
Other comprehensive income (loss) | (524) | (521) | (325) |
Total comprehensive income | $ 13,545 | $ 5,939 | $ 6,855 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common Stock | Paid-in Capital in Excess of par | Accumulated Other Comprehensive Income | Retained Earnings | Preferred Stock | Total |
Balances at Dec. 31, 2013 | $ 84 | $ 44,741 | $ 325 | $ 167,309 | $ 212,459 | |
Balances (in shares) at Dec. 31, 2013 | 8,400,000 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net income attributable to common shareholders | 7,180 | 7,180 | ||||
Net unrealized loss from currency translation adjustment, net of tax benefit | (325) | (325) | ||||
Shares repurchased | $ (2) | (5,350) | (5,352) | |||
Shares repurchased (in shares) | (249,000) | |||||
Shares issued under stock compensation plans | $ 2 | 408 | 410 | |||
Shares issued under stock compensation plans (in shares) | 272,000 | |||||
Cancellation of restricted stock units in satisfaction of withholding tax | $ (1) | (1,543) | (1,544) | |||
Cancellation of restricted stock units in satisfaction of withholding tax (in shares) | (77,000) | |||||
Stock-based compensation, net of forfeitures | 3,509 | 3,509 | ||||
Tax benefit on disqualified disposition of shares | 311 | 311 | ||||
Balances at Dec. 31, 2014 | $ 83 | 42,076 | 174,489 | 216,648 | ||
Balances (in shares) at Dec. 31, 2014 | 8,346,000 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net income attributable to common shareholders | 6,460 | 6,460 | ||||
Net unrealized loss from currency translation adjustment, net of tax benefit | (521) | (521) | ||||
Shares repurchased | $ (9) | (16,491) | (16,500) | |||
Shares repurchased (in shares) | (912,000) | |||||
Shares issued under stock compensation plans | $ 2 | 516 | 518 | |||
Shares issued under stock compensation plans (in shares) | 205,000 | |||||
Cancellation of restricted stock units in satisfaction of withholding tax | $ (1) | (1,557) | (1,558) | |||
Cancellation of restricted stock units in satisfaction of withholding tax (in shares) | (91,000) | |||||
Stock-based compensation, net of forfeitures | 4,150 | 4,150 | ||||
Tax benefit on disqualified disposition of shares | 26 | 26 | ||||
Balances at Dec. 31, 2015 | $ 75 | 28,720 | (521) | 180,949 | $ 209,223 | |
Balances (in shares) at Dec. 31, 2015 | 7,548,000 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Issuance of preferred stock (in shares) | 0 | |||||
Net income attributable to common shareholders | 14,069 | $ 14,069 | ||||
Net unrealized loss from currency translation adjustment, net of tax benefit | (568) | (568) | ||||
Net unrealized gain from derivative instruments, net of tax expense | 44 | 44 | ||||
Shares repurchased | $ (12) | (28,946) | (28,958) | |||
Shares repurchased (in shares) | (1,212,000) | |||||
Shares issued under stock compensation plans | $ 1 | 154 | 155 | |||
Shares issued under stock compensation plans (in shares) | 127,000 | |||||
Cancellation of restricted stock units in satisfaction of withholding tax | (1,369) | (1,369) | ||||
Cancellation of restricted stock units in satisfaction of withholding tax (in shares) | (61,000) | |||||
Stock-based compensation, net of forfeitures | 3,717 | 3,717 | ||||
Issuance of preferred stock | $ 19,752 | |||||
Tax benefit on disqualified disposition of shares | 236 | 236 | ||||
Accretion of preferred stock issuance costs | (8) | 8 | (8) | |||
Preferred stock dividends paid | (281) | (281) | ||||
Balances at Dec. 31, 2016 | $ 64 | $ 2,512 | $ (1,045) | $ 194,729 | $ 19,760 | $ 196,260 |
Balances (in shares) at Dec. 31, 2016 | 6,402,000 | 1,000 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Issuance of preferred stock (in shares) | 1,000 | 1,000,000 |
Consolidated Statements of Sha7
Consolidated Statements of Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Shareholders' Equity | |||
Net unrealized loss from derivative instruments, tax benefit | $ (300) | $ 275 | $ 174 |
Reclassification adjustment for losses included in net income, tax expense | $ 25 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net income | $ 14,069 | $ 6,460 | $ 7,180 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization expense | 66,280 | 69,424 | 65,314 |
Write-down of equipment | 9,514 | 9,181 | 5,602 |
Stock-based compensation expenses | 3,717 | 4,150 | 3,509 |
Amortization of deferred costs | 4,271 | 4,307 | 4,319 |
Amortization of interest rate derivative cost | (499) | ||
Allowances and provisions | (571) | 697 | (81) |
Gain on sale of leased equipment | (3,482) | (8,320) | (5,882) |
Income from joint ventures | (1,813) | (1,175) | (1,329) |
Loss (gain) on extinguishment of debt | 137 | (1,151) | |
Deferred income taxes | 9,100 | 6,027 | 4,110 |
Changes in assets and liabilities: | |||
Receivables | (2,287) | (5,769) | 4,812 |
Spare parts inventory | (5,093) | 3,828 | (5,964) |
Intangibles | (1,511) | ||
Other assets | (1,707) | (2,635) | (590) |
Accounts payable and accrued expenses | 2,329 | 1,677 | (1,998) |
Restricted cash | 10,728 | 9,636 | (6,831) |
Maintenance reserves | 548 | 4,580 | (10,861) |
Security deposits | (4,048) | 5,747 | 1,158 |
Unearned lease revenue | 732 | 748 | 793 |
Net cash provided by operating activities | 100,913 | 107,412 | 62,762 |
Cash flows from investing activities: | |||
Proceeds from sale of equipment (net of selling expenses) | 62,525 | 41,608 | 43,632 |
Restricted cash for investing activities | (1,345) | (16,763) | 6,366 |
Capital contribution to joint ventures | (5,545) | (630) | (17,623) |
Distributions received from joint ventures | 1,167 | 1,304 | 847 |
Maintenance rights payments received | 5,802 | ||
Purchase of equipment held for operating lease and for sale | (173,662) | (174,772) | (119,008) |
Purchase of maintenance rights | (5,530) | (8,844) | (9,098) |
Purchase of property, equipment and furnishings | (1,006) | (3,988) | (13,831) |
Net cash used in investing activities | (123,396) | (156,283) | (108,715) |
Cash flows from financing activities: | |||
Proceeds from issuance of notes payable | 149,000 | 192,700 | 154,395 |
Debt issuance cost | (3,808) | (13) | (5,074) |
Interest bearing security deposit | 455 | (1,606) | 4,553 |
Proceeds from shares issued under stock compensation plans | 155 | 518 | 410 |
Cancellation of restricted stock units in satisfaction of withholding tax | (1,369) | (1,558) | (1,544) |
Repurchase of common stock | (28,958) | (16,500) | (5,352) |
Excess tax benefit from stock-based compensation | 236 | 26 | 311 |
Proceeds from issuance of preferred stock | 19,752 | ||
Principal payments on notes payable | (113,981) | (153,816) | (101,054) |
Restricted cash from financing activities | 1,345 | 25,359 | |
Net cash provided by (used in) financing activities | 22,827 | 45,110 | 46,645 |
Increase/(Decrease) in cash and cash equivalents | 344 | (3,761) | 692 |
Cash and cash equivalents at beginning of period | 9,732 | 13,493 | 12,801 |
Cash and cash equivalents at end of period | 10,076 | 9,732 | 13,493 |
Net cash paid for: | |||
Interest | 37,319 | 35,568 | 33,132 |
Income Taxes | 459 | 353 | 210 |
Supplemental disclosures of non-cash investing activities: | |||
Purchase of aircraft and engines, liability incurred but not paid | 5,337 | 4,662 | 8,188 |
Engines and equipment, transferred from Held for Operating Lease to Held for Sale but not settled | 28,560 | 22,079 | 3,071 |
Equipment held for sale, transferred to spare parts inventory | 0 | $ 6,061 | $ 9,649 |
Transfer from property, equipment and furnishings to assets held for lease | 2,925 | ||
Temporary Equity, Dividends, Adjustment | 281 | ||
Temporary Equity, Accretion to Redemption Value, Adjustment | $ 8 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | (1) Organization and Summary of Significant Accounting Policies (a) Organization Willis Lease Finance Corporation (“Willis” or the “Company”) is a provider of aviation services whose primary focus is providing operating leases of commercial aircraft engines and other aircraft-related equipment to air carriers, manufacturers and overhaul/repair facilities worldwide. Willis also engages in the selective purchase and resale of commercial aircraft engines. WLFC (Ireland) Limited, WLFC Funding (Ireland) Limited and WLFC Lease (Ireland) Limited are wholly-owned Irish subsidiaries of Willis formed to facilitate certain of Willis’ international leasing activities. Willis Aviation Finance Limited in Ireland is a wholly-owned subsidiary formed to facilitate the leasing and technical support of worldwide activities. Willis Lease France is a wholly-owned French subsidiary of Willis formed to facilitate sales and marketing activities in Europe. Willis Lease (China) Limited is a wholly-owned subsidiary of Willis formed to facilitate the acquisition and leasing of assets in China. Willis Engine Securitization Trust II (“WEST II”) is a bankruptcy remote special purpose vehicle which was established for the purpose of financing aircraft engines through an asset-backed securitization. WEST Engine Acquisition LLC and Facility Engine Acquisition LLC are wholly-owned subsidiaries of WEST II and own the engines which secure the notes issued by WEST II. Willis Engine Securitization (Ireland) Limited is another wholly-owned subsidiary of WEST II and was established to facilitate certain international leasing activities by WEST II. WEST II is a variable interest entity which the Company owns 100% of the equity and consolidates in our financial statements. In 2013, the Company launched Willis Aeronautical Services, Inc. (“Willis Aero”), a wholly-owned subsidiary, whose primary focus is the sale of aircraft engine parts and materials through the acquisition or consignment from third parties of aircraft and engines. In 2016, we purchased, through our wholly owned subsidiary Willis Asset Management Limited (“Willis Asset Management”), the business and assets of Total Engine Support Limited (“TES”). TES has been the engine management and consulting business of the TES Aviation Group. Willis Asset Management has 502 engines under management as of December 31, 2016. (b) Principles of Consolidation The consolidated financial statements include the accounts of Willis, WEST Engine Funding LLC, WEST Engine Funding (Ireland) Limited, WEST Engine Acquisition LLC, Facility Engine Acquisition LLC, WLFC (Ireland) Limited, Willis Lease (Ireland) Limited, WLFC Funding (Ireland) Limited, Willis Aviation Finance Limited, Willis Lease France, Willis Lease (China) Limited, WEST Engine Securitization Trust II, Willis Engine Securitization (Ireland) Limited, Willis Aero, Willis Lease Singapore Pte. Ltd., and Willis Asset Management Limited (together, the “Company”). We evaluate all entities in which we have an economic interest firstly to determine whether for accounting purposes the entity is a variable interest entity or voting interest entity. If the entity is a variable interest entity we consolidate the financial statements of that entity if we are the primary beneficiary of the entities’ activities. If the entity is a voting interest entity we consolidate the entity when we have a majority of voting interests. All inter-company balances are eliminated upon consolidation. (c) Correction of Immaterial Errors – Consolidated Financial Statements During 2016 the Company determined that its financial statements for the years ended December 31, 2015, 2014, and for prior years contained errors resulting from the incorrect accounting for equipment purchased with in-place leases. The Company previously did not identify measure and account for maintenance rights acquired. The Company’s accounting policy for maintenance rights is described below as note 1(d). Management evaluated the materiality of the errors described above from a qualitative and quantitative perspective in accordance with the requirements of the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 99, Materiality (SAB 99). Based on such evaluation, we have concluded that these corrections would not be material to any individual prior period and have corrected such balances herein. The associated correcting entries were recorded in the respective period starting with the opening consolidated balance sheet of December 31, 2014. The Consolidated Balance Sheet as of December 31, 2015 presented herein has been revised as follows: decrease in Equipment Held for Operating Lease by $13.7 million, increase in Maintenance Rights by $12.1 million, decrease in Deferred Income Taxes by $0.6 million and decrease in retained earnings by $1.1 million as of December 31, 2015. The adjustments to the previously reported Consolidated Statement of Income for the years ending December 31, 2015 and 2014 were as follows: a decrease in Maintenance Reserve Revenue of $1.7 million and $41,000, respectively; an increase (decrease) in Gain on Sale of Leased Equipment of ($34,000) and $0.1 million, respectively; an decrease in Depreciation and Amortization expense of $0.2 million and $0.1 million, respectively; and a decrease in Income Tax Expense of $0.5 million and $35,000, a decrease in net income of $0.9 million and $0.1 million, respectively; and a decrease in basic and diluted earnings per share of $0.11 and $0.01, respectively. The adjustments to the previously reported Consolidated Statement of cash flows for the years ending December 31, 2015 and 2014 were as follows: a decrease in cash provided by operating income of $1.7 million; and a decrease in the cash used by investing activities of $1.7 million. There were other immaterial out of period adjustments recorded that affected lease rent revenue, spare part sales revenue and expense and general and administrative expenses for the years ended December 31, 2015 and 2014. (d) Revenue Recognition Revenue from leasing of aircraft equipment is recognized as operating lease revenue on a straight-line basis over the terms of the applicable lease agreements. Revenue is not recognized when cash collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received. We regularly sell equipment from our lease portfolio. This equipment may or may not be subject to a lease at the time of sale. The gain or loss on such sales is recognized as revenue and consists of proceeds associated with the sale less the net book value of the asset sold and any direct costs associated with the sale. To the extent that deposits associated with the engine are not included in the sale we include any such amount in our calculation of gain or loss. The Company evaluates sales arrangements under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition: Multiple Element Arrangements (“FASB ASC 605-25”), which addresses accounting for multiple element arrangements. The Company has determined that two deliverables, the sale of equipment and the management services, are separate units of accounting. Therefore, revenue is recognized in accordance with FASB ASC 605-10-S99, Revenue Recognition: Overall: SEC Materials, formerly SAB 104, for each unit. For multiple deliverable revenue arrangements, the Company allocates revenue to equipment sales and management services using the relative selling price method to recognize revenue when the revenue recognition criteria for each deliverable are met. The selling price of a deliverable is based on a hierarchy and if the Company is unable to establish vendor-specific objective evidence of selling price (“VSOE”) it uses third-party evidence of selling price (“TPE”), and if no such data is available, it uses a best estimated selling price (“BSP”). When VSOE cannot be established, the Company attempts to establish the selling price of each element based on TPE. When the Company is unable to establish selling price using VSOE or TPE, the Company uses BSP. The objective of BSP is to determine the price at which the Company would transact a sale if the equipment or service were sold on a stand-alone basis. The selling price of the service elementis based on TPE and is determined by reviewing information from management agreements entered into by other parties on a standalone basis, compared it to the management agreements entered into with the investor group and determined that the fees charged on a standalone basis were comparable to the fees charged when the Company entered into the management agreement concurrent with the sale of the portfolio of engines. Accordingly, the Company determined that the fees charged for its management services were comparable to those charged by other asset managers for the same service. The Company recognizes revenue from management fees under equipment management agreements as earned on a monthly basis. Management fees are based upon a percentage of net lease rents of the investor group’s engine portfolio calculated on an accrual basis and recorded in Other revenue. Under the terms of some of our leases, the lessees pay use fees (also known as maintenance reserves) to us based on usage of the leased asset, which are designed to cover expected future maintenance costs. Some of these amounts are reimbursable to the lessee if they make specifically defined maintenance expenditures. Use fees received are recognized in revenue as maintenance reserve revenue if they are not reimbursable to the lessee. Use fees that are reimbursable are recorded as a maintenance reserve liability until they are reimbursed to the lessee or the lease terminates, at which time they are recognized in revenue as maintenance reserve revenue. Certain lessees may be significantly delinquent in their rental payments and may default on their lease obligations. As of December 31, 2016, we had an aggregate of approximately $3.6 million in lease rent and $2.4 million in maintenance reserve receivables more than 30 days past due. Our inability to collect receivables or to repossess engines or other leased equipment in the event of a default by a lessee could have a material adverse effect on us. The Company estimates an allowance for doubtful accounts for lease receivables it does not consider fully collectible. The allowance for doubtful accounts includes the following: (1) specific reserves for receivables which are impaired for which management believes full collection is doubtful; and (2) a general reserve for estimated losses based on historical experience. We recognize sales of spare parts upon shipping and the amount reported as cost of sales is recorded at specific cost. We recognize service revenue from fees earned under engine maintenance service agreements as earned on a monthly basis. No customer accounted for greater than 10% of total lease rent revenue in 2016, 2015 and 2014. (e) Other Revenue Other revenue consists primarily of management fee income, lease administration fees and third party consignment commissions earned by Willis Aero. During the year ended December 31, 2016, other revenue included $4.0 million of security payments for aircraft upon default of a lessee. (f) Equipment Held for Operating Lease Aircraft assets held for operating lease are stated at cost, less accumulated depreciation. Certain costs incurred in connection with the acquisition of aircraft assets are capitalized as part of the cost of such assets. Major overhauls paid for by us, which improve functionality or extend the original useful life, are capitalized and depreciated over the shorter of the estimated period to the next overhaul (“deferral method”) or the remaining useful life of the equipment. We do not accrue for planned major maintenance. The cost of overhauls of aircraft assets under long term leases, for which the lessee is responsible for maintenance during the period of the lease, are paid for by the lessee or from reimbursable maintenance reserves paid to the Company in accordance with the lease, and are not capitalized. Based on specific aspects of the equipment, we generally depreciate engines on a straight-line basis over a 15-year period from the acquisition date to a 55% residual value. We believe that this methodology accurately reflects our typical holding period for the assets and, that the residual value assumption reasonably approximates the selling price of the assets 15 years from date of acquisition. Our typical 15 year holding period is the estimated useful life of our engines based on our business model and plans, and represents how long we anticipate holding a newly acquired engine. The technical useful life of a new engine can be in excess of 25 years. We review the useful life and residual values of all engines periodically as demand changes to accurately depreciate the cost of equipment over the useful life of the engines. The useful life of older generation engines and aircraft may be significantly less than 15 years, based upon the technical status of the engine, as well as supply and demand factors. For these older generation engines and aircraft, the remaining useful life and our remaining expected holding period are typically the same. For older generation engines or aircraft that are unlikely to be repaired at the end of the current expected useful lives, we depreciate the engines or aircraft over their estimated lives to a residual value based on an estimate of the wholesale value of the parts after disassembly. As of December 31, 2016, 56 engines and 6 aircraft having a net book value of $126.1 million were depreciated under this policy with estimated useful lives ranging from 1 to 124 months. We adjust our estimates annually for these older generation assets, including updating our estimates of an engine’s or aircraft’s remaining operating life as well as future residual value expected from part-out based on the current technical status of the engine or aircraft. For engines or aircraft that are unlikely to be repaired at the end of the current expected useful lives, we depreciate the engines or aircraft over their estimated lives to a residual value based on an estimate of the wholesale value of the parts after disassembly. The aircraft owned by us are depreciated on a straight-line basis over an estimated useful life of 13 to 20 years to a 15% to 17% residual value. The spare parts packages owned by us are depreciated on a straight-line basis over an estimated useful life of 14-15 years to a 25% residual value. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets to be disposed are reported at the lower of carrying amount or fair value less cost to sell. Impairment is identified by comparison of undiscounted forecasted cash flows, including estimated sales proceeds, over the life of the asset with the assets’ book value. If the forecasted undiscounted cash flows are less than the book value the asset is written down to its fair value. Fair value is determined per individual asset by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors considered relevant by Management. We conduct a formal annual review of the carrying value of long-lived assets and also evaluate assets during the year if we note a triggering event indicating impairment is possible. Such review resulted in an impairment charge of $1.8 million, $0.6 million and $2.4 million in 2016, 2015, and 2014, respectively (Included in “Write-down of equipment” in the Consolidated Statements of Income). (g) Equipment Held for Sale Equipment held for sale includes engines being marketed for sale as well as engines removed from our lease portfolio that are being parted out, with our investment in the long lived asset being recovered through the sale of spare parts. The assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell (h) Debt Issuance Costs and Related Fees To the extent that we are required to pay fees in order to secure debt, such fees are capitalized, included in Notes Payable on the Consolidate Balance Sheet, and amortized over the life of the related loan using the effective interest method. (i) Maintenance and Repair Costs Maintenance and repair costs under our leases are generally the responsibility of the lessees. Under many of our leases, lessees pay periodic use fees (often called maintenance reserves) to us based on the usage of the asset. 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. Use fees billed are recognized in maintenance reserve revenue if they are not reimbursable to the lessee. Use fees that are reimbursable are included in maintenance reserve liability until they are reimbursed to the lessee or the lease terminates, at which time they are recognized in maintenance reserve 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. Major overhauls paid for by us, which improve functionality or extend the remaining useful life, are capitalized and depreciated over the shorter of the estimated period to the next overhaul (“deferral method”) or the remaining useful life of the equipment. We do not accrue for planned major maintenance. (j) Interest Rate Hedging We enter into various derivative instruments periodically to mitigate the exposure on our variable rate borrowings. The derivative instruments are fixed-rate interest swaps that are recorded at fair value as either an asset or liability. While substantially all our derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria have been met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective. The hedging instrument’s effectiveness is assessed utilizing regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. All of the transactions that we have designated as hedges are cash flow hedges. The effective portion of the change in fair value on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period during which the transaction being hedged affects earnings. The ineffective portion of the hedges is recorded in earnings in the current period. k) Income Taxes We use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in the tax rates is recognized in income in the period that includes the enactment date. The Company recognizes in the financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs (See Note 6). The Company files income tax returns in various states and countries which may have different statutes of limitations. The open tax years for federal and state tax purposes are from 2013-2016 and 2012-2016, respectively. The Company records penalties and accrued interest related to uncertain tax positions in income tax expense. Such adjustments have historically been minimal and immaterial to our financial results. (l) Property, Equipment and Furnishings Property, equipment and furnishings are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets, which range from three to fifteen years. Leasehold improvements are recorded at cost and depreciated by the straight-line method over the shorter of the lease term or useful life of the leasehold. (m) Cash and Cash Equivalents We consider highly liquid investments readily convertible into known amounts of cash, with original maturities of 90 days or less, as cash equivalents. (n) Restricted Cash We have certain bank accounts that are subject to restrictions in connection with our WEST II borrowings. Under WEST II, cash is collected in a restricted account, which is used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of maintenance reserve payments and all lease security deposits are accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. Under WEST II, cash from maintenance reserve payments are held in the restricted cash account equal to the maintenance obligations projected for the subsequent six months, and are subject to a minimum balance of $9.0 million. Security deposits are held until the end of the lease, at which time provided return conditions have been met, the deposit will be returned to the lessee. To the extent return conditions are not met, these deposits may be retained by us. (o) Spare Parts Inventory Inventory consists of spare aircraft and engine parts and is stated at lower of cost or net realizable value. An impairment charge for excess or inactive inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns, future sales expectations and salvage value. (p) Intangible Assets Intangible assets include customer relationships and goodwill arising from the Company’s acquisition of J.T. Power and Total Engine Support Limited (“TES”). Intangible assets are accounted for in accordance with FASB ASC 350, “Intangibles — Goodwill and Other.” Goodwill is assessed for impairment annually. Customer relationships are amortized on a straight line basis over their estimated useful life of five years. The Company has no intangible assets with indefinite useful lives. (q) Management Estimates These financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to residual values, estimated asset lives, impairments and bad debts. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes that the accounting policies on revenue recognition, maintenance reserves and expenditures, useful life of equipment, asset residual values, asset impairment and allowance for doubtful accounts are critical to the results of operations. If the useful lives or residual values are lower than those estimated by us, upon sale of the asset a loss may be realized. Significant management judgment is required in the forecasting of future operating results, which are used in the preparation of projected undiscounted cash-flows and should different conditions prevail, material impairment write-downs may occur. (r) Per share information Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. The computation of fully diluted earnings per share is similar to the computation of basic earnings per share, except for the inclusion of all potentially dilutive common shares. Redeemable preferred stock is not convertible and does not affect dilutive shares. The reconciliation between basic common shares and fully diluted common shares is presented below: Years Ended December 31, 2016 2015 2014 (in thousands) Shares: Weighted-average number of common shares outstanding Dilutive and potentially dilutive common shares Total shares (s) Investments Our investment in the WMES and CASC Willis joint ventures, where we own 50% of the equity of the ventures, are accounted for using the equity method of accounting. The investments are recorded at the amount invested plus or minus our 50% share of net income or loss, less any distributions or return of capital received from the entities. (t) Stock Based Compensation We recognize compensation expense in the financial statements for share-based awards based on the grant-date fair value of those awards. Additionally, stock-based compensation expense includes an estimate for pre-vesting forfeitures and is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term. (u) Initial Direct Costs associated with Leases We account for the initial direct costs, including sales commission and legal fees, incurred in obtaining a new lease by deferring and amortizing those costs over the term of the lease. The amortization of these costs is recorded under General and Administrative expenses in the Consolidated Statements of Income. The amounts amortized were $1.6 million, $1.6 million and $1.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. (v) Maintenance Rights We identify, measure and account for maintenance right assets and liabilities associated with acquisitions of equipment with in-place leases. A maintenance right asset represents the fair value of the contractual right under a lease to receive equipment in an improved maintenance condition as compared to the maintenance condition on the acquisition date. A maintenance right liability represents the Company's obligation to pay the lessee for the difference between the lease-end contractual maintenance condition of the equipment and the actual maintenance condition of the equipment on the acquisition date. The equipment condition at the end of the lease term may result in either overhaul work being performed by the lessee to meet the required return condition or a financial settlement. When a capital event is performed on the equipment by the lessee, which satisfies their maintenance right obligation, the maintenance rights are added to the equipment basis and depreciated to the next capital event. When equipment is sold before the end of the pre-existing lease, the maintenance rights are applied against any accumulated maintenance reserves, if paid by the lessee, and the remaining balance is applied to the disposition gain or loss. When a lease terminates, an end of lease true-up is performed and the maintenance right is applied against the accumulated maintenance reserves or, for non-reserve lessees the final settlement payment, and any remaining net maintenance right is recorded in the income statement. Maintenance right assets were $17.7 million and $12.1 million as of December 31, 2016 and December 31, 2015, respectively. (w) Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. We use a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value which are the following: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets Measured and Recorded at Fair Value on a Recurring Basis As of December 31, 2016, we measured the fair value of our interest rate swaps of $100.0 million (notional amount) based on Level 2 inputs, due to the usage of inputs that can be corroborated by observable market data. The Company estimates the fair value of derivative instruments using a discounted cash flow technique and, at December 31, 2016, has used creditworthiness inputs that corroborate observable market data evaluating the Company’s and counterparties’ risk of non-performance. We had an interest rate swap agreement which had a net fair value of $69,000 as of December 31, 2016. In 2016, $25,000, was realized through the income statement as an increase in interest expense. The following table shows by level, within the fair value hierarchy, the Company’s assets and liabilities at fair value as of December 31, 2016: Assets and (Liabilities) at Fair Value December 31, 2016 Level 1 Level 2 Level 3 Total (in thousands) Derivatives $ — $ $ — $ Total $ — $ $ — $ No derivatives existed during the year ended December 31, 2015. Assets Measured and Recorded at Fair Value on a Nonrecurring Basis We determine fair value of long-lived assets held and used, such as Equipment held for operating lease and Equipment held for sale, by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. The following table shows by level, within the fair value hierarchy, the Company’s assets measured at fair value on a nonrecurring basis during the years ended December 31, 2016 and 2015, and the losses recorded during the years ended December 31, 2016 and 2015 on those assets: Assets at Fair Value Total Losses December 31, 2016 December 31, 2015 December 31, Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 2016 2015 (in thousands) (in thousands) Equipment held for lease $ — $ $ — $ $ — $ $ — $ $ $ Equipment held for sale — — — — Spare parts inventory — — — — — — — Total $ — $ $ — $ $ — $ $ — $ $ $ At December 31, 2016, the Company used Level 2 inputs to measure write down of equipment held for lease, equipment held for sale, and spare parts inventory. Level 2 inputs include quoted prices for similar assets in inactive markets. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. Write-downs of equipment to their estimated fair values totaled $9.5 million for the year ended December 31, 2016 compared to $9.2 million recorded in the year ago period. A writedown of $5.5 million was recorded due to the adjustment of the carrying value for six impaired engines and one impaired aircraft within the portfolio to reflect estimated market value. A further write-down of equipment totaling $2.0 million was recorded in the year ended December 31, 2016 due to a management decision to consign one engine for part-out and sale, in which the asset’s net book value exceeded the estimated proceeds. An additional writedown of $2.0 million was recorded in year ended December 31, 2016 to adjust the carrying value of engine parts held on consignment for which market conditions for the sale of parts has changed. A write-down of equipment totaling $9.2 million was recorded in the year ended December 31, 2015. A write-down of equipment totaling $5.5 million was recorded in the year ended D |
Equipment Held for Operating Le
Equipment Held for Operating Lease | 12 Months Ended |
Dec. 31, 2016 | |
Equipment Held for Operating Lease [Abstract] | |
Equipment Held for Operating Lease | (2) Equipment Held for Operating Lease As of December 31, 2016, we had a total lease portfolio of 208 aircraft engines and related equipment, 5 spare parts packages, 11 aircraft and various parts and other engine-related equipment with a net book value of $1,136.6 million in our lease portfolio. As of December 31, 2015, we had a total lease portfolio of 201 aircraft engines and related equipment, 5 spare parts packages, 10 aircraft and various parts and other engine-related equipment with a net book value of $1,109.2 million in our lease portfolio. A majority of our equipment is leased and operated internationally. All leases relating to this equipment are denominated and payable in U.S. dollars. We lease our equipment to lessees domiciled in eight geographic regions. The tables below set forth geographic information about our leased equipment grouped by domicile of the lessee (which is not necessarily indicative of the asset’s actual location): Years Ended December 31, Lease rent revenue 2016 2015 2014 (in thousands) Region Europe $ $ $ Asia South America United States Mexico Canada Middle East Africa Totals $ $ $ Years Ended December 31, Lease rent revenue less applicable depreciation and interest 2016 2015 2014 (in thousands) Region Europe $ Asia South America United States Mexico Canada Middle East Africa Off-lease and other Totals $ $ $ Years Ended December 31, Net book value of equipment held for operating lease 2016 2015 2014 (in thousands) Region Europe $ Asia South America United States $ $ Mexico Canada Middle East Africa Off-lease and other Totals $ $ $ As of December 31, 2016 and 2015, the lease status of the equipment held for operating lease was as follows: December 31, 2016 Lease Term Net Book Value (in thousands) Off-lease and other $ Month-to-month leases Leases expiring 2017 Leases expiring 2018 Leases expiring 2019 Leases expiring 2020 Leases expiring 2021 Leases expiring thereafter $ December 31, 2015 Lease Term Net Book Value (in thousands) Off-lease and other $ Month-to-month leases Leases expiring 2016 Leases expiring 2017 Leases expiring 2018 Leases expiring 2019 Leases expiring 2020 Leases expiring thereafter $ As of December 31, 2016, minimum future payments under non-cancelable leases were as follows: Year (in thousands) 2017 $ 2018 2019 2020 2021 Thereafter $ |
Investments
Investments | 12 Months Ended |
Dec. 31, 2016 | |
Investments | |
Investments | (3) Investments On May 25, 2011, we entered into an agreement with Mitsui & Co., Ltd. to participate in a joint venture formed as a Dublin-based Irish limited company — Willis Mitsui & Company Engine Support Limited (“WMES”) for the purpose of acquiring and leasing jet engines. Each partner holds a fifty percent interest in the joint venture and the Company uses the equity method in recording investment activity. The investment has increased to $32.5 million as of December 31, 2016 as a result of the Company making $5.5 million in capital contributions to WMES, receiving $1.2 million in distributions, recording $1.2 million as deferred gain as a result of the Company selling four engines to WMES and the Company’s share of WMES reported income of $2.0 million during the year ended December 31, 2016. On June 3, 2014 we entered into an agreement with China Aviation Supplies Import & Export Corporation (“CASC”) to participate in a joint venture named CASC Willis Engine Lease Company Limited (“CASC Willis”), a new joint venture based in Shanghai, China. Each partner holds a fifty percent interest in the joint venture. In October 2014, we made a $15.0 million initial capital contribution, representing our fifty percent, up-front funding contribution to the new joint venture. The company acquires and leases jet engines to Chinese airlines and concentrates on meeting the fast growing demand for leased commercial aircraft engines and aviation assets in the People’s Republic of China. CASC Willis owned a lease portfolio of 3 engines with a net book value of $49.1 million as of December 31, 2016. Our investment in the joint venture is $12.9 million as of December 31, 2016. During 2016, CASC was reorganized, with portions of its partnership interest in CASC Willis being transferred to three Chinese airlines and another government-owned entity. The 2016 CASC reorganization resulted in no voting structure change to the joint venture. Years Ending December 31, 2016 and 2015 (in thousands) WMES CASC Total Investment in joint ventures as of December 31, 2014 $ $ $ Investment — Earnings (losses) from joint ventures Distribution — Foreign Currency Translation Adjustment — Investment in joint ventures as of December 31, 2015 $ $ $ Investment — Earnings (losses) from joint ventures Deferred gain on engine sale — Distribution — Foreign Currency Translation Adjustment — Investment in joint ventures as of December 31, 2016 $ $ $ “Other revenue” on the Consolidated Statement of Income includes management fees earned of $2.1 million, $1.7 million and $2.0 million during the years ended December 31, 2016, 2015 and 2014, respectively, related to the servicing of engines for the WMES lease portfolio. During 2015, WMES consigned an engine for part out and sale to our Willis Aero subsidiary. The value of the engine is $0.1 million as of December 31, 2016. Summarized financial information for 100% of WMES is presented in the following table: Years Ended December 31, 2016 2015 2014 (in thousands) Revenue $ $ $ Expenses WMES net income $ $ $ December 31, December 31, 2016 2015 (in thousands) Total assets $ $ Total liabilities Total WMES net equity $ $ |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2016 | |
Notes Payable | |
Notes Payable | (4) Notes Payable Notes payable consisted of the following: As of December 31, 2016 2015 (in thousands) Credit facility at a floating rate of interest of LIBOR plus 2.75%, secured by engines. The facility has a committed amount of $890.0 million at December 31, 2016, which revolves until the maturity date of April 2021. $ $ WEST II Series 2012-A term notes payable at a fixed rate of interest of 5.50%, maturing in September 2037. Secured by engines. Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024. Secured by an aircraft. Note payable at a variable interest rate of LIBOR plus 2.25%, maturing in January 2018. Secured by engines. Notes payable Less: unamortized debt issuance costs Total notes payable $ $ One-month LIBOR was 0.77% and 0.43% as of December 31, 2016 and December 31, 2015, respectively. Principal outstanding at December 31, 2016, is repayable as follows: Year (in thousands) 2017 $ 2018 2019 2020 2021 (includes $608.0 million outstanding on revolving credit facility) Thereafter $ Virtually all of the above debt requires our ongoing compliance with the covenants of each financing, including debt/equity ratios, minimum tangible net worth and minimum interest coverage ratios, and other eligibility criteria including customer and geographic concentration restrictions. The Company also has certain negative financial covenants such as liens, advances, change in business, sales of assets, dividends and stock repurchases. These covenants are tested quarterly and the Company was in full compliance with all covenant requirements at December 31, 2016. At December 31, 2016, we are in compliance with the covenants specified in the revolving credit facility, including the Interest Coverage Ratio requirement of at least 2.25 to 1.00, and the Total Leverage Ratio requirement to remain below 4.25 to 1.00. As defined in the revolving credit facility Credit Agreement, the Interest Coverage Ratio is the ratio of Earnings before Interest, Taxes, Depreciation and Amortization and other one-time charges (EBITDA) to Consolidated Interest Expense and the Total Leverage Ratio is the ratio of Total Indebtedness to Tangible Net Worth. At December 31, 2016, we are in compliance with the covenants specified in the WEST II indenture and servicing agreement. At December 31, 2016, notes payable consists of loans totaling $900.3 million payable over periods of approximately 1.0 years to 7.5 years with interest rates varying between approximately 2.6% and 5.5%. Substantially all of our assets are pledged to secure our obligations to creditors. Our significant debt instruments are discussed below: At December 31, 2016, we had a revolving credit facility to finance the acquisition of equipment for lease as well as for general working capital purposes, with the amounts drawn under the facility not to exceed that which is allowed under the borrowing base as defined by the credit agreement. On April 20, 2016 we entered into a Third Amended and Restated Credit Agreement which increased the revolving credit facility to $890.0 million from $700.0 million and extended the term to April 2021. This $890 million revolving credit facility has an accordion feature which would expand the entire credit facility up to $1 billion. The initial interest rate on the facility is LIBOR plus 2.75%. The interest rate is adjusted quarterly, based on the Company’s leverage ratio, as calculated under the terms of the revolving credit facility. As of December 31, 2016 and December 31, 2015, $282.0 million and $151.0 million were available under this facility, respectively. On a quarterly basis, the interest rate is adjusted based on the Company’s leverage ratio, as calculated under the terms of the revolving credit facility. Based on the Company’s leverage ratio of 3.15 at December 31, 2016, the interest rate on this facility is one-month LIBOR plus 2.75% as of December 31, 2016. Under the revolving credit facility, all subsidiaries except WEST II jointly and severally guarantee payment and performance of the terms of the loan agreement. The guarantee would be triggered by a default under the agreement. On September 17, 2012, we closed an asset-backed securitization (“ABS”) through a newly-created, bankruptcy-remote, Delaware statutory trust, WEST II, of which the Company is the sole beneficiary. WEST II issued and sold $390 million aggregate principal amount of Class 2012-A Term Notes (the “Notes”) and received $384.9 million in net proceeds. The Notes’ creditors do not have recourse to the Company. We used these funds, net of transaction expenses and swap termination costs in combination with our revolving credit facility, to pay off the prior WEST notes totaling $435.9 million. At closing, 22 engines were pledged as collateral from WEST to the Company’s revolving credit facility, which provided the remaining funds to pay off the WEST notes. The assets and liabilities of WEST II will remain on the Company’s balance sheet. The current portfolio of 58 commercial jet aircraft engines and leases thereof secures the obligations of WEST II under the ABS. The Notes have no fixed amortization and are payable solely from revenue received by WEST II from the engines and the engine leases, after payment of certain expenses of WEST II. The Notes bear interest at a fixed rate of 5.50% per annum. The Notes may be accelerated upon the occurrence of certain events, including the failure to pay interest for five business days after the due date thereof. The Notes are expected to be paid in 10 years. The legal final maturity of the Notes is September 15, 2037. In connection with the transactions described above, effective September 17, 2012, the Company entered into a Servicing Agreement and Administrative Agency Agreement with WEST II to provide certain engine, lease management and reporting functions for WEST II in return for fees based on a percentage of collected lease revenues and asset sales. Because WEST II is consolidated for financial statement reporting purposes, all fees eliminate upon consolidation. At December 31, 2016 and 2015, $279.5 million and $300.5 million of WEST II term notes were outstanding, respectively. The assets of WEST II are not available to satisfy our obligations or any of our affiliates other than the obligations specific to WEST II. WEST II is consolidated for financial statement presentation purposes. WEST II’s ability to make distributions and pay dividends to the Company is subject to the prior payments of its debt and other obligations and WEST II’s maintenance of adequate reserves and capital. Under WEST II, cash is collected in a restricted account, which is used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of maintenance reserve payments and all lease security deposits are accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. Cash from maintenance reserve payments are held in the restricted cash account equal to the maintenance obligations projected for the subsequent six months, and are subject to a minimum balance of $9.0 million. On September 13, 2016, the Company entered into an amendment (the “Amendment No. 2”) to the Amended and Restated Trust Agreement of WEST II, as amended by Trust Amendment No. 1, dated as of September 14, 2012. The Amendment No. 2 allows the Company to make additional equity contributions to fund engine maintenance expenses, to make up shortfalls in required net sale proceeds from engine dispositions and to provide additional funds in the acquisition of replacement engines for WEST II. These potential future equity contributions by the Company are voluntary. The Amendment No. 2 also increases the percentage of WEST II engines subject to disposition and modifies certain concentration limits. On September 18, 2013, we completed the acquisition of the fifty percent membership interest held by the other joint venture partner in WOLF, with the transaction being accounted for as an asset acquisition. As a result of the transaction, we now own one hundred percent of WOLF. The WOLF assets and liabilities and the results of operations related to the WOLF assets have been included in the accompanying consolidated financial statements as of the acquisition date, September 18, 2013. Two term notes with an original principal amount of $36.0 million, with a balance outstanding of $24.0 million as of December 31, 2015, are included in Notes payable. On March 25, 2015, we paid off the $23.1 million balance of the two term notes associated with the WOLF assets at a 5% discount. This transaction resulted in the recording of a $1.2 million gain on debt extinguishment which has been included in our statement of income for the year ended December 31, 2015. On July 16, 2014, we closed on a loan with a ten year term totaling $13.4 million. During the second quarter of 2016, we closed on two additional loans totaling $4.7 million, repayable over the same ten year term. The interest is payable at fixed rates ranging from 2.60% to 2.97% for the initial five years of the loan term and principal and interest is paid monthly. The loans provided 100% of the funding for the purchase of a corporate aircraft and subsequent modifications and upgrades. The balance outstanding on these loans is $14.5 million and $16.1 million as December 31, 2016 and December 31, 2015, respectively. On January 10, 2014, we extended the term of an existing loan that was scheduled to mature on January 11, 2015. The loan has a term of 4 years with a maturity date of January 11, 2018. Interest is payable at one-month LIBOR plus 2.25% and principal and interest is paid quarterly. The loan is secured by three engines. The balance outstanding on this loan is $11.7 million and $13.1 million as of December 31, 2016 and December 31, 2015, respectively. |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments | |
Derivative Instruments | (5) Derivative Instruments We periodically hold interest rate derivative instruments to mitigate exposure to changes in interest rates, in particular one-month LIBOR, with $619.7 million and $562.1 million of our borrowings at December 31, 2016 and 2015, respectively, at variable rates. As a matter of policy, we do not use derivatives for speculative purposes. During 2016, we entered into one interest rate swap agreement which has notional outstanding amount of $100.0 million, with remaining terms of 52 months. The fair value of the swap at December 31, 2016 was $68,000, representing a net asset for us. We recorded a $25,000, nil and ($0.5 million) expense (benefit) to net finance costs during the years ended December 31, 2016, 2015 and 2014 respectively from derivative investments. The Company estimates the fair value of derivative instruments using a discounted cash flow technique and has used creditworthiness inputs that corroborate observable market data evaluating the Company’s and counterparties’ risk of non-performance. Valuation of the derivative instruments requires certain assumptions for underlying variables and the use of different assumptions would result in a different valuation. Management believes it has applied assumptions consistently during the period. We apply hedge accounting and account for the change in fair value of our cash flow hedges through other comprehensive income for all derivative instruments. Earnings Effects of Derivative Instruments on the Statements of Income The following table provides information about the income effects of our cash flow hedging relationships for the years ended December 31, 2016, 2015, and 2014: Amount of Loss (Gain) Recognized on Derivatives in the Statements of Income Derivatives in Cash Flow Hedging Location of Loss (Gain) Recognized on Years Ended December 31, Relationships Derivatives in the Statements of Income 2016 2015 2014 (in thousands) Interest rate contracts Interest expense $ $ — $ Total $ $ — $ Our derivatives were designated in a cash flow hedging relationship with the effective portion of the change in fair value of the derivative reported in the cash flow hedges subaccount of accumulated other comprehensive income. Effect of Derivative Instruments on Cash Flow Hedging The following tables provide additional information about the financial statement effects related to our cash flow hedges for the years ended December 31, 2016, 2015, and 2014: Amount of Gain (Loss) Recognized Location of Loss (Gain) Amount of Loss (Gain) Reclassified in OCI on Derivatives Reclassified from from Accumulated OCI into Income Derivatives in (Effective Portion) Accumulated OCI into (Effective Portion) Cash Flow Hedging Years Ended December 31, Income Years Ended December 31, Relationships 2016 2015 2014 (Effective Portion) 2016 2015 2014 (in thousands) (in thousands) Interest rate contracts $ $ — $ — Interest expense $ $ — $ Total $ $ — $ — Total $ $ — $ The effective portion of the change in fair value on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period during which the transaction being hedged affects earnings or it is probable that the forecasted transaction will not occur. The ineffective portion of the hedges is recorded in earnings in the current period. However, these are highly effective hedges and no significant ineffectiveness occurred in the periods presented. Counterparty Credit Risk The Company evaluates the creditworthiness of the counterparties under its hedging agreements. The swap counterparty for the interest rate swap in place during 2016 was a large financial institution in the United States that possessed an investment grade credit rating. Based on this rating, the Company believes that the counterparty was creditworthy and that their continuing performance under the hedging agreement was probable, and did not require the counterparty to provide collateral or other security to the Company. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Income Taxes | (6) Income Taxes The components of income before income taxes are as follows Years ended December 31, 2016 2015 2014 (in thousands) U.S. $ $ $ Non U.S. Income from before income taxes $ $ $ The components of income tax expense for the years ended December 31, 2016, 2015, and 2014, included in the accompanying consolidated statements of income were as follows: Federal State Foreign Total (in thousands) December 31, 2016 Current $ $ $ $ Deferred — Total 2016 $ $ $ $ December 31, 2015 Current $ $ $ $ Deferred — Total 2015 $ $ $ $ December 31, 2014 Current $ $ $ $ Deferred — Total 2014 $ $ $ $ The following is a reconciliation of the federal income tax expense at the statutory rate of 34% to the effective income tax expense: Years Ended December 31, 2016 2015 2014 (in thousands and % of pre-tax income) $ % $ % $ % Statutory federal income tax expense State taxes, net of federal benefit Foreign tax paid Tax consequences of the sale of engines to WMES — — Uncertain tax positions Permanent differences-nondeductible executive compensation Permanent differences and other Effective income tax expense The Company records tax expense or benefit for unusual or infrequent items discretely in the period in which they occur. The following table summarizes the activity related to the Company’s unrecognized tax benefits: (in thousands) Balance as of December 31, 2014 $ Increases related to current year tax positions Decreases due to tax positions released Balance as of December 31, 2015 Increases related to current year tax positions Decreases due to tax positions expired Balance as of December 31, 2016 $ No reserve was established as of December 31, 2016 and December 31, 2015 for the exposure in Europe. If the Company is able to eventually recognize these uncertain tax positions, all of the unrecognized benefit would reduce the Company’s effective tax rate. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below: As of December 31, 2016 2015 (in thousands) Deferred tax assets: Unearned lease revenue $ $ State taxes Reserves and allowances Other accruals Alternative minimum tax credit Net operating loss carry forward Charitable contributions Total deferred tax assets Less: valuation allowance Net deferred tax assets Deferred tax liabilities: Depreciation and impairment on aircraft engines and equipment Other deferred tax assets (liabilities) Net deferred tax liabilities Other comprehensive loss deferred tax asset Net deferred tax liabilities $ $ As of December 31, 2016, we had net operating loss carry forwards of approximately $105.0 million for federal tax purposes and $4.7 million for state tax purposes. The federal net operating loss carry forwards will expire at various times from 2023 to 2034 and the state net operating loss carry forwards will expire at various times from 2023 to 2034. During 2014, a valuation allowance of $1.3 million was established for the net operating losses expiring in California for the periods 2017 to 2024. The Company’s ability to utilize the net operating loss and tax credit carry forwards in the future may be subject to restriction in the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax law. As of December 31, 2016, we also had alternative minimum tax credit of approximately $0.4 million for federal income tax purposes which has no expiration date and which should be available to offset future regular tax liabilities. Management believes that no valuation allowance is required on deferred tax assets related to federal net operating loss carry forwards, as it is more likely than not that all amounts are recoverable through future taxable income. Deferred tax assets relating to tax benefits of employee stock option grants have been reduced to reflect exercises in 2016. Some exercises resulted in tax deductions in excess of previously recorded benefits based on the option value at the time of grant (“windfall”). Although these additional tax benefits are reflected in net operating tax loss carryforwards, pursuant to ASC 718, in the amount of $3.0 million as of December 31, 2016, the additional tax benefit associated with the windfall is not recognized until the deduction reduces taxes payable. The tax effect of windfalls included in net operating loss carryforwards but not reflected in deferred tax assets for 2016 are $1.0 million and will be recorded to paid-in capital when recognized. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | (7) Fair Value of Financial Instruments The carrying amount reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, operating lease related receivables, and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. The carrying amount of the Company’s outstanding balance on its Notes Payable as of December 31, 2016 and 2015 was estimated to have a fair value of approximately $864.0 million and $890.1 million, respectively, based on the fair value of estimated future payments calculated using the prevailing interest rates at each year end. |
Risk Management - Risk Concentr
Risk Management - Risk Concentrations and Interest Rate Risk | 12 Months Ended |
Dec. 31, 2016 | |
Risk Management - Risk Concentrations and Interest Rate Risk | |
Risk Management - Risk Concentrations and Interest Rate Risk | (8) Risk Management — Risk Concentrations and Interest Rate Risk Risk Concentrations Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash deposits, lease receivables and interest rate swaps. We place our cash deposits with financial institutions and other creditworthy institutions such as money market funds and limit the amount of credit exposure to any one party. We opt for security of principal as opposed to yield. Concentrations of credit risk with respect to lease receivables are limited due to the large number of customers comprising our customer base, and their dispersion across different geographic areas. Some lessees are required to make payments for maintenance reserves at the end of the lease however, our risk is considered limited due to the relatively few lessees which have this provision in the lease. We enter into interest rate swap agreements with counterparties that are investment grade financial institutions. Interest Rate Risk Management To mitigate exposure to interest rate changes, we periodically enter into interest rate swap agreements. As of December 31, 2016, one swap agreement had a notional outstanding amount of $100.0 million, a remaining term of 52 months. In 2016, 2015 and 2014, $25,000, nil, and ($0.5 million) was realized through the income statement as an increase (decrease) in interest expense, respectively. |
Commitments, Contingencies, Gua
Commitments, Contingencies, Guarantees and Indemnities | 12 Months Ended |
Dec. 31, 2016 | |
Commitments | |
Commitments, Contingencies, Guarantees and Indemnities | (9) Commitments, Contingencies, Guarantees and Indemnities The following table lists our properties and their remaining lease commitments: Lease Remaining Lease Location Property Type Expiration Commitment (in thousands) Novato, California Principal Office 09/30/18 $ Boynton Beach, Florida Warehouse and office 10/29/19 San Diego, California Warehouse and office 10/31/19 Bridgend, Wales, United Kingdom Warehouse and office 10/31/17 Singapore Office 12/31/17 Shanghai, China Office 12/31/17 Shanghai, China Warehouse 07/31/17 Dublin, Ireland Office 05/15/17 London, United Kingdom Office 11/18/18 Blagnac, France Office 12/31/17 Total $ |
Equity
Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity | |
Equity | (10) Equity Common Stock Repurchase On September 27, 2012, the Company announced that its Board of Directors has authorized a plan to repurchase up to $100.0 million of its common stock over the next 5 years. The Board of Directors reaffirmed the repurchase plan on April 21, 2016. This plan extends the previous plan authorized on December 8, 2009, and increases the value of the total number of shares authorized for repurchase up to $100.0 million. During 2016, the Company repurchased 1,212,230 shares of common stock for approximately $29.0 million under this program, at a weighted average price of $23.71 per share. The repurchased shares were subsequently retired. Redeemable Preferred Stock On October 11, 2016, the Company entered into a Stock Purchase Agreement with Development Bank of Japan Inc., relating to the sale and issuance of an aggregate of 1,000,000 shares of the Company’s 6.5% Series A Preferred Stock, $0.01 par value per share (the “Preferred Stock”) at a purchase price of $20.00 per share. The purchase and sale of the Preferred Stock closed on October 14, 2016. The net proceeds to the Company after deducting investor fees were $19.8 million. The Preferred Stock carries a quarterly dividend at the rate per annum of 6.5% per share, with a $20.00 liquidation preference per share. The rights and privileges of the Preferred Stock are described below: Voting Rights Holders of the Preferred Stock do not have general voting rights. Dividends The Preferred Stock carries a quarterly dividend at the rate per annum of 6.5% per share. As of December 31, 2016, no dividends have been declared or paid. Liquidation Preference The holders of the Preferred Stock have preference in the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the corporation, including a merger or consolidation. Upon such liquidation event, the preferred stockholders are entitled to be paid out of the assets of the Company available for distribution to its stockholders after payment of all the Company’s indebtedness and other obligations and before any payment shall be made to the holders of common stock or any other class or series of stock ranking on liquidation junior to the Preferred Stock an amount equal to the greater of $20.00 per share, plus any declared but unpaid dividends. Redemption The preferred stock has no stated maturity date, however the holders of the Preferred Stock have the option to require the Company to redeem all or any portion of the Preferred Stock for cash upon occurrence of any significant changes in operating results, ownership structure, or liqudity events as defined in the Preferred Stock purchase agreements. The redemption price is $20 per share plus dividends accrued but not paid. The Company is accreting the Preferred Stock to redemption value over the period from the date of issuance to October 2023, such that the carrying amounts of the securities will equal the redemption amounts at the earliest redemption date. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 12 Months Ended |
Dec. 31, 2016 | |
Stock-Based Compensation Plans | |
Stock-Based Compensation Plans | (11) Stock-Based Compensation Plans The components of stock compensation expense for the years ended December 31, 2016, 2015, and 2014, included in the accompanying consolidated statements of income were as follows: 2016 2015 2014 (in thousands) 2007 Stock Incentive Plan $ $ $ Employee Stock Purchase Plan Total Stock Compensation Expense $ $ $ The significant stock compensation plans are described below. Our 2007 Stock Incentive Plan (the 2007 Plan) was adopted on May 24, 2007. Under this 2007 Plan, a total of 2,000,000 shares are authorized for stock based compensation available in the form of either restricted stock or stock options. On May 28, 2015, the Company’s shareholders authorized an increase in the number of shares of Common Stock available for grant by 800,000 shares bringing the total to 2,800,000 shares authorized. 2,400,357 shares of restricted stock were granted under the 2007 Stock Incentive Plan by December 31, 2016. Of this amount, 155,745 shares of restricted stock were cancelled and returned to the pool of shares which could be granted under the 2007 Stock Incentive Plan resulting in a net number of 555,388 shares which were available as of December 31, 2016 for future issuance under the 2007 Incentive Plan. The fair value of the restricted stock awards equaled the stock price at the date of grants. The following table summarizes restricted stock activity during the years ended December 31: Shares Restricted stock at December 31, 2013 Granted in 2014 (vesting over 3 years) Granted in 2014 (vesting over 4 years) Granted in 2014 (vesting on first anniversary from date of issuance) Cancelled in 2014 Vested in 2014 Restricted stock at December 31, 2014 Granted in 2015 (vesting over 3 years) Granted in 2015 (vesting over 4 years) Granted in 2015 (vesting on first anniversary from date of issuance) Cancelled in 2015 — Vested in 2015 Restricted stock at December 31, 2015 Granted in 2016 (vesting over 2 years) Granted in 2016 (vesting over 3 years) Granted in 2016 (vesting over 4 years) Granted in 2016 (vesting on first anniversary from date of issuance) Cancelled in 2016 Vested in 2016 Restricted stock at December 31, 2016 Our accounting policy is to recognize the associated expense of such awards on a straight-line basis over the vesting period. At December 31, 2016 the stock compensation expense related to the restricted stock awards that will be recognized over the average remaining vesting period of 1.5 years totals $3.8 million. At December 31, 2016, the intrinsic value of unvested restricted stock awards is $7.7 million. The Plan terminates on May 24, 2017. A summary of activity under the 2007 Plan for the years ended December 31, 2016, 2015, and 2014 is as follows: Weighted Average Aggregate Grant Number Outstanding Grant Date Fair Value Date Fair Value Balance as of December 31, 2013 $ $ Shares granted Shares cancelled Shares vested Balance as of December 31, 2014 $ $ Shares granted Shares cancelled — — — Shares vested Balance as of December 31, 2015 $ $ Shares granted Shares cancelled Shares vested Balance as of December 31, 2016 $ $ Employee Stock Purchase Plan: Under our Employee Stock Purchase Plan (ESPP), as amended and restated effective May 20, 2010, 250,000 shares of common stock have been reserved for issuance. The Purchase Plan was effective in September 1996. Eligible employees may designate not more than 10% of their cash compensation to be deducted each pay period for the purchase of common stock under the Purchase Plan. Participants may purchase not more than 1,000 shares or $25,000 of common stock in any one calendar year. Each January 31 and July 31 shares of common stock are purchased with the employees’ payroll deductions from the immediately preceding six months at a price per share of 85% of the lesser of the market price of the common stock on the purchase date or the market price of the common stock on the date of entry into an offering period. In 2016 and 2015, 11,014 and 10,374 shares of common stock, respectively, were issued under the Purchase Plan. We issue new shares through our transfer agent upon employee stock purchase. The weighted average per share fair value of the employee’s purchase rights under the Purchase Plan for the rights granted was $6.35, $6.17 and $3.19 for 2016, 2015 and 2014, respectively. 1996 Stock Option/Stock Issuance Plan: We granted stock options under our 1996 Stock Option/Stock Issuance Plan (the 1996 Plan), as amended and restated as of March 1, 2003, until the plan terminated in June 2006. Under this Plan, a total of 3,025,000 shares were authorized for grant. These options have a contractual term of ten years and vest at a rate of 25% annually commencing on the first anniversary of the date of grant. For shares outstanding with graded vesting, our accounting policy is to value the options as one award and recognize the associated expense on a straight-line basis over the vesting period. We issue new shares through our transfer agent upon stock option exercise. In the year ended December 31, 2014, 26,437 options were exercised with a total intrinsic value at exercise date of approximately $0.2 million. In the year ended December 31, 2015, 49,000 options were exercised with a total intrinsic value at exercise date of approximately $0.3 million. As of December 31, 2016, there are no options remaining under the 1996 Plan. |
Employee 401(k) Plan
Employee 401(k) Plan | 12 Months Ended |
Dec. 31, 2016 | |
Employee 401(k) Plan | |
Employee 401(k) Plan | (12) Employee 401(k) Plan We adopted The Willis 401(k) Plan (the 401(k) Plan) effective as of January 1997. The 401(k) Plan provides for deferred compensation as described in Section 401(k) of the Internal Revenue Code. The 401(k) Plan is a contributory plan available to all our full-time and part-time employees in the United States. In 2016, employees who participated in the 401(k) Plan could elect to defer and contribute to the 401(k) Plan up to 20% of pretax salary or wages up to $18,000 (or $24,000 for employees at least 50 years of age). We match 50% of employee contributions up to 8% of the employee’s salary which totaled $0.4 million, $0.4 million and $0.3 million for the years ended December, 31, 2016, 2015, and 2014, respectively. |
Quarterly Consolidated Financia
Quarterly Consolidated Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Consolidated Financial Information (Unaudited) | |
Quarterly Consolidated Financial Information (Unaudited) | (13) Quarterly Consolidated Financial Information (Unaudited) The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2016, 2015, and 2014 (in thousands, except per share data). Fiscal 2016 (1) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ $ $ $ $ Net income attributable to common shareholders Basic earnings per common share Diluted earnings per common share Average common shares outstanding Diluted average common shares outstanding Fiscal 2015 (1) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ $ $ $ $ Net income (loss) attributable to common shareholders Basic earnings (loss) per common share Diluted earnings (loss) per common share Average common shares outstanding Diluted average common shares outstanding Fiscal 2014 (1) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ $ $ $ $ Net income (loss) attributable to common shareholders Basic earnings (loss) per common share Diluted earnings (loss) per common share Average common shares outstanding Diluted average common shares outstanding (1) Certain amounts include adjustments to prior periods see "Note 1. Summary of Significant Accounting Policies (c) Correction of Immaterial Errors - Consolidated Financial Statements" for further disclosure. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions | |
Related Party Transactions | ( 14) Related Party Transactions Stock Buybacks On April 1, 2016, in a transaction approved by a Special Committee of the Board of Directors, the Company purchased 60,000 shares of its common stock directly from the Company’s Chief Executive Officer, Charles F. Willis. The purchase price was $21.59 per share, the closing price of the Company’s common stock as of March 31, 2016. On December 8, 2016, in a transaction approved by a Special Committee of the Board of Directors, the Company purchased 40,000 shares of its common stock directly from the Company’s Chief Executive Officer, Charles F. Willis. The purchase price was $24.95 per share, a 2% discount to the closing price of the Company’s common stock as of December 8, 2016 of $25.46. WMES “Other revenue” on the Consolidated Statement of Income includes management fees earned of $2.1 million, $1.7 million and $2.0 million during the years ended December 31, 2016, 2015 and 2014, respectively, related to the servicing of engines for the WMES lease portfolio. During 2016, the Company sold four engines to WMES. See “Note 3. Investments” for further disclosure. |
Operating Segments
Operating Segments | 12 Months Ended |
Dec. 31, 2016 | |
Operating Segments | |
Operating Segments | (15) Operating Segments The Company operates in two business segments: (i) Leasing and Related Operations which involves acquiring and leasing, primarily pursuant to operating leases, commercial aircraft, aircraft engines and other aircraft equipment and the selective purchase and resale of commercial aircraft engines and other aircraft equipment and (ii) Spare Parts Sales which involves the purchase and resale of after-market engine and airframe parts, whole engines, engine modules and portable aircraft components and leasing of engines destined for disassembly and sale of parts. The Company evaluates the performance of each of the segments based on profit or loss after general and administrative expenses and inter-company allocation of interest expense. While the Company believes there are synergies between the two business segments, the segments are managed separately because each requires different business strategies. The following tables present a summary of the operating segments (amounts in thousands): Leasing and For the year ended December 31, 2016 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ $ — $ — $ Maintenance reserve revenue — — Spare parts and equipment sales — Gain on sale of leased equipment — — Other revenue Total revenue Expenses: Depreciation and amortization expense — Cost of spare parts and equipment sales — General and administrative — Net finance costs — Other expense — — Total expenses — Earnings from operations $ $ $ $ Leasing and For the year ended December 31, 2015 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ $ — $ — $ Maintenance reserve revenue — — Spare parts and equipment sales — Gain on sale of leased equipment — — Other revenue Total revenue Expenses: Depreciation and amortization expense — Cost of spare parts and equipment sales — General and administrative — Net finance costs — Other expense — — Total expenses — Earnings (loss) from operations $ $ $ $ Leasing and For the year ended December 31, 2014 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ $ — $ — $ Maintenance reserve revenue — — Spare parts and equipment sales — — Gain on sale of leased equipment — — Other revenue Total revenue Expenses: Depreciation and amortization expense — Cost of spare parts and equipment sales — — General and administrative — Interest expense — Other expense — Total expenses — Earnings from operations $ $ $ $ (1) Represents revenue generated between our operating segments Total assets as of December 31, 2016 $ $ $ — $ Total assets as of December 31, 2015 $ $ $ — $ Total assets as of December 31, 2014 $ $ $ — $ |
SCHEDULE I - Parent Company Inf
SCHEDULE I - Parent Company Information | 12 Months Ended |
Dec. 31, 2016 | |
SCHEDULE I - Parent Company Information | |
SCHEDULE I - Parent Company Information | WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES SCHEDULE I — CONDENSED BALANCE SHEETS Parent Company Information (In thousands, except share data) December 31, December 31, 2016 2015 ASSETS Cash and cash equivalents $ $ Equipment held for operating lease, less accumulated depreciation Equipment held for sale Maintenance Rights Operating lease related receivable, net of allowances Spare parts inventory Due from affiliate Investments Investment in subsidiaries Property, equipment & furnishings, less accumulated depreciation Intangible assets, net Other assets, net Total assets $ $ LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY Liabilities: Accounts payable and accrued expenses $ $ Deferred income taxes Notes payable Maintenance reserves Security deposits Unearned lease revenue Total liabilities Redeemable preferred stock ($0.01 par value, 1,000,000 shares authorized; 1,000,000 and nil shares issued and outstanding at December 31, 2016 and 2015, respectively) — Shareholders’ equity: Common stock ($0.01 par value, 20,000,000 shares authorized; 6,401,929 and 7,548,395 shares issued and outstanding at December 31, 2016 and 2015, respectively) Paid-in capital in excess of par Retained earnings Accumulated other comprehensive loss, net of income tax benefit Total shareholders’ equity Total liabilities, redeemable preferred stock and equity $ $ WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES SCHEDULE I — CONDENSED STATEMENTS OF INCOME Parent Company Information (In thousands) Years Ended December 31, 2016 2015 2014 REVENUE Lease rent revenue $ $ $ Maintenance reserve revenue Spare parts and equipment sales Gain on sale of leased equipment Other revenue Total revenue EXPENSES Depreciation expense Cost of spare parts and equipment sales Write-down of equipment General and administrative Technical expense Interest expense Total expenses Earnings from operations Earnings from joint ventures Income before income taxes Income tax expense Equity in income of subsidiaries, net of tax of $5,168, $4,037, and $3,214 at December 31, 2016, 2015 and 2014, respectively Net income $ $ $ Preferred stock dividends — — Accretion of preferred stock issuance costs — — Net income attributable to common shareholders $ $ $ WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES SCHEDULE I — CONDENSED STATEMENTS OF COMPREHENSIVE INCOME Parent Company Information (In thousands) Years Ended December 31, 2016 2015 2014 Net income $ $ $ Other comprehensive income: Currency translation adjustment — Unrealized losses on derivative instruments — — Reclassification adjustment for losses (gains) included in net income — — Net gain (loss) recognized in other comprehensive income Tax benefit (expense) related to items of other comprehensive income (loss) Other comprehensive income from parent Total comprehensive income $ $ $ WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES SCHEDULE I — CONDENSED STATEMENTS OF CASH FLOWS Parent Company Information (In thousands) Years Ended December 31, 2016 2015 2014 Cash flows from operating activities: Net income $ $ $ Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of subsidiaries Depreciation expense Write-down of equipment Stock-based compensation expenses Amortization of deferred costs Amortization of interest rate derivative cost — — Allowances and provisions Gain on sale of leased equipment Income from joint ventures Loss on extinguishment of debt — — Deferred income taxes Changes in assets and liabilities: Receivables Spare parts inventory Intangibles — — Other assets Accounts payable and accrued expenses Due to / from subsidiaries Maintenance reserves Security deposits Unearned lease revenue Net cash provided by operating activities Cash flows from investing activities: Increase in investment in subsidiaries Distributions received from subsidiaries Proceeds from sale of equipment held for operating lease (net of selling expenses) Capital contribution to joint venture Distributions received from joint venture Maintenance rights payments received — — Purchase of equipment held for operating lease Purchase of maintenance rights Purchase of property, equipment and furnishings Net cash used in investing activities Cash flows from financing activities: Proceeds from issuance of notes payable Debt issuance cost Proceeds from shares issued under stock compensation plans Cancellation of restricted stock units in satisfaction of withholding tax Security deposit Repurchase of common stock Excess tax benefit from stock-based compensation Proceeds from issuance of preferred stock — — Principal payments on notes payable Net cash provided by financing activities Increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ $ $ Supplemental disclosures of cash flow information: Net cash paid for: Interest $ $ $ Income Taxes $ $ $ Supplemental disclosures of non-cash investing and financing activities: During the years ended December 31, 2016, 2015, 2014, engines and equipment totaling $229, $41,410 and $120,880, respectively, were transferred to the parent from its subsidiaries. During the years ended December 31, 2016, 2015, 2014, engines and equipment totaling $18,194, $21,786 and $3,071, respectively, were transferred from Held for Operating Lease to Held for Sale. During the years ended December 31, 2016, 2015 and 2014, engines and equipment totaling nil, $6,061 and $9,649, respectively, were transferred from Held for Sale to Spare Parts Inventory. During the years ended December 31, 2016, an aircraft of $2,925 was transferred from Property, equipment and furnishings to Assets Held for Lease. As of December 31, 2016, accrued preferred stock dividends were $281. During the year ended December 31, 2016, the accretion of preferred stock issuance costs was $8. |
SCHEDULE II - VALUATION ACCOUNT
SCHEDULE II - VALUATION ACCOUNTS | 12 Months Ended |
Dec. 31, 2016 | |
SCHEDULE II - VALUATION ACCOUNTS | |
SCHEDULE II - VALUATION ACCOUNTS | WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES SCHEDULE II — VALUATION ACCOUNTS (In thousands) Additions Balance at Charged Net Beginning (Credited) (Deductions) Balance at of Period to Expense Recoveries End of Period December 31, 2014 Accounts receivable, allowance for doubtful accounts December 31, 2015 Accounts receivable, allowance for doubtful accounts — December 31, 2016 Accounts receivable, allowance for doubtful accounts — Deductions in allowance for doubtful accounts represent uncollectible accounts written off, net of recoveries. |
Organization and Summary of S26
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |
Organization | (a) Organization Willis Lease Finance Corporation (“Willis” or the “Company”) is a provider of aviation services whose primary focus is providing operating leases of commercial aircraft engines and other aircraft-related equipment to air carriers, manufacturers and overhaul/repair facilities worldwide. Willis also engages in the selective purchase and resale of commercial aircraft engines. WLFC (Ireland) Limited, WLFC Funding (Ireland) Limited and WLFC Lease (Ireland) Limited are wholly-owned Irish subsidiaries of Willis formed to facilitate certain of Willis’ international leasing activities. Willis Aviation Finance Limited in Ireland is a wholly-owned subsidiary formed to facilitate the leasing and technical support of worldwide activities. Willis Lease France is a wholly-owned French subsidiary of Willis formed to facilitate sales and marketing activities in Europe. Willis Lease (China) Limited is a wholly-owned subsidiary of Willis formed to facilitate the acquisition and leasing of assets in China. Willis Engine Securitization Trust II (“WEST II”) is a bankruptcy remote special purpose vehicle which was established for the purpose of financing aircraft engines through an asset-backed securitization. WEST Engine Acquisition LLC and Facility Engine Acquisition LLC are wholly-owned subsidiaries of WEST II and own the engines which secure the notes issued by WEST II. Willis Engine Securitization (Ireland) Limited is another wholly-owned subsidiary of WEST II and was established to facilitate certain international leasing activities by WEST II. WEST II is a variable interest entity which the Company owns 100% of the equity and consolidates in our financial statements. In 2013, the Company launched Willis Aeronautical Services, Inc. (“Willis Aero”), a wholly-owned subsidiary, whose primary focus is the sale of aircraft engine parts and materials through the acquisition or consignment from third parties of aircraft and engines. In 2016, we purchased, through our wholly owned subsidiary Willis Asset Management Limited (“Willis Asset Management”), the business and assets of Total Engine Support Limited (“TES”). TES has been the engine management and consulting business of the TES Aviation Group. Willis Asset Management has 502 engines under management as of December 31, 2016. |
Principles of Consolidation | (b) Principles of Consolidation The consolidated financial statements include the accounts of Willis, WEST Engine Funding LLC, WEST Engine Funding (Ireland) Limited, WEST Engine Acquisition LLC, Facility Engine Acquisition LLC, WLFC (Ireland) Limited, Willis Lease (Ireland) Limited, WLFC Funding (Ireland) Limited, Willis Aviation Finance Limited, Willis Lease France, Willis Lease (China) Limited, WEST Engine Securitization Trust II, Willis Engine Securitization (Ireland) Limited, Willis Aero, Willis Lease Singapore Pte. Ltd., and Willis Asset Management Limited (together, the “Company”). We evaluate all entities in which we have an economic interest firstly to determine whether for accounting purposes the entity is a variable interest entity or voting interest entity. If the entity is a variable interest entity we consolidate the financial statements of that entity if we are the primary beneficiary of the entities’ activities. If the entity is a voting interest entity we consolidate the entity when we have a majority of voting interests. All inter-company balances are eliminated upon consolidation. |
Correction of Immaterial Errors – Consolidated Financial Statements | (c) Correction of Immaterial Errors – Consolidated Financial Statements During 2016 the Company determined that its financial statements for the years ended December 31, 2015, 2014, and for prior years contained errors resulting from the incorrect accounting for equipment purchased with in-place leases. The Company previously did not identify measure and account for maintenance rights acquired. The Company’s accounting policy for maintenance rights is described below as note 1(d). Management evaluated the materiality of the errors described above from a qualitative and quantitative perspective in accordance with the requirements of the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 99, Materiality (SAB 99). Based on such evaluation, we have concluded that these corrections would not be material to any individual prior period and have corrected such balances herein. The associated correcting entries were recorded in the respective period starting with the opening consolidated balance sheet of December 31, 2014. The Consolidated Balance Sheet as of December 31, 2015 presented herein has been revised as follows: decrease in Equipment Held for Operating Lease by $13.7 million, increase in Maintenance Rights by $12.1 million, decrease in Deferred Income Taxes by $0.6 million and decrease in retained earnings by $1.1 million as of December 31, 2015. The adjustments to the previously reported Consolidated Statement of Income for the years ending December 31, 2015 and 2014 were as follows: a decrease in Maintenance Reserve Revenue of $1.7 million and $41,000, respectively; an increase (decrease) in Gain on Sale of Leased Equipment of ($34,000) and $0.1 million, respectively; an decrease in Depreciation and Amortization expense of $0.2 million and $0.1 million, respectively; and a decrease in Income Tax Expense of $0.5 million and $35,000, a decrease in net income of $0.9 million and $0.1 million, respectively; and a decrease in basic and diluted earnings per share of $0.11 and $0.01, respectively. The adjustments to the previously reported Consolidated Statement of cash flows for the years ending December 31, 2015 and 2014 were as follows: a decrease in cash provided by operating income of $1.7 million; and a decrease in the cash used by investing activities of $1.7 million. There were other immaterial out of period adjustments recorded that affected lease rent revenue, spare part sales revenue and expense and general and administrative expenses for the years ended December 31, 2015 and 2014. |
Revenue Recognition | (d) Revenue Recognition Revenue from leasing of aircraft equipment is recognized as operating lease revenue on a straight-line basis over the terms of the applicable lease agreements. Revenue is not recognized when cash collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received. We regularly sell equipment from our lease portfolio. This equipment may or may not be subject to a lease at the time of sale. The gain or loss on such sales is recognized as revenue and consists of proceeds associated with the sale less the net book value of the asset sold and any direct costs associated with the sale. To the extent that deposits associated with the engine are not included in the sale we include any such amount in our calculation of gain or loss. The Company evaluates sales arrangements under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition: Multiple Element Arrangements (“FASB ASC 605-25”), which addresses accounting for multiple element arrangements. The Company has determined that two deliverables, the sale of equipment and the management services, are separate units of accounting. Therefore, revenue is recognized in accordance with FASB ASC 605-10-S99, Revenue Recognition: Overall: SEC Materials, formerly SAB 104, for each unit. For multiple deliverable revenue arrangements, the Company allocates revenue to equipment sales and management services using the relative selling price method to recognize revenue when the revenue recognition criteria for each deliverable are met. The selling price of a deliverable is based on a hierarchy and if the Company is unable to establish vendor-specific objective evidence of selling price (“VSOE”) it uses third-party evidence of selling price (“TPE”), and if no such data is available, it uses a best estimated selling price (“BSP”). When VSOE cannot be established, the Company attempts to establish the selling price of each element based on TPE. When the Company is unable to establish selling price using VSOE or TPE, the Company uses BSP. The objective of BSP is to determine the price at which the Company would transact a sale if the equipment or service were sold on a stand-alone basis. The selling price of the service elementis based on TPE and is determined by reviewing information from management agreements entered into by other parties on a standalone basis, compared it to the management agreements entered into with the investor group and determined that the fees charged on a standalone basis were comparable to the fees charged when the Company entered into the management agreement concurrent with the sale of the portfolio of engines. Accordingly, the Company determined that the fees charged for its management services were comparable to those charged by other asset managers for the same service. The Company recognizes revenue from management fees under equipment management agreements as earned on a monthly basis. Management fees are based upon a percentage of net lease rents of the investor group’s engine portfolio calculated on an accrual basis and recorded in Other revenue. Under the terms of some of our leases, the lessees pay use fees (also known as maintenance reserves) to us based on usage of the leased asset, which are designed to cover expected future maintenance costs. Some of these amounts are reimbursable to the lessee if they make specifically defined maintenance expenditures. Use fees received are recognized in revenue as maintenance reserve revenue if they are not reimbursable to the lessee. Use fees that are reimbursable are recorded as a maintenance reserve liability until they are reimbursed to the lessee or the lease terminates, at which time they are recognized in revenue as maintenance reserve revenue. Certain lessees may be significantly delinquent in their rental payments and may default on their lease obligations. As of December 31, 2016, we had an aggregate of approximately $3.6 million in lease rent and $2.4 million in maintenance reserve receivables more than 30 days past due. Our inability to collect receivables or to repossess engines or other leased equipment in the event of a default by a lessee could have a material adverse effect on us. The Company estimates an allowance for doubtful accounts for lease receivables it does not consider fully collectible. The allowance for doubtful accounts includes the following: (1) specific reserves for receivables which are impaired for which management believes full collection is doubtful; and (2) a general reserve for estimated losses based on historical experience. We recognize sales of spare parts upon shipping and the amount reported as cost of sales is recorded at specific cost. We recognize service revenue from fees earned under engine maintenance service agreements as earned on a monthly basis. No customer accounted for greater than 10% of total lease rent revenue in 2016, 2015 and 2014. |
Other Revenue | (e) Other Revenue Other revenue consists primarily of management fee income, lease administration fees and third party consignment commissions earned by Willis Aero. During the year ended December 31, 2016, other revenue included $4.0 million of security payments for aircraft upon default of a lessee. |
Equipment Held for Operating Lease | (f) Equipment Held for Operating Lease Aircraft assets held for operating lease are stated at cost, less accumulated depreciation. Certain costs incurred in connection with the acquisition of aircraft assets are capitalized as part of the cost of such assets. Major overhauls paid for by us, which improve functionality or extend the original useful life, are capitalized and depreciated over the shorter of the estimated period to the next overhaul (“deferral method”) or the remaining useful life of the equipment. We do not accrue for planned major maintenance. The cost of overhauls of aircraft assets under long term leases, for which the lessee is responsible for maintenance during the period of the lease, are paid for by the lessee or from reimbursable maintenance reserves paid to the Company in accordance with the lease, and are not capitalized. Based on specific aspects of the equipment, we generally depreciate engines on a straight-line basis over a 15-year period from the acquisition date to a 55% residual value. We believe that this methodology accurately reflects our typical holding period for the assets and, that the residual value assumption reasonably approximates the selling price of the assets 15 years from date of acquisition. Our typical 15 year holding period is the estimated useful life of our engines based on our business model and plans, and represents how long we anticipate holding a newly acquired engine. The technical useful life of a new engine can be in excess of 25 years. We review the useful life and residual values of all engines periodically as demand changes to accurately depreciate the cost of equipment over the useful life of the engines. The useful life of older generation engines and aircraft may be significantly less than 15 years, based upon the technical status of the engine, as well as supply and demand factors. For these older generation engines and aircraft, the remaining useful life and our remaining expected holding period are typically the same. For older generation engines or aircraft that are unlikely to be repaired at the end of the current expected useful lives, we depreciate the engines or aircraft over their estimated lives to a residual value based on an estimate of the wholesale value of the parts after disassembly. As of December 31, 2016, 56 engines and 6 aircraft having a net book value of $126.1 million were depreciated under this policy with estimated useful lives ranging from 1 to 124 months. We adjust our estimates annually for these older generation assets, including updating our estimates of an engine’s or aircraft’s remaining operating life as well as future residual value expected from part-out based on the current technical status of the engine or aircraft. For engines or aircraft that are unlikely to be repaired at the end of the current expected useful lives, we depreciate the engines or aircraft over their estimated lives to a residual value based on an estimate of the wholesale value of the parts after disassembly. The aircraft owned by us are depreciated on a straight-line basis over an estimated useful life of 13 to 20 years to a 15% to 17% residual value. The spare parts packages owned by us are depreciated on a straight-line basis over an estimated useful life of 14-15 years to a 25% residual value. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets to be disposed are reported at the lower of carrying amount or fair value less cost to sell. Impairment is identified by comparison of undiscounted forecasted cash flows, including estimated sales proceeds, over the life of the asset with the assets’ book value. If the forecasted undiscounted cash flows are less than the book value the asset is written down to its fair value. Fair value is determined per individual asset by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors considered relevant by Management. We conduct a formal annual review of the carrying value of long-lived assets and also evaluate assets during the year if we note a triggering event indicating impairment is possible. Such review resulted in an impairment charge of $1.8 million, $0.6 million and $2.4 million in 2016, 2015, and 2014, respectively (Included in “Write-down of equipment” in the Consolidated Statements of Income). |
Equipment Held for Sale | (g) Equipment Held for Sale Equipment held for sale includes engines being marketed for sale as well as engines removed from our lease portfolio that are being parted out, with our investment in the long lived asset being recovered through the sale of spare parts. The assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell |
Debt Issuance Costs and Related Fees | (h) Debt Issuance Costs and Related Fees To the extent that we are required to pay fees in order to secure debt, such fees are capitalized, included in Notes Payable on the Consolidate Balance Sheet, and amortized over the life of the related loan using the effective interest method. |
Maintenance and Repair Costs | (i) Maintenance and Repair Costs Maintenance and repair costs under our leases are generally the responsibility of the lessees. Under many of our leases, lessees pay periodic use fees (often called maintenance reserves) to us based on the usage of the asset. 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. Use fees billed are recognized in maintenance reserve revenue if they are not reimbursable to the lessee. Use fees that are reimbursable are included in maintenance reserve liability until they are reimbursed to the lessee or the lease terminates, at which time they are recognized in maintenance reserve 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. Major overhauls paid for by us, which improve functionality or extend the remaining useful life, are capitalized and depreciated over the shorter of the estimated period to the next overhaul (“deferral method”) or the remaining useful life of the equipment. We do not accrue for planned major maintenance. |
Interest Rate Hedging | (j) Interest Rate Hedging We enter into various derivative instruments periodically to mitigate the exposure on our variable rate borrowings. The derivative instruments are fixed-rate interest swaps that are recorded at fair value as either an asset or liability. While substantially all our derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria have been met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective. The hedging instrument’s effectiveness is assessed utilizing regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. All of the transactions that we have designated as hedges are cash flow hedges. The effective portion of the change in fair value on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period during which the transaction being hedged affects earnings. The ineffective portion of the hedges is recorded in earnings in the current period. |
Income Taxes | k) Income Taxes We use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in the tax rates is recognized in income in the period that includes the enactment date. The Company recognizes in the financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs (See Note 6). The Company files income tax returns in various states and countries which may have different statutes of limitations. The open tax years for federal and state tax purposes are from 2013-2016 and 2012-2016, respectively. The Company records penalties and accrued interest related to uncertain tax positions in income tax expense. Such adjustments have historically been minimal and immaterial to our financial results. |
Property, Equipment and Furnishings | (l) Property, Equipment and Furnishings Property, equipment and furnishings are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets, which range from three to fifteen years. Leasehold improvements are recorded at cost and depreciated by the straight-line method over the shorter of the lease term or useful life of the leasehold. |
Cash and Cash Equivalents | (m) Cash and Cash Equivalents We consider highly liquid investments readily convertible into known amounts of cash, with original maturities of 90 days or less, as cash equivalents. |
Restricted Cash | (n) Restricted Cash We have certain bank accounts that are subject to restrictions in connection with our WEST II borrowings. Under WEST II, cash is collected in a restricted account, which is used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of maintenance reserve payments and all lease security deposits are accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. Under WEST II, cash from maintenance reserve payments are held in the restricted cash account equal to the maintenance obligations projected for the subsequent six months, and are subject to a minimum balance of $9.0 million. Security deposits are held until the end of the lease, at which time provided return conditions have been met, the deposit will be returned to the lessee. To the extent return conditions are not met, these deposits may be retained by us. |
Spare Parts Inventory | (o) Spare Parts Inventory Inventory consists of spare aircraft and engine parts and is stated at lower of cost or net realizable value. An impairment charge for excess or inactive inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns, future sales expectations and salvage value. |
Intangible Assets | (p) Intangible Assets Intangible assets include customer relationships and goodwill arising from the Company’s acquisition of J.T. Power and Total Engine Support Limited (“TES”). Intangible assets are accounted for in accordance with FASB ASC 350, “Intangibles — Goodwill and Other.” Goodwill is assessed for impairment annually. Customer relationships are amortized on a straight line basis over their estimated useful life of five years. The Company has no intangible assets with indefinite useful lives. |
Management Estimates | (q) Management Estimates These financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to residual values, estimated asset lives, impairments and bad debts. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes that the accounting policies on revenue recognition, maintenance reserves and expenditures, useful life of equipment, asset residual values, asset impairment and allowance for doubtful accounts are critical to the results of operations. If the useful lives or residual values are lower than those estimated by us, upon sale of the asset a loss may be realized. Significant management judgment is required in the forecasting of future operating results, which are used in the preparation of projected undiscounted cash-flows and should different conditions prevail, material impairment write-downs may occur. |
Per share information | (r) Per share information Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. The computation of fully diluted earnings per share is similar to the computation of basic earnings per share, except for the inclusion of all potentially dilutive common shares. Redeemable preferred stock is not convertible and does not affect dilutive shares. The reconciliation between basic common shares and fully diluted common shares is presented below: Years Ended December 31, 2016 2015 2014 (in thousands) Shares: Weighted-average number of common shares outstanding Dilutive and potentially dilutive common shares Total shares |
Investments | (s) Investments Our investment in the WMES and CASC Willis joint ventures, where we own 50% of the equity of the ventures, are accounted for using the equity method of accounting. The investments are recorded at the amount invested plus or minus our 50% share of net income or loss, less any distributions or return of capital received from the entities. |
Stock Based Compensation | (t) Stock Based Compensation We recognize compensation expense in the financial statements for share-based awards based on the grant-date fair value of those awards. Additionally, stock-based compensation expense includes an estimate for pre-vesting forfeitures and is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term. |
Initial Direct Costs associated with Leases | (u) Initial Direct Costs associated with Leases We account for the initial direct costs, including sales commission and legal fees, incurred in obtaining a new lease by deferring and amortizing those costs over the term of the lease. The amortization of these costs is recorded under General and Administrative expenses in the Consolidated Statements of Income. The amounts amortized were $1.6 million, $1.6 million and $1.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Fair Value Measurements | (w) Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. We use a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value which are the following: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets Measured and Recorded at Fair Value on a Recurring Basis As of December 31, 2016, we measured the fair value of our interest rate swaps of $100.0 million (notional amount) based on Level 2 inputs, due to the usage of inputs that can be corroborated by observable market data. The Company estimates the fair value of derivative instruments using a discounted cash flow technique and, at December 31, 2016, has used creditworthiness inputs that corroborate observable market data evaluating the Company’s and counterparties’ risk of non-performance. We had an interest rate swap agreement which had a net fair value of $69,000 as of December 31, 2016. In 2016, $25,000, was realized through the income statement as an increase in interest expense. The following table shows by level, within the fair value hierarchy, the Company’s assets and liabilities at fair value as of December 31, 2016: Assets and (Liabilities) at Fair Value December 31, 2016 Level 1 Level 2 Level 3 Total (in thousands) Derivatives $ — $ $ — $ Total $ — $ $ — $ No derivatives existed during the year ended December 31, 2015. Assets Measured and Recorded at Fair Value on a Nonrecurring Basis We determine fair value of long-lived assets held and used, such as Equipment held for operating lease and Equipment held for sale, by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. The following table shows by level, within the fair value hierarchy, the Company’s assets measured at fair value on a nonrecurring basis during the years ended December 31, 2016 and 2015, and the losses recorded during the years ended December 31, 2016 and 2015 on those assets: Assets at Fair Value Total Losses December 31, 2016 December 31, 2015 December 31, Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 2016 2015 (in thousands) (in thousands) Equipment held for lease $ — $ $ — $ $ — $ $ — $ $ $ Equipment held for sale — — — — Spare parts inventory — — — — — — — Total $ — $ $ — $ $ — $ $ — $ $ $ At December 31, 2016, the Company used Level 2 inputs to measure write down of equipment held for lease, equipment held for sale, and spare parts inventory. Level 2 inputs include quoted prices for similar assets in inactive markets. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. Write-downs of equipment to their estimated fair values totaled $9.5 million for the year ended December 31, 2016 compared to $9.2 million recorded in the year ago period. A writedown of $5.5 million was recorded due to the adjustment of the carrying value for six impaired engines and one impaired aircraft within the portfolio to reflect estimated market value. A further write-down of equipment totaling $2.0 million was recorded in the year ended December 31, 2016 due to a management decision to consign one engine for part-out and sale, in which the asset’s net book value exceeded the estimated proceeds. An additional writedown of $2.0 million was recorded in year ended December 31, 2016 to adjust the carrying value of engine parts held on consignment for which market conditions for the sale of parts has changed. A write-down of equipment totaling $9.2 million was recorded in the year ended December 31, 2015. A write-down of equipment totaling $5.5 million was recorded in the year ended December 31, 2015 due to a management decision to consign four engines for part-out and sale, in which the assets’ net book value exceeded the estimated proceeds from part-out. Write-downs on held for use equipment to their estimated fair values totaled $0.6 million for the year ended December 31, 2015 due to an adjustment of carrying values for certain impaired parts packages within the portfolio to reflect estimated market values. A further write-down of $2.8 million was recorded in the year ended December 31, 2015 to adjust the carrying value of engine parts for which market conditions for the sale of parts has changed. An additional write-down of $0.3 million was recorded in the year ended December 31, 2015 based on a comparison of the inventory values with the revised net proceeds expected from part sales. |
Foreign Currency Translation | (x) Foreign Currency Translation The Company’s foreign investments have been converted at rates of exchange at December 31, 2016. The changes in exchange rates in our foreign investments reported under the equity method are included in stockholders’ equity as accumulated other comprehensive income. |
Redeemable Preferred Stock | (y) Redeemable Preferred Stock The Company’s Series A preferred shares are redeemable at $20 per share upon the occurrence of certain events. The Company classifies this equity as mezzanine as it is a conditionally redeemable security. The Company incurred approximately $0.2 million of issuance costs during 2016, in connection with the issuance of its preferred shares. The Company is accreting the issuance costs to redemption value over the period from the date of issuance to October 2023, such that the carrying amounts of the securities will equal the redemption amounts at the earliest redemption date |
Organization and Summary of S27
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation between basic common shares and fully diluted common shares | Years Ended December 31, 2016 2015 2014 (in thousands) Shares: Weighted-average number of common shares outstanding Dilutive and potentially dilutive common shares Total shares |
Schedule of fair value hierarchy of assets and liabilities measured on recurring basis | Assets and (Liabilities) at Fair Value December 31, 2016 Level 1 Level 2 Level 3 Total (in thousands) Derivatives $ — $ $ — $ Total $ — $ $ — $ |
Schedule of fair value hierarchy of assets measured on nonrecurring basis and gain (losses) recorded | Assets at Fair Value Total Losses December 31, 2016 December 31, 2015 December 31, Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 2016 2015 (in thousands) (in thousands) Equipment held for lease $ — $ $ — $ $ — $ $ — $ $ $ Equipment held for sale — — — — Spare parts inventory — — — — — — — Total $ — $ $ — $ $ — $ $ — $ $ $ |
Equipment Held for Operating 28
Equipment Held for Operating Lease (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equipment Held for Operating Lease [Abstract] | |
Schedule of geographic information about the entity's leased aircraft equipment grouped by domicile of the lessee | Years Ended December 31, Lease rent revenue 2016 2015 2014 (in thousands) Region Europe $ $ $ Asia South America United States Mexico Canada Middle East Africa Totals $ $ $ Years Ended December 31, Lease rent revenue less applicable depreciation and interest 2016 2015 2014 (in thousands) Region Europe $ Asia South America United States Mexico Canada Middle East Africa Off-lease and other Totals $ $ $ Years Ended December 31, Net book value of equipment held for operating lease 2016 2015 2014 (in thousands) Region Europe $ Asia South America United States $ $ Mexico Canada Middle East Africa Off-lease and other Totals $ $ $ |
Schedule of lease status of the equipment held for operating lease | December 31, 2016 Lease Term Net Book Value (in thousands) Off-lease and other $ Month-to-month leases Leases expiring 2017 Leases expiring 2018 Leases expiring 2019 Leases expiring 2020 Leases expiring 2021 Leases expiring thereafter $ December 31, 2015 Lease Term Net Book Value (in thousands) Off-lease and other $ Month-to-month leases Leases expiring 2016 Leases expiring 2017 Leases expiring 2018 Leases expiring 2019 Leases expiring 2020 Leases expiring thereafter $ |
Schedule of minimum future payments under non-cancelable leases | Year (in thousands) 2017 $ 2018 2019 2020 2021 Thereafter $ |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Investments | |
Schedule of investments | Years Ending December 31, 2016 and 2015 (in thousands) WMES CASC Total Investment in joint ventures as of December 31, 2014 $ $ $ Investment — Earnings (losses) from joint ventures Distribution — Foreign Currency Translation Adjustment — Investment in joint ventures as of December 31, 2015 $ $ $ Investment — Earnings (losses) from joint ventures Deferred gain on engine sale — Distribution — Foreign Currency Translation Adjustment — Investment in joint ventures as of December 31, 2016 $ $ $ |
Summarized financial information | Years Ended December 31, 2016 2015 2014 (in thousands) Revenue $ $ $ Expenses WMES net income $ $ $ December 31, December 31, 2016 2015 (in thousands) Total assets $ $ Total liabilities Total WMES net equity $ $ |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Notes Payable | |
Schedule of notes payable | As of December 31, 2016 2015 (in thousands) Credit facility at a floating rate of interest of LIBOR plus 2.75%, secured by engines. The facility has a committed amount of $890.0 million at December 31, 2016, which revolves until the maturity date of April 2021. $ $ WEST II Series 2012-A term notes payable at a fixed rate of interest of 5.50%, maturing in September 2037. Secured by engines. Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024. Secured by an aircraft. Note payable at a variable interest rate of LIBOR plus 2.25%, maturing in January 2018. Secured by engines. Notes payable Less: unamortized debt issuance costs Total notes payable $ $ |
Schedule or principal outstanding | Year (in thousands) 2017 $ 2018 2019 2020 2021 (includes $608.0 million outstanding on revolving credit facility) Thereafter $ |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments | |
Schedule of income effects of cash flow hedging relationships | Amount of Loss (Gain) Recognized on Derivatives in the Statements of Income Derivatives in Cash Flow Hedging Location of Loss (Gain) Recognized on Years Ended December 31, Relationships Derivatives in the Statements of Income 2016 2015 2014 (in thousands) Interest rate contracts Interest expense $ $ — $ Total $ $ — $ |
Schedule of information about financial statement effects related to cash flow hedges | Amount of Gain (Loss) Recognized Location of Loss (Gain) Amount of Loss (Gain) Reclassified in OCI on Derivatives Reclassified from from Accumulated OCI into Income Derivatives in (Effective Portion) Accumulated OCI into (Effective Portion) Cash Flow Hedging Years Ended December 31, Income Years Ended December 31, Relationships 2016 2015 2014 (Effective Portion) 2016 2015 2014 (in thousands) (in thousands) Interest rate contracts $ $ — $ — Interest expense $ $ — $ Total $ $ — $ — Total $ $ — $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Schedule of components of income (loss) from continuing operation before income taxes | Years ended December 31, 2016 2015 2014 (in thousands) U.S. $ $ $ Non U.S. Income from before income taxes $ $ $ |
Schedule of components of income tax expense | Federal State Foreign Total (in thousands) December 31, 2016 Current $ $ $ $ Deferred — Total 2016 $ $ $ $ December 31, 2015 Current $ $ $ $ Deferred — Total 2015 $ $ $ $ December 31, 2014 Current $ $ $ $ Deferred — Total 2014 $ $ $ $ |
Schedule of reconciliation of the federal income tax expense at the statutory rate to the effective income tax expense | Years Ended December 31, 2016 2015 2014 (in thousands and % of pre-tax income) $ % $ % $ % Statutory federal income tax expense State taxes, net of federal benefit Foreign tax paid Tax consequences of the sale of engines to WMES — — Uncertain tax positions Permanent differences-nondeductible executive compensation Permanent differences and other Effective income tax expense |
Summary of activity related to the Company's unrecognized tax benefits | (in thousands) Balance as of December 31, 2014 $ Increases related to current year tax positions Decreases due to tax positions released Balance as of December 31, 2015 Increases related to current year tax positions Decreases due to tax positions expired Balance as of December 31, 2016 $ |
Schedule of tax effects of temporary differences of the deferred tax assets and liabilities | As of December 31, 2016 2015 (in thousands) Deferred tax assets: Unearned lease revenue $ $ State taxes Reserves and allowances Other accruals Alternative minimum tax credit Net operating loss carry forward Charitable contributions Total deferred tax assets Less: valuation allowance Net deferred tax assets Deferred tax liabilities: Depreciation and impairment on aircraft engines and equipment Other deferred tax assets (liabilities) Net deferred tax liabilities Other comprehensive loss deferred tax asset Net deferred tax liabilities $ $ |
Commitments, Contingencies, G33
Commitments, Contingencies, Guarantees and Indemnities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments | |
Lease commitments | Lease Remaining Lease Location Property Type Expiration Commitment (in thousands) Novato, California Principal Office 09/30/18 $ Boynton Beach, Florida Warehouse and office 10/29/19 San Diego, California Warehouse and office 10/31/19 Bridgend, Wales, United Kingdom Warehouse and office 10/31/17 Singapore Office 12/31/17 Shanghai, China Office 12/31/17 Shanghai, China Warehouse 07/31/17 Dublin, Ireland Office 05/15/17 London, United Kingdom Office 11/18/18 Blagnac, France Office 12/31/17 Total $ |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stock-based compensation plans | |
Schedule of components of stock compensation expense | 2016 2015 2014 (in thousands) 2007 Stock Incentive Plan $ $ $ Employee Stock Purchase Plan Total Stock Compensation Expense $ $ $ |
Restricted stock | |
Stock-based compensation plans | |
Summary of activity under the 2007 Plan | Shares Restricted stock at December 31, 2013 Granted in 2014 (vesting over 3 years) Granted in 2014 (vesting over 4 years) Granted in 2014 (vesting on first anniversary from date of issuance) Cancelled in 2014 Vested in 2014 Restricted stock at December 31, 2014 Granted in 2015 (vesting over 3 years) Granted in 2015 (vesting over 4 years) Granted in 2015 (vesting on first anniversary from date of issuance) Cancelled in 2015 — Vested in 2015 Restricted stock at December 31, 2015 Granted in 2016 (vesting over 2 years) Granted in 2016 (vesting over 3 years) Granted in 2016 (vesting over 4 years) Granted in 2016 (vesting on first anniversary from date of issuance) Cancelled in 2016 Vested in 2016 Restricted stock at December 31, 2016 |
Summary of activity under the 2007 Plan | Weighted Average Aggregate Grant Number Outstanding Grant Date Fair Value Date Fair Value Balance as of December 31, 2013 $ $ Shares granted Shares cancelled Shares vested Balance as of December 31, 2014 $ $ Shares granted Shares cancelled — — — Shares vested Balance as of December 31, 2015 $ $ Shares granted Shares cancelled Shares vested Balance as of December 31, 2016 $ $ |
Quarterly Consolidated Financ35
Quarterly Consolidated Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Consolidated Financial Information (Unaudited) | |
Summary of the unaudited quarterly results of operations | Fiscal 2016 (1) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ $ $ $ $ Net income attributable to common shareholders Basic earnings per common share Diluted earnings per common share Average common shares outstanding Diluted average common shares outstanding Fiscal 2015 (1) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ $ $ $ $ Net income (loss) attributable to common shareholders Basic earnings (loss) per common share Diluted earnings (loss) per common share Average common shares outstanding Diluted average common shares outstanding Fiscal 2014 (1) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Total revenue $ $ $ $ $ Net income (loss) attributable to common shareholders Basic earnings (loss) per common share Diluted earnings (loss) per common share Average common shares outstanding Diluted average common shares outstanding (1) Certain amounts include adjustments to prior periods see "Note 1. Summary of Significant Accounting Policies (c) Correction of Immaterial Errors - Consolidated Financial Statements" for further disclosure. |
Operating Segments (Tables)
Operating Segments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Operating Segments | |
Summary of the operating segments | Leasing and For the year ended December 31, 2016 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ $ — $ — $ Maintenance reserve revenue — — Spare parts and equipment sales — Gain on sale of leased equipment — — Other revenue Total revenue Expenses: Depreciation and amortization expense — Cost of spare parts and equipment sales — General and administrative — Net finance costs — Other expense — — Total expenses — Earnings from operations $ $ $ $ Leasing and For the year ended December 31, 2015 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ $ — $ — $ Maintenance reserve revenue — — Spare parts and equipment sales — Gain on sale of leased equipment — — Other revenue Total revenue Expenses: Depreciation and amortization expense — Cost of spare parts and equipment sales — General and administrative — Net finance costs — Other expense — — Total expenses — Earnings (loss) from operations $ $ $ $ Leasing and For the year ended December 31, 2014 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ $ — $ — $ Maintenance reserve revenue — — Spare parts and equipment sales — — Gain on sale of leased equipment — — Other revenue Total revenue Expenses: Depreciation and amortization expense — Cost of spare parts and equipment sales — — General and administrative — Interest expense — Other expense — Total expenses — Earnings from operations $ $ $ $ (1) Represents revenue generated between our operating segments Total assets as of December 31, 2016 $ $ $ — $ Total assets as of December 31, 2015 $ $ $ — $ Total assets as of December 31, 2014 $ $ $ — $ |
Organization and Summary of S37
Organization and Summary of Significant Accounting Policies (Organization and Revenue Recognition) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Sep. 18, 2013 | |
Revenue Recognition | ||
Lease rent to be received, more than 30 days past due | $ 3.6 | |
Maintenance reserve payments to be received, more than 30 days past due | $ 2.4 | |
Minimum number of days for which lease rent and maintenance reserve payments are past due | 30 days | |
Other Revenue, Net | $ 4 | |
WOLF | ||
Organizations [Line Items] | ||
Previously held interest (as a percent) | 50.00% | |
Acquisition of the remaining outstanding shares (as a percent) | 100.00% | 50.00% |
Organization and Summary of S38
Organization and Summary of Significant Accounting Policies (Correction of Immaterial Errors) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Decrease in deferred income taxes | $ (9,100,000) | $ (6,027,000) | $ (4,110,000) |
Decrease in depreciation and amortization expense | 200,000 | 100,000 | |
Maintenance Rights | 17,670,000 | 12,140,000 | |
Restatement adjustment | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Decrease in equipment held for operating lease | 13,700,000 | ||
Increase maintenance rights | 12,100,000 | ||
Decrease in deferred income taxes | 600,000 | ||
Decrease in retained earnings | 1,100,000 | ||
Decrease in maintenance reserve revenue | 1,700,000 | 41,000 | |
Increase (decrease) in gain on sale of leased equipment | (34,000) | 100,000 | |
Increase in income tax benefit | 500,000 | 35,000 | |
Decrease in net income | $ 900,000 | $ 100,000 | |
Decrease in basic and diluted earnings per share | $ 0.11 | $ 0.01 | |
Decrease in cash provided by operating income | $ 1,700,000 | ||
Decrease in the cash used by investing activities | $ 1,700,000 | ||
Parent Company | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Decrease in deferred income taxes | (4,710,000) | (1,806,000) | $ (1,478,000) |
Maintenance Rights | $ 16,468,000 | $ 22,680,000 |
Organization and Summary of S39
Organization and Summary of Significant Accounting Policies (Equipment Held of Operating Lease) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Equipment Held for Operating Lease | |||
Impairment charge | $ 9,514 | $ 9,181 | $ 5,602 |
Minimum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 3 years | ||
Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 15 years | ||
Engines and related equipment | |||
Equipment Held for Operating Lease | |||
Number of engines | item | 56 | ||
Engines and related equipment | Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 15 years | ||
Aircraft | |||
Equipment Held for Operating Lease | |||
Number of aircraft | item | 6 | ||
Aircraft | Minimum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 13 years | ||
Residual value (as a percent) | 15.00% | ||
Aircraft | Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 20 years | ||
Residual value (as a percent) | 17.00% | ||
Engines and aircraft | |||
Equipment Held for Operating Lease | |||
Equipment net book value | $ 126,100 | ||
Engines and aircraft | Minimum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 1 year | ||
Engines and aircraft | Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 124 years | ||
New engine [Member] | Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 25 years | ||
Equipment held for lease Member | |||
Equipment Held for Operating Lease | |||
Impairment charge | $ 1,800 | $ 600 | |
Equipment held for lease Member | Engines and related equipment | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 15 years | ||
Residual value (as a percent) | 55.00% | ||
Equipment held for lease Member | Spare part packages | |||
Equipment Held for Operating Lease | |||
Residual value (as a percent) | 25.00% | ||
Equipment held for lease Member | Spare part packages | Minimum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 14 years | ||
Equipment held for lease Member | Spare part packages | Maximum | |||
Equipment Held for Operating Lease | |||
Estimated useful life | 15 years | ||
Equipment held for lease Member | Engines and aircraft | |||
Equipment Held for Operating Lease | |||
Impairment charge | $ 2,400 |
Organization and Summary of S40
Organization and Summary of Significant Accounting Policies (Property, Equipment and Furnishings and Restricted Cash) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Restricted Cash | |
Minimum amount of cash from maintenance reserve payments required to be held in restricted cash account | $ 9 |
Projected maintenance obligation period | 6 months |
Minimum | |
Property, Equipment and Furnishings | |
Useful life of property, equipment and furnishings | 3 years |
Maximum | |
Property, Equipment and Furnishings | |
Useful life of property, equipment and furnishings | 15 years |
Organization and Summary of S41
Organization and Summary of Significant Accounting Policies (Intangibles and Per Share Information) (Details) - USD ($) shares in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Shares: | |||||||||||||||
Weighted-average number of common shares outstanding | 6,149 | 6,307 | 6,685 | 7,149 | 7,739 | 7,839 | 7,841 | 7,848 | 7,839 | 7,938 | 7,976 | 7,914 | 6,570 | 7,817 | 7,917 |
Dilutive and potentially dilutive common shares | 144 | 170 | 224 | ||||||||||||
Total shares | 6,275 | 6,448 | 6,819 | 7,272 | 7,872 | 7,963 | 7,841 | 8,044 | 8,037 | 8,123 | 8,179 | 8,129 | 6,714 | 7,987 | 8,141 |
Indefinite lived intangible assets | |||||||||||||||
Intangible Assets | |||||||||||||||
Intangible assets with indefinite useful lives | $ 0 | $ 0 | |||||||||||||
Customer relationships | |||||||||||||||
Intangible Assets | |||||||||||||||
Useful life | 5 years |
Organization and Summary of S42
Organization and Summary of Significant Accounting Policies (Investments and Lease Costs) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Initial Direct Costs associated with Leases | |||
Amortization of initial direct costs associated with leases | $ 1.6 | $ 1.6 | $ 1.5 |
Maintenance Rights [Abstrac] | |||
Maintenance right assets | $ 17.7 | $ 12.1 | |
WOLF | |||
Investments | |||
Previously held interest (as a percent) | 50.00% | ||
WMES | |||
Investments | |||
Ownership interest (as a percent) | 50.00% |
Organization and Summary of S43
Organization and Summary of Significant Accounting Policies (Fair Value on a Nonrecurring Basis) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Assets at fair value and gains (losses) recorded | |||
Derivative, Notional Amount | $ 100,000,000 | ||
Derivatives | $ 0 | ||
Equipment held for sale | 30,710,000 | 23,454,000 | |
Assets at fair value | 69,000 | ||
Increase (decrease) in asset write-down | 25,000 | ||
Asset write-down | 9,514,000 | 9,181,000 | $ 5,602,000 |
Additional write-down | 2,800,000 | ||
Asset helf-for-use write-down | 300,000 | ||
Equipment | |||
Assets at fair value and gains (losses) recorded | |||
Asset helf-for-use write-down | 600,000 | ||
Engine Parts | |||
Assets at fair value and gains (losses) recorded | |||
Asset write-down | 2,000,000 | ||
Additional write-down | 2,000,000 | ||
Recurring | Level 1 | |||
Assets at fair value and gains (losses) recorded | |||
Derivatives | 69,000 | ||
Total | 69,000 | ||
Recurring | Level 3 | |||
Assets at fair value and gains (losses) recorded | |||
Derivatives | 69,000 | ||
Total | 69,000 | ||
Nonrecurring | |||
Assets at fair value and gains (losses) recorded | |||
Equipment held for lease | 1,196,000 | 2,154,000 | |
Equipment held for sale | 8,976,000 | 4,931,000 | |
Spare parts inventory | 1,538,000 | ||
Assets at fair value | 11,710,000 | 7,085,000 | |
Total losses on equipment held for lease | (3,674,000) | (2,536,000) | |
Total losses on equipment held for sale | (5,365,000) | (6,645,000) | |
Total losses on spare parts inventory | (475,000) | ||
Total losses on assets | (9,514,000) | (9,181,000) | |
Nonrecurring | Equipment | |||
Assets at fair value and gains (losses) recorded | |||
Asset write-down recorded earlier | 5,500,000 | ||
Nonrecurring | Level 2 | |||
Assets at fair value and gains (losses) recorded | |||
Equipment held for lease | 1,196,000 | 2,154,000 | |
Equipment held for sale | 8,976,000 | 4,931,000 | |
Spare parts inventory | 1,538,000 | ||
Assets at fair value | 11,710,000 | $ 7,085,000 | |
Engines and related equipment | Nonrecurring | |||
Assets at fair value and gains (losses) recorded | |||
Asset write-down | $ 9,500,000 |
Organization and Summary of S44
Organization and Summary of Significant Accounting Policies (Redeemable Preferred Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Class of Stock [Line Items] | |||
Debt issuance cost | $ 3,808 | $ 13 | $ 5,074 |
Series A Preferred Stock | |||
Class of Stock [Line Items] | |||
Series A Preferred stock redemption price (in dollars per share) | $ 20 | ||
Debt issuance cost | $ 200 | ||
Parent Company | |||
Class of Stock [Line Items] | |||
Debt issuance cost | $ 3,808 | $ 13 | $ 5,074 |
Equipment Held for Operating 45
Equipment Held for Operating Lease (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($)aircraftitemregion | Dec. 31, 2015USD ($)aircraftitem | Dec. 31, 2014USD ($) | Oct. 31, 2014USD ($) | |
Equipment Held for Lease | ||||
Number of geographic regions in which aircraft lessees are domiciled in | region | 8 | |||
Lease rent revenue | $ 119,895 | $ 108,046 | $ 101,431 | |
Lease rent revenue less applicable depreciation and interest | 18,376 | 5,658 | 3,809 | |
Net book value of equipment held for operating lease | 1,136,603 | 1,109,168 | 1,057,381 | $ 49,100 |
Minimum future payments under non-cancelable leases | ||||
2,017 | 89,119 | |||
2,018 | 57,192 | |||
2,019 | 43,979 | |||
2,020 | 33,482 | |||
2,021 | 16,930 | |||
Thereafter | 23,466 | |||
Minimum future payments | 264,168 | |||
United States | ||||
Equipment Held for Lease | ||||
Lease rent revenue | 44,650 | 43,703 | 37,850 | |
Lease rent revenue less applicable depreciation and interest | 13,137 | 11,074 | 6,988 | |
Net book value of equipment held for operating lease | 384,661 | 387,652 | 343,102 | |
Mexico | ||||
Equipment Held for Lease | ||||
Lease rent revenue | 34,524 | 31,569 | 21,658 | |
Lease rent revenue less applicable depreciation and interest | 10,318 | 8,867 | 5,891 | |
Net book value of equipment held for operating lease | 265,736 | 309,158 | 232,511 | |
Canada | ||||
Equipment Held for Lease | ||||
Lease rent revenue | 11,504 | 9,688 | 9,907 | |
Lease rent revenue less applicable depreciation and interest | 3,464 | 1,929 | 3,503 | |
Net book value of equipment held for operating lease | 112,268 | 112,718 | 107,080 | |
Europe | ||||
Equipment Held for Lease | ||||
Lease rent revenue | 13,395 | 9,177 | 11,880 | |
Lease rent revenue less applicable depreciation and interest | 1,053 | 634 | 2,577 | |
Net book value of equipment held for operating lease | 148,208 | 99,876 | 61,521 | |
South America | ||||
Equipment Held for Lease | ||||
Lease rent revenue | 6,251 | 6,886 | 7,771 | |
Lease rent revenue less applicable depreciation and interest | 2,430 | 2,310 | 2,157 | |
Net book value of equipment held for operating lease | 55,114 | 35,374 | 57,371 | |
Asia | ||||
Equipment Held for Lease | ||||
Lease rent revenue | 4,049 | 2,828 | 4,958 | |
Lease rent revenue less applicable depreciation and interest | 74 | (123) | (100) | |
Net book value of equipment held for operating lease | 35,199 | 18,893 | 11,026 | |
Africa | ||||
Equipment Held for Lease | ||||
Lease rent revenue | 3,674 | 2,223 | 4,143 | |
Lease rent revenue less applicable depreciation and interest | 743 | 474 | 1,277 | |
Net book value of equipment held for operating lease | 8,971 | 9,612 | 12,063 | |
Middle East | ||||
Equipment Held for Lease | ||||
Lease rent revenue | 1,848 | 1,972 | 3,264 | |
Lease rent revenue less applicable depreciation and interest | 460 | 206 | 1,041 | |
Net book value of equipment held for operating lease | 42,949 | 18,937 | 17,125 | |
Off-lease and other | ||||
Equipment Held for Lease | ||||
Lease rent revenue less applicable depreciation and interest | (13,303) | (19,713) | (19,525) | |
Net book value of equipment held for operating lease | $ 83,497 | $ 116,948 | $ 215,582 | |
Equipment held for lease Member | Engines and related equipment | ||||
Equipment Held for Lease | ||||
Number of equipments held for lease | aircraft | 208 | 201 | ||
Equipment held for lease Member | Spare parts packages | ||||
Equipment Held for Lease | ||||
Number of equipments held for lease | item | 5 | 5 | ||
Equipment held for lease Member | Aircrafts | ||||
Equipment Held for Lease | ||||
Number of equipments held for lease | aircraft | 11 | 10 | ||
Month-to-month leases | ||||
Equipment Held for Lease | ||||
Net book value of equipment held for operating lease | $ 88,546 | $ 90,173 | ||
Leases expiring 2016 | ||||
Equipment Held for Lease | ||||
Net book value of equipment held for operating lease | 429,635 | |||
Leases expiring 2017 | ||||
Equipment Held for Lease | ||||
Net book value of equipment held for operating lease | 396,155 | 106,923 | ||
Leases expiring 2018 | ||||
Equipment Held for Lease | ||||
Net book value of equipment held for operating lease | 144,977 | 87,916 | ||
Leases expiring 2019 | ||||
Equipment Held for Lease | ||||
Net book value of equipment held for operating lease | 70,511 | 60,022 | ||
Leases expiring 2020 | ||||
Equipment Held for Lease | ||||
Net book value of equipment held for operating lease | 180,732 | 86,922 | ||
Leases expiring 2021 | ||||
Equipment Held for Lease | ||||
Net book value of equipment held for operating lease | 57,196 | |||
Leases expiring thereafter | ||||
Equipment Held for Lease | ||||
Net book value of equipment held for operating lease | $ 114,989 | $ 130,629 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Oct. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 03, 2014 | |
Investments | ||||||||
Investment in WMES joint ventures at beginning of the period | $ 41,295 | $ 41,590 | ||||||
Investment | 5,545 | 630 | $ 17,623 | |||||
Earnings from joint venture | 1,813 | 1,175 | ||||||
Distribution | (1,167) | (1,304) | ||||||
Foreign Currency Translation Adjustment | 868 | (796) | ||||||
Investment in WMES joint ventures at end of the period | 45,406 | 41,295 | 41,590 | |||||
Amortization of deferred gain | (1,212) | |||||||
Property Subject to or Available for Operating Lease, Net | $ 49,100 | $ 1,136,603 | $ 1,109,168 | $ 1,057,381 | ||||
Equity Method Investments | 41,295 | 41,590 | 41,590 | $ 45,406 | 41,295 | 41,590 | ||
WMES | ||||||||
Investments | ||||||||
Ownership interest (as a percent) | 50.00% | |||||||
Investment in WMES joint ventures at beginning of the period | 27,272 | 26,672 | ||||||
Investment | 5,545 | 630 | ||||||
Earnings from joint venture | 2,032 | 1,274 | ||||||
Distribution | (1,167) | (1,304) | ||||||
Investment in WMES joint ventures at end of the period | 32,470 | 27,272 | 26,672 | |||||
Amortization of deferred gain | (1,212) | |||||||
Equity Method Investments | 27,272 | 26,672 | 26,672 | $ 32,470 | 27,272 | 26,672 | ||
Engine Value | 100 | |||||||
Consolidated Statements of Income | ||||||||
Revenue | 35,463 | 26,909 | 25,757 | |||||
Expenses | 31,669 | 24,574 | 23,150 | |||||
WMES net income | 3,794 | 2,335 | 2,607 | |||||
Consolidated Balance Sheets | ||||||||
Total assets | 293,299 | 256,126 | ||||||
Total liabilities | 219,881 | 195,258 | ||||||
Total WMES net equity | 73,418 | 60,868 | ||||||
WMES | Other Revenue | ||||||||
Investments | ||||||||
Management fees | 2,100 | 1,700 | 2,000 | |||||
CASC Willis | ||||||||
Investments | ||||||||
Investment in WMES joint ventures at beginning of the period | 14,023 | 14,918 | ||||||
Earnings from joint venture | (219) | (99) | ||||||
Foreign Currency Translation Adjustment | 868 | (796) | ||||||
Investment in WMES joint ventures at end of the period | 12,936 | 14,023 | 14,918 | |||||
Equity Method Investments | 14,023 | $ 14,918 | $ 14,918 | 12,936 | $ 14,023 | $ 14,918 | ||
CASC | ||||||||
Investments | ||||||||
Ownership interest (as a percent) | 50.00% | |||||||
Investment | $ 15,000 | |||||||
Investment in WMES joint ventures at end of the period | 12,900 | |||||||
Equity Method Investments | $ 12,900 | $ 12,900 |
Notes Payable (Details)
Notes Payable (Details) | Mar. 25, 2015USD ($) | Dec. 31, 2014 | Jul. 16, 2014USD ($) | Jan. 10, 2014engine | Sep. 17, 2012USD ($)engine | Apr. 30, 2016USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($) | Jun. 30, 2016USD ($)item | Sep. 18, 2013USD ($) |
Long Term Debt | ||||||||||||
One-month LIBOR rate (as a percent) | 0.77% | 0.43% | 0.77% | |||||||||
Principal outstanding repayable | ||||||||||||
2,017 | $ 23,624,000 | $ 23,624,000 | ||||||||||
2,018 | 33,294,000 | 33,294,000 | ||||||||||
2,019 | 23,430,000 | 23,430,000 | ||||||||||
2,020 | 23,031,000 | 23,031,000 | ||||||||||
2,021 | 631,268,000 | 631,268,000 | ||||||||||
Thereafter | 179,056,000 | 179,056,000 | ||||||||||
Notes payable | 913,703,000 | $ 878,684,000 | 913,703,000 | |||||||||
Less: unamortized debt issuance costs | (13,448,000) | (12,595,000) | (13,448,000) | |||||||||
Total notes payable | 900,255,000 | 866,089,000 | 900,255,000 | |||||||||
Notes payable | 900,255,000 | 866,089,000 | $ 900,255,000 | |||||||||
Net proceeds received from notes issued and sold | $ 149,000,000 | 192,700,000 | $ 154,395,000 | |||||||||
WOLF | ||||||||||||
Principal outstanding repayable | ||||||||||||
Acquisition of remaining outstanding shares of previously held equity method investment (as a percent) | 100.00% | 100.00% | 50.00% | |||||||||
WEST II | ||||||||||||
Principal outstanding repayable | ||||||||||||
Fixed amortization of notes payable | $ 0 | |||||||||||
WEST II Series 2012-A term notes payable at a fixed rate of interest maturing in September 2037. Secured by engines | WEST II | ||||||||||||
Long Term Debt | ||||||||||||
Fixed rate (as a percent) | 5.50% | 5.50% | ||||||||||
Principal outstanding repayable | ||||||||||||
Notes payable | $ 279,541,000 | 300,467,000 | $ 279,541,000 | |||||||||
Maturity term | 10 years | |||||||||||
Face amount | $ 390,000,000 | |||||||||||
Net proceeds received from notes issued and sold | 384,900,000 | |||||||||||
Number of engines in portfolio offered as collateral | item | 58 | |||||||||||
Number of business days to pay interest | 5 days | |||||||||||
WEST II Series 2012-A term notes payable at a fixed rate of interest maturing in September 2037. Secured by engines | WEST II | Minimum | ||||||||||||
Principal outstanding repayable | ||||||||||||
Minimum amount of cash from maintenance reserve payments required to be held in restricted cash account | $ 9,000,000 | 9,000,000 | ||||||||||
Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024. Secured by an aircraft | ||||||||||||
Long Term Debt | ||||||||||||
Initial term for interest payment | 5 years | |||||||||||
Principal outstanding repayable | ||||||||||||
Notes payable | $ 14,453,000 | 16,135,000 | $ 14,453,000 | |||||||||
Maturity term | 10 years | |||||||||||
Face amount | $ 13,400,000 | $ 4,700,000 | ||||||||||
Number of term notes held | item | 2 | |||||||||||
Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024. Secured by an aircraft | Minimum | ||||||||||||
Long Term Debt | ||||||||||||
Fixed rate (as a percent) | 2.60% | 2.60% | ||||||||||
Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024. Secured by an aircraft | Maximum | ||||||||||||
Long Term Debt | ||||||||||||
Fixed rate (as a percent) | 2.97% | 2.97% | ||||||||||
Note payable at a fixed interest rate of 2.25%, maturing in January 2018, secured by engines | ||||||||||||
Long Term Debt | ||||||||||||
Fixed rate (as a percent) | 2.25% | 2.25% | ||||||||||
Principal outstanding repayable | ||||||||||||
Notes payable | $ 11,709,000 | 13,082,000 | $ 11,709,000 | |||||||||
Maturity term | 4 years | |||||||||||
Number of engines pledged as collateral | engine | 3 | |||||||||||
Note payable at a fixed interest rate of 2.25%, maturing in January 2018, secured by engines | One-month LIBOR | ||||||||||||
Long Term Debt | ||||||||||||
Fixed rate (as a percent) | 2.25% | |||||||||||
Prior WEST notes | ||||||||||||
Principal outstanding repayable | ||||||||||||
Notes payable | $ 435,900,000 | |||||||||||
Notes payable Member | ||||||||||||
Principal outstanding repayable | ||||||||||||
Total notes payable | 900,300,000 | 900,300,000 | ||||||||||
Notes payable | $ 900,300,000 | $ 900,300,000 | ||||||||||
Notes payable Member | Minimum | ||||||||||||
Long Term Debt | ||||||||||||
Fixed rate (as a percent) | 2.60% | 2.60% | ||||||||||
Principal outstanding repayable | ||||||||||||
Maturity term | 1 year | |||||||||||
Notes payable Member | Maximum | ||||||||||||
Long Term Debt | ||||||||||||
Fixed rate (as a percent) | 5.50% | 5.50% | ||||||||||
Principal outstanding repayable | ||||||||||||
Maturity term | 7 years 6 months | |||||||||||
Revolving credit facility | ||||||||||||
Long Term Debt | ||||||||||||
Basis spread on variable rate (as a percent) | 2.75% | |||||||||||
Maximum borrowing capacity under credit facility | $ 890,000,000 | |||||||||||
Amount of debt available under accordion feature | 1,000,000,000 | |||||||||||
Principal outstanding repayable | ||||||||||||
Leverage ratio | 3.15 | 3.15 | ||||||||||
Remaining borrowing capacity available | $ 282,000,000 | 151,000,000 | $ 282,000,000 | |||||||||
Maximum borrowing capacity under credit facility before amendment | $ 700,000,000 | |||||||||||
Revolving credit facility | One-month LIBOR | ||||||||||||
Long Term Debt | ||||||||||||
Basis spread on variable rate (as a percent) | 2.75% | |||||||||||
Revolving credit facility | WEST | ||||||||||||
Principal outstanding repayable | ||||||||||||
Number of engines pledged as collateral | engine | 22 | |||||||||||
Revolving credit facility | Credit agreement | Minimum | ||||||||||||
Principal outstanding repayable | ||||||||||||
Interest coverage ratio | 2.25 | 2.25 | ||||||||||
Revolving credit facility | Credit agreement | Maximum | ||||||||||||
Principal outstanding repayable | ||||||||||||
Leverage ratio | 4.25 | 4.25 | ||||||||||
Credit facility at a floating rate of interest of LIBOR plus 2.75%, secured by engines | ||||||||||||
Long Term Debt | ||||||||||||
Maximum borrowing capacity under credit facility | $ 890,000,000 | $ 890,000,000 | ||||||||||
Principal outstanding repayable | ||||||||||||
Notes payable | $ 608,000,000 | 549,000,000 | $ 608,000,000 | |||||||||
Credit facility at a floating rate of interest of LIBOR plus 2.75%, secured by engines | LIBOR | ||||||||||||
Long Term Debt | ||||||||||||
Basis spread on variable rate (as a percent) | 2.75% | |||||||||||
Term notes | WOLF | ||||||||||||
Principal outstanding repayable | ||||||||||||
Notes payable | $ 24,000,000 | |||||||||||
Face amount | $ 36,000,000 | |||||||||||
Loan Paid off | $ 23,100,000 | |||||||||||
Discount (in percentage) | 5.00% | |||||||||||
Number of term notes held | item | 2 |
Derivative Instruments (Details
Derivative Instruments (Details) | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Derivative instruments | |||
Number of interest rate swap agreements | item | 1 | ||
Notional amount outstanding | $ 100,000,000 | ||
Remaining maturity term | 52 months | ||
(Benefit) expense recorded to net finance costs | $ 25,000 | $ 0 | $ 500,000 |
Net fair value of swap liability | 68,000 | ||
Interest rate contracts | |||
Derivative instruments | |||
Borrowings at variable interest rates | $ 619,700,000 | $ 562,100,000 |
Derivative Instruments (Detai49
Derivative Instruments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Interest rate contracts | |||
Effects of derivative instruments | |||
Amount of loss recognized in the income statement as an increase in interest expense | $ 25,000 | $ 0 | $ 500,000 |
Cash Flow Hedging | |||
Effects of derivative instruments | |||
Amount of loss recognized in the income statement as an increase in interest expense | 25,000 | (499,000) | |
Cash Flow Hedging | Interest rate contracts | Interest expense Member | |||
Effects of derivative instruments | |||
Amount of loss recognized in the income statement as an increase in interest expense | $ 25,000 | $ (499,000) |
Derivative Instruments (Detai50
Derivative Instruments (Details) - USD ($) | 12 Months Ended | 36 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | |
Effects of derivative instruments | ||||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | $ (799,000) | $ (796,000) | $ (499,000) | |
Cash Flow Hedging | ||||
Effects of derivative instruments | ||||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | 69,000 | |||
Amount of Loss (Gain) Reclassified from Accumulated OCI into Income (Effective Portion) | 25,000 | (499,000) | ||
Significant ineffectiveness on held hedges | $ 0 | |||
Cash Flow Hedging | Interest expense Member | ||||
Effects of derivative instruments | ||||
Amount of Loss (Gain) Reclassified from Accumulated OCI into Income (Effective Portion) | 25,000 | $ (499,000) | ||
Cash Flow Hedging | Interest rate contracts | ||||
Effects of derivative instruments | ||||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | $ 69,000 |
Income Taxes (Components of Inc
Income Taxes (Components of Income Before Taxes and of Income Tax Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes | |||
U.S. | $ 21,634 | $ 11,319 | $ 10,433 |
Non U.S. | 2,312 | 1,456 | 1,307 |
Income before income taxes | 23,946 | 12,775 | 11,740 |
Federal | |||
Current | 324 | (208) | 109 |
Deferred | 8,807 | 4,871 | 3,797 |
Total | 9,131 | 4,663 | 3,906 |
State | |||
Current | 14 | 13 | 179 |
Deferred | 292 | 1,163 | 164 |
Total | 306 | 1,176 | 343 |
Foreign | |||
Current | 440 | 476 | 311 |
Total | 440 | 476 | 311 |
Total | |||
Current | 778 | 281 | 599 |
Deferred | 9,099 | 6,034 | 3,961 |
Total | 9,877 | 6,315 | 4,560 |
Reconciliation of the federal income tax expense at the statutory rate to the effective income tax expense | |||
Statutory federal income tax expense | 8,142 | 4,343 | 3,992 |
State taxes, net of federal benefit | 202 | 776 | 118 |
Foreign tax paid | 440 | 476 | 101 |
Tax consequences of the sale of engines to WMES | (306) | (36) | |
Uncertain tax positions | (40) | (195) | (101) |
Permanent differences-nondeductible executive compensation | 1,201 | 1,117 | 768 |
Permanent differences and other | (68) | 104 | (282) |
Total | $ 9,877 | $ 6,315 | $ 4,560 |
Reconciliation of the federal income tax expense | |||
Statutory federal income tax expense (as a percent) | 34.00% | 34.00% | 34.00% |
State taxes, net of federal benefit (as a percent) | 0.80% | 6.10% | 1.00% |
Foreign tax paid (as a percent) | 1.80% | 3.70% | 0.90% |
Tax consequences of the sale of engines to WMES (as a percent) | (2.40%) | (0.30%) | |
Uncertain tax positions (as a percent) | (0.10%) | (1.50%) | (0.90%) |
Permanent differences-162(m) (as a percent) | 5.00% | 8.70% | 6.50% |
Permanent differences and other (as a percent) | (0.30%) | 0.80% | (2.40%) |
Effective income tax expense (benefit) (as a percent) | 41.20% | 49.40% | 38.80% |
Income Taxes (Summary of Unreco
Income Taxes (Summary of Unrecognized Tax Benefits and Temporary Differences) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Unrecognized tax benefits | ||
Balance at the beginning of the period | $ 274 | $ 464 |
Increases related to current year tax positions | 4 | 5 |
Decreases due to tax positions expired | (72) | (195) |
Balance at the end of the period | 206 | 274 |
Uncertain tax positions, reserved for tax exposure in Europe | 0 | |
Deferred tax assets: | ||
Unearned lease revenue | 1,839 | 1,511 |
State taxes | 1,035 | 944 |
Reserves and allowances | 1,659 | 898 |
Other accruals | 2,501 | 1,767 |
Alternative minimum tax credit | 377 | 377 |
Net operating loss carry forward | 35,693 | 35,827 |
Charitable contributions | 52 | 42 |
Total deferred tax assets | 43,156 | 41,366 |
Less: valuation allowance | (1,280) | (1,280) |
Net deferred tax assets | 41,876 | 40,086 |
Deferred tax liabilities: | ||
Depreciation and impairment on aircraft engines and equipment | (147,827) | (137,496) |
Other deferred tax assets (liabilities) | 422 | 981 |
Net deferred tax liabilities | (147,405) | (136,515) |
Other comprehensive income, deferred tax asset | 551 | 275 |
Net deferred tax liabilities | (104,978) | $ (96,154) |
Additional tax benefits reflected in net operating tax loss carryforwards pursuant to SFAS 123R | 3,000 | |
Tax effects of windfalls included in net operating loss carryforwards | 1,000 | |
Federal | ||
Deferred tax liabilities: | ||
Operating loss carryforwards | 105,000 | |
State | ||
Deferred tax liabilities: | ||
Operating loss carryforwards | $ 4,700 |
Fair Value of Financial Instr53
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value of Financial Instruments | ||
Fair value of notes payable | $ 864 | $ 890.1 |
Risk Management - Risk Concen54
Risk Management - Risk Concentrations and Interest Rate Risk (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Risk Management-Risk Concentrations and Interest Rate Risk | |||
Derivative, Notional Amount | $ 100,000,000 | ||
Interest rate contracts | |||
Risk Management-Risk Concentrations and Interest Rate Risk | |||
Credit Derivative, Term | 52 months | ||
Amount of loss recognized in the income statement as an increase in interest expense | $ 25,000 | $ 0 | $ 500,000 |
Cash Flow Hedging | |||
Risk Management-Risk Concentrations and Interest Rate Risk | |||
Amount of loss recognized in the income statement as an increase in interest expense | 25,000 | (499,000) | |
Cash Flow Hedging | Interest expense Member | Interest rate contracts | |||
Risk Management-Risk Concentrations and Interest Rate Risk | |||
Amount of loss recognized in the income statement as an increase in interest expense | $ 25,000 | $ (499,000) |
Commitments, Contingencies, G55
Commitments, Contingencies, Guarantees and Indemnities (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Equipment Held for Operating Lease | |
Remaining lease commitment | $ 2,939 |
Office space | Novato, California | |
Equipment Held for Operating Lease | |
Remaining lease commitment | 932 |
Office space | Singapore | |
Equipment Held for Operating Lease | |
Remaining lease commitment | 102 |
Office space | Shanghai, China | |
Equipment Held for Operating Lease | |
Remaining lease commitment | 86 |
Office space | Dublin, Ireland | |
Equipment Held for Operating Lease | |
Remaining lease commitment | 12 |
Office space | London, United Kingdom | |
Equipment Held for Operating Lease | |
Remaining lease commitment | 116 |
Office space | Blagnac, France | |
Equipment Held for Operating Lease | |
Remaining lease commitment | 16 |
Office and warehouse space | Boynton Beach, Florida | |
Equipment Held for Operating Lease | |
Remaining lease commitment | 822 |
Office and warehouse space | San Diego, California | |
Equipment Held for Operating Lease | |
Remaining lease commitment | 481 |
Office and warehouse space | Bridgend, Wales, United Kingdom | |
Equipment Held for Operating Lease | |
Remaining lease commitment | 368 |
Warehouse lease | Shanghai, China | |
Equipment Held for Operating Lease | |
Remaining lease commitment | $ 4 |
Equity (Details)
Equity (Details) - USD ($) | Oct. 11, 2016 | Sep. 27, 2012 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Common Stock Repurchase | |||||
Repurchase of common stock authorized by Board of Directors | $ 100,000,000 | ||||
Number of years for repurchase of common stock | 5 years | ||||
Common stock repurchased, value | $ 28,958,000 | $ 16,500,000 | $ 5,352,000 | ||
Shares issued | 1,000,000 | 0 | |||
Dividend rate (as a percent) | 6.50% | ||||
Temporary Equity, Par or Stated Value Per Share | $ 0.01 | $ 0.01 | |||
Liquidation preference | 20 | ||||
Redemption price | $ 20 | ||||
Common Stock | |||||
Common Stock Repurchase | |||||
Common stock repurchased (in shares) | 1,212,000 | 912,000 | 249,000 | ||
Common stock repurchased, value | $ 12,000 | $ 9,000 | $ 2,000 | ||
Preferred Stock | |||||
Common Stock Repurchase | |||||
Shares issued | 1,000 | ||||
Preferred stock dividends paid | $ 0 | ||||
Dividend declared | $ 0 | ||||
Redeemable Preferred Stock | |||||
Common Stock Repurchase | |||||
Shares issued | 1,000,000 | ||||
Dividend rate (as a percent) | 6.50% | ||||
Temporary Equity, Par or Stated Value Per Share | $ 0.01 | ||||
Purchase price | $ 20 | ||||
Net proceeds after deducting investor fees | $ 19,800,000 | ||||
Dutch Auction [Member] | |||||
Common Stock Repurchase | |||||
Weighted average price per share (in dollars per share) | $ 23.71 | ||||
Parent Company | |||||
Common Stock Repurchase | |||||
Shares issued | 1,000,000 | 0 | |||
Temporary Equity, Par or Stated Value Per Share | $ 0.01 |
Stock-Based Compensation Plan57
Stock-Based Compensation Plans - Restricted stock activity (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
The 2007 plan | ||||
Number Outstanding | ||||
Balance at the beginning of the period (in shares) | 396,595 | 525,356 | 515,130 | |
Shares granted | 136,645 | 146,440 | 237,708 | |
Shares vested | (213,528) | (275,201) | (221,732) | |
Shares cancelled | (20,377) | (5,750) | ||
Balance at the end of the period (in shares) | 299,335 | 396,595 | 525,356 | |
Intrinsic value of unvested awards (in dollars) | $ 6,058,336 | $ 7,131,200 | $ 8,786,611 | $ 7,060,474 |
The 2007 plan | Restricted stock | ||||
Number Outstanding | ||||
Balance at the beginning of the period (in shares) | 396,595 | 525,356 | 515,130 | |
Shares vested | (213,528) | (275,201) | (221,732) | |
Shares cancelled | (20,377) | (5,750) | ||
Balance at the end of the period (in shares) | 299,335 | 396,595 | 525,356 | |
Remaining average vesting period for recognition of unrecognized compensation expense | 1 year 6 months | |||
Unrecognized compensation expense (in dollars) | $ 3,800,000 | |||
The 2007 plan | Restricted stock | Awards Vesting Over Two Year Member | ||||
Number Outstanding | ||||
Shares granted | 20,000 | |||
Vesting period | 2 years | |||
The 2007 plan | Restricted stock | Awards Vesting Over Three Years [Member] | ||||
Number Outstanding | ||||
Shares granted | 85,000 | 125,000 | 174,500 | |
Vesting period | 3 years | 3 years | 3 years | |
The 2007 plan | Restricted stock | Awards vesting over four years [Member] | ||||
Number Outstanding | ||||
Shares granted | 13,250 | 5,000 | 13,000 | |
Vesting period | 4 years | 4 years | 4 years | |
The 2007 plan | Restricted stock | Awards vesting on first anniversary | ||||
Number Outstanding | ||||
Shares granted | 16,440 | 50,208 | ||
The 2007 plan | Restricted Stock Four Year Vesting [Member] | Awards vesting on first anniversary | ||||
Number Outstanding | ||||
Shares granted | 18,395 | |||
1996 Plan | ||||
Number Outstanding | ||||
Vesting period | 10 years |
Stock-Based Compensation Plan58
Stock-Based Compensation Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | May 28, 2015 | May 20, 2010 | May 24, 2007 | Jun. 30, 2006 | |
The 2007 plan | |||||||
Stock-based compensation plans | |||||||
Number of shares authorized | 2,800,000 | 2,800,000 | 800,000 | 2,000,000 | |||
Options | |||||||
Options cancelled (in shares) | (155,745) | ||||||
Outstanding at the end of the period (in shares) | 555,388 | 555,388 | |||||
1996 Plan | |||||||
Stock-based compensation plans | |||||||
Number of shares authorized | 3,025,000 | ||||||
Vesting period | 10 years | ||||||
Vesting rate (as a percent) | 25.00% | ||||||
Period of beginning of vesting of awards from grant date | 1 year | ||||||
Total intrinsic value of options exercised (in dollars) | $ 0.3 | $ 0.2 | |||||
Options | |||||||
Outstanding at the end of the period (in shares) | 0 | 0 | |||||
Employee Stock Purchase Plan | |||||||
Stock-based compensation plans | |||||||
Number of shares authorized | 250,000 | ||||||
Restricted stock | The 2007 plan | |||||||
Stock-based compensation plans | |||||||
Number of shares authorized | 2,400,357 | 2,400,357 |
Stock-Based Compensation Plan59
Stock-Based Compensation Plans (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Weighted Average Grant Date Fair Value | ||||
Stock compensation expense (in dollars) | $ 3,717,000 | $ 4,150,000 | $ 3,509,000 | |
The 2007 plan | ||||
Weighted Average Grant Date Fair Value | ||||
Balance at the beginning of the period (in dollars per share) | $ 17.98 | $ 13.71 | $ 13.71 | |
Stock compensation expense (in dollars) | $ 3,681,000 | $ 4,102,000 | $ 3,459,000 | |
Options cancelled (in shares) | 155,745 | |||
Shares granted (in dollars per share) | $ 21.55 | $ 18.53 | $ 19.84 | |
Shares cancelled (in dollars per share) | 17.79 | 14.02 | ||
Shares vested (in dollars per share) | 17.12 | 15.87 | 13.24 | |
Balance at the end of the period (in dollars per share) | $ 20.24 | $ 20.24 | $ 17.98 | $ 13.71 |
Aggregate Value | ||||
Balance at the beginning of the period (in dollars) | $ 7,131,200 | $ 8,786,611 | $ 7,060,474 | |
Shares granted (in dollars) | 2,944,941 | 2,713,159 | 4,710,362 | |
Shares cancelled (in dollars) | (362,536) | (80,630) | ||
Shares vested (in dollars) | (3,655,269) | (4,368,570) | (2,903,595) | |
Balance at the end of the period (in dollars) | $ 6,058,336 | 6,058,336 | 7,131,200 | 8,786,611 |
Employee Stock Purchase Plan | ||||
Weighted Average Grant Date Fair Value | ||||
Stock compensation expense (in dollars) | $ 36,000 | $ 48,000 | $ 50,000 | |
Shares granted (in dollars per share) | $ 6.35 | $ 6.17 | $ 3.19 | |
Aggregate Value | ||||
Maximum percentage of cash compensation allowed to be deducted for the purchase of common stock by eligible employees | 10.00% | |||
Maximum number of shares to be purchased by employee in one calendar year | 1,000 | |||
Maximum amount of shares to be purchased by employee in one calendar year (in dollars) | $ 25,000 | |||
Purchase price expressed as a percentage of the market price of the common stock on the purchase date or on the date of entry | 85.00% | |||
Shares issued | 11,014 | 10,374 | ||
Restricted stock | The 2007 plan | ||||
Unused Elements Abstract | ||||
Intrinsic value of unvested awards issued(in dollars) | $ 7,700,000 | $ 7,700,000 |
Employee 401(k) Plan (Details)
Employee 401(k) Plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee 401(k) Plan | |||
Maximum percentage of pretax salary, which can be deferred by employees | 20.00% | ||
Maximum amount of wages, which can be deferred by employees | $ 18,000 | ||
Maximum amount of wages, which can be deferred by employees at least 50 years of age | $ 24,000 | ||
Minimum age of employees for a specified contribution amount of wages | 50 years | ||
Percentage of employee's salary for which the company contributes a matching contribution | 50.00% | ||
Maximum percentage of employee's salary for which the company contributes a matching contribution | 8.00% | ||
Amount of employer contribution | $ 400,000 | $ 400,000 | $ 300,000 |
Quarterly Consolidated Financ61
Quarterly Consolidated Financial Information - Unaudited (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Consolidated Financial Information (Unaudited) | |||||||||||||||
Total revenue | $ 55,476 | $ 51,461 | $ 49,618 | $ 50,719 | $ 55,186 | $ 57,730 | $ 43,810 | $ 41,336 | $ 41,205 | $ 45,519 | $ 43,994 | $ 43,340 | $ 207,274 | $ 198,062 | $ 174,058 |
Net income (loss) attributable to common shareholders | $ 2,418 | $ 3,985 | $ 3,366 | $ 4,011 | $ 3,037 | $ 2,551 | $ (486) | $ 1,358 | $ (491) | $ 1,000 | $ 2,319 | $ 4,352 | $ 13,780 | $ 6,460 | $ 7,180 |
Basic earnings (loss) per common share (in dollars per share) | $ 0.40 | $ 0.63 | $ 0.50 | $ 0.57 | $ 0.39 | $ 0.33 | $ (0.06) | $ 0.17 | $ (0.06) | $ 0.13 | $ 0.29 | $ 0.55 | $ 2.10 | $ 0.83 | $ 0.91 |
Diluted earnings (loss) per common share (in dollars per share) | $ 0.39 | $ 0.62 | $ 0.49 | $ 0.55 | $ 0.38 | $ 0.32 | $ (0.06) | $ 0.17 | $ (0.06) | $ 0.12 | $ 0.28 | $ 0.54 | $ 2.05 | $ 0.81 | $ 0.88 |
Average common shares outstanding (in shares) | 6,149 | 6,307 | 6,685 | 7,149 | 7,739 | 7,839 | 7,841 | 7,848 | 7,839 | 7,938 | 7,976 | 7,914 | 6,570 | 7,817 | 7,917 |
Diluted average common shares outstanding (in shares) | 6,275 | 6,448 | 6,819 | 7,272 | 7,872 | 7,963 | 7,841 | 8,044 | 8,037 | 8,123 | 8,179 | 8,129 | 6,714 | 7,987 | 8,141 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 08, 2016 | Apr. 01, 2016 | Mar. 31, 2016 | |
Related Party and Similar Transactions | ||||||
Repurchased price | $ 24.95 | $ 21.59 | ||||
Number of shares repurchased | $ 40,000 | |||||
Percentage of difference in repurchase and closing price | 2.00% | |||||
Closing price | $ 25.46 | |||||
WMES | Other Revenue | ||||||
Related Party and Similar Transactions | ||||||
Asset Management Fees | $ 2,100,000 | $ 1,700,000 | $ 2,000,000 | |||
Chief Executive Officer [Member] | ||||||
Related Party and Similar Transactions | ||||||
Number of shares repurchased | $ 60,000 |
Operating Segments (Details)
Operating Segments (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Operating segments | |||||||||||||||
Number of operating segments | item | 2 | ||||||||||||||
Revenue: | |||||||||||||||
Lease rent revenue | $ 119,895 | $ 108,046 | $ 101,431 | ||||||||||||
Maintenance reserve revenue | 57,091 | 53,396 | 53,322 | ||||||||||||
Spare parts and equipment sales | 17,783 | 25,582 | 8,917 | ||||||||||||
Gain on sale of leased equipment | 3,482 | 8,320 | 5,882 | ||||||||||||
Other revenue | 9,023 | 2,718 | 4,506 | ||||||||||||
Total revenue | $ 55,476 | $ 51,461 | $ 49,618 | $ 50,719 | $ 55,186 | $ 57,730 | $ 43,810 | $ 41,336 | $ 41,205 | $ 45,519 | $ 43,994 | $ 43,340 | 207,274 | 198,062 | 174,058 |
Expenses: | |||||||||||||||
Depreciation expense | 66,280 | 69,424 | 65,314 | ||||||||||||
Cost Of Spare Parts and Equipment Sales | 13,293 | 17,849 | 7,474 | ||||||||||||
General and administrative | 47,780 | 42,744 | 35,859 | ||||||||||||
Interest Expense | 41,144 | 39,012 | 37,062 | ||||||||||||
Net finance costs | 41,281 | 37,861 | 37,062 | ||||||||||||
Other expense | 16,507 | 18,584 | 17,938 | ||||||||||||
Total expenses | 185,141 | 186,462 | 163,647 | ||||||||||||
Earnings from operations | 22,133 | 11,600 | 10,411 | ||||||||||||
Total assets | 1,337,887 | 1,294,285 | 1,245,841 | 1,337,887 | 1,294,285 | 1,245,841 | |||||||||
Intersegment Eliminations [Member] | |||||||||||||||
Revenue: | |||||||||||||||
Other revenue | (1,635) | (458) | (736) | ||||||||||||
Total revenue | (1,635) | (458) | (736) | ||||||||||||
Expenses: | |||||||||||||||
Earnings from operations | (1,635) | (458) | (736) | ||||||||||||
Leasing and Related Operations | |||||||||||||||
Revenue: | |||||||||||||||
Lease rent revenue | 108,046 | ||||||||||||||
Maintenance reserve revenue | 53,396 | ||||||||||||||
Spare parts and equipment sales | 9,975 | ||||||||||||||
Gain on sale of leased equipment | 8,320 | ||||||||||||||
Other revenue | 2,517 | ||||||||||||||
Total revenue | 182,254 | ||||||||||||||
Expenses: | |||||||||||||||
Depreciation expense | 69,135 | ||||||||||||||
Cost Of Spare Parts and Equipment Sales | 5,734 | ||||||||||||||
General and administrative | 39,974 | ||||||||||||||
Net finance costs | 37,474 | ||||||||||||||
Other expense | 18,584 | ||||||||||||||
Total expenses | 170,901 | ||||||||||||||
Earnings from operations | 11,353 | ||||||||||||||
Leasing and Related Operations | Operating Segments [Member] | |||||||||||||||
Revenue: | |||||||||||||||
Lease rent revenue | 119,895 | 101,431 | |||||||||||||
Maintenance reserve revenue | 57,091 | 53,322 | |||||||||||||
Spare parts and equipment sales | 3,335 | ||||||||||||||
Gain on sale of leased equipment | 3,482 | 5,882 | |||||||||||||
Other revenue | 8,711 | 3,581 | |||||||||||||
Total revenue | 192,514 | 164,216 | |||||||||||||
Expenses: | |||||||||||||||
Depreciation expense | 65,939 | 65,025 | |||||||||||||
Cost Of Spare Parts and Equipment Sales | 2,394 | ||||||||||||||
General and administrative | 44,703 | 33,211 | |||||||||||||
Interest Expense | 36,779 | ||||||||||||||
Net finance costs | 40,813 | ||||||||||||||
Other expense | 16,507 | 17,830 | |||||||||||||
Total expenses | 170,356 | 152,845 | |||||||||||||
Earnings from operations | 22,158 | 11,371 | |||||||||||||
Total assets | 1,307,460 | 1,267,414 | 1,226,701 | 1,307,460 | 1,267,414 | 1,226,701 | |||||||||
Spare Parts Sales | |||||||||||||||
Revenue: | |||||||||||||||
Spare parts and equipment sales | 15,607 | ||||||||||||||
Other revenue | 659 | ||||||||||||||
Total revenue | 16,266 | ||||||||||||||
Expenses: | |||||||||||||||
Depreciation expense | 289 | ||||||||||||||
Cost Of Spare Parts and Equipment Sales | 12,115 | ||||||||||||||
General and administrative | 2,770 | ||||||||||||||
Net finance costs | 387 | ||||||||||||||
Total expenses | 15,561 | ||||||||||||||
Earnings from operations | 705 | ||||||||||||||
Spare Parts Sales | Operating Segments [Member] | |||||||||||||||
Revenue: | |||||||||||||||
Spare parts and equipment sales | 14,448 | 8,917 | |||||||||||||
Other revenue | 1,947 | 1,661 | |||||||||||||
Total revenue | 16,395 | 10,578 | |||||||||||||
Expenses: | |||||||||||||||
Depreciation expense | 341 | 289 | |||||||||||||
Cost Of Spare Parts and Equipment Sales | 10,899 | 7,474 | |||||||||||||
General and administrative | 3,077 | 2,648 | |||||||||||||
Interest Expense | 283 | ||||||||||||||
Net finance costs | 468 | ||||||||||||||
Other expense | 108 | ||||||||||||||
Total expenses | 14,785 | 10,802 | |||||||||||||
Earnings from operations | 1,610 | (224) | |||||||||||||
Total assets | $ 30,427 | $ 26,871 | $ 19,140 | $ 30,427 | $ 26,871 | $ 19,140 |
SCHEDULE I - Parent Company I64
SCHEDULE I - Parent Company Information - Condensed Balance Sheets (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Oct. 31, 2014 | Dec. 31, 2013 |
ASSETS | |||||
Cash and cash equivalents | $ 10,076,000 | $ 9,732,000 | $ 13,493,000 | $ 12,801,000 | |
Equipment held for operating lease, less accumulated depreciation | 1,136,603,000 | 1,109,168,000 | 1,057,381,000 | $ 49,100,000 | |
Equipment held for sale | 30,710,000 | 23,454,000 | |||
Maintenance Rights | 17,670,000 | 12,140,000 | |||
Operating lease related receivable, net of allowances | 16,484,000 | 13,626,000 | |||
Spare parts inventory | 25,443,000 | 20,826,000 | |||
Investments | 45,406,000 | 41,295,000 | |||
Deferred income taxes | 43,156,000 | 41,366,000 | |||
Property, equipment & furnishings, less accumulated depreciation | 16,802,000 | 20,247,000 | |||
Intangible assets, net | 2,182,000 | 932,000 | |||
Other assets, net | 14,213,000 | 9,839,000 | |||
Total assets | 1,337,887,000 | 1,294,285,000 | 1,245,841,000 | ||
Liabilities: | |||||
Accounts payable and accrued expenses | 17,792,000 | 21,665,000 | |||
Derivatives | 0 | ||||
Deferred income taxes | 104,978,000 | 96,154,000 | |||
Notes payable | 900,255,000 | 866,089,000 | |||
Maintenance reserves | 71,602,000 | 71,054,000 | |||
Security deposits | 21,417,000 | 25,010,000 | |||
Unearned revenue | 5,823,000 | 5,090,000 | |||
Total liabilities | 1,121,867,000 | 1,085,062,000 | |||
Redeemable preferred stock ($0.01 par value, 1,000,000 shares authorized; 1,000,000 and nil shares issued and outstanding at December 31, 2016 and 2015, respectively) | 19,760,000 | ||||
Shareholders' equity: | |||||
Common stock ($0.01 par value, 20,000,000 shares authorized; 6,401,929 and 7,548,395 shares issued and outstanding at December 31, 2016 and 2015, respectively) | 64,000 | 75,000 | |||
Paid-in capital in excess of par | 2,512,000 | 28,720,000 | |||
Retained earnings | 194,729,000 | 180,949,000 | |||
Accumulated other comprehensive loss, net of income (loss) tax expense (benefit) | (1,045,000) | (521,000) | |||
Total shareholders' equity | 196,260,000 | 209,223,000 | 216,648,000 | 212,459,000 | |
Total liabilities, redeemable preferred stock and shareholders' equity | 1,337,887,000 | 1,294,285,000 | |||
Parent Company | |||||
ASSETS | |||||
Cash and cash equivalents | 4,574,000 | 2,894,000 | $ 2,411,000 | $ 1,520,000 | |
Equipment held for operating lease, less accumulated depreciation | 811,091,000 | 753,024,000 | |||
Equipment held for sale | 22,446,000 | 10,938,000 | |||
Maintenance Rights | 16,468,000 | 22,680,000 | |||
Operating lease related receivable, net of allowances | 7,853,000 | 4,170,000 | |||
Spare parts inventory | 17,554,000 | 16,420,000 | |||
Due from affiliate | 24,723,000 | 20,286,000 | |||
Investments | 45,406,000 | 41,295,000 | |||
Investment in subsidiaries | (2,879,000) | (1,280,000) | |||
Property, equipment & furnishings, less accumulated depreciation | 16,096,000 | 19,964,000 | |||
Intangible assets, net | 1,021,000 | 271,000 | |||
Other assets, net | 12,289,000 | 8,118,000 | |||
Total assets | 976,642,000 | 898,780,000 | |||
Liabilities: | |||||
Accounts payable and accrued expenses | 13,428,000 | 17,659,000 | |||
Deferred income taxes | 43,265,000 | 37,358,000 | |||
Notes payable | 626,876,000 | 572,759,000 | |||
Maintenance reserves | 54,655,000 | 38,072,000 | |||
Security deposits | 18,555,000 | 20,612,000 | |||
Unearned revenue | 3,843,000 | 3,090,000 | |||
Total liabilities | 760,622,000 | 689,550,000 | |||
Redeemable preferred stock ($0.01 par value, 1,000,000 shares authorized; 1,000,000 and nil shares issued and outstanding at December 31, 2016 and 2015, respectively) | 19,760,000 | ||||
Shareholders' equity: | |||||
Common stock ($0.01 par value, 20,000,000 shares authorized; 6,401,929 and 7,548,395 shares issued and outstanding at December 31, 2016 and 2015, respectively) | 64,000 | 75,000 | |||
Paid-in capital in excess of par | 2,512,000 | 28,727,000 | |||
Retained earnings | 194,729,000 | 180,949,000 | |||
Accumulated other comprehensive loss, net of income (loss) tax expense (benefit) | (1,045,000) | (521,000) | |||
Total shareholders' equity | 196,260,000 | 209,230,000 | |||
Total liabilities, redeemable preferred stock and shareholders' equity | $ 976,642,000 | $ 898,780,000 |
SCHEDULE I - Parent Company I65
SCHEDULE I - Parent Company Information - Condensed Balance Sheets - Additional Information (Details) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Par value | $ 0.01 | $ 0.01 |
Temporary Equity, Shares Authorized | 1,000,000 | 1,000,000 |
Temporary Equity, Shares Issued | 1,000,000 | 0 |
Temporary Equity, Shares Outstanding | 1,000,000 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 6,401,929 | 7,548,395 |
Common stock, shares outstanding | 6,401,929 | 7,548,395 |
Parent Company | ||
Par value | $ 0.01 | |
Temporary Equity, Shares Authorized | 1,000,000 | |
Temporary Equity, Shares Issued | 1,000,000 | 0 |
Temporary Equity, Shares Outstanding | 1,000,000 | |
Common stock, par value (in dollars per share) | $ 0.01 | |
Common stock, shares authorized | 20,000,000 | |
Common stock, shares issued | 6,401,929 | 7,548,395 |
Common stock, shares outstanding | 6,401,929 | 7,548,395 |
SCHEDULE I - Parent Company I66
SCHEDULE I - Parent Company Information - Condensed Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
REVENUE | |||||||||||||||
Lease rent revenue | $ 119,895 | $ 108,046 | $ 101,431 | ||||||||||||
Maintenance reserve revenue | 57,091 | 53,396 | 53,322 | ||||||||||||
Spare parts and equipment sales | 17,783 | 25,582 | 8,917 | ||||||||||||
Gain on sale of leased equipment | 3,482 | 8,320 | 5,882 | ||||||||||||
Other revenue | 9,023 | 2,718 | 4,506 | ||||||||||||
Total revenue | $ 55,476 | $ 51,461 | $ 49,618 | $ 50,719 | $ 55,186 | $ 57,730 | $ 43,810 | $ 41,336 | $ 41,205 | $ 45,519 | $ 43,994 | $ 43,340 | 207,274 | 198,062 | 174,058 |
EXPENSES | |||||||||||||||
Cost Of Spare Parts and Equipment Sales | 13,293 | 17,849 | 7,474 | ||||||||||||
Write-down of equipment | 9,514 | 9,181 | 5,602 | ||||||||||||
General and administrative | 47,780 | 42,744 | 35,859 | ||||||||||||
Technical expense | 6,993 | 9,403 | 12,336 | ||||||||||||
Net finance costs: | |||||||||||||||
Interest expense | 41,144 | 39,012 | 37,062 | ||||||||||||
Total net finance costs | 41,281 | 37,861 | 37,062 | ||||||||||||
Total expenses | 185,141 | 186,462 | 163,647 | ||||||||||||
Earnings from operations | 22,133 | 11,600 | 10,411 | ||||||||||||
Earnings from joint ventures | 1,813 | 1,175 | 1,329 | ||||||||||||
Income before income taxes | 23,946 | 12,775 | 11,740 | ||||||||||||
Income tax (expense) benefit | (9,877) | (6,315) | (4,560) | ||||||||||||
Net income | 14,069 | 6,460 | 7,180 | ||||||||||||
Preferred stock dividends | 281 | ||||||||||||||
Accretion of preferred stock issuance costs | 8 | ||||||||||||||
Net income attributable to common shareholders | $ 2,418 | $ 3,985 | $ 3,366 | $ 4,011 | $ 3,037 | $ 2,551 | $ (486) | $ 1,358 | $ (491) | $ 1,000 | $ 2,319 | $ 4,352 | 13,780 | 6,460 | 7,180 |
Parent Company | |||||||||||||||
REVENUE | |||||||||||||||
Lease rent revenue | 76,283 | 63,443 | 50,492 | ||||||||||||
Maintenance reserve revenue | 30,742 | 29,937 | 22,229 | ||||||||||||
Spare parts and equipment sales | 8,404 | 20,210 | 7,588 | ||||||||||||
Gain on sale of leased equipment | 3,322 | 2,420 | 2,276 | ||||||||||||
Other revenue | 10,660 | 7,017 | 5,227 | ||||||||||||
Total revenue | 129,411 | 123,027 | 87,812 | ||||||||||||
EXPENSES | |||||||||||||||
Depreciation expense | 43,451 | 40,623 | 29,276 | ||||||||||||
Cost Of Spare Parts and Equipment Sales | 6,591 | 13,559 | 6,354 | ||||||||||||
Write-down of equipment | 5,989 | 6,764 | 4,681 | ||||||||||||
General and administrative | 39,201 | 35,898 | 29,479 | ||||||||||||
Technical expense | 4,637 | 6,805 | 4,455 | ||||||||||||
Net finance costs: | |||||||||||||||
Interest expense | 23,358 | 18,448 | 13,500 | ||||||||||||
Total expenses | 123,227 | 122,097 | 87,745 | ||||||||||||
Earnings from operations | 6,184 | 930 | 67 | ||||||||||||
Earnings from joint ventures | 1,813 | 1,175 | 1,329 | ||||||||||||
Income before income taxes | 7,997 | 2,105 | 1,396 | ||||||||||||
Income tax (expense) benefit | 4,710 | 2,277 | 1,346 | ||||||||||||
Equity in income of subsidiaries, net of tax of $199, $3,357, and $8,749 at December 31, 2013, 2012 and 2011, respectively | 10,782 | 6,632 | 7,130 | ||||||||||||
Net income | 14,069 | 6,460 | 7,180 | ||||||||||||
Preferred stock dividends | 281 | ||||||||||||||
Accretion of preferred stock issuance costs | 8 | ||||||||||||||
Net income attributable to common shareholders | $ 13,780 | $ 6,460 | $ 7,180 |
SCHEDULE I - Parent Company I67
SCHEDULE I - Parent Company Information - Condensed Statements of Income - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Parent Company | |||
Equity in income of subsidiaries | |||
Equity in income of subsidiaries, tax | $ 5,168 | $ 4,037 | $ 3,214 |
SCHEDULE I - Parent Company I68
SCHEDULE I - Parent Company Information - Condensed Statements of Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed Financial Statements, Captions [Line Items] | |||
Net income attributable to common shareholders | $ 14,069 | $ 6,460 | $ 7,180 |
Other comprehensive income (loss): | |||
Currency translation adjustment | (868) | (796) | |
Derivative instruments | |||
Unrealized losses on derivative instruments | 69 | ||
Reclassification adjustment for losses (gains) included in net income | 499 | ||
Tax benefit related to items of other comprehensive income (loss) | 275 | 275 | 174 |
Other comprehensive income (loss) | (524) | (521) | (325) |
Total comprehensive income | 13,545 | 5,939 | 6,855 |
Parent Company | |||
Condensed Financial Statements, Captions [Line Items] | |||
Net income attributable to common shareholders | 14,069 | 6,460 | 7,180 |
Other comprehensive income (loss): | |||
Currency translation adjustment | (868) | (796) | |
Derivative instruments | |||
Unrealized losses on derivative instruments | 69 | ||
Reclassification adjustment for losses (gains) included in net income | (499) | ||
Net loss recognized in other comprehensive income | (799) | (796) | (499) |
Tax benefit related to items of other comprehensive income (loss) | 275 | 275 | 174 |
Other comprehensive income (loss) from parent | (524) | (521) | (325) |
Total comprehensive income | $ 13,545 | $ 5,939 | $ 6,855 |
SCHEDULE I - Parent Company I69
SCHEDULE I - Parent Company Information - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net income attributable to common shareholders | $ 14,069 | $ 6,460 | $ 7,180 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation expense | 66,280 | 69,424 | 65,314 |
Write-down of equipment | 9,514 | 9,181 | 5,602 |
Stock-based compensation expenses | 3,717 | 4,150 | 3,509 |
Amortization of deferred costs | 4,271 | 4,307 | 4,319 |
Amortization of interest rate derivative cost | (499) | ||
Allowances and provisions | (571) | 697 | (81) |
Gain on sale of leased equipment | (3,482) | (8,320) | (5,882) |
Loss (gain) on debt extinguishment | 137 | (1,151) | |
Income from joint ventures | (1,813) | (1,175) | (1,329) |
Deferred income taxes | 9,100 | 6,027 | 4,110 |
Changes in assets and liabilities: | |||
Receivables | (2,287) | (5,769) | 4,812 |
Spare parts inventory | (5,093) | 3,828 | (5,964) |
Intangibles | (1,511) | ||
Other assets | (1,707) | (2,635) | (590) |
Accounts payable and accrued expenses | 2,329 | 1,677 | (1,998) |
Maintenance reserves | 548 | 4,580 | (10,861) |
Security deposits | (4,048) | 5,747 | 1,158 |
Unearned lease revenue | 732 | 748 | 793 |
Net cash provided by operating activities | 100,913 | 107,412 | 62,762 |
Cash flows from investing activities: | |||
Proceeds from sale of equipment held for operating lease (net of selling expenses) | 62,525 | 41,608 | 43,632 |
Capital contribution to joint ventures | (5,545) | (630) | (17,623) |
Distributions received from joint venture | 1,167 | 1,304 | 847 |
Maintenance rights payments received | 5,802 | ||
Purchase of equipment held for operating lease | (173,662) | (174,772) | (119,008) |
Purchase of maintenance rights | (5,530) | (8,844) | (9,098) |
Purchase of property, equipment and furnishings | (1,006) | (3,988) | (13,831) |
Net cash used in investing activities | (123,396) | (156,283) | (108,715) |
Cash flows from financing activities: | |||
Proceeds from issuance of notes payable | 149,000 | 192,700 | 154,395 |
Debt issuance cost | (3,808) | (13) | (5,074) |
Proceeds from shares issued under stock compensation plans | 155 | 518 | 410 |
Cancellation of restricted stock units in satisfaction of withholding tax | (1,369) | (1,558) | (1,544) |
Security deposit | 455 | (1,606) | 4,553 |
Repurchase of common stock | (28,958) | (16,500) | (5,352) |
Excess tax benefit from stock-based compensation | 236 | 26 | 311 |
Proceeds from Issuance of Redeemable Convertible Preferred Stock | 19,752 | ||
Principal payments on notes payable | (113,981) | (153,816) | (101,054) |
Net cash provided by (used in) financing activities | 22,827 | 45,110 | 46,645 |
Increase/(Decrease) in cash and cash equivalents | 344 | (3,761) | 692 |
Cash and cash equivalents at beginning of period | 9,732 | 13,493 | 12,801 |
Cash and cash equivalents at end of period | 10,076 | 9,732 | 13,493 |
Net cash paid for: | |||
Interest | 37,319 | 35,568 | 33,132 |
Income Taxes | 459 | 353 | 210 |
Supplemental disclosures of non-cash investing activities: | |||
Engines and equipment, transferred from Held for Operating Lease to Held for Sale but not settled | 28,560 | 22,079 | 3,071 |
Engines and equipment, transferred to (from) the parent to its subsidiaries | 229 | 41,410 | 120,880 |
Equipment Held For Sale Transfer To Spare Parts Inventory | 0 | 6,061 | 9,649 |
Transferred from property, equipment and furnishings to Assets held for Lease | 2,925 | ||
Temporary Equity, Dividends, Adjustment | 281 | ||
Temporary Equity, Accretion to Redemption Value, Adjustment | 8 | ||
Dividends, Preferred Stock | 281 | ||
Parent Company | |||
Cash flows from operating activities: | |||
Net income attributable to common shareholders | 14,069 | 6,460 | 7,180 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Equity in income of subsidiaries | (10,782) | (6,632) | (7,130) |
Depreciation expense | 43,451 | 40,623 | 29,276 |
Write-down of equipment | 5,989 | 6,764 | 4,681 |
Stock-based compensation expenses | 3,717 | 4,150 | 3,509 |
Amortization of deferred costs | 2,704 | 2,646 | 2,391 |
Amortization of interest rate derivative cost | (499) | ||
Allowances and provisions | (1) | (17) | 34 |
Gain on sale of leased equipment | (3,322) | (2,420) | (2,276) |
Loss (gain) on debt extinguishment | 137 | ||
Income from joint ventures | (1,813) | (1,175) | (1,329) |
Deferred income taxes | 4,710 | 1,806 | 1,478 |
Changes in assets and liabilities: | |||
Receivables | (4,884) | (865) | (1,204) |
Spare parts inventory | (1,608) | 4,547 | (5,533) |
Intangibles | (750) | ||
Other assets | (2,648) | (2,420) | (942) |
Accounts payable and accrued expenses | 3,723 | 4,471 | 2,425 |
Due to / from subsidiaries | (4,437) | (1,242) | (17,651) |
Maintenance reserves | 16,583 | 5,227 | 17,563 |
Security deposits | (2,283) | 5,354 | 2,303 |
Unearned lease revenue | 878 | 817 | 1,048 |
Net cash provided by operating activities | 63,433 | 68,094 | 35,324 |
Cash flows from investing activities: | |||
Increase in investment in subsidiaries | (2,329) | (23,923) | (9,666) |
Distributions received from subsidiaries | 15,500 | 3,791 | 17,582 |
Proceeds from sale of equipment held for operating lease (net of selling expenses) | 60,893 | 18,792 | 21,360 |
Capital contribution to joint ventures | (5,545) | (630) | (17,623) |
Distributions received from joint venture | 1,167 | 1,304 | 847 |
Maintenance rights payments received | 5,802 | ||
Purchase of equipment held for operating lease | (167,874) | (161,888) | (101,710) |
Purchase of maintenance rights | (5,530) | (8,844) | (3,296) |
Purchase of property, equipment and furnishings | (443) | (3,736) | (13,767) |
Net cash used in investing activities | (104,161) | (169,332) | (106,273) |
Cash flows from financing activities: | |||
Proceeds from issuance of notes payable | 149,000 | 192,700 | 154,395 |
Debt issuance cost | (3,808) | (13) | (5,074) |
Proceeds from shares issued under stock compensation plans | 155 | 518 | 410 |
Cancellation of restricted stock units in satisfaction of withholding tax | (1,369) | (1,558) | (1,544) |
Security deposit | 455 | (1,606) | 4,553 |
Repurchase of common stock | (28,958) | (16,500) | (5,352) |
Excess tax benefit from stock-based compensation | 236 | 26 | 311 |
Proceeds from Issuance of Redeemable Convertible Preferred Stock | 19,752 | ||
Principal payments on notes payable | (93,055) | (71,846) | (75,859) |
Net cash provided by (used in) financing activities | 42,408 | 101,721 | 71,840 |
Increase/(Decrease) in cash and cash equivalents | 1,680 | 483 | 891 |
Cash and cash equivalents at beginning of period | 2,894 | 2,411 | 1,520 |
Cash and cash equivalents at end of period | 4,574 | 2,894 | 2,411 |
Net cash paid for: | |||
Interest | 20,619 | 16,462 | 11,110 |
Income Taxes | 20 | 75 | 76 |
Supplemental disclosures of non-cash investing activities: | |||
Engines and equipment, transferred from Held for Operating Lease to Held for Sale but not settled | 18,194 | 21,786 | 3,071 |
Equipment Held For Sale Transfer To Spare Parts Inventory | $ 6,061 | $ 9,649 | |
Temporary Equity, Dividends, Adjustment | 281 | ||
Temporary Equity, Accretion to Redemption Value, Adjustment | $ 8 |
SCHEDULE II - VALUATION ACCOU70
SCHEDULE II - VALUATION ACCOUNTS (Details) - Accounts receivable, allowance for doubtful accounts - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Valuation accounts | |||
Balance at Beginning of Period | $ 912 | $ 215 | $ 296 |
Additions Charged (Credited) to Expense | (125) | 697 | (26) |
Net (Deductions) Recoveries | (55) | ||
Balance at End of Period | $ 787 | $ 912 | $ 215 |