-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OOig7oQnjoQVyB5vyWenaP4yyE9UxoprL02bhoetD4bI9cMgvIiWSbEVlGO9H3kR g4mbI6ReSE1PM0e7f0mFIQ== 0000950005-97-000385.txt : 19970403 0000950005-97-000385.hdr.sgml : 19970403 ACCESSION NUMBER: 0000950005-97-000385 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970402 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILLIS LEASE FINANCE CORP CENTRAL INDEX KEY: 0001018164 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 680070656 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-28774 FILM NUMBER: 97573740 BUSINESS ADDRESS: STREET 1: 180 HARBOR DR STREET 2: STE 200 CITY: SAUSALITO STATE: CA ZIP: 94965 BUSINESS PHONE: 4153315281 MAIL ADDRESS: STREET 1: 180 HARBOR DR STREET 2: SUITE 200 CITY: SAUSALITO STATE: CA ZIP: 94965 10-K405/A 1 AMENDMENT TO ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB/A Amendment No. 1 [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1996 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: WILLIS LEASE FINANCE CORPORATION (Exact name of registrant as specified in its charter) California 68-0070656 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 180 Harbor Drive, Suite 200, Sausalito, CA 94965 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (415) 331-5281 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Title of Each Class Which Registered ------------------- ---------------- None Securities registered pursuant to Section 12(g) of the Act: Title of Each Class ------------------- None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Registration S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [X] The aggregate market value of voting stock held by non-affiliates of the registrant as of March 21, 1997 was approximately $31,980,464 (based on a closing sale price of $13.88 per share as reported on the NASDAQ National Market System). Shares of Common Stock held by each executive officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The following information relates to the Company's Common Stock, which is listed on the NASDAQ National Market under the symbol WLFC. As of March 21, 1997, there were 1,170 stockholders of record of the Company's Common Stock. The foregoing number does not include beneficial holders of the Company's common stock. The high and low sales price of the Common Stock for each quarter since the effective date of the Initial Public Offering (the "Offering"), September 18, 1996, as reported by NASDAQ, are set forth below: 1996 ---- High Low Third Quarter $ 10 $ 8 1/2 Fourth Quarter $ 12 7/8 $ 8 3/4 The Company did not declare any dividends for the year ended December 31, 1996. ITEM 6. SELECTED FINANCIAL DATA The following table summarizes selected consolidated financial data and operating information of the Company. The selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Form 10-K.
Years Ended December 31, ------------------------------------------------------ 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Revenue: Operating lease revenue $ 13,740 13,771 13,636 10,323 8,744 Gain (loss) on sale of leased engines 2 (483) 633 (281) 659 Spare parts sales 5,843 3,859 795 -- -- Sale of equipment acquired for resale 12,105 5,472 2,184 -- 3,598 Interest and other income 618 119 542 938 70 ------------------------------------------------------- $ 32,308 22,738 17,790 10,980 13,071 Expenses: Cost of spare parts sales $ 3,308 2,546 659 -- -- Cost of equipment acquired for resale 10,789 2,742 1,863 -- 3,140 All other expenses 13,351 14,168 13,295 9,857 9,117 Gain on modification of credit facility -- 2,203 -- -- -- Income before income taxes and minority interest 4,860 5,485 1,973 1,123 814 Net income 2,804 3,216 1,172 669 487 Balance Sheet Data: Total assets $124,933 91,437 83,542 68,632 69,711 Debt financing 73,186 69,911 69,456 59,840 64,349 Shareholders' equity 23,202 4,812 1,959 1,151 463 Lease Portfolio: Engine portfolio at the end of the period 32 31 26 25 26
11 Year Ended December 31, 1996 compared to Year Ended December 31, 1995 Revenue is summarized as follows:
Years ended December 31, ---------------------------------------------------------------- 1996 1995 ---------------------------------------------------------------- Amount % Amount % ------ --- ------ --- (dollars in thousands) Revenue: Operating lease revenue $13,740 42.5 $13,771 60.6 Gain (loss) on sale of leased engines 2 0.0 (483) (2.1) Spare parts sales 5,843 18.1 3,859 17.0 Sale of equipment acquired for resale 12,105 37.5 5,472 24.0 Interest and other income 618 1.9 119 0.5 ---------------------------------------------------------------- Total $32,308 100.00 $22,738 100.0 ================================================================
The Company's results of operation are significantly impacted by changes in the portfolio of equipment. Lease Portfolio. At December 31, 1995, the Company had 31 engines in its operating lease portfolio. During 1996, four engines were transferred from the lease portfolio to the equipment sale portfolio and subsequently sold. One engine was transferred at its net book value to WASI to be dismantled and is held for sale as spare parts inventory. Another engine was sold under a sale and leaseback agreement and is now reflected on the Company's balance sheet as an engine on capital lease. The remaining three engines were sold to third parties. In the third quarter of 1996, the Company acquired one engine for $2.8 million and in the fourth quarter, the Company acquired four engines for a total cost of approximately $16.3 million as well as two auxiliary power units (APU's) and a spare parts package for a total cost of approximately $3.2 million. At December 31, 1996, the Company owned 31 engines in its lease portfolio and had 1 engine on a capital lease. Operating Leases. Operating lease revenue for the year-ended December 31, 1996 decreased to $13.7 million from $13.8 million from the corresponding period in 1995. This decrease is primarily due to a decrease in revenue from one engine which was off-lease and in a repair facility for eight months in 1996 and two engines which were sold in 1996, offset slightly by five engines purchased and leased late in 1996. In 1996, expenses directly related to operating lease activity dropped 23% to $8.1 million from $10.6 million in 1995. The reduction in expenses in 1996 was due to a reduction in depreciation expenses of $1.6 million (33%) as a result of two engines subject to component depreciation in 1995 that were fully depreciated and the sale of two engines in the 3rd quarter of 1996. Interest expense dropped $1.2 million (22%) in 1996 from 1995, due primarily to the modification of the existing term loan in June 1995 resulting in more favorable interest rates. Residual sharing expenses, however, increased 77% to $723,000 in 1996 from the corresponding period in 1995 due to changes in the Company's portfolio of engines subject to such agreements. Gain (Loss) on Sale of Leased Engines. The loss in 1995 was attributable to unanticipated overhaul expenses of $373,000 required in order to prepare an engine for resale and a $110,000 loss on the sale of the engine. Spare Parts Sales. Revenues from spare parts sales increased 51% to $5.8 million and the gross margin rose to 43% in 1996 from 34% in the corresponding period in 1995, primarily due to a changed inventory mix and increased volume. 13 WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (2) Aircraft Engines Held for Operating Lease (Continued)
Years ended December 31, -------------------------------------------------------------- Region 1996 1995 1994 - ------ ---- ---- ---- Operating lease revenue less depreciation, interest, spare parts interest and residual share: United States $2,405,061 $463,336 $275,681 Canada 548,769 301,039 185,746 Mexico 306,007 348,900 307,843 Australia/New Zealand 471,293 271,355 410,112 Europe 1,409,631 1,521,563 675,408 South America 185,297 77,569 82,059 Asia 339,545 185,196 125,121 Off-lease and other (60,711) (231,210) (105,484) -------------------------------------------------------------- Total operating lease revenue less depreciation, interest, spare parts interest and residual share $5,604,892 $2,937,748 $1,956,486 ============================================================== Years ended December 31, -------------------------------------------------------------- Region 1996 1995 1994 - ------ ---- ---- ---- Net book value of engines: United States $31,332,388 $24,138,266 $23,601,123 Canada 7,115,984 7,356,011 7,596,038 Mexico 13,441,445 9,255,029 9,506,072 Australia/New Zealand 5,509,070 5,706,410 9,332,036 Europe 30,051,738 19,056,190 16,921,539 South America 2,033,831 1,951,012 4,829,647 Asia 4,109,446 4,243,830 7,202,126 Off-lease 2,498,527 2,997,631 -- -------------------------------------------------------------- Total net book value of engines owned and on Capitol Lease $96,092,429 $74,704,379 $78,988,581 ==============================================================
38 WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (13) Accounting for Stock Based Compensation (SFAS 123) In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation (SFAS 123). SFAS 123 establishes financial accounting and reporting standards for stock-based employee compensation plans. SFAS 123 encourages all entities to adopt a fair value based method of accounting for stock based compensation plans in which compensation cost is measured at the date the award is granted based on the value of the award and is recognized over the employee service period. However, SFAS 123 allows an entity to continue to use the method prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), with pro forma disclosures of net income and earnings per share as if the fair value based method had been applied. APB 25 requires compensation expense to be recognized over the employee service period based on the excess, if any, of the quoted market price of the stock at the date the award is granted or other measurement date, as applicable, over an amount an employee must pay to acquire the stock. SFAS 123 is effective for financial statements for fiscal years beginning after December 31, 1995. At December 31, 1996, the Company has two stock-based compensation plans and has issued warrants, which are described below. The Company applies APB 25 in accounting for its plans. Accordingly, no compensation cost has been recognized for its fixed stock option plans and its stock purchase plan. Had compensation cost for the Company's two stock-based compensation plans been determined consistent with SFAS 123, the Company's net income and earnings per share would have been reduced to $2,398,699 and $.63, respectively. Employee Stock Purchase Plan Under the 1996 Stock Purchase Plan, the Company is authorized to issue up to 75,000 shares of its Common Stock to its full-time employees, nearly all of whom are eligible to participate. Under the terms of the Plan, the employees may elect to have up to 10% of their annual base salary, to a maximum of $25,000 per year, withheld for the purchase of the Company's Common Stock. Purchase intervals are six months each, ending on January 31 and July 31. The purchase price is the lesser of 85% of the market price of the Common Stock at the beginning of each purchase interval or 85% of the market price of the Common Stock at the end of each purchase interval. The first stock purchase date was January 31, 1997; accordingly, the Company had sold no shares to employees under the plan through December 31, 1996. Under FASB Statement 123, compensation cost is recognized for the fair value of the employees' purchase rights, which was estimated using the Black Scholes model with the following assumptions for 1996: Dividend yield of zero; an expected life of 1.25 years; expected volatility of 84 percent; and weighted average risk-free interest rate of 6.22 percent. The weighted average fair value of those purchase rights granted in 1996 was $3.08. 1996 Stock Option/Stock Issuance Plan Under the 1996 Stock Option/Stock Issuance Plan, 525,000 shares of the Company's shares have been set aside to provide eligible persons with the opportunity to acquire a proprietary interest in the Company. The plan includes a Discretionary Option Grant Program, a Stock Issuance Program, and an Automatic Option Grant Program for eligible non-employee Board members. The fair value of each option grant was estimated on the date of grant using the Black Scholes option-pricing model with the following assumptions for 1996: weighted average risk-free interest rate of 6.22 percent; dividend yield of zero; expected life of 2.43 years, and volatility of 84 percent. 45 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. April 1, 1997 Willis Lease Finance Corporation By: /s/ CHARLES F. WILLIS, IV --------------------------------- Charles F. Willis, IV Chairman of the Board, President, and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the followings persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date Title Signature ---- ----- --------- Date: April 1, 1997 Chief Executive Officer /s/ CHARLES F. WILLIS, IV (Principal Executive Officer) --------------------- Charles F. Willis, IV Date: April 1, 1997 Executive Vice President and /s/ WILLIAM L. McELFRESH Director -------------------- William L. McElfresh Date: April 1, 1997 Chief Financial Officer and /s/ ELLIOT M. FISCHER Chief Accounting Officer ----------------- (Principal Financial and Elliot M. Fischer Principal Accounting Officer) Date: April 1, 1997 Director /s/ ROSS K. ANDERSON ---------------- Ross K. Anderson Date: April 1, 1997 Director /s/ WILLIAM M. LEROY ---------------- William M. LeRoy Date: April 1, 1997 Director /s/ WILLARD H. SMITH, JR -------------------- Willard H. Smith, Jr.
27 EX-23.1 2 ACCOUNTANTS' CONSENT Accountants' Consent -------------------- The Board of Directors Willis Lease Finance Corporation We consent to incorporation by reference in the registration statement on Form S-8 of Willis Lease Finance Corporation of our report dated March 6, 1997, relating to the balance sheets of Willis Lease Finance Corporation as of December 31, 1996 and 1995, and the related statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1996, which report appears in the December 31, 1996, annual report on Form 10-KSB of Willis Lease Finance Corporation. San Francisco, California March 28, 1997 EX-27 3 FINANCIAL DATA SCHEDULE
5 12-MOS DEC-31-1996 JAN-01-1996 DEC-31-1996 20,173,445 0 3,196,972 0 4,057,648 0 96,551,209 16,532,825 124,932,693 0 76,146,114 16,055,689 0 0 7,146,563 124,932,693 17,947,922 32,307,712 14,096,658 18,000,627 5,123,813 0 4,323,276 4,859,996 1,976,471 0 0 0 0 2,804,472 0.74 0.74
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