WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

SCHEDULE I — CONDENSED BALANCE SHEETS

Parent Company Information

(In thousands, except share data)


	December 31,		December 31,
	2015		2014
ASSETS
Cash and cash equivalents	$	2,894	$	2,411
Equipment held for operating lease, less accumulated depreciation		763,549		628,341
Equipment held for sale		22,680		15,768
Operating lease related receivable, net of allowances		4,502		3,379
Spare parts inventory		16,120		14,906
Due from affiliate		20,286		19,044
Investments		41,295		41,590
Investment in subsidiaries		118		6,054
Property, equipment & furnishings, less accumulated depreciation		19,964		17,867
Intangible assets, net		271		271
Other assets, net		13,577		13,528
Total assets	$	905,256	$	763,159

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued expenses	$	17,660	$	10,820
Deferred income taxes		37,272		26,132
Notes payable		578,218		457,364
Maintenance reserves		38,072		32,845
Security deposits		20,612		16,864
Unearned lease revenue		3,090		2,273
Total liabilities		694,924		546,298

Shareholders’ equity:
Common stock ($0.01 par value, 20,000,000 shares authorized; 7,548,395 and 8,346,304 shares issued and outstanding at December 31, 2015 and 2014, respectively)		75		83
Paid-in capital in excess of par		28,720		42,076
Retained earnings		182,058		174,702
Accumulated other comprehensive loss, net of income tax benefit		(521)		—
Total shareholders’ equity		210,332		216,861
Total liabilities and shareholders’ equity	$	905,256	$	763,159

WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

SCHEDULE I — CONDENSED STATEMENTS OF INCOME

Parent Company Information

(In thousands)


	Years Ended December 31,
	2015		2014		2013
REVENUE
Lease rent revenue	$	63,214	$	50,749	$	36,593
Maintenance reserve revenue		29,896		22,270		14,046
Spare parts and equipment sales		20,236		7,588		—
Gain on sale of leased equipment		2,488		2,147		3,472
Other revenue		7,017		5,227		8,022
Total revenue		122,851		87,981		62,133

EXPENSES
Depreciation expense		40,867		29,555		19,699
Cost of spare parts and equipment sales		13,576		6,354		—
Write-down of equipment		6,764		4,681		4,204
General and administrative		35,898		29,546		29,907
Technical expense		6,805		4,455		5,478
Interest expense		18,448		13,500		15,030
Total expenses		122,358		88,091		74,318

Earnings (loss) from operations		493		(110)		(12,185)

Earnings from joint ventures		1,175		1,329		3,526

Income (loss) before income taxes		1,668		1,219		(8,659)
Income tax expense (benefit)		2,090		1,708		(4,525)

Equity in income of subsidiaries, net of tax of $4,697, $3,553, and $199 at December 31, 2015, 2014 and 2013, respectively		7,778		7,736		19,760

Net income	$	7,356	$	7,247	$	15,626

WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

SCHEDULE I — CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Parent Company Information

(In thousands)



	Years Ended December 31,
	2015		2014		2013
Net income	$	7,356	$	7,247	$	15,626

Other comprehensive income (loss):
Currency translation adjustment		(796)		—		—
Unrealized losses on derivative instruments		—		—		(187)
Reclassification adjustment for losses (gains) included in net income		—		(499)		1,485
Net gain (loss) recognized in other comprehensive income		(796)		(499)		1,298
Tax benefit (expense) related to items of other comprehensive income (loss)		275		174		(435)
Other comprehensive income from parent		(521)		(325)		863

Total comprehensive income	$	6,835	$	6,922	$	16,489

WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

SCHEDULE I — CONDENSED STATEMENTS OF CASH FLOWS

Parent Company Information

(In thousands)


	Years Ended December 31,
	2015		2014		2013
Cash flows from operating activities:
Net income	$	7,356	$	7,247	$	15,626
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of subsidiaries		(7,778)		(7,736)		(19,760)
Depreciation expense		40,867		29,555		19,699
Write-down of equipment		6,764		4,681		4,204
Stock-based compensation expenses		4,150		3,509		3,439
Amortization of deferred costs		2,646		2,391		2,286
Amortization of interest rate derivative cost		—		(499)		(404)
Allowances and provisions		(17)		34		(94)
Gain on sale of leased equipment		(2,488)		(2,147)		(3,472)
Gain on insurance settlement		—		—		(351)
Income from joint ventures		(1,175)		(1,329)		(3,526)
Deferred income taxes		2,287		1,383		(4,072)
Changes in assets and liabilities:
Receivables		(953)		(1,502)		1,871
Spare parts inventory		4,847		(5,533)		—
Other assets		(2,420)		(942)		(2,165)
Accounts payable and accrued expenses		4,589		322		(943)
Due to / from subsidiaries		1		(2,208)		(4,041)
Maintenance reserves		5,227		8,693		3,495
Security deposits		5,254		(1,616)		426
Unearned lease revenue		646		919		(575)
Net cash provided by operating activities		69,803		35,222		11,643

Cash flows from investing activities:
Increase in investment in subsidiaries		(23,923)		(9,666)		(34,098)
Distributions received from subsidiaries		3,791		17,582		69,548
Proceeds from sale of equipment held for operating lease (net of selling expenses)		22,885		21,360		21,644
Capital contribution to joint venture		(630)		(17,623)		(11,219)
Distributions received from joint venture		1,304		847		—
Acquisition of J.T. Power, net of cash acquired		—		—		(4,171)
Acquisition of WOLF, net of cash acquired		—		—		(1,000)
Purchase of equipment held for operating lease		(170,732)		(104,904)		(132,140)
Purchase of property, equipment and furnishings		(3,736)		(13,767)		(450)
Net cash used in investing activities		(171,041)		(106,171)		(91,886)

Cash flows from financing activities:
Proceeds from issuance of notes payable		192,700		154,395		130,000
Debt issuance cost		(13)		(5,074)		(637)
Proceeds from shares issued under stock compensation plans		518		410		680
Cancellation of restricted stock units in satisfaction of withholding tax		(1,558)		(1,544)		(1,248)
Security deposit		(1,606)		4,553		7,588
Repurchase of common stock		(16,500)		(5,352)		(5,918)
Excess tax benefit from stock-based compensation		26		311		—
Principal payments on notes payable		(71,846)		(75,859)		(52,844)
Net cash provided by financing activities		101,721		71,840		77,621
Increase/(Decrease) in cash and cash equivalents		483		891		(2,622)
Cash and cash equivalents at beginning of period		2,411		1,520		4,142
Cash and cash equivalents at end of period	$	2,894	$	2,411	$	1,520
Supplemental disclosures of cash flow information:
Net cash paid for:
Interest	$	16,462	$	11,110	$	11,903
Income Taxes	$	75	$	76	$	111

Supplemental disclosures of non-cash investing activities:
During the years ended December 31, 2015, 2014, 2013, engines and equipment totaling $21,786, $3,071 and $422, respectively, were transferred from Held for Operating Lease to Held for Sale.
During the years ended December 31, 2015, 2014, 2013, engines and equipment totaling $41,410, $120,880 and $116,020, respectively, were transferred to the parent from its subsidiaries.
During the years ended December 31, 2015 and 2014, engines and equipment totaling $6,061 and $9,649, respectively, were transferred from Held for Sale to Spare Parts Inventory.