What changed in this filing

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Item 9A. Controls and Procedures

2024-03-15 compared with 2023-03-10 · 281 added, 207 removed, 1096 unchanged (31% of the section changed)

23 unchanged sentences

OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the quarter ended December 31, 2023, none of the Company’s Section 16 officers or directors informed us of the adoption , modification, or termination of a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

2024 Annual Meeting of Stockholders Date

Our Board of Directors has set the date of the Company’s 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”) for May 22, 2024.

The 2024 Annual Meeting will be held virtually via live webcast, and the exact time will be specified in our Notice of 2024 Annual Meeting and related proxy statement for the 2024 Annual Meeting.

Because the date of the 2024 Annual Meeting has been advanced by more than 30 days from the first anniversary of our 2023 Annual Meeting of Stockholders, the Board of Directors has set a new deadline for the receipt of any stockholder proposals submitted for the 2024 Annual Meeting.

If a stockholder desires to present a proposal for inclusion in our proxy statement for the 2024 Annual Meeting, the proposal must be submitted in writing to us for receipt not later than April 1, 2024.

Additionally, to be included in our proxy materials, proposals must comply with the proxy rules relating to stockholder proposals, in particular Rule 14a-8 under the Exchange Act.

Stockholders who wish to raise a proposal or nomination for consideration at the 2024 Annual Meeting, but who do not wish to submit a proposal for inclusion in our proxy materials pursuant to Rule 14a-8, should comply with our bylaws and deliver to us a copy of their proposal no later than March 25, 2024.

A stockholder submission must include certain specified information concerning the proposal or nominee, as the case may be, as required by our bylaws, and information as to the stockholder’s ownership of our common stock.

In either case, proposals should be sent to Willis Lease Finance Corporation, 60 East Sir Francis Drake Boulevard, Suite 209, Larkspur, CA 94939, Attention:

Corporate Secretary.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

We have adopted a Standards of Ethical Conduct Policy (the “Code of Ethics”) that applies to all directors and employees including our Chief Executive Officer, President, and Chief Financial Officer.

The Code of Ethics is available on our website at www.willislease.com.

If we make any substantive amendments to the Code of Ethics or grant any waiver from a provision of the code to our Chief Executive Officer, President and Chief Financial Officer, we will disclose the nature of the amendment or waiver on our investor relations page under the heading “Corporate Governance” on our website at www.willislease.com or in a report on Form 8-K.

The Code of Ethics is available on our website at www.wlfc.global.

If we make any substantive amendments to the Code of Ethics or grant any waiver from a provision of the code to our Chief Executive Officer, President, or Chief Financial Officer, we will disclose the nature of the amendment or waiver on our website at www.wlfc.global under “Corporate Governance” or in a report on Form 8-K.

We have a long-standing commitment to ethical business conduct and compliance with applicable laws and regulations.

As part of this commitment, we have adopted an Insider Trading Policy, which is filed as Exhibit 19.1 to our Annual Report on Form 10-K for the year ended December 31, 2023.

The remainder of the information required by this item is incorporated by reference to our Proxy Statement.

133 unchanged sentences

Bank National Association, as security trustee and operating bank (incorporated by reference to Exhibit 10.64 to our report on Form 10-Q filed August 8, 2021).

10.65 Letter Agreement to Amend Credit Agreement to Address Inconsistencies, , dated November 8, 2019, among Registrant, as Borrower, MUFG Union Bank, N.A., as Security Agent, MUFG Bank Ltd., as Administrative Agent, and the Lenders party thereto.

10.66# Security Agent Resignation, Assignment, Assumption and Omnibus Amendment, dated as of December 1, 2022, among Registrant, as Borrower, MUFG Bank, Ltd., as Administrative Agent and Successor Security Agent, MUFG Union Bank, N.A., as Resigning Security Agent, and the Lenders party thereto.

10.67# Amendment No.

3 to Fourth Amended and Restated Credit Agreement, dated as of June 29, 2023, among Registrant, as Borrower, and MUFG Bank, Ltd., as Administrative Agent and Security Agent.

10.68# Amendment No.

4 to Fourth Amended and Restated Credit Agreement, dated as of October 31, 2023, among Registrant, as Borrower, and MUFG Bank, Ltd., as Administrative Agent and Security Agent.

10.69# Administrative Agency Agreement, dated as of October 31, 2023, among Willis Engine Structured Trust VII, the Registrant, U.S.

Bank National Association, as trustee, and each Managed Group Member referred to therein and from time to time made a party thereto.

10.70# Asset Purchase Agreement, dated as of October 31, 2023, between the Registrant and Willis Engine Structured Trust VII.

10.71# Trust Indenture, dated as of October 31, 2023, among Willis Engine Structured Trust VII, U.S.

Bank National Association, as Trustee, the Registrant and Bank of America, N.A.

10.72# Revolving Credit Agreement, dated as of October 31, 2023, among Willis Engine Structured Trust VII, Bank of America, N.A.

and the Registrant.

10.73 Servicing Agreement, dated as of October 31, 2023, among Willis Engine Structured Trust VII, the Registrant and each Service Group Member referred to therein and from time to time made a party thereto.

10.74# Security Trust Agreement, dated as of October 31, 2023, among Willis Engine Structured Trust VII, each Grantor referred to therein and from time to time made a party thereto and U.S.

Bank National Association, as security trustee and operating bank.

19.1 Insider Trading Policy.

21.1 Subsidiaries of the Registrant.

6 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

97.1 Compensation Recovery Policy.

101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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(Principal Financial and Accounting Officer) Scott B.

March 10, 2023 Director /s/ HANS JOERG HUNZIKER

Hans Joerg Hunziker

March 14, 2024 Director /s/ BRENDAN J.

March 14, 2024 Director /s/ ROBERT J.

3 unchanged sentences

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm ( PCA OB ID Number 248 )

Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248 )

Consolidated Balance Sheets as of December 31, 202 3 and December 31, 202 2

5 unchanged sentences

Schedule II - Valuation Accounts

Reports of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

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Fair value is determined by reference to independent appraisals, quoted market prices (e.g., an offer to purchase) and other factors considered relevant by the Company.

As a result of the annual impairment test, the Company recorded no impairment charges for the year ended December 31, 2022.

As a result of the annual impairment test, the Company recorded impairment charges of $2.0 million for the year ended December 31, 2023.

As of December 31, 2023, the balance of equipment held for operating lease, notes receivable and investments in sales-type leases was $2.1 billion, $92.6 million and $8.8 million, respectively.

18 unchanged sentences

March 14, 2024

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

41 unchanged sentences

Intangible assets, net 1,040 1,129

Notes receivable 81,439 115,456

Investments in sales-type leases 6,440 —

Notes receivable, net of allowances of $ 69 and $ 0 at December 31, 2023 and 2022, respectively

92,621 81,439

Investments in sales-type leases, net of allowances of $ 9 and $ 0 at December 31, 2023 and 2022, respectively

Other assets 64,430 87,205

17 unchanged sentences

Accumulated other comprehensive income, net of income tax expense of $ 3,215 and $ 7,587 at December 31, 2023 and 2022, respectively

11,447 26,743

Total shareholders’ equity 438,963 404,688

1 unchanged sentence

________________________________________________________

(1) Total assets at December 31, 2022 and 2021 include the following assets of variable interest entity’s (“VIE’s”) that can only be used to settle the liabilities of the VIE’s:

(1) Total assets at December 31, 2023 and 2022 include the following assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the VIEs:

Restricted cash $ 160,958 and $ 76,870 ;

1 unchanged sentence

Maintenance rights $ 7,806 and $ 5,433 ;

Inventory $ 0 and $ 4,367 ;

Notes receivable $ 91,960 and $ 80,220 ;

Investments in sales-type leases $ 3,564 and $ 0 ;

and Other assets $ 13,339 and $ 6,470 , respectively.

13 unchanged sentences

Gain on sale of financial assets — 3,116

Asset transition fee — 6,256

Other revenue 32,088 25,095

11 unchanged sentences

Income from operations 64,222 9,855

(Loss) Income from joint ventures ( 62 ) 800

Income (loss) from joint ventures 2,908 ( 62 )

Income before income taxes 67,130 9,793

5 unchanged sentences

Basic weighted average earnings per common share:

$ 6.40 $ 0.35

Diluted weighted average earnings per common share:

$ 6.23 $ 0.33

Basic weighted average common shares outstanding 6,305 6,071

9 unchanged sentences

Currency translation adjustment ( 523 ) ( 1,373 )

Unrealized gain on derivative instruments 27,508 11,250

Unrealized gain on derivative instruments at joint venture 1,697 1,454

Net gain recognized in other comprehensive income 27,832 13,102

Tax expense related to items of other comprehensive income 6,120 2,954

Other comprehensive income 21,712 10,148

Unrealized (loss) gain on derivative instruments ( 18,309 ) 27,508

Reclassification of gain on derivative instruments to interest expense ( 247 ) —

Unrealized (loss) gain on derivative instruments at joint venture ( 530 ) 1,697

Net (loss) gain recognized in other comprehensive income ( 19,609 ) 27,832

Tax (benefit) expense related to items of other comprehensive income ( 4,313 ) 6,120

Other comprehensive (loss) income ( 15,296 ) 21,712

Total comprehensive income $ 28,485 $ 27,151

8 unchanged sentences

Preferred Stock Common Stock Paid-in Capital in Retained Comprehensive Total Shareholders’

Shares Amount Shares Amount Excess of par Earnings (Loss) Income Equity

Shares Amount Shares Amount Excess of par Earnings Income Equity

Balances at December 31, 2021 2,500 $ 49,805 6,531 $ 65 $ 15,401 $ 355,388 $ 5,031 $ 375,885

Net income — — — — — 5,439 — 5,439

Net unrealized gain from currency translation adjustment, net of tax expense of $ 89

Net unrealized loss from currency translation adjustment, net of tax benefit of $ 302

— — — — — — ( 1,071 ) ( 1,071 )

12 unchanged sentences

— — — — — — ( 408 ) ( 408 )

Net unrealized gain from derivative instruments, net of tax expense of $ 6,421

Net unrealized loss from derivative instruments, net of tax benefit of $ 4,143

— — — — — — ( 14,696 ) ( 14,696 )

Shares repurchased — — ( 154 ) ( 1 ) ( 5,244 ) — — ( 5,245 )

Net realized gain from derivative instruments, net of tax expense of $ 55

— — — — — — ( 192 ) ( 192 )

Shares issued under stock compensation plans — — 345 3 271 — — 274

4 unchanged sentences

— — — — — ( 3,334 ) — ( 3,334 )

Cumulative effect due to adoption of new accounting standard — — — — — ( 84 ) — ( 84 )

Balances at December 31, 2023 2,500 $ 49,964 6,849 $ 68 $ 29,667 $ 397,781 $ 11,447 $ 438,963

11 unchanged sentences

Stock-based compensation expense 14,802 13,551

Amortization of deferred costs 5,319 5,016

Accretion of deferred costs and note discounts 6,150 5,319

Allowances and provisions 838 837

1 unchanged sentence

Gain on sale of leased equipment ( 10,581 ) ( 3,133 )

Gain on insurance proceeds ( 761 ) —

Gain on derivative instruments ( 247 ) —

Gain on sale of financial assets — ( 3,116 )

Loss (Income) from joint ventures 62 ( 800 )

(Gain) Loss on disposal of property, equipment and furnishings ( 71 ) 44

Gain on debt extinguishment — ( 2,558 )

Income from joint ventures ( 2,908 ) 62

Loss (gain) on disposal of property, equipment and furnishings 9 ( 71 )

Deferred income taxes 19,652 2,065

15 unchanged sentences

Payments received on notes receivable 4,147 3,974

Insurance proceeds received on equipment 2,189 —

Net cash used in investing activities ( 92,780 ) ( 194,376 )

7 unchanged sentences

Debt issuance costs ( 9,431 ) —

Net cash provided by financing activities 43,327 74,053

Increase in cash, cash equivalents and restricted cash ( 6,625 ) 16,716

Net cash (used in) provided by financing activities ( 57,944 ) 43,327

Increase (decrease) in cash, cash equivalents and restricted cash 79,013 ( 6,625 )

Cash, cash equivalents and restricted cash at beginning of period 89,016 95,641

5 unchanged sentences

Supplemental disclosures of non-cash activities:

Transfers from Equipment held for sale to Equipment held for operating lease $ 542 $ —

Transfers from Equipment held for operating lease to Investments in sales-type leases $ 6,898 $ —

Transfers from Equipment held for operating lease to Equipment held for sale $ 1,901 $ 7,183

Transfers from Equipment held for operating lease to Spare parts inventory $ 667 $ 1,906

Transfers from Spare parts inventory to Equipment held for operating lease $ — $ 1,555

Transfers from Notes receivable to Equipment held for operating lease $ — $ 27,804

Transfers from Equipment held for sale to Equipment held for operating lease $ — $ 542

Non-cash additions to Equipment held for operating lease $ 2,817 $ 1,148

Accretion of preferred stock issuance costs $ 75 $ 84

17 unchanged sentences

WEST V is a VIE which the Company owns 100 % of the interest and consolidates in its financial statements.

In May 2021, the Company and its direct, consolidated VIE Willis Engine Structured Trust VI (“WEST VI”), closed its offering of $ 336.7 million aggregate principal amount of fixed rate notes (the “WEST VI Notes”).

The WEST VI Notes were issued in three series, with the Series A Notes issued in an aggregate principal amount of $ 278.6 million, the Series B Notes issued in an aggregate principal amount of $ 38.7 million and the Series C Notes issued in an aggregate principal amount of $ 19.4 million.

Principal and interest on the WEST III, WEST IV, WEST V and WEST VI Notes are payable monthly to the extent of available cash in accordance with a priority of payments included in the respective indenture agreements.

The WEST III, WEST IV, WEST V and WEST VI Notes are secured by, among other things, the respective ABS’s direct and indirect interests in a portfolio of assets.

The WEST III, WEST IV, WEST V and WEST VI Notes have scheduled amortizations and are payable solely from revenue received from the lease portfolios, after payment of certain expenses of the respective ABS.

The assets of WEST III, WEST IV, WEST V and WEST VI are not available to satisfy the Company’s obligations other than the obligations specific to the respective ABS.

WEST III, WEST IV, WEST V and WEST VI are consolidated for financial statement presentation purposes, with the respective assets and liabilities on the Company’s balance sheet.

Willis Engine Securitization Trust VI (“WEST VI” or the “WEST VI Notes”) is a bankruptcy remote special purpose vehicle which was established for the purpose of financing aircraft engines through an ABS, of which the Company is the sole beneficiary.

WEST VI is a VIE which the Company owns 100 % of the interest and consolidates in its financial statements.

In October 2023, the Company and its direct, wholly-owned subsidiary, Willis Engine Structured Trust VII (“WEST VII”), closed its offering of $ 410.0 million aggregate principal amount of fixed rate notes (the “WEST VII Notes”).

WEST VII is a bankruptcy remote special purpose vehicle which was established for the purpose of financing aircraft engines through an ABS, of which the Company is the sole beneficiary.

WEST VII is a VIE which the Company owns 100 % of the interest and consolidates in its financial statements.

Principal and interest on the WEST III, WEST IV, WEST V, WEST VI, and WEST VII Notes are payable monthly to the extent of available cash in accordance with a priority of payments included in the respective indenture agreements.

The WEST III, WEST IV, WEST V, WEST VI, and WEST VII Notes are secured by, among other things, the respective ABS’s direct and indirect interests in a portfolio of assets.

The WEST III, WEST IV, WEST V, WEST VI, and WEST VII Notes have scheduled amortizations and are payable solely from revenue received from the lease portfolios, after payment of certain expenses of the respective ABS.

The assets of WEST III, WEST IV, WEST V, WEST VI, and WEST VII are not available to satisfy the Company’s obligations other than the obligations specific to the respective ABS.

WEST III, WEST IV, WEST V, WEST VI, and WEST VII are consolidated for financial statement presentation purposes, with the respective assets and liabilities on the Company’s Consolidated Balance Sheets.

Each ABS’s ability to make distributions and pay dividends to the Company is subject to the prior payments of its debt and other obligations and maintenance of adequate reserves and capital.

1 unchanged sentence

Additionally, a portion of the maintenance reserve payments and lease security deposits are formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively.

Additionally, in connection with WEST III, WEST IV, WEST V and WEST VI, the Company entered into servicing agreements and administrative agency agreements to provide certain engine, lease management and reporting functions in return for fees based on a percentage of collected lease revenues and asset sales.

Because WEST III, WEST IV, WEST V and WEST VI are consolidated for financial statement reporting purposes, all fees eliminate upon consolidation.

Additionally, in connection with WEST III, WEST IV, WEST V, WEST VI, and WEST VII, the Company entered into servicing agreements and administrative agency agreements to provide certain engine, lease management and reporting functions in return for fees based on a percentage of collected lease revenues and asset sales.

Because WEST III, WEST IV, WEST V, WEST VI, and WEST VII are consolidated for financial statement reporting purposes, all fees eliminate upon consolidation.

(b) Basis of Presentation and Principles of Consolidation

13 unchanged sentences

Use fees that are reimbursable are recorded as a maintenance reserve liability until they are reimbursed to the lessee, the lease terminates, or the obligation to reimburse the lessee for such reserves ceases to exist, at which time they are recognized in revenue as maintenance reserve revenue.

Unearned Revenue includes deferred nonrefundable use fees which qualify as in-substance fixed lease payments due to the lessee being required to make certain minimum payments.

Unearned Revenue includes deferred nonrefundable use fees which qualify as in-substance fixed lease payments due to the lessee’s requirement to make certain minimum payments.

These in-substance fixed lease payments are recognized ratably over the expected lease term rather than when the variable use fees are invoiced.

As of December 31, 2022, there was $ 6.3 million of deferred in-substance fixed payment use fees included in Unearned Revenue.

As of December 31, 2023 and 2022, there were $ 28.4 million and $ 6.3 million, respectively, of deferred in-substance fixed payment use fees included in Unearned Revenue.

Certain lessees may be significantly delinquent in their rental payments and may default on their lease obligations.

3 unchanged sentences

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.

(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.

The Company also estimates an allowance for credit losses.

Receivables, net of allowances, include amounts billed to customers in which the right to payment is unconditional.

The Company maintains an allowance for trade receivables to provide for the estimated amount that will not be collected, even when the risk of loss is remote.

The allowance is measured on a collective pool basis when similar risk characteristics exist and is established as a percentage of accounts receivable.

The percentage is based on all available and relevant information including age of outstanding receivables, historical payment experience and loss history, current economic conditions, and, when reasonable and supportable factors exist, management’s expectation of future economic conditions.

A write-off is recorded when all or part of the receivable is deemed uncollectible.

Write-offs are charged against the previously established allowance for credit losses.

Partial or full recoveries of amounts previously written off are generally recognized as a reduction in the allowance for credit losses.

Notes receivable and investments in sales-type leases, net of allowances, represent the current remaining balances that the Company expects to collect for failed sale-leaseback transactions and sales-type leases.

The Company establishes allowances for credit losses to cover probable but specifically unknown losses existing in the portfolio.

In doing so, the Company categorizes financial assets by pools with similar risk characteristics, including whether the financial asset is collateral-backed and whether the customer is placed on non-accrual status.

A write-off is recorded when all or part of the financial asset is deemed uncollectible.

Write-offs are charged against previously established allowances for credit losses.

Partial or full recoveries of amounts previously written off are generally recognized as a reduction in the allowances for credit losses.

One customer accounted for more than 10 % of total lease rent revenue during the years ended December 31, 2023 and 2022.

One customer accounted for more than 10 % of total receivables during the year ended December 31, 2023.

Spare parts sales

2 unchanged sentences

In determining the performance obligation, management has identified the promise in the contract to be the shipment of the spare parts to the customer.

Title passes to the buyer when the goods are shipped, and the buyer is responsible for any loss in transit, and the Company has a legal right to payment for the spare parts.

Title passes to the buyer when the goods are shipped, the buyer is responsible for any loss in transit, and the Company has a legal right to payment for the spare parts.

Management has determined that physical acceptance of the spare parts to be a formality in accordance with Accounting Standards Codification (“ASC”) 606-10-5-86.

8 unchanged sentences

Management has identified the promise in the equipment sale contract to be the transfer of ownership of the asset.

Management believes the asset holds standalone value to the customer as it is not dependent on any other services for functionality purposes and therefore is distinct within the context of the contract and as described in ASC 606-10.

Management believes that the asset holds stand-alone value to the customer as it is not dependent on any other services for functionality purposes, and therefore is distinct within the context of the contract and as described in ASC 606-10.

As such, management has identified the transfer of the asset as the performance obligation.

1 unchanged sentence

Equipment sales revenue is based on a set price for a set number of assets, which is allocated to the performance obligation discussed above, in its entirety.

The Company has determined the date of transfer to the customer to be the date the customer obtains control and title over the asset and the date which revenue is to be recognized and payment is due.

The Company has determined the date of transfer to the customer to be the date that the customer obtains control and title over the asset and the date which revenue is to be recognized and payment is due.

Managed services

4 unchanged sentences

As each of the services provided within the contract have separate prices, the Company allocates the price to its related performance obligation described above.

Management has determined each of the revenue elements contain performance obligations that are satisfied over time and therefore recognizes revenue over time in accordance with ASC 606-10-25-27.

Management has determined that each of the revenue elements contain performance obligations that are satisfied over time and therefore recognizes revenue over time in accordance with ASC 606-10-25-27.

The Company utilizes the percentage-of-completion method (input method) for recognizing fleet management services and will calculate revenues based on labor hours incurred.

20 unchanged sentences

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 the Company, 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.

Major overhauls paid for by the Company, 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.

The Company does not accrue for planned major maintenance.

4 unchanged sentences

The technical useful life of a new engine can be in excess of 25 years.

The Company reviews 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 aircraft and airframes owned by the Company are generally depreciated on a straight-line basis over an estimated useful life of 13 to 20 years to a 15 % to 17 % residual value.

The Company reviews the useful lives and residual values of all engines periodically as demand changes to accurately depreciate the cost of equipment over the useful lives of the engines.

The aircraft and airframes owned by the Company are generally depreciated on a straight-line basis over an estimated useful life of 13 to 20 years to a 17 % residual value.

The marine vessel owned by the Company is depreciated on a straight-line basis over an estimated useful life of 18 years to a 15 % residual value.

The other leased parts and related equipment owned by the Company are generally depreciated on a straight-line basis over an estimated useful life of 14 to 15 years to a 25 % residual value.

The useful life of older generation engines and aircraft may be significantly less 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 the remaining expected holding period are typically the same.

The useful lives of older generation engines and aircraft may be significantly less 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 lives and the remaining expected holding periods 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, the Company depreciates 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.

7 unchanged sentences

, an offer to purchase) and other factors considered relevant by the Company.

The Company evaluates assets during the year if a triggering event is identified indicating impairment is possible and also conducts a formal annual review of the carrying value of long-lived assets.

The formal annual review resulted in no impairment charge in 2022 and a total impairment charge of $ 3.5 million in 2021.

The Company evaluates assets during the year if a triggering event is identified indicating impairment is possible and also conducts a formal annual review of the carrying values of long-lived assets.

The formal annual review resulted in $ 2.0 million in impairment charge in 2023 and no impairment charge in 2022.

Additionally, the Company recorded impairment charges of $ 2.4 million and $ 21.8 million in 2023 and 2022, respectively, as a result of triggering events occurring during the year.

5 unchanged sentences

Fees paid in order to secure debt are capitalized, included in Debt obligations on the Consolidated Balance Sheets, and amortized over the life of the related loan using the effective interest method.

Interest expense related to the accretion of debt issuance costs and note discounts was $ 4.8 million and $ 4.4 million in 2023 and 2022, respectively.

(g) Interest Rate Hedging

3 unchanged sentences

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 at the inception of the hedge and either regression or qualitative analysis on at least a quarterly basis throughout its life.

The hedging instrument’s effectiveness is assessed utilizing both a dollar offset and regression testing approach at the inception of the hedge and either a dollar offset and regression testing approach or qualitative analysis on at least a quarterly basis throughout its life.

All of the transactions that the Company has designated as hedges are cash flow hedges.

17 unchanged sentences

(k) Restricted Cash

The Company has certain bank accounts that are subject to restrictions in connection with its WEST III, WEST IV, WEST V and WEST VI notes payable.

The Company has certain bank accounts that are subject to restrictions in connection with its WEST III, WEST IV, WEST V, WEST VI, and WEST VII notes payable.

Under these borrowings, cash is collected in restricted accounts, which are used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company.

3 unchanged sentences

Under WEST V, cash equal to a portion of the projected maintenance obligations for the subsequent twelve months is held in a restricted account and is subject to a minimum balance of $ 5.0 million.

Under WEST VI, cash equal to a portion of the projected maintenance obligations for the subsequent twelve months is held in a restricted account and is subject to a minimum balance of $ 1.0 million.

Under WEST III, WEST IV and WEST V, security deposits are held in restricted accounts equal to a portion of the security deposits for leases scheduled to terminate over the subsequent four months , in each case, subject to a minimum balance of $ 1.0 million.

Under WEST VI and WEST VII, cash equal to a portion of the projected maintenance obligations for the subsequent twelve months is held in a restricted account and is subject to a minimum balance of $ 1.0 million.

Under WEST III, WEST IV, WEST V, and WEST VII, security deposits are held in restricted accounts equal to a portion of the security deposits for leases scheduled to terminate over the subsequent four months , in each case, subject to a minimum balance of $ 1.0 million.

Under WEST VI, all security deposits for leases scheduled to terminate before the expected maturity date of the notes are held in a restricted account, subject to a minimum balance of $ 1.0 million.

1 unchanged sentence

To the extent return conditions are not met, these deposits may be retained by the Company.

The Company had total cash and cash equivalents and restricted cash, as presented in the Consolidated Statements of Cash Flows, as follows:

(in thousands)

Cash and cash equivalents $ 7,071 $ 12,146

Restricted cash 160,958 76,870

Total as presented in the consolidated statements of cash flows $ 168,029 $ 89,016

(l) Spare Parts Inventory

14 unchanged sentences

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

Management evaluates estimates on an ongoing basis, including those related to residual values, estimated asset lives, impairments and bad debts.

Management evaluates estimates on an ongoing basis, including those related to residual values, estimated asset lives, impairments, bad debts and credit losses.

Estimates are based 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.

Management believes that the accounting policies on revenue recognition, useful life of equipment, asset residual values, asset impairment, allowance for doubtful accounts, and allowance for credit losses are critical to the results of operations.

If the useful lives or residual values are lower than those estimated, upon sale of the asset a loss may be realized.

20 unchanged sentences

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 a capital event is performed on the equipment by the lessee, which satisfies the lessee’s 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.

11 unchanged sentences

(w) Risks and Uncertainties

In January 2022, the Company lifted travel restrictions and subsequently reopened its corporate headquarters and other offices for employees and contractors to work from.

The Company has experienced and continues to experience various degrees of disruption due to the COVID-19 pandemic.

Lower demand for air travel presents significant risks to the Company, resulting in impacts which have adversely affected the Company's business, results of operations, and financial condition.

The Company is not able to evaluate or foresee the full extent of these impacts at the current time.

The scope and nature of the impact of COVID-19 on the airline industry, and in turn the Company's business, continue to evolve and the outcomes are uncertain.

Given the uncertainty in the rapidly changing market and economic conditions related to COVID-19, we will continue to evaluate the nature and extent of the impact to the Company's business and financial position.

The ultimate extent of the effects of the COVID-19 pandemic on the Company will depend on future developments, and such effects could exist for an extended period of time.

Other than what has been reflected in the Consolidated Financial Statements, the Company is not aware of any specific event or circumstance related to the COVID-19 pandemic that would require it to update its estimates or judgments or adjust the carrying value of its assets or liabilities.

Given the uncertainty in the rapidly changing market and economic conditions related to the current high interest rate and inflationary environment, we will continue to evaluate the nature and extent of the impact on the Company’s business and financial position.

The ultimate extent of the effects of the current high interest rate and inflationary environment on the Company will depend on future developments, and such effects could exist for an extended period of time.

Other than what has been reflected in the Consolidated Financial Statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates or judgments or adjust the carrying value of its assets or liabilities.

Actual results could differ from those estimates and any such differences may be material to the Consolidated Financial Statements.

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Recent Accounting Pronouncements Adopted by the Company

In July 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-05, “Lease (Topic 842):

Lessors – Certain Leases with Variable Lease Payments” related to accounting for sales-type leases or direct financing leases with variable lease payments.

This ASU is effective for interim and annual years beginning after December 15, 2021, with early adoption permitted.

The Company adopted this guidance effective January 1, 2022, and the adoption had no impact to the Company’s consolidated financial statements and related disclosures.

In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance” related to disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy.

This ASU is effective for annual periods beginning after December 15, 2021, with early application permitted.

The Company adopted this guidance effective January 1, 2022, and the adoption had no impact to the Company's consolidated financial statements and related disclosures.

In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848,” which extended the sunset date to apply the relief in Topic 848 from December 31, 2022 to December 31, 2024.

The amendment in this guidance should be applied on a prospective basis and, for companies with a fiscal year ending December 31, are effective December 1, 2022.

When the transition occurs, the Company expects to apply this expedient to its existing debt instruments and interest rate swaps that reference LIBOR, and to any other new transactions that reference LIBOR or another reference rate that is discontinued, through December 31, 2024.

The adoption of this ASU did not impact the Company’s consolidated financial statements and related disclosures.

Recent Accounting Pronouncements To Be Adopted by the Company

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”).

ASU 2016-13 revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology.

At the beginning of January 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology.

ASU 2016-13 affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash.

Additional disclosures about significant estimates and credit quality are also required.

In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” This ASU clarifies receivables from operating leases are accounted for using the lease guidance and not as financial instruments.

In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” This ASU clarifies various scoping and other issues arising from ASU 2016-13.

In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments.” This ASU improves the Codification and amends the interaction of Topic 842 and Topic 326.

In March 2022, the FASB issued ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326)” which eliminated the accounting guidance for Troubled Debt Restructurings by creditors and enhances disclosure requirements for certain loan refinancing and restructurings.

The amendment also requires an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.

The amendments in this ASU are effective for the Company on January 1, 2023, with early adoption permitted.

The Company will adopt this accounting standard update effective January 1, 2023.

We expect that the adoption of the standard will not have a material impact on our consolidated financial statements.

There was not a significant impact on the Consolidated Financial Statements upon adoption of the standard.

Receivables, net of allowances, include amounts billed to customers in which the right to payment is unconditional.

We maintain an allowance for our trade receivables to provide for the estimated amount that will not be collected, even when the risk of loss is remote.

The allowance is measured on a collective pool basis when similar risk characteristics exist and is established as a percentage of accounts receivable.

A write-off is recorded when all or part of the receivable is deemed uncollectible.

Write-offs are charged against the previously established allowance for credit losses.

Partial or full recoveries of amounts previously written off are generally recognized as a reduction in the allowance for credit losses.

Notes receivable and investments in sales-type leases, net of allowances, represent the current remaining balances we expect to collect for our failed sale-leaseback transactions and sales-type leases.

We establish allowances for credit losses to cover probable but specifically unknown losses existing in the portfolio.

In doing so, we categorize our financial assets by pools with similar risk characteristics, including whether the financial asset is collateral-backed and whether the customer is placed on non-accrual status.

A write-off is recorded when all or part of the financial asset is deemed uncollectible.

Write-offs are charged against previously established allowances for credit losses.

Partial or full recoveries of amounts previously written off are generally recognized as a reduction in the allowances for credit losses.

In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .” The amendments in this ASU improve segment reporting requirements, primarily through enhanced disclosures on significant segment expenses.

Other disclosures that the ASU requires public entities to provide include the title and position of the Chief Operating Decision Maker (“CODM”) and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements.

The Company adopted this ASU for the year ended December 31, 2023.

There was not a significant impact to the Company’s disclosures.

Recent Accounting Pronouncements To Be Adopted by the Company

In August 2023, the FASB issued ASU 2023-05, “Business Combinations – Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement.” The amendments in this ASU apply to the formation of a joint venture, and under this ASU, a joint venture formation is the creation of a new reporting entity that would trigger a new basis of accounting.

This ASU requires net assets contributed to the joint venture in a formation transaction to be measured at fair value at the formation date.

The amendments in this ASU are effective for all joint ventures within the ASU’s scope that are formed on or after January 1, 2025, with early adoption permitted.

Joint ventures formed on or after the effective date of ASU 2023-05 will be required to apply the new guidance prospectively.

Joint ventures formed before the ASU’s effective date are permitted to apply the new guidance (1) retrospectively if they have “sufficient information” to do so or (2) prospectively if financial statements have not yet been issued (or made available for issuance).

The Company expects to adopt this accounting standard update effective January 1, 2025 and is currently evaluating the potential effects on the consolidated financial statements.

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” The ASU amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification (the “Codification”), the purpose of which is to update and simplify disclosure requirements.

The effective dates of the ASU will depend, in part, on whether an entity is already subject to the current disclosure requirements of the Securities and Exchange Commission (“SEC”).

For such entities and those that must “file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer,” the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

For all other entities, the amendments will be effective two years after the date of such removal.

Entities must apply the amended content to financial statements issued after the ASU’s effective date.

For each of the Codification subtopics that the Company is already subject to, the Company expects to adopt the accounting standard update on each of the removal dates of the related disclosure requirements.

The Company is currently evaluating the potential effects on the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” Under the ASU, public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).

The amendments in this ASU are effective for public business entities for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company expects to adopt this accounting standard update for the year ended December 31, 2025 and is currently evaluating the potential effects on the consolidated financial statements.

As lessor, and as of December 31, 2023, the majority of our leases were operating leases with the exception of certain failed sale-leaseback transactions classified as notes receivable or investments in sales-type leases under the guidance provided by ASC 842.

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These lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Additionally, in December 2022, the Company subleased a Willis Mitsui & Company Engine Support Limited (“WMES”) engine to a third party, with WMES as the head lessor.

Under ASC 842, the Company recognized a ROU asset of $ 4.9 million and a lease liability of $ 4.9 million for this lease during the year ended December 31, 2022.

Leases with terms of 12 months or less are not recorded on the balance sheet;

Additionally, in 2022, the Company subleased a Willis Mitsui & Company Engine Support Limited (“WMES”) engine to a third party, with WMES as the head lessor.

Under ASC 842, the Company recognized a right-of-use (“ROU”) asset of $ 4.9 million and a lease liability of $ 4.9 million for this lease during the year ended December 31, 2022.

Leases with terms of 12 months or less are not recorded on the Consolidated Balance Sheets;

the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

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, fixed rent, common-area maintenance costs, vehicle protection plans and other service fees) as elected under the practical expedient package provided by ASC 842.

The Company’s leases have remaining lease terms of approximately one to seven years , some of which include options to renew or extend the lease term from one to five years .

The Company’s leases have remaining lease terms of approximately one to 14 years, some of which include options to renew or extend the lease term from one to five years .

Our automobile leases include an option to purchase the vehicle at lease termination.

The depreciable life of assets is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

The depreciable lives of assets are limited by the expected lease terms, unless there is a transfer of title or purchase option reasonably certain of exercise.

The exercise of lease renewal options or purchase at lease termination is at the Company’s sole discretion.

If it is reasonably certain that we will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of our ROU assets and lease liabilities.

Supplemental balance sheet information related to leases was as follows:

Supplemental information to the Consolidated Balance Sheets related to leases was as follows:

Leases Classification December 31, 2023 December 31, 2022

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Operating lease right-of-use assets Other assets $ 8,652 $ 11,382

Total leased assets $ 11,382 $ 6,067

Operating lease right-of-use liabilities Accounts payable and accrued expenses $ 10,365 $ 5,206

Total lease liabilities $ 10,365 $ 5,206

Lease liabilities Accounts payable and accrued expenses $ 7,941 $ 10,365

Weighted average remaining lease term (years)

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Operating leases 4.6 % 4.9 %

The weighted average discount rate is based on the discount rate for each lease and the remaining balance of the lease payments for each lease at the reporting date.

Future maturities of the Company’s operating lease liabilities at December 31, 2022 are as follows:

The weighted average discount rate is based on the incremental borrowing rate for each lease and the remaining balance of the lease payments for each lease at the reporting date.

Future maturities of the Company’s lease liabilities at December 31, 2023 are as follows:

Year (in thousands)

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Gain on sale of financial assets 3,116 — — 3,116

Asset transition fee (1) 6,256 — — 6,256

Managed services 23,613 — — 23,613

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Total revenue $ 286,025 $ 26,087 $ ( 185 ) $ 311,927

________________________________________________________

(1) Asset transition fee reflects the settlement received from the close out of an engine transition program.

Equipment Held for Operating Lease

As of December 31, 2023, the Company had $ 2,112.8 million of equipment held in our operating lease portfolio, $ 92.6 million of notes receivable, $ 9.2 million of maintenance rights, and $ 8.8 million of investments in sales-type leases, which represented 337 engines, 12 aircraft, one marine vessel and other leased parts and equipment.

As of December 31, 2021, the Company had $ 1,991.4 million of equipment held in our operating lease portfolio, $ 115.5 million of notes receivable, and $ 22.5 million of maintenance rights, which represented 304 engines, 12 aircraft, one marine vessel and other leased parts and equipment.

As of December 31, 2022, the Company had $ 2,111.9 million of equipment held in our operating lease portfolio, $ 81.4 million of notes receivable, $ 17.7 million of maintenance rights, and $ 6.4 million of investments in sales-type leases, which represented 339 engines, 13 aircraft, one marine vessel and other leased parts and equipment.

The following table disaggregates equipment held for operating lease by asset class (in thousands):

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$ 2,707,130 $ ( 594,293 ) $ 2,112,837 $ 2,655,118 $ ( 543,183 ) $ 2,111,935

Notes Receivable

During the years ended December 31, 2022 and 2021, the Company recorded interest income related to the notes receivable, recorded in Other revenue of $ 7.6 million and $ 12.9 million, respectively.

The effective interest rates on our notes receivable ranged from 7.1 % to 12.2 % as of December 31, 2022 and 6.3 % to 12.2 % as of December 30, 2021.

Notes Receivable and Investments in Sales-Type Leases

During the years ended December 31, 2023 and 2022, the Company recorded interest income related to the notes receivable and investments in sales-type leases of $ 8.7 million and $ 7.6 million, respectively.

The effective interest rates on our notes receivable and investments in sales-type leases ranged from 7.1 % to 12.2 % as of December 31, 2023 and 7.1 % to 12.2 % as of December 31, 2022.

A majority of the equipment is leased and operated internationally.

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South America 136,917 141,145

Central America 130,187 163,526

Canada 109,056 69,030

Central America 43,192 130,187

Middle East 42,965 42,853

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Each partner holds a 50 % interest in the joint venture, and the Company uses the equity method in recording investment activity.

As of December 31, 2022, WMES owned a lease portfolio of 35 engines and five aircraft with a net book value of $ 255.5 million.

As of December 31, 2023, WMES owned a lease portfolio of 35 engines and four aircraft with a net book value of $ 232.2 million.

In 2014, the Company entered into an agreement with China Aviation Supplies Import & Export Corporation (“CASC”) to participate in a joint venture named CASC Willis Lease Finance Company Limited (“CASC Willis”), a joint venture based in Shanghai, China.

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Investment in joint ventures as of December 31, 2021 $ 39,069 $ 16,858 $ 55,927

Income from joint ventures 250 550 800

Income (loss) from joint ventures 248 ( 310 ) ( 62 )

Foreign currency translation adjustment — ( 1,373 ) ( 1,373 )

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Foreign currency translation adjustment — ( 523 ) ( 523 )

Other comprehensive gain from joint ventures 1,697 — 1,697

Other comprehensive loss from joint ventures ( 530 ) — ( 530 )

Investment in joint ventures as of December 31, 2023 $ 40,047 $ 17,997 $ 58,044

“Other revenue” on the Consolidated Statements of Income includes management fees earned of $ 2.4 million and $ 2.0 million during the years ended December 31, 2023 and 2022, respectively, related to the servicing of engines for the WMES lease portfolio.

During 2022, the Company sold two engines to WMES for $ 12.6 million.

During 2023, WMES sold an engine to the Company for $ 22.3 million, and the Company sold two engines to WMES for $ 28.8 million.

During 2022, the Company sold two engines to WMES for $ 12.6 million.

There were no aircraft or engine sales to CASC Willis during 2022 or 2021.

In December 2022, the Company subleased a WMES engine to a third party, with WMES as the head lessor.

During 2022, the Company subleased a WMES engine to a third party, with WMES as the head lessor.

Under ASC 842, the Company recognized a ROU asset of $ 4.9 million and a lease liability of $ 4.9 million for this lease during the year ended December 31, 2022.

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Total WMES net equity $ 86,128 $ 84,497

The difference between the Company’s investment in WMES and 50 % of total WMES net equity is primarily attributable to the recognition of deferred gains, prior to the adoption of ASU 2017-05, related to engines sold by the Company to WMES.

The difference between the Company’s investment in WMES and 50 % of total WMES net equity, as well as the difference between the Company’s income or loss from WMES and 50 % of total WMES net income, is primarily attributable to the recognition of deferred gains, which are related to engines sold by WMES to the Company, and prior to the adoption of ASU 2017-05, related to engines sold by the Company to WMES.

Debt Obligations

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(in thousands)

Credit facility at a floating rate of interest of one-month LIBOR plus 1.75 % at December 31, 2022, secured by engines.

The facility has a committed amount of $ 1.0 billion at December 31, 2022, which revolves until the maturity date of June 2024

Credit facility at a floating rate of interest of one-month term Secured Overnight Financing Rate (“SOFR”) plus 1.75 % at December 31, 2023, secured by engines.

The facility has a committed amount of $ 708.0 million at December 31, 2023.

$ 49.8 million revolves until the earlier of the final WEST VII novated asset or the maturity date of March 31, 2024, $ 158.2 million revolves until the maturity date of June 2024, and $ 500.0 million revolves until the maturity date of June 2025.

$ 353,000 $ 727,000

WEST VII Series A 2023 term notes payable at a fixed rate of interest of 8.00 %, maturing in October 2048, secured by engines

WEST VI Series A 2021 term notes payable at a fixed rate of interest of 3.10 %, maturing in May 2046, secured by engines

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23,592 30,255

Note payable at a fixed rate of interest of 4.59 %, maturing in January 2032, secured by an engine

Note payable at a fixed rate of interest of 4.23 %, maturing in July 2031, secured by an engine

Note payable at a fixed rate of interest of 3.18 %, maturing in July 2024, secured by an aircraft

1,827,059 1,862,089

unamortized debt issuance costs ( 14,811 ) ( 19,356 )

unamortized debt issuance costs and note discounts ( 24,178 ) ( 14,811 )

Total debt obligations $ 1,802,881 $ 1,847,278

One-month LIBOR was 4.39% and 0.10% as of December 31, 2022 and 2021, respectively.

In October 2023, the Company entered into Amendment No.

4 to the Fourth Amended and Restated Credit Agreement (“Amendment No.

4”), which extended the maturity date for $ 500.0 million of its credit facility to June 2025.

In December 2023, under the terms of Amendment No.

4, the Company terminated $ 292.0 million of its credit facility.

This termination resulted in the credit facility having a reduced total committed amount of $ 708.0 million as of December 31, 2023.

$ 49.8 million revolves until the earlier of the final WEST VII novated asset or the maturity date of March 31, 2024, and $ 158.2 million revolves until the maturity date of June 2024.

One-month term SOFR was 5.38%, and the one-month London Inter-Bank Offered Rate (“LIBOR”) was 4.39% as of December 31, 2023 and December 31, 2022, respectively.

As it relates to the $ 22.6 million and $ 17.8 million notes payable resulting from failed sale-leaseback transactions that are secured by engines, the Company has options to repurchase the engines in January 2032 for $ 17.7 million and July 2031 for $ 17.0 million, respectively.

Principal outstanding at December 31, 2023, is expected to be repayable as follows:

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Total $ 1,827,059

At December 31, 2022, the Company 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.

In June 2019, the Company entered into the Fourth Amended and Restated Credit Agreement (“Amended Credit Agreement”) which incorporates an accordion feature that can expand the $ 1.0 billion credit facility up to $ 1.3 billion.

Pursuant to the Amended Credit Agreement, all obligations under the revolving credit facility are collateralized by the title and interest of the Company and certain of its subsidiaries, and to substantially all of its assets and properties.

In June 2021, the Company entered into Amendment No.

2 to the Amended Credit Agreement, which updates the provisions relating to the future discontinuance of LIBOR and sets forth the mechanics for establishing the Secured Overnight Financing Rate (“SOFR”) as a benchmark replacement rate.

At December 31, 2023, the Company 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.

As of December 31, 2023 and 2022, $ 355.0 million and $ 273.0 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.

Under the revolving credit facility, all subsidiaries except WEST III, WEST IV, WEST V and WEST VI jointly and severally guarantee payment and performance of the terms of the loan agreement.

Under the revolving credit facility, all subsidiaries except WEST III, WEST IV, WEST V, WEST VI, and WEST VII 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.

In May 2021, WLFC and its direct, wholly-owned subsidiary WEST VI, closed its offering of $ 336.7 million aggregate principal amount of fixed rate notes.

The WEST VI Notes are secured by, among other things, WEST VI’s direct and indirect ownership interests in a portfolio of aircraft engines and an airframe.

The Series A Notes have a fixed coupon of 3.104 %, an expected maturity of approximately eight years and a final maturity date in May 2046, the Series B Notes have a fixed coupon of 5.438 %, an expected maturity of approximately eight years and a final maturity date in May 2046 and the Series C Notes have a fixed coupon of 7.385 %, an expected maturity of approximately eight years and a final maturity date in May 2046.

The Series A Notes were issued at a price of 99.99481 % of par, the Series B Notes were issued at a price of 99.99996 % of par and the Series C Notes were issued at a price of 99.99869 % of par.

Principal on the WEST VI Notes is payable monthly to the extent of available cash in accordance with a priority of payments included in the indenture.

In May 2021, WLFC repaid an existing note payable with a balance of $ 5.8 million that was secured by two engines.

In October 2023, the Company and its direct, wholly-owned subsidiary WEST VII, closed its offering of $ 410.0 million aggregate principal amount of fixed rate notes.

The notes are secured by, among other things, WEST VII’s direct and indirect interests in a portfolio of aircraft engines and airframes.

The notes have a fixed coupon of 8.00 %, an expected maturity in October 2029, and a final maturity date in October 2048.

The notes were issued at a price of 98.84814 % of par.

Principal on the notes is payable monthly to the extent of available cash in accordance with a priority of payments included in the indenture.

In December 2022, the Company recognized a $ 2.6 million gain on debt extinguishment associated with the repurchase of six tranches of ABS notes with a balance of $ 12.2 million.

The assets of WEST III, WEST IV, WEST V and WEST VI are not available to satisfy the Company’s obligations other than the obligations specific to that WEST entity.

WEST III, WEST IV, WEST V and WEST VI are consolidated for financial statement presentation purposes.

WEST III, WEST IV, WEST V and WEST VI’s ability to make distributions and pay dividends to the Company is subject to the prior payments of their debt and other obligations and their maintenance of adequate reserves and capital.

Under WEST III, WEST IV, WEST V and WEST VI, cash is collected in restricted accounts, which are used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company.

The assets of WEST III, WEST IV, WEST V, WEST VI, and WEST VII are not available to satisfy the Company’s obligations other than the obligations specific to that WEST entity.

WEST III, WEST IV, WEST V, WEST VI, and WEST VII are consolidated for financial statement presentation purposes.

WEST III’s, WEST IV’s, WEST V’s, WEST VI’s, and WEST VII’s abilities to make distributions and pay dividends to the Company is subject to the prior payments of their debt and other obligations and their maintenance of adequate reserves and capital.

Under WEST III, WEST IV, WEST V, WEST VI, and WEST VII, cash is collected in restricted accounts, 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 lease security deposits are formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively.

The WEST III, WEST IV, WEST V and WEST VI indentures require that a minimum threshold of maintenance reserve and security deposit balances be held in restricted cash accounts.

Virtually all of our debt requires 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 WEST III, WEST IV, WEST V, WEST VI, and WEST VII indentures require that a minimum threshold of maintenance reserve and security deposit balances be held in restricted cash accounts.

Virtually all of the Company’s debt requires 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 either monthly or quarterly, and the Company was in full compliance with all financial covenant requirements at December 31, 2022.

Compliance with these covenants is tested either monthly, quarterly, or annually, as required, and the Company was in full compliance with all financial covenant requirements at December 31, 2023.

Derivative Instruments

The Company periodically holds interest rate derivative instruments to mitigate exposure to changes in interest rates, to predominantly one-month LIBOR, with $ 727.0 million and $ 590.0 million of variable rate borrowings at December 31, 2022 and 2021, respectively.

The Company periodically holds interest rate derivative instruments to mitigate exposure to changes in interest rates, predominantly one-month SOFR, with $ 353.0 million and $ 727.0 million of variable rate borrowings at December 31, 2023 and 2022, respectively.

As a matter of policy, management does not use derivatives for speculative purposes.

As of December 31, 2023, the Company had five interest rate swap agreements.

During the first quarter of 2021, the Company entered into four fixed-rate interest swap agreements, each having notional amounts of $ 100.0 million, two with remaining terms of 13 months and two with remaining terms of 37 months as of December 31, 2022.

One interest rate swap agreement was entered into during 2019 which has a notional outstanding amount of $ 100.0 million with a remaining term of 18 months as of December 31, 2022.

One interest rate swap agreement which the Company entered into in 2016 expired in April 2021.

During 2021, the Company entered into four fixed-rate interest swap agreements, each having notional amounts of $ 100.0 million, two with remaining terms of one month and two with remaining terms of 25 months as of December 31, 2023.

One interest rate swap agreement was entered into during 2019 which has a notional outstanding amount of $ 100.0 million with a remaining term of six months as of December 31, 2023.

The derivative instruments were designated as cash flow hedges at inception and recorded at fair value.

As it relates to the two fixed-rate interest swap agreements with remaining terms of one month as of December 31, 2023, the Company evaluated the probability of the forecasted transactions occurring.

The Company determined that it is not probable that the forecasted transactions will occur upon the maturities of these two fixed-rate interest rate swap agreements and as such, reclassified into earnings the associated amount in accumulated other comprehensive income.

The impact was an addition to interest income, or reduction to interest expense, in the Company’s Consolidated Statements of Income of approximately $ 0.2 million for the year ended December 31, 2023.

The Company evaluated the effectiveness of the swaps to hedge the interest rate risk associated with its variable rate debt and concluded at the swap inception date that the swaps were highly effective in hedging that risk.

The Company evaluates the effectiveness of the hedging relationship on an ongoing basis and concluded there was no ineffectiveness in the hedges for the year ended December 31, 2023.

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.

The Company estimates the fair value of derivative instruments using a discounted cash flow technique.

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.

The Company applies hedge accounting and accounts for the change in fair value of its cash flow hedges through other comprehensive income for all derivative instruments.

The net fair value of the interest rate swaps as of December 31, 2022 was $ 34.8 million, representing an asset and is reflected within other assets on the Consolidated Balance Sheets.

The net fair value of the interest rate swaps as of December 31, 2021 was $ 7.3 million, representing an asset of $ 8.0 million and a liability of $ 0.7 million, reflected within other assets and accounts payable and accrued expenses on the Consolidated Balance Sheets, respectively.

The Company applies hedge accounting and accounts for the change in fair value of its cash flow hedges through other comprehensive income for derivative instruments that are effective and for which the related forecasted transaction is probable of occurring.

The net fair value of the interest rate swaps as of December 31, 2023 and December 31, 2022 was $ 16.5 million and $ 34.8 million, respectively, each representing an asset and reflected within other assets on the Consolidated Balance Sheets.

The Company recorded an adjustment to interest expense of $( 23.4 ) million and $( 7.8 ) million during the years ended December 31, 2023 and 2022, respectively, from derivative investments.

As of December 31, 2023, the accumulative derivative gain was $ 16.5 million, and as of December 31, 2022, the accumulative derivative gain was $ 34.8 million.

Effect of Derivative Instruments on Earnings in the Statements of Income and of Comprehensive Income

Effect of Derivative Instruments on Earnings in the Consolidated Statements of Income and of Comprehensive Income

The following table provides additional information about the financial statement effects related to the cash flow hedges for the years ended December 31, 2023 and 2022:

Derivatives in Cash Flow Hedging Relationships Amount of Gain Recognized in OCI on Derivatives

Derivatives in Cash Flow Hedging Relationships Amount of Unrealized (Loss) Gain Recognized in OCI on Derivatives

(Effective Portion)

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The Company evaluates the creditworthiness of the counterparties under its hedging agreements.

The counterparties for the interest rate swaps are large financial institutions that possessed an investment grade credit rating.

Based on this rating, the Company believes that the counterparties were credit-worthy and that their continuing performance under the hedging agreement was probable and did not require the counterparties to provide collateral or other security to the Company.

The counterparties for the interest rate swaps are large financial institutions that possess investment grade credit ratings.

Based on these ratings, the Company believes that the counterparties were credit-worthy and that their continuing performance under the hedging agreement is probable and does not require the counterparties to provide collateral or other security to the Company.

The components of income before income taxes are as follows:

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Balance as of December 31, 2021 $ 13

Decreases related to current year tax positions —

Increases related to current year tax positions 11

Decreases due to tax positions expired ( 5 )

Balance as of December 31, 2022 19

Decreases related to current year tax positions 11

Increases related to current year tax positions 435

Decreases due to tax positions expired ( 5 )

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Notes receivable ( 5,405 ) ( 5,479 )

Right of use liability ( 1,360 ) ( 139 )

Lease liability ( 930 ) ( 1,360 )

Other deferred tax liabilities ( 4,622 ) ( 4,590 )

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As of December 31, 2023, the Company had net operating loss carry forwards of approximately $ 235.4 million for federal tax purposes and $ 1.0 million (tax effected) for state tax purposes.

The majority of the federal net operating loss carry forwards were generated in 2020 and can be carried forward indefinitely.

The remainder will expire at various times from 2033 to 2037, and the state net operating loss carry forwards will expire at various times from 2026 to 2043.

The majority of the federal net operating loss carry forwards were generated in 2020 and can be carried forward indefinitely, and the state net operating loss carry forwards will expire at various times from 2026 to 2043.

There is a $ 0.5 million valuation allowance for net operating losses in California that expire between 2034 and 2042 and a $ 0.1 million valuation allowance for net operating losses in Georgia that expire between 2032 and 2040.

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The open tax years for federal and state tax purposes are from 2006 to 2023.

Other than $ 6.2 million held at a subsidiary in China, for which the tax impact of the planned repatriation has been accrued, it is the Company's intention to reinvest undistributed earnings of their wholly-owned foreign operations and thereby indefinitely postpone their remittance.

It is the Company’s intention to reinvest undistributed earnings of their wholly-owned foreign operations and thereby indefinitely postpone their remittance.

Accordingly, no provision has been made for foreign withholding taxes or U.S.

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• Investments in sales-type leases:

The carrying amount of the Company's outstanding balance on its Investments in sales-type leases as of December 31, 2022 was estimated to have a fair value of approximately $ 6.4 million based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs).

The Company had no Investments in sales-type leases at December 31, 2021.

The carrying amount of the Company's outstanding balance on its Investments in sales-type leases as of December 31, 2023 and 2022 was estimated to have a fair value of approximately $ 8.7 million and $ 6.4 million, respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs).

• Debt obligations :

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As of December 31, 2023 and 2022, the Company measured the fair value of its interest rate swaps based on Level 2 inputs, due to the usage of inputs that can be corroborated by observable market data.

The net fair value of the interest rate swaps as of December 31, 2022 was $ 34.8 million, representing an asset.

The net fair value of the interest rate swaps as of December 31, 2021 was $ 7.3 million, representing an asset of $ 8.0 million and a liability of $ 0.7 million.

The Company estimates the fair value of derivative instruments using a discounted cash flow technique.

The Company recorded an adjustment to interest expense of $( 23.4 ) million and $( 7.8 ) million during the years ended December 31, 2023 and 2022, respectively, from derivative investments.

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Total $ 4,398 $ 21,849

Write-downs of equipment to their estimated fair values totaled $ 4.4 million for the year ended December 31, 2023, primarily reflecting an adjustment of the carrying value of five engines and two airframes.

As of December 31, 2023, included within equipment held for lease and equipment held for sale was $ 31.9 million in remaining book value of 15 assets which were previously written down.

Write-downs of equipment to their estimated fair values totaled $ 21.8 million for the year ended December 31, 2022, primarily reflecting an adjustment of the carrying value of four impaired engines.

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The remaining write-downs were in the ordinary course of business.

As of December 31, 2022, included within equipment held for lease and equipment held for sale was $ 32.4 million in remaining book value of 16 assets which were previously written down.

Write-downs of equipment to their estimated fair values totaled $ 7.7 million for the year ended December 31, 2021 which included write-downs of $ 3.9 million due to a management decision to monetize three engines and one airframe either by sale to a third party or for part-out and $ 3.8 million for the adjustment of the carrying value of seven impaired engines.

Earnings Per Share

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These funding commitments could potentially require the Company’s performance in the event of demands by third parties or contingent events.

As of December 31, 2022, the Company had $ 428.1 million in purchase commitments of equipment that will be satisfied within four fiscal years.

As of December 31, 2023, the Company had $ 459.7 million in purchase commitments of equipment that will be satisfied within three fiscal years.

The purchase obligations are subject to escalation based on the closing date of each transaction.

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Common Stock Repurchase

At its October 26, 2022 meeting, the Board of Directors approved the renewal of the existing common stock repurchase plan which allows for repurchases of up to $ 60.0 million of the Company’s common stock, extending the plan through December 31, 2024.

In October 2022, the Board of Directors approved the renewal of the existing common stock repurchase plan which allows for repurchases of up to $ 60.0 million of the Company’s common stock, extending the plan through December 31, 2024.

Repurchased shares are immediately retired.

During 2022, the Company repurchased 154,215 shares of common stock for approximately $ 5.2 million under the plan, at a weighted average price of $ 33.98 per share.

During 2023, no shares were repurchased.

During 2022, the Company repurchased 154,215 shares of common stock for approximately $ 5.2 million under the plan, at a weighted average price of $ 33.98 per share.

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Holders of the Preferred Stock do not have general voting rights.

The Company’s Series A-1 Preferred Stock and Series A-2 Preferred Stock accrue quarterly dividends at the rate per annum of 6.5 % per share.

During each of the years ended December 31, 2022 and 2021, the Company paid total dividends of $ 3.3 million on the Series A-1 and Series A-2 Preferred Stock, respectively.

The Company’s Series A-1 Preferred Stock accrued quarterly dividends at the rate per annum of 6.5 % per share through October 15, 2023 and accrue quarterly dividends at the rate per annum of 8.5 % per share thereafter.

The Company’s Series A-2 Preferred Stock accrue quarterly dividends at the rate per annum of 6.5 % per share.

During the years ended December 31, 2023 and 2022, the Company paid total dividends of $ 3.2 million and $ 3.3 million on the Series A-1 and Series A-2 Preferred Stock, respectively.

Liquidation Preference:

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The redemption price is $ 20.00 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 the date first callable by the Preferred Stockholders (October 2023 for the Series A Preferred Stock and September 2024 for the Series A-2 Preferred Stock), such that the carrying amounts of the securities will equal the redemption amounts at the earliest redemption dates.

The Company is accreting the Preferred Stock to redemption value over the period from the date of issuance to the date first callable by the Preferred Stockholders (September 2024 for both of the Series A Preferred Stock and Series A-2 Preferred Stock, as a result of the First Amendment to Second Amended and Restated Certificate of Designations, Preferences, and Relative Rights and Limitations of Series A Cumulative Redeemable Preferred Stock dated as of September 26, 2023), such that the carrying amounts of the securities will equal the redemption amounts at the earliest redemption dates.

Stock-Based Compensation Plans

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2023 Stock Incentive Plan $ 14,667 $ 13,401

2021 Stock Incentive Plan 13,401 14,678

Employee Stock Purchase Plan 135 150

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The significant stock compensation plans are described below.

The 2007 Stock Incentive Plan (the “2007 Plan”) was adopted in May 2007.

Under this 2007 Plan, a total of 2,800,000 shares were authorized for stock-based compensation available in the form of either restricted stock awards (“RSAs”) or stock options.

The RSAs are subject to service-based vesting, typically between one and four years , in which a specific period of continued employment must pass before an award vests.

The expense associated with these awards is recognized on a straight-line basis over the respective vesting period, with forfeitures accounted for as they occur.

For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant date fair value of the award tranche that is actually vested at that date.

As of December 31, 2022, there were no stock options outstanding under the 2007 Plan.

The 2018 Stock Incentive Plan (the “2018 Plan”) was adopted in May 2018.

Under this 2018 Plan total of 800,000 shares were authorized for stock-based compensation, plus the number of shares remaining under the 2007 Plan and any future forfeited awards under the 2007 Plan, in the form of RSAs.

In November 2021, the 2018 Plan was amended and restated as the 2021 Stock Incentive Plan (the “2021 Plan”) to increase the number of shares reserved for issuance under the 2021 Plan by 1,000,000 shares.

The RSAs are subject to either service-based vesting, which is typically between one and four years , in which a specific period of continued employment must pass before an award vests, or performance-based vesting, which is typically over one year .

The 2023 Incentive Stock Plan (the “2023 Plan”) amended and restated the prior 2021 Incentive Stock Plan.

The 2023 Plan authorized 1,750,000 shares for issuance, plus the number of shares remaining for issuance under the prior stock plan and any future forfeited awards under the prior plan.

Stock-based compensation is in the form of restricted stock awards (“RSAs”).

The RSAs are subject to either service-based vesting, which is typically between one and four years, in which a specific period of continued employment must pass before an award vests, or performance-based vesting, which is typically between one and two years.

The expense associated with these awards is recognized on a straight-line basis over the respective vesting period, with forfeitures accounted for as they occur.

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The fair value of the restricted stock awards equaled the stock price at the grant date.

The following table summarizes restricted stock activity under the 2007 and 2021 Plans for the years ended December 31, 2022 and 2021:

The following table summarizes restricted stock activity under the 2023 Plan for the years ended December 31, 2023 and 2022:

Number Outstanding Weighted Average

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In 2023, employees who participated in the 401(k) Plan could elect to defer and contribute to the 401(k) Plan up to 75 % of pretax salary or wages up to $ 22,500 (or $ 30,000 for employees at least 50 years of age).

The Company matches 50 % of employee contributions and was capped at $ 13,500 per employee in 2022.

The Company match totaled $ 0.7 million for each of the years ended December 31, 2022 and 2021, respectively.

The Company matches 50 % of employee contributions and was capped at $ 11,250 per employee (or $ 15,000 for employees at least 50 years of age) in 2023.

The Company match totaled $ 0.9 million and $ 0.7 million during the years ended December 31, 2023 and 2022, respectively.

Related Party Transactions

Joint Ventures

“Other revenue” on the Consolidated Statement of Income includes management fees earned of $ 2.0 million and $ 2.1 million during the years ended December 31, 2022 and 2021, respectively, related to the servicing of engines for the WMES lease portfolio.

During 2022, the Company sold two engines to WMES for $ 12.6 million.

During 2023, WMES sold an engine to the Company for $ 22.3 million, and the Company sold two engines to WMES for $ 28.8 million.

During 2022, the Company sold two engines to WMES for $ 12.6 million.

There were no aircraft or engine sales to CASC Willis during 2022 or 2021.

In December 2022, the Company subleased a WMES engine to a third party, with WMES as the head lessor.

During 2022, the Company subleased a WMES engine to a third party, with WMES as the head lessor.

Under ASC 842, the Company recognized a ROU asset of $ 4.9 million and a lease liability of $ 4.9 million for this lease during the year ended December 31, 2022.

Between January 2023 and July 2023, Willis Asset Management Limited, one of the Company’s wholly-owned and vertically-integrated subsidiaries, leased one of its hangars to Fur Feather and Fin Limited, an entity in which the Company’s Executive Chairman retains an ownership interest, for quarterly rent payments of approximately $ 7,700 .

The lease was approved by the Board’s Independent Directors.

During 2023, the Company paid approximately $ 44,000 of expenses payable to Mikchalk Lake, LLC, an entity in which our Executive Chairman retains an ownership interest.

These expenses were for lodging and other business-related services.

Additionally, during the year ended December 31, 2022, the Company paid a third-party vendor approximately $ 0.1 million under an exclusive use agreement for an aircraft used for business-related purposes.

The third-party vendor leased the aircraft from a company which our Executive Chairman owns.

These transactions were approved by the Board’s Independent Directors.

These expenses were for lodging and other business-related services and were approved by the Board’s Independent Directors.

Reportable Segments

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(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 other related businesses and (ii) Spare Parts Sales which involves the purchase and resale of after-market engine parts, whole engines, engine modules and portable aircraft components.

The Company evaluates the performance of each of the segments based on profit or loss after general and administrative expenses.

The Company evaluates the performance and allocation of resources of each of the segments based on profit or loss after general and administrative expenses.

While the Company believes there are synergies between the two business segments, the segments are managed separately because each requires different business strategies.

The Company’s CODM is Austin Willis, Chief Executive Officer.

The following tables present a summary of the reportable segments (in thousands):

6 unchanged sentences

Gain on sale of leased equipment 10,581 — — 10,581

Gain on sale of financial assets 3,116 — — 3,116

Other revenue 31,610 689 ( 211 ) 32,088

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Interest expense 78,795 — — 78,795

Gain on debt extinguishment ( 2,558 ) — — ( 2,558 )

Total finance costs 78,795 — — 78,795

9 unchanged sentences

Gain on sale of financial assets 3,116 — — 3,116

Asset transition fee (1) 6,256 — — 6,256

Other revenue 24,607 673 ( 185 ) 25,095

7 unchanged sentences

Interest expense 66,743 — — 66,743

Gain on debt extinguishment ( 2,558 ) — — ( 2,558 )

Total finance costs 64,185 — — 64,185

Total expenses 276,665 25,407 — 302,072

Income (loss) from operations $ 8,950 $ ( 473 ) $ ( 137 ) $ 8,340

_____________________

(1) Asset transition fee reflects the settlement received from the close out of an engine transition program.

Income from operations $ 9,360 $ 680 $ ( 185 ) $ 9,855

Leasing and Related Operations Spare Parts Sales Eliminations Total

1 unchanged sentence

Total assets as of December 31, 2022 $ 2,530,130 $ 45,087 $ — $ 2,575,217

Subsequent Events

On January 31, 2024, the Company detected unauthorized activity on portions of its information technology (IT) systems.

WLFC believes it has fully contained the unauthorized activity and continues to operate and service customers.

However, the investigation to assess the complete nature, scope, and impact of the incident, including what data has been exfiltrated or otherwise impacted, remains ongoing.

Effective March 8, 2024, in accordance with Amendment No.

4, the Company’s credit facility was reduced from $ 708.0 million to $ 658.2 million following the novation of the final WEST VII asset.

WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

of Period Additions

of Period Cumulative Effect Due to Adoption of New Accounting Standard Additions

to Expense Net

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Year Ended December 31, 2023

Accounts receivable, allowance for doubtful accounts $ 1,154 $ 837 $ ( 480 ) $ 1,511

Accounts receivable, allowance for doubtful accounts and credit losses $ 1,511 $ 20 $ 824 $ ( 44 ) $ 2,311

Notes receivable, allowance for credit losses $ — $ 58 $ 11 $ — $ 69

Investments in sales-type leases, allowance for credit losses $ — $ 6 $ 3 $ — $ 9

Deferred tax valuation allowance $ 536 $ — $ 442 $ — $ 978

Deductions in allowance for doubtful accounts represent uncollectible accounts written off, net of recoveries.

Deductions in allowance for doubtful accounts and credit losses represent uncollectible accounts written off, net of recoveries.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures