10-Q 1 if2_3q04.txt SEPTEMBER 30, 2004 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-Q ---------------- X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE --- SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2004 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE --- SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ ---------------- Commission File No. 33-2794 ---------------- POLARIS AIRCRAFT INCOME FUND II, A California Limited Partnership State of Organization: California IRS Employer Identification No. 94-2985086 201 High Ridge Road, Stamford, Connecticut 06927 Telephone - (203) 357-3776 Indicate by check mark whether the registrant:(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act). Yes No X --- --- This document consists of 15 pages. POLARIS AIRCRAFT INCOME FUND II, A California Limited Partnership FORM 10-Q - For the Quarterly Period Ended September 30, 2004 INDEX Part I. Financial Information Page Item 1. Financial Statements (Unaudited) a) Condensed Balance Sheets - September 30, 2004 and December 31, 2003............................................3 b) Condensed Statements of Operations - Three and Nine Months Ended September 30, 2004 and 2003............................4 c) Condensed Statements of Changes in Partners' Capital (Deficit) - Year Ended December 31, 2003 and Nine Months Ended September 30, 2004.....................5 d) Condensed Statements of Cash Flows - Nine Months Ended September 30, 2004 and 2003............................6 e) Notes to Condensed Financial Statements......................7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...........10 Item 4. Controls and Procedures.................................13 Part II. Other Information Item 1. Legal Proceedings.......................................14 Item 6. Exhibits................................................14 Signature ........................................................15 2 Part 1. Financial Information ----------------------------- Item 1. Financial Statements POLARIS AIRCRAFT INCOME FUND II, A California Limited Partnership CONDENSED BALANCE SHEETS (Unaudited) September 30, December 31, 2004 2003 ---- ---- ASSETS: CASH AND CASH EQUIVALENTS $ 4,547,997 $ 4,649,947 RECEIVABLE FROM AFFILIATE 18,318 -- OTHER RECEIVABLES 403 1,612 AIRCRAFT HELD FOR SALE -- 1,049,000 ----------- ----------- Total Assets $ 4,566,718 $ 5,700,559 =========== =========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT): PAYABLE TO AFFILIATES $ -- $ 120,867 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 153,198 124,580 ----------- ----------- Total Liabilities 153,198 245,447 ----------- ----------- PARTNERS' CAPITAL (DEFICIT): General Partner (3,602,148) (3,651,782) Limited Partners, 499,730 units in 2004 and 499,757 units in 2003 issued and outstanding 8,015,668 9,106,894 ----------- ----------- Total Partners' Capital 4,413,520 5,455,112 ----------- ----------- Total Liabilities and Partners' Capital $ 4,566,718 $ 5,700,559 =========== =========== The accompanying notes are an integral part of these condensed statements. 3 POLARIS AIRCRAFT INCOME FUND II, A California Limited Partnership CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2004 2003 2004 2003 ---- ---- ---- ---- REVENUES: Rent from operating leases $ -- $ 305,003 $ -- $ 1,924,456 Interest 15,048 10,746 33,592 38,769 Gain on sale of aircraft 33,591 -- 34,591 -- Lessee return condition settlements -- 56,952 -- 177,697 Lessee settlements 74,054 -- 149,078 69,346 Other income 8,406 -- 8,406 -- ----------- ----------- ----------- ----------- Total Revenues 131,099 372,701 225,667 2,210,268 ----------- ----------- ----------- ----------- EXPENSES: Depreciation -- 1,046,155 -- 2,058,650 Write-up of aircraft held for sale -- -- (175,000) -- Management fees to general partner -- 8,357 -- 50,428 Operating 128,119 161,969 229,596 278,423 Administration and other 65,422 75,395 240,913 236,231 ----------- ----------- ----------- ----------- Total Expenses 193,541 1,291,876 295,509 2,623,732 ----------- ----------- ----------- ----------- NET LOSS $ (62,442) $ (919,175) $ (69,842) $ (413,464) =========== =========== =========== =========== NET INCOME (LOSS) ALLOCATED TO THE GENERAL PARTNER $ 58,444 $ (9,192) $ 146,809 $ 598,192 =========== =========== =========== =========== NET LOSS ALLOCATED TO LIMITED PARTNERS $ (120,886) $ (909,983) $ (216,651) $(1,011,656) =========== =========== =========== =========== NET LOSS PER LIMITED PARTNERSHIP UNIT $ (0.24) $ (1.82) $ (0.43) $ (2.02) =========== =========== =========== ===========
The accompanying notes are an integral part of these condensed statements. 4 POLARIS AIRCRAFT INCOME FUND II, A California Limited Partnership CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) Year Ended December 31, 2003 and Nine Months Ended September 30, 2004 General Limited Partner Partners Total ------- -------- ----- Balance, December 31, 2002 $ (3,555,808) $ 16,352,341 $ 12,796,533 Net income (loss) 598,345 (996,571) (398,226) Cash distribution to partners ($12.50 per Limited Partnership Unit) (694,319) (6,248,876) (6,943,195) ------------ ------------ ------------ Balance, December 31, 2003 (3,651,782) 9,106,894 5,455,112 Net income (loss) 146,809 (216,651) (69,842) Cash distribution to partners ($1.75 per Limited Partnership Unit) (97,175) (874,575) (971,750) ------------ ------------ ------------ Balance, September 30, 2004 $ (3,602,148) $ 8,015,668 $ 4,413,520 ============ ============ ============ The accompanying notes are an integral part of these condensed statements. 5 POLARIS AIRCRAFT INCOME FUND II, A California Limited Partnership CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2004 2003 ---- ---- OPERATING ACTIVITIES: Net loss $ (69,842) $ (413,464) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation -- 2,058,650 Write-up of aircraft held for sale (175,000) -- Gain on sale of aircraft (34,591) -- Changes in operating assets and liabilities: Increase in receivable from affiliate (18,318) -- Decrease in rent and other receivables 1,209 199,948 Increase in prepaid expense -- (3,871) (Decrease) increase in payable to affiliates (120,867) 39,105 Increase (decrease) in accounts payable and accrued liabilities 28,618 (432,011) Decrease in deferred income -- (475,123) ------------ ------------ Net cash (used in) provided by operating activities (388,791) 973,234 ------------ ------------ INVESTING ACTIVITIES: Net proceeds from sale of aircraft 1,258,591 -- ------------ ------------ Net cash provided by investing activities 1,258,591 -- ------------ ------------ FINANCING ACTIVITIES: Cash distributions to partners (971,750) (6,943,195) ------------ ------------ Net cash used in financing activities (971,750) (6,943,195) ------------ ------------ CHANGES IN CASH AND CASH EQUIVALENTS (101,950) (5,969,961) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,649,947 10,605,028 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,547,997 $ 4,635,067 ============ ============ NON-CASH INVESTING AND FINANCING ACTIVITIES: Transfer of operating lease assets to assets held for sale $ -- $ 500,000 ============ ============ The accompanying notes are an integral part of these condensed statements. 6 POLARIS AIRCRAFT INCOME FUND II, A California Limited Partnership NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 1. Organization and the Partnership Polaris Aircraft Income Fund II, A California Limited Partnership (PAIF-II or the Partnership), was formed on June 27, 1984 for the purpose of acquiring and leasing aircraft. The Partnership will terminate no later than December 2010. Upon organization, both the General Partner and the initial Limited Partner contributed $500 to capital. The Partnership recognized no profits or losses during the periods ended December 31, 1984 and 1985. The offering of Limited Partnership units terminated on December 31, 1986, at which time the Partnership had sold 499,997 units of $500, representing $249,998,500. All partners were admitted to the Partnership on or before December 1, 1986. During January 1998, 24 units were redeemed by the Partnership in accordance with section 18 of the Limited Partnership Agreement. During the nine months ended September 30, 2004, 27 units were abandoned. At September 30, 2004, there were 499,730 units outstanding, net of redemptions. As of September 30, 2004, the Partnership had sold all of its remaining aircraft. With the completion of such sales, the Partnership plans to make a final distribution of cash and terminate the Partnership thereafter. The General Partner expects the final cash distribution and termination of the Partnership will occur during the fourth quarter of 2004. Polaris Investment Management Corporation (PIMC), the sole General Partner of the Partnership, supervises the day-to-day operations of the Partnership. PIMC is a wholly-owned subsidiary of Polaris Aircraft Leasing Corporation (PALC). Polaris Holding Company (PHC) is the parent company of PALC. General Electric Capital Corporation (GE Capital), an affiliate of General Electric Company, owns 100% of PHC's outstanding common stock. PIMC has entered into a services agreement dated as of July 1, 1994 with GE Capital Aviation Services, Inc. (GECAS). Amounts paid and allocations to related parties are described in Notes 4 and 5. Note 2. Reclassification Certain 2003 amounts have been reclassified to conform to the 2004 presentation. These reclassifications had no impact on previously reported net income or partners' capital. Note 3. Accounting Principles and Policies In the opinion of management, the condensed financial statements presented herein include all adjustments, consisting only of normal recurring items, necessary to summarize fairly the Partnership's financial position and results of operations. The financial statements have been prepared in accordance with the instructions of the Quarterly Report to the Securities and Exchange Commission (SEC) Form 10-Q. The condensed balance sheet at December 31, 2003 has been derived from the audited financial statements at that date but does not include all of the information and note disclosures required by accounting principles generally accepted in the United States (GAAP). These statements 7 should be read in conjunction with the financial statements and notes thereto for the years ended December 31, 2003, 2002, and 2001 included in the Partnership's 2003 Annual Report to the SEC on Form 10-K. Note 4. Related Parties Under the Limited Partnership Agreement (the Agreement), the Partnership paid the following amounts for the current quarter to the General Partner, PIMC, in connection with services rendered or payments made on behalf of the Partnership: Payments made during the Three Months Ended September 30, 2004 ------------------ Out-of-Pocket Operating Expense Reimbursement $ 85,357 Out-of-Pocket Administrative Expense Reimbursement 167,365 -------- $252,722 ======== As of September 30, 2004, the Partnership also has a net Receivable from Affiliate of $18,318 which is comprised of a receivable due from PIMC totaling $33,985 (see Note 8) and a payable due to PIMC totaling $15,667 representing reimbursement of out-of-pocket administrative expenses. Note 5. Partners' Capital The Agreement stipulates different methods by which revenue, income and loss from operations and gain or loss on the sale of aircraft are to be allocated to the General Partner and the Limited Partners. Such allocations are made using income or loss calculated under GAAP for book purposes, which varies from income or loss calculated for tax purposes. Cash available for distributions, including the proceeds from the sale of aircraft, is distributed 10% to the General Partner and 90% to the Limited Partners. The different methods of allocating items of income, loss and cash available for distribution combined with the calculation of items of income and loss for book and tax purposes result in book basis capital accounts that may vary significantly from tax basis capital accounts. The ultimate liquidation and distribution of remaining cash will be based on the tax basis capital accounts following liquidation, in accordance with the Agreement. Note 6. Aircraft and Depreciation The Partnership periodically reviewed the estimated realizability of the residual values at the projected end of each aircraft's economic life. For any downward adjustment in estimated residual value or decrease in the projected remaining economic life, the depreciation expense over the projected remaining economic life of the aircraft was increased. 8 Aircraft on lease were carried at cost unless deemed impaired, in which case the asset was recorded at fair value. Aircraft on lease were deemed impaired, if the projected net cash flow for each aircraft (projected rental revenue, net of management fees, less projected maintenance costs, if any, plus the estimated residual value) was less than the carrying value of the aircraft. An impairment loss was recognized equal to the difference between the net carrying value of the asset and its fair value. Aircraft held for sale were carried at the lower of cost or fair value less cost to sell. During the three and nine months ended September 30, 2004, the Partnership recognized a write-up of $0 and $175,000, respectively, in the carrying value of aircraft held for sale due to changes in estimated fair market values based on the selling price of the Partnership's remaining aircraft in the July 23, 2004 Aircraft Sale and Purchase Agreement. The adjustment to increase the net carrying value did not result in a net carrying value in excess of the original net carrying value of the assets when they were initially designated as held for sale. Note 7. Sale of Aircraft On February 9, 2004 the General Partner, on behalf of the Partnership, sold four DC-9-30 aircraft for $450,000 in cash. The Partnership recognized a gain on the sale of $1,000. On August 27, 2004 the General Partner, on behalf of the Partnership, sold its six remaining DC-9-30 aircraft for $808,591 in cash, net of selling costs. The Partnership recognized a gain on the sale of $34,591. Note 8. Subsequent Events On November 5, 2004, the Partnership received a payment of $78,050 representing a distribution from an original administrative rent claim in the amount of $422,989 filed against a former lessee's bankrupt estate. Also, in November 2004, the Partnership received an additional payment of $32,440 (plus interest of $1,545) representing a distribution associated with the original rent claim that was remitted by the bankruptcy estate to GECAS in December 2002. This payment is included in Lessee Settlements on the Statement of Operations for the three and nine months ended September 30, 2004 and is included in Receivable from Affiliate as of September 30, 2004. Further, the Partnership expects to receive an additional payment totaling $84,125 from the bankruptcy estate associated with the administrative rent claim during the fourth quarter of 2004. As such it is expected that the Partnership will ultimately received 100% of the administrative claim amount. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements Certain portions of this Quarterly Report on Form 10-Q contain forward-looking statements that are based on management's expectations, estimates, projections and assumptions. Words such as "expects", "anticipates", "plans", "believes", "scheduled", "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements, which include but are not limited to projections of revenues, earnings, cash flows, aircraft disposition and the like. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors such as, without limitation, general U.S. and international political and economic conditions. All forward-looking statements speak only as of the date of this report, or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Partnership or any person acting on its behalf are qualified by the cautionary statements in this report. The Partnership does not undertake any obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report. Business Overview At September 30, 2004, Polaris Aircraft Income Fund II (PAIF-II or the Partnership) no longer owns any aircraft from its original portfolio of 30 used McDonnell Douglas DC-9-30 commercial jet aircraft (DC-9-30). On August 27, 2004, the Partnership sold its six remaining DC-9-30 aircraft to an unaffiliated buyer and received net cash proceeds of $808,591. During the three months ended March 31, 2004, the Partnership sold four DC-9-30 aircraft on February 9, 2004 for total cash proceeds of $450,000. These DC-9-30 aircraft had been stored in New Mexico while being marketed for sale. Prior to December 31, 2004, the General Partner expects the Partnership to make its final distribution of cash and to terminate the Partnership thereafter. Partnership Operations The Partnership recorded a net loss of $62,442, or $0.24 per Limited Partnership Unit, for the three months ended September 30, 2004, compared to a net loss of $919,175, or $1.82 per Limited Partnership Unit, for the three months ended September 30, 2003. The Partnership recorded net a loss of $69,842, or $0.43 per Limited Partnership Unit, for the nine months ended September 30, 2004, compared to a net loss of $413,464, or $2.02 per Limited Partnership Unit, for the nine months ended September 30, 2003. Variances in net income may not correspond to variances in net income per Limited Partnership Unit due to the allocation of components of income and loss in accordance with the Limited Partnership Agreement. The decrease in net loss during the three and nine months ended September 30, 2004 as compared to the same periods in 2003, is primarily due to the write-up of the carrying value of aircraft held for sale and gain on sale of aircraft, an absence of depreciation expense and management fees to the General Partner and a decrease in operating expenses, partially offset by an absence of rental income, as discussed below. 10 The absence of rental income from operating leases during the three and nine months ended September 30, 2004, as compared to $305,003 and $1,924,456, respectively, in the same periods in 2003, is due to all lease terms having expired during 2003. Interest income increased slightly during the three months ended September 30, 2004, as compared to the same period in 2003, primarily due to the receipt of net sales proceeds totaling $1,258,591 and recent increases in interest rates. Interest income decreased slightly during the nine months ended September 30, 2004, as compared to the same period in 2003, primarily due to lower interest rates during the first two quarters of 2004 and lower average cash balances. The recognized gain on sale of aircraft during the three and nine months ended September 30, 2004 of $33,591 and $34,591, respectively, was due to the sale of four of the Partnership's aircraft on February 9, 2004 for $450,000 and the sale of the six remaining aircraft on August 27, 2004 for $808,591, net of selling costs. There were no aircraft sales during the same periods in 2003. There were no revenues from payments of lessee return condition settlements during the three and nine months ended September 30, 2004, as compared to $56,952 and $177,697, respectively, for the same periods in 2003, due to all remaining aircraft having been returned upon lease expiration during 2003. There were two aircraft returned during the three months ended September 30, 2003 and a total of five aircraft returned during the nine months ended September 30, 2003. During the three and nine months ended September 30, 2004, the Partnership recognized lessee settlement income in the amount of $74,054 and $149,078, respectively, as compared to $0 and $69,346, respectively, recognized during the same periods in 2003. The payments received during the 2004 and 2003 periods resulted from distributions by a former lessee's bankrupt estate representing a portion of the $422,989 administrative rent claims initially filed by the Partnership pursuant to the bankruptcy (also see Note 8). Aircraft held for sale were carried at the lower of cost or fair value less cost to sell. During the nine months ended September 30, 2004, the Partnership recognized income of $175,000, or $0.35 per Limited Partnership Unit, on the write-up of the carrying value of five of its aircraft, which previously had been reduced through additional depreciation expense as the result of past reviews of estimated market values. The estimated fair market value of the aircraft held for sale was based on the total sale price of $820,000 for the Partnership's six DC-9-30's in the July 23, 2004 Aircraft Sale and Purchase Agreement. The carrying value of one of the Partnership's aircraft was not adjusted because its cost basis determined at lease expiration was less than the estimated fair market value. No adjustments to the market value of aircraft held for sale were made during the three months ended September 30, 2004 and the three and nine months ended September 30, 2003. The absence of depreciation expense and management fees to the General Partner during the three and nine months ended September 30 2004, as compared to the same periods in 2003, was due to all lease terms having expired during 2003. Operating expenses decreased during the three and nine months ended September 30, 2004, as compared to the same periods in 2003, primarily due to maintenance and storage related costs associated with the aircraft while being held for sale. During the nine months ended September 30, 2004, ten aircraft were held in 11 storage until February 9, 2004 when four were sold and six remained in storage until August 27, 2004 when these aircraft were sold. As of September 30, 2003, nine aircraft were held in storage while being marketed for sale. Administration and other expense decreased during the three months ended September 30, 2004, as compared to the same period in 2003, primarily due to decreased legal fees related to various SEC and investor reporting matters and printing and postage expenses. Administration and other expense increased slightly during the nine months ended September 30, 2004, as compared to the same period in 2003. Liquidity and Cash Distributions Liquidity - No further rent payments were due during the nine months ended September 30, 2004 since all lease terms expired during 2003. The Partnership received all payments due from its sole lessee for the aircraft remaining on lease during the nine months ended September 30, 2003. PIMC, the General Partner, has determined that cash reserves be maintained as a prudent measure to ensure that the Partnership has available funds for winding up the affairs of the Partnership and for other contingencies. As of September 30, 2004, the Partnership has liquidated all of its aircraft and in November 2004 received two distributions of $78,050 and $32,440 from a former lessee's bankrupt estate representing payments on the original $422,989 administrative rent claims made by the Partnership against the lessee's estate (see Note 8 also). Prior to December 31, 2004, the General Partner expects the Partnership to make its final distribution of cash and to terminate the Partnership thereafter. Cash Distributions - Cash distributions to Limited Partners during the nine months ended September 30, 2004 and 2003 were $874,575, or $1.75 per Limited Partnership Unit, and $6,248,876, or $12.50 per Unit, respectively. The General Partner had determined that it is in the best interests of the Partnership to suspend any further cash distributions until the Partnership is in a position to dissolve, wind up, terminate and make a final distribution of its remaining cash. In reaching this conclusion, the General Partner considered the anticipated costs of storing and insuring the aircraft pending sale, the anticipated costs of marketing and preparing the aircraft for sale, the anticipated costs of winding up the Partnership's business, the uncertainty as to the period of time required to sell the aircraft and wind up the Partnership, the uncertainty as to the terms on which the Partnership's aircraft would be sold and the desirability of maintaining a prudent level of cash reserves for Partnership needs and contingencies. The Partnership does not have any material off-balance sheet commitments or obligations. 12 Item 4. Controls and Procedures (a) Evaluation of disclosure controls and procedures PIMC management reviewed the Partnership's internal controls and procedures and the effectiveness of these controls. As of September 30, 2004, PIMC management, including its Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures pursuant to Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Partnership's disclosure controls and procedures are effective in timely alerting them to material information relating to the Partnership required to be included in its periodic SEC filings. (b) Change to internal controls There was no change in the Partnership's internal controls over financial reporting or in other factors during the Partnership's last quarter that materially affected, or are reasonably likely to materially affect, the Partnership's internal controls over financial reporting. There were no significant deficiencies or material weaknesses, and therefore no corrective actions taken. 13 Part II. Other Information -------------------------- Item 1. Legal Proceedings As discussed in Item 3 of Part I of Polaris Aircraft Income Fund II's (the Partnership) 2003 Annual Report to the Securities and Exchange Commission (SEC) on Form 10-K (Form 10-K) and in Item 1 of Part II of the Partnership's Quarterly Report to the SEC on Form 10-Q (Form 10-Q) for the period ended June 30, 2004, there is one pending legal proceeding involving the Partnership. There have been no material developments with respect to such proceeding during the period covered by this report. However, the Partnership has received the payments described in Note 8 to the Financial Statements. Other Proceedings - Item 10 in Part III of the Partnership's 2003 Form 10-K and Item 1 of Part II of the Partnership's Quarterly Report to the SEC on Form 10-Q for the period ended June 30, 2004 discuss certain actions which have been filed against Polaris Investment Management Corporation and others in connection with the sale of interests in the Partnership and the management of the Partnership. The Partnership is not a party to these actions. There have been no material developments with respect to any of the actions described therein during the period covered by this report. Item 6. Exhibits a) Exhibits (numbered in accordance with Item 601 of Regulation S-K) 31.1 CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 14 SIGNATURE Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. POLARIS AIRCRAFT INCOME FUND II, A California Limited Partnership (Registrant) By: Polaris Investment Management Corporation, General Partner November 15, 2004 By: /s/ Stephen E. Yost ----------------- ---------------------------------------- Stephen E. Yost, Chief Financial Officer 15