-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P4+5GN2mJrgfL5Z0F3SbQpvgzt4wUIRANOaves2+8REB740lJ0sTKHed6oANalTV ocj6lXjJdm8yJ3yCzewDSg== 0000950149-97-001556.txt : 19970814 0000950149-97-001556.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950149-97-001556 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970813 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRLEASE LTD CENTRAL INDEX KEY: 0000799033 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE LESSORS [6172] IRS NUMBER: 943008908 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09259 FILM NUMBER: 97659639 BUSINESS ADDRESS: STREET 1: 733 FRONT ST STREET 2: P.O. BOX 193985 CITY: SAN FRANCISCO STATE: CA ZIP: 94119 BUSINESS PHONE: 4156279289 DEFA14A 1 AIRLEASE SECOND QUARTER REPORT 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [X] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 Airlease Ltd., A California Limted Partnership - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [ ] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. and 0-11. (1) Title of each class of securities to which transaction applies: --------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: --------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): --------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: --------------------------------------------------------------------- (5) Total fee paid: --------------------------------------------------------------------- [X] Fee paid previously with preliminary materials: [X] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: $14,735.25 ---------------------------------------------------------------------- (2) Form, Schedule or Registration Statement no.: DEF 14A ---------------------------------------------------------------------- (3) Filing Party: Airlease Ltd., A California Limited Partnership ---------------------------------------------------------------------- (4) Date Filed: July 3, 1997 ---------------------------------------------------------------------- 2 AIRLEASE MANAGEMENT SERVICES, INC. The General Partner of Airlease Ltd., A California Limited Partnership August 4, 1997 Dear Limited Partners: Consent material in connection with the solicitation of consents to authorize the General Partner to amend the Limited Partnership Agreement was sent to you recently. According to our records, your consent for this important proposal has not yet been received. The deadline for voting is August 28, 1997. Regardless of the number of units you may own, it is important that we receive your vote. Since the time remaining is short, we urge you to consider the proposal, mark your consent card accordingly, and mail the enclosed consent card promptly. If you have questions or need additional consent materials, please call D.F. King & Co., Inc. at (800) 714-3313. Your interest and participation in the partnership are sincerely appreciated. Sincerely, /s/ D. B. Gebler ------------------------------------- David B. Gebler Chairman Airlease Management Services, Inc. General Partner 555 California Street 4th Floor San Francisco, CA 94104 Phone 415/765-1814 Fax 415/765-1817 3 AIRLEASE LTD. [PHOTO OF JETLINER] 1997 SECOND QUARTER REPORT 4 Chairman's Letter SECOND QUARTER FINANCIAL RESULTS Airlease earned $1,442,000 in the second quarter ended June 30, 1997, (a decline of $146,000 or 9 percent) compared with 1996 second-quarter earnings of $1,588,000. Second-quarter revenues were $2,393,000, compared with last year's second quarter revenues of $2,717,000. Earnings for the first six-months of 1997 were $2,508,000, (a decline of $1,251,000 or 33 percent) compared with six-month earnings last year of $3,759,000. Revenues for the first half of 1997 were $4,712,000, compared with revenues of $6,148,000 for the first half of last year. The declines in results for the second-quarter and first six-months reflect the sale of an aircraft in the first quarter of 1996 and recognition of a gain on sale of $556,000, while no aircraft were sold in the first quarter of 1997. In addition, the sale of a total of seven aircraft during 1996 reduced the size of the portfolio and operating lease revenue. At June 30, 1997, the partnership owned an interest in one aircraft subject to an operating lease compared to interests in seven such aircraft one-year earlier. Depreciation expense declined as a result of the aircraft sales during 1996. Offsetting this reduction were higher investor reporting expenses incurred in connection with the solicitation of unitholder consents. The second quarter cash distribution of 45 cents per unit was declared for unitholders of record as of June 30, and is payable on August 15, 1997. This distribution exceeded second quarter net income resulting in a return of capital of approximately 14 cents. PORTFOLIO MATTERS The partnership owns a 50 percent interest in a DC-9-51 aircraft leased to Sun Jet International, Inc. On June 18, 1997, Sun Jet filed for bankruptcy. Sun Jet did not make its June or July rental payment and has not maintained the aircraft in compliance with the lease. The aircraft represents about one percent of the partnership's total assets and contributed about three percent of revenues for the first half of 1997. The partnership is monitoring the Sun Jet bankruptcy proceedings and will take such action as it believes to be in the partnership's best interest. PLAN TO RESTRICT TRANSFERABILITY OF UNITS AND CEASE REINVESTMENT As previously announced, primarily because of changes in tax law which will become effective on December 31, 1997, the partnership currently is seeking unitholder approval to authorize the general partner to delist the units from trading on the New York Stock 5 Exchange, to stop making new aircraft investments and to sell aircraft as attractive opportunities arise. In addition, if favorable changes in tax law are proposed or enacted the general partner would be authorized to take other actions which are beneficial to unitholders. On August 5, 1997, Federal legislation was enacted which provides that publicly traded partnerships, like Airlease, could elect to continue to be publicly traded, but that these partnerships would be subject to an entity level tax of 3.5 percent on their annual gross income. This tax would reduce the present value of future cash distributions per unit from the projected distributions for the proposal described in the Consent Solicitation Statement by approximately $0.50-$0.75. In addition, unless California adopts similar legislation, Airlease would be taxed as a corporation for California tax purposes beginning January 1, 1998 if the units continue to be publicly traded. Any California tax imposed on the partnership would also reduce cash distributions. We are reviewing the options regarding California legislation. If the proposal is approved and when the California tax law position is clarified, the general partner will determine whether imposing transfer restrictions by delisting units from the New York Stock Exchange in December 1997 is in the best interests of the unitholders. We urge you to carefully read the Consent Solicitation Statement, which provides detailed information about the proposal. If you were a record holder as of June 4, 1997, and have not yet received the package, or if you have any questions, please contact our Solicitation Agent at (800) 714-3313 or the partnership at (888) 800-0161. For your vote to count, the consent card must be postmarked by August 28, 1997. Failure to return the card has the same effect as a vote against the proposal. We recommend you vote to approve the proposal. Sincerely, /s/ David B. Gebler - -------------------- David B. Gebler Chairman Airlease Management Services, Inc. General Partner August 5, 1997 6 BALANCE SHEETS AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
June 30, 1997 December 31, (IN THOUSANDS EXCEPT UNIT DATA) (UNAUDITED) 1996 - --------------------------------------------------------------------------------------- ASSETS Cash $ 0 $ 580 Finance leases - net 85,895 83,056 Operating leases - net 908 1,090 Notes receivable (net of provision for doubtful account of $228 in 1997) 0 236 Prepaid expenses and other assets 244 168 ------- ------- Total assets $87,047 $85,130 ======= ======= LIABILITIES AND PARTNERS' EQUITY LIABILITIES Distribution payable to partners $ 2,102 $ 5,045 Accounts payable and accrued liabilities 939 972 Long-term notes payable 20,660 14,071 ------- ------- Total liabilities 23,701 20,088 ------- ------- COMMITMENTS AND CONTINGENCIES PARTNERS' EQUITY Limited partners (4,625,000 units outstanding) 62,713 64,391 General partner 633 651 ------- ------- Total partners' equity 63,346 65,042 ------- ------- Total liabilities and partners' equity $87,047 $85,130 ======= =======
See notes to condensed financial statements 7 STATEMENTS OF INCOME AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
Three Months Ended Six Months Ended June 30, June 30, (UNAUDITED; IN THOUSANDS ------------------ ---------------- EXCEPT PER UNIT AMOUNTS) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------- REVENUES Finance lease income $2,296 $2,215 $4,559 $4,468 Operating lease rentals 85 400 141 999 Gain on sale of equipment 0 0 0 556 Other income 12 102 12 125 ------ ------ ------ ------ Total revenues 2,393 2,717 4,712 6,148 ------ ------ ------ ------ EXPENSES Interest 472 491 1,006 1,014 Depreciation - operating leases 111 352 182 795 Allowance for doubtful account 0 0 228 0 Management fee - general partner 159 187 335 379 Investor reporting 200 61 401 124 General and administrative 9 38 52 77 ------ ------ ------ ------ Total expenses 951 1,129 2,204 2,389 ------ ------ ------ ------ Net Income $1,442 $1,588 $2,508 $3,759 ====== ====== ====== ====== Net Income Allocated To: General Partner $ 14 $ 16 $ 25 $ 38 ====== ====== ====== ====== Limited Partners $1,428 $1,572 $2,483 $3,721 ====== ====== ====== ====== Net Income Per Limited Partnership Unit $ 0.31 $ 0.34 $ 0.54 $ 0.80 ====== ====== ====== ======
See notes to condensed financial statements 8 STATEMENTS OF CASH FLOWS AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
SIX MONTHS ENDED JUNE 30, ------------------- (UNAUDITED; IN THOUSANDS) 1997 1996 - ---------------------------------------------------------------------------------------------------- NET CASH FLOWS FROM OPERATING ACTIVITIES $ 2,809 $ 4,177 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Aircraft equipment purchase (5,753) 0 Proceeds from sale of equipment 0 6,559 (Increase) decrease in notes receivable 8 339 Rental receipts in excess of earned finance lease income 2,914 2,706 -------- ------- Net cash provided (used) by investing activities (2,831) 9,604 -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Borrowings/(repayment) under lines of credit, net 312 (2,641) Proceeds from issuance of long-term debt 9,000 0 Repayment of long-term debt (2,723) (2,730) Distributions paid to partners (7,147) (8,409) -------- ------- Net cash used by financing activities (558) (13,780) -------- ------- Increase (decrease) in cash (580) 1 Cash at beginning of period 580 0 ------- ------- Cash at end of period $ 0 $ 1 ======== ======== ADDITIONAL INFORMATION Interest paid $ 905 $ 1,049 ======== ========
See notes to condensed financial statements 9 NOTES TO CONDENSED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION - The accompanying unaudited condensed financial statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of the Partnership, necessary to a fair statement of the results for the interim periods. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. The December 31, 1996 balance sheet included herein is derived from the audited financial statements included in the Partnership's Annual Report and incorporated by reference in the Form 10-K for the year ended 1996, but does not include all disclosures required by generally accepted accounting principles. The statements should be read in conjunction with the Organization and Significant Accounting Policies and other notes to financial statements included in the Partnership's Annual Report for the year ended December 31, 1996. DERIVATIVES - The Partnership holds one derivative financial instrument, which is an interest rate swap agreement used to manage the Partnership's interest rate risk. The Partnership accounts for this derivative financial instrument on an accrual basis when the cash flows generated from the hedging instrument fulfill the objectives of the hedge strategy and when there is high correlation between the derivative and the hedged asset or liability. Under accrual accounting interest differentials paid or received under interest rate swap agreements are recognized as an adjustment to interest expense over the life of the agreements. Termination gains or losses of such derivatives are amortized to interest expense over the remaining life of the hedged transaction. When a derivative no longer fulfills the high correlation objective, it is accounted for on a mark-to-market basis and termination of such derivatives is recognized immediately in the Statement of Income as a component of interest expense. 2. NET INCOME PER LIMITED PARTNERSHIP UNIT Net Income Per Limited Partnership Unit is computed by dividing the net income allocated to the Limited Partners by the weighted average units outstanding (4,625,000). 10 AIRLEASE LTD. A California Limited Partnership 555 California Street, 4th Floor San Francisco, CA 94104 -----END PRIVACY-ENHANCED MESSAGE-----