-----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, EJljltCpHiRKZ4OwPEYYKVec0NV7RreB6TTjko37YbFQslPmYwRpWfKhyuFD4BbT O/hBPNdFXqYaRRTahnuWVw== 0000930832-97-000018.txt : 19971113 0000930832-97-000018.hdr.sgml : 19971113 ACCESSION NUMBER: 0000930832-97-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JETFLEET AIRCRAFT L P CENTRAL INDEX KEY: 0000846927 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943087300 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19216 FILM NUMBER: 97715660 BUSINESS ADDRESS: STREET 1: 1440 CHAPIN AVENUE STREET 2: SUITE 310 CITY: BURLINGAME STATE: CA ZIP: 94010 BUSINESS PHONE: 415-696-3900 MAIL ADDRESS: STREET 1: 1440 CHAPIN AVENUE STREET 2: SUITE 310 CITY: BURLINGAME STATE: CA ZIP: 94010 10-Q 1 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, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FIILE NUMBER: 0-19216 JETFLEET AIRCRAFT, L.P. (Exact name of registrant as specified in its charter) CALIFORNIA 94-3087300 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 1440 CHAPIN AVE., SUITE 310 94010 BURLINGAME, CALIFORNIA (Zip Code) (Address of principal executive office) Registrant's telephone number, including area code: (650) 696-3900 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. /X/ Yes / / No On November 13, 1997, 296,069 Limited Partnership Units were outstanding. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS JetFleet Aircraft, L.P. Balance Sheets ASSETS
September 30, December 31, 1997 1996 ----- ------ (Unaudited) Current assets: Cash $ 157,430 $ 30,728 Lease payments receivable 45,000 180,000 Accounts receivable 10,176 - Reserves receivable from lessee - 4,688 Total current assets 212,606 215,416 Aircraft under operating leases and aircraft held for operating leases, net of accumulated depreciation of $4,836,260 in 1997 and $4,055,292 in 1996 1,547,377 2,328,345 ------------ ----------- $ 1,759,983 $ 2,543,761 ============ =========== LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Accounts payable $ 17,279 $ 16,743 Accrued maintenance costs 58,199 25,277 Prepaid rents 8,142 8,890 Unearned interest income 510 14,674 ------------ ----------- Total liabilities 84,130 65,584 ------------ ----------- Partners' capital 1,675,853 2,478,177 ------------ ----------- $ 1,759,983 $ 2,543,761 ============ =========== See accompanying notes.
JetFleet Aircraft, L.P. Statements of Operations (Unaudited)
For the Nine Months For the Three Months Ended September 30, Ended September 30, 1997 1996 1997 1996 Revenues: Rental income $ 415,086 $ 436,708 $ 137,613 $ 160,386 Interest income 14,368 36,916 2,625 10,532 ---------- ---------- ---------- ----------- 429,454 473,624 140,238 170,918 Costs and expenses: Amortization of organization costs - 1,435 - 405 General and administrative 55,570 90,024 5,962 28,408 Maintenance costs (20,703) 35,000 - - Depreciation of aircraft 780,968 780,968 260,323 260,323 ---------- ---------- ---------- ----------- 815,835 907,427 266,285 289,136 ---------- ---------- ---------- ----------- Net loss $ (386,381)$ (433,803) $ (126,047) $ (118,218) ========== ========== =========== =========== Allocation of net loss: General partners $ (3,864)$ (4,338) $ ( 1,260) $ (1,182) Limited partners (382,517) (429,465) ( 124,787) (117,036) ---------- ---------- ---------- ----------- $(386,381)$ (433,803) $ (126,047) $ (118,218) ========== ========== =========== =========== Per Limited Partnership Unit $ (1.29)$ (1.45) $ (0.42) $ (0.40) ========== ========== =========== =========== Limited Partnership Units outstanding 296,069 296,069 296,069 296,069 ========== ========== =========== =========== See accompanying notes.
JetFleet Aircraft, L.P. Statements of Cash Flows (Unaudited)
For the Nine Months Ended September 30, 1997 1996 ----- ----- Net cash provided by operating activities $ 407,645 $ 268,211 Investing activities- Payments received on capital lease 135,000 135,000 Financing activities - Distributions (415,943) (415,400) --------- --------- Net increase / (decrease) in cash 126,702 (12,189) Cash, beginning of period 30,728 96,184 --------- --------- Cash, end of period $ 157,430 $ 83,995 ========= ========= See accompanying notes.
JetFleet Aircraft, L.P. Notes to Financial Statements September 30, 1997 (Unaudited) 1. Basis of Presentation JetFleet Aircraft, L.P. ("JetFleet"), a California limited partnership, was formed on February 16, 1989 and commenced operations in November 1989. The accompanying unaudited financial statements reflect all adjustments (consisting of only normal recurring accruals) which are, in the opinion of CMA Capital Group, the Corporate General Partner, necessary for a fair presentation of the financial results for such periods. The results of operations for such periods are not necessarily indicative of results of operations for a full year. The statements should be read in conjunction with the Summary of Significant Accounting Policies and other notes to financial statements included in JetFleet's Annual Report on Form 10-K for the year ended December 31, 1996. 2. Aircraft Under Operating Leases deHavilland Aircraft JetFleet owns a 24.37% undivided interest in a deHavilland DHC- 7-103 aircraft, serial number 72 ("S/N 72") and a 95.90% undivided interest in a deHavilland DHC-7-102 aircraft, serial number 57 ("S/N 57"). The remaining undivided interests in these two aircraft are owned by the seller and JetFleet Aircraft II, L.P. ("JetFleet II"), a California limited partnership and an affiliate of JetFleet (collectively, the "Co-Owners"). S/N 57 was subject to a triple net lease with Johnson Controls World Services, Inc. ("JCWS") for a two year term, renewable in one year increments for an aggregate period of eight years. JCWS operated S/N 57 under an eight year contract, which commenced in 1986, with the United States Army for use in the Marshall Islands at the site of the Army's deep space research center where missile guidance systems are tested. During 1994, the lease with JCWS for S/N 57 was extended through September 30, 1995, at reduced rent. A new contract with the United States Army commenced on February 15, 1995 for a term of two years with three two-year renewal options. The contract was awarded to Range Systems Engineering, a subsidiary of Raytheon Service Company ("Raytheon"). JetFleet's management anticipates that the lease will continue for as long as the underlying government contract continues, although there is no contractual requirement to this effect. During 1995 the lease was extended through September 30, 1996 and, during 1996, an agreement was reached to extend the lease through September 30, 1998 at a reduced rental rate, with an option to extend the term for two additional years. JetFleet Aircraft, L.P. Notes to Financial Statements September 30, 1997 (Unaudited) 2. Aircraft Under Operating Leases (continued) S/N 72, which, at the time of purchase, was subject to the same contract with JCWS as S/N 57, was returned by JCWS during June 1993. In August 1993, S/N 72 was leased to Eclipse Airlines. Upon its return from Eclipse, S/N 72 was leased to The AGES Group, L.P. ("AGES") for the period December 22, 1993 through September 1, 1994. Upon its return by AGES, S/N 72 underwent certain scheduled maintenance and other repair work. On March 31, 1995, S/N 72 was leased to the National Airline Commission of Papua New Guinea ("Air Niugini") for a term of six months. The lease was subsequently extended until October 31, 1995. JetFleet collected a total of $53,060 in monthly lease payments from Air Niugini during the term of the lease. In addition, Air Niugini paid JetFleet its pro-rata share of maintenance costs of $31,710. Upon its return by Air Niugini, S/N 72 underwent certain scheduled maintenance and other repair work. On April 25, 1996, S/N 72 was leased to Air Tindi Limited ("Air Tindi") for a term of thirty-six months. Air Tindi has provided a letter of credit which serves as a security deposit under the lease. In addition, Air Tindi pays JetFleet its pro-rata share of maintenance costs per hour of usage, which amount is to be applied for scheduled overhauls and inspections. Air Tindi is a regional airline headquartered in Yellowknife, Northwest Territories, Canada and provides charter and regularly scheduled flights throughout the Northwest Territories. 3. Investment in Capital Lease McDonnell Douglas DC-9-32 Aircraft JetFleet owns a 50.00% interest in a McDonnell Douglas DC-9-32, serial number 47236 (the "DC-9"). The remaining 50.00% interest is owned by JetFleet II. The DC-9 is leased back to the seller, Interglobal, Inc. for thirty-six months (the "DC-9 Lease"). The DC-9 is currently sub-leased to and being operated by Aero California S.A. de CV. As part of the sale and leaseback described above, Interglobal, Inc. assigned its rights under the sublease to the Co-Owners. JetFleet's investment in the DC-9 is being accounted for as a capital lease. JetFleet recorded $14,164 of interest income attributable to the DC-9 Lease during the nine months ended September 30, 1997. 4. Other On April 8, 1997 a Registration Statement on Form S-4 was filed with the Securities and Exchange Commission disclosing a proposed consolidation of JetFleet and JetFleet II into a newly incorporated Delaware corporation, AeroCentury Corp. The Registration Statement was declared effective on September 23, 1997 and the proposed consolidation has been submitted to the limited partners of JetFleet and JetFleet II for their approval. If the consolidation is approved, JetFleet and JetFleet II will cease to exist as independent entities. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity At the end of the third quarter of 1997, JetFleet had cash balances of $157,430. This amount was held for the distribution made to the Unitholders in October 1997 for the months of August and September and to pay accrued expenses. During the quarter, JetFleet's primary sources of liquidity were cash flows from leasing operations and capital lease payments. JetFleet's liquidity will vary in the future, increasing to the extent cash flows from operations exceed expenses, and decreasing as distributions are made to the Unitholders and to the extent expenses exceed cash flows from leases. JetFleet uses substantially all its operating cash flow to make cash distributions to its Unitholders. Since JetFleet's leases are triple net leases (the lessee pays operating and maintenance expenses, insurance and taxes), JetFleet does not anticipate that it will incur significant operating expenses in connection with ownership of its aircraft as long as they remain on lease. However, JetFleet incurred repair costs in 1996 for S/N 72 which were $35,000 in excess of the amounts collected from lessees. These repair costs are the result of maintenance performed to enhance the aircraft's marketability. From May 1995 through September 1997, JetFleet made distributions at an annualized rate of 4%. JetFleet ceased cash distributions to its partners effective October 1, 1997. If the proposed consolidation discussed in Note 4 is not approved by the partners, JetFleet will use its cash flow to reinvest in additional aircraft assets. JetFleet currently has available adequate reserves to meet its immediate cash requirements. 1997 versus 1996 Cash flows from operations increased approximately $140,000. The increase from year to year was partially due to a decrease in net loss of approximately $48,000 (see Results of Operations, below). During the first nine months of 1997, JetFleet had cash inflows of approximately $33,000 in maintenance reserves from lessees and $5,000 of rent receivable. These cash inflows were partially offset by the recognition of approximately $14,000 of unearned income and the recording of a receivable of approximately $10,000 for rent receivable. During the first nine months of 1996, JetFleet's primary cash outflows consisted of accrued maintenance costs of approximately $59,000, previously accrued expenses of approximately $42,000 and unearned income of approximately $37,000. Such cash outflows were partially offset by payments on accounts receivable of approximately $46,000 and prepaid rent of approximately $11,000. There were no investing activities during the nine months ended June 30, 1997 and 1996. In 1997 and 1996, there were no financing sources of cash. Cash distributions to Unitholders were approximately the same from year to year. Results of Operations JetFleet recorded net losses of ($386,381) and ($433,803) or ($1.29) and ($1.45) per Limited Partnership Unit outstanding in the nine months ended September 30, 1997 and 1996, respectively, and net losses of ($126,047) and ($118,218) or ($0.42) and ($0.40) per Limited Partnership Unit outstanding in the three months ended September 30, 1997 and 1996, respectively. 1997 versus 1996 Rental income decreased approximately $22,000 and for the nine month and three month periods ended September 30, 1997 compared to the same periods in 1996. The decreases were primarily a result of decreased rent for S/N 57, pursuant to the 1996 lease extension. The decreases were only partially offset by additional rent received for S/N 72 during the second quarter of 1997, which had been off lease during April 1996. Interest income from the capital lease for the DC-9 was $23,000 and $8,000 lower in the nine month and three month periods ending September 30, 1997, respectively, due to the decreasing lease payments receivable. There was no change in depreciation from 1996 to 1997. There was no accrual or payment of the base management, incentive management or re-lease fees for 1997 or 1996 as the annualized rate of distributions in those years did not meet the Preferred Return as defined in the Prospectus. General and administrative expenses decreased approximately $34,000 and $22,000 during the nine months and three months ended September 30, 1997 compared to the same periods in 1996. In 1996, such expenses included insurance costs associated with S/N 72 during its off-lease period. No insurance costs were incurred during 1997. Maintenance costs decreased approximately $56,000 for the nine month period ended September 30, 1997, compared to the same period in 1996, because JetFleet did not incur any repair costs in 1997 for S/N 72, as a result of it being on lease subject to a triple net lease and because JetFleet recorded an adjustment of approximately $21,000 for the reimbursement of maintenance costs previously expensed and paid. JetFleet incurred no maintenance costs during the three months ended September 30, 1997 or 1996. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 13, 1997. JETFLEET AIRCRAFT, L.P. By: CMA Capital Group, Managing General Partner By: /s/ Neal D. Crispin --------------------- Neal D. Crispin Title: Chief Executive Officer Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons in the capacities indicated on November 13, 1997.
Signature Title /s/ Neal D. Crispin Chief Executive and Chief Financial - ------------------- Neal D. Crispin Officer and Chairman of the Board of Directors of the Managing General Partner /s/ Richard D. Koehler Executive Vice President and - ---------------------- Richard D. Koehler Director of the Managing General Partner
EXHIBIT INDEX Exhibit No. Description Page No. - ------------ ------------ --------- EX-27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE FOR 3RD QUARTER OF 1997
5 1 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 157,430 0 55,176 0 0 212,606 6,383,637 (4,836,260) 1,759,983 84,130 0 0 0 0 1,675,853 1,759,983 0 429,454 0 0 815,835 0 0 (386,381) 0 (386,381) 0 0 0 (386,381) 0 0
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