Exhibit 99.9
EXHIBIT 5 - PROJECTIONS: FOOTNOTES
BALANCE SHEET
1. Cash and cash equivalents - Decrease in balance from 6/30/01 to 12/31/01
resulting from (a) Portland Sale Proceeds ($10mm) staying with UniCapital
Corporation, (b) elimination of reserve ("Tax Reserve") maintained at the
company's lease servicer for payment of lease-related sales and property
taxes ($4mm) by assumption and (c) elimination of lease finance collection
accounts ($40mm) from projection by assumption.
Projection assumes no timing differences between collection of sales and
property taxes from lessees and the payment to taxing authorities, and
assumes the 6/30/01 Tax Reserve used to settle Post-petition accounts
payable and accrued expenses in a like amount. Projection assumes no
timing differences between collection of payments and the application to
debt service.
2 Accounts and notes receivable - $4mm of 6/30/01 balance related to
non-Debtor Subsidiaries known as special purpose entities ("SPEs"), which
amount assumed to be collected and applied toward the debt of the
non-Debtor SPEs. Decrease in remaining 6/30/01 balance resulting from the
following:
6/30/01 2001 2002 2003
Receivables Balance Write-Offs Collection Collection Collection
----------- ------- ---------- ---------- ---------- ----------
Property Tax 8.5 4.0 3.0 1.5
Big Ticket Related 4.4 0.2 1.3 2.9
Other Receivables 3.2 2.5 0.7
Notes Receivable 5.9 5.9
-----------------------------------------------------
Total 22.0 6.7 7.9 5.9 1.5
Collection related to a note receivable in the amount of $5.0mm in form of
collateral repossession. See "Investment in minority owned affiliates"
comment for details. Proceeds from certain collections are applied to
repay associated debt balances.
Projection assumes creation of new receivables related to aircraft and
aircraft engine assets (known as "Big Ticket" assets), which new
receivables are collected by year-end 2002.
3. Net investment in direct financing and sales type leases - Decrease in
balance from 6/30/01 to 12/31/01 resulting from net write-offs ($81mm) and
ordinary runoff ($134mm). During Projection period, net investment
balances decrease as a result of management's portfolio performance and
realization assumptions.
4. Equipment under operating lease, net - Decrease in balance from 6/30/01
to 12/31/01 in part due to repossession by lenders of aircraft assets
in 2001 ($53mm), with balance representing runoff of Equipment Leases
categorized as operating leases. Decrease during 2002 in part due to
the sale of aircraft assets ($49mm), with balance representing runoff
of Equipment Leases categorized as operating leases. During Projection
period, net investment balances decrease as a result of management's
portfolio performance and realization assumptions.
5. Equipment held for sale/lease - Decrease in balance from 6/30/01 to
12/31/01 resulting primarily from sale of aircraft engines ($7.5mm) and
write-off of miscellaneous inventory ($7.5mm). The 12/31/01 balance,
comprised primarily of aircraft and aircraft engine equipment, assumed to
be sold during 2002.
6. Deferred tax benefit - Balance as of 6/30/01 is made up almost entirely of
tax net operating losses, as reflected on the 12/31/00 consolidated
federal tax return of the company, tax effected at an estimated 38% tax
rate (representing a combined federal and state rate). Subsequent period
changes in this balance result from the generation/use of future estimated
tax net operating losses, tax effected at the same 38% rate.
7. Investment in minority owned affiliates - Investment represents company's
investment in Aircraft Finance Trust ("AFT"), which investment increased
from 6/30/01 balance resulting from the repossession of collateral in
satisfaction of a note receivable offset by net losses of AFT. Investment
balance changes during Projection period as a result of projected AFT
income.
8. Other assets - Balances decrease as follows:
6/30/01 2001 2002 2003
Other Assets Balance Write-Offs Collection Collection Collection
------------ ------- ---------- ---------- ---------- ----------
Retainers 1.7 1.7
Debt Issue Costs 3.9 3.9
Prepaid Amounts 0.6 0.6
Restricted Escrows 5.4 5.0 0.4
Restricted Deposits 0.9 0.4 0.5
Misc. Assets 0.7 0.3 0.4
--------------------------------------------------------
Total 13.2 4.8 5.8 2.6
Restricted Escrows and Restricted Deposits are collected and
simultaneously surrendered to secured lenders repossessing aircraft
collateral in connection with defaulted non-recourse debt. Retainers are
assumed to be collected by the Debtors after Professionals are paid in
full from cash collateral and the Administration Claims Reserve (without
prejudice to right to seek authority to use retainers for such payments).
9. Recourse debt - Recourse debt balances as of 6/30/01 represent outstanding
balances under the Pre-Petition Lender Indebtedness and a recourse loan
secured by Class B securities issued in connection with the company's
1999-equipment lease securitization. The recourse debt balance projected
after 6/30/01 represents the Pre-Petition Lender Indebtedness, reduced
during the Projection period by distributions pursuant to the terms of the
Plan.
10. Non-recourse and limited recourse debt - Balance as of 6/30/01 includes
non-recourse secured debt of non-Debtor special purpose entities,
non-recourse debt secured by aircraft and non-recourse and limited
recourse debt secured by the Reorganized Debtors' equipment lease assets.
All balances are assumed to be serviced by cash flow from the related
assets during the Projection period.
11. Pre-petition accrued interest - Balance represents portion of the Allowed
Class 1 Claim related to pre-Petition interest.
12. Post-petition accrued interest - Balance represents (a) portion of the
Allowed Class 1 and 2 Claims related to post-Petition interest, (b) as
of 6/30/01, accrued interest related to the debt of non-Debtor special
purpose entities ($4.1mm) and (c) as of 6/30/01, portion of various
Allowed Class 3 claims related to post-petition interest ($743k).
Interest on all other debt, the secured debt of the non-Debtor special
purpose entities and the various Class 3 claims after 6/30/01, is
assumed to be paid during period in which it accrues. As such,
interest on all other debt flows through the income statement, but does
not appear on the balance sheet.
13. Pre-petition accounts payable and accrued expenses - Balance as of 6/30/01
assumed to be handled as Class 5 claims pursuant to the Plan.
14. Post-petition accounts payable and accrued expenses - $4.2mm of the
6/30/01 balance represents sales taxes payable, which amounts are
projected to be settled by the decrease in cash from 12/31/01 to
12/31/02, and $2.9mm of the 6/30/01 balance represents payables of the
non-Debtor special purpose entities. The payables of the non-Debtor
special purpose entities are assumed to be satisfied out of cash flow
from such entities' assets. During the Projection period, expenses are
assumed to be satisfied in the period in which they accrue.
Accordingly, projected expenses flow through the income statement but
do not appear on the balance sheet.
15. Security and other deposits - Decrease in balance from 6/30/01 to 12/31/01
primarily resulting from forfeiture of aircraft assets to secured lenders
repossessing such assets in connection with defaulted non-recourse debt
and assumption by such lenders of deposit and reserve responsibilities
($8mm). Further decrease in 2002 resulting from sale of assets and
assumption by buyers of deposit and reserve responsibilities ($8mm).
16. Deferred tax liability - Balance as of 6/30/01 is made up of the
estimated differences in the book and federal tax basis in the
company's assets and liabilities, calculated as of 12/31/00; tax
effected at an estimated 38% tax rate (representing a combined federal
and state rate). Subsequent period changes in this balance result from
the future estimated changes in the book and federal tax basis in the
assets; tax effected at the same 38% rate. The following table
summarizes the significant differences in book and tax basis, by
category:
6/30/01 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06
Bad Debt Reserves (54.3) (10.0) (6.0) (4.0) (2.0) (1.0) 0.0
Big Ticket W/downs & Dep'n (91.5) (60.4) - - - - -
Inv. in Minority Owned Affiliate 40.3 63.8 94.1 121.7 148.5 175.2 199.8
Engines - Acc't Method (ss.481) 72.6 48.4 24.2 - - - -
Leases - Acc't Method & Dep'n 181.8 127.3 76.4 50.9 25.5 12.7 0.0
All Other Differences (58.7) (17.8) (10.7) (7.1) (3.6) (1.8) 0.0
----------------------------------------------------------------------------
Total 90.1 151.3 178.0 161.5 168.4 185.1 199.8
Tax Effected Total 34.3 57.5 67.7 61.4 64.0 70.3 75.9
17. Deferred operating revenue - Decrease in balance through 12/31/01
primarily resulting from reclassification of $4mm to offset direct finance
lease balance. Balance of deferred operating revenue ($2mm as of 6/30/01
and $1.6mm as 12/31/01) related to Japanese Leveraged Lease on 2 leased
aircraft. Such amounts will be taken into income monthly with balance, if
any, recognized at disposition of related aircraft.
INCOME STATEMENT
18. Selling, general and administrative expenses - SG&A for six months
ending 6/30/01 includes (a) the posting of a reserve for notes
receivable related to the sale of aircraft in prior years ($16.7mm),
(b) the posting of a reserve for accounts receivable at VRL-UCP, Inc.
(f/k/a Varilease Corporation) and aircraft lease rent owed in
connection with defaulted leases ($7.8mm), (c) the write-off of PP&E
($1.2mm), and (d) the loss on sale of a residual interest in a joint
venture ($2.5mm).
SG&A for six months ending 12/31/01 includes $81mm of lease contract
write-offs. Deteriorating portfolio performance and reinstatement of
suspended write-off policy caused unusual activity in second half of 2001.
Generally, SG&A includes, as an offset to expense, credit and collections
realizations on written-off contracts.
Asset LLC
Balance Sheet, Income Statement, and Cashflows
Five Year Forecast
(in thousands)
Pro forma Projection Projection
June 30, 2001 December 31, 2001 December 31, 2002
----------------- ----------------- -----------------
ASSETS
Cash and cash equivalents 54,696 1,000 1,000
Accounts and Notes receivable 26,056 7,378 1,500
Net investment in direct financing and sales-type leases 733,529 518,208 333,208
Equipment under operating leases, net 158,871 88,123 16,158
Equipment held for sale/lease 34,294 18,761 --
Deferred Tax Asset 84,963 161,658 179,800
Investments in minority owned affiliates 17,817 16,236 16,756
Other assets 13,220 2,552 --
---------- ---------- ----------
Total assets 1,123,445 813,916 548,422
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Recourse debt 223,914 208,000 181,933
Non-recourse and limited recourse debt 831,222 608,938 368,247
Pre-petition Accrued Interest 2,800 2,800 2,800
Post-petition Accrued Interest 7,980 19,469 35,912
Pre-petition Accounts payable and accrued expenses 23,519 -- --
Post-petition Accounts payable and accrued expenses 7,094 -- --
Security and other deposits 18,808 8,457 --
Deferred Tax Liability 34,252 57,487 67,654
Deferred Operating Revenues 6,165 1,622 --
---------- ---------- ----------
Total liabilities 1,155,754 906,773 656,546
---------- ---------- ----------
Stockholders' equity
Common Stock 57 -- --
Additional paid-in capital 817,663 -- --
Retained earnings (850,029) (92,857) (108,124)
---------- ---------- ----------
Total stockholders' equity (32,309) (92,857) (108,124)
---------- ---------- ----------
---------- ---------- ----------
Total liabilities and stockholders' equity 1,123,445 813,916 548,422
========== ========== ==========
(table continued)
Asset LLC
Balance Sheet, Income Statement, and Cashflows
Five Year Forecast
(in thousands)
Projection Projection Projection
December 31, 2003 December 31, 2004 December 31, 2005
----------------- ----------------- -----------------
ASSETS
Cash and cash equivalents 1,000 1,000 1,000
Accounts and Notes receivable -- -- --
Net investment in direct financing and sales-type leases 187,597 103,735 52,438
Equipment under operating leases, net 5,049 2,391 1,773
Equipment held for sale/lease -- -- --
Deferred Tax Asset 179,639 189,617 203,717
Investments in minority owned affiliates 18,281 20,953 24,892
Other assets -- -- --
---------- ---------- ----------
Total assets 391,566 317,696 283,820
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Recourse debt 170,057 161,969 161,181
Non-recourse and limited recourse debt 225,500 154,776 113,999
Pre-petition Accrued Interest 2,800 2,800 2,800
Post-petition Accrued Interest 51,023 65,286 79,173
Pre-petition Accounts payable and accrued expenses -- -- --
Post-petition Accounts payable and accrued expenses -- -- --
Security and other deposits -- -- --
Deferred Tax Liability 61,357 64,009 70,347
Deferred Operating Revenues -- -- --
---------- ---------- ----------
Total liabilities 510,738 448,840 427,500
---------- ---------- ----------
Stockholders' equity
Common Stock -- -- --
Additional paid-in capital -- -- --
Retained earnings (119,172) (131,144) (143,680)
---------- ---------- ----------
Total stockholders' equity (119,172) (131,144) (143,680)
---------- ---------- ----------
---------- ---------- ----------
Total liabilities and stockholders' equity 391,566 317,696 283,820
========== ========== ==========
Asset LLC
Balance Sheet, Income Statement, and Cashflows
Five Year Forecast
(in thousands)
(table continued)
Projection
December 31, 2006
-----------------
ASSETS
Cash and cash equivalents 1,000
Accounts and Notes receivable --
Net investment in direct financing and sales-type leases 33,462
Equipment under operating leases, net 625
Equipment held for sale/lease --
Deferred Tax Asset 215,775
Investments in minority owned affiliates 30,169
Other assets --
----------
Total assets 281,031
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Recourse debt 161,554
Non-recourse and limited recourse debt 100,216
Pre-petition Accrued Interest 2,800
Post-petition Accrued Interest 93,040
Pre-petition Accounts payable and accrued expenses --
Post-petition Accounts payable and accrued expenses --
Security and other deposits --
Deferred Tax Liability 75,916
Deferred Operating Revenues --
----------
Total liabilities 433,526
----------
Stockholders' equity
Common Stock --
Additional paid-in capital --
Retained earnings (152,495)
----------
Total stockholders' equity (152,495)
----------
----------
Total liabilities and stockholders' equity 281,031
==========
Asset LLC
Balance Sheet, Income Statement, and Cashflows
Five Year Forecast
(in thousands) Pro forma Projection Projection
Six Months Ending Six Months Ending Year Ending
June 30, 2001 December 31, 2001 December 31, 2002
----------------- ----------------- -----------------
INCOME STATEMENT
Finance income from direct financing and 35,887 20,802 40,657
sales-type leases
Rental income from operating leases 38,051 11,782 25,799
Sales of equipment 6,860 73,726 52,571
Gain on sale of leases 633 -- --
Fees, commissions and remarketing income (5,388) 187 --
Interest and other income 4,981 (6,561) 988
-------------- - ------------- --------------
Total revenues 81,024 99,936 120,014
Cost of operating leases 20,810 9,582 19,151
Cost of equipment sold 10,360 66,180 62,758
Interest expense 55,998 22,072 51,434
Selling, general & administrative expenses 38,493 98,146 8,914
-------------- - ------------- --------------
Total expenses 125,661 195,979 142,257
-------------- - ------------- --------------
Income from operations (44,637) (96,044) (22,243)
-------------- - ------------- --------------
Provision(benefit) for income taxes (52,459) (6,976)
- ------------- --------------
Net income (43,585) (15,267)
============== ==============
TAX CALCULATION
Book Income (loss) (140,681) (22,243)
Off B/S Income (loss) -- 1,253
-------------- --------------
Book Taxable Income (loss) (140,681) (20,990)
Tax Rate 38% 38%
-------------- --------------
Book provision(benefit) for federal income taxes (53,459) (7,976)
Other Taxes currently due 1,000 1,000
Book to Tax differences (61,147) (26,753)
Tax Rate 38% 38%
-------------- --------------
Book to Tax provision(benefit) (23,236) (10,166)
-------------- --------------
Total provision(benefit) for federal income taxes (75,694) (17,142)
============== ==============
(table continued)
Asset LLC
Balance Sheet, Income Statement, and Cashflows
Five Year Forecast
(in thousands) Projection Projection Projection
Year Ending Year Ending Year Ending
December 31, 2003 December 31, 2004 December 31, 2005
-------------- -------------- --------------
INCOME STATEMENT
Finance income from direct financing and 20,442 9,712 3,204
sales-type leases
Rental income from operating leases 6,504 1,434 119
Sales of equipment -- -- --
Gain on sale of leases -- -- --
Fees, commissions and remarketing income -- -- --
Interest and other income 1,525 2,673 3,939
-------------- -------------- --------------
Total revenues 28,471 13,819 7,262
Cost of operating leases 4,238 1,065 394
Cost of equipment sold -- -- --
Interest expense 35,149 26,838 22,610
Selling, general & administrative expenses 5,266 4,215 3,555
-------------- -------------- --------------
Total expenses 44,653 32,118 26,559
-------------- -------------- --------------
Income from operations (16,183) (18,299) (19,297)
-------------- -------------- --------------
Provision(benefit) for income taxes (6,327) (6,762) (5,489)
-------------- -------------- --------------
Net income (11,972) (12,535) (8,816)
============== ============== ==============
TAX CALCULATION
Book Income (loss) (16,183) (18,299) (19,297)
Off B/S Income (loss) 37 (981) (1,129)
-------------- -------------- --------------
Book Taxable Income (loss) (16,145) (19,281) (20,425)
Tax Rate 38% 38% 38%
-------------- -------------- --------------
Book provision(benefit) for federal income taxes (6,135) (7,327) (7,762)
Other Taxes currently due 1,000 1,000 1,000
Book to Tax differences 16,569 (6,977) (16,680)
Tax Rate 38% 38% 38%
-------------- -------------- --------------
Book to Tax provision(benefit) 6,296 (2,651) (6,338)
-------------- -------------- --------------
Total provision(benefit) for federal income taxes 1,161 (8,978) (13,100)
============== ============== ==============
(table continued)
Asset LLC
Balance Sheet, Income Statement, and Cashflows
Five Year Forecast
(in thousands) Projection
Year Ending
December 31, 2006
-----------------
INCOME STATEMENT
Finance income from direct financing and 563
sales-type leases
Rental income from operating leases 1
Sales of equipment --
Gain on sale of leases --
Fees, commissions and remarketing income --
Interest and other income 5,277
--------------
Total revenues 5,841
Cost of operating leases 342
Cost of equipment sold --
Interest expense 21,116
Selling, general & administrative expenses (1,312)
--------------
Total expenses 20,146
--------------
Income from operations (14,305)
==============
Provision(benefit) for income taxes (5,489)
--------------
Net income (8,816)
==============
TAX CALCULATION
Book Income (loss) (14,305)
Off B/S Income (loss) (2,772)
--------------
Book Taxable Income (loss) (17,077)
Tax Rate 38%
--------------
Book provision(benefit) for federal income taxes (6,489)
Other Taxes currently due 1,000
Book to Tax differences (14,655)
Tax Rate 38%
--------------
Book to Tax provision(benefit) (5,569)
--------------
Total provision(benefit) for federal income taxes (11,058)
==============
Note:
Provision (benefit) for income taxes for six months ending December 31, 2001
represents the provision (benefit) for the full year ending December 31, 2001
Asset LLC
Balance Sheet, Income Statement, and Cashflows
Five Year Forecast
(in thousands) Projection Projection
Six Months Ending Six Months Ending Year Ending
June 30, 2001 December 31, 2001 December 31, 2002
----------------- ----------------- -----------------
CASHFLOW STATEMENT
Cash flows from operating activities:
Net Income (loss) (43,585) (15,267)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 11,684 19,151
Change in Other Balance Sheet Accounts (23,815) 6,944
--------------------- --------------------
Net Cash provided (used in) operating activities (55,716) 10,828
Cash flows from investing activities:
Proceeds from sale of finance contracts - 356
Proceeds from sale of equipment 60,348 70,574
Collection of finance contracts, net of finance 134,569 185,000
income earned - -
--------------------- --------------------
Net Cash received (used) in investing activities 194,917 255,930
Cash flows from financing activities:
Payment of recourse debt (12,434) (26,067)
Payment of non-recourse and limited recourse debt (180,464) (240,689)
--------------------- --------------------
Net cash provided (used) by financing activities (192,898) (266,756)
--------------------- --------------------
Increase (decrease) in cash and cash equivalents (53,696) (0)
Cash and cash equivalents at beginning of period 54,696 1,000
--------------------- --------------------
Cash and cash equivalents at end of period 1,000 1,000
===================== ====================
(Table continued)
Asset LLC
Balance Sheet, Income Statement, and Cashflows
Five Year Forecast
(in thousands) Projection Projection Projection
Year Ending Year Ending Year Ending
December 31, 2003 December 31, 2004 December 31, 2005
----------------- ----------------- -----------------
CASHFLOW STATEMENT
Cash flows from operating activities:
Net Income (loss) (11,048) (11,972) (12,535)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 4,238 1,065 394
Change in Other Balance Sheet Accounts 8,951 4,263 2,185
----------------- ----------------- -----------------
Net Cash provided (used in) operating activities 2,141 (6,644) (9,956)
Cash flows from investing activities:
Proceeds from sale of finance contracts - - -
Proceeds from sale of equipment 6,872 1,592 224
Collection of finance contracts, net of finance 145,611 83,862 51,298
income earned - - -
----------------- ----------------- -----------------
Net Cash received (used) in investing activities 152,482 85,454 51,523
Cash flows from financing activities:
Payment of recourse debt (11,876) (8,087) (788)
Payment of non-recourse and limited recourse debt (142,749) (70,724) (40,778)
----------------- ----------------- -----------------
Net cash provided (used) by financing activities (154,625) (78,811) (41,566)
----------------- ----------------- -----------------
Increase (decrease) in cash and cash equivalents (0) 0 0
Cash and cash equivalents at beginning of period 1,000 1,000 1,000
----------------- ----------------- -----------------
Cash and cash equivalents at end of period 1,000 1,000 1,000
================= ================= =================
(Table continued)
Asset LLC
Balance Sheet, Income Statement, and Cashflows
Five Year Forecast
(in thousands)
Projection
Year Ending
December 31, 2006
-----------------
CASHFLOW STATEMENT
Cash flows from operating activities:
Net Income (loss) (8,816)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 342
Change in Other Balance Sheet Accounts 2,102
-----------------
Net Cash provided (used in) operating activities (6,372)
Cash flows from investing activities:
Proceeds from sale of finance contracts -
Proceeds from sale of equipment 806
Collection of finance contracts, net of finance 18,976
income earned -
-----------------
Net Cash received (used) in investing activities 19,782
Cash flows from financing activities:
Payment of recourse debt 373
Payment of non-recourse and limited recourse debt (13,782)
-----------------
Net cash provided (used) by financing activities (13,409)
-----------------
Increase (decrease) in cash and cash equivalents 0
Cash and cash equivalents at beginning of period 1,000
-----------------
Cash and cash equivalents at end of period 1,000
=================