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 June 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 FILE NUMBER: 0-19216
JETFLEET AIRCRAFT, L.P.
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction
of incorporation or organization)
94-3087300
(I.R.S. Employer Identification No.)
1440 CHAPIN AVENUE, SUITE 310
BURLINGAME, CALIFORNIA
(Address of principal executive office)
94010
(Zip Code)
Registrant's telephone number, including area code: (415) 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 August 12, 1997, 296,069 Limited Partnership Units were
outstanding.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JetFleet Aircraft, L.P.
Balance Sheets
ASSETS
<BTB>
June 30, December 31,
1997 1996
---- ----
(Unaudited)
Current assets:
Cash $ 134,484 $ 30,728
Lease payments receivable 90,000 180,000
Accounts receivable 20,702 -
Reserves receivable from lessee - 4,688
-------- ---------
Total current assets 245,186 215,416
---------- ---------
Aircraft under operating leases and
aircraft held for operating leases, net of
accumulated depreciation of $4,575,938
in 1997 and $4,055,292 in 1996 1,807,699 2,328,345
--------- ----------
$ 2,052,885 $ 2,543,761
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 30,705 $ 16,743
Accrued maintenance costs 58,347 25,277
Prepaid rents 8,890 8,890
Unearned interest income 3,134 14,674
---------- ----------
Total liabilities 101,076 65,584
---------- ---------
Partners' capital 1,951,809 2,478,177
---------- ---------
$ 2,052,885 $ 2,543,761
========== ===========
<FN>
See accompanying notes.
JetFleet Aircraft, L.P.
Statements of Operations
(Unaudited)
<BTB>
For the Six Months For the Three Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
----- ----- ----- -----
Revenues:
Rental income $ 277,472 $ 276,322 $ 137,801 $ 149,274
Interest income 11,744 26,384 4,757 12,411
-------- ------- -------- --------
289,216 302,706 142,558 161,685
-------- ------- -------- --------
Costs and expenses:
Amortization of
organization costs - 1,030 - 405
General and
administrative 49,607 61,616 27,290 29,575
Maintenance costs (20,703) 35,000 (20,703) -
Depreciation of
aircraft 520,646 520,645 260,323 260,323
------- ------- -------- --------
549,550 618,291 266,910 290,303
------- ------- -------- --------
Net loss $ (260,334) $ (315,585) $ (124,352) $ (128,618)
======== ======= ======== ========
Allocation of net loss:
General partners $ (2,603) $ (3,155) $ ( 1,244) $ (1,286)
Limited partners (257,731) (312,430) ( 123,108) (127,332)
-------- ------- --------- --------
$ (260,334) $(315,585) $( 124,352) $ (128,618)
======== ======= ========= ========
Per Limited
Partnership Unit $ (0.87) $ (1.06) $ (0.42) $ (0.43)
======== ======= ========= ========
Limited Partnership
Units outstanding 296,069 296,069 296,069 296,069
======== ======= ======== ========
<FN>
See accompanying notes.
JetFleet Aircraft, L.P.
Statements of Cash Flows
(Unaudited)
<BTB>
For the Six Months
Ended June 30,
1997 1996
----- ------
Net cash provided by operating activities $ 279,790 $ 134,618
Investing activities-
Payments received on capital lease 90,000 90,000
Financing activities -
Distributions (266,034) (265,322)
-------- --------
Net increase / (decrease) in cash 103,756 (40,704)
Cash, beginning of period 30,728 96,184
-------- --------
Cash, end of period $ 134,484 $ 55,480
======== ========
<FN>
See accompanying notes.
JetFleet Aircraft, L.P.
Notes to Financial Statements
June 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
June 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 $11,539
of interest income attributable to the DC-9 Lease during the six
months ended June 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. Upon
effectiveness of the Registration Statement, the proposed
consolidation will be 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 second quarter of 1997, JetFleet had cash
balances of $134,484. This amount was held for the distribution
made to the Unitholders in July 1997 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.
Since May 1995, JetFleet has made distributions at an
annualized rate of 4%. JetFleet currently has available adequate
reserves to meet its immediate cash requirements.
1997 versus 1996
Cash flows from operations increased approximately $145,000.
The increase from year to year was partially due to a decrease in
net loss of approximately $56,000 (see Results of Operations,
below). During the first six months of 1997, JetFleet had cash
inflows of approximately $33,000 in maintenance reserves from
lessees and rent receivable from lessees of approximately $5,000.
These cash inflows were partially offset by the recognition of
approximately $11,000 of unearned income and the recording of a
receivable of approximately $21,000 for reimbursement of
maintenance costs previously expensed and paid. During the first
six months of 1996, JetFleet's primary cash outflows consisted of
accrued maintenance costs of approximately $42,000, previously
accrued expenses of approximately $58,000 and unearned income of
approximately $26,000. Such cash outflows were partially offset
by payments on accounts receivable of approximately $44,000.
There were no investing activities during the six months ended
June 30, 1996 and 1997.
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 ($260,334) and ($315,585) or
($0.87) and ($1.06) per Limited Partnership Unit outstanding in
the six months ended June 30, 1997 and 1996, respectively, and net
losses of ($124,352) and ($128,618) or ($0.42) and ($0.43) per
Limited Partnership Unit outstanding in the three months ended
June 30, 1997 and 1996, respectively. The decreased loss for the
six month periods was primarily a result of the decreases of
approximately $56,000 and $12,000 in maintenance and general and
administrative costs, respectively, which was only partially
offset by a decrease of approximately $14,000 in income recognized
from the capital lease for the DC-9.
1997 versus 1996
Rental income was approximately the same in the six month
periods ended June 30, 1997, and approximately $11,000 less for
the three month period of 1997 compared to 1996. The decrease for
the three month period was primarily a result of the decreased
rent for S/N 57. The decrease was 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 $14,000 and $7,000 lower in the six
month and three month periods ending June 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
$12,000 during the six months ended June 30, 1997 compared to the
same period in 1996. In 1996, such expenses included insurance
costs associated with S/N 72 during its off-lease. No insurance
costs were incurred during the six month period in 1997. General
and administrative expenses for the three month periods in 1996
and 1997 were approximately the same.
Maintenance costs decreased approximately $56,000 and $21,000,
for the six and three month periods ended June 30, 1997,
respectively, compared to the same periods 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.
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 August 12, 1997.
JETFLEET AIRCRAFT, L.P.
<BTB>
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 August 12, 1997.
<BTB>
Signature Title
/s/ Neal D. Crispin Chief Executive and Chief Financial
- --------------------- Officer and Chairman of the Board of
Neal D. Crispin Directors of the Managing General
Partner
/s/ Richard D. Koehler Executive Vice President and
- -------------------- Director of the Managing General
Richard D. Koehler Partner
11
EXHIBIT INDEX
Exhibit No. Description Page No.
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EX-27 Financial Data Schedule