UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[XX] 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 ____________________
-----------------------------
For Quarter Ended June 30, 1997 Commission File No. 0-18368
AIRFUND International Limited Partnership
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-3037350
- ---------------------------------------- -------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
88 Broad Street, Boston, MA 02110
- ---------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 854-5800
98 North Washington Street, Boston, MA 02114
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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 such
filing requirements for the past 90 days. Yes |X| No |_|
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court 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 such filing requirements for the past 90 days.
Yes |_| No |_|
AIRFUND International Limited Partnership
FORM 10-Q
INDEX
Page
----
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statement of Financial Position
at June 30, 1997 and December 31, 1996 3
Statement of Operations
for the three and six months ended June 30, 1997 and 1996 4
Statement of Cash Flows
for the six months ended June 30, 1997 and 1996 5
Notes to the Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
PART II. OTHER INFORMATION:
Items 1 - 6 13
2
AIRFUND International Limited Partnership
STATEMENT OF FINANCIAL POSITION
June 30, 1997 and December 31, 1996
(Unaudited)
June 30, December 31,
1997 1996
-------- ------------
ASSETS
Cash and cash equivalents $ 2,521,954 $ 4,126,851
Rents receivable 134,433 --
Accounts receivable - affiliate 91,410 --
Equipment at cost, net of accumulated depreciation of
$9,672,795 and $8,421,801 at June 30, 1997
and December 31, 1996, respectively 18,322,740 19,573,734
------------ ------------
Total assets $ 21,070,537 $ 23,700,585
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Notes payable $ 10,203,515 $ 11,321,769
Accrued interest 129,219 118,940
Accrued liabilities 15,000 442,400
Accrued liabilities - affiliate 27,962 63,930
Deferred rental income 219,172 158,904
Cash distributions payable to partners -- 1,000,000
------------ ------------
Total liabilities 10,594,868 13,105,943
------------ ------------
Partners' capital (deficit):
General Partner (1,175,213) (1,169,264)
Limited Partnership Interests
(3,040,000 Units; initial purchase price of $25 each) 11,650,882 11,763,906
------------ ------------
Total partners' capital 10,475,669 10,594,642
------------ ------------
Total liabilities and partners' capital $ 21,070,537 $ 23,700,585
============ ============
The accompanying notes are an integral part
of these financial statements.
3
AIRFUND International Limited Partnership
STATEMENT OF OPERATIONS
for the three and six months ended June 30, 1997 and 1996
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
Income:
Lease revenue $ 969,104 $ 1,161,279 $ 1,805,402 $ 2,141,350
Interest income 30,261 17,649 64,184 162,573
----------- ----------- ----------- -----------
Total income 999,365 1,178,928 1,869,586 2,303,923
----------- ----------- ----------- -----------
Expenses:
Depreciation 625,497 889,782 1,250,994 1,655,523
Interest expense 229,473 291,906 472,161 392,014
Equipment management fees
- affiliate 48,455 58,064 90,270 107,068
Operating expenses - affiliate 108,920 186,891 175,134 252,138
----------- ----------- ----------- -----------
Total expenses 1,012,345 1,426,643 1,988,559 2,406,743
----------- ----------- ----------- -----------
Net loss $ (12,980) $ (247,715) $ (118,973) $ (102,820)
=========== =========== =========== ===========
Net loss
per limited partnership unit $ -- $ (0.08) $ (0.04) $ (0.03)
=========== =========== =========== ===========
Cash distributions declared
per limited partnership unit $ -- $ -- $ -- $ --
=========== =========== =========== ===========
The accompanying notes are an integral part
of these financial statements.
4
AIRFUND International Limited Partnership
STATEMENT OF CASH FLOWS
for the six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
----------- -----------
Cash flows from (used in) operating activities:
Net loss $ (118,973) $ (102,820)
Adjustments to reconcile net loss to net
cash from operating activities:
Depreciation 1,250,994 1,655,523
Changes in assets and liabilities
Decrease (increase) in:
rents receivable (134,433) 562,594
accounts receivable - affiliate (91,410) 353,803
Increase (decrease) in:
accrued interest 10,279 67,796
accrued liabilities (427,400) (500)
accrued liabilities - affiliate (35,968) (6,789)
deferred rental income 60,268 28,650
----------- -----------
Net cash from operating activities 513,357 2,558,257
----------- -----------
Cash flows used in investing activities:
Purchase of equipment -- (240,726)
----------- -----------
Net cash used in investing activities -- (240,726)
----------- -----------
Cash flows used in financing activities:
Principal payments - notes payable (1,118,254) (1,393,088)
Distributions paid (1,000,000) (600,000)
----------- -----------
Net cash used in financing activities (2,118,254) (1,993,088)
----------- -----------
Net increase (decrease) in cash and cash equivalents (1,604,897) 324,443
Cash and cash equivalents at beginning of period 4,126,851 1,079,341
----------- -----------
Cash and cash equivalents at end of period $ 2,521,954 $ 1,403,784
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 461,882 $ 324,218
=========== ===========
Supplemental disclosure of investing and financing activities:
At December 31, 1995, the Partnership held $4,360,599 in a special-purpose
escrow account pending the completion of an aircraft exchange (See Results
of Operations). The Partnership completed the exchange in March 1996
obtaining interests in aircraft at an aggregate cost of $13,762,438,
utilizing cash of $4,601,325 (including the escrowed funds) and
third-party financing of $9,161,113.
The accompanying notes are an integral part
of these financial statements.
5
AIRFUND International Limited Partnership
Notes to the Financial Statements
June 30, 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The financial statements presented herein are prepared in conformity with
generally accepted accounting principles and the instructions for preparing Form
10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and are unaudited. As such, these financial statements do not include
all information and footnote disclosures required under generally accepted
accounting principles for complete financial statements and, accordingly, the
accompanying financial statements should be read in conjunction with the
footnotes presented in the 1996 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
1996 Annual Report.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at June 30, 1997 and December 31, 1996 and results of operations for
the three and six month periods ended June 30, 1997 and 1996 have been made and
are reflected.
NOTE 2 - CASH
At June 30, 1997, the Partnership had $2,420,000 invested in reverse
repurchase agreements, secured by U.S. Treasury Bills or interests in U.S.
Government securities.
NOTE 3 - REVENUE RECOGNITION
Rents are payable to the Partnership monthly and quarterly and no
significant amounts are calculated on factors other than the passage of time.
All leases are accounted for as operating leases and are noncancellable. Rents
received prior to their due dates are deferred. Future minimum rents of
$7,481,006 are due as follows:
For the year ending June 30, 1998 $ 3,912,688
1999 2,839,030
2000 729,288
------------
Total $ 7,481,006
============
The Partnership entered into a new 1-year lease agreement with Aer Lease
Limited for its proportionate interest in a Lockheed L-1011-50 aircraft at a
base rent to the Partnership of $60,450 per month, beginning April 27, 1997.
NOTE 4 - EQUIPMENT
The following is a summary of equipment owned by the Partnership at June
30, 1997. In the opinion of Equis Financial Group Limited Partnership ("EFG"),
(formerly American Finance Group), the acquisition cost of the equipment did not
exceed its fair market value.
6
AIRFUND International Limited Partnership
Notes to the Financial Statements
(Continued)
Lease
Term Equipment
Equipment Type (Months) at Cost
- ------------------------------------- -------- -----------
Two McDonnell-Douglas MD-82 (Finnair) 36 $13,762,438
One Lockheed L-1011-50 (Aer Lease) 12 7,877,224
Three Boeing 737-2H4 (Southwest) 49 6,355,873
-----------
Total equipment cost 27,995,535
Accumulated depreciation (9,672,795)
-----------
Equipment, net of accumulated depreciation $18,322,740
===========
The cost of each of the Partnership's aircraft represent proportionate
ownership interests. The remaining interests are owned by other affiliated
partnerships sponsored by EFG. All Partnerships individually report, in
proportion to their respective ownership interests, their respective shares of
assets, liabilities, revenues, and expenses associated with the aircraft.
NOTE 5 - RELATED PARTY TRANSACTIONS
All operating expenses incurred by the Partnership are paid by EFG on
behalf of the Partnership and EFG is reimbursed at its actual cost for such
expenditures. Fees and other costs incurred during each of the six month periods
ended June 30, 1997 and 1996, which were paid or accrued by the Partnership to
EFG or its Affiliates, are as follows:
1997 1996
----------- -----------
Equipment management fees $ 90,270 $ 107,068
Administrative charges 23,286 10,500
Reimbursable operating expenses
due to third parties 151,848 241,638
---------- -----------
Total $ 265,404 $ 359,206
========== ==========
All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Partnership.
At June 30, 1997, the Partnership was owed $91,410 by EFG for such funds and the
interest thereon. These funds were remitted to the Partnership in July 1997.
7
AIRFUND International Limited Partnership
Notes to the Financial Statements
(Continued)
NOTE 6 - NOTES PAYABLE
Notes payable at June 30, 1997 consisted of installment notes payable to
banks of $10,203,515. All of the installment notes are non-recourse, with
interest rates ranging between 8.65% and 8.89% and are collateralized by the
equipment and assignment of the related lease payments. All of the notes were
originated in connection with the like-kind exchange transaction involving the
Southwest Aircraft and the Finnair Aircraft (See Results of Operations). The
installment notes related to the Southwest Aircraft will be fully amortized by
noncancellable rents. The Partnership has a balloon payment obligation at the
expiration of the primary lease term related to the Finnair Aircraft of
$4,671,150. The carrying amount of notes payable approximates fair value at June
30, 1997.
The annual maturities of the installment notes payable are as follows:
For the year ending June 30, 1998 $ 2,558,828
1999 6,935,984
2000 708,703
-----------
Total $10,203,515
===========
NOTE 7 - LEGAL PROCEEDINGS
On June 24, 1997, four plaintiffs (the "Plaintiffs") owning limited partner
units or beneficiary interests in eight investment programs sponsored by EFG
filed a lawsuit, as a derivative action, on behalf of the Partnership and 27
other investment programs (collectively, the "Nominal Defendants") in the
Superior Court of the Commonwealth of Massachusetts for the County of Suffolk
against EFG and certain of EFG's affiliates, including the General Partner of
the Partnership and four other wholly-owned subsidiaries of EFG which are the
general partner or managing trustee of one or more of the investment programs,
(collectively, the "Managing Defendants"), and certain other entities and
individuals that have control of the Managing Defendants and the Nominal
Defendants (the "Controlling Defendants"). The Plaintiffs assert claims of
breach of fiduciary duty, breach of contract, unjust enrichment, and equitable
relief and seek various remedies, including compensatory and punitive damages to
be determined at trial.
The General Partner and EFG are in the early stages of evaluating the
nature and extent of the claims asserted in this lawsuit and cannot predict its
outcome with any degree of certainty. However, based upon all of the facts
presently being considered by management, the General Partner and EFG do not
believe that any likely outcome will have a material adverse effect on the
Partnership. The General Partner, EFG and their affiliates intend to vigorously
defend against the lawsuit.
8
AIRFUND International Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Certain statements in this quarterly report that are not historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and are subject to a variety of risks
and uncertainties. There are a number of important factors that could cause
actual results to differ materially from those expressed in any forward-looking
statements made herein. These factors include, but are not limited to, the
ability of EFG to collect all rents due under the attendant lease agreements and
successfully remarket the Partnership's aircraft upon the expiration of such
leases.
Three and six months ended June 30, 1997 compared to the three and six months
ended June 30, 1996:
Overview
As an equipment leasing partnership, the Partnership was organized to
acquire and lease a portfolio of commercial jet aircraft subject to lease
agreements with third parties. Upon its inception in 1989, the Partnership
purchased three used commercial jet aircraft and a proportionate interest in a
fourth aircraft which were leased by major carriers engaged in passenger
transportation. Initially, each aircraft generated rental revenues pursuant to
primary-term lease agreements. In 1991, one of the Partnership's original
aircraft was sold to a third party and a portion of the sale proceeds was
reinvested in a proportionate interest in another aircraft. Subsequently, all of
the aircraft in the Partnership's original portfolio have been re-leased,
renewed, exchanged for other aircraft or sold (see below). At June 30, 1997 the
Partnership owned a proportionate interest in six aircraft. All of the
Partnership's aircraft are currently on lease. Upon expiration of the lease
agreements, each aircraft will be re-leased or sold depending on prevailing
market conditions and the assessment of such conditions by EFG to obtain the
most advantageous economic benefit. Ultimately, all aircraft will be sold and
the net proceeds will be distributed to the Partners, after all liabilities and
obligations of the Partnership have been satisfied.
Results of Operations
For the three and six months ended June 30, 1997, the Partnership
recognized lease revenue of $969,104 and $1,805,402, respectively, compared to
$1,161,279 and $2,141,350 for the same periods in 1996. The decrease in lease
revenue from 1996 to 1997 resulted from the expiration of the leases related to
the Partnership's interest in a Lockheed L-1011-50 aircraft and the sale of two
727-251 Advanced aircraft (discussed below). These decreases were partially
offset by the Partnership's aircraft exchange, which was concluded in the first
quarter of 1996. As a result of the aircraft exchange, the Partnership replaced
its ownership interest in a Boeing 747-SP, with interests in five other aircraft
(three Boeing 737 aircraft leased by Southwest Airlines, Inc. and two McDonnell
Douglas MD-82 aircraft leased by Finnair OY). The Southwest aircraft were
exchanged into the Partnership in 1995 while the Finnair Aircraft were exchanged
into the Partnership on March 25, 1996. Accordingly, revenue for the six months
ended June 30, 1996 reflected only a portion of the rents ultimately earned from
the like-kind exchange. In aggregate, the replacement aircraft generated
approximately $842,000 and $1,678,000 of lease revenue during the three and six
months ended June 30, 1997, respectively, compared to approximately $674,000 and
$990,000 for the same periods in 1996. In the near-term lease revenue will
increase due to the re-lease with Aer Lease Limited, discussed below,
thereafter, lease revenue will decline due to the expiration of the lease terms,
described herein.
The Partnership's two lease agreements with Northwest expired on October
31, 1996. The Partnership sold both of the Boeing 727-251 Advanced aircraft to
Northwest during the second half of 1996 and, in addition to the sales proceeds,
received lease termination rents with respect to one of the aircraft. The
Partnership recognized
9
AIRFUND International Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
aggregate lease revenue of $360,000 and $720,000 from these aircraft during the
three and six months ended June 30, 1996, respectively.
The Partnership's renewal lease agreement with Cathay Pacific Airways, Ltd
("Cathay") related to its interest in the Lockheed L-1011-50 aircraft expired on
February 14, 1996 and was extended until April 11, 1996. Subsequent to this
extension, Cathay leased the aircraft at a fixed rate until June 30, 1996 at
which date the aircraft was returned to the Partnership. The aircraft underwent
heavy maintenance which cost the Partnership approximately $570,000, all of
which was accrued or incurred at June 30, 1997. The Partnership entered into a
new 12-month lease agreement with Aer Lease Limited at a base rent to the
Partnership of $60,450 per month, beginning April 27, 1997. In aggregate, the
Partnership recognized lease revenue of approximately $127,000 related to this
aircraft during the each of three and six months ended June 30, 1997, compared
to $127,000 and $431,000 for the same periods in 1996. Currently, the demand for
Lockheed L-1011 aircraft is weak, limited principally to air cargo carriers and
operators of passenger charters. Several major airlines have reduced their
commitment to the Lockheed L-1011. Such circumstances inhibited the remarketing
of the Partnership's Lockheed L-1011-50 aircraft and required the Partnership to
refurbish the aircraft to meet the needs of Aer Lease Limited.
The Partnership holds a proportionate ownership interest in the Lockheed
L-1011-50 aircraft and the Southwest and Finnair Aircraft, discussed above. The
remaining interests are owned by other affiliated partnerships sponsored by EFG.
All partnerships individually report, in proportion to their respective
ownership interests, their respective shares of assets, liabilities, revenues
and expenses associated with the aircraft. (See Note 4 to the financial
statements.)
The ultimate realization of residual value for aircraft is dependent upon
many factors, including EFG's ability to sell and re-lease the aircraft.
Changing market conditions, industry trends, technological advances, and many
other events can converge to enhance or detract from asset values at any given
time. EFG attempts to monitor these changes in the airline industry in order to
identify opportunities which may be advantageous to the Partnership and which
will maximize total cash returns for each aircraft.
The total economic value realized upon final disposition of each aircraft
is comprised of all primary lease term revenue generated from that aircraft,
together with its residual value. The latter consists of cash proceeds realized
upon the aircraft's sale in addition to all other cash receipts obtained from
renting the aircraft on a re-lease, renewal or month-to-month basis.
Consequently, the amount of any future gain or loss reported in the financial
statements will not necessarily be indicative of the total residual value the
Partnership achieved from leasing the aircraft.
Interest income for the three and six months ended June 30, 1997 was
$30,261 and $64,184, respectively, compared to $17,649 and $162,573 for the same
periods in 1996. Interest income is typically generated from temporary
investments of rental receipts and equipment sale proceeds in short-term
instruments. Interest income in 1996 included interest of $130,268 earned on
cash held in a special-purpose escrow account in connection with the like-kind
exchange transaction, discussed above.
For the three and six months ended June 30, 1997, the Partnership incurred
interest expense of $229,473 and $472,161, respectively, compared to $291,906
and $392,014 for the same periods in 1996. Interest expense in 1997 and 1996
resulted from financing obtained from third-party lenders in connection with the
Southwest Aircraft and the Finnair Aircraft. The financing of the Finnair
Aircraft occurred on March 25, 1996. Therefore, interest expense related to the
Finnair debt during the six months ended June 30, 1996 was only incurred from
that date through the end of the period. Interest expense in future periods is
expected to decline as the principal balance of notes payable is reduced through
the application of rent receipts to outstanding debt.
10
AIRFUND International Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
Management fees were 5% of lease revenue during each of the periods ended
June 30, 1997 and 1996, and will not change as a percentage of lease revenue in
future periods.
Operating expenses consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as insurance,
printing, distribution and remarketing expenses. Collectively, operating
expenses represented 11.2% and 9.7% of lease revenue during the three and six
months ended June 30, 1997, respectively, compared to 16.1% and 11.8% for the
same periods in 1996. During the six months ended June 30, 1997, significant
heavy maintenance costs were incurred or accrued in connection with the Lockheed
L-1011 aircraft to allow the Partnership to remarket this aircraft (see above).
During the six months ended June 30, 1996, operating expenses included legal
expenses and broker fees incurred in connection with the like-kind exchange
transaction, discussed above. The amount of future operating expenses cannot be
predicted with certainty; however, such expenses are usually higher during the
acquisition and liquidation phases of a partnership. Other fluctuations will
occur in relation to the volume and timing of aircraft remarketing activities.
Depreciation expense was $625,497 and $1,250,994 for the three and six months
ended June 30, 1997, respectively, compared to $889,782 and $1,655,523 for the
same periods in 1996.
Liquidity and Capital Resources and Discussion of Cash Flows
The Partnership by its nature is a limited life entity which was
established for specific purposes described in the preceding "Overview". As an
equipment leasing program, the Partnership's principal operating activities
generally derive from aircraft rental transactions. Accordingly, the
Partnership's principal source of cash from operations is generally provided by
the collection of periodic rents. These cash inflows are used to satisfy debt
service obligations associated with leveraged leases, and to pay management fees
and operating costs. Operating activities generated net cash inflows of $513,357
and $2,558,257 for the six months ended June 30, 1997 and 1996, respectively.
The expiration of the Partnership's lease agreement related to its interest in
the Lockheed L-1011-50 aircraft and the sale of the two Boeing 727-251 Advanced
aircraft have caused a decline in the Partnership's lease revenue and
corresponding sources of operating cash. This has been partially offset by rents
generated in connection with the Southwest and Finnair aircraft and the re-lease
of the aircraft to Aer Lease Limited. In addition, the Partnership has expended
substantial funds in connection with the remarketing of the Lockheed L-1011-50
aircraft. Overall, expenses associated with rental activities, such as
management fees, and net cash flow from operating activities decline as the
Partnership remarkets its aircraft. Conversely, the Partnership may incur
increased costs to insure the successful remarketing of these aircraft.
Ultimately, the Partnership will dispose of all aircraft under lease. This will
occur principally through sale transactions whereby each aircraft will be sold
to the existing lessee or to a third party. Generally, this will occur upon
expiration of each aircraft's primary or renewal/re-lease term.
Cash expended for equipment acquisitions is reported under investing
activities on the accompanying Statement of Cash Flows. In 1996, the Partnership
expended $240,726 in cash in connection with the like-kind exchange transactions
referred to above. There were no equipment acquisitions during the same period
in 1997.
As described in Results of Operations, the Partnership obtained long-term
financing in connection with the like-kind exchange transactions involving the
Southwest Aircraft and the Finnair Aircraft. The repayments of principal related
to such indebtedness are reported as a component of financing activities. The
corresponding note agreements are recourse only to the specific equipment
financed and to the minimum rental payments contracted to be received during the
debt amortization period. As rental payments are collected, a portion or all of
the rental payment will be used to repay principal and interest. The Partnership
also has balloon payment obligations at the expiration of the primary lease term
related to the Finnair Aircraft of $4,671,150.
11
AIRFUND International Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
Cash distributions paid to the Recognized Owners consist of both a return
of and a return on capital. To the extent that cash distributions consist of
Cash From Sales or Refinancings, substantially all of such cash distributions
should be viewed as a return of capital. Cash distributions do not represent and
are not indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Partnership and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each aircraft
at its disposal date. Future market conditions, technological changes, the
ability of EFG to manage and remarket the aircraft, and many other events and
circumstances, could enhance or detract from individual asset yields and the
collective performance of the Partnership's aircraft portfolio.
Overall, the future liquidity of the Partnership will be greatly
dependent upon the collection of contractual rents and the outcome of residual
activities. The General Partner anticipates that cash proceeds resulting from
these sources and current cash reserves will satisfy the Partnership's future
expense obligations. However, the amount of cash available for distribution in
future periods is expected to fluctuate widely as the General Partner attempts
to remarket the Partnership's aircraft and possibly upgrade certain aircraft to
meet the standards of potential successor lessees. Accordingly, the General
Partner did not declare a cash distribution for the first and second quarters of
1997 and expects to suspend the declaration of quarterly cash distributions
between the periods corresponding to major remarketing events.
12
AIRFUND International Limited Partnership
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Response:
Refer to Note 7 to the financial statements herein.
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6(a). Exhibits
Response: None
Item 6(b). Reports on Form 8-K
Response: None
13
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on behalf of the registrant and in the capacity and
on the date indicated.
AIRFUND International Limited Partnership
By: AFG Aircraft Management Corporation, a
Massachusetts corporation and the General
Partner of the Registrant.
By: /s/ Michael J. Butterfield
--------------------------------------------------
Michael J. Butterfield
Treasurer of AFG Aircraft Management Corporation
(Duly Authorized Officer and
Principal Accounting Officer)
Date: August 14, 1997
By: /s/ Gary M. Romano
--------------------------------------------------
Gary M. Romano
Clerk of AFG Aircraft Management Corporation
(Duly Authorized Officer and
Principal Financial Officer)
Date: August 14, 1997
14