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 File No. 2-91762
---------------------------
POLARIS AIRCRAFT INCOME FUND I
State of Organization: California
IRS Employer Identification No. 94-2938977
201 Mission Street, 27th Floor, San Francisco, California 94105
Telephone - (415) 284-7400
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes_X_ No___
This document consists of 15 pages.
<PAGE>
POLARIS AIRCRAFT INCOME FUND I
FORM 10-Q - For the Quarterly Period Ended September 30, 1997
INDEX
Part I. Financial Information Page
Item 1. Financial Statements
a) Balance Sheets - September 30, 1997 and
December 31, 1996..........................................3
b) Statements of Operations - Three and Nine Months
Ended September 30, 1997 and 1996..........................4
c) Statements of Changes in Partners' Capital
(Deficit) - Year Ended December 31, 1996
and Nine Months Ended September 30, 1997...................5
d) Statements of Cash Flows - Nine Months
Ended September 30, 1997 and 1996..........................6
e) Notes to Financial Statements..............................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............10
Part II. Other Information
Item 1. Legal Proceedings.........................................13
Item 6. Exhibits and Reports on Form 8-K..........................14
Signature ......................................................15
2
<PAGE>
Part 1. Financial Information
-----------------------------
Item 1. Financial Statements
POLARIS AIRCRAFT INCOME FUND I
BALANCE SHEETS
(Unaudited)
September 30, December 31,
1997 1996
---- ----
ASSETS:
CASH AND CASH EQUIVALENTS $ 6,206,590 $ 10,065,652
RENT AND OTHER RECEIVABLES, net of allowance for
credit losses of $30,365 in 1997 and $233,913
in 1996 -- 18,816
NOTES RECEIVABLE, net of allowance for credit
losses of $0 in 1997 and $177,537 in 1996 -- 418,145
AIRCRAFT AND AIRCRAFT ENGINES, net
of accumulated depreciation of $56,250 in 1997
and $20,823,462 in 1996 903,750 3,751,387
------------ ------------
$ 7,110,340 $ 14,254,000
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):
PAYABLE TO AFFILIATES $ 137,717 $ 77,676
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES 341,348 464,603
LESSEE SECURITY DEPOSITS 95,000 70,925
MAINTENANCE RESERVES 1,345,123 3,217,368
DEFERRED INCOME 21,290 --
------------ ------------
Total Liabilities 1,940,478 3,830,572
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner (676,951) (624,341)
Limited Partners, 168,729 units
issued and outstanding 5,846,813 11,047,769
------------ ------------
Total Partners' Capital 5,169,862 10,423,428
------------ ------------
$ 7,110,340 $ 14,254,000
============ ============
The accompanying notes are an integral part of these statements.
3
<PAGE>
<TABLE>
POLARIS AIRCRAFT INCOME FUND I
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rent from operating leases $ 90,000 $ 475,000 $ 270,000 $ 1,463,900
Interest 85,841 126,711 418,994 365,021
Gain on sale of aircraft -- -- 1,832,673 --
Gain on sale of aircraft inventory 86,382 89,738 222,602 346,508
Lessee settlement and other 690,946 468 691,726 15,033
-------- --------- ---------- -----------
Total Revenues 953,169 691,917 3,435,995 2,190,462
-------- --------- ---------- -----------
EXPENSES:
Depreciation 3,750 314,182 11,250 942,546
Management fees to general partner 4,500 24,337 13,500 58,837
Provision for credit losses 30,365 354,019 30,365 663,600
Operating 49,502 104,698 208,843 381,048
Administration and other 44,629 35,351 129,760 116,178
-------- --------- ---------- -----------
Total Expenses 132,746 832,587 393,718 2,162,209
-------- --------- ---------- -----------
NET INCOME (LOSS) $820,423 $(140,670) $3,042,277 $ 28,253
======== ========= ========== ===========
NET INCOME (LOSS) ALLOCATED
TO THE GENERAL PARTNER $619,786 $ (1,407) $ 776,974 $ 253,351
======== ========= ========== ===========
NET INCOME (LOSS) ALLOCATED
TO LIMITED PARTNERS $200,637 $(139,263) $2,265,303 $ (225,098)
======== ========= ========== ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ 1.19 $ (0.83) $ 13.43 $ (1.33)
======== ========= ========== ===========
The accompanying notes are an integral part of these statements.
</TABLE>
4
<PAGE>
<TABLE>
POLARIS AIRCRAFT INCOME FUND I
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<CAPTION>
Year Ended December 31, 1996 and
Nine Months Ended September 30, 1997
------------------------------------
General Limited
Partner Partners Total
------- -------- -----
<S> <C> <C> <C>
Balance, December 31, 1995 $(590,280) $ 14,417,273 $ 13,826,993
Net income (loss) 247,154 (838,569) (591,415)
Cash distributions to partners (281,215) (2,530,935) (2,812,150)
--------- ------------ ------------
Balance, December 31, 1996 (624,341) 11,047,769 10,423,428
Net income 776,974 2,265,303 3,042,277
Cash distributions to partners (829,584) (7,466,259) (8,295,843)
--------- ------------ ------------
Balance, September 30, 1997 $(676,951) $ 5,846,813 $ 5,169,862
========= ============ ============
The accompanying notes are an integral part of these statements.
</TABLE>
5
<PAGE>
<TABLE>
POLARIS AIRCRAFT INCOME FUND I
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,042,277 $ 28,253
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 11,250 942,546
Gain on sale of aircraft inventory (222,602) --
Gain on sale of aircraft (1,832,673) --
Net provision for credit losses -- (471,908)
Changes in operating assets and liabilities,
net of effects of sale of aircraft:
Decrease in rent and other receivables 18,816 799,220
Increase in payable to affiliates 60,041 149
Increase (decrease) in accounts payable
and accrued liabilities (123,255) 318,115
Increase in deferred income 21,290 --
Increase (decrease) in lessee security deposits 24,075 (75,000)
Increase in maintenance reserves 176,815 1,129,127
------------ -----------
Net cash provided by operating activities 1,176,034 2,670,502
------------ -----------
INVESTING ACTIVITIES:
Proceeds from sale of aircraft 2,620,000 --
Principal payments on note receivable 418,145 68,060
Net proceeds from sale of aircraft inventory 222,602 --
------------ -----------
Net cash provided by investing activities 3,260,747 68,060
------------ -----------
FINANCING ACTIVITIES:
Cash distributions to partners (8,295,843) (2,812,150)
------------ -----------
Net cash used in financing activities (8,295,843) (2,812,150)
------------ -----------
CHANGES IN CASH AND CASH
EQUIVALENTS (3,859,062) (73,588)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 10,065,652 9,807,315
------------ -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 6,206,590 $ 9,733,727
============ ===========
The accompanying notes are an integral part of these statements.
</TABLE>
6
<PAGE>
POLARIS AIRCRAFT INCOME FUND I
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Principles and Policies
In the opinion of management, the financial statements presented herein include
all adjustments, consisting only of normal recurring items, necessary to
summarize fairly Polaris Aircraft Income Fund I's (the Partnership's) financial
position and results of operations. The financial statements have been prepared
in accordance with the instructions of the Quarterly Report to the Securities
and Exchange Commission (SEC) Form 10-Q (Form 10-Q) and do not include all of
the information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto for the years ended December 31, 1996, 1995, and
1994 included in the Partnership's 1996 Annual Report to the SEC on Form 10-K
(Form 10-K).
2. Sale of two Boeing 737-200s
In January 1997, the Partnership received a deposit of $162,000 toward the sales
price of $1,620,000 for the sale of two Boeing 737-200s and two spare engines
formerly leased to Viscount Air Services, Inc. (Viscount). The Partnership
received the remaining $1,458,000 in March 1997. In addition, the Partnership
retained certain maintenance reserves and deposits received from the former
lessee of these aircraft aggregating approximately $968,000 that had been held
by the Partnership to offset potential future maintenance expenses for these
aircraft. As a result, the Partnership recognized a net gain of $781,504 on the
sale of these aircraft during the first quarter of 1997.
3. Sale of one Boeing 737-200
In April 1997, the Partnership received a deposit of $250,000 toward the sales
price of $1,000,000 for the sale of one Boeing 737-200 formerly leased to
Viscount and subleased to Nations Air Express, Inc. The Partnership received the
remaining $750,000 in May 1997. In addition, the Partnership retained certain
maintenance reserves and deposits received from the former lessee of this
aircraft, aggregating approximately $1,081,000, that had been held by the
Partnership to offset potential future maintenance expenses for this aircraft.
As a result, the Partnership recognized a net gain of $1,051,169 on the sale of
this aircraft during the second quarter of 1997.
4. Engine Note Receivable
In April 1997, the Partnership received $408,496, as payment in full, of the
outstanding engine finance sale note receivable, including accrued interest, due
from Rock-It Cargo USA, Inc. and Riverhorse Investments, Inc.
5. Nations Air Settlement
As previously reported, First Security Bank, National Association (FSB), as
owner trustee for the Partnership, filed an action against Nations Air Express,
Inc. (Nations Air) to recover damages arising from Nations Air's possession and
use of the Partnership's aircraft. On March 31, 1997, Nations Air entered into a
comprehensive Settlement Agreement with FSB, Polaris Holding Company (PHC), the
Partnership, Polaris Aircraft Income Fund II, Polaris Investment Management
7
<PAGE>
Corporation (General Partner) and GE Capital Aviation Services (GECAS)
(collectively, the "GECAS Parties"). Pursuant to the Settlement Agreement,
Nations Air filed a Stipulated Judgment whereby Nations Air agreed, among other
things, to purchase PHC's aircraft (the "PHC Aircraft") for $3.3 million payable
no later than May 30, 1997. Subsequent to March 31, 1997, GECAS, on behalf of
FSB, and Nations Air agreed to extend the date by which Nations Air or its
designee must purchase the PHC Aircraft to July 14, 1997. On that date FSB, as
owner trustee for PHC, sold the PHC Aircraft to Nations Air's designee and
received the purchase price of $3.3 million. On September 29, 1997 the
Partnership received $690,946 as its share of the settlement payment before
legal expenses.
6. Engine Lease to CanAir
In April 1997, the Partnership and CanAir Cargo Ltd. (CanAir) agreed to extend
the engine leases for seven months beyond the original lease expiration date of
May 1997.
On July 28, 1997, CanAir obtained an order under the Companies' Creditors
Arrangement Act of Canada (the CCAA Order) from the Ontario Court of Justice,
General Division. The CCAA Order restrains CanAir's creditors, including
lessors, from exercising any rights arising from CanAir's default or
non-performance of its obligations until October 28, 1997 or further order of
the court. CanAir leased three engines from the Partnership, and a total of five
aircraft from Polaris Holding Company (PHC) and General Electric Capital Leasing
Canada, Inc. (GECL Canada). CanAir had defaulted on its July and August 1997
engine rent and maintenance reserve payment obligations to the Partnership. On
August 22, 1997, GE Capital Aviation Services, Inc. (GECAS) as agent for PHC,
GECL Canada and the Partnership (together, the GECAS Parties), entered into an
Aircraft Lease Purchase Agreement with Royal Aviation Inc. and Royal Cargo Inc.
for the transfer of CanAir's future lease obligations to Royal Aviation Inc.
Pursuant to this agreement, the leases were extended to August 2000 at the
current lease rate and the Partnership received a security deposit of $45,000
from Royal Aviation.
CanAir still owes the GECAS Parties a total of approximately $1.5 million. Of
this amount, approximately $30,365 is owed to the Partnership under the engine
lease, exclusive of accrued interest and maintenance reserve payment
obligations. On October 29, 1997, CanAir filed a plan of reorganization with the
court, which is subject to the approval of CanAir's creditors and the court.
Pursuant to the plan of reorganization, CanAir proposes to pay the GECAS Parties
approximately $800,000 from CanAir's future cash flows, with payment of the
outstanding balance to be deferred and subordinated to other classes of
creditors. There can be no assurance about the likelihood of the GECAS Parties
receiving the outstanding amounts from CanAir or when any such payments would be
made pursuant to the plan of reorganization. The court ordered an extension
until November 20, 1997 of the stay under the CCAA Order in order to hold a vote
of creditors to approve the plan. The vote of creditors is scheduled for
November 17, 1997.
During the quarter ended September 30, 1997, the Partnership recorded an
allowance for credit losses of $30,365 for the outstanding receivables from
CanAir through August 21, 1997, after applying CanAir's security deposit of
$20,925 towards the outstanding receivables due.
8
<PAGE>
7. Related Parties
Under the Limited Partnership Agreement, the Partnership paid or agreed to pay
the following amounts for the current quarter to the general partner, Polaris
Investment Management Corporation, in connection with services rendered or
payments made on behalf of the Partnership:
Payments for the
Three Months Ended Payable at
September 30, 1997 September 30, 1997
------------------ ------------------
Aircraft Management Fees $ - $ 4,500
Out-of-Pocket Administrative Expense
Reimbursement 44,496 24,229
Out-of-Pocket Operating and
Remarketing Expense Reimbursement 11,612 108,988
---------- ----------
$ 56,108 $ 137,717
========== ===========
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
At September 30, 1997, Polaris Aircraft Income Fund I (the Partnership) owned
three spare engines and certain inventoried aircraft parts. The three spare
engines were leased to CanAir Cargo Ltd. (CanAir). CanAir's future obligations
under the lease have been transferred to Royal Aviation, Inc., as discussed in
Note 6. In addition, the Partnership transferred four aircraft to aircraft
inventory during 1992 and 1993. These aircraft have been disassembled for sale
of their component parts. In May 1997, the Partnership sold its one remaining
aircraft out of its original portfolio of eleven aircraft. The Boeing 737- 200
aircraft sold in May 1997 was formerly leased to Viscount Air Services, Inc.
(Viscount) and subleased to Nations Air Express, Inc. (Nations Air), was
returned to the Partnership in February 1997. Two engines formerly leased to
Viscount, were returned to the Partnership in May and October 1996 and were sold
in March 1997. One additional engine from these aircraft was sold to Viscount
during 1995. Viscount's affiliates, Rock-It Cargo USA, Inc. (Rock-It Cargo) and
Riverhorse Investments, Inc. (Riverhorse Investments) assumed the note for this
engine sale in October 1996. The Partnership has sold five aircraft and one
airframe from its original aircraft portfolio: a Boeing 737-200 Convertible
Freighter in 1990, a McDonnell Douglas DC-9-10 in 1992, a Boeing 737-200 in 1993
and the airframe from a Boeing 737-200 aircraft in April 1995 and two Boeing
737-200 aircraft in March 1997.
Remarketing Update
Sale of two Boeing 737-200s - In January 1997, the Partnership received a
deposit of $162,000 toward the sales price of $1,620,000 for the sale of two
Boeing 737-200s and two spare engines formerly leased to Viscount. The
Partnership received the remaining $1,458,000 in March 1997. In addition, the
Partnership retained certain maintenance reserves and deposits received from the
former lessee of these aircraft aggregating approximately $968,000 that had been
held by the Partnership to offset potential future maintenance expenses for
these aircraft. As a result, the Partnership recognized a net gain of $781,504
on the sale of these aircraft during the first quarter of 1997.
Engine Note Receivable - In April 1997, the Partnership received $408,496, as
payment in full, of the outstanding engine finance sale note receivable,
including accrued interest, due from Rock-It Cargo and Riverhorse Investments.
Sale of one Boeing 737-200 - In April 1997, the Partnership received a deposit
of $250,000 toward the sales price of $1,000,000 for the sale of one Boeing
737-200 formerly leased to Viscount and subleased to Nations Air Express, Inc.
The Partnership received the remaining $750,000 in May 1997. In addition, the
Partnership retained certain maintenance reserves and deposits received from the
former lessee of this aircraft, aggregating approximately $1,081,000, that had
been held by the Partnership to offset potential future maintenance expenses for
this aircraft. As a result, the Partnership recognized a net gain of $1,051,169
on the sale of this aircraft during the second quarter of 1997.
Engine Lease to CanAir - In April 1997, the Partnership agreed to a lease
extension for seven months beyond the original lease expiration date of May
1997. CanAir subsequently obtained an order under the Companies' Creditors
Arrangement Act of Canada, as discussed in Note 6 to the financial statements.
During the quarter ended September 30, 1997, the Partnership recorded an
allowance for credit losses of $30,365 for the outstanding receivables from
CanAir through August 21, 1997, after applying CanAir's security deposit of
$20,925 towards the outstanding receivables due.
On August 22, 1997, GE Capital Aviation Services, Inc. (GECAS) as agent for PHC,
GECL Canada and the Partnership, entered into an "Aircraft Lease Purchase
Agreement" with Royal Aviation Inc. and Royal Cargo Inc. (Royal Cargo) for the
10
<PAGE>
transfer of the leases with CanAir. Pursuant to this agreement, the leases were
extended to August 2000 at the current lease rate and the Partnership received a
security deposit of $45,000 from Royal Cargo.
Partnership Operations
The Partnership recorded net income of $820,423, or $1.19 per limited
partnership unit, for the three months ended September 30, 1997, compared to a
net loss of $140,670, or $0.83 per limited partnership unit, for the same period
in 1996. The Partnership recorded net income of $3,042,277, or $13.43 per
limited partnership unit, for the nine months ended September 30, 1997, compared
to net income of $28,253 or an allocated net loss of $1.33 per unit for the same
period in 1996. The Partnership reported improved operating results during the
three and nine months ended September 30, 1997, as compared to the same periods
in 1996.
During the three months ended September 30, 1997 the Partnership received a
payment of $690,946 as its share of a settlement payment from Nations Air,
before legal expenses. Included in revenues for the nine months ended September
30, 1997, is a gain from the sale of three aircraft totaling $1,832,673 as
previously discussed in the notes to the financial statements.
During the third quarter of 1997, the Partnership recorded an allowance for
credit losses of $30,365 against the net outstanding receivables from CanAir.
The Partnership recorded an allowance for credit losses of $309,581 during the
first quarter of 1996 for certain unpaid rent and accrued interest receivables
from Viscount as a result of Viscount's default on certain obligations due the
Partnership and Viscount's subsequent bankruptcy filing. The Partnership
recorded an allowance for credit losses of $354,019 during the third quarter of
1996 for Viscount's outstanding balance of the line of credit and accrued
interest. In addition, the Partnership recognized legal expenses of
approximately $375,000 related to the Viscount defaults and Chapter 11
bankruptcy filing. These legal costs are included in operating expense in the
Partnership's statement of operations for the nine months ended September 30,
1996.
Nations Air Settlement
As previously reported, First Security Bank, National Association (FSB), as
trustee for the Partnership, filed an action against Nations Air Express, Inc.
(Nations Air) to recover damages arising from Nations Air's possession and use
of the Partnership's aircraft. On March 31, 1997, Nations Air entered into a
comprehensive Settlement Agreement with FSB, Polaris Holding Company (PHC), the
Partnership, Polaris Aircraft Income Fund II, Polaris Investment Management
Corporation (General Partner) and GECAS (collectively, the "GECAS Parties").
Pursuant to the Settlement Agreement, Nations Air filed a Stipulated Judgment
whereby Nations Air agreed, among other things, to purchase PHC's aircraft (the
"PHC Aircraft") for $3.3 million payable no later than May 30, 1997. Subsequent
to March 31, 1997, GECAS, on behalf of FSB, and Nations Air agreed to extend the
date by which Nations Air or its designee must purchase the PHC Aircraft to July
14, 1997. On that date FSB, as owner trustee for PHC, sold the PHC Aircraft to
Nations Air's designee and received the purchase price of $3.3 million. On
September 29, 1997 the Partnership received $690,946 as its share of the
settlement payment before legal expenses.
Liquidity and Cash Distributions
Liquidity - The Partnership receives engine maintenance reserve payments from
its lessee that may be reimbursed to the lessee or applied against certain costs
incurred by the Partnership for maintenance work performed on the Partnership's
engines, as specified in the leases. Maintenance reserve balances remaining at
the termination of the lease, if any, may be used by the Partnership to offset
11
<PAGE>
future maintenance expenses or recognized as revenue. The net maintenance
reserves balances aggregate $1,345,123 as of September 30, 1997.
Cash Distributions - Cash distributions to limited partners for the three months
ended September 30, 1997 were $6,116,427, or $36.25 per limited partnership
unit. There were no cash distributions to limited partners for the three months
ended September 30, 1996. Cash distributions were $7,466,259, or $44.25 per
limited partnership unit and $2,530,935, or $15.00 per unit, for the nine months
ended September 30, 1997 and 1996, respectively. The timing and amount of future
cash distributions to partners are not yet known and will depend upon the
Partnership's future cash requirements, including receipt of rental payments
from Royal Cargo.
12
<PAGE>
Part II. Other Information
--------------------------
Item 1. Legal Proceedings
As discussed in Item 3 of Part I of Polaris Aircraft Income Fund I's (the
Partnership) 1996 Annual Report to the Securities and Exchange Commission (SEC)
on Form 10-K (Form 10-K) and in Item 1 of Part II of the Partnership's Quarterly
Report to the SEC on Form 10-Q (Form 10-Q) for the periods ended March 31, 1997
and June 30, 1997, there are a number of pending legal actions or proceedings
involving the Partnership. Except as discussed below, there have been no
material developments with respect to any such actions or proceedings during the
period covered by this report.
CanAir Cargo Ltd. (CanAir) Order under the Companies' Creditors Arrangement Act
of Canada - On July 28, 1997, CanAir obtained an order under the Companies'
Creditors Arrangement Act of Canada (the CCAA Order) from the Ontario Court of
Justice, General Division. The CCAA Order restrains CanAir's creditors,
including lessors, from exercising any rights arising from CanAir's default or
non-performance of its obligations until October 28, 1997 or further order of
the court. CanAir leased three engines from the Partnership, and a total of five
aircraft from Polaris Holding Company (PHC) and General Electric Capital Leasing
Canada, Inc. (GECL Canada). CanAir had defaulted on its July and August 1997
engine rent and maintenance reserve payment obligations to the Partnership. On
August 22, 1997, GE Capital Aviation Services, Inc. (GECAS) as agent for PHC,
GECL Canada and the Partnership (together, the GECAS Parties), entered into an
Aircraft Lease Purchase Agreement with Royal Aviation Inc. and Royal Cargo Inc.
for the transfer of CanAir's future lease obligations to Royal Aviation Inc., as
described in Item 2, under the caption "Remarketing Update -- Engine Lease to
CanAir."
CanAir still owes the GECAS Parties a total of approximately $1.5 million. Of
this amount, approximately $30,365 is owed to the Partnership under the engine
lease, exclusive of accrued interest and maintenance reserve payment
obligations. On October 29, 1997, CanAir filed a plan of reorganization with the
court, which is subject to the approval of CanAir's creditors and the court.
Pursuant to the plan of reorganization, CanAir proposes to pay the GECAS Parties
approximately $800,000 from CanAir's future cash flows, with payment of the
outstanding balance to be deferred and subordinated to other classes of
creditors. There can be no assurance about the likelihood of the GECAS Parties
receiving the outstanding amounts from CanAir or when any such payments would be
made pursuant to the plan of reorganization. The court ordered an extension
until November 20, 1997 of the stay under the CCAA Order in order to hold a vote
of creditors to approve the plan. The vote of creditors is scheduled for
November 17, 1997.
Other Proceedings - Item 10 in Part III of the Partnership's 1996 Form 10-K and
Item 1 in Part II of the Partnership's Form 10-Q for the periods ended June 30,
1997 and March 31, 1997 discuss certain actions which have been filed against
Polaris Investment Management Corporation and others in connection with the sale
of interests in the Partnership and the management of the Partnership. With the
exception of Novak, et al v. Polaris Holding Company, et al, (which has been
dismissed, as discussed in the Partnership's 1996 Form 10-K) where the
Partnership was named as a defendant for procedural purposes, the Partnership is
not a party to these actions. There have been no material developments with
respect to any of the actions described therein during the period covered by
this report.
13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
27. Financial Data Schedule.
b) Reports on Form 8-K
None.
14
<PAGE>
SIGNATURE
Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
POLARIS AIRCRAFT INCOME FUND I
(Registrant)
By: Polaris Investment
Management Corporation,
General Partner
November 12, 1997 By: /S/Marc A. Meiches
- --------------------------------- --------------------------------
Marc A. Meiches
Chief Financial Officer
(principal financial officer and
principal accounting officer of
Polaris Investment Management
Corporation, General Partner of
the Registrant)
15
<TABLE> <S> <C>
<ARTICLE>5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 6206590
<SECURITIES> 0
<RECEIVABLES> 30365
<ALLOWANCES> 30365
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 960000
<DEPRECIATION> 56250
<TOTAL-ASSETS> 7110340
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5169862
<TOTAL-LIABILITY-AND-EQUITY> 7110340
<SALES> 0
<TOTAL-REVENUES> 3435995
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 363353
<LOSS-PROVISION> 30365
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3042277
<INCOME-TAX> 0
<INCOME-CONTINUING> 3042277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3042277
<EPS-PRIMARY> 13.43
<EPS-DILUTED> 0
</TABLE>
