UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q/A
Amendment No. 1
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_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __to__
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Commission File No. 2-91762
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POLARIS AIRCRAFT INCOME FUND I
State of Organization: California
IRS Employer Identification No. 94-2938977
201 High Ridge Road, Stamford, Connecticut 06927
Telephone - (203) 357-3776
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 4 pages.
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The undersigned registrant hereby amends Item 2 of its Quarterly Report on Form
10-Q for the period ended June 30, 1998 in its entirety as follows:
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
At June 30, 1998, Polaris Aircraft Income Fund I (the Partnership) owned three
engines and certain inventoried aircraft parts out of its original portfolio of
eleven aircraft. The three engines are leased to Royal Aviation Inc. and Royal
Cargo, Inc. (Royal Aviation). 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.
Partnership Operations
The Partnership recorded net income of $119,225, or $0.70 per limited
partnership unit for the three months ended June 30, 1998 compared to net income
of $1,213,510 or $7.12 per limited partnership unit, for the three months ended
June 30, 1997. The Partnership recorded net income of $512,638, or $3.01 per
limited partnership unit for the six months ended June 30, 1998, compared to net
income of $2,221,854, or $12.24 per limited partnership unit, for the six months
ended June 30, 1997. The decrease in operating results during the three and six
months ended June 30, 1998, as compared to the same periods in 1997, is
primarily the result of gains on the sale of aircraft in 1997 as discussed
below.
During the first quarter of 1997, the Partnership sold two Boeing 737-200s and
two spare engines formerly leased to Viscount to Solair, Inc. for cash proceeds
of $1,620,000. 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.
During the second quarter of 1997, the Partnership sold one Boeing 737-200
formerly leased to Viscount and subleased to Nations Air Express, Inc. for
$1,000,000. 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.
Interest income decreased during the three and six months ended June 30, 1998,
as compared to the same periods in 1997, primarily due to a decrease in the cash
reserves as discussed in the liquidity section.
Operating expenses decreased during the three and six months ended June 30,
1998, as compared to the same periods in 1997, due to a decrease in legal
expenses during the three months and six months ended June 30, 1998. During the
six months ended June 30, 1997, the Partnership recognized legal expenses of
approximately $130,000 related to the Nations Air Express, Inc. default and the
Viscount default and Chapter 11 bankruptcy filing. During the six months ended
June 30, 1998, the Partnership recognized legal expenses of only $3,514 related
to the Braniff bankruptcy.
Claims Related to Lessee Defaults
Braniff, Inc. (Braniff) Bankruptcy - As more fully discussed in Note 3,
Braniff's bankrupt estate has made a payment in the amount of $200,000 in
respect of the unsecured claims of the Partnership and other affiliates of
Polaris Investment Management Corporation. Of this amount, $138,462 was
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allocated to the Partnership, based on its pro rata share of the total claims,
and recognized as revenue during the six months ended June 30, 1998.
Jet Fleet Bankruptcy - As more fully discussed in Note 3, the bankruptcy
proceeding of Jet Fleet Corporation was closed on August 6, 1997, and the
bankruptcy proceeding of Jet Fleet International Airlines, Inc. was closed on
February 10, 1998. Distributions from the bankrupt estate have not been made to
the unsecured creditors, and the Partnership is not likely to receive any
distributions on its Proof of Claim.
The Partnership had been holding deposits and maintenance reserves pending the
outcome of the Jet Fleet bankruptcy proceedings. Consequently, the Partnership
recognized, during the six months ended June 30, 1998, revenue of $92,610 that
had been held as deposits and maintenance reserves.
Liquidity and Cash Distributions
Liquidity - The Partnership receives maintenance reserve payments from Royal
Aviation that may be reimbursed to the lessee or applied against certain costs
incurred by the Partnership for maintenance work performed on the Partnership's
aircraft or 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 future maintenance expenses or recognized as revenue. The
net maintenance reserves balances aggregate $1,651,567 as of June 30, 1998.
The Partnership received payments of approximately $15,000 and $64,000 during
the three months and six months ended June 30, 1998, respectively, compared to
payments of approximately $50,000 and $136,000 during the three and six months
ended June 30, 1997, respectively, from the sale of parts from the four
disassembled aircraft.
Polaris Investment Management Corporation, the general partner, has determined
that the Partnership maintain cash reserves as a prudent measure to insure that
the Partnership has available funds in the event that the engines presently on
lease to Royal Aviation require remarketing and for other contingencies,
including expenses of the Partnership. The Partnership's cash reserves will be
monitored and may be revised from time to time as further information becomes
available in the future.
Cash Distributions - Cash distributions to limited partners were $1,349,832, or
$8.00 per limited partnership unit for the six months ended June 30, 1998 and
1997. 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
the receipt of rental payments from Royal Aviation.
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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
August 24, 1998 By: /S/Marc A. Meiches
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Marc A. Meiches
Chief Financial Officer
(principal financial officer and
principal accounting officer of
Polaris Investment Management
Corporation, General Partner of
the Registrant)
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