UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
Commission file number 1-9259
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 94-3008908
(State of Incorporation) (I.R.S. Employer Identification No.)
733 Front Street, P.O. Box 193985, San Francisco, California 94119
(Address of principal executive offices) (Zip Code)
(415) 627-9289
(Registrant's telephone number, including area code)
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
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
I N D E X
Page No.
Part I - Financial Information:
Item 1. Financial Statements
Balance Sheets --
June 30, 1995 and December 31, 1994 3
Statements of Income --
Three and six months ended June 30, 1995 and 1994 4
Condensed Statements of Cash Flows
Six months ended June 30, 1995 and 1994 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II - Other Information:
Item 6. Exhibits and Reports on Form 8-K. 9
Signatures 10
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
1995 December 31,
(In thousands except unit data) (Unaudited) 1994
<S> <C> <C>
ASSETS
Cash ......................................... $ 0 $ 0
Finance leases - net ......................... 91,231 93,697
Operating leases - net ....................... 11,754 12,853
Equipment held for lease or sale ............. 0 0
Notes receivable ............................. 1,255 673
Prepaid expenses and other assets ............ 292 319
--- ---
Total assets ............................. $104,532 $107,542
======== ========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution payable to partners ............. $ 2,336 $ 2,196
Accounts payable and accrued liabilities ..... 1,145 1,259
Long-term notes payable ...................... 27,571 29,525
------ ------
Total liabilities ........................ 31,052 32,980
------ ------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
Limited partners (4,625,000 units outstanding) 72,745 73,816
General partner .............................. 735 746
--- ---
Total partners' equity ................... 73,480 74,562
------ ------
Total liabilities and partners' equity ... $104,532 $107,542
======== ========
</TABLE>
See NOTES TO CONDENSED FINANCIAL STATEMENTS
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(Unaudited; in thousands June 30 June 30,
except per unit amounts) 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Finance lease income ................... $2,442 $2,409 $4,758 $4,917
Operating lease rentals ................ 734 675 1,485 1,345
Other income 45 110 81 123
-- --- -- ---
Total revenues .................... 3,221 3,194 6,324 6,385
_____ _____ _____ _____
EXPENSES
Interest .............................. 607 676 1,234 1,349
Depreciation - operating leases ....... 522 537 1,044 1,069
Fees to general partner ............... 200 199 395 408
Investor reporting .................... 58 62 112 132
General and administrative ............ 41 45 90 89
-- -- -- --
Total expenses .................... 1,428 1,519 2,875 3,047
----- ----- ----- -----
Net Income ............................ $1,793 $1,675 $3,449 $3,338
====== ====== ====== ======
Net Income Allocated To:
General Partner ....................... $ 17 $ 17 $ 34 $ 33
====== ====== ====== ======
Limited Partners ...................... $1,776 $1,658 $3,415 $3,305
====== ====== ====== ======
Net Income Per Limited Partnership Unit $ 0.38 $0.36 $ 0.74 $ 0.71
====== ===== ====== ======
</TABLE>
See NOTES TO CONDENSED FINANCIAL STATEMENTS
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
(Unaudited; in thousands) 1995 1994
---- ----
<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES $ 4,461 $ (161)
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES
Aircraft equipment purchase ............................ 0 (290)
(Increase)/decrease in notes receivable ................ (582) 35
Rental receipts in excess of earned finance
lease income .......................................... 2,467 2,312
----- -----
Net cash from investing activities ................... 1,885 2,057
----- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing under line of credit, net .................... (359) 4,270
Proceeds from issuance of long-term debt ............... 425 0
Repayment of long-term debt ............................ (2,020) (1,869)
Distributions paid to partners ......................... (4,392) (4,298)
------ ------
Net cash used by financing activities ................ (6,346) (1,897)
------ ------
Increase/(decrease) in cash ............................ 0 (1)
Cash at beginning of period ............................ 0 2
- -
Cash at end of period ............................... 0 1
= =
ADDITIONAL INFORMATION
Interest paid ......................................... $ 1,209 $ 1,222
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</TABLE>
See NOTES TO CONDENSED FINANCIAL INFORMATION
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements reflect all adjust-
ments (consisting only of normal recurring adjustments) which are, in the
opinion of the Partnership, necessary to a fair statement of the results for
the interim periods. The results of operations for such interim periods are
not necessarily indicative of results of operations for a full year. The
December 31, 1994 balance sheet included herein is derived from the audited
financial statements included in the Partnership's Annual Report and incorpo-
rated by reference in the Form 10-K for the year ended December 31, 1994, but
does not include all disclosures required by generally accepted accounting
principles. The statements should be read in conjunction with the Organization
and Significant Accounting Policies and other notes to financial statements
included in the Partnership's Annual Report for the year ended December 31,
1994.
2. NET INCOME PER LIMITED PARTNERSHIP UNIT
Net Income Per Limited Partnership Unit is computed by dividing the net income
allocated to the Limited Partners by the weighted average units outstanding
(4,625,000).
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The partnership presently has four long-term debt facilities. At June 30,
1995, the following amounts were outstanding: $14.0 million on an 8.75% non-
recourse note, collateralized by three aircraft leased to USAir; $6.7 million
on a 7.4% non-recourse note collateralized by one aircraft leased to FedEx;
$6.5 million under a non-recourse long-term revolving declining variable
interest loan facility collateralized by a fourth aircraft leased to USAir;
and $0.4 on a non-recourse variable interest loan facility which bears
interest at LIBOR plus 2.5% and is collateralized by the partnership's
interest in one aircraft leased to Finnair Oy. Under an interest-rate-cap
agreement, the LIBOR rate cannot exceed 8.5%. Approximately $4.3 million of
the revolving facilities' borrowing capacity remains available.
Long-term borrowings at June 30, 1995 represented 18.5% of the original cost
of aircraft presently owned by the partnership, including capitalized expendi-
tures for upgrades. The terms of the Partnership Agreement permit debt to be
at a level not exceeding 50% of such cost.
Cash distributions paid in the first six months of 1995 amounted to $4,392,000
versus $4,298,000 in the first six months of 1994, an increase of $94,000.
This increase in cash distribution reflects increased cash available from
operations as defined in the Partnership Agreement.
In June 1995, the partnership declared a $0.50 per unit quarterly distribution
amounting to $2,336,000, an increase of $140,000 from the prior quarterly
distribution. The increase reflects receipt of past-due rent from TWA and the
partnership's policy of distributing all cash available from operations which
can vary based upon receipt of rent and payment of expenses. Such distribution
exceeded second quarter net income of $1,793,000 which resulted in a return of
capital and a decline in limited partners' equity of $543,000. The second-
quarter cash distribution is payable on August 15, 1995 to unitholders of
record as of the close of business on June 30, 1995.
Results of Operations
Net income for the quarter ended June 30, 1995 was $1,793,000, an increase of
$118,000 or 7% over the comparable 1994 three-month period. For the six-month
period ended June 30, 1995, net income was $3,449,000, an increase of 3.3% over
the comparable 1994 six-month period. Improved results for the three- and
six-month period primarily reflect lower borrowing costs.
Revenues for the three and six-month period ended June 30, 1995 were $3,221,000
and $6,324,000 respectively, compared with $3,194,000 and $6,385,000 for the
comparable 1994 periods. Increased finance lease income for the three-month
period ended June 30, 1995 reflects the recognition of past-due rents from
TWA offset in part by the normal reduction in finance lease income as the
portfolio matures. The decline in finance lease income for the six-month
period reflects this normal reduction as the portfolio matures. Increased
operating lease rentals for both the three- and six-month 1995 periods reflect
the re-lease of an aircraft to Sun Jet in late 1994. Reduction in other income
for both the three and six-month 1995 periods results primarily from a one-time
sale of aircraft parts which occurred in the second-quarter period of 1994.
Portfolio Matters
TWA recently filed for Chapter 11 bankruptcy with a prepackaged plan of
reorganization, and has reported that it could emerge from bankruptcy as soon
as September 1995. The airline has also stated it expects normal operations
would continue during the bankruptcy period without any impairment to the
airline's trade creditors. TWA resumed making its scheduled rent payments in
February, and as agreed, paid half of the past-due amount in April and the
balance paid in July.
As discussed in the partnership's first quarter report, one of the seven
Continental aircraft was damaged while on the ground. A determination has been
made that the aircraft (which at June 30, 1995 represented less than 1% of
total assets based on the partnership's one-third interest) is a total loss.
The insurance proceeds are expected to cover the partnership's loss. In light
of current conditions in the aircraft market and the relatively small insurance
proceeds, the partnership does not intend to invest the proceeds in additional
aircraft.
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PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K.
None.
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SIGNATURES
Pursuant to the requirements 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.
AIRLEASE LTD., A CALIFORNIA LIMITED
PARTNERSHIP
By: Airlease Management Services, Inc.
General Partner
July 31, 1995 By: /s/ David B. Gebler
Date David B. Gebler
President
July 31, 1995 By: /s/ Robert A. Keyes, Jr.
Date Robert A. Keyes, Jr.
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 104,240
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 104,532
<CURRENT-LIABILITIES> 0
<BONDS> 27,571
<COMMON> 0
0
0
<OTHER-SE> 73,480
<TOTAL-LIABILITY-AND-EQUITY> 104,532
<SALES> 6,324
<TOTAL-REVENUES> 6,324
<CGS> 0
<TOTAL-COSTS> 1,044
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,234
<INCOME-PRETAX> 3,449
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,449
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,449
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
