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 March 31, 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
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I N D E X
Page No.
Part I - Financial Information:
Item 1. Financial Statements
Balance Sheets --
March 31, 1995 and December 31, 1994 .....................3
Statements of Income --
Three months ended March 31, 1995 and 1994 ...............4
Condensed Statements of Cash Flows
Three months ended March 31, 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
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BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(In thousands except unit data) (Unaudited) 1994
- - - - - --------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Cash ......................................... $ 1 $ 0
Finance leases - net ......................... 92,853 93,697
Operating leases - net ....................... 12,304 12,853
Notes receivable ............................. 1,409 673
Prepaid expenses and other assets ............ 306 319
-------- --------
Total assets ............................. $106,873 $107,542
======== ========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution payable to partners ............. $ 2,196 $ 2,196
Accounts payable and accrued liabilities ..... 1,355 1,259
Long-term notes payable ...................... 29,300 29,525
-------- --------
Total liabilities ........................ 32,851 32,980
-------- --------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
Limited partners (4,625,000 units outstanding) 73,282 73,816
General partner .............................. 740 746
-------- --------
Total partners' equity ................... 74,022 74,562
-------- --------
Total liabilities and partners' equity ... $106,873 $107,542
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- - - - - --------------------------------------------------------------------------------
See NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
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STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
(Unaudited; in thousands March 31,
except per unit amounts) 1995 1994
- - - - - --------------------------------------------------------------------------------
REVENUES
<S> <C> <C>
Finance lease income .................. $2,316 $2,508
Operating lease rentals ............... 751 670
Other income .......................... 36 13
----- -----
Total revenues .................... 3,103 3,191
----- -----
EXPENSES
Interest .............................. 627 673
Depreciation - operating leases ....... 522 532
Fees to general partner ............... 195 209
Investor reporting .................... 54 70
General and administrative ............ 49 44
----- -----
Total expenses .................... 1,447 1,528
----- -----
Net Income ............................ $1,656 $1,663
===== =====
Net Income Allocated To:
General Partner ....................... $ 17 $ 17
====== ======
Limited Partners ...................... $1,639 $1,646
====== ======
Net Income Per Limited Partnership Unit $ 0.35 $ 0.36
====== ======
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See NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
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STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(Unaudited; in thousands) 1995 1994
- - - - - --------------------------------------------------------------------------------
<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES ............... $ 2,314 $ 991
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase)/decrease in notes receivable ................ (736) 17
Rental receipts in excess of earned finance lease income 844 751
------- -------
Net cash from investing activities ................... 108 768
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing under long-term revolving loan facility ....... 678 1,216
Repayment of long-term debt ............................. (903) (828)
Distributions paid to partners .......................... (2,196) (2,149)
------ ------
Net cash used by financing activities ................. (2,421) (1,761)
------ ------
Increase/(decrease) in cash ............................. 1 (2)
Cash at beginning of period ............................. 0 2
------- -------
Cash at end of period ................................ 1 0
====== ======
ADDITIONAL INFORMATION
Interest paid ........................................... $ 489 $ 506
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See NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
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NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
---------------------
The accompanying unaudited condensed financial statements reflect all
adjustments (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 incorporated 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
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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 March 31,
1995, the following amounts were outstanding: $14.9 million on an 8.75%
non-recourse note, collateralized by three aircraft leased to USAir; $6.9
million on a 7.4% non-recourse note collateralized by one aircraft leased to
FedEx; and $7.5 million under a non-recourse long-term revolving declining
variable interest loan facility collateralized by a fourth aircraft leased to
USAir. There were no outstanding amounts under the fourth facility which is
collateralized by the partnership's interest in the aircraft leased to Finnair
Oy. Approximately $4.3 million of the revolving facilities' borrowing capacity
remains available.
Long-term borrowing at March 31, 1995 represented 19.6% of the original cost of
aircraft presently owned by the partnership, including capitalized expenditures
for upgrades. The terms of the Partnership Agreement permit debt to be at a
level not exceeding 50% of such cost.
In February, the partnership financed $731,000 to Continental Airlines for
certain avionics and upgrades associated with the seven 737-200 aircraft on
lease to Continental, bringing the outstanding notes receivable to $1,409,000.
These loans, which were a condition of a Continental bankruptcy stipulation,
will be repaid with interest over the two-year remaining life of the lease. The
partnership's remaining obligation to fund loans to Continental under the
bankruptcy stipulation is approximately $250,000.
Declared cash distributions for the fourth quarter 1994 of $2,196,000 and
fourth quarter 1993 of $2,149,000 were paid in the first quarter ending March
31, 1995 and March 31, 1994, respectively. Cash distributions paid for the
fourth quarter 1994 compared to the previous year's quarter were $47,000
higher, based on the improved stability of the partnership's portfolio.
In March 1995, the partnership declared a $0.47 per unit quarterly distribution
amounting to $2,196,000 payable on May 15, 1995 to unitholders of record as of
the close of business on March 31, 1995. Such distribution exceeded first
quarter net income of $1,656,000 which resulted in a return of capital of
$540,000.
Results of Operations
- - - - - ---------------------
Net income for the quarter ended March 31, 1995 was $1,656,000, a decrease of
$7,000, over the comparable 1994 three-month period. Revenues decreased
slightly to $3,103,000 from $3,191,000. The increase in operating lease
revenues of $81,000 in the first quarter was offset by a delay of income
recognition on the Trans World Airlines ("TWA") lease (as explained below) and
by the scheduled decrease in finance lease income. Expenses declined 5% from
the prior year's quarter, reflecting decreases in almost all categories of
expenses.
TWA resumed its scheduled payments and was put back on accrual status in
February and has agreed to remit the past-due amounts over the next several
months. Income from these past due amounts will be recorded when received. The
partnership's 50% interest in the MD-82 aircraft on lease to TWA represents
7.5% of total partnership assets at March 31, 1995.
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The partnership has been advised by Continental that one of the seven 737-200
aircraft was damaged while on the ground. Although rent continues, the
partnership is working with Continental to quantify the extent of the damage to
determine whether it will be more economical for them to repair the aircraft or
declare it a total loss and pay off their obligations under the lease. The
partnership's one-third interest in the seven aircraft on lease on Continental
represents 3.3% of total assets at March 31, 1995.
At March 31, 1995, all of the partnership's sixteen aircraft were on lease and
all customers were current under their present lease agreements.
<PAGE>
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
May 11, 1995 By: /s/David B. Gebler
Date
David B. Gebler
President
May 11, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 106,566
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 106,873
<CURRENT-LIABILITIES> 0
<BONDS> 29,300
<COMMON> 0
0
0
<OTHER-SE> 74,022
<TOTAL-LIABILITY-AND-EQUITY> 106,873
<SALES> 3,103
<TOTAL-REVENUES> 3,103
<CGS> 0
<TOTAL-COSTS> 522
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 627
<INCOME-PRETAX> 1,656
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,656
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,656
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
