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 September 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 --
September 30, 1995 and December 31, 1994 ...............3
Statements of Income --
Three and nine months ended September 30, 1995
and 1994 ...............................................4
Condensed Statements of Cash Flows
Nine months ended September 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>
September 30, December 31,
1995 1994
(In thousands except unit data) (Unaudited)
<S> <C> <C>
ASSETS
Cash............................................ $ 0 $ 0
Finance leases - net ............................ 93,194 93,697
Operating leases - net .......................... 10,792 12,853
Notes receivable ................................ 1,096 673
Prepaid expenses and other assets ............... 535 319
------ ------
Total assets ............................... $105,617 $107,542
======== ========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution payable to partners ....... ....... $ 2,803 $ 2,196
Accounts payable and accrued liabilities ....... 1,754 1,259
Long-term notes payable ........................ 28,659 29,525
------ ------
Total liabilities ........................... 33,216 32,980
------ ------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
Limited partners (4,625,000 units outstanding) 71,677 73,816
General partner ................................ 724 746
------ ------
Total partners' equity ....................... 72,401 74,562
------ ------
Total liabilities and partners' equity .... $105,617 $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 Nine Months Ended
(Unaudited; in thousands September 30, September 30,
except per unit amounts) 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Finance lease income .......................$2,413 $2,438 $7,171 $7,355
Operating lease rentals .................... 699 725 2,184 2,070
Other income ............................... 67 17 148 140
-- -- --- ---
Total revenues ......................... 3,179 3,180 9,503 9,565
----- ----- ----- -----
EXPENSES
Interest ................................... 581 681 1,815 2,030
Depreciation - operating leases ............ 581 541 1,625 1,610
Fees to general partner .................... 196 198 591 606
Investor reporting ......................... 58 71 170 203
General and administrative ................. 38 68 128 157
--- --- ----- -----
Total expenses ......................... 1,454 1,559 4,329 4,606
----- ----- ----- -----
Net Income .................................$1,725 $1,621 $5,174 $4,959
====== ====== ====== ======
Net Income Allocated To:
General Partner ............................$ 17 $ 16 $ 52 $ 50
====== ====== ====== ======
Limited Partners ...........................$1,708 $1,605 $5,122 $4,909
====== ====== ====== ======
Net Income Per Limited Partnership Unit ....$ 0.37 $ 0.35 $ 1.11 $ 1.06
====== ====== ====== ======
</TABLE>
See NOTES TO CONDENSED FINANCIAL STATEMENTS
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
(Unaudited; in thousands) 1995 1994
---- ----
<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES $ 7,137 $ 1,466
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Aircraft equipment purchase (66) (316)
Casualty settlement proceeds 444 -
(Increase)/decrease in notes receivable (423) (221)
Rental receipts in excess of earned finance
lease income 503 3,134
--- -----
Net cash from investing activities 458 2,597
--- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing under line of credit, net 553 5,674
Proceeds from issuance of long-term debt 600 0
Repayment of long-term debt (2,020) (3,292)
Distributions paid to partners (6,728) (6,447)
------ ------
Net cash used by financing activities (7,595) (4,065)
------ ------
Increase/(decrease) in cash 0 (2)
Cash at beginning of period 0 2
----- -----
Cash at end of period $ 0 $ 0
======== ========
ADDITIONAL INFORMATION
Interest paid $ 1,356 $ 1,721
========= ========
</TABLE>
NON-CASH INVESTING AND FINANCING ACTIVITIES
During the second quarter of 1994, accrued conversion costs were adjusted
by $920,000.
<PAGE>
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
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).
<PAGE>
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 September 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; $7.4 million under a non-recourse long-term revolving declining variable
interest loan facility collateralized by a fourth aircraft leased to USAir; and
$0.6 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 $2.6 million of the revolving
facilities' borrowing capacity remains available.
Long-term borrowings at September 30, 1995 represent 19.2% 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.
Cash distributions paid in the first nine months of 1995 amounted to $6,728,000
versus $6,447,000 in the first nine months of 1994, an increase of $281,000.
This increase in cash distribution principally reflects increased cash
available from operations as defined in the Partnership Agreement.
In September 1995, the partnership declared a $0.50 per unit quarterly
distribution amounting to $2,336,000, equal to the prior quarterly
distribution. Such distribution exceeded third quarter net income of $1,725,000
which resulted in a return of capital of $611,000. The partnership also
declared a special cash distribution of $0.10 per unit from the casualty
proceeds received on the partnership's one-third interest in one 737-200
aircraft which was declared a total loss. The partnership elected to make a
special distribution after considering the small amount of casualty proceeds
and the present lack of new investment opportunities which would provide an
acceptable return to unitholders. Both cash distributions are payable on
November 15, 1995 to unitholders of record as of the close of business on
September 29, 1995. As stated in its prospectus, Airlease's intention is to
distribute all cash available from operations, which can vary based upon
receipt of rent and payment of expenses. The partnership may also distribute
cash available from sales, refinancings, or casualty proceeds.
Results of Operations
Net income for the quarter ended September 30, 1995 was $1,725,000, an increase
of $104,000 or 6% over the comparable 1994 three-month period. For the
nine-month period ended September 30, 1995, net income was $5,174,000, an
increase of 4.3% over the comparable 1994 nine-month period. Improved results
for the three-and nine-month period primarily reflect lower interest expenses
resulting from lower outstanding balances on the partnership's borrowing
facilities discussed above. Total revenues for the three-and nine-month period
ended September 30, 1995 were $3,179,000 and $9,503,000, respectively, compared
with $3,180,000 and $9,565,000 for the comparable 1994 periods. Third quarter
finance lease income declined reflecting the normal reduction as the portfolio
matures. Operating rentals also declined reflecting the Continental casualty
loss. Other income increased reflecting a small book gain from the casualty
proceeds received on the 737-200 aircraft and higher interest income from notes
receivable. For the 1995 nine-month period, finance lease income declined
reflecting the normal reduction as the portfolio matures offset by the increase
in operating lease rentals from the re-lease of an aircraft to Sun Jet.
Portfolio Matters
USAir, the partnership's major lessee (69% of total assets at September 30,
1995) recently announced it is holding discussions with United Airlines and
American Airlines concerning possible strategic relationships up to and
including acquisition of the airline. Any such discussions will be closely
monitored by the partnership.
TWA (7% of total assets at September 30, 1995) emerged from bankruptcy in
August, one month earlier than expected. The airline is current on its
scheduled monthly rent payments.
<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.
<PAGE>
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
November 9, 1995 By: /s/ David B. Gebler
Date David B. Gebler
President
November 9, 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> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 105,082
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 105,617
<CURRENT-LIABILITIES> 0
<BONDS> 28,659
<COMMON> 0
0
0
<OTHER-SE> 72,401
<TOTAL-LIABILITY-AND-EQUITY> 105,617
<SALES> 9,503
<TOTAL-REVENUES> 9,503
<CGS> 0
<TOTAL-COSTS> 1,625
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,815
<INCOME-PRETAX> 5,174
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,174
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
