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, 1996
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, 1996 and December 31, 1995 ..................3
Statements of Income --
Three and six months ended June 30, 1996 and 1995 ....4
Condensed Statements of Cash Flows
Six months ended June 30, 1996 and 1995 ..............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,
1996 December 31,
(In thousands except unit data) (Unaudited) 1995
- ---------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1 $ 0
Finance leases - net 88,858 91,564
Operating leases - net 2,847 10,259
Notes receivable 594 933
Prepaid expenses and other assets 185 265
--- ---
Total assets $ 92,485 $103,021
====== =======
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution payable to partners $ 2,102 $ 2,336
Accounts payable and accrued liabilities 974 1,490
Long-term notes payable 22,111 27,483
------ ------
Total liabilities 25,187 31,309
====== ======
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
Limited partners (4,625,000 units outstanding) 66,625 70,995
General partner 673 717
--- ---
Total partners' equity 67,298 71,712
------ ------
Total liabilities and partners' equity 92,485 $103,021
====== =======
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See NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
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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) 1996 1995 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Finance lease income $2,215 $2,442 $4,468 $4,758
Operating lease rentals 400 734 999 1,485
Gain on sale of equipment 0 0 556 0
Other income 102 45 125 81
--- -- --- --
Total revenues 2,717 3,221 6,148 6,324
----- ----- ----- -----
EXPENSES
Interest 491 607 1,014 1,234
Depreciation - operating leases 352 522 795 1,044
Management fee - general partner 187 200 379 395
Investor reporting 61 58 124 112
General and administrative 38 41 77 90
-- -- -- --
Total expenses 1,129 1,428 2,389 2,875
----- ----- ----- -----
Net Income $1,588 $1,793 $3,759 $3,449
===== ===== ===== =====
Net Income Allocated To:
General Partner $ 16 $ 17 $ 38 $ 34
===== ===== ===== =====
Limited Partners $1,572 $1,775 $3,721 $3,415
===== ===== ===== =====
Net Income Per Limited Partnership
Unit $ 0.34 $ 0.38 $ 0.80 $ 0.74
===== ===== ===== =====
</TABLE>
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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) 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES $ 4,177 $ 4,461
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment 6,559 0
(Increase)/decrease in notes receivable 339 (582)
Rental receipts in excess of earned finance
lease income 2,706 2,467
----- -----
Net cash from investing activities 9,604 1,885
----- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing/(repayment) under lines of credit, net (2,641) (359)
Proceeds from issuance of long-term debt 0 425
Repayment of long-term debt (2,730) (2,020)
Distributions paid to partners (8,409) (4,392)
------ ------
Net cash used by financing activities (13,780) (6,346)
------- ------
Increase in cash 1 0
Cash at beginning of period 0 0
- -
Cash at end of period $ 1 $ 0
========= =======
ADDITIONAL INFORMATION
Interest paid $ 1,049 $ 1,209
========= =======
</TABLE>
- -------------------------------------------
See NOTES TO CONDENSED FINANCIAL STATEMENTS
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
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 opera-
tions for a full year. The December 31, 1995 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, 1995, 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, 1995.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents consist of highly liquid
investments with a maturity of three months or less at the time of purchase.
For Cash and Cash Equivalents, the carrying amount is stated at fair value.
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 three long-term debt facilities. At June 30,
1996, the following amounts were outstanding: $11.1 million on an 8.75%
non-recourse note collateralized by three aircraft leased to USAir; $6.3
million on a 7.4% non-recourse note collateralized by one aircraft leased to
FedEx; and $4.7 million under a non-recourse long-term revolving declining
variable interest loan facility collateralized by a fourth aircraft leased to
USAir. Approximately $1.7 million remains available under the revolving loan
facility.
Long-term borrowing at June 30, 1996 represented 16% of the original cost
of the aircraft presently owned by the partnership, including capital
expenditures for upgrades. The terms of the Partnership Agreement permit debt
to be at a level not exceeding 50% of such cost.
Declared cash distributions for the first quarter 1996 of $2,336,000 and
first quarter 1995 of $2,196,000 were paid in the second quarter ending
June 30, 1996 and June 30, 1995, respectively. Increased cash distributions
paid in the first quarter 1996 reflected higher cash available from operations
as defined in the Partnership Agreement.
In May 1996, the partnership declared a special cash distribution of $0.80
per unit to unitholders of record on May 20, 1996 which was paid on May 31,
1996. In March, the partnership sold its 50% interest in an MD-82 aircraft. As
a result of this sale, a special cash distribution of $0.80 was paid to
unitholders in May from the proceeds of the sale.
In June 1996, the partnership declared a $0.45 per unit quarterly distribution
amounting to $2,102,000 payable on August 15, 1996 to unitholders of record on
June 28, 1996. This distribution exceeded second quarter net income of
$1,588,000.
Results of Operations
Net income for the second quarter ended June 30, 1996 was $1,588,000, a
decrease of $205,000 or 11% over the comparable 1995 three-month period.
Second-quarter 1996 revenues were $2,717,000 compared with last year's revenues
of $3,221,000. Lower earnings and revenues for the 1996 three-month period are
primarily attributable to the sale of a 50% interest in one MD-82 aircraft in
March, last year's casualty loss of a one-third interest in one 737-200
aircraft, and the normal runoff of finance lease income as the portfolio
matures.
Earnings for the 1996 six-month period were $3,759,000, an increase of 9%
compared with the six-month period ended June 30, 1996. Revenues for the 1996
period were $6,148,000 compared with last year's revenues of $6,324,000. Lower
revenues primarily reflect a lower level of income as the portfolio matures,
partially offset by a gain on sale of aircraft. While revenues declined,
expenses declined further, resulting from lower depreciation and interest
expense.
<PAGE>
Recent Developments
As of June 30, 1996, the partnership owned interests in 14 aircraft. Six
Boeing 737-200 aircraft on lease to Continental Airlines, representing less
than 2% of assets, are scheduled to come off-lease at December 31, 1996. The
partnership has entered into an agreement to sell its one-third interest in
these aircraft at lease expiration. Assuming the transaction is consummated,
the sale will result in net sale proceeds of $2.9 million and a gain on
sale of approximately $1.9 million. The General Partner has not yet determined
the best use of the sale proceeds, which may include reinvestment, repayment
of debt, or a special cash distribution.
On July 26, 1996, USL Capital Corporation and BankAmerica Corporation
announced agreement for BankAmerica Leasing and Capital Group affiliates to
acquire approximately $1.8 billion in assets from USL Capital Corporation,
including USL Capital's interests in Airlease Management Services, Inc., the
General Partner of Airlease Ltd. and in United States Airlease Holding, Inc.,
which holds 22% of the limited partnership units. Following the sale,
BankAmerica will manage the commercial aircraft of Airlease Ltd. and the
aircraft presently owned by USL Capital Corporation. The Airlease transactions
are expected to be completed by the end of the year.
<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
August 8, 1996 By: /s/ David B. Gebler
Date David B. Gebler
President
August 8, 1996 By: /s/ Robert A. Keyes, Jr.
Date Robert A. Keyes, Jr.
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 92,299
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 92,485
<CURRENT-LIABILITIES> 0
<BONDS> 22,111
0
0
<COMMON> 0
<OTHER-SE> 67,298
<TOTAL-LIABILITY-AND-EQUITY> 92,485
<SALES> 6,148
<TOTAL-REVENUES> 6,148
<CGS> 0
<TOTAL-COSTS> 795
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,014
<INCOME-PRETAX> 3,759
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,759
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,759
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
