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, 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 --
March 31, 1996 and December 31, 1995 .....................3
Statements of Income --
Three months ended March 31, 1996 and 1995 ...............4
Condensed Statements of Cash Flows
Three months ended March 31, 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 .........................8
Signatures................................................9
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
[CAPTION]
<TABLE>
March 31,
1996 December 31,
(In thousands except unit data) (Unaudited) 1995
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 3,767 $ 0
Finance leases - net 90,557 91,564
Operating leases - net 3,229 10,259
Notes receivable 766 933
Prepaid expenses and other assets 252 265
--- ---
Total assets $ 98,571 $103,021
====== =======
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution payable to partners $ 2,336 $ 2,336
Accounts payable and accrued
liabilities 1,523 1,490
Long-term notes payable 23,163 27,483
------ ------
Total liabilities 27,022 31,309
====== ======
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
Limited partners
(4,625,000 units outstanding) 70,834 70,995
General partner 715 717
--- ---
Total partners' equity 71,549 71,712
------ ------
Total liabilities and partners'
equity $ 98,571 $103,021
====== =======
</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
(Unaudited; in thousands March 31,
except per unit amounts) 1996 1995
---- ----
REVENUES
<S> <C> <C>
Finance lease income $2,253 $2,316
Operating lease rentals 599 751
Gain on sale of equipment 556 0
Other income 23 36
-- --
Total revenues 3,431 3,103
----- -----
EXPENSES
Interest 523 627
Depreciation - operating leases 443 522
Management fee - general partner 192 195
Investor reporting 63 54
General and administrative 39 49
-- --
Total expenses 1,260 1,447
----- -----
Net Income $2,171 $1,656
===== =====
Net Income Allocated To:
General Partner $ 22 $ 17
==== ====
Limited Partners $2,149 $1,639
===== =====
Net Income Per Limited Partnership
Unit $ 0.46 $ 0.35
===== =====
</TABLE>
See NOTES TO CONDENSED FINANCIAL STATEMENTS
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(Unaudited in thousands) 1996 1995
---- ----
<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES $ 2,689 $ 2,314
------- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment 6,559 0
(Increase)/decrease in notes receivable 167 (736)
Rental receipts in excess of earned finance
lease income 1,007 844
----- ---
Net cash from investing activities 7,733 108
----- ---
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing/(repayment) under lines of credit, net (2,781) 678
Repayment of long-term debt (1,538) (903)
Distributions paid to partners (2,336) (2,196)
------ ------
Net cash used by financing activities (6,655) (2,421)
------ ------
Increase in cash 3,767 1
Cash at beginning of period 0 0
----- -----
Cash at end of period $ 3,767 $ 1
======= =====
ADDITIONAL INFORMATION
Interest paid $ 426 $ 489
======= ====
</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
operations 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 March 31,
1996, the following amounts were outstanding: $12.1 million on an 8.75%
non-recourse note collateralized by three aircraft leased to USAir; $6.5 million
on a 7.4% non-recourse note collateralized by one aircraft leased to FedEx; and
$4.6 million under a non-recourse long-term revolving declining variable
interest loan facility collateralized by a fourth aircraft leased to USAir. A
fourth facility which was collateralized by an aircraft sold in March 1996 was
paid off with a portion of the sale proceeds received. Approximately $2.2
million remains available under the revolving loan facility.
Long-term borrowing at March 31, 1996 represented 16.8% of the original cost of
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.
In March, the partnership sold its 50% interest in one MD-82 aircraft for $6.9
million. The aircraft was purchased by Airlease in April 1992 for $8.5 million
and was leased to Finnair OY for seven years. The early sale provided the
partnership with an attractive gain over its book value. Approximately $3
million of the sale proceeds were used to pay down debt, including a loan
collateralized by the aircraft and other debt outstanding under available bank
lines used for managing the business.
Although the partnership reviewed aircraft reinvestment opportunities, none were
identified as suitable for the partnership. In consideration of this, conditions
in the market and other factors, the General Partner determined the best use of
the remaining sale proceeds was to return them to unitholders. A special
distribution of $0.80 per unit was declared to unitholders of record on May 20,
1996 and is payable on May 31, 1996. Since the special distribution is in excess
of reported earnings, it partially reflects a return of capital to unitholders.
Declared cash distributions for the fourth quarter 1995 of $2,336,000 and fourth
quarter 1994 of $2,196,000 were paid in the first quarter ending March 31, 1996
and March 31, 1995, respectively. The increase in cash distributions paid for
the fourth quarter 1995 compared to the previous year's quarter reflects the
continuing stability of the partnership's portfolio.
In March 1996, the partnership declared a $0.50 per unit quarterly distribution
amounting to $2,336,000 payable on May 15, 1996 to unitholders of record on
March 29, 1996. This distribution exceeded first quarter net income of
$2,171,000.
Results of Operations
- ---------------------
Net income for the quarter ended March 31, 1996 was $2,171,000, an increase of
$515,000 over the comparable 1995 three-month period. Revenues were $3,431,000,
compared with 1995's three-month revenues of $3,103,000. Higher income and
revenues for the 1996 first quarter were largely due to the gain on sale of
$556,000. Expenses declined 13% primarily due to lower interest and depreciation
expense associated with the sale of an aircraft.
At March 31, 1996, all of the partnership's fourteen aircraft were on lease, and
all customers were current under their present lease agreements.
Recent Developments
- -------------------
The General Partner of the Partnership is Airlease Management Services, Inc., a
wholly-owned subsidiary of USL Capital, which in turn is an indirect subsidiary
of Ford Motor Company ("Ford"). As previously reported, Ford is investigating
the sale of all or a portion of USL Capital.
<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 15, 1996 By: /s/ David B. Gebler
Date David B. Gebler
President
May 15, 1996 By: /s/ Robert A. Keyes, Jr.
Date Robert A. Keyes, Jr.
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,767
<SECURITIES> 0
<RECEIVABLES> 94,552
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 98,571
<CURRENT-LIABILITIES> 0
<BONDS> 23,163
0
0
<COMMON> 0
<OTHER-SE> 71,549
<TOTAL-LIABILITY-AND-EQUITY> 98,571
<SALES> 3,431
<TOTAL-REVENUES> 3,431
<CGS> 0
<TOTAL-COSTS> 443
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 523
<INCOME-PRETAX> 2,171
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,171
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,171
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
