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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Airlease Ltd., A California Limted Partnership
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials:
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
$14,735.25
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(2) Form, Schedule or Registration Statement no.:
DEF 14A
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(3) Filing Party:
Airlease Ltd., A California Limited Partnership
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(4) Date Filed:
July 3, 1997
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AIRLEASE MANAGEMENT SERVICES, INC.
The General Partner of Airlease Ltd., A California Limited Partnership
August 4, 1997
Dear Limited Partners:
Consent material in connection with the solicitation of consents to
authorize the General Partner to amend the Limited Partnership Agreement was
sent to you recently.
According to our records, your consent for this important proposal has
not yet been received. The deadline for voting is August 28, 1997. Regardless of
the number of units you may own, it is important that we receive your vote.
Since the time remaining is short, we urge you to consider the proposal,
mark your consent card accordingly, and mail the enclosed consent card promptly.
If you have questions or need additional consent materials, please call D.F.
King & Co., Inc. at (800) 714-3313.
Your interest and participation in the partnership are sincerely
appreciated.
Sincerely,
/s/ D. B. Gebler
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David B. Gebler
Chairman
Airlease Management Services, Inc.
General Partner
555 California Street 4th Floor San Francisco, CA 94104
Phone 415/765-1814 Fax 415/765-1817
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AIRLEASE LTD.
[PHOTO OF JETLINER]
1997 SECOND QUARTER REPORT
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Chairman's Letter
SECOND QUARTER FINANCIAL RESULTS
Airlease earned $1,442,000 in the second quarter ended June 30, 1997, (a
decline of $146,000 or 9 percent) compared with 1996 second-quarter earnings of
$1,588,000. Second-quarter revenues were $2,393,000, compared with last year's
second quarter revenues of $2,717,000.
Earnings for the first six-months of 1997 were $2,508,000, (a decline of
$1,251,000 or 33 percent) compared with six-month earnings last year of
$3,759,000. Revenues for the first half of 1997 were $4,712,000, compared with
revenues of $6,148,000 for the first half of last year.
The declines in results for the second-quarter and first six-months reflect the
sale of an aircraft in the first quarter of 1996 and recognition of a gain on
sale of $556,000, while no aircraft were sold in the first quarter of 1997. In
addition, the sale of a total of seven aircraft during 1996 reduced the size of
the portfolio and operating lease revenue. At June 30, 1997, the partnership
owned an interest in one aircraft subject to an operating lease compared to
interests in seven such aircraft one-year earlier. Depreciation expense
declined as a result of the aircraft sales during 1996. Offsetting this
reduction were higher investor reporting expenses incurred in connection with
the solicitation of unitholder consents.
The second quarter cash distribution of 45 cents per unit was declared for
unitholders of record as of June 30, and is payable on August 15, 1997. This
distribution exceeded second quarter net income resulting in a return of
capital of approximately 14 cents.
PORTFOLIO MATTERS
The partnership owns a 50 percent interest in a DC-9-51 aircraft leased to Sun
Jet International, Inc. On June 18, 1997, Sun Jet filed for bankruptcy. Sun
Jet did not make its June or July rental payment and has not maintained the
aircraft in compliance with the lease. The aircraft represents about one
percent of the partnership's total assets and contributed about three percent
of revenues for the first half of 1997. The partnership is monitoring the Sun
Jet bankruptcy proceedings and will take such action as it believes to be in
the partnership's best interest.
PLAN TO RESTRICT TRANSFERABILITY OF UNITS AND CEASE REINVESTMENT
As previously announced, primarily because of changes in tax law which will
become effective on December 31, 1997, the partnership currently is seeking
unitholder approval to authorize the general partner to delist the units from
trading on the New York Stock
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Exchange, to stop making new aircraft investments and to sell aircraft as
attractive opportunities arise. In addition, if favorable changes in tax law
are proposed or enacted the general partner would be authorized to take other
actions which are beneficial to unitholders.
On August 5, 1997, Federal legislation was enacted which provides that publicly
traded partnerships, like Airlease, could elect to continue to be publicly
traded, but that these partnerships would be subject to an entity level tax of
3.5 percent on their annual gross income. This tax would reduce the present
value of future cash distributions per unit from the projected distributions
for the proposal described in the Consent Solicitation Statement by
approximately $0.50-$0.75.
In addition, unless California adopts similar legislation, Airlease would be
taxed as a corporation for California tax purposes beginning January 1, 1998 if
the units continue to be publicly traded. Any California tax imposed on the
partnership would also reduce cash distributions. We are reviewing the options
regarding California legislation. If the proposal is approved and when the
California tax law position is clarified, the general partner will determine
whether imposing transfer restrictions by delisting units from the New York
Stock Exchange in December 1997 is in the best interests of the unitholders.
We urge you to carefully read the Consent Solicitation Statement, which
provides detailed information about the proposal. If you were a record holder
as of June 4, 1997, and have not yet received the package, or if you have any
questions, please contact our Solicitation Agent at (800) 714-3313 or the
partnership at (888) 800-0161. For your vote to count, the consent card must be
postmarked by August 28, 1997. Failure to return the card has the same effect
as a vote against the proposal.
We recommend you vote to approve the proposal.
Sincerely,
/s/ David B. Gebler
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David B. Gebler
Chairman
Airlease Management Services, Inc.
General Partner
August 5, 1997
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BALANCE SHEETS
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
June 30,
1997 December 31,
(IN THOUSANDS EXCEPT UNIT DATA) (UNAUDITED) 1996
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<S> <C> <C>
ASSETS
Cash $ 0 $ 580
Finance leases - net 85,895 83,056
Operating leases - net 908 1,090
Notes receivable (net of provision for
doubtful account of $228 in 1997) 0 236
Prepaid expenses and other assets 244 168
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Total assets $87,047 $85,130
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LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution payable to partners $ 2,102 $ 5,045
Accounts payable and accrued liabilities 939 972
Long-term notes payable 20,660 14,071
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Total liabilities 23,701 20,088
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COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
Limited partners (4,625,000 units outstanding) 62,713 64,391
General partner 633 651
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Total partners' equity 63,346 65,042
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Total liabilities and partners' equity $87,047 $85,130
======= =======
</TABLE>
See notes to condensed financial statements
<PAGE> 7
STATEMENTS OF INCOME
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(UNAUDITED; IN THOUSANDS ------------------ ----------------
EXCEPT PER UNIT AMOUNTS) 1997 1996 1997 1996
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<S> <C> <C> <C> <C>
REVENUES
Finance lease income $2,296 $2,215 $4,559 $4,468
Operating lease rentals 85 400 141 999
Gain on sale of equipment 0 0 0 556
Other income 12 102 12 125
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Total revenues 2,393 2,717 4,712 6,148
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EXPENSES
Interest 472 491 1,006 1,014
Depreciation - operating leases 111 352 182 795
Allowance for doubtful account 0 0 228 0
Management fee - general partner 159 187 335 379
Investor reporting 200 61 401 124
General and administrative 9 38 52 77
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Total expenses 951 1,129 2,204 2,389
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Net Income $1,442 $1,588 $2,508 $3,759
====== ====== ====== ======
Net Income Allocated To:
General Partner $ 14 $ 16 $ 25 $ 38
====== ====== ====== ======
Limited Partners $1,428 $1,572 $2,483 $3,721
====== ====== ====== ======
Net Income Per Limited Partnership Unit $ 0.31 $ 0.34 $ 0.54 $ 0.80
====== ====== ====== ======
</TABLE>
See notes to condensed financial statements
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STATEMENTS OF CASH FLOWS
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
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(UNAUDITED; IN THOUSANDS) 1997 1996
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<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES $ 2,809 $ 4,177
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CASH FLOWS FROM INVESTING ACTIVITIES
Aircraft equipment purchase (5,753) 0
Proceeds from sale of equipment 0 6,559
(Increase) decrease in notes receivable 8 339
Rental receipts in excess of earned finance lease income 2,914 2,706
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Net cash provided (used) by investing activities (2,831) 9,604
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CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings/(repayment) under lines of credit, net 312 (2,641)
Proceeds from issuance of long-term debt 9,000 0
Repayment of long-term debt (2,723) (2,730)
Distributions paid to partners (7,147) (8,409)
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Net cash used by financing activities (558) (13,780)
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Increase (decrease) in cash (580) 1
Cash at beginning of period 580 0
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Cash at end of period $ 0 $ 1
======== ========
ADDITIONAL INFORMATION
Interest paid $ 905 $ 1,049
======== ========
</TABLE>
See notes to condensed financial statements
<PAGE> 9
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, 1996 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 1996, 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, 1996.
DERIVATIVES - The Partnership holds one derivative financial instrument, which
is an interest rate swap agreement used to manage the Partnership's interest
rate risk. The Partnership accounts for this derivative financial instrument
on an accrual basis when the cash flows generated from the hedging instrument
fulfill the objectives of the hedge strategy and when there is high correlation
between the derivative and the hedged asset or liability. Under accrual
accounting interest differentials paid or received under interest rate swap
agreements are recognized as an adjustment to interest expense over the life of
the agreements. Termination gains or losses of such derivatives are amortized
to interest expense over the remaining life of the hedged transaction.
When a derivative no longer fulfills the high correlation objective, it is
accounted for on a mark-to-market basis and termination of such derivatives is
recognized immediately in the Statement of Income as a component of interest
expense.
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
555 California Street, 4th Floor
San Francisco, CA 94104
