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, 2000
Commission file number 1-9259
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
California 94-3008908
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(State of Incorporation) (I.R.S. Employer Identification No.)
555 California Street, 4th floor, San Francisco, CA 94104
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(Address of principal executive offices) (Zip Code)
(415) 765-1814
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(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, 2000 and December 31, 1999..................3
Statements of Income --
Three months ended March 31, 2000 and 1999............4
Statements of Cash Flows
Three months ended March 31, 2000 and 1999............5
Notes to Financial Statements............................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............7
Item 3. Quantitative and Qualitative Disclosures about
Market Risk..............................................8
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
March 31,
2000 December 31,
(In thousands except unit data) (Unaudited) 1999
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash $ 3 $ 2
Finance leases - net 65,721 67,509
Prepaid expenses and other assets 247 276
-------- --------
Total assets $ 65,971 $ 67,787
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LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution payable to partners $ 2,102 $ 1,915
Accounts payable and accrued liabilities 443 429
Taxes Payable 141 4
Long-term notes payable 8,943 10,092
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Total liabilities 11,629 12,440
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COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
Limited partners (4,625,000 units outstanding) 53,799 54,794
General partner 543 553
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Total partners' equity 54,342 55,347
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Total liabilities and partners' equity $ 65,971 $ 67,787
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See NOTES TO CONDENSED FINANCIAL STATEMENTS
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF INCOME
Three Months Ended
(Unaudited; in thousands March 31,
except per unit amounts) 2000 1999
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<S> <C> <C>
REVENUES
Finance lease income $1,771 $1,982
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Total revenues 1,771 1,982
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EXPENSES
Interest 263 347
Management fee - general partner 153 159
Investor reporting 79 70
General and administrative 42 39
Tax on gross income 137 175
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Total expenses 674 790
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Net Income $1,097 $1,192
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Net Income Allocated To:
General Partner $ 11 $ 12
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Limited Partners $1,086 $1,180
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Net Income Per Limited Partnership Unit $ 0.23 $ 0.26
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See NOTES TO CONDENSED FINANCIAL STATEMENTS
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
(Unaudited; in thousands) 2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,097 $ 1,192
Adjustments to reconcile net income to net cash provided
by operating activities:
Increase in accounts payable and accrued liabilities 14 54
Increase/(decrease) in taxes payable 137 (524)
Decrease in prepaid expenses and other assets 29 15
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Net cash provided by operating activities 1,277 737
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CASH FLOWS FROM INVESTING ACTIVITIES
Rental receipts in excess of earned finance lease income 1,788 1,578
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Net cash provided by investing activities 1,788 1,578
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CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings/(repayments) under lines of credit, net (783) (40)
Repayment of long-term notes payable (365) (365)
Distributions paid to partners (1,916) (1,916)
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Net cash used by financing activities (3,064) (2,321)
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Increase (decrease) in cash 1 (6)
Cash at beginning of period 2 9
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Cash at end of period $ 3 $ 3
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ADDITIONAL INFORMATION
Interest paid $ 163 $ 206
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- -----------------------------------------------------
See NOTES TO CONDENSED FINANCIAL STATEMENTS
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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
BASIS OF PRESENTATION - The accompanying unaudited financial statements
reflect all adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of the Partnership's management, necessary for a
fair presentation of the financial position and results of operations for
the presented periods. The results of operations for such interim periods
are not necessarily indicative of results of operations for a full year.
The December 31, 1999 balance sheet included herein is taken 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, 1999. 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, 1999.
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 of the
units outstanding (4,625,000).
3. INCOME TAXES
------------
In January 1998, the Partnership made an election to pay an annual federal
tax of 3.5% and a 1% California tax at the Partnership level on its gross
income beginning January 1, 1998. The election was made in order to avoid a
limitation on the public trading of the Partnership's units.
6
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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 three long-term debt facilities. At March 31,
2000, the following amounts were outstanding: $4.6 million on a 7.4%
non-recourse note collateralized by one aircraft leased to FedEx; $3.4 million
on a 9.35% non-recourse note collateralized by one aircraft on lease to Trans
World Airlines; and $1 million on a long-term variable rate revolving loan
facility guaranteed by the Partnership and collateralized by two aircraft on
lease to US Airways. At March 31, 2000 approximately $6 million remains
available under the revolving loan facility.
At March 31, 2000, long-term borrowings of $8.9 million represented 7.3 % of the
original cost of the aircraft presently owned by the Partnership, including
capital expenditures for upgrades. The terms of the Limited Partnership
Agreement permit debt to be at a level not exceeding 50% of such cost.
Cash distributions paid in the first three months of 2000 were $0.41 per limited
partnership unit, representing the regular 1999 fourth-quarter cash
distribution.
In March 2000, the Partnership declared a first-quarter 2000 cash distribution
of $0.45 per unit totaling $2,102,275 and payable on May 15, 2000 to unitholders
of record on March 31, 2000. The four-cent increase from the declared 1999
fourth-quarter distribution reflects higher cash flow resulting from consistent
rental receipts from lessees and lower expenses. Since this distribution was in
excess of earnings, Partnership equity declined to $54.3 million at March 31,
2000, and limited partner equity per unit declined to $11.33. The portion of the
distribution in excess of net income constitutes a return of capital.
Results of Operations
- ---------------------
The Partnership earned $1,097,000 in the first quarter ended March 31, 2000, a
decrease of $95,000 or 8% from the 1999 first-quarter earnings of $1,192,000.
First-quarter revenues were $1,771,000, compared with last year's first-quarter
revenues of $1,982,000.
The revenue reduction in the first three months of 2000 is primarily due to the
scheduled decline in finance lease income as the net investment in finance
leases declined.
Expenses for the first three months of 2000 were $674,000, a decrease of
$116,000 from $790,000 for the comparable 1999 period. The decline in expenses
is primarily due to lower interest expense in 2000 as a result of the
Partnership's reduced debt balances.
7
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Portfolio
- ---------
As of March 31, 2000 the Partnership's portfolio consisted entirely of Stage III
aircraft; six are MD 82s and one is a 727-200 FH. Stage III aircraft meet the
FAA noise compliance regulations for aircraft operated in the continental United
States after December 31, 1999.
Forward-Looking Statements
- --------------------------
The information set forth in this quarterly report contains certain
forward-looking statements, which reflect the current view of the partnership
with respect to future events and financial performance. The words, "expect",
"intend", "believe", "anticipate", "likely" and "will" and similar expressions
generally identify forward-looking statements. These statements are subject to
certain risks and uncertainties, which could cause actual results, and events to
differ materially from those anticipated in the forward-looking statements.
Factors that could cause the partnership's actual results to differ from current
expectations include, among others, changes in the aircraft or aircraft leasing
market, economic downturn in the airline industry, default by lessees under
leases causing the partnership to incur uncontemplated expenses or not to
receive rental income as and when expected, changes in interest rates and
legislative or regulatory changes that adversely affect the value of aircraft.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The General Partner believes there has been no material change in the
Partnership's exposure to market risk from that discussed in the Partnership's
Annual Report on Form 10-k for the year ended December 31, 1999.
8
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PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
27. Financial Data Schedule.
(b) The Partnership did not file any reports on Form 8-k during the
quarter ended March 31, 2000.
9
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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
April 24, 2000 By: /s/ DAVID B. GEBLER
- -------------------- ------------------------------------------
Date David B. Gebler
Chairman, Chief Executive Officer
and President
April 24, 2000 By: /s/ RICHARD C. WALTER
- -------------------- -----------------------------------------
Date Richard C. Walter
Chief Financial Officer
10
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<CIK> 0000799033
<NAME> AIRLEASE LTD
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1.000
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0
0
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<SALES> 1,771
<TOTAL-REVENUES> 1,771
<CGS> 0
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<OTHER-EXPENSES> 411
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 261
<INCOME-PRETAX> 1,097
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<INCOME-CONTINUING> 1,097
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<CHANGES> 0
<NET-INCOME> 1,097
<EPS-BASIC> 0.23
<EPS-DILUTED> 0.23
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