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AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
| California | 94-3008908 |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
555 California Street, 4th floor, San Francisco, CA 94104
(Address of principal executive offices)
(415) 765-1814
(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
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, 2000 and December 31, 1999.........................................................3
Statements of Income --
Three and nine months ended September 30, 2000 and 1999.................................4
Statements of Cash Flows
Nine months ended September 30, 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
2
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
September 30,
2000 December 31,
(In thousands except unit data) (Unaudited) 1999
---------------------------------------------------------------------------------
ASSETS
Cash $ 1 $ 2
Finance leases - net 64,276 67,509
Prepaid expenses and other assets 190 276
-------- --------
Total assets $ 64,467 $ 67,787
======== ========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution payable to partners $ 2,102 $ 1,915
Accounts payable and accrued liabilities 537 429
Taxes Payable 138 4
Long-term notes payable 9,453 10,092
-------- --------
Total liabilities 12,230 12,440
-------- --------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
Limited partners (4,625,000 units outstanding) 51,715 54,794
General partner 522 553
-------- --------
Total partners' equity 52,237 55,347
-------- --------
Total liabilities and partners' equity $ 64,467 $ 67,787
======== ========
___________________________________________
See NOTES TO CONDENSED FINANCIAL STATEMENTS
3
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
(Unaudited; in thousands September 30, September 30,
except per unit amounts) 2000 1999 2000 1999
-----------------------------------------------------------------------------------
REVENUES
Finance lease income $1,657 $1,879 $5,140 $5,789
------ ------ ------ ------
Total revenues 1,657 1,879 5,140 5,789
------ ------ ------ ------
EXPENSES
Interest 217 311 718 985
Management fee - general partner 150 157 455 474
Investor reporting 79 70 237 209
General and administrative 40 34 123 115
Tax on gross income 137 175 411 525
------ ------ ------ ------
Total expenses 623 747 1,944 2,308
------ ------ ------ ------
Net Income $1,035 $1,132 $3,196 $3,481
====== ====== ====== ======
Net Income Allocated To:
General Partner $ 10 $ 11 $ 32 $ 35
====== ====== ====== ======
Limited Partners $1,025 $1,121 $3,164 $3,446
====== ====== ====== ======
Net Income Per Limited Partnership
Unit $ 0.22 $ 0.24 $ 0.68 $ 0.75
====== ====== ====== ======
___________________________________________
See NOTES TO CONDENSED FINANCIAL STATEMENTS
4
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
(Unaudited; in thousands) 2000 1999
---------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 3,196 $ 3,481
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accounts payable and accrued liabilities 108 72
Increase/(decrease) in taxes payable 134 (582)
Decrease in prepaid expenses and other assets 86 57
------ -------
Net cash provided by operating activities 3,524 3,028
------ -------
CASH FLOWS FROM INVESTING ACTIVITIES
Rental receipts in excess of earned finance lease
income 3,233 5,544
------ -------
Net cash provided by investing activities 3,233 5,544
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings/(repayments) under lines of credit, net 762 (1,520)
Repayment of long-term notes payable (1,401) (1,314)
Distributions paid to partners (6,119) (5,746)
------ -------
Net cash used by financing activities (6,758) (8,580)
------ -------
Decrease in cash (1) (8)
Cash at beginning of period 2 9
------ -------
Cash at end of period $ 1 $ 1
====== =======
ADDITIONAL INFORMATION
Interest paid $ 597 $ 822
====== =======
___________________________________________
See NOTES TO CONDENSED FINANCIAL STATEMENTS
5
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 combined federal and state tax at the Partnership level of 4.5% tax on its applicable 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
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
ITEM 2. - 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 September 30, 2000, the following amounts were outstanding: $4.3 million on a 7.4% non-recourse note collateralized by one aircraft leased to FedEx; $2.6 million on a 9.35% non-recourse note collateralized by one aircraft on lease to Trans World Airlines; and $2.5 million on a long-term variable rate revolving loan facility guaranteed by the Partnership and collateralized by two aircraft on lease to USAirways. At September 30, 2000 approximately $3.2 million remains available under the revolving loan facility.
At September 30, 2000, long-term borrowings of $9.5 million represented 7.8% 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 nine months of 2000 were $1.31 per limited partnership unit, representing the regular 1999 fourth-quarter cash distribution of $0.41 per unit and the regular 2000 first and second quarter cash distributions of $0.45 per unit.
In September 2000, the Partnership declared a third-quarter 2000 cash distribution of $0.45 per unit totaling $2,102,273 payable on November 15, 2000, to unitholders of record on September 29, 2000. Since this distribution and the first and second quarter 2000 distributions were in excess of earnings, Partnership equity declined to $52.2 million at September 30, 2000 from $55.3 million at December 31, 1999, and limited partner equity per unit declined to $11.18. The portion of the distribution in excess of net income constitutes a return of capital. The 1999 third-quarter cash distribution was $0.41 per unit.
Results of Operations
The Partnership earned $1,035,000 in the third quarter ended September 30, 2000, a decrease of $97,000 or 8.6% from 1999 third-quarter earnings of $1,132,000. Third-quarter revenues were $1,657,000, compared with last year's third-quarter revenues of $1,879,000.
Net income for the first nine months of 2000 was $3,196,000, compared with net income of $3,481,000 for the first nine months of 1999. Revenues for the first nine months of 2000 were $5,140,000 compared with revenues of $5,789,000 for the comparable period of 1999.
The revenue reduction is primarily due to the balances due from the lessees continuing to decline (smaller asset base), and the resulting decline in finance lease income in 2000.
Expenses for the first nine months of 2000 were $1,944,000, or $364,000 from $2,308,000 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
Portfolio Matters
As of September 30, 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.
ITEM 3. -
QUANTITATIVE AND QUALITATIVE DISCLOSURES 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
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
September 30, 2000.
9
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
Date: October 27, 2000
/s/ DAVID B. GEBLER
David B. Gebler
Chairman, Chief Executive Officer and President
Date: October 27, 2000
/s/ RICHARD C. WALTER
Richard C. Walter
Chief Financial Officer
10
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