UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-16836
JETSTREAM, L.P.
(Exact name of registrant as specified in its charter)
Delaware 84-1053359
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, New York, NY 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(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
Balance Sheets
September 30, December 31,
Assets 1994 1993
Aircraft, at cost $25,334,000 $25,684,000
Less-accumulated depreciation (3,918,357) ----
21,415,643 25,684,000
Cash and cash equivalents 1,373,065 1,089,805
Restricted cash 1,782,453 3,048,884
Rent receivable 20,000 20,000
Interest receivable 842 7,303
Prepaid expenses ---- 36,841
Loan receivable 256,023 ----
Total Assets $24,848,026 $29,886,833
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 265,899 $ 252,007
Maintenance payable ---- 791,000
Distribution payable 1,223,065 939,805
Deferred revenue 130,000 150,000
Security deposit ---- 80,000
Total Liabilities 1,618,964 2,212,812
Partners' Capital (Deficit):
General Partners (745,720) (701,271)
Limited Partners (4,895,005 units outstanding) 23,974,782 28,375,292
Total Partners' Capital 23,229,062 27,674,021
Total Liabilities and Partners' Capital $24,848,026 $29,886,833
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
Income 1994 1993 1994 1993
Rental $1,395,000 $1,125,000 $3,735,000 $4,059,182
Interest 22,827 29,404 69,868 76,036
Other ---- ---- 13,228 ----
Total Income 1,417,827 1,154,404 3,818,096 4,135,218
Expenses
Depreciation and
amortization 1,306,119 1,533,957 3,918,357 4,601,871
Management fees 126,180 72,195 326,949 270,772
General and
administrative 49,488 56,328 170,531 165,485
Operating 12,000 59,136 71,394 90,592
Total Expenses 1,493,787 1,721,616 4,487,231 5,128,720
Net Loss $ (75,960) $ (567,212) $ (669,135) $ (993,502)
Net Loss Allocated:
To the General
Partners $ (759) $ (5,672) $ (6,691) $ (9,935)
To the Limited
Partners (75,201) (561,540) (662,444) (983,567)
$(75,960) $(567,212) $(669,135) $(993,502)
Per limited
partnership unit
(4,895,005 outstanding) $(0.02) $(0.11) $(0.14) $(0.20)
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1994
Limited General Total
Partners' Partners' Partners'
Capital (Deficit) Capital
Balance at December 31, 1993 $28,375,292 $ (701,271) $27,674,021
Net Loss (662,444) (6,691) (669,135)
Cash distributions (3,738,066) (37,758) (3,775,824)
Balance at September 30, 1994 $23,974,782 $ (745,720) $23,229,062
Statements of Cash Flows
For the nine months ended September 30, 1994 and 1993
Cash Flows from Operating Activities: 1994 1993
Net loss $ (669,135) $ (993,502)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 3,918,357 4,601,871
Restricted Cash 1,266,431 ----
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Rent receivable ---- (5,000)
Interest receivable 6,461 (4,430)
Prepaid expenses 36,841 (38,772)
Accounts payable and accrued expenses 13,892 (101,279)
Maintenance payable (791,000) ----
Deferred revenue (20,000) (418,720)
Security deposit (80,000) ----
Net cash provided by operating activities 3,681,847 3,040,168
Cash Flows from Investing Activities:
Loan receivable (256,023) ----
Proceeds from sale of aircraft - net 350,000 ----
Net cash provided by investing activities 93,977 ----
Cash Flows from Financing Activities:
Cash distributions (3,492,564) (4,647,820)
Net cash used for financing activities (3,492,564) (4,647,820)
Net increase (decrease) in cash and
cash equivalents 283,260 (1,607,652)
Cash and cash equivalents at beginning of period 1,089,805 2,417,644
Cash and cash equivalents at end of period $ 1,373,065 $ 809,992
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1993 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments consisting of only
normal recurring accruals which are, in the opinion of management, necessary to
present a fair statement of financial position as of September 30, 1994 and the
results of operations, changes in partners' capital (deficit), and cash flows
for the nine months then ended. Results of operations for the period are not
necessarily indicative of the results to be expected for the full year.
The following significant events have occurred subsequent to fiscal year 1993,
and material contingencies exist that require disclosure in this interim report
per Regulation S-X, Rule 10-01, Paragraph (a)(5).
(1) On February 9, 1994, Continental entered into a new lease agreement.
The agreement between Continental and the Partnership provides for Continental
to lease the plane for a term of four years. Effective March 15, 1994,
Continental shall pay $180,000 per month in advance. In addition, the
Partnership made a one-time payment of $750,000 in March 1994 to perform
various maintenance work on the plane. Also, the Partnership has agreed to
provide up to $600,000 of financing to Continental to perform modification work
on the aircraft including advanced avionics, interior furnishings and exterior
paint. The modification financing is repayable over the life of the lease at
an interest rate of 8% per annum for advances made before February 1, 1996, and
with respect to advances made after February 1, 1996, a rate per annum equal to
the yield to maturity of United States Treasury Notes having a maturity closest
to the remaining term of the lease, plus 4.25 percent. On June 7, 1994, the
Partnership made its first advance to Continental in the amount of $278,203.
(2) The current lease agreement with Delta for the Partnership's 737-200
advanced aircraft was scheduled to expire in December 1994. However, in early
May 1994, Delta exercised its option to extend the lease for a term of two
years from the previous expiration date, with the remaining terms of the lease
unchanged.
(3) The current lease agreements with TWA were scheduled to expire October
31, 1994 (one aircraft) and November 30, 1994 (two aircraft). TWA has agreed
to extend the leases on two of the aircraft to April 30, 1995. Thereafter, TWA
may continue to lease the two aircraft on a month to month basis. Pursuant to
the lease extension agreement, the rental rates have been reduced to $32,500
per month per aircraft paid in advance. The third aircraft will be returned to
the partnership soon after its lease expiration date of November 30, 1994.
Part I, Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations
Liquidity and Capital Resources
As of September 30, 1994, the Partnership had all seven of its aircraft on
lease. Two aircraft were on lease to USAir, Inc. ("USAir"), three aircraft
were on lease to Trans World Airlines Inc. ("TWA"), one aircraft was on lease
to Delta Air Lines, Inc. ("Delta") and one aircraft was on lease to Continental
Airlines ("Continental"). At September 30, 1994, all airlines were current on
their lease obligations.
The current lease agreements with TWA were scheduled to expire October 31, 1994
(one aircraft) and November 30, 1994 (two aircraft). TWA has agreed to extend
the leases on two of the aircraft to April 30, 1995. Thereafter, TWA may
continue to lease the two aircraft on a month to month basis. Pursuant to the
lease extension agreement, the rental rates have been reduced from $40,000 per
month per aircraft to $32,500 per month per aircraft paid in advance. The
third aircraft will be returned to the Partnership soon after its lease
expiration date of November 30, 1994. The General Partners are currently
exploring the potential of leasing the aircraft to another airline. In the
event that such efforts are unsuccessful, the General Partners will pursue a
sale of the aircraft.
Pursuant to the terms of the lease agreement executed with Continental in
February 1994, the Partnership agreed to provide up to $600,000 of financing to
the airline to perform modification work on the Partnership's MD-80 Series
aircraft, including advanced avionics, interior furnishings and exterior paint.
On June 7, 1994, the Partnership made its first advance to Continental in the
amount of $278,203. The modification financing is repayable over the life of
the lease at an interest rate of 8% per annum for advances made before February
1, 1996, and, with respect to advances made after February 1, 1996, a rate per
annum equal to the yield to maturity of United States Treasury Notes having a
maturity closest to the remaining terms of the lease, plus 4.25 percent.
The Partnership currently has two 737-200 aircraft on-lease with USAir at a
quarterly lease rate of $105,000 per aircraft. The General Partners anticipate
that USAir will exercise its option under the current lease agreements to
terminate the leases for both aircraft on May 1, 1995 and return the aircraft
to the Partnership soon thereafter. While the General Partners will attempt to
find a replacement lessee for the aircraft, there can be no assurance that such
efforts will be successful
The Partnership is faced with a competitive and weakened environment in the
aircraft leasing industry which has had an immediate and material impact on the
business of the Partnership. In particular, the large oversupply of aircraft
available for lease has resulted in significant reductions in market lease
rates thereby impacting the lease rates obtained by the Partnership as leases
for the aircraft have been either renewed or extended.
At September 30, 1994, the Partnership had cash and cash equivalents of
$1,373,065, as compared to $1,089,805 at December 31, 1993. The $283,260
increase in cash and cash equivalents is attributable to the proceeds from the
sale in February 1994 of the aircraft formerly on lease with Carnival. The
Partnership's restricted cash totalled $1,782,453 at September 30, 1994, as
compared to $3,048,884 at December 31, 1993. The $1,266,431 decrease is
comprised of: (i) $750,000 paid to Continental in February 1994 in accordance
with their new lease agreement; (ii) $121,000 paid to Carnival in February 1994
to reimburse their security deposit and a portion of maintenance costs incurred
while leasing the Partnership's aircraft; (iii) $117,228 which was transferred
from restricted to operating cash and included in the first quarter 1994
distribution; and (iv) $278,203 which was loaned to Continental on June 7,
1994. At September 30, 1994, the Partnership's restricted cash was comprised
of aircraft maintenance reserves. At December 31, 1993, the Partnership's
restricted cash was comprised of: (i) $2,968,884 of aircraft maintenance
reserves; and (ii) an $80,000 security deposit from Carnival, which was
subsequently returned to Carnival in February 1994, as a result of the
termination of its lease. At December 31, 1993, a portion of the aircraft
maintenance reserves are also reflected as a liability under "maintenance
payable" and Carnival's security deposit is reflected as a liability under
"security deposit."
On July 29, 1994, the Partnership paid distributions to the Unitholders for the
period April 1, 1994 to June 30, 1994, in the amount of $1,289,752 or
approximately $.26 per Unit. At September 30, 1994, the Partnership had a
distribution payable to Unitholders of $1,223,065 or approximately $.25 per
unit. This amount reflects the 1994 third quarter cash flow from operations.
This distribution was subsequently paid on November 2, 1994. Future cash
distributions will be determined on a quarterly basis after an evaluation of
the Partnership's current and expected financial position.
At September 30, 1994, deferred revenue totalled $130,000 as compared to
$150,000 at December 31, 1993. The decrease is attributable to the timing of
lease payments made to the Partnership by TWA on the lease which was originally
scheduled to expire on October 31, 1994.
Results of Operations
Substantially all of the Partnership's revenue was generated from the leasing
of the Partnership's aircraft to commercial air carriers under triple net
operating leases. The balance of the Partnership's revenue consisted of
interest income.
For the three and nine months ended September 30, 1994, the Partnership
reported a net loss of $75,960 and $669,135, respectively, as compared to a net
loss of $567,212 and $993,502, respectively, for the corresponding periods in
1993. The decreases in the Partnership's net loss position are primarily
attributable to the re-leasing of the Partnership's MD-80 Series aircraft to
Continental airlines and a decrease in depreciation and amortization.
Rental income for the three and nine months ended September 30, 1994, was
$1,395,000 and $3,735,000, respectively, as compared to $1,125,000 and
$4,059,182, respectively, for the corresponding periods in 1993. The increase
for the three month period is the result of Continental re-leasing the MD-80
Series aircraft. The decrease in the nine month period is primarily the result
of: (i) TWA paying lower rental rates pursuant to the airlines' amended lease
agreements in 1993; and (ii) the expiration of the lease with Carnival in
December 1993.
Interest income for the three and nine months ended September 30, 1994, was
$22,827 and $69,868, respectively, as compared to $29,404 and $76,036,
respectively, for the corresponding periods in 1993. The decreases are due to
lower cash balances maintained by the Partnership during the first nine months
of 1994 as compared to the same period in 1993. The decreases are partially
offset by the interest income earned on the financing provided to Continental.
Other income for the nine months ended September 30, 1994, was $13,228. While
the Partnership's MD-80 Series aircraft was in storage, McDonnell Douglas
rented the aircraft to test certain equipment.
Depreciation and amortization for the three and nine months ended September 30,
1994 was $1,306,119 and $3,918,357, respectively, as compared to $1,533,957 and
$4,601,871, respectively, for the corresponding periods in 1993. The decreases
are due to the write-down of the value of the Partnership's aircraft in
December 1993.
Management fees for the three and nine months ended September 30, 1994, were
$126,180 and $326,949, respectively, as compared to $72,195 and $270,772,
respectively, for the corresponding periods in 1993. Management fees are based
on rental income and operating cash flow. The increases are primarily the
result of the recent lease agreement with Continental.
General and administrative expenses for the three and nine months ended
September 30, 1994, were $49,488 and $170,531, respectively, as compared to
$56,328 and $165,485, respectively, for the corresponding periods in 1993. The
decrease for the three month period is mainly due to a decrease in transfer
agent fees. The increase for the nine month period is primarily due to higher
postage fees.
Operating expenses for the three and nine months ended September 30, 1994, were
$12,000 and $71,394, respectively, as compared to $59,136 and $90,592,
respectively, for the corresponding period in 1993. The decreases are mainly
due to the reduction of costs associated with the idle status of the
Partnership's MD-80 Series aircraft as it was re-leased in March 1994.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended September 30, 1994.
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.
JETSTREAM, L.P.
BY: JET AIRCRAFT LEASING INC.
Administrative General Partner
Date: November 14, 1994 BY: /s/ Moshe Braver
Name: Moshe Braver
Title: Director and President
Date: November 14, 1994 BY: /s/ Daniel M. Palmier
Name: Daniel M. Palmier
Title: Vice President and
Chief Financial Officer
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 3,155,518
<SECURITIES> 000
<RECEIVABLES> 276,865
<ALLOWANCES> 000
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<PP&E> 25,334,000
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