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 June 30, 1995
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, 29th Floor, New York, NY
Attn: Andre Anderson 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
June 30, December 31,
Assets 1995 1994
Aircraft, at adjusted cost $ 24,287,000 $ 25,334,000
Less-accumulated
depreciation (7,051,464) (5,224,476)
----------- -----------
17,235,536 20,109,524
Cash and cash equivalents 3,507,193 2,785,283
Restricted cash 321,797 321,797
Rent receivable 70,000 -
Loan receivable 206,963 239,994
Interest receivable 680 898
---------- ----------
Total Assets $ 21,342,169 $ 23,457,496
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and
accrued expenses $ 307,142 $ 253,292
Distribution payable 1,071,537 1,174,627
Deferred revenue 90,000 90,000
---------- ----------
Total Liabilities 1,468,679 1,517,919
---------- ----------
Partners' Capital (Deficit):
General Partners (779,276) (758,616)
Limited Partners
(4,895,005 Units Outstanding) 20,652,766 22,698,193
---------- ----------
Total Partners' Capital 19,873,490 21,939,577
---------- ----------
Total Liabilities and
Partners' Capital $ 21,342,169 $ 23,457,496
========== ==========
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1995
General Limited
Partners Partners Total
Balance at December 31, 1994 $ (758,616) $ 22,698,193 $ 21,939,577
Net Income 916 90,643 91,559
Cash distributions (21,576) (2,136,070) (2,157,646)
--------- ---------- ----------
Balance at June 30, 1995 $ (779,276) $ 20,652,766 $ 19,873,490
========= ========== ==========
Statements of Operations
Three months ended Six months ended
June 30, June 30,
Income 1995 1994 1995 1994
Rental $ 1,230,000 $ 1,395,000 $ 2,460,000 $ 2,340,000
Interest 53,251 18,614 98,079 47,041
Other - - - 13,228
Gain on sale of aircraft 446,375 - 446,375 -
--------- --------- --------- --------
Total Income 1,729,626 1,413,614 3,004,454 2,400,269
--------- --------- --------- --------
Expenses
Depreciation 1,262,494 1,306,119 2,568,613 2,612,238
Management fees 110,636 116,238 222,860 200,769
General and administrative 42,670 45,751 90,063 121,043
Operating 13,837 13,344 31,359 59,394
--------- --------- -------- --------
Total Expenses 1,429,637 1,481,452 2,912,895 2,993,444
--------- --------- -------- --------
Net Income (Loss) $ 299,989 $ (67,838) $ 91,559 $ (593,175)
========= ========= ======== ========
Net Income (Loss) Allocated:
To the General Partners $ 3,000 $ (679) $ 916 $ (5,932)
To the Limited Partners 296,989 (67,159) 90,643 (587,243)
--------- ---------- -------- --------
$ 299,989 $ (67,838) $ 91,559 $ (593,175)
========= ========== ======== ========
Per limited partnership
unit (4,895,005
outstanding) $ 0.06 $ (0.01) $ 0.02 $ (0.12)
========= ========= ======== ========
Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income (loss) $ 91,559 $ (593,175)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Gain on sale of aircraft (446,375) -
Depreciation 2,568,613 2,612,238
Increase (decrease) in cash
arising from changes in operating
assets and liabilities:
Restricted cash - 1,266,431
Rent receivable (70,000) -
Interest receivable 218 3,303
Prepaid expenses - 36,841
Accounts payable and accrued
expenses 53,850 695
Maintenance payable - (791,000)
Deferred revenue - 20,000
Security deposit - (80,000)
--------- ---------
Net cash provided by
operating activities 2,197,865 2,475,333
--------- ---------
Cash Flows from Investing Activities:
Loan receivable 33,031 (272,574)
Proceeds from sale of aircraft - net 751,750 350,000
--------- ---------
Net cash provided by
investing activities 784,781 77,426
--------- ---------
Cash Flows from Financing Activities:
Cash distributions (2,260,736) (2,202,812)
--------- ---------
Net cash used for financing activities (2,260,736) (2,202,812)
Net increase in cash and
cash equivalents 721,910 349,947
Cash and cash equivalents at
beginning of period 2,785,283 1,089,805
--------- ---------
Cash and cash equivalents at
end of period $ 3,507,193 $ 1,439,752
=========== ===========
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of June 30, 1995 and the results of operations for the three and
six months ended June 30, 1995 and 1994, cash flows for the six months ended
June 30, 1995 and 1994, and the statement of changes in partners' capital
(deficit) for the six months ended June 30, 1995. Results of operations for
the periods are not necessarily indicative of the results to be expected for
the full year.
The following significant events have occurred subsequent to fiscal year 1994,
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
In June 1995, the General Partners sold the aircraft formerly on lease with
Trans World Airlines, Inc. ("TWA") for net proceeds of $751,750. The aircraft
had a carrying value of $305,375 on the date of sale resulting in a gain on
sale of $446,375.
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
As of June 30, 1995, the Partnership had four of its six aircraft on-lease.
One aircraft was on-lease to Delta Air Lines, Inc. ("Delta"), one aircraft was
on-lease to Continental Airlines ("Continental") and two aircraft were on-lease
to Trans World Airlines ("TWA"). As discussed below, the General Partners
reached an agreement with Eastwind Airlines ("Eastwind") in July 1995 to lease
the Partnership's two 737-200 Stage 2 non-advanced aircraft previously on-lease
to USAir, Inc. ("USAir"). As of June 30, 1995, all airlines to which the
Partnership had aircraft on-lease were current on their lease obligations. The
Partnership is faced with an extremely competitive environment in the aircraft
leasing industry which has had a material negative 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 extended and as new leases have been executed.
The General Partners had been attempting to re-lease one of the Partnership's
727-200 Stage 2 non-advanced aircraft, which was returned by TWA subsequent to
its lease expiration in November 1994. However, in light of the extremely
competitive and deteriorated operating environment, particularly for older
Stage 2 aircraft, such efforts were unsuccessful. Accordingly, the aircraft
was sold in June 1995. The net proceeds from the sale, totalling approximately
$752,000, are being retained in the Partnership's cash reserves pending the
completion of an analysis of the cash needs for the Partnership's remaining
aircraft.
In June 1995, TWA filed a pre-packaged reorganization plan under Chapter 11 of
the U.S. Bankruptcy Code. At a subsequent confirmation hearing held on August
2, 1995, the Bankruptcy Court confirmed the reorganization plan and TWA expects
to emerge from Chapter 11 bankruptcy no later than August 31, 1995. It is
presently unclear what impact, if any, the reorganization plan will have on the
Partnership. TWA continues to lease the Partnership's two remaining 727-200
Stage 2 non-advanced aircraft on a month-to-month basis and remains current on
its lease payments to the Partnership. To date, TWA has not given any
indication to the Partnership as to how long it will continue to lease these
aircraft.
The Partnership's two 737-200 stage 2 non-advanced aircraft previously on-lease
with USAir were returned to the Partnership upon the expiration of the
respective leases on May 1, 1995. Subsequent to the completion of the
technical acceptance of these aircraft from USAir, the General Partners reached
an agreement with Eastwind Airlines, a start-up airline based in Trenton, New
Jersey, to lease both of the aircraft. It is anticipated that Eastwind will
place both aircraft into service by the end of August 1995. Under the terms of
the lease agreements, which expire on November 30, 1999, Eastwind will pay the
Partnership a monthly lease rate of $35,000 per aircraft. In addition,
Eastwind will be required to pay the Partnership an engine charge based on
usage and will also be required to fund airframe maintenance reserves.
Delta gave notice to the Partnership in early April 1995 that it is exercising
an option under the current lease agreement to terminate the lease for the
Partnership's 737-200 advanced aircraft in December 1995. While the General
Partners are hopeful that a replacement lessee can be found for this aircraft,
there can be no assurance that such efforts will be successful. In the event
the aircraft is re-leased, it will likely be at a lower rate than the current
monthly lease rate of $95,000.
At June 30, 1995, the Partnership had unrestricted cash and cash equivalents of
$3,507,193, as compared to $2,785,283 at December 31, 1994. The $721,910
increase in cash and cash equivalents is primarily attributable to the proceeds
received from the sale of the 727-200 non-advanced aircraft in June 1995 as
discussed above. The Partnership's restricted cash balance at June 30, 1995 of
$321,797 was unchanged from December 31, 1994. The Partnership's restricted
cash is comprised of the balance of modification work financing committed to
Continental in accordance with the 1994 lease agreement.
As of June 30, 1995, the Partnership had a rent receivable balance totalling
$70,000, compared to $0 at December 31, 1994. The balance at June 30, 1995
represents second quarter 1995 rental payments owed to the Partnership by
USAir.
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. As of
June 30, 1995, Continental had made principal payments on the loan totalling
$71,240. Principal payments made on the loan by Continental during the first
and second quarters of 1995, totalling $33,031, is the reaso n for the decrease
in the Partnership's loan receivable balance, which totalled $206,963 at June
30, 1995, compared to $239,994 at December 31, 1994. Continental makes monthly
lease payments to the Partnership of $180,000. Accounts payable and accrued
expenses totalled $307,142 at June 30, 1995, compared to $253,292 at December
31, 1994. The increase is primarily attributable to an initial deposit of
$50,000 made to the Partnership by Eastwind and a sales fee earned by a General
Partner as a result of the June 1995 sale of the 727-200 non-advanced plane
formerly on-lease to TWA.
On May 4, 1995, the Partnership paid a distribution to the Unitholders for the
period from January 1, 1995 to March 31, 1995, in the amount of $1,075,248, or
approximately $.22 per Unit. At June 30, 1995, the Partnership had a
distribution payable to Unitholders of $1,060,822, or approximately $.22 per
Unit. This amount reflects the 1995 second quarter cash distribution, which
was funded from cash flow from operations. This distribution was subsequently
paid on August 3, 1995.
Future cash distributions will be determined on a quarterly basis after an
evaluation of the Partnership's current and expected financial position. The
level of cash available for future distributions will be reduced if TWA
terminates the remaining leases for the Partnership's two 727-200 aircraft.
Distributions will be further impacted if efforts to re-lease the Partnership's
737-200 advanced aircraft are unsuccessful subsequent to the expiration of the
current lease with Delta in December 1995.
Results of Operations
Substantially all of the Partnership's revenue for the six months ended June
30, 1995 was generated from the leasing of the Partnership's aircraft to
commercial air carriers under triple net operating leases and, to a lesser
extent, the sale of the 727-200 non-advanced plane in June 1995.
For the three and six months ended June 30, 1995, the Partnership reported net
income of $299,989 and $91,559, respectively, as compared to net losses of
$67,838 and $593,175, respectively, for the corresponding periods in 1994. The
increases are primarily attributable to a gain on the June 1995 sale of the
727-200 non-advanced aircraft totalling $446,375.
Rental income for the three and six months ended June 30, 1995, was $1,230,000
and $2,460,000, respectively, compared to $1,395,000 and $2,340,000,
respectively, for the corresponding periods in 1994. The decrease for the
three month period is primarily attributable to the lease expiration of one of
the 727-200 non-advanced aircraft, formerly on-lease with TWA, in November
1994. Additionally, the leases with TWA for the two remaining 727-200
non-advanced aircraft were extended during the fourth quarter of 1994 at lower
rates. The increase for the six month period is primarily due to the lease
agreement with Continental, which became effective on March 15, 1994.
Interest income for the three and six months ended June 30, 1995 was $53,251
and $98,079, respectively, compared to $18,614 and $47,041, respectively, for
the corresponding periods in 1994. The increases are due to an increase in the
Partnership's invested cash balance, higher interest rates, and interest income
earned on the loan to Continental.
General and administrative expenses for the three and six months ended June 30,
1995 were $42,670 and $90,063, respectively, as compared to $45,751 and
$121,043, respectively, for the corresponding periods in 1994. The decrease
for the six month period is primarily attributable to legal expenses which were
incurred in the first quarter of 1994 in connection with the new lease
agreement with Continental.
For the three and six months ended June 30, 1995, operating expenses were
$13,837 and $31,359, respectively, compared to $13,344 and $59,394,
respectively, for the corresponding periods in 1994. The lower expense for the
six month period is primarily attributable to a decrease in insurance
expenditures required to be made by the Partnership related to the aircraft
on-lease to Continental and Delta and the two aircraft previously on-lease to
USAir.
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 June 30, 1995
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: August 14, 1995 BY: /s/ Moshe Braver
Name: Moshe Braver
Title: Director and
President
Date: August 14, 1995 BY: /s/ John Stanley
Name: John Stanley
Title: Vice President
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,828,990
<SECURITIES> 000
<RECEIVABLES> 277,643
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 4,106,633
<PP&E> 24,287,000
<DEPRECIATION> (7,051,464)
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<CURRENT-LIABILITIES> 1,468,679
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 19,873,490
<TOTAL-LIABILITY-AND-EQUITY> 21,342,169
<SALES> 000
<TOTAL-REVENUES> 3,004,454
<CGS> 000
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<OTHER-EXPENSES> 2,912,895
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<INCOME-PRETAX> 91,559
<INCOME-TAX> 000
<INCOME-CONTINUING> 91,559
<DISCONTINUED> 000
<EXTRAORDINARY> 000
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<NET-INCOME> 91,559
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