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, 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.)
Attn: Andre Anderson
3 World Financial Center,
29th Floor, 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 1995 1994
Aircraft, at adjusted cost $24,287,000 $25,334,000
Less-accumulated depreciation (8,226,708) (5,224,476)
16,060,292 20,109,524
Cash and cash equivalents 3,506,257 2,785,283
Restricted cash 321,797 321,797
Rent receivable 125,869 ---
Loan receivable 189,991 239,994
Interest receivable 625 898
Prepaid expenses 5,000 ---
Total Assets $20,209,831 $23,457,496
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 406,066 $ 253,292
Distribution payable 1,070,601 1,174,627
Deferred revenue 90,000 90,000
Security deposit 50,000 ---
Total Liabilities 1,616,667 1,517,919
Partners' Capital (Deficit):
General Partners (792,080) (758,616)
Limited Partners (4,895,005 Units Outstanding) 19,385,244 22,698,193
Total Partners' Capital 18,593,164 21,939,577
Total Liabilities and Partners' Capital $20,209,831 $23,457,496
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1995
General Limited
Partners Partners Total
Balance at December 31, 1994 $ (758,616) $22,698,193 $21,939,577
Net loss (1,289) (127,592) (128,881)
Cash distributions (32,175) (3,185,357) (3,217,532)
Balance at September 30, 1995 $ (792,080) $19,385,244 $18,593,164
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
Income 1995 1994 1995 1994
Rental $1,075,869 $1,395,000 $3,535,869 $3,735,000
Interest 61,934 22,827 160,013 69,868
Other --- --- --- 13,228
Total Income 1,137,803 1,417,827 3,695,882 3,818,096
Expenses
Depreciation 1,175,244 1,306,119 3,743,857 3,918,357
Management fees 100,160 126,180 323,020 326,949
General and administrative 67,889 49,488 157,952 170,531
Operating 14,950 12,000 46,309 71,394
Total Expenses 1,358,243 1,493,787 4,271,138 4,487,231
Net loss from operations (220,440) (75,960) (575,256) (669,135)
Other Income
Gain on sale of aircraft --- --- 446,375 ---
Net Loss $ (220,440) $ (75,960) $ (128,881) $ (669,135)
Net Loss Allocated:
To the General Partners $ (2,205) $ (759) $ (1,289) $ (6,691)
To the Limited Partners (218,235) (75,201) (127,592) (662,444)
$ (220,440) $ (75,960) $ (128,881) $ (669,135)
Per limited partnership unit
(4,895,005 outstanding) $ (0.05) $ (0.02) $ (0.03) $ (0.14)
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net loss $ (128,881) $ (669,135)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Gain on sale of aircraft (446,375) ---
Depreciation 3,743,857 3,918,357
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Restricted cash --- 1,266,431
Rent receivable (125,869) ---
Interest receivable 273 6,461
Prepaid expenses (5,000) 36,841
Accounts payable and accrued expenses 152,774 13,892
Maintenance payable --- (791,000)
Deferred revenue --- (20,000)
Security deposit 50,000 (80,000)
Net cash provided by operating activities 3,240,779 3,681,847
Cash Flows from Investing Activities:
Loan receivable 50,003 (256,023)
Proceeds from sale of aircraft - net 751,750 350,000
Net cash provided by investing activities 801,753 93,977
Cash Flows from Financing Activities:
Cash distributions (3,321,558) (3,492,564)
Net cash used for financing activities (3,321,558) (3,492,564)
Net increase in cash and cash equivalents 720,974 283,260
Cash and cash equivalents at beginning of period 2,785,283 1,089,805
Cash and cash equivalents at end of period $3,506,257 $1,373,065
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 September 30, 1995 and the results of operations for the three
and nine months ended September 30, 1995 and 1994, cash flows for the nine
months ended September 30, 1995 and 1994, and the statement of changes in
partners' capital (deficit) for the nine months ended September 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).
(1) In June 1995, the General Partners sold the aircraft formerly
on lease with Trans World Airlines, Inc. ("TWA") for net sales 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.
(2) On July 12, 1995, the Partnership entered into three lease
agreements ("Agreements") with Eastwind Airlines, Inc. ("Eastwind").
The Agreements provide for Eastwind to lease two aircraft previously on
lease with US Air, for a term of four years. Effective November 1,
1995, Eastwind shall pay $70,000 per month in advance. In addition,
Eastwind shall pay maintenance reserves and power-by-the-hour charges
effective August 1, 1995. Maintenance reserves shall be $80 per
airframe flight hour for scheduled "Q" checks and $7.50 per flight hour
for scheduled landing gear overhaul. For each engine,
power-by-the-hour charges shall be $60 per engine flight hour or cycle,
whichever is greater.
(3) Delta gave notice to the Partnership in early April 1995 that
it would exercise an option under the current lease agreement to
terminate the lease for the Partnership's 737-200 advanced aircraft in
December 1995. However, an agreement was reached with Delta in
November 1995 to amend and extend the current lease until September 30,
1999 at a monthly lease rate of $80,000. While this rate represents a
decline from the previous rate of $95,000 per month, it is in line with
prevailing market rates. Under the terms of the amended lease, Delta
does not have the option of returning the aircraft prior to the new
expiration date as it did under the previous lease agreement.
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
As of September 30, 1995, the Partnership had all six of its aircraft on-lease.
One aircraft was on-lease to Delta Air Lines, Inc. ("Delta"), one aircraft was
on-lease to Continental Airlines ("Continental"), two aircraft were on-lease to
Trans World Airlines ("TWA") and two aircraft were on-lease to Eastwind
Airlines ("Eastwind"). As of September 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.
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
monthly lease payments of $32,500 per aircraft. To date, TWA has not given any
indication to the Partnership as to how long it will continue to lease these
aircraft. In light of the very competitive and weakened leasing market for
this type of aircraft, there can be no assurances that the Partnership will be
able to re-lease these aircraft once TWA exercises its option to terminate the
leases.
The Partnership entered into an agreement with Eastwind in July 1995 to lease
the Partnership's two 737-200 non-advanced aircraft, which had previously been
on-lease to USAir. 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 commencing in November 1995. In addition, Eastwind is
required to pay the Partnership an engine charge based on usage and is also
required to fund airframe maintenance reserves effective August 1, 1995.
Delta gave notice to the Partnership in early April 1995 that it would exercise
an option under the current lease agreement to terminate the lease for the
Partnership's 737-200 advanced aircraft in December 1995. However, an
agreement was reached with Delta in November 1995 to amend and extend the
current lease until September 30, 1999 at a monthly lease rate of $80,000.
While this rate represents a decline from the previous rate of $95,000 per
month, it is in line with prevailing market rates. Under the terms of the
amended lease, Delta does not have the option of returning the aircraft prior
to the new expiration date as it did under the previous lease agreement.
At September 30, 1995, the Partnership had unrestricted cash and cash
equivalents of $3,506,257, as compared to $2,785,283 at December 31, 1994. The
$720,974 increase in unrestricted cash and cash equivalents is primarily
attributable to the proceeds received from the sale of the 727-200 non-advanced
aircraft in June 1995 which had previously been on-lease to TWA. The
Partnership's restricted cash balance at September 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 September 30, 1995, the Partnership had a rent receivable balance
totalling $125,869, compared to $0 at December 31, 1994. The balance at
September 30, 1995 represents second quarter 1995 rental payments owed to the
Partnership by USAir and maintenance reserves and engine charges earned by the
Partnership in accordance with the new lease agreements with Eastwind.
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
September 30, 1995, Continental had made principal payments on the loan
totalling $88,212. Principal payments made on the loan by Continental during
the first three quarters of 1995, totalling $50,003, are the reason for the
decrease in the Partnership's loan receivable balance, which totalled $189,991
at September 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 $406,066 at September 30, 1995,
compared to $253,292 at December 31, 1994. The increase is primarily
attributable to management and re-leasing fees earned by the General Partners
which were unpaid as of September 30, 1995, and a sales fee earned by a General
Partner as a result of the June 1995 sale of the 727-200 non-advanced aircraft
formerly on-lease to TWA.
As of September 30, 1995, the Partnership had a security deposit balance
totalling $50,000, compared to $0 at December 31, 1994. The balance at
September 30, 1995 represents a security deposit made to the Partnership by
Eastwind in conjunction with the lease executions for the Partnership's two
737-200 non-advanced aircraft in the third quarter of 1995. On August 3, 1995,
the Partnership paid a distribution to the Unitholders for the period from
April 1, 1995 to June 30, 1995, in the amount of $1,060,822, or approximately
$.22 per Unit. At September 30, 1995, the Partnership had a distribution
payable to Unitholders of $1,049,287, or approximately $.21 per Unit. This
amount reflects the 1995 third quarter cash distribution, which was funded from
cash flow from operations. This distribution was subsequently paid on November
2, 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 leases for the Partnership's two 727-200 aircraft.
Results of Operations
Substantially all of the Partnership's revenue for the nine months ended
September 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 nine months ended September 30, 1995, the Partnership
reported net losses of $220,440 and $128,881, respectively, as compared to net
losses of $75,960 and $669,135, respectively, for the corresponding periods in
1994. The increase for the three month period is primarily attributable to a
decrease in rental income, partially offset by decreases in depreciation
expense and management fees. The decrease for the nine month period is
primarily attributable to a gain on the June 1995 sale of the 727-200
non-advanced aircraft totalling $446,375, partially offset by a decline in
rental income.
Rental income for the three and nine months ended September 30, 1995, was
$1,075,869 and $3,535,869, respectively, compared to $1,395,000 and $3,735,000,
respectively, for the corresponding periods in 1994. The decreases are
primarily attributable to (i) the lease expiration and subsequent sale of one
of the 727-200 non-advanced aircraft, formerly on-lease with TWA, in November
1994, (ii) the reduction of the monthly lease rates paid by TWA as a result of
the lease extensions negotiated for the Partnership's two remaining 727-200
non-advanced aircraft in the fourth quarter of 1994 and (iii) the idle status
of the Partnership's two 737-200 non-advanced aircraft subsequent to the
expiration of the leases with USAir in May 1995. The decrease for the nine
month period is partially offset by the lease agreement with Continental, which
became effective on March 15, 1994.
Interest income for the three and nine months ended September 30, 1995 was
$61,934 and $160,013, respectively, compared to $22,827 and $69,868,
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.
Depreciation expense for the three and nine months ended September 30, 1995 was
$1,175,244 and $3,743,857, respectively, compared to $1,306,119 and $3,918,357,
respectively, for the corresponding periods in 1994. The decreases are
primarily attributable to the June 1995 sale of the 727-200 non-advanced
aircraft, as discussed above.
Management fees for the three and nine months ended September 30, 1995 totalled
$100,160 and $323,020, respectively, as compared to $126,180 and $326,949,
respectively, for the corresponding periods in 1994. Management fees are based
on rental income and operating revenue. The decrease for the three month
period is primarily attributable to a decrease in rental income during the
third quarter of 1995, as discussed above.
General and administrative expenses for the three and nine months ended
September 30, 1995 were $67,889 and $157,952, respectively, as compared to
$49,488 and $170,531, respectively, for the corresponding periods in 1994. The
increase for the three month period is primarily attributable to legal expenses
which were incurred in the third quarter of 1995 in connection with the new
lease agreements with Eastwind. The decrease for the nine 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 nine months ended September 30, 1995, operating expenses were
$14,950 and $46,309, respectively, compared to $12,000 and $71,394,
respectively, for the corresponding periods in 1994. The decrease for the nine
month period is primarily attributable to a decrease in insurance expenditures.
The decrease for the nine month period was partially offset by increased
storage and maintenance expenses incurred by the Partnership during the 1995
period primarily as a result of the idle status of the 727-200 non-advanced
aircraft which was returned to the Partnership by TWA in the fourth quarter of
1994 and subsequently sold in June 1995.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended September 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: November 14, 1995 BY: /s/ Moshe Braver
Name: Moshe Braver
Title: Director and President
Date: November 14, 1995 BY: /s/ John Stanley
Name: John Stanley
Title: Vice President and
Chief Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,828,054
<SECURITIES> 000
<RECEIVABLES> 321,485
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 4,149,539
<PP&E> 24,287,000
<DEPRECIATION> (8,226,708)
<TOTAL-ASSETS> 20,209,831
<CURRENT-LIABILITIES> 1,616,667
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 18,593,164
<TOTAL-LIABILITY-AND-EQUITY> 20,209,831
<SALES> 000
<TOTAL-REVENUES> 4,142,257
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 4,271,138
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> (128,881)
<INCOME-TAX> 000
<INCOME-CONTINUING> (128,881)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (128,881)
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