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 March 31, 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, 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
March 31, December 31,
Assets 1995 1994
Aircraft, at adjusted cost $25,334,000 $25,334,000
Less-accumulated depreciation (6,530,595) (5,224,476)
18,803,405 20,109,524
Cash and cash equivalents 2,696,765 2,785,283
Restricted cash 321,797 321,797
Loan receivable 223,595 239,994
Interest receivable 784 898
Total Assets $22,046,346 $23,457,496
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 225,199 $ 253,292
Distribution payable 1,086,109 1,174,627
Deferred revenue 90,000 90,000
Total Liabilities 1,401,308 1,517,919
Partners' Capital (Deficit):
General Partners (771,561) (758,616)
Limited Partners (4,895,005 Units Outstanding) 21,416,599 22,698,193
Total Partners' Capital 20,645,038 21,939,577
Total Liabilities and Partners' Capital $22,046,346 $23,457,496
See accompanying notes to the financial statements.
Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1995
General Limited
Partners Partners Total
Balance at December 31, 1994 $(758,616) $22,698,193 $21,939,577
Net Loss (2,084) (206,346) (208,430)
Cash distributions (10,861) (1,075,248) (1,086,109)
Balance at March 31, 1995 $(771,561) $21,416,599 $20,645,038
See accompanying notes to the financial statements.
Statements of Operations
For the three months ended March 31, 1995 and 1994
Income 1995 1994
Rental $ 1,230,000 $ 945,000
Other --- 13,228
Interest 44,828 28,427
Total Income 1,274,828 986,655
Expenses
Depreciation 1,306,119 1,306,119
Management fees 112,224 84,531
General and administrative 47,393 75,292
Operating 17,522 46,050
Total Expenses 1,483,258 1,511,992
Net Loss $ (208,430) $ (525,337)
Net Loss Allocated:
To the General Partners $ (2,084) $ (5,253)
To the Limited Partners (206,346) (520,084)
$ (208,430) $ (525,337)
Per limited partnership
unit (4,895,005 outstanding) $(0.04) $(0.11)
See accompanying notes to the financial statements.
Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net loss $ (208,430) $ (525,337)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,306,119 1,306,119
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Restricted cash --- 988,228
Interest receivable 114 602
Prepaid expenses --- 23,977
Accounts payable and accrued expenses (28,093) (29,582)
Maintenance payable --- (791,000)
Deferred revenue --- 20,000
Security deposit --- (80,000)
Net cash provided by operating activities 1,069,710 913,007
Cash Flows from Investing Activities:
Loan receivable 16,399 ---
Proceeds from sale of aircraft - net --- 350,000
Net cash provided by investing activities 16,399 350,000
Cash Flows from Financing Activities:
Cash distributions (1,174,627) (939,805)
Net cash used for financing activities (1,174,627) (939,805)
Net increase (decrease) in cash and cash equivalents (88,518) 323,202
Cash and cash equivalents at beginning of period 2,785,283 1,089,805
Cash and cash equivalents at end of period $2,696,765 $1,413,007
See accompanying notes to the financial statements.
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 March 31, 1995 and the results of operations and cash flows for
the three months ended March 31, 1995 and 1994 and the statement of changes in
partners' capital (deficit) for the three months ended March 31, 1995. Results
of operations for the periods are not necessarily indicative of the results to
be expected for the full year.
No 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).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
As of March 31, 1995, the Partnership had six of its seven aircraft on-lease.
However, as discussed below, leases for the two aircraft previously on-lease
to USAir expired on May 1, 1995. Accordingly, as of May 2, 1995, four of the
Partnership's seven aircraft were 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 with Trans World
Airlines ("TWA"). At March 31, 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 either renewed or extended.
The Partnership's two 737-200 Stage 2 non-advanced aircraft previously on-lease
to USAir were returned to the Partnership subsequent to the expiration of
their respective leases on May 1, 1995 and are currently in storage. In
addition, the Partnership currently has one 727-200 Stage 2 non-advanced
aircraft in storage, which was returned to the Partnership by TWA in November
1994. The leases with TWA for the Partnership's two remaining 727-200 Stage 2
non-advanced aircraft, which were originally scheduled to expire on April 30,
1995, were extended on a month-to-month basis, with the monthly lease rate of
$32,500 remaining unchanged. To date, TWA has not given any indication to the
Partnership as to how long it will continue to lease the aircraft. The
General Partners have explored the potential of re-leasing the idle aircraft
with other airlines. However, in light of the extremely competitive operating
environment in the aircraft leasing industry, particularly for Stage 2
aircraft, such efforts have to date been unsuccessful. While the Partnership
has received some offers to lease these aircraft, a suitable lessee has not
yet been located. Accordingly, the General Partners are exploring
opportunities to sell these aircraft.
In addition to the recent lease expirations discussed above, 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 efforts to re-lease the aircraft 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.
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
March 31, 1995, Continental had made principal payments on the loan totalling
$54,608. Continental makes monthly lease payments to the Partnership of
$180,000.
At March 31, 1995, the Partnership had cash and cash equivalents of $2,696,765,
as compared to $2,785,283 at December 31, 1994. The $88,518 decrease in cash
and cash equivalents is primarily attributable to the fourth quarter 1994
distribution paid in the first quarter of 1995 exceeding first quarter 1995
cash flow from operations. The Partnership's restricted cash balance at March
31, 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.
On February 2, 1995, the Partnership paid a distribution to the Unitholders for
the period from October 1, 1994 to December 31, 1994, in the amount of
$1,162,881, or approximately $.24 per Unit. At March 31, 1995, the Partnership
had a distribution payable to Unitholders of $1,075,248, or approximately $.22
per Unit. This amount reflects the 1995 first quarter cash distribution which
was funded from cash flow from operations. This distribution was subsequently
paid on May 4, 1995.
Future cash distributions will be determined on a quarterly basis after an
evaluation of the Partnership's current and expected financial position. As a
result of the idle status of the aircraft formerly on-lease with USAir as
discussed above, the amount of future quarterly distributions to the partners
will in all likelihood be reduced. The level of cash available for
distribution will be further reduced once TWA terminates the remaining leases
for the Partnership's two 727-200 aircraft and, if efforts to re-lease the
Partnership's 737-200 advanced aircraft are unsuccessful subsequent to
expiration of the current lease with Delta in December 1995.
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 during the first
quarter of 1995 consisted of interest income.
For the three months ended March 31, 1995, the Partnership reported a net loss
of $208,430 as compared to a net loss of $525,337 for the corresponding period
in 1994. The decrease in net loss is primarily attributable to higher rental
income as a result of the re-leasing of the Partnership's MD-80 Series aircraft
to Continental in March 1994.
Rental income for the three months ended March 31, 1995, was $1,230,000 as
compared to $945,000 for the corresponding period in 1994. The increase is due
to the new lease agreement with Continental effective March 15, 1994.
Interest income for the three months ended March 31, 1995 was $44,828 as
compared to $28,427 for the corresponding period in 1994. The increase is due
mainly to an increase in interest rates, and interest income earned on the loan
to Continental.
Other income for the three months ended March 31, 1995 was $0 as compared to
$13,228 for the corresponding period in 1994. While the Partnership's MD-80
aircraft was off-lease and in storage during the first quarter of 1994,
McDonnell Douglas rented the aircraft to test certain equipment.
Management fees for the three months ended March 31, 1995, were $112,224 as
compared to $84,531 for the corresponding period in 1994. Management fees are
based on rental income and operating cash flow. The increase is attributable
to the higher rental income due to the new lease agreement with Continental.
General and administrative expenses for the three months ended March 31, 1995,
were $47,393 as compared to $75,292 for the corresponding period in 1994. The
decrease 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 months ended March 31, 1995, operating expenses were $17,522 as
compared to $46,050 for the corresponding period in 1994. The 1995 balance is
comprised of consulting, inspection, storage and maintenance fees for the
aircraft returned by TWA in December 1994. The 1994 balance is comprised of
insurance, storage and maintenance costs incurred as a result of the idle
status of the MD-80 Series aircraft through mid-March 1994, and costs to
re-deliver the aircraft to Continental. Additionally, fees were incurred
during the first quarter of 1994 for inspection and consulting services
relating to the sale of the aircraft previously on-lease with Carnival
Airlines.
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 March 31, 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: May 12, 1995
BY: /s/ Moshe Braver
Name: Moshe Braver
Title: Director and President
Date: May 12, 1995
BY: /s/ John Stanley
Name: John Stanley
Title: Vice President and
Chief Financial Officer
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<PERIOD-END> MAR-31-1995
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