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, 1996
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 At June 30, At December 31,
1996 1995
Assets
Aircraft, at cost: $25,987,000 $24,287,000
Less accumulated depreciation (11,414,013) (9,401,952)
14,572,987 14,885,048
Cash and cash equivalents 2,213,269 3,494,433
Restricted cash 321,797 321,797
Rent receivable (net of allowance for doubtful
accounts of $70,000 in 1996 and 1995) 80,576 58,758
Loan receivable 136,873 172,636
Interest receivable 509 605
Prepaid expenses --- 3,125
Total Assets $17,326,011 $18,936,402
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 451,627 $ 244,647
Distribution payable 1,277,614 1,058,778
Deferred revenue 125,000 90,000
Security deposit 50,000 50,000
Total Liabilities 1,904,241 1,443,425
Partners' Capital (Deficit):
General Partners (823,794) (803,082)
Limited Partners (4,895,005 units outstanding) 16,245,564 18,296,059
Total Partners' Capital 15,421,770 17,492,977
Total Liabilities and Partners' Capital $17,326,011 $18,936,402
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1996
General Limited
Partners Partners Total
Balance at December 31, 1995 $ (803,082) $18,296,059 $17,492,977
Net income 3,249 321,636 324,885
Cash distributions (23,961) (2,372,131) (2,396,092)
Balance at June 30, 1996 $ (823,794) $16,245,564 $15,421,770
Statements of Operations Three Months Six Months
ended June 30, ended June 30,
1996 1995 1996 1995
Income
Rental $1,391,246 $1,230,000 $2,580,671 $2,460,000
Other 42,676 --- 42,676 ---
Interest 37,047 53,251 87,919 98,079
Total income 1,470,969 1,283,251 2,711,266 2,558,079
Expenses
Depreciation 1,048,743 1,262,494 2,012,061 2,568,613
Management fees 127,846 110,636 238,531 222,860
General and administrative 38,727 42,670 86,204 90,063
Operating 20,433 13,837 49,585 31,359
Total expenses 1,235,749 1,429,637 2,386,381 2,912,895
Income (loss) from operations 235,220 (146,386) 324,885 (354,816)
Other Income
Gain on sale of aircraft --- 446,375 --- 446,375
Net Income $ 235,220 $ 299,989 $ 324,885 $ 91,559
Net Income Allocated:
To the General Partners $ 2,352 $ 3,000 $ 3,249 $ 916
To the Limited Partners 232,868 296,989 321,636 90,643
$ 235,220 $ 299,989 $ 324,885 $ 91,559
Per limited partnership unit
(4,895,005 outstanding) $.05 $.06 $.07 $.02
Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net income $ 324,885 $ 91,559
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of aircraft --- (446,375)
Depreciation 2,012,061 2,568,613
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Rent receivable (21,818) (70,000)
Interest receivable 96 218
Prepaid expenses 3,125 ---
Accounts payable and accrued expenses 6,980 53,850
Deferred revenue 35,000 ---
Net cash provided by operating activities 2,360,329 2,197,865
Cash Flows From Investing Activities
Loan receivable 35,763 33,031
Additions to aircraft (1,700,000) ---
Accounts payable - additions to aircraft 200,000 ---
Proceeds from sale of aircraft - net --- 751,750
Net cash provided by (used for) investing activities (1,464,237) 784,781
Cash Flows From Financing Activities
Cash distributions (2,177,256) (2,260,736)
Net cash used for financing activities (2,177,256) (2,260,736)
Net increase (decrease) in cash and cash equivalents (1,281,164) 721,910
Cash and cash equivalents, beginning of period 3,494,433 2,785,283
Cash and cash equivalents, end of period $2,213,269 $3,507,193
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1995 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, 1996 and the results of operations for the three and
six months ended June 30, 1996 and 1995 and cash flows for the six months ended
June 30, 1996 and 1995 and the statement of changes in partners' capital
(deficit) for the six months ended June 30, 1996. Results of operations for the
period are not necessarily indicative of the results to be expected for the
full year.
No significant events have occurred subsequent to fiscal year 1995, 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 June 30, 1996, the Partnership had all six of its aircraft on-lease. One
aircraft was on-lease to Delta Air Lines ("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"). At June 30, 1996, 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 in recent
years, 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 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 the aircraft. Once
the aircraft are returned to the Partnership, the General Partners believe that
it will be very difficult to re-lease them to another airline.
The Partnership's two 737-200 non-advanced aircraft are currently on-lease to
Eastwind. Under the terms of the lease agreements, which expire on November
30, 1999, Eastwind pays the Partnership a monthly lease rate of $35,000 per
aircraft. In addition, the airline is required to pay the Partnership an
engine charge based on usage and airframe maintenance charges. Heavy
maintenance or "Q" checks, which entail refurbishing an aircraft's airframe and
repairing or replacing various time-sensitive components of the aircraft,
excluding the engines, were completed during the first and second quarters on
each of the aircraft on-lease to Eastwind. The Q checks were completed at a
cost to the Partnership of approximately $850,000 per aircraft. It is
anticipated, however, that costs incurred by the Partnership in connection with
the Q checks will be recovered by the maintenance charges which are expected to
be paid by Eastwind over the term of the leases. Eastwind was responsible for
funding costs associated with the Q checks on each aircraft in excess of
$850,000. During the course of the Q checks, which took approximately four to
five weeks for each aircraft, the Partnership did not receive rental payments
from Eastwind.
The lease with Delta for the Partnership's 737-200 advanced aircraft expires in
September 1999. In accordance with the terms of the lease agreement, Delta
pays the Partnership a monthly lease rate of $80,000.
At June 30, 1996, the Partnership had unrestricted cash and cash equivalents of
$2,213,269, compared to $3,494,433 at December 31, 1995. The $1,281,164
decrease is primarily due to payments made by the Partnership during the first
and second quarters of 1996 in connection with the heavy maintenance or "Q"
checks on the two 737-200 non-advanced aircraft on-lease to Eastwind. The
Partnership's restricted cash balance of $321,797 remained unchanged from
December 31, 1995. The Partnership's restricted cash is comprised of the
balance of modification work financing committed to Continental in accordance
with the 1994 lease agreement.
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 term of the lease, plus 4.25 percent. As of
June 30, 1996, Continental had made principal payments on the loan totalling
$141,330. Payments made on this loan are the reason for the decrease in the
Partnership's loan receivable balance, which totalled $136,873 at June 30, 1996
as compared to $172,636 at December 31, 1995. Continental makes monthly lease
payments to the Partnership of $180,000.
At June 30, 1996, the Partnership had a rent receivable balance totalling
$80,576, compared to $58,758 at December 31, 1995. The higher rent receivable
balance at June 30, 1996 is primarily attributable to an increase in unpaid
engine charges and airframe maintenance charges owed to the Partnership by
Eastwind Airlines as a result of an increase in the usage of the Partnership's
two 737-200 non-advanced aircraft by Eastwind during the second quarter of
1996.
Accounts payable and accrued expenses totalled $451,627 at June 30, 1996,
compared to $244,647 at December 31, 1995. The increase is primarily
attributable to the accrual of approximately $200,000 in remaining costs
incurred by the Partnership in connection with the Q checks that were performed
on the Partnership's two 737-200 non-advanced aircraft currently on-lease to
Eastwind.
Deferred revenue at June 30, 1996 totalled $125,000, compared to $90,000 at
December 31, 1995. The increase is primarily attributable to the timing of
rental payments made to the Partnership by Eastwind.
On May 10, 1996, the Partnership paid a distribution to the Unitholders for the
period from January 1, 1996 to March 31, 1996, in the amount of $1,107,293, or
approximately $.23 per Unit. At June 30, 1996, the Partnership had a
distribution payable to Unitholders of $1,264,838, or approximately $.26 per
Unit. This amount reflects the 1996 second quarter cash distribution, which
was funded from cash flow from operations. This distribution was subsequently
paid on August 7, 1996.
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 distribution will be reduced if TWA
terminates the leases for the Partnership's two 727-200 non-advanced aircraft
which it is currently leasing on a month-to-month basis.
Results of Operations
Substantially all of the Partnership's revenue for the six months ended June
30, 1996 was generated from the leasing of the Partnership's aircraft to
commercial air carriers under triple net operating leases.
For the three and six months ended June 30, 1996, the Partnership generated net
income of $235,220 and $324,885, respectively, compared to net income of
$299,989 and $91,559 for the corresponding periods in 1995. The decrease for
the three month period is primarily attributable to a $446,375 gain recognized
during the second quarter of 1995 as a result of the June 1995 sale of the
727-200 non-advanced aircraft formerly on-lease to TWA. No such gain was
recognized in the second quarter of 1996. Excluding the gain on sale of
aircraft, the Partnership recorded a loss from operations for the three months
ended June 30, 1995 totalling $146,386, compared to income from operations for
the three months ended June 30, 1996 totalling $235,220. The increase in net
income (excluding the aforementioned gain on the June 1995 sale of the 727-200
aircraft formerly on-lease to TWA) for both the three and six month periods is
primarily attributable to higher rental income and a decrease in depreciation
expense.
Rental income for the three and six months ended June 30, 1996 was $1,391,246
and $2,580,671, respectively, compared to $1,230,000 and $2,460,000 for the
corresponding periods in 1995. The increases for both periods are primarily due
to the execution of the leases with Eastwind in the third quarter of 1995 for
the Partnership's two 737-200 non-advanced aircraft. The increases in both
periods were partially offset by a reduction in the monthly lease rate paid by
Delta in accordance with the lease extension for the Partnership's 737-200
advanced aircraft executed in November 1995 and the expiration of the leases
with USAir in May 1995.
Other income totalled $42,676 for the three and six months ended June 30, 1996,
compared to $0 for the corresponding periods in 1995. The balance for the 1996
periods reflects a payment received by the Partnership as settlement of an
administrative claim by the Partnership against Pan American World Airways,
Inc. ("Pan Am") which was filed in Bankruptcy Court in 1992. The Partnership
was seeking to recover certain rent and maintenance costs associated with Pan
Am's failure to comply with the return provisions of its lease. The case was
settled during the second quarter of 1996.
Interest income for the three and six months ended June 30, 1996 totalled
$37,047 and $87,919, respectively, compared to $53,251 and $98,079 for the
corresponding periods in 1995. The decreases in both periods are primarily due
to decreases in the Partnership's invested cash balance during the 1996
periods.
Depreciation expense for the three and six months ended June 30, 1996 totalled
$1,048,743 and $2,012,061, respectively, compared to $1,262,494 and $2,568,613
for the corresponding periods in 1995. The decreases for both periods are
primarily attributable to the June 1995 sale of the 727-200 non-advanced
aircraft formerly on-lease to TWA and the two aircraft currently on-lease to
TWA being fully depreciated in April 1995.
Operating expenses for the three and six months ended June 30, 1996 totalled
$20,433 and $49,585, respectively, compared to $13,837 and $31,359 for the
corresponding periods in 1995. The increases for both periods are primarily
attributable to consulting costs which were incurred by the Partnership in
connection with the Q checks on the two aircraft leased to Eastwind.
Part II Other Information
Item 1 Legal Proceedings
The Partnership filed an administrative claim against Pan Am in
Bankruptcy Court as a result of Pan Am's return of the
Partnership's aircraft in November 1991. The aircraft was
subsequently sold in February 1992. The Partnership was seeking
to recover certain rent and maintenance costs associated with
Pan Am's failure to comply with the return provisions of its
lease. The case was settled in the second quarter of 1996. The
Partnership received $42,676 as settlement of this claim in
April 1996.
Items 2-5 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 June 30, 1996.
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.
General Partner
Date: August 13, 1996 BY: /s/ Moshe Braver
Name: Moshe Braver
Director and President
Date: August 13, 1996 BY: /s/ John Stanley
Name: John Stanley
Vice President and
Chief Financial Officer
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<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
<CASH> 2,213,269
<SECURITIES> 0
<RECEIVABLES> 217,958
<ALLOWANCES> 0
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<PP&E> 25,987,000
<DEPRECIATION> 11,414,013
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<OTHER-SE> 15,421,770
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<CGS> 0
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<INCOME-PRETAX> 324,885
<INCOME-TAX> 0
<INCOME-CONTINUING> 324,885
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