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, 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 I.R.S. Employer
of 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 March 31, At December 31,
1996 1995
Assets
Aircraft, at cost $ 25,537,000 $ 24,287,000
Less accumulated depreciation (10,365,270) (9,401,952)
15,171,730 14,885,048
Cash and cash equivalents 2,654,133 3,494,433
Restricted cash 321,797 321,797
Rent receivable (net of allowance
for doubtful accounts of $70,000
in 1996 and 1995) 33,008 58,758
Loan receivable 154,900 172,636
Interest receivable 544 605
Prepaid expenses --- 3,125
Total Assets $ 18,336,112 $ 18,936,402
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 595,970 $ 244,647
Distribution payable 1,118,478 1,058,778
Deferred revenue 107,500 90,000
Security deposit 50,000 50,000
Total liabilities 1,871,948 1,443,425
Partners' Capital (Deficit):
General Partners (813,370) (803,082)
Limited Partners
(4,895,005 units outstanding) 17,277,534 18,296,059
Total Partners' Capital 16,464,164 17,492,977
Total Liabilities and Partners' Capital $ 18,336,112 $ 18,936,402
Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1996
General Limited
Partners Partners Total
Balance at December 31, 1995 $ (803,082) $18,296,059 $17,492,977
Net income 897 88,768 89,665
Cash distributions (11,185) (1,107,293) (1,118,478)
Balance at March 31, 1996 $ (813,370) $17,277,534 $16,464,164
Statements of Operations
For the three months ended March 31, 1996 1995
Income
Rental $ 1,189,425 $ 1,230,000
Interest 50,872 44,828
Total income 1,240,297 1,274,828
Expenses
Depreciation 963,318 1,306,119
Management fees 110,685 112,224
General and administrative 47,477 47,393
Operating 29,152 17,522
Total expenses 1,150,632 1,483,258
Net Income (Loss) $ 89,665 $ (208,430)
Net Income (Loss) Allocated:
To the General Partners $ 897 $ (2,084)
To the Limited Partners 88,768 (206,346)
$ 89,665 $ (208,430)
Per limited partnership unit
(4,895,005 outstanding) $.02 $(.04)
Statements of Cash Flows
For the three months ended March 31,
1996 1995
Cash Flows From Operating Activities
Net income (loss) $ 89,665 $(208,430)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation 963,318 1,306,119
Increase (decrease) in cash arising
from changes in operating assets and liabilities:
Rent receivable 25,750 ---
Interest receivable 61 114
Prepaid expenses 3,125 ---
Accounts payable and accrued expenses 351,323 (28,093)
Deferred revenue 17,500 ---
Net cash provided by operating activities 1,450,742 1,069,710
Cash Flows From Investing Activities
Additions to aircraft (1,250,000) ---
Loan receivable 17,736 16,399
Net cash provided by
(used for) investing activities (1,232,264) 16,399
Cash Flows From Financing Activities
Cash distributions (1,058,778) (1,174,627)
Net cash used for financing activities (1,058,778) (1,174,627)
Net decrease in cash and cash equivalents (840,300) (88,518)
Cash and cash equivalents, beginning of period 3,494,433 2,785,283
Cash and cash equivalents, end of period $ 2,654,133 $ 2,696,765
Notes to the Financial Statements
The unaudited interim 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 March 31, 1996 and the results of operations and cash flows for
the three months ended March 31, 1996 and 1995 and the statement of changes in
partners' capital (deficit) for the three months ended March 31, 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 March 31, 1996, the Partnership had all six of its aircraft on-lease. One
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 March 31, 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, 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 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 Stage 2 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 is also required to pay
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 recently
completed 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. Costs
associated with the Q checks in excess of $850,000 will be paid by Eastwind.
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.
An agreement was reached with Delta in November 1995 to amend and extend the
current lease for the Partnership's 737-200 advanced aircraft 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 was representative of
prevailing market rates at the time. Under the terms of the amended lease,
Delta does not have the option of returning the aircraft prior to the
expiration date as it did under the previous lease agreement.
At March 31, 1996, the Partnership had unrestricted cash and cash equivalents
of $2,654,133, compared to $3,494,433 at December 31, 1995. The $840,300
decrease is primarily due to payments made by the Partnership during the first
quarter of 1996 in connection with the Q checks on the two 737-200 non-advanced
aircraft on- lease to Eastwind as discussed above. 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
March 31, 1996, Continental had made principal payments on the loan totalling
$123,303. Payments made on this loan are the reason for the decrease in the
Partnership's loan receivable balance, which totalled $154,900 at March 31,
1996 as compared to $172,636 at December 31, 1995. Continental makes monthly
lease payments to the Partnership of $180,000.
At March 31, 1996, the Partnership had a rent receivable balance totalling
$33,008, compared to $58,758 at December 31, 1995. The balances for both
periods represent unpaid engine charges and airframe maintenance charges owed
to the Partnership by Eastwind Airlines in accordance with the lease
agreements. The decrease in the rent receivable balance at March 31, 1996 is
primarily attributable to a decrease in such charges as a result of both of the
aircraft on-lease to Eastwind being taken out of operation for a portion of the
first quarter of 1996 to undergo a Q check.
Accounts payable and accrued expenses totalled $595,970 at March 31, 1996,
compared to $244,647 at December 31, 1995. The increase is primarily
attributable to the accrual of approximately $350,000 in 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 March 31, 1996 totalled $107,500, 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 February 2, 1996, the Partnership paid a distribution to the Unitholders for
the period from October 1, 1995 to December 31, 1995, in the amount of
$1,048,190, or approximately $.21 per Unit. At March 31, 1996, the Partnership
had a distribution payable to Unitholders of $1,107,293, or approximately $.23
per Unit. This amount reflects the 1996 first quarter cash distribution, which
was funded from cash flow from operations. This distribution was subsequently
paid on May 10, 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 three months ended March
31, 1996 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 1996 consisted of interest
income.
For the three months ended March 31, 1996, the Partnership generated net income
of $89,665, compared to a net loss of $208,430 for the corresponding period in
1995. The change from net loss to net income is primarily attributable to a
decrease in depreciation expense recorded by the Partnership as a result of the
sale of the 727-200 non-advanced aircraft in June 1995 that had previously been
on-lease to TWA.
Rental income for the three months ended March 31, 1996 was $1,189,425,
compared to $1,230,000 for the corresponding period in 1995. The slight
decrease is primarily due to the 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.
Interest income for the three months ended March 31, 1996 was $50,872, compared
to $44,828 for the corresponding period in 1995. The increase is primarily
attributable to an increase in the Partnership's invested cash balance.
Depreciation expense for the three months ended March 31, 1996 totalled
$963,318, compared to $1,306,119 for the corresponding period in 1995. The
decrease is primarily attributable to the sale of the 727-200 non-advanced
aircraft in June 1995 as discussed above and two of the Partnership's aircraft
being fully depreciated in 1995.
Operating expenses for the three months ended March 31, 1996 totalled $29,152,
compared to $17,522 for the corresponding period in 1995. The increase is
primarily attributable to consulting costs which were incurred by the
Partnership in connection with the Q check on the two aircraft leased to
Eastwind.
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-
On March 18, 1996, based upon, among other things, the advice of
Partnership counsel, Skadden, Arps, Slate, Meagher & Flom, the
General Partners adopted a resolution that states, among other
things, if a Change of Control (as defined below) occurs, the
General Partners may distribute the Partnership's cash balances
not required for its ordinary course day-to-day operations.
"Change of Control" means any purchase or offer to purchase more
than 10% of the Units that is not approved in advance by the
General Partners. In determining the amount of the
distribution, the General Partners may take into account all
material factors. In addition, the Partnership will not be
obligated to make any distribution to any partner, and no
partner will be entitled to receive any distribution, until the
General Partners have declared the distribution and established
a record date and distribution date for the distribution. The
Partnership filed a Form 8-K disclosing this resolution on March
21, 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: May 13, 1996 BY: /s/ Moshe Braver
Name: Moshe Braver
Title: Director and President
Date: May 13, 1996 BY: /s/ John Stanley
Name: John Stanley
Title: Vice President and
Chief Financial Officer
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<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1996
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<RECEIVABLES> 258,452
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