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, 1999
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or
Transition Report Pursuant to Section 13 or 15(d) of
- ---------- the Securities Exchange Act of 1934
For the Transition period from to
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Commission File Number: 0-16836
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JETSTREAM, L.P.
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Exact Name of Registrant as Specified in its Charter
Delaware 84-1053359
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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) 526-3183
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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
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2
JETSTREAM, L.P.
<TABLE>
<CAPTION>
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BALANCE SHEETS
At June 30, At December 31,
1999 1998
(unaudited) (audited)
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<S> <C> <C>
Assets
Aircraft, at cost $ 24,972,000 $ 25,987,000
Less accumulated depreciation (20,492,276) (19,901,456)
------------------------------
4,479,724 6,085,544
Cash and cash equivalents 3,532,787 1,853,981
Rent receivable, net of allowance for doubtful
accounts of $878,144 in 1999 and $533,453
in 1998 50,000 50,000
- -------------------------------------------------------------------------------
Total Assets $ 8,062,511 $ 7,989,525
===============================================================================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 964,143 $ 635,127
Distribution payable 2,832,787 748,094
Deferred revenue 90,000 90,000
Security deposit 50,000 50,000
------------------------------
Total Liabilities 3,936,930 1,523,221
------------------------------
Partners' Capital (Deficit):
General Partners (35,061) (912,047)
Limited Partners (4,895,005 units outstanding) 4,160,642 7,378,351
------------------------------
Total Partners' Capital 4,125,581 6,466,304
- -------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $ 8,062,511 $ 7,989,525
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
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STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
For the six months ended June 30, 1999
General Limited
Partners Partners Total
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<S> <C> <C> <C>
Balance at December 31, 1998 $(912,047) $ 7,378,351 $ 6,466,304
Net income 907,490 1,065,593 1,973,083
Distributions (30,504) (4,283,302) (4,313,806)
- -------------------------------------------------------------------------------
Balance at June 30, 1999 $ (35,061) $ 4,160,642 $ 4,125,581
===============================================================================
</TABLE>
See accompanying notes to the financial statements.
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3
JETSTREAM, L.P.
<TABLE>
<CAPTION>
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STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended June 30, Six months ended June 30,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Income
Rental $1,117,529 $1,317,281 $2,234,691 $2,631,615
Interest 46,161 27,414 70,799 52,760
Other -- -- -- 128
----------------------------------------------------
Total Income 1,163,690 1,344,695 2,305,490 2,684,503
- -----------------------------------------------------------------------------------------
Expenses
Depreciation 802,910 802,910 1,605,820 1,605,820
Management fees 79,524 107,017 168,380 218,193
General and administrative 67,458 52,485 149,181 94,848
Operating 229,552 -- 229,552 4,746
Bad debts 227,530 -- 344,691 --
----------------------------------------------------
Total Expenses 1,406,974 962,412 2,497,624 1,923,607
- -----------------------------------------------------------------------------------------
Income (loss) before gain on
sale of aircraft (243,284) 382,283 (192,134) 760,896
Gain on sale of aircraft 2,165,217 -- 2,165,217 --
----------------------------------------------------
Net Income $1,921,933 $ 382,283 $1,973,083 $ 760,896
=========================================================================================
Net Income Allocated:
To the General Partners $ 906,978 $ 3,823 $ 907,490 $ 7,609
To the Limited Partners 1,014,955 378,460 1,065,593 753,287
- -----------------------------------------------------------------------------------------
$1,921,933 $ 382,283 $1,973,083 $ 760,896
=========================================================================================
Per limited partnership unit
(4,895,005 outstanding) $ .21 $ .08 $ .22 $ .15
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</TABLE>
See accompanying notes to the financial statements.
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4
JETSTREAM, L.P.
<TABLE>
<CAPTION>
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STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended June 30,
1999 1998
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<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 1,973,083 $ 760,896
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of aircraft (2,165,217) --
Depreciation 1,605,820 1,605,820
Bad debts 344,691 --
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Rent receivable (344,691) (152,041)
Accounts payable and accrued expenses 250,142 43,284
--------------------------
Net cash provided by operating activities 1,663,828 2,257,959
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Cash Flows From Investing Activities
Net proceeds from sale of aircraft 2,244,091 --
Net cash provided by investing activities 2,244,091 --
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Cash Flows From Financing Activities
Cash distributions (2,229,113) (2,483,002)
--------------------------
Net cash used for financing activities (2,229,113) (2,483,002)
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Net increase (decrease) in cash and cash equivalents 1,678,806 (225,043)
Cash and cash equivalents, beginning of period 1,853,981 2,131,335
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Cash and cash equivalents, end of period $ 3,532,787 $ 1,906,292
===============================================================================
Supplemental Disclosure of Noncash Operating Activities
In connection with the sale of the aircraft, accrued resale fees in the amount
of $78,874 has reduced the gain on the sale of the aircraft.
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</TABLE>
See accompanying notes to the financial statements.
<PAGE>
5
JETSTREAM, L.P.
NOTES TO THE FINANCIAL STATEMENTS
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1998 audited financial statements within Form 10-K.
The unaudited financial statements include all normal and recurring adjustments
which are, in the opinion of management, necessary to present a fair statement
of financial position as of June 30, 1999 and the results of operations for the
three and six months ended June 30, 1999 and 1998 and cash flows for the six
months ended June 30, 1999 and 1998 and the statement of partners' capital
(deficit) for the six months ended June 30, 1999. Results of operations for the
period are not necessarily indicative of the results to be expected for the full
year.
The following significant event has occurred subsequent to fiscal year 1998,
which requires disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
The General Partners are developing a plan to sell the Partnership's remaining
aircraft and subsequently terminate the Partnership (the "Liquidation Plan").
Such Liquidation Plan will require the approval of more than 50% of the
unitholders entitled to vote. It is anticipated that a consent solicitation
statement requesting such approval will be forwarded to investors during the
third or fourth quarter of this year.
On April 2, 1999, the Partnership sold one of its B-727-200 non-advanced
aircraft, which was scheduled to be leased to Sun Pacific International, Inc.,
to an unaffiliated entity, Sport Hawk Chicago, Inc. (the "Buyer"), for a net
selling price of approximately $2,244,091. The selling price was determined by
arm's length negotiations between the Partnership and the Buyer. As a result of
the sale, the General Partners intend to distribute the net proceeds therefrom
during the third quarter of 1999.
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6
JETSTREAM, L.P.
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
The General Partners are developing a plan to sell the Partnership's remaining
aircraft and subsequently terminate the Partnership (the "Liquidation Plan").
Such Liquidation Plan will require the approval of more than 50% of the
unitholders entitled to vote. It is anticipated that a consent solicitation
statement requesting such approval will be forwarded to investors during the
third or fourth quarter of this year.
As of June 30, 1999, four of the Partnership's five aircraft were on-lease. Two
aircraft were on-lease to Eastwind Airlines ("Eastwind"), one aircraft was
on-lease to Delta Air Lines, Inc. ("Delta") and one aircraft was on-lease to
Continental Airlines ("Continental"). During 1998, two aircraft were leased to
Trans World Airlines Inc. ("TWA") on a month-to-month basis until the third
quarter. The General Partners negotiated new lease agreements for these two
aircraft with Sun Pacific International, Inc. ("Sun Pacific"). However, as
discussed below, one of the aircraft was subsequently sold to an unaffiliated
entity and Sun Pacific ceased commercial operations in mid-April 1999.
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 is required to pay the Partnership a monthly lease rate of
$35,000 per aircraft. In addition, the airline is required to pay the
Partnership an airframe maintenance charge based on usage. Eastwind is
delinquent on rental payments and maintenance reserves totaling $878,144 and has
contacted the General Partners to renegotiate the terms of its lease. At June
30, 1999, the Partnership had provided an allowance of $878,144 against this
receivable. For the six months ended June 30, 1999, the Partnership recognized
rental income and maintenance reserves of $674,691, and collected $330,000 of
such income. The General Partners will pursue all remedies available to the
Partnership with respect to the collection of these receivables.
The lease with Delta for the Partnership's 737-200 advanced aircraft was
scheduled to expire in September 1999. In accordance with the terms of the lease
agreement, Delta pays the Partnership a monthly lease rate of $80,000 through
September 1999. During the second quarter of 1999, Delta extended its lease for
two years through September 2001. This lease extension requires Delta to pay the
Partnership a monthly lease rate of $65,000 and to hushkit the plane.
Continental makes monthly lease payments to the Partnership of $180,000. The
lease with Continental was originally scheduled to expire in March 1998.
Continental extended its lease through March 1999 and in October 1998 it
exercised its second option to renew this lease through March 2000, with the
remaining terms of the lease unchanged.
The Partnership's two remaining 727-200 non-advanced aircraft were leased on a
month-to-month basis by TWA at a monthly lease rate of $32,500. TWA terminated
its leases on these aircraft and returned one plane in July 1998 and another in
September 1998. In accordance with the lease agreement, TWA was to have
performed certain required maintenance prior to returning the aircraft. In lieu
of having TWA perform this maintenance, the Partnership agreed to receive
payments of $360,656 and $360,792 for each respective aircraft from TWA, plus a
commitment from TWA for up to an additional $200,000 per aircraft, if supported
by legitimate maintenance costs.
In September 1998, the Partnership entered into two lease agreements with Sun
Pacific for the two 727-200 non-advanced aircraft which were previously leased
to TWA. One of these aircraft was sold to an unaffiliated entity, Sport Hawk
Chicago, Inc. The Partnership agreed to assign the above described maintenance
payments of $360,656 and $360,792 received from TWA in order for Sun Pacific to
perform the maintenance on the aircraft. At June 30, 1999, the maintenance on
the aircraft had not been completed and the funds set aside to perform the
maintenance have been exhausted. Furthermore, the Partnership has not received
rental payments from Sun Pacific pursuant to the terms of the leases. The
remaining plane requires C-checks and corrosion repair, for which $200,000 has
been reserved at June 30, 1999.
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7
JETSTREAM, L.P.
On April 2, 1999, the Partnership sold one of its B-727-200 non-advanced
aircraft, which was scheduled to be leased to Sun Pacific, to an unaffiliated
entity, Sport Hawk Chicago, Inc. (the "Buyer"), for a selling price of
approximately $2,629,000 and the lease with Sun Pacific was terminated. The
selling price was determined by arm's length negotiations between the
Partnership and the Buyer. As a result of the sale, the General Partners intend
to distribute the net proceeds therefrom during the third quarter of 1999.
On April 16, 1999, Sun Pacific ceased commercial operations, and once the
required maintenance of the remaining aircraft is complete, the General Partners
will attempt to lease the aircraft to another carrier.
At June 30, 1999, the Partnership had unrestricted cash and cash equivalents of
$3,532,787, compared to $1,853,981 at December 31, 1998. The increase is
primarily attributable to the net proceeds of $2,244,091 received on the sale of
the aircraft.
At June 30, 1999 and December 31, 1998, the Partnership had a rent receivable
balance net of allowance for doubtful accounts totaling $50,000. The balance
represents amounts owed by Eastwind in excess of the $878,144 allowance
established by the Partnership, as discussed above.
Accounts payable and accrued expenses totaled $964,143 at June 30, 1999 as
compared to $635,127 at December 31, 1998. The increase is primarily
attributable to the maintenance costs on the aircraft leased to Sun Pacific,
resale fees accrued relating to the sale of the aircraft, and to deferred
management fees.
On May 24, 1999 the Partnership paid a distribution to Unitholders of
$1,481,019, or approximately $.30 per Unit. At June 30, 1999, the Partnership
had a distribution payable to Unitholders of $2,832,787 or approximately $.58
per unit, which will be paid in August 1999. Of this amount, $.12 per unit
represents a distribution of cash flow from operations and $.46 per unit
represents a distribution of net sale proceeds. Future cash distributions will
be determined on a quarterly basis after an evaluation of the Partnership's
current and expected financial position.
Results of Operations
- ---------------------
Substantially all of the Partnership's revenue for the six months ended June 30,
1999 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 consisted of interest income.
For the three and six months ended June 30, 1999, the Partnership generated net
income of $1,921,933 and $1,973,083, compared to net income of $382,283 and
$760,896 for the corresponding periods in 1998. The increase is primarily
attributable to the gain of $2,165,217 recognized as a result of the sale of one
727-200 aircraft.
Rental income for the three and six months ended June 30, 1999 was $1,117,529
and $2,234,691, compared to $1,317,281 and $2,631,615 for the corresponding
periods in 1998. The decrease in rental income was primarily due to TWA
returning two of the aircraft in 1998.
Interest income for the three and six months ended June 30, 1999 was $46,161 and
$70,799, compared to $27,414 and $52,760, respectively, for the corresponding
periods in 1998. The increase is primarily attributable to an increase in the
Partnership's average cash balances during the 1999 period resulting from the
proceeds from the sale.
General and administrative expenses totaled $67,458 and $149,181 for the three
and six months ended June 30, 1999, compared to $52,485 and $94,848 for the
corresponding periods in 1998. The increase is primarily due to an increase in
Partnership administrative servicing costs and legal costs.
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JETSTREAM, L.P.
Operating expenses for the six months ended June 30, 1999 totaled $229,552,
compared to $4,746 for the corresponding periods in 1998. The increase is due to
C-checks and corrosion repair on the aircraft leased to Sun Pacific.
Bad debt expense for the three and six months ended June 30, 1999 totaled
$227,530 and $344,691, which amount represents the increase in the allowance for
delinquent rental payments and maintenance reserves under Eastwind's lease.
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 April 16, the Partnership filed a Form 8-K reporting that on
April 2, 1999 the Partnership executed a sale of one of its
B-727-200 non-advanced aircraft.
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9
JETSTREAM, L.P.
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 16, 1999 BY: /s/Michael T. Marron
-----------------------------------------------
Name: Michael T. Marron
Title: Director, President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Jun-30-1999
<CASH> 3,532,787
<SECURITIES> 000
<RECEIVABLES> 50,000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 3,582,787
<PP&E> 24,972,000
<DEPRECIATION> 20,492,276
<TOTAL-ASSETS> 8,062,511
<CURRENT-LIABILITIES> 3,936,930
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 4,125,581
<TOTAL-LIABILITY-AND-EQUITY> 8,062,511
<SALES> 000
<TOTAL-REVENUES> 2,305,490
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 2,152,933
<LOSS-PROVISION> 344,691
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> (192,134)
<INCOME-TAX> 000
<INCOME-CONTINUING> (192,134)
<DISCONTINUED> 000
<EXTRAORDINARY> 2,165,217
<CHANGES> 000
<NET-INCOME> 1,973,083
<EPS-BASIC> .22
<EPS-DILUTED> .22
</TABLE>
