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, 1999
--------------
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) 526-3183
--------------
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
--- ---
<PAGE>
2
JETSTREAM, L.P.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
BALANCE SHEETS
At March 31, At December 31,
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Assets
Aircraft, at cost $ 25,987,000 $ 25,987,000
Less accumulated depreciation (20,704,366) (19,901,456)
------------------------------
5,282,634 6,085,544
Cash and cash equivalents 1,981,019 1,853,981
Rent receivable, net of allowance for
doubtful accounts of $650,614 in 1999
and $533,453 in 1998 50,000 50,000
Prepaid expenses 300,000 --
- -------------------------------------------------------------------------------
Total Assets $ 7,613,653 $ 7,989,525
===============================================================================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 956,199 $ 635,127
Distribution payable 1,481,019 748,094
Deferred revenue 90,000 90,000
Security deposit 50,000 50,000
------------------------------
Total Liabilities 2,577,218 1,523,221
------------------------------
Partners' Capital (Deficit):
General Partners (926,345) (912,047)
Limited Partners (4,895,005 units outstanding) 5,962,780 7,378,351
------------------------------
Total Partners' Capital 5,036,435 6,466,304
- -------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $ 7,613,653 $ 7,989,525
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
For the three months ended March 31, 1999
General Limited
Partners Partners Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1998 $(912,047) $ 7,378,351 $ 6,466,304
Net income 512 50,638 51,150
Distributions (14,810) (1,466,209) (1,481,019)
- -------------------------------------------------------------------------------
Balance at March 31, 1999 $(926,345) $ 5,962,780 $ 5,036,435
===============================================================================
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
3
JETSTREAM, L.P.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the three months ended March 31,
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Income
Rental $1,117,162 $1,314,334
Other -- 128
Interest 24,638 25,346
--------------------------
Total Income 1,141,800 1,339,808
- -------------------------------------------------------------------------------
Expenses
Depreciation 802,910 802,910
Management fees 88,856 111,176
General and administrative 81,723 42,363
Operating -- 4,746
Bad debts 117,161 --
--------------------------
Total Expenses 1,090,650 961,195
- -------------------------------------------------------------------------------
Net Income $ 51,150 $ 378,613
===============================================================================
Net Income Allocated:
To the General Partners $ 512 $ 3,786
To the Limited Partners 50,638 374,827
- -------------------------------------------------------------------------------
$ 51,150 $ 378,613
===============================================================================
Per limited partnership unit
(4,895,005 outstanding) $ .01 $ .08
- -------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
4
JETSTREAM, L.P.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
For the three months ended March 31,
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 51,150 $ 378,613
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 802,910 802,910
Bad debts 117,161 --
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Rent receivable (117,161) (42,756)
Prepaid expenses (300,000) --
Accounts payable and accrued expenses 321,072 28,974
--------------------------
Net cash provided by operating activities 875,132 1,167,741
- -------------------------------------------------------------------------------
Cash Flows From Financing Activities
Cash distributions (748,094) (1,433,890)
--------------------------
Net cash used for financing activities (748,094) (1,433,890)
- -------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 127,038 (266,149)
Cash and cash equivalents, beginning of period 1,853,981 2,131,335
- -------------------------------------------------------------------------------
Cash and cash equivalents, end of period $1,981,019 $ 1,865,186
===============================================================================
</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 reoccurring
adjustments which are, in the opinion of management, necessary to present a fair
statement of financial position as of March 31, 1999 and the results of
operations for the three months ended March 31, 1999 and 1998 and cash flows for
the three months ended March 31, 1999 and 1998 and the statement of partners'
capital (deficit) for the three months ended March 31, 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).
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 selling
price of approximately $2,660,000. The selling price was determined by arm's
length negotiations between the Partnership and the Buyer.
<PAGE>
6
JETSTREAM, L.P.
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
As of March 31, 1999, four of the Partnership's six 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"). The remaining two aircraft were leased to
Trans World Airlines Inc. ("TWA") on a month-to-month basis until the third
quarter of 1998. The General Partners have 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 $700,614 and has
contacted the General Partners to renegotiate the terms of its lease. At March
31, 1999, the Partnership had provided an allowance of $650,614 against this
receivable. For the three months ended March 31, 1999, the Partnership
recognized rental income and maintenance reserves of $337,161, and collected
$220,000 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 expires in
September 1999. In accordance with the terms of the lease agreement, Delta pays
the Partnership a monthly lease rate of $80,000.
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. Upon completion of certain maintenance, Sun Pacific is required to pay
the Partnership a monthly lease rate of $64,042 per aircraft. 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 March 31, 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.
<PAGE>
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 $2,660,000 and the lease with Sun Pacific was terminated. The
selling price was determined by arm's length negotiations between the
Partnership and the Buyer. Prepaid expenses at March 31, 1999 included $300,000
of maintenance costs on the aircraft sold, which will offset the gain on sale in
the 1999 second quarter statement of operations. As a result of the sale, the
General Partners intend to distribute the net proceeds therefrom (after payment
of or provision for the Partnership's liabilities and expenses, and
establishment of a reserve for contingencies, if any) during the second quarter
of 1999.
On April 16, 1999, Sun Pacific ceased commercial operations, and the General
Partners are currently attempting to lease the remaining aircraft to another
carrier.
At March 31, 1999, the Partnership had unrestricted cash and cash equivalents of
$1,981,019, compared to $1,853,981 at December 31, 1998.
At March 31, 1999 and December 31, 1999, 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 $650,614 allowance
established by the Partnership, as discussed above.
Accounts payable and accrued expenses totaled $956,199 at March 31, 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, and
to deferred management fees.
On March 4, 1999, the Partnership paid a distribution to the Unitholders for the
period from October 1, 1998 to December 31, 1998, in the amount of $748,094, or
approximately $.15 per Unit. At March 31, 1999 the Partnership had a
distribution payable to Unitholders of $1,481,019, or approximately $.30 per
Unit, which will be paid on or about May 24, 1999. 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 three months ended March
31, 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 months ended March 31, 1999, the Partnership generated net income
of $51,150, compared to net income of $378,613 for the corresponding period in
1998. The decrease is primarily attributable to the establishment of an
allowance for doubtful accounts on Eastwind's receivable balance and a decrease
in rental revenue as a result of the Partnership's two 727-200 aircraft being
off lease during 1999.
Rental income for the three months ended March 31, 1999 was $1,117,162, compared
to $1,314,334 for the corresponding period in 1998. The decrease in rental
income was primarily due to TWA returning two of the aircraft in 1998.
Interest income for the three months ended March 31, 1999 was $24,638, compared
to $25,346 for the corresponding period in 1998. The decrease is primarily
attributable to a decrease in the Partnership's average cash balances during the
1999 period.
General and administrative expenses totaled $81,723 for the three months ended
March 31, 1999, compared to $42,363 for the corresponding period in 1998. The
increase is primarily due to an increase in Partnership administrative servicing
costs and legal costs.
<PAGE>
8
JETSTREAM, L.P.
Operating expenses for the three months ended March 31, 1999 totaled $-0-,
compared to $4,746 for the corresponding periods in 1998. The 1998 balance is
primarily attributable to non-recurring operating expenses associated with
repair and maintenance work completed on the two aircraft on-lease to Eastwind.
Bad debt expense for the three months ended March 31, 1999 totaled $117,161,
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.
<PAGE>
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: May 17, 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> 3-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Mar-31-1999
<CASH> 1,981,019
<SECURITIES> 000
<RECEIVABLES> 50,000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 2,331,019
<PP&E> 25,987,000
<DEPRECIATION> 20,704,366
<TOTAL-ASSETS> 7,613,653
<CURRENT-LIABILITIES> 2,577,218
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 5,036,435
<TOTAL-LIABILITY-AND-EQUITY> 7,613,653
<SALES> 000
<TOTAL-REVENUES> 1,141,800
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 973,489
<LOSS-PROVISION> 117,161
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 51,150
<INCOME-TAX> 000
<INCOME-CONTINUING> 51,150
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 51,150
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
