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, 2000
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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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JETSTREAM, L.P.
<TABLE>
<CAPTION>
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BALANCE SHEETS
At March 31, At December 31,
2000 1999
(unaudited)
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<S> <C> <C>
Assets
Aircraft held for sale $ 3,272,489 $ 3,272,489
Cash and cash equivalents 1,363,062 1,405,675
Miscellaneous receivable 10,500 --
Rent receivable (net of allowance for doubtful
accounts of $1,150,284) 50,000 50,000
- -------------------------------------------------------------------------------
Total Assets $ 4,696,051 $ 4,728,164
===============================================================================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 1,228,153 $ 1,145,297
Distribution payable 603,312 645,925
Deferred revenue 90,000 90,000
Security deposit 50,000 50,000
-----------------------------
Total Liabilities 1,971,465 1,931,222
-----------------------------
Partners' Capital (Deficit):
General Partners (57,080) (56,357)
Limited Partners (4,895,005 units outstanding) 2,781,666 2,853,299
-----------------------------
Total Partners' Capital 2,724,586 2,796,942
- -------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $ 4,696,051 $ 4,728,164
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
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STATEMENT OF PARTNERS' CAPITAL (DEFICIT) (UNAUDITED)
For the three months ended March 31, 2000
General Limited
Partners Partners Total
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<S> <C> <C> <C>
Balance at December 31, 1999 $ (56,357) $ 2,853,299 $ 2,796,942
Net income 5,310 525,646 530,956
Distributions (6,033) (597,279) (603,312)
- -------------------------------------------------------------------------------
Balance at March 31, 2000 $ (57,080) $ 2,781,666 $ 2,724,586
===============================================================================
</TABLE>
See accompanying notes to the financial statements. 2
<PAGE>
JETSTREAM, L.P.
<TABLE>
<CAPTION>
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STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months ended March 31,
2000 1999
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<S> <C> <C>
Income
Rental $ 735,000 $ 1,117,162
Other 10,500 --
Interest 23,600 24,638
--------------------------
Total Income 769,100 1,141,800
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Expenses
Depreciation -- 802,910
Management fees 63,513 88,856
General and administrative 174,631 81,723
Bad debts -- 117,161
--------------------------
Total Expenses 238,144 1,090,650
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Net Income $ 530,956 $ 51,150
===============================================================================
Net Income Allocated:
To the General Partners $ 5,310 $ 512
To the Limited Partners 525,646 50,638
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$ 530,956 $ 51,150
===============================================================================
Per limited partnership unit
(4,895,005 outstanding) $ .11 $ .01
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</TABLE>
See accompanying notes to the financial statements. 3
<PAGE>
JETSTREAM, L.P.
<TABLE>
<CAPTION>
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STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months ended March 31,
2000 1999
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<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 530,956 $ 51,150
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation -- 802,910
Bad debts -- 117,161
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Rent receivable -- (117,161)
Miscellaneous receivable and prepaid expenses (10,500) (300,000)
Accounts payable and accrued expenses 82,856 321,072
--------------------------
Net cash provided by operating activities 603,312 875,132
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Cash Flows From Financing Activities
Cash distributions (645,925) (748,094)
--------------------------
Net cash used for financing activities (645,925) (748,094)
- -------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (42,613) 127,038
Cash and cash equivalents, beginning of period 1,405,675 1,853,981
--------------------------
Cash and cash equivalents, end of period $ 1,363,062 $ 1,981,019
===============================================================================
</TABLE>
See accompanying notes to the financial statements. 4
<PAGE>
JETSTREAM, L.P.
NOTES TO THE FINANCIAL STATEMENTS
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1999 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, 2000 and the results of
operations for the three months ended March 31, 2000 and 1999 and cash flows for
the three months ended March 31, 2000 and 1999 and the statement of partners'
capital (deficit) for the three months ended March 31, 2000. Results of
operations for the period are not necessarily indicative of the results to be
expected for the full year.
The following significant events occurred subsequent to fiscal year 1999, which
require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
On April 17, 2000, the Partnership sold its 737-200 aircraft, previously on
lease to Delta, to an unaffiliated entity for a gross selling price of
$4,350,000. In addition, on May 9, 2000, the Partnership sold its two B-737-200
aircraft, previously on lease to Eastwind, to an unaffiliated entity for a gross
selling price of $200,000 per aircraft. The engines for these two aircraft were
sold separately in October 1999 for $175,000 to an unaffiliated buyer. The
selling prices were determined by arm's length negotiations between the
Partnership and the buyers.
The General Partners also signed a letter of intent for the MD-80 Series
aircraft. A contract is currently being negotiated with the prospective
purchaser and it is anticipated that the remaining aircraft will be sold during
the second quarter of 2000. However, there can be no assurance that the sale
will close within this timeframe, or that the Partnership will receive the
estimated market value for the aircraft. Once the aircraft are sold and the
Partnership's liabilities are paid, the sales proceeds will be distributed to
the Limited Partners and the Partnership will cease to exist. Winding up the
Partnership can be a complex process which may depend on a number of factors,
and some of these factors may be beyond the General Partners' control.
5
<PAGE>
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, 2000, two of the Partnership's remaining five aircraft were
on-lease. One aircraft was on-lease to Delta Air Lines, Inc. ("Delta") and one
aircraft was on-lease to Continental Airlines ("Continental"). The two aircraft
that were on-lease to Eastwind Airlines ("Eastwind") were returned to the
Partnership in October 1999 (see below). The other aircraft was previously
leased to Sun Pacific International, Inc. ("Sun Pacific"), which ceased
commercial operations in mid-April 1999 (see below).
The General Partners have implemented a plan, by actively marketing the
aircraft, to sell the Partnership's remaining aircraft and subsequently
terminate the Partnership pursuant to a Plan of Liquidation and Dissolution
dated November 20, 1999 (the "Liquidation Plan").
As a result of the approval of the Liquidation Plan, the Partnership has
designated its aircraft as assets held for sale and has ceased to record
depreciation expense related to those assets as of November 19, 1999, the date
of approval. In accordance with FASB Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and Assets to be Disposed Of, all of the
Partnership's aircraft are reported at the lower of carrying amount or fair
value less costs to sell.
On April 17, 2000, the Partnership sold its 737-200 aircraft, previously on
lease to Delta, to an unaffiliated entity for a gross selling price of
$4,350,000. In addition, on May 9, 2000, the Partnership sold its two B-737-200
aircraft, previously on lease to Eastwind, to an unaffiliated entity for a gross
selling price of $200,000 per aircraft. The engines for these two aircraft were
sold separately in October 1999 for $175,000 to an unaffiliated buyer. The
selling prices were determined by arm's length negotiations between the
Partnership and the buyers.
The General Partners signed a letter of intent for the MD-80 Series aircraft. A
contract is currently being negotiated with the prospective purchaser and it is
anticipated that the remaining aircraft will be sold during the second quarter
of 2000. However, there can be no assurance that the sale will close within this
timeframe, or that the Partnership will receive the estimated market value for
the aircraft. Once the aircraft are sold and the Partnership's liabilities are
paid, the sales proceeds will be distributed to the Limited Partners and the
Partnership will cease to exist. Winding up the Partnership can be a complex
process which may depend on a number of factors, and some of these factors may
be beyond the General Partners' control.
Continental makes monthly lease payments of $180,000 for the Partnership's MD-80
Series aircraft. The lease with Continental is currently scheduled to expire in
September 2000.
The lease with Eastwind Airlines ("Eastwind") for the Partnership's two 737-200
non-advanced aircraft expired on November 30, 1999. In late August 1999, the
Partnership was notified that Eastwind had voluntarily ceased commercial
operations. The Partnership took possession of the aircraft and in October 1999
sold the aircrafts' engines to an unaffiliated entity for $175,000. The
Partnership recognized a loss of $25,000 on this sale in 1999. After several
months of partial payments, Eastwind made its last payment to the Partnership in
June 1999, and is delinquent on rental payments and maintenance reserves
totaling $1,200,284 as of March 31, 2000.
On September 29, 1999, an affiliate of the Managing General Partner, along with
two other creditors, filed an involuntary petition for bankruptcy relief against
Eastwind in the United States Bankruptcy Court for the District of Delaware. As
of the date of this document, the Bankruptcy Court had not yet issued an order
for relief adjudicating Eastwind as a debtor under Title 11 of the United States
Code. The General Partners intend to pursue all viable remedies available to the
Partnership with respect to the collection of these delinquent payments subject
to the decisions of the Bankruptcy Court and the applicable provisions of the
U.S. Bankruptcy Code.
6
<PAGE>
JETSTREAM, L.P.
In September 1998, the Partnership entered into two lease agreements with Sun
Pacific for the two 727-200 non-advanced aircraft. The Partnership sold one of
the aircraft to an unaffiliated entity in April 1999, for approximately
$2,629,000 and the lease with Sun Pacific for this plane was terminated. On
April 16, 1999, Sun Pacific ceased commercial operations. The Partnership has
notified Sun Pacific that they are in default of their lease agreement with
respect to the second plane due to their failure to make the required rental
payments to the Partnership. In addition, the remaining plane requires C-checks
and corrosion repair, for which $201,979 has been reserved at March 31, 2000.
The Partnership is currently attempting to gain possession of the aircraft and
all necessary paperwork. Once the plane and the necessary paperwork are
obtained, the Partnership will be in a position to have the required maintenance
completed. Once the aircraft is returned and the required maintenance is
complete, the General Partners will attempt to sell the aircraft to another
purchaser pursuant to the Liquidation Plan.
At March 31, 2000, the Partnership had unrestricted cash and cash equivalents of
$1,363,062, compared to $1,405,675 at December 31, 1999. The decrease is
primarily attributable to a decrease in operating income.
At March 31, 2000, 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 $1,150,284 allowance established by the
Partnership, as discussed above.
Accounts payable and accrued expenses totaled $1,228,153 at March 31, 2000 as
compared to $1,145,297 at December 31, 1999. The increase is primarily
attributable to unpaid management fees for 1999 and 2000.
As of March 31, 2000, the Partnership had a distribution payable to Unitholders
of $603,312 or $.12 per Unit which was paid on May 10, 2000. As of December 31,
1999, the Partnership had a distribution payable to Unitholders of $645,925 or
approximately $.13 per Unit which was paid on March 6, 2000. In light of the
Partnership's Liquidation Plan, quarterly cash distributions will be suspended
beginning with the second quarter distribution scheduled to be paid in August
2000.
Results of Operations
- ---------------------
Substantially all of the Partnership's revenue for the three months ended March
31, 2000 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, 2000, the Partnership generated net income
of $530,956, compared to net income of $51,150 for the corresponding period in
1999. The increase is primarily attributable to a decrease in depreciation
expense partially offset by a decrease in rental income.
Rental income for the three months ended March 31, 2000 was $735,000, compared
to $1,117,162 for the corresponding period in 1999. The decrease in rental
income was primarily due to a decrease in the number of aircraft on lease.
Interest income for the three months ended March 31, 2000 was $23,600, compared
to $24,638 for the corresponding period in 1999. The decrease is primarily
attributable to a decrease in the average cash balance.
During 1999, the aircraft were depreciated to their salvage value, consequently
there was no depreciation expense for the three months ended March 31, 2000
compared to depreciation expense of $802,910 in 1999.
General and administrative expenses totaled $174,631 for the three months ended
March 31, 2000, compared to $81,723 for the corresponding period in 1999. The
increase is primarily due to consulting services and other expenses incurred in
relation to the Liquidation Plan.
Bad debt expense for the three months ended March 31, 2000 totaled $-0-,
compared to $117,161 for the corresponding period in 1999.
7
<PAGE>
JETSTREAM, L.P.
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 -
-------------------
There were no reports on Form 8-K for the quarter ended March 31,
2000.
8
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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 15, 2000 BY: /s/Michael T. Marron
-----------------------------------------------
Name: Michael T. Marron
Title: Director, President and Chief Financial Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-END> Mar-31-2000
<CASH> 1,363,062
<SECURITIES> 000
<RECEIVABLES> 50,000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 1,413,062
<PP&E> 3,272,489
<DEPRECIATION> 000
<TOTAL-ASSETS> 4,696,051
<CURRENT-LIABILITIES> 1,971,465
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 2,724,586
<TOTAL-LIABILITY-AND-EQUITY> 4,696,051
<SALES> 000
<TOTAL-REVENUES> 769,100
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 238,144
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 530,956
<INCOME-TAX> 000
<INCOME-CONTINUING> 530,956
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 530,956
<EPS-BASIC> .11
<EPS-DILUTED> .11
</TABLE>
