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, 1998
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: 0-16838
JETSTREAM II, L.P.
Exact Name of Registrant as Specified in its Charter
Delaware 84-1068932
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer 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,
1998 1997
Assets
Aircraft, at cost $ 26,877,000 $ 26,877,000
Less accumulated depreciation (16,672,770) (15,917,963)
10,204,230 10,959,037
Cash and cash equivalents 1,830,528 1,810,843
Accounts receivable 45,000 45,000
Total Assets $ 12,079,758 $ 12,814,880
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 386,502 $ 328,819
Distribution payable 1,024,660 1,113,369
Deferred revenue 153,333 153,333
Total Liabilities 1,564,495 1,595,521
Partners' Capital (Deficit):
General Partners (846,021) (838,980)
Limited Partners
(4,837,505 units outstanding) 11,361,284 12,058,339
Total Partners' Capital 10,515,263 11,219,359
Total Liabilities and Partners' Capital $ 12,079,758 $ 12,814,880
Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1998
General Limited
Partners Partners Total
Balance at December 31, 1997 $ (838,980) $ 12,058,339 $ 11,219,359
Net income 3,206 317,358 320,564
Cash distributions (10,247) (1,014,413) (1,024,660)
Balance at March 31, 1998 $ (846,021) $ 11,361,284 $ 10,515,263
Statements of Operations
For the three months ended March 31, 1998 1997
Income
Rental $ 1,230,000 $ 1,192,500
Interest 23,042 28,572
Other 2,753 1,600
Total Income 1,255,795 1,222,672
Expenses
Depreciation 754,807 754,807
Management fees 111,842 109,302
General and administrative 68,058 47,511
Operating expense 524 _
Total Expenses 935,231 911,620
Net Income $ 320,564 $ 311,052
Net Income Allocated:
To the General Partners $ 3,206 $ 3,111
To the Limited Partners 317,358 307,941
$ 320,564 $ 311,052
Per limited partnership unit
(4,837,505 outstanding) $ .07 $ .06
Statements of Cash Flows
For the three months ended March 31, 1998 1997
Cash Flows From Operating Activities
Net income $ 320,564 $ 311,052
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 754,807 754,807
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Interest receivable _ 61
Accounts payable and accrued expenses 57,683 (207)
Net cash provided by operating activities 1,133,054 1,065,713
Cash Flows From Investing Activities
Loan receivable _ 20,862
Net cash provided by investing activities _ 20,862
Cash Flows From Financing Activities
Cash distributions (1,113,369) (1,079, 616)
Net cash used for financing activities (1,113,369) (1,079, 616)
Net increase in cash and cash equivalents 19,685 6,959
Cash and cash equivalents, beginning of period 1,810,843 1,791,426
Cash and cash equivalents, end of period $ 1,830,528 $ 1,798,385
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1997 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, 1998 and the results of
operations and cash flows for the three months ended March 31, 1998 and 1997
and the statement of partners' capital (deficit) for the three months ended
March 31, 1998. 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 1997 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, 1998, JetStream II, L.P. (the " Partnership") had all
six of its aircraft on-lease. Three aircraft were on-lease to Northwest
Airlines, Inc. ("Northwest"), one aircraft was on-lease to Boeing Capital
Corporation ("BCC"), one aircraft was on-lease to Delta Air Lines, Inc.
("Delta"), and one aircraft was on-lease to Continental Airlines, Inc.
("Continental").
The leases for the Partnership's three DC-9-30 aircraft expire in January 2007
(two aircraft) and April 2007 (one aircraft). Northwest pays the Partnership a
monthly lease rate of $35,000 per aircraft. As part of the August 1996
agreement to extend these leases, Northwest agreed to hushkit each aircraft
prior to December 31, 1999. In exchange for funding the cost of the hushkits,
Northwest will be entitled to 50% of the proceeds from the eventual sale of the
aircraft. The General Partners believe that the lease extensions and
hushkitting of the engines will, in all likelihood, increase the value of the
aircraft and will present the Partnership with more viable sales opportunities
for the aircraft in the future.
The lease for the Partnership's B-727-200 with TWA was terminated on October
30, 1997. TWA had been leasing the aircraft on a month-to month basis at a
monthly lease rate of $32,500. Commencing November 1, 1997, the aircraft was
re-leased to Boeing Capital Corporation ("BCC"), which subleases the aircraft
to SportHawk International, Inc. BCC pays the Partnership a monthly lease rate
of $45,000. The primary term of the BCC lease expires on October 31, 1999.
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.
The lease with Continental was scheduled to expire in March 1998. However, in
September 1997, the Partnership reached an agreement with Continental to extend
the lease through March 1999, with the remaining terms of the lease unchanged.
Continental makes monthly lease payments to the Partnership of $180,000.
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 $302,525. The modification financing was 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. During
the third quarter of 1997, Continental paid off the remaining balance of the
loan, which had totaled $108,403 as of December 31, 1996.
At March 31, 1998, the Partnership had unrestricted cash and cash equivalents
of $1,830,528, largely unchanged from $1,810,843 at December 31, 1997.
On February 2, 1998, the Partnership paid a distribution to the Unitholders for
the period from October 1, 1997 to December 31, 1997 in the amount of
$1,102,235, or approximately $.23 per Unit. At March 31, 1998, the Partnership
had a distribution payable of $1,024,660, or approximately $.21 per Unit. Such
amount reflects the 1998 first quarter distribution which was funded from cash
flow from operations. This distribution will be paid on or about May 21, 1998.
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, 1998 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 1998 consisted primarily of
interest income.
For the three months ended March 31, 1998, the Partnership generated net income
of $320,564, compared to net income of $311,052 for the corresponding period in
1997. The increase in net income is primarily attributable to higher rental
income and other income, partially offset by an increase in management fees and
general and administrative expenses and a decrease in interest income. Rental
income for the three months ended March 31, 1998 was $1,230,000 compared to
$1,192,500 for the three months ended March 31, 1997. The increase is
primarily a result of a higher lease rate which SportHawk pays for the aircraft
formerly leased by TWA.
Interest income for the three months ended March 31, 1998 was $23,042,
compared to $28,572 for the corresponding period in 1997. The decrease is
primarily attributable to a decrease in the Partnership's average
cash balances during the 1998 period.
General and administrative expenses totalled $68,058 for the three months
ended March 31, 1998, compared to $47,511 for the corresponding period
in 1997. The increase is primarily attributable to higher professional
and other expenses relating to the fourth quarter of 1997 and higher
postage expenses.
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 - No reports on Form 8-K
were filed during the quarter ended March 31, 1998.
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 II, L.P.
BY: JET AIRCRAFT LEASING INC.
Administrative General Partner
Date: May 14, 1998 BY: /s/ Jeffrey C. Carter
Name: Jeffrey C. Carter
Title: Director, President,
and Chief Financial Officer
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<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1998
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