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, 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) 526-3183
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 ____
Balance Sheets At June 30, At December 31,
1998 1997
Assets
Aircraft, at cost: $ 26,877,000 $ 26,877,000
Less accumulated depreciation (17,427,577) (15,917,963)
9,449,423 10,959,037
Cash and cash equivalents 1,878,650 1,810,843
Accounts receivable 45,417 45,000
Total Assets $ 11,373,490 $ 12,814,880
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 369,571 $ 328,819
Distribution payable 1,069,334 1,113,369
Deferred revenue 153,333 153,333
Total Liabilities 1,592,238 1,595,521
Partners' Capital (Deficit):
General Partners (853,361) (838,980)
Limited Partners
(4,837,505 units outstanding) 10,634,613 12,058,339
Total Partners' Capital 9,781,252 11,219,359
Total Liabilities and Partners'
Capital $ 11,373,490 $ 12,814,880
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1998
General Limited
Partners Partners Total
Balance at December 31, 1997 $ (838,980) $ 12,058,339 $ 11,219,359
Net income 6,559 649,328 655,887
Cash distributions (20,940) (2,073,054) (2,093,994)
Balance at June 30, 1998 $ (853,361) $ 10,634,613 $ 9,781,252
Statements of Operations
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
Income
Rental $ 1,230,000 $ 1,192,500 $ 2,460,000 $ 2,385,000
Interest 27,372 30,386 50,414 58,958
Other 905 435 3,658 2,035
Total Income 1,258,277 1,223,321 2,514,072 2,445,993
Expenses
Depreciation 754,807 754,807 1,509,614 1,509,614
Management fees 111,396 105,371 223,238 214,673
General and administrative 55,951 58,634 124,009 106,145
Operating 800 _ 1,324 _
Total Expenses 922,954 918,812 1,858,185 1,830,432
Net Income $ 335,323 $ 304,509 $ 655,887 $ 615,561
Net Income Allocated:
To the General Partners $ 3,353 $ 3,045 $ 6,559 $ 6,156
To the Limited Partners 331,970 301,464 649,328 609,405
$ 335,323 $ 304,509 $ 655,887 $ 615,561
Per limited partnership unit
(4,837,505 outstanding) $.07 $.06 $.13 $.13
Statements of Cash Flows
For the six months ended June 30, 1998 1997
Cash Flows From Operating Activities
Net income $ 655,887 $ 615,561
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,509,614 1,509,614
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Accounts receivable (417) _
Interest receivable _ 150
Accounts payable and accrued expenses 40,752 (132,098)
Net cash provided by operating activities 2,205,836 1,993,227
Cash Flows From Investing Activities
Loan receivable _ 42,107
Net cash provided by investing activities _ 42,107
Cash Flows From Financing Activities
Cash distributions (2,138,029) (2,366,338)
Net cash used for financing activities (2,138,029) (2,366,338)
Net increase (decrease) in cash and
cash equivalents 67,807 (331,004)
Cash and cash equivalents, beginning of period 1,810,843 1,791,426
Cash and cash equivalents, end of period $ 1,878,650 $ 1,460,422
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
June 30, 1998 and the results of operations for the three and six
months ended June 30, 1998 and 1997, cash flows for the six
months ended June 30, 1998 and 1997 and the statement of
partners' capital (deficit) for the six months ended June 30,
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 June 30, 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.
Continental makes monthly lease payments to the Partnership of
$180,000. 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 has an option to renew this lease for an additional
year.
At June 30, 1998, the Partnership had unrestricted cash and cash
equivalents of $1,878,650, largely unchanged from $1,810,843 at
December 31, 1997.
On May 21, 1998, the Partnership paid a distribution to the
Unitholders for the period from January 1, 1998 to March 31, 1998
in the amount of $1,024,660, or approximately $.21 per Unit. At
June 30, 1998, the Partnership had a distribution payable of
$1,069,334, or approximately $.22 per Unit. Such amount reflects
the 1998 second quarter distribution which was funded from cash
flow from operations. This distribution was paid on August 4,
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 six months
ended June 30, 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 second quarter of 1998 consisted of interest and other
income.
For the three and six months ended June 30, 1998, the Partnership
generated net income of $335,323 and $655,887, respectively,
compared to net income of $304,509 and $615,561 for the
corresponding periods in 1997. The increase in net income is
primarily attributable to higher rental income, partially offset
by an increase in management fees and, for the six-month period,
an increase in general and administrative expenses.
Rental income for the three and six months ended June 30, 1998
was $1,230,000 and $2,460,000, respectively, compared to
$1,192,500 and $2,385,000 for the corresponding periods in 1997.
The increase is primarily a result of a higher lease rate paid
for the 727-200 non-advanced aircraft in comparison to 1997.
Interest income for the three and six months ended June 30, 1998
was $27,372 and $50,414, respectively, compared to $30,386 and
$58,958 for the corresponding periods 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 for the three and six months
ended June 30, 1998 totalled $55,951 and $124,009, respectively,
compared to $58,634 and $106,145 for the corresponding periods in
1997. The increase for the six-month period is primarily
attributable to higher professional and administrative 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 June 30, 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: August 14, 1998 BY: /s/ Michael T. Marron
Name: Michael T. Marron
Director, President, and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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