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
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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: 0-16838
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JETSTREAM II, L.P.
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Exact Name of Registrant as Specified in its Charter
Virginia 84-1068932
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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
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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 II, L.P.
<TABLE>
<CAPTION>
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BALANCE SHEETS
At March 31, At December 31,
1999 1998
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<S> <C> <C>
Assets
Aircraft, at cost $ 26,877,000 $ 26,877,000
Less accumulated depreciation (19,692,000) (18,937,193)
------------------------------
7,185,000 7,939,807
Cash and cash equivalents 1,903,966 1,781,869
Accounts receivable 45,000 45,000
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Total Assets $ 9,133,966 $ 9,766,676
===============================================================================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 411,207 $ 280,044
Distribution payable 1,653,966 1,084,395
Deferred revenue 153,333 153,333
------------------------------
Total Liabilities 2,218,506 1,517,772
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Partners' Capital (Deficit):
General Partners (882,019) (868,684)
Limited Partners (4,837,505 units outstanding) 7,797,479 9,117,588
------------------------------
Total Partners' Capital 6,915,460 8,248,904
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Total Liabilities and Partners' Capital $ 9,133,966 $ 9,766,676
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
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STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
For the three months ended March 31, 1999
General Limited
Partners Partners Total
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<S> <C> <C> <C>
Balance at December 31, 1998 $(868,684) $ 9,117,588 $ 8,248,904
Net income 3,205 317,317 320,522
Distributions (16,540) (1,637,426) (1,653,966)
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Balance at March 31, 1999 $(882,019) $ 7,797,479 $ 6,915,460
===============================================================================
</TABLE>
See accompanying notes to the financial statements.
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3
JETSTREAM II, L.P.
<TABLE>
<CAPTION>
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STATEMENTS OF OPERATIONS
Three months ended March 31,
1999 1998
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<S> <C> <C>
Income
Rental $1,230,000 $1,230,000
Interest 25,189 23,042
Other 560 2,753
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Total Income 1,255,749 1,255,795
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Expenses
Depreciation 754,807 754,807
Management fees 115,146 111,842
General and administrative 65,274 68,058
Operating -- 524
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Total Expenses 935,227 935,231
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Net Income $ 320,522 $ 320,564
===============================================================================
Net Income Allocated:
To the General Partners $ 3,205 $ 3,206
To the Limited Partners 317,317 317,358
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$ 320,522 $ 320,564
===============================================================================
Per limited partnership unit
(4,837,505 outstanding) $ .07 $ .07
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</TABLE>
<TABLE>
<CAPTION>
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STATEMENTS OF CASH FLOWS
For the three months ended March 31,
1999 1998
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<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 320,522 $ 320,564
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:
Accounts payable and accrued expenses 131,163 57,683
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Net cash provided by operating activities 1,206,492 1,133,054
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Cash Flows From Financing Activities:
Cash distributions (1,084,395) (1,113,369)
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Net cash used for financing activities (1,084,395) (1,113,369)
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Net increase in cash and cash equivalents 122,097 19,685
Cash and cash equivalents, beginning of period 1,781,869 1,810,843
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Cash and cash equivalents, end of period $ 1,903,966 $ 1,830,528
===============================================================================
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
4
JETSTREAM II, 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 March 31, 1999 and the results of operations for the
three months ended March 31, 1999 and 1998, 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 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 30, 1999, the Partnership sold one of its B-727-200 non-advanced
aircraft to an unaffiliated entity, SportHawk International, Inc. ("SportHawk")
for a selling price of approximately $1,000,000. The selling price was
determined pursuant to a lease negotiated with the buyer, which exercised its
option to purchase the aircraft.
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.
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5
JETSTREAM II, 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, 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 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 subleased the aircraft to
SportHawk. BCC paid the Partnership a monthly lease rate of $45,000. The primary
term of the BCC lease was scheduled to expire on October 31, 1999. Pursuant to
the terms of the lease, on April 30, 1999 SportHawk exercised its option to
purchase the aircraft for a selling price of approximately $1,000,000 plus the
remaining rent due under the lease. The Partnership received $243,000 for such
rental payments due under the lease through October 31, 1999.
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.
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 to March 1999 and in October 1998, exercised its
second option to renew this lease through March 2000, with the remaining terms
of the lease unchanged.
At March 31, 1999, the Partnership had unrestricted cash and cash equivalents of
$1,903,966, compared to $1,781,869 at December 31, 1998.
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 $1,084,395, or
approximately $.22 per unit. At March 31, 1999, the Partnership had a
distribution payable to Unitholders of $1,653,966, or approximately $.34 per
unit. The distribution 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.
<PAGE>
6
JETSTREAM II, L.P.
Results of Operations
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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 during the first quarter of 1999 consisted of interest and
other income.
For the three months ended March 31, 1999, the Partnership generated net income
of $320,522, compared to net income of $320,564 for the corresponding period in
1998.
Rental income for the three months ended March 31, 1999 was $1,230,000,
unchanged from March 31, 1998.
Interest income for the three months ended March 31, 1999 was $25,189, compared
to $23,042 for the corresponding period in 1998. The increase is primarily
attributable to an increase in the Partnership's average cash balances during
the 1999 period.
General and administrative expenses for the three months ended March 31, 1999
totaled $65,274, compared to $68,058 for the corresponding period in 1998. The
slight decrease is due to lower printing and postage costs offset by higher
professional fees.
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, 1999.
<PAGE>
7
JETSTREAM II, 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 II, L.P.
BY: JET AIRCRAFT LEASING INC.
Administrative 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> 1,903,966
<SECURITIES> 000
<RECEIVABLES> 45,000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 1,948,966
<PP&E> 26,877,000
<DEPRECIATION> 19,692,000
<TOTAL-ASSETS> 9,133,966
<CURRENT-LIABILITIES> 2,218,506
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 6,915,460
<TOTAL-LIABILITY-AND-EQUITY> 9,133,966
<SALES> 000
<TOTAL-REVENUES> 1,255,749
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 935,277
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 320,522
<INCOME-TAX> 000
<INCOME-CONTINUING> 320,522
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 320,522
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
