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, 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
Delaware 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 June 30, At December 31,
1999 1998
(unaudited) (audited)
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<S> <C> <C>
Assets
Aircraft, at cost $ 21,877,000 $ 26,877,000
Less accumulated depreciation (16,324,835) (18,937,193)
------------------------------
5,552,165 7,939,807
Cash and cash equivalents 2,550,161 1,781,869
Accounts receivable 45,977 45,000
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Total Assets $ 8,148,303 $ 9,766,676
================================================================================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 486,956 $ 280,044
Distribution payable 2,300,161 1,084,395
Deferred revenue 153,333 153,333
------------------------------
Total Liabilities 2,940,450 1,517,772
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Partners' Capital (Deficit):
General Partners (687,786) (868,684)
Limited Partners (4,837,505 units outstanding) 5,895,639 9,117,588
------------------------------
Total Partners' Capital 5,207,853 8,248,904
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Total Liabilities and Partners' Capital $ 8,148,303 $ 9,766,676
================================================================================
</TABLE>
<TABLE>
<CAPTION>
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STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
For the six months ended June 30, 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 210,328 700,629 910,957
Distributions (29,430) (3,922,578) (3,952,008)
- -------------------------------------------------------------------------------
Balance at June 30, 1999 $(687,786) $ 5,895,639 $ 5,207,853
===============================================================================
</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 (UNAUDITED)
Three months ended June 30, Six months ended June 30,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Income
Rental $1,140,000 $1,230,000 $2,370,000 $2,460,000
Interest 31,136 27,372 56,325 50,414
Other 3,620 905 4,180 3,658
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Total Income 1,174,756 1,258,277 2,430,505 2,514,072
- ----------------------------------------------------------------------------------------------
Expenses
Depreciation 629,891 754,807 1,384,698 1,509,614
Management fees 103,856 111,396 219,002 223,238
General and administrative 53,024 55,951 118,299 124,009
Operating 800 800 800 1,324
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Total Expenses 787,571 922,954 1,722,799 1,858,185
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Net income before gain
on sale of aircraft 387,185 335,323 707,706 655,887
Gain on sale of aircraft 203,251 -- 203,251 --
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Net Income $ 590,436 $ 335,323 $ 910,957 $ 655,887
==============================================================================================
Net Income Allocated:
To the General Partners $ 207,123 $ 3,353 $ 210,328 $ 6,559
To the Limited Partners 383,313 331,970 700,629 649,328
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$ 590,436 $ 335,323 $ 910,957 $ 655,887
==============================================================================================
Per limited partnership unit
(4,837,505 outstanding) $ .08 $ .07 $ .14 $ .13
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</TABLE>
See accompanying notes to the financial statements.
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4
JETSTREAM II, L.P.
<TABLE>
<CAPTION>
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STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended June 30,
1999 1998
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<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 910,957 $ 655,887
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of aircraft (203,251) --
Depreciation 1,384,698 1,509,614
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Accounts receivable (977) (417)
Accounts payable and accrued expenses 169,607 40,752
--------------------------
Net cash provided by operating activities 2,261,034 2,205,836
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Cash Flows From Investing Activities:
Cash received from sale of aircraft 1,243,500 --
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Net cash provided by investing activities 1,243,500 --
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Cash Flows From Financing Activities:
Cash distributions (2,736,242) (2,138,029)
--------------------------
Net cash used for financing activities (2,736,242) (2,138,029)
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Net increase in cash and cash equivalents 768,292 67,807
Cash and cash equivalents, beginning of period 1,781,869 1,810,843
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Cash and cash equivalents, end of period $ 2,550,161 $ 1,878,650
================================================================================
Supplemental Disclosure of Noncash Operating Activities
In connection with the sale of the aircraft, accrued resale fees in the amount
of $37,305 has decreased the gain on the sale of the aircraft.
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</TABLE>
See accompanying notes to the financial statements.
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5
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 June 30, 1999 and the results of operations for the
three and six months ended June 30, 1999 and 1998, cash flows for the six months
ended June 30, 1999 and 1998 and the statement of partners' capital (deficit)
for the three and six months ended June 30, 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).
The General Partners are developing a plan to sell the Partnership's remaining
aircraft and subsequently terminate the Partnership (the "Liquidation Plan").
Such Liquidation Plan will require the approval of more than 50% of the
unitholders entitled to vote. It is anticipated that a consent solicitation
statement requesting such approval will be forwarded to investors during the
third or fourth quarter of this year.
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 $1,243,000 and the Partnership recognized a gain of
$203,251. 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
during the third quarter of 1999.
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6
JETSTREAM II, L.P.
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
The General Partners are developing a plan to sell the Partnership's remaining
aircraft and subsequently terminate the Partnership (the "Liquidation Plan").
Such Liquidation Plan will require the approval of more than 50% of the
unitholders entitled to vote. It is anticipated that a consent solicitation
statement requesting such approval will be forwarded to investors during the
third or fourth quarter of this year.
As of June 30, 1999, JetStream II, L.P. (the "Partnership") had all five of its
aircraft on-lease. Three aircraft were on-lease to Northwest Airlines, Inc.
("Northwest"), one aircraft was on-lease to Delta Air Lines, Inc. ("Delta"), and
one aircraft was on-lease to Continental Airlines, Inc. ("Continental"). As
discussed below, the aircraft which was leased to Boeing Capital Corporation
("BCC") was sold on April 30, 1999.
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 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 $1,243,000 and the Partnership recognized a gain of $203,251.
As a result of the sale, the General Partners intend to distribute the net
proceeds therefrom during the third 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 through September 1999. During
the second quarter of 1999, Delta extended its lease through September 30, 2001.
This lease extension requires Delta to pay the Partnership a monthly lease rate
of $65,000 and to hushkit the plane.
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 June 30, 1999, the Partnership had unrestricted cash and cash equivalents of
$2,550,161, compared to $1,781,869 at December 31, 1998. The increase is due to
the receipt of cash related to the sale of the aircraft.
On May 25, 1999, the Partnership paid a distribution to the Unitholders for the
period from January 1, 1999 to March 31, 1999 in the amount of $1,651,847, or
approximately $.34 per unit. At June 30, 1999, the Partnership had a
distribution payable to Unitholders of $2,300,161, or approximately $.48 per
unit. The distribution will be paid in August 1999. Of this amount, $.22 per
unit represents a distribution of cash flow from operations and $.26 per unit
represents a distribution of net sale proceeds. Future cash distributions will
be determined on a quarterly basis after an evaluation of the Partnership's
current and expected financial position.
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7
JETSTREAM II, L.P.
Results of Operations
- ---------------------
Substantially all of the Partnership's revenue for the three and six months
ended June 30, 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 second quarter of 1999 consisted of interest
and other income.
For the three and six months ended June 30, 1999, the Partnership generated net
income of $404,484 and $910,957, compared to net income of $335,323 and $655,887
for the corresponding period in 1998. Net income for the 1999 period includes a
gain on sale of aircraft in the amount of $203,251. Excluding this gain,
Partnership operations resulted in income before gain on sale of aircraft of
$387,115 and $707,707 for the three and six months ended March 31, 1999,
respectively, compared with income before gain on sale of aircraft of $335,323
and $655,887 for the corresponding periods in 1998.
Rental income for the three and six months ended June 30, 1999 was $1,228,782
and $2,370,000, compared to rental income of $1,230,000 and $2,640,000 for the
corresponding period in 1998.
Interest income for the three and six months ended June 30, 1999 was $31,136 and
$56,325, compared to $27,372 and $50,414 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 resulting from the cash received on
the sale of the aircraft.
General and administrative expenses for the three and six months ended June 30,
1999 and 1998 totaled $53,024 and $118,299, respectively, compared to $55,951
and $124,009 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
June 30, 1999.
<PAGE>
8
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: August 16, 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> 6-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Jun-30-1999
<CASH> 2,550,161
<SECURITIES> 000
<RECEIVABLES> 45,977
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 2,596,138
<PP&E> 21,877,000
<DEPRECIATION> 16,324,835
<TOTAL-ASSETS> 8,148,303
<CURRENT-LIABILITIES> 2,940,450
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 5,207,853
<TOTAL-LIABILITY-AND-EQUITY> 8,148,303
<SALES> 000
<TOTAL-REVENUES> 2,430,505
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 1,722,799
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 707,706
<INCOME-TAX> 000
<INCOME-CONTINUING> 707,706
<DISCONTINUED> 000
<EXTRAORDINARY> 203,251
<CHANGES> 000
<NET-INCOME> 910,957
<EPS-BASIC> .14
<EPS-DILUTED> .14
</TABLE>
