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: 0-16838
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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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JETSTREAM II, 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 $ 5,270,597 $ 5,270,597
Cash and cash equivalents 1,503,761 1,333,331
Accounts receivable 12,726 2,226
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Total Assets $ 6,787,084 $ 6,606,154
===============================================================================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses (Note 6) $ 864,373 $ 753,586
Distribution payable 926,033 755,580
Deferred revenue 145,833 145,833
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Total Liabilities 1,936,239 1,654,999
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Partners' Capital (Deficit):
General Partners (5,477) (4,474)
Limited Partners (4,837,505 units outstanding) 4,856,322 4,955,629
-----------------------------
Total Partners' Capital 4,850,845 4,951,155
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Total Liabilities and Partners' Capital $ 6,787,084 $ 6,606,154
===============================================================================
</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 $ (4,474) $ 4,955,629 $ 4,951,155
Net income 8,257 817,466 825,723
Distributions (9,260) (916,773) (926,033)
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Balance at March 31, 2000 $ (5,477) $ 4,856,322 $ 4,850,845
===============================================================================
</TABLE>
See accompanying notes to the financial statements. 2
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JETSTREAM II, L.P.
<TABLE>
<CAPTION>
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STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended March 31,
2000 1999
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<S> <C> <C>
Income
Rental $ 1,050,000 $ 1,230,000
Interest 23,932 25,189
Other 11,425 560
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Total Income 1,085,357 1,255,749
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Expenses
Depreciation -- 754,807
Management fees 93,619 115,146
General and administrative 166,015 65,274
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Total Expenses 259,634 935,227
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Net Income $ 825,723 $ 320,522
===============================================================================
Net Income Allocated:
To the General Partners $ 8,257 $ 3,205
To the Limited Partners 817,466 317,317
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$ 825,723 $ 320,522
===============================================================================
Per limited partnership unit
(4,837,505 outstanding) $ .17 $ .07
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</TABLE>
See accompanying notes to the financial statements. 3
<PAGE>
JETSTREAM II, 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 $ 825,723 $ 320,522
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation -- 754,807
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Accounts receivable (10,500) --
Accounts payable and accrued expenses 110,787 131,163
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Net cash provided by operating activities 926,010 1,206,492
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Cash Flows From Financing Activities:
Cash distributions (755,580) (1,084,395)
--------------------------
Net cash used for financing activities (755,580) (1,084,395)
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Net increase in cash and cash equivalents 170,430 122,097
Cash and cash equivalents, beginning of period 1,333,331 1,781,869
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Cash and cash equivalents, end of period $ 1,503,761 $ 1,903,966
===============================================================================
</TABLE>
See accompanying notes to the financial statements. 4
<PAGE>
JETSTREAM II, 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 recurring 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, 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 event occurred subsequent to fiscal year 1999, which
requires disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
On April 7, 2000, April 14, 2000 and April 20, 2000, the Partnership sold three
of its DC-9-30 aircraft, previously on lease to Northwest, to an unaffiliated
entity for a gross selling price of $2,083,333 per aircraft. As part of the
August 1996 agreement with Northwest to extend certain leases, the lessee agreed
to hushkit each aircraft. In exchange for this agreement, the lessee will be
entitled to 50% of the proceeds from the eventual sale of the associated
aircraft. These amounts have not been recognized as a liability in the
accompanying financial statements as of March 31, 2000 but are estimated to be
approximately $3.1 million.
In addition, on April 17, 2000, the Partnership sold its 737-200 aircraft,
previously leased to Delta, to an unaffiliated entity for a gross selling price
of $4,350,000.
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 remaining plane, an 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 remaining 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 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, 2000, the Partnership's five aircraft were all 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").
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 7, 2000, April 10, 2000 and April 20, 2000, the Partnership sold three
of its DC-9-30 aircraft, previously on lease to Northwest, to an unaffiliated
entity for a gross selling price of $2,083,333 per aircraft. As part of the
August 1996 agreement with Northwest to extend certain leases, the lessee agreed
to hushkit each aircraft. In exchange for this agreement, the lessee is entitled
to 50% of the proceeds from the eventual sale of the associated aircraft. These
amounts have not been recognized as a liability in the accompanying financial
statements as of March 31, 2000 but are estimated to be approximately $3.1
million.
In addition, on April 17, 2000, the Partnership sold its 737-200 aircraft,
previously leased to Delta, to an unaffiliated entity for a gross selling price
of $4,350,000.
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 remaining plane, an 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 remaining 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.
At March 31, 2000, the Partnership had unrestricted cash and cash equivalents of
$1,503,761, compared to $1,333,331 at December 31, 1999. The increase is due to
cash provided by operations exceeding cash distributions.
At March 31, 2000, the Partnership had a distribution payable to Unitholders of
$926,023 or approximately $.20 per Unit, which will be paid during the month of
May 2000. At December 31, 1999, the Partnership had a distribution payable to
Unitholders of $755,580 or approximately $.16 per Unit, which was paid on March
1, 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.
6
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JETSTREAM II, L.P.
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 during the first quarter of 2000 consisted of interest and
other income.
For the three months ended March 31, 2000, the Partnership generated net income
of $825,723, compared to net income of $320,522 for the corresponding period in
1999.
Rental income for the three months ended March 31, 2000 was $1,050,000, compared
to rental income of $1,230,000 for the corresponding period in 1999. The
decrease is due to a reduction in Delta's monthly rental and the sale of the
B727-200 aircraft in 1999.
Interest income for the three months ended March 31, 2000 was $23,932, compared
to $25,189 for the corresponding period in 1999. The decrease is primarily
attributable to lower average cash balances.
During 1999, the aircraft was designated as "held for sale," consequently there
was no depreciation expense for the period ended March 31, 2000 compared to
$754,807 in the 1999 period. The reduction is due to the fact that the
Partnership ceased recording depreciation on November 19, 1999, in accordance
with Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
General and administrative expenses for the three months ended March 31, 2000
totaled $166,015, compared to $65,274 for the corresponding period in 1999. The
increase is due to expenses incurred in implementing the Liquidation Plan.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
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(27) Financial Data Schedule
(b) Reports on Form 8-K -
-------------------
No reports on Form 8-K were filed during the quarter ended March
31, 2000.
7
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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 15, 2000 BY: /s/Michael T. Marron
------------------------------------------------
Name: Michael T. Marron
Title: Director, President, and Chief Financial Officer
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-END> Mar-31-2000
<CASH> 1,503,761
<SECURITIES> 000
<RECEIVABLES> 12,726
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 1,516,487
<PP&E> 5,270,797
<DEPRECIATION> 000
<TOTAL-ASSETS> 6,787,084
<CURRENT-LIABILITIES> 1,936,239
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 4,850,845
<TOTAL-LIABILITY-AND-EQUITY> 6,787,084
<SALES> 000
<TOTAL-REVENUES> 1,085,357
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 259,634
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 825,723
<INCOME-TAX> 000
<INCOME-CONTINUING> 825,723
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 825,723
<EPS-BASIC> .17
<EPS-DILUTED> .17
</TABLE>
