FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 _______________________
Commission file number 0-17712
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PEGASUS AIRCRAFT PARTNERS, L.P.
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(Exact name of registrant as specified in its charter)
DELAWARE 84-1099968
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(State of organization) (IRS Employer
Identification No.)
Four Embarcadero Center 35th Floor
San Francisco, California 94111
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(Address of principal (Zip Code)
executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (415) 434-3900
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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This document consists of 18 pages.
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PEGASUS AIRCRAFT PARTNERS, L.P.
QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheets - September 30, 2000 and
December 31, 1999 3
Statements of Income for the three months
ended September 30, 2000 and 1999 4
Statements of Income for the nine months
ended September 30, 2000 and 1999 5
Statements of Partners' Capital for the nine
months ended September 30, 2000 and 1999 6
Statements of Cash Flows for the nine
months ended September 30, 2000 and 1999 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
Signature 17
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PART I. FINANCIAL INFORMATION
-----------------------------
Item 1. Financial Statements
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PEGASUS AIRCRAFT PARTNERS, L.P.
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BALANCE SHEETS -- SEPTEMBER 30, 2000 (UNAUDITED) AND DECEMBER 31, 1999
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2000 1999
---- ----
(in thousands except unit data)
ASSETS
------
Cash and cash equivalents $ 1,679 $ 1,873
Rent and other receivables 286 476
Aircraft, net 19,441 24,573
Other assets 5 50
-------- --------
Total Assets $ 21,411 $ 26,972
======== ========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
LIABILITIES:
Notes payable $ 11,050 $ 14,000
Accounts payable and accrued expenses 90 111
Maintenance reserves payable 1,532 969
Payable to affiliates 886 491
Deferred rental income and deposits 523 1,185
Distributions payable to partners 1,212 1,616
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Total Liabilities 15,293 18,372
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COMMITMENTS AND CONTINGENCIES (Notes 2 and 4)
PARTNERS' CAPITAL:
General Partners 64 (710)
Limited Partners (4,000,005 units issued and
outstanding in 2000 and 1999) 6,054 9,310
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Total Partners' Capital 6,118 8,600
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Total Liabilities and Partners' Capital $ 21,411 $ 26,972
======== ========
The accompanying notes re an integral part of these financial statements.
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PEGASUS AIRCRAFT PARTNERS, L.P.
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STATEMENTS OF INCOME
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FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
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(unaudited)
2000 1999
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(in thousands, except unit
data and per unit amounts)
REVENUE:
Rentals from operating leases $ 1,582 $ 2,015
Interest 19 27
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1,601 2,042
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EXPENSES:
Depreciation and amortization 866 1,285
Management and re-lease fees 120 156
General and administrative 65 49
Interest 311 347
Direct lease 22 21
Engine rental expense -- 70
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1,384 1,928
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NET INCOME $ 217 $ 114
========== ==========
NET INCOME ALLOCATED:
To the General Partners $ 2 $ 1
To the Limited Partners 215 113
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$ 217 $ 114
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 0.06 $ 0.03
========== ==========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS ISSUED
AND OUTSTANDING 4,000,005 4,000,005
========== ==========
The accompanying notes are an integral part of these financial statements.
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PEGASUS AIRCRAFT PARTNERS, L.P.
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STATEMENTS OF INCOME
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FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
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(unaudited)
2000 1999
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(in thousands, except unit
data and per unit amounts)
REVENUE:
Rentals from operating leases $ 5,277 $ 6,076
Gain on sale of aircraft 1,611 --
Interest 53 59
Other 181 --
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7,122 6,135
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EXPENSES:
Depreciation and amortization 3,144 3,808
Write-downs 500 --
Management and re-lease fees 607 484
General and administrative 182 150
Interest 980 858
Direct lease 67 68
Engine rental and other 84 70
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5,564 5,438
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NET INCOME $ 1,558 $ 697
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NET INCOME ALLOCATED:
To the General Partners $ 814 $ 7
To the Limited Partners 744 690
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$ 1,558 $ 697
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 0.19 $ 0.17
========== ==========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS ISSUED AND
OUTSTANDING 4,000,005 4,000,005
========== ==========
The accompanying notes are an integral part of these financial statements.
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PEGASUS AIRCRAFT PARTNERS, L.P.
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STATEMENTS OF PARTNERS' CAPITAL
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FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
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(unaudited)
General Limited
Partners Partners Total
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(dollar amounts in thousands)
Balance, January 1, 2000 $ (710) $ 9,310 $ 8,600
Net income 814 744 1,558
Distributions declared to partners (40) (4,000) (4,040)
-------- -------- --------
Balance, September 30, 2000 $ 64 $ 6,054 $ 6,118
======== ======== ========
Balance, January 1, 1999 $ (653) $ 14,913 $ 14,260
Net income 7 690 697
Distributions declared to partners (48) (4,800) (4,848)
-------- -------- --------
Balance, September 30, 1999 $ (694) $ 10,803 $ 10,109
======== ======== ========
The accompanying notes are an integral part of these financial statements.
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PEGASUS AIRCRAFT PARTNERS, L.P.
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STATEMENTS OF CASH FLOWS
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FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
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(unaudited)
2000 1999
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(dollar amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,558 $ 697
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,144 3,808
Gain on sale of aircraft (1,611) --
Write-downs 500 --
Change in assets and liabilities:
Rent and other receivables 190 (57)
Other assets 45 19
Accounts payable and accrued expenses (21) (23)
Payable to affiliates 395 5
Accrued interest payable -- 114
Deferred rental income and deposits (662) 147
Maintenance reserves payable 563 373
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Net cash provided by operating
activities 4,101 5,083
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of aircraft 4,360 --
Capitalized aircraft improvements (1,261) (4,089)
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Net cash provided by (used) in
investing activities 3,099 (4,089)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions paid to partners (4,444) (4,848)
Proceeds from notes payable -- 4,000
Repayment of notes payable (2,950) --
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Net cash used in financing activities (7,394) (848)
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NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (194) 146
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,873 2,129
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,679 $ 2,275
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 977 $ 733
======= =======
The accompanying notes are an integral part of these financial statements.
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PEGASUS AIRCRAFT PARTNERS, L.P.
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NOTES TO FINANCIAL STATEMENTS
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SEPTEMBER 30, 2000
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(unaudited)
1. General
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and in accordance with instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partners, all adjustments
necessary for a fair presentation have been included. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. The most significant
assumptions and estimates relate to useful life and recoverability of the
aircraft values. Actual results could differ from such estimates. The
accompanying unaudited financial statements should be read in conjuction with
the financial statements and footnotes thereto included in the Partnership's
annual report on Form 10-K for the year ended December 31, 1999. Operating
results for the three and nine month periods ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000.
The Partnership intends to adopt the guidance in EITF Issue No. 00-1
Investor Balance Sheet and Income Statement Display under the Equity Method of
Investments in Certain Partnerships and Other Ventures (EITF 00-1) in its Annual
Report on Form 10-K for the fiscal year ending December 31, 2000 and will
account for its investment in the Trust which owns the MD-81 aircraft leased to
US Airways under the equity method. The Partnership will also provide the
information required by SAB 74. If the equity method had been adopted in the
accompanying financial statements, revenue from operating leases for the nine
months ended September 30, 2000 would be $4,366,000, and depreciation and
amortization would be $2,566,000. Revenue from operating leases for the nine
months ended September 30, 1999 would be $5,165,000, and depreciation and
amortization would be $3,230,000. If the equity method had been adopted, net
income for each of the nine month periods would be unchanged. Equity in earnings
of the MD-81 Trust for the respective periods was $333,000 for both 2000 and
1999, which would have been included in the revenue portion of the income
statement, causing no change to the reported net income.
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2. Aircraft
The Partnership's net investment in aircraft as of September 30, 2000
and December 31, 1999 consisted of the following (in thousands):
2000 1999
---- ----
Aircraft on operating leases, at cost $ 59,100 $ 88,716
Less: Accumulated depreciation (38,897) (54,659)
Write-downs* (3,178) (9,484)
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$ 17,025 $ 24,573
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Aircraft held for lease, at cost $ 11,915 $ --
Less: Accumulated depreciation (6,365) --
Write-downs (3,134) --
-------- --------
2,416 --
-------- --------
Aircraft, net $ 19,441 $ 24,573
======== ========
* 1999 includes $3,673,000 net lease settlement proceeds relating to the Boeing
747 which were accounted for as cost recovery
Kitty Hawk Aircargo, Inc. ("Kitty Hawk"). The Boeing 727-200 Advanced
aircraft formerly leased to Continental was hushkitted, converted to a freighter
and delivered to Kitty Hawk in August, 1999. Kitty Hawk is a Dallas, Texas based
operator of more than 100 freighter aircraft. The lease agreement provides for
84 months rent at $117,800 per month. Kitty Hawk has provided a security deposit
of $236,000 and is obligated to fund maintenance reserves, in the aggregate, at
a rate of $375 per flight hour. Compliance with the recently issued AD relating
to freighter conversions was performed in conjunction with the conversion. The
Partnership invested approximately $4.4 million in hushkitting, a C-check and
the cargo conversion.
During the nine months ended September 30, 2000, the Partnership
invested approximately $1.3 million with respect to the overhaul of two engines
for the Boeing 727-200 aircraft leased to Kitty Hawk. While these engines were
being overhauled, the Partnership leased two other engines from an affiliate of
the Managing General Partner. One of the overhauled engines was re-installed on
the aircraft and the leased engine removed and returned to the Affiliate. The
Partnership exchanged with the Managing General Partner's affiliate, the second
overhauled engine for the other leased engine. There was no gain or loss
recognized on this transaction.
Kitty Hawk filed for protection under Chapter 11 of the U.S. Bankruptcy
Code on May 1, 2000, but, with Bankruptcy Court approval, has made all payments
due to the Partnership as of September 30, 2000. Kitty Hawk has submitted a plan
of reorganization with the Court, although such a plan has not been approved.
Sky Trek International Airlines, Inc. ("Sky Trek"). While the
Partnership anticipates filing a claim in Sky Trek's Chapter 7 bankruptcy, it is
not likely to recover any amounts. The Partnership is evaluating its options
with respect to the Boeing 727-200 formerly leased to Sky Trek.
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3. Transactions With Affiliates
Base Management Fees: The General Partners are entitled to receive a
quarterly subordinated base management fee in an amount generally equal to 1.5%
of gross aircraft rentals, net of re-lease fees paid. Of this amount, 1.0% is
payable to the Managing General Partner and 0.5% is payable to the
Administrative General Partner. The General Partners earned a total of $24,000
and $79,000 of base management fees during the quarter and nine months ended
September 30, 2000, respectively.
Incentive Management Fees: The General Partners also are entitled to
receive a quarterly subordinated incentive management fee in an amount equal to
4.5% of quarterly cash flow and sales proceeds (net of resale fees). Of this
amount, 2.5% is payable to the Managing General Partner and 2.0% is payable to
the Administrative General Partner. The General Partners earned a total of
$51,000 and $375,000 of incentive management fees during the quarter and nine
months ended September 30, 2000, respectively.
Re-lease Fees: The General Partners are entitled to receive a quarterly
subordinated fee for re-leasing aircraft or renewing a lease in an amount equal
to 3.5% of the gross rentals from such re-lease or renewal for each quarter for
which such payment is made. Of this amount, 2.5% is payable to the Managing
General Partner and 1.0% is payable to the Administrative General Partner. The
General Partners earned a total of $45,000 and $153,000 of re-lease fees during
the quarter and nine months ended September 30, 2000, respectively.
Payment of the above fees is subordinated to the limited partners
receiving an 8% annual non-cumulative return based upon original contributed
capital (as defined and adjusted per the Partnership agreement). Fees not paid
on a current basis are accrued. Pursuant to the terms of the Partnership
Agreement, the General Partner's Capital Accounts were allocated $807,000 of the
gain due to the sale of the Boeing 747-100 aircraft. Since 1996, as part of a
class action settlement, an affiliate of the Administrative General Partner
places fees and distributions remitted to it by the Administrative General
Partner into an account for the benefit of the class action members.
Accountable General and Administrative Expenses: The General Partners
are entitled to reimbursement of certain expenses paid on behalf of the
Partnership which are incurred in connection with the administration and
management of the Partnership. There were no reimbursable expenses, during the
three and nine months ended September 30, 2000, payable to the Administrative
General Partner.
During the nine months ended September 30, 2000, the Partnership paid
an affiliate of the Managing General Partner $84,000 for the lease of two
JT8D-9A engines for the Boeing 727-200 aircraft on lease to Kitty Hawk.
Additionally, the Partnership paid approximately $5,000 to a maintenance
facility that is affiliated with the Managing General Partner.
4. Notes Payable
In February 1999, the Partnership's lender agreed to increase its
commitment from $10 million to $14.5 million and the interest rate increased
from 1.25% to 1.5% over prime, all of which was due in April 2000. Subject to
the completion of the sale of the Boeing 747 to TWA and the pay down in debt,
the current lender agreed to a six-month extension to the loan. The outstanding
balance under this line of credit at September 30, 2000 was $11.05 million and
the interest rate was 11%. The current lender agreed to extend the term of its
10
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facility by six months and the Partnership is attempting to locate a replacement
lender. While the current loan requires interest only payments, a replacement
lender may require amortization of principal, which will reduce cash available
for distribution. Although the Partnership did not pay the principal when due,
the lender has not accelerated the loan. The Partnership is in negotiations with
the lender to achieve a suitable pay down schedule, assuming no replacement
lender is located. If unable to locate a replacement lender, future
distributions to the partners may need to be reduced or eliminated in order to
retire debt and the Partnership may also need to sell assets.
5. Subsequent Event
Shareholders of US Airways Group Inc. ("US Airways") have voted to
accept a merger proposal from UAL Corp., the parent company of United Airlines,
Inc. The Partnership owns 50% of a MD-81 aircraft leased to US Airways. No
change in the aircraft lease is expected if the merger is consummated.
11
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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
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This report may contain, in addition to historical information,
Forward-Looking Statements that include risks and other uncertainties. The
Partnership's actual results may differ materially from those anticipated in
these Forward-Looking Statements. Factors that might cause such a difference
include those discussed below, as well as general economic and business
conditions, competition and other factors discussed elsewhere in this report.
The Partnership undertakes no obligation to release publicly any revisions to
these Forward-Looking Statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of anticipated or unanticipated events.
Liquidity and Capital Resources
-------------------------------
The Partnership owns and manages a diversified portfolio of commercial
aircraft and makes quarterly distributions to the partners of net cash flow
generated by operations in the current and/or prior quarters. In certain
situations, the Partnership may retain cash flow from operations to finance
authorized capital expenditures.
The Partnership invests working capital and cash flow from operations
prior to its distribution to the partners in short-term, highly liquid
investments or a fund that invests in such instruments. At September 30, 2000,
the Partnership's unrestricted cash and cash equivalents of $1,679,000 were
primarily invested in such a fund. This amount was $194,000 less than the
Partnership's unrestricted cash and cash equivalents at December 31, 1999 of
$1,873,000. This decrease in unrestricted cash was attributable to the amount by
which cash distributions to partners, repayments of notes payable and
capitalized aircraft improvements exceeded cash generated by operating
activities and sales proceeds during the nine months ended September 30, 2000.
In April 2000, the Partnership sold its Boeing 747-100 to the lessee,
TWA, for total consideration of $4,360,000. As part of the sale, the Partnership
retained deposits received from TWA, aggregating $360,000, which had been held
by the Partnership, applying them towards the sales price for this aircraft. The
Partnership recognized a net gain of $1,611,000 on the sale of this aircraft
during the second quarter 2000.
Although TWA had a cash position of $157 million at September 30, 2000
and reported a smaller loss during the third quarter of 2000, versus the prior
year's quarter, given TWA's historical financial difficulties, its ongoing
financial losses are of concern. A default or deferral of lease payments on the
part of TWA, or Kitty Hawk, or any other lessee, may affect quarterly
distributions. TWA accounted for 37% and Kitty Hawk accounted for 20% of the
Partnership's lease revenue during the first nine months of 2000. Kitty Hawk was
current on all payments due to the Partnership as of September 30, 2000, but
filed for Chapter 11 bankruptcy protection on May 1, 2000.
Rent and other receivables decreased by $190,000, from $476,000 at
December 31, 1999 to $286,000 at September 30, 2000, due to Sky Trek's $190,000
security deposit which was applied against its $190,000 rent receivable.
Other assets decreased by $45,000, from $50,000 at December 31, 1999 to
$5,000 at September 30, 2000, due to a decrease in prepaid expenses.
12
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Notes payable decreased by $2,950,000, from $14,000,000 at December 31,
1999 to $11,050,000 at September 30, 2000, due to the pay down of debt from the
proceeds of the aircraft sale to TWA, as discussed above.
Accounts payable and accrued expenses decreased by $21,000, from
$111,000 at December 31, 1999 to $90,000 at September 30, 2000, primarily due to
a decrease in transfer agent fees.
Maintenance reserves payable increased by $563,000, from $969,000 at
December 31, 1999 to $1,532,000 at September 30, 2000, primarily due to the
receipt of payments from lessees during the nine months ended September 30,
2000.
Payable to affiliates increased by $395,000, from $491,000 at December
31, 1999 to $886,000 at September 30, 2000, due to additional management fees
that have been accrued but not yet paid.
Deferred rental income and deposits decreased by $662,000, from
$1,185,000 at December 31, 1999 to $523,000 at September 30, 2000. This decrease
was due to the application of security deposits and deferred rents from TWA
towards the aircraft sale, as discussed above, and the application of the Sky
Trek deposit against its rent receivable.
During the three months ended September 30, 2000, the Partnership paid
cash distributions relating to the second quarter of 2000 at the rate of $0.30
per Unit. As has historically been the case, the amount of future cash
distributions will be determined on a quarterly basis after an evaluation of the
Partnership's operating results and its current and expected financial position.
A similar distribution at $0.30 per Unit for the third quarter of 2000 was paid
in October 2000.
Distributions may be characterized for tax, accounting and economic
purposes as a return of capital, a return on capital, or both. The portion of
each cash distribution by a partnership, which exceeds its net income for the
fiscal period, may be deemed a return of capital. Based on the amount of net
income reported by the Partnership for accounting purposes, 82% of the cash
distributions declared for the quarter ended September 30, 2000, constituted a
return of capital. Also, based on the amount of net income reported by the
Partnership for accounting purposes, approximately 73% of the cash distributions
paid to the partners from inception of the Partnership through September 30,
2000 constituted a return of capital. However, the total actual return on
capital over the Partnership's life can only be determined at the termination of
the Partnership after all cash flows, including proceeds from the sale of the
aircraft, have been realized.
In February 1999, the Partnership's lender agreed to increase
its commitment from $10 million to $14.5 million and the interest rate increased
from 1.25% to 1.5% over prime, all of which was due in April 2000. Subject to
the completion of the sale of the Boeing 747 to TWA and the pay down in debt,
the current lender agreed to a six month extension to the loan. The outstanding
balance under this line of credit at September 30, 2000 was $11.05 million and
the interest rate was 11%. The current lender agreed to extend the term of its
facility by six months and the Partnership is attempting to locate a replacement
lender. Although the Partnership did not pay the principal when due, the lender
has not accelerated the loan. The Partnership is in negotiations with the lender
to achieve a suitable pay down schedule, assuming no replacement lender is
located. If unable to obtain a replacement lender, future distributions to the
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partners may need to be further reduced or eliminated in order to retire debt
and the Partnership may also need to sell assets. The Limited Partnership
Agreement permits the Partnership to borrow up to 35% (or $28,000,000) of the
original offering proceeds for improvements, enhancement or maintenance of
aircraft.
With the exception of the Boeing 727-200 formerly leased to Sky Trek,
the Partnership's aircraft are subject to leases with remaining terms of at
least 8 months.
During the nine months ended June 30, 2000, the Partnership invested
approximately $1.3 million with respect to the overhaul of two engines for the
Boeing 727-200 aircraft leased to Kitty Hawk.
Results of Operations
---------------------
The Partnership's net income was $1,558,000 for the nine months ended
September 30, 2000 (the "2000 Period") and $217,000 for the quarter ended
September 30, 2000 (the "2000 Quarter") as compared to $697,000 for the nine
months ended September 30, 1999 (the "1999 Period") and $114,000 for the quarter
ended September 30, 1999 (the "1999 Quarter").
The increase in the Partnership's net income for the 2000 Period
resulted primarily from the gain on sale of the Boeing 747-100 (as discussed in
Note 2 to the unaudited Financial Statements). This increase was partially
offset by a decrease in rental revenue and the write-down of the 727-200
aircraft previously leased to Sky Trek, as discussed below.
Rental revenue decreased by $799,000 and $433,000, or 13% and 21%,
respectively, for the 2000 Period and 2000 Quarter, due primarily to the
decrease in rental revenue from the Boeing 747-100 aircraft sold to TWA on April
7, 2000, as discussed in Note 2 to the unaudited financial statements.
Additionally, there was a decrease in rental revenue with respect to the Sky
Trek aircraft, which was placed on non-accrual and cash collection status
beginning in the third quarter of 1998 and was returned during the second
quarter of 2000. Partially offsetting these decreases was an increase in
revenues with respect to the aircraft on lease to Kitty Hawk (off-lease during
the first half of 1999).
The Partnership recognized other income of $181,000 during the 2000
Period, from a return condition settlement payment from Continental Airlines,
Inc. relating to the aircraft on lease to Kitty Hawk.
The Partnership recognized a gain of $1,611,000 on sale of the Boeing
747-100 aircraft to TWA during April, 2000, as discussed in Note 2 to the
unaudited Financial Statements.
Interest income decreased $6,000 and $8,000, or 10% and 30%,
respectively, in the 2000 Period and 2000 Quarter, in comparison to the 1999
Period and 1999 Quarter, primarily due to lower cash balances and lower interest
income on such cash balances.
Depreciation and amortization decreased by $664,000 and $419,000, or
17% and 33%, respectively, in the 2000 Period and the 2000 Quarter, as compared
to the 1999 Period and 1999 Quarter, primarily due to the sale of the Boeing
747-100 aircraft to TWA during April 2000 and the termination of the lease to
Sky Trek in May 2000. Partially offsetting these decreases was an increase in
depreciation related to the aircraft on lease to Kitty Hawk (off-lease during
the first half of 1999).
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The Partnership provided a write-down aggregating $500,000, to reduce
the carrying value to an approximation of market value for the 727-200 aircraft
previously leased to Sky Trek, at June 30, 2000. There were no write-downs
during the 1999 Period.
Management and re-lease fee expenses to the General Partners for the
2000 Period increased $123,000, or 25%, in comparison to the 1999 Period. This
was primarily attributable to sales proceeds of $4.36 million, from the sale of
the Boeing 747-100 aircraft to TWA during April 2000, as discussed in Note 2 to
the unaudited Financial Statements, which serves separately as the basis for
certain fees.
General and administrative expense increased by $32,000 and $16,000, or
21% and 33%, respectively, in the 2000 Period and the 2000 Quarter, as compared
to the 1999 Period and 1999 Quarter, which was primarily due to increases in
outside audit and investor report fees, partially offset by decreases in
transfer agent and appraisal fees.
Interest expense increased by $122,000, or 14%, in the 2000 Period, as
compared to the 1999 Period, due to an increase in the average amount of
borrowings and a slight increase in the average interest rate during the 2000
Period, as compared to the 1999 Period.
Engine rental expense was $84,000 during the 2000 Period, due to the
Partnership temporarily renting two JT8D-9A engines, from an affiliate of the
Managing General Partner, for the aircraft leased to Kitty Hawk. There was no
corresponding expense during the 1999 Period.
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PART II. OTHER INFORMATION
--------------------------
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits and reports to be filed: none
27. Financial Data Schedule (in electronic format only).
(b) The Partnership did not file any reports on Form 8-K during the
third quarter of the fiscal year ending December 31, 2000.
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SIGNATURE
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.
Pegasus Aircraft Partners, L.P.
(Registrant)
By: Air Transport Leasing, Inc.
Administrative General Partner
Date: November 13, 2000 By: /s/ CARMINE FUSCO
-----------------
Carmine Fusco
Vice President, Secretary, Treasurer and
Chief Financial and Accounting Officer
17
