<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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: 0-19216
JetFleet Aircraft, L.P.
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction
of incorporation or organization)
1440 Chapin Avenue, Suite 310
Burlingame, California
(Address of principal executive office)
94010
(Zip Code)
(415) 696-3900
Registrant's telephone number, including area code:
94-3087300
(I.R.S. Employer Identification No.)
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 the
filing requirements for the past 90 days. X Yes No
On May 14, 1997, 296,069 Limited Partnership Units were outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JetFleet Aircraft, L.P.
Balance Sheets
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1997 1996
(Unaudited)
----- ----
<S> <C> <C>
Current assets:
Cash $ 81,685 $ 30,728
Lease payments receivable 150,000 180,000
Reserves receivable from lessee - 4,688
------------ ------------
Total current assets 231,685 215,416
Aircraft under operating leases and
aircraft held for operating leases, net of
accumulated depreciation of $4,315,615
in 1997 and $4,055,292 in 1996 2,068,022 2,328,345
------------ ------------
$ 2,299,707 $ 2,543,761
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 13,560 $ 16,743
Accrued maintenance costs 43,237 25,277
Prepaid rents 8,890 8,890
Unearned interest income 7,892 14,674
------------ ------------
Total liabilities 73,579 65,584
Partners' capital 2,226,128 2,478,177
------------ ------------
$ 2,299,707 $ 2,543,761
============ ============
<FN>
See accompanying notes.
</TABLE>
1
<PAGE> 3
JetFleet Aircraft, L.P.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1997 1996
<S> <C> <C>
Revenues:
Rental income $ 139,672 $ 127,048
Interest income 6,987 13,973
----------- -----------
146,659 141,021
Costs and expenses:
General and administrative 22,318 32,666
Maintenance costs - 35,000
Depreciation of aircraft 260,323 260,322
----------- -----------
282,641 327,988
----------- -----------
Net loss $ < 135,982> $ < 186,967>
=========== ===========
Allocation of net loss:
General partners $ < 1,360> $ <1,870>
Limited partners < 134,622> <185,097>
----------- -----------
$ < 135,982> $ <186,967>
=========== ===========
Per Limited Partnership Unit $ < 0.45> $ < 0.63>
=========== ===========
Limited Partnership
Units outstanding 296,069 296,069
=========== ===========
<FN>
See accompanying notes.
</TABLE>
2
<PAGE> 4
JetFleet Aircraft, L.P.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1997 1996
<S> <C> <C>
Net cash provided by operating activities $ 137,024 $ 38,232
Investing activities-
Payments received on capital lease 30,000 45,000
Financing activities -
Distributions < 116,067> < 115,370>
----------- ------------
Net increase / <decrease> in cash 50,957 <32,138>
----------- ------------
Cash, beginning of period 30,728 96,184
Cash, end of period $ 81,685 $ 64,046
=========== ============
<FN>
See accompanying notes.
</TABLE>
4
<PAGE> 5
JetFleet Aircraft, L.P.
Notes to Financial Statements
March 31, 1997
(Unaudited)
1. Basis of Presentation
JetFleet Aircraft, L.P. ("JetFleet"), a California limited partnership,
was formed on February 16, 1989 and commenced operations in November
1989.
The accompanying unaudited financial statements reflect all adjustments
(consisting of only normal recurring accruals) which are, in the opinion of
CMA Capital Group, the Corporate General Partner, necessary for a fair
presentation of the financial results for such periods. The results of
operations for such periods are not necessarily indicative of results of
operations for a full year. The statements should be read in conjunction with
the Summary of Significant Accounting Policies and other notes to financial
statements included in JetFleet's Annual Report on Form 10-K for the year
ended December 31, 1996.
2. Aircraft Under Operating Leases
deHavilland Aircraft
JetFleet owns a 24.37% undivided interest in a deHavilland DHC-7-103
aircraft, serial number 72 ("S/N 72") and a 95.90% undivided interest in a
deHavilland DHC-7-102 aircraft, serial number 57 ("S/N 57"). The remaining
undivided interests in these two aircraft are owned by the seller and
JetFleet Aircraft II, L.P. ("JetFleet II"), a California limited
partnership and an affiliate of JetFleet (collectively, the "Co-Owners").
S/N 57 was subject to a triple net lease with Johnson Controls World
Services, Inc. ("JCWS") for a two year term, renewable in one year increments
for an aggregate period of eight years. JCWS operated S/N 57 under an eight
year contract, which commenced in 1986, with the United States Army for use
in
the Marshall Islands at the site of the Army's deep space research center
where missile guidance systems are tested.
During 1994, the lease with JCWS for S/N 57 was extended through
September 30, 1995, at reduced rent. A new contract with the United States
Army commenced on February 15, 1995 for a term of two years with three two-
year renewal options. The contract was awarded to Range Systems
Engineering,
a subsidiary of Raytheon Service Company ("Raytheon"). JetFleet's
management anticipates that the lease will continue for as long as the
underlying government contract continues, although there is no contractual
requirement to this effect. During 1995 the lease was extended through
September 30, 1996 and, during 1996, an agreement was reached to extend the
lease for S/N 57 through September 30, 1998 at a reduced rental rate, with an
option to extend the term for two additional years.
4
<PAGE> 6
JetFleet Aircraft, L.P.
Notes to Financial Statements
March 31, 1997
(Unaudited)
2. Aircraft Under Operating Leases (continued)
S/N 72, which, at the time of purchase, was subject to the same contract
with JCWS as S/N 57, was returned by JCWS during June 1993. In August 1993,
S/N 72 was leased to Eclipse Airlines. Upon its return from Eclipse, S/N 72
was leased to The AGES Group, L.P. ("AGES") for the period December 22, 1993
through September 1, 1994. Upon its return by AGES, S/N 72 underwent
certain
scheduled maintenance and other repair work.
On March 31, 1995, S/N 72 was leased to the National Airline Commission
of Papua New Guinea (trading as Air Niugini) ("Air Niugini") for a term of six
months. The lease was subsequently extended until October 31, 1995.
JetFleet collected a total of $53,060 in monthly lease payments from Air
Niugini during the term of the lease. In addition, Air Niugini paid
JetFleet its pro-rata share of maintenance costs of $31,710. Upon its
return by Air Niugini, S/N 72 underwent certain scheduled maintenance and
other repair work.
On April 25, 1996, S/N 72 was leased to Air Tindi Limited ("Air Tindi")
for a term of thirty-six months. Air Tindi has provided a letter of credit
which serves as a security deposit under the lease. In addition, Air Tindi
pays JetFleet its pro-rata share of maintenance costs per hour of usage,
which amount is to be applied for scheduled overhauls and inspections. Air
Tindi is a regional airline headquartered in Yellowknife, Northwest
Territories, Canada and provides charter and regularly scheduled flights
throughout the Northwest Territories.
3. Investment in Capital Lease
McDonnell Douglas DC-9-32 Aircraft
JetFleet owns a 50.00% interest in a McDonnell Douglas DC-9-32, serial
number 47236 (the "DC-9"). The remaining 50.00% interest is owned by
JetFleet II. The DC-9 is leased back to the seller, Interglobal, Inc. for
thirty-six months (the "DC-9 Lease). The DC-9 is currently sub-leased to and
being operated by Aero California S.A. de CV. As part of the sale and
leaseback described above, Interglobal, Inc. assigned its rights under
the sublease to the Co-Owners. JetFleet's investment in the DC-9 is being
accounted for as a capital lease. JetFleet recorded $6,782 of interest
income attributable to the DC-9 Lease during the three months
ended March 31, 1997.
5
<PAGE> 7
JetFleet Aircraft, L.P.
Notes to Financial Statements
March 31, 1997
(Unaudited)
4. Subsequent Events
On April 8, 1997 a Registration Statement on Form S-4 was filed with the
Securities and Exchange Commission disclosing a proposed consolidation of
JetFleet and JetFleet II into a newly incorporated Delaware corporation,
AeroCentury Corp. Upon effectiveness of the Registration Statement, the
proposed consolidation will be submitted to the limited partners of JetFleet
and JetFleet II for their approval. If the consolidation is approved,
JetFleet and JetFleet II will cease to exist as independent entities.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
At the end of the first quarter of 1997, JetFleet had cash balances of
$81,685. This amount was held for the distribution made to the Unitholders in
April 1997 and to pay accrued expenses.
During the quarter, JetFleet's primary sources of liquidity were cash
flows from leasing operations and capital lease payments. JetFleet's
liquidity will vary in the future, increasing to the extent cash flows from
operations exceed expenses, and decreasing as distributions are made to the
Unitholders and to the extent expenses exceed cash flows from leases.
JetFleet uses substantially all its operating cash flow to make cash
distributions to its Unitholders. Since JetFleet's leases are triple net
leases (the lessee pays operating and maintenance expenses, insurance and
taxes), JetFleet does not anticipate that it will incur significant
operating expenses in connection with ownership of its aircraft as long as
they remain on lease. However, JetFleet incurred repair costs in 1996 for
S/N 72 which were $35,000 in excess of the amounts collected from lessees.
These repair costs are the result of maintenance performed to enhance the
aircraft's marketability.
Since May 1995, JetFleet has made distributions at an annualized rate
of 4%. JetFleet currently has available adequate reserves to meet its
immediate cash requirements.
1997 versus 1996
Cash flows from operations were approximately $137,000 and $38,000
during the first quarters of 1997 and 1996, respectively. The increase from
year to year was partially due to a decrease in net loss of approximately
$50,000 (see Results of Operations, below). In addition, during the first
quarter of 1996, JetFleet paid for accrued maintenance costs of approximately
$16,000, realized unearned income of approximately $14,000 and paid
previously
accrued expenses of approximately $5,000 to affiliates. During the first
quarter of 1997, JetFleet received approximately $18,000 in maintenance
reserves from lessees, and realized rent receivable from lessees of
approximately $5,000 and unearned income of approximately $7,000.
Cash flows from investing activities decreased $15,000 in 1997 because
the rent due on the DC-9 for March 1997 was not received until April 1997.
In 1997 and 1996, there were no financing sources of cash. Cash
distributions to Unitholders were approximately the same from year to year.
7
<PAGE> 9
Results of Operations
JetFleet recorded net losses of <$135,982> and <$186,967> or <$0.45>
and <$0.63> per Limited Partnership Unit outstanding for the three months
ended March 31, 1997 and 1996, respectively. The decreased loss was primarily
a result of the decreases of approximately $35,000 and $10,000 in maintenance
and general and administrative costs, respectively, as well as an increase of
approximately $12,000 in rental income. The increase in rental income was
only partially offset by a decrease of approximately $7,000 in income
recognized from the capital lease for the DC-9.
1997 versus 1996
Rental income was $12,000 higher during in 1997 versus due to the
increased monthly rent received from S/N 72, which was only partially offset
by the decreased monthly rent received for S/N 57. Interest income from the
capital lease for the DC-9 was $7,000 lower in 1997 due to the decreasing
lease payments receivable.
There was no change in depreciation from 1996 to 1997.
There was no accrual or payment of the base management, incentive
management or re-lease fees for 1997 or 1996 as the annualized rate of
distributions in those years did not meet the Preferred Return as defined in
the Prospectus.
General and administrative expenses decreased approximately $10,000 from
1996 to 1997, due to a decrease in insurance expense associated with S/N 72.
Maintenance costs decreased approximately $35,000 from 1996 to 1997
because JetFleet did not incur any repair costs in 1997 for S/N 72, as a
result of it being on lease subject to a triple net lease.
8
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on May 14, 1997.
JETFLEET AIRCRAFT, L.P.
<TABLE>
<BTB>
<S> <C>
By: CMA Capital Group,
Managing General Partner
By: /S/ Neal D. Crispin
Neal D. Crispin
Title: Chief Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons in the capacities indicated on
May 14, 1997.
<TABLE>
<BTB>
<S> <C>
Signature Title
/S/ Neal D. Crispin Chief Executive and Chief Financial
- --------------------- Officer and Chairman of the Board of
Neal D. Crispin Directors of the Managing General
Partner
/S/ Richard D. Koehler Executive Vice President and
- ------------------------ Director of the Managing General
Richard D. Koehler Partner
</TABLE>
9
<PAGE> 11
EXHIBIT INDEX
Exhibit No. Description Page No.
- ------------ ------------ ---------
EX-27 Financial Data Schedule
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 81,685
<SECURITIES> 0
<RECEIVABLES> 150,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 231,685
<PP&E> 6,383,637
<DEPRECIATION> 2,068,022
<TOTAL-ASSETS> 2,299,707
<CURRENT-LIABILITIES> 73,579
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,226,128
<TOTAL-LIABILITY-AND-EQUITY> 2,299,707
<SALES> 0
<TOTAL-REVENUES> 139,672
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 282,641
<LOSS-PROVISION>
<INTEREST-EXPENSE>
<INCOME-PRETAX> (135,982)
<INCOME-TAX>
<INCOME-CONTINUING> (135,982)
<DISCONTINUED>
<EXTRAORDINARY>
<CHANGES>
<NET-INCOME> (135,982)
<EPS-PRIMARY>
<EPS-DILUTED>
</TABLE>
