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 September 30, 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 FIILE NUMBER: 0-19216
JETFLEET AIRCRAFT, L.P.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-3087300
(State or other jurisdiction (I.R.S. Employer
Identification No.)
of incorporation or organization)
1440 CHAPIN AVE., SUITE 310 94010
BURLINGAME, CALIFORNIA (Zip Code)
(Address of principal executive office)
Registrant's telephone number, including area code:
(650) 696-3900
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 the filing
requirements for the past 90 days. /X/ Yes / / No
On November 13, 1997, 296,069 Limited Partnership Units
were outstanding.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JetFleet Aircraft, L.P.
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
----- ------
(Unaudited)
<BTB>
<S> <C> <C>
Current assets:
Cash $ 157,430 $ 30,728
Lease payments receivable 45,000 180,000
Accounts receivable 10,176 -
Reserves receivable from lessee - 4,688
Total current assets 212,606 215,416
Aircraft under operating leases and
aircraft held for operating leases,
net of accumulated depreciation
of $4,836,260 in 1997
and $4,055,292 in 1996 1,547,377 2,328,345
------------ -----------
$ 1,759,983 $ 2,543,761
============ ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 17,279 $ 16,743
Accrued maintenance costs 58,199 25,277
Prepaid rents 8,142 8,890
Unearned interest income 510 14,674
------------ -----------
Total liabilities 84,130 65,584
------------ -----------
Partners' capital 1,675,853 2,478,177
------------ -----------
$ 1,759,983 $ 2,543,761
============ ===========
<FN>
See accompanying notes.
</TABLE>
JetFleet Aircraft, L.P.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months For the Three Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
<BTB>
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 415,086 $ 436,708 $ 137,613 $ 160,386
Interest income 14,368 36,916 2,625 10,532
---------- ---------- ---------- -----------
429,454 473,624 140,238 170,918
Costs and expenses:
Amortization of
organization costs - 1,435 - 405
General and
administrative 55,570 90,024 5,962 28,408
Maintenance costs (20,703) 35,000 - -
Depreciation
of aircraft 780,968 780,968 260,323 260,323
---------- ---------- ---------- -----------
815,835 907,427 266,285 289,136
---------- ---------- ---------- -----------
Net loss $ (386,381)$ (433,803) $ (126,047) $ (118,218)
========== ========== =========== ===========
Allocation of net loss:
General partners $ (3,864)$ (4,338) $ ( 1,260) $ (1,182)
Limited partners (382,517) (429,465) ( 124,787) (117,036)
---------- ---------- ---------- -----------
$(386,381)$ (433,803) $ (126,047) $ (118,218)
========== ========== =========== ===========
Per Limited
Partnership Unit $ (1.29)$ (1.45) $ (0.42) $ (0.40)
========== ========== =========== ===========
Limited Partnership
Units outstanding 296,069 296,069 296,069 296,069
========== ========== =========== ===========
<FN>
See accompanying notes.
</TABLE>
JetFleet Aircraft, L.P.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1997 1996
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<BTB>
<S> <C> <C>
Net cash provided by operating activities $ 407,645 $ 268,211
Investing activities-
Payments received on capital lease 135,000 135,000
Financing activities -
Distributions (415,943) (415,400)
--------- ---------
Net increase / (decrease) in cash 126,702 (12,189)
Cash, beginning of period 30,728 96,184
--------- ---------
Cash, end of period $ 157,430 $ 83,995
========= =========
<FN>
See accompanying notes.
</TABLE>
JetFleet Aircraft, L.P.
Notes to Financial Statements
September 30, 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 through September 30, 1998 at a reduced
rental rate, with an option to extend the term for two additional
years.
JetFleet Aircraft, L.P.
Notes to Financial Statements
September 30, 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 ("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 $14,164 of
interest income attributable to the DC-9 Lease during the nine
months ended September 30, 1997.
4. Other
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. The Registration Statement
was declared effective on September 23, 1997 and the proposed
consolidation has been 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
At the end of the third quarter of 1997, JetFleet had cash
balances of $157,430. This amount was held for the distribution
made to the Unitholders in October 1997 for the months of August
and September 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.
From May 1995 through September 1997, JetFleet made
distributions at an annualized rate of 4%. JetFleet ceased cash
distributions to its partners effective October 1, 1997. If the
proposed consolidation discussed in Note 4 is not approved by the
partners, JetFleet will use its cash flow to reinvest in additional
aircraft assets. JetFleet currently has available adequate
reserves to meet its immediate cash requirements.
1997 versus 1996
Cash flows from operations increased approximately $140,000.
The increase from year to year was partially due to a decrease in
net loss of approximately $48,000 (see Results of Operations,
below). During the first nine months of 1997, JetFleet had cash
inflows of approximately $33,000 in maintenance reserves from
lessees and $5,000 of rent receivable. These cash inflows were
partially offset by the recognition of approximately $14,000 of
unearned income and the recording of a receivable of approximately
$10,000 for rent receivable. During the first nine months of 1996,
JetFleet's primary cash outflows consisted of accrued maintenance
costs of approximately $59,000, previously accrued expenses of
approximately $42,000 and unearned income of approximately $37,000.
Such cash outflows were partially offset by payments on accounts
receivable of approximately $46,000 and prepaid rent of
approximately $11,000.
There were no investing activities during the nine months ended
June 30, 1997 and 1996.
In 1997 and 1996, there were no financing sources of cash.
Cash distributions to Unitholders were approximately the same from
year to year.
Results of Operations
JetFleet recorded net losses of ($386,381) and ($433,803) or
($1.29) and ($1.45) per Limited Partnership Unit outstanding in the
nine months ended September 30, 1997 and 1996, respectively, and
net losses of ($126,047) and ($118,218) or ($0.42) and ($0.40) per
Limited Partnership Unit outstanding in the three months ended
September 30, 1997 and 1996, respectively.
1997 versus 1996
Rental income decreased approximately $22,000 and for the nine
month and three month periods ended September 30, 1997 compared to
the same periods in 1996. The decreases were primarily a result of
decreased rent for S/N 57, pursuant to the 1996 lease extension.
The decreases were only partially offset by additional rent
received for S/N 72 during the second quarter of 1997, which had
been off lease during April 1996. Interest income from the capital
lease for the DC-9 was $23,000 and $8,000 lower in the nine month
and three month periods ending September 30, 1997, respectively,
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
$34,000 and $22,000 during the nine months and three months ended
September 30, 1997 compared to the same periods in 1996. In 1996,
such expenses included insurance costs associated with S/N 72
during its off-lease period. No insurance costs were incurred
during 1997.
Maintenance costs decreased approximately $56,000 for the nine
month period ended September 30, 1997, compared to the same period
in 1996, 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 and because JetFleet recorded an adjustment of
approximately $21,000 for the reimbursement of maintenance costs
previously expensed and paid. JetFleet incurred no maintenance
costs during the three months ended September 30, 1997 or 1996.
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 November 13, 1997.
JETFLEET AIRCRAFT, L.P.
By: CMA Capital Group,
Managing General Partner
<TABLE>
<BTB>
<S> <C>
By: /s/ Neal D. Crispin
---------------------
Neal D. Crispin
Title: Chief Executive Officer
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 November 13, 1997.
</TABLE>
<TABLE>
<CAPTION>
<BTB>
<S> <C>
Signature Title
/s/ Neal D. Crispin Chief Executive and Chief Financial
- -------------------
Neal D. Crispin Officer and Chairman of the Board of
Directors of the Managing General
Partner
/s/ Richard D. Koehler Executive Vice President and
- ----------------------
Richard D. Koehler Director of the Managing General
Partner
</TABLE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ------------ ------------ ---------
EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 157,430
<SECURITIES> 0
<RECEIVABLES> 55,176
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 212,606
<PP&E> 6,383,637
<DEPRECIATION> (4,836,260)
<TOTAL-ASSETS> 1,759,983
<CURRENT-LIABILITIES> 84,130
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,675,853
<TOTAL-LIABILITY-AND-EQUITY> 1,759,983
<SALES> 0
<TOTAL-REVENUES> 429,454
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 815,835
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (386,381)
<INCOME-TAX> 0
<INCOME-CONTINUING> (386,381)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (386,381)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
