<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 September 30, 1996
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: 0-21480
JETFLEET AIRCRAFT II, L.P.
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction
of incorporation or organization)
94-3137154
(I.R.S. Employer Identification No.)
1440 CHAPIN AVENUE, SUITE 310
BURLINGAME, CALIFORNIA
(Address of principal executive office)
94010
(Zip Code)
Registrant's telephone number, including area code: (415) 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 14, 1996, 693,505 Limited Partnership Units were outstanding.
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JetFleet Aircraft II, L.P.
Balance Sheets
ASSETS
September 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 1,422,522 $ 1,364,593
Accounts receivable
from affiliates - 45,000
Lease payments receivable 540,000 960,000
------------ -------------
Total current assets 1,962,522 2,369,593
Aircraft and aircraft engines
under operating leases and aircraft
held for operating leases, net of
accumulated depreciation of
$9,608,586 in 1996
and $7,213,339 in 1995 15,252,057 17,520,291
Lease payments receivable 300,000 1,275,000
Organization and offering costs, net
of accumulated amortization of
$115,160 in 1996 and $91,214 in 1995 40,877 64,822
------------ ------------
$ 17,555,456 $ 21,229,706
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 87,037 $ 119,254
Accrued maintenance costs 370,492 410,702
Payable to affiliates 29,378 49,075
Security deposits 140,415 140,415
Unearned interest income 101,488 287,373
Prepaid rent received 34,442 15,000
----------- ------------
Total current liabilities 763,252 1,021,819
Unearned interest income 19,918 174,032
----------- ------------
Total liabilities 783,170 1,195,851
Partners' capital 16,772,286 20,033,855
----------- ------------
$17,555,456 $ 21,229,706
=========== ============
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JetFleet Aircraft II, L.P.
Statements of Operations
(Unaudited)
For the Nine Months For the Three Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Revenues:
<S> <C> <C> <C> <C>
Rental income $1,996,667 $1,976,103 $726,426 $688,580
Gain / <loss> on
sale of equipment 34,859 ( 46,090) - -
Interest income 220,746 129,477 47,352 81,330
Other income 94,081 - 94,081 -
---------- ---------- -------- --------
2,346,353 2,059,490 867,859 769,910
Costs and expenses:
Management fees 107,231 86,636 61,774 31,771
Depreciation of
aircraft and
aircraft engines 2,443,569 2,702,102 816,444 856,924
Amortization of
organization and
offering costs 23,946 23,944 7,983 7,981
Maintenance costs 119,252 119,177 14,252 -
General and
administrative 234,442 155,293 63,071 43,253
---------- ----------- -------- ----------
2,928,440 3,087,152 963,524 939,929
---------- ----------- -------- ----------
Net loss $( 582,087) $(1,027,662) $(95,665) $( 170,019)
========== =========== ======== ==========
Allocation of net loss:
General partners $ ( 29,104) $ ( 51,383) $( 4,783) $ ( 8,501)
Limited partners ( 552,983) ( 976,279) ( 90,882) ( 161,518)
---------- ----------- --------- ---------
( 582,087) $(1,027,662) $(95,665) $(170,019)
========== =========== ======== =========
Per Limited
Partnership Unit $ ( 0.80) $ ( 1.41) $ ( 0.13) $ ( 0.23)
========== =========== ======== =========
Limited Partnership
Units outstanding 693,505 693,505 693,505 693,505
========== =========== ======== =========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JetFleet Aircraft II, L.P.
Statements of Cash Flows
(Unaudited)
For the Nine Months
Ended September 30,
1996 1995
<S> <C> <C>
Net cash provided by operating activities $ 1,482,888 $ 2,505,718
Investing activities:
Payments received on capital lease 1,395,000 (1,875,000)
Sale of interests in aircraft
and aircraft engines 211,000 5,089,344
Purchase of interests in aircraft
and aircraft engines ( 351,477) ( 2,058,846)
------------- ------------
Net cash provided by investing activities 1,254,523 1,155,498
Financing activities -
Distributions ( 2,679,482) ( 2,566,411)
------------- ------------
Net increase in cash 57,929 1,094,805
Cash, beginning of period 1,364,593 370,310
------------- -------------
Cash, end of period $ 1,422,522 $ 1,465,115
============= =============
<FN>
See accompanying notes.
</TABLE>
<PAGE>
JetFleet Aircraft II, L.P.
Notes to Financial Statements
September 30, 1996
(Unaudited)
1. Basis of Presentation
JetFleet Aircraft II, L.P. ("JetFleet II ") is a California limited
partnership formed on June 24, 1991 for the purpose of acquiring a portfolio
of aircraft and aircraft engines, or interests therein, which are subject to
triple net leases. 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 ("Group"),
necessary for a fair presentation of the financial results. The results of
operations of such period 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 II's Annual Report on Form 10-K for the
period ended December 31, 1995.
2. Equipment Under Operating Leases
Aircraft
JetFleet II holds 75.53% and 100.00% undivided interests in two
deHavilland DHC-7-103 aircraft, serial number 72 ("S/N 72") and serial number
11 ("S/N 11"), respectively. JetFleet II also holds 4.00% and 100.00%
undivided interests in two deHavilland DHC-7-102 aircraft, serial number 57
("S/N 57") and serial number 44 ("S/N 44"), respectively. The remaining
undivided interests in S/N 72 and S/N 57 are held by the seller and JetFleet
Aircraft, L.P. ("JetFleet "), a California limited partnership and an
affiliate of JetFleet II (collectively, the "Co-Owners").
At the time of purchase, all four deHavilland aircraft were subject to
triple net leases with Johnson Controls World Services, Inc. ("JCWS") for two
year terms, renewable in one year increments for an aggregate period of eight
years. JCWS operated the aircraft 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 leases with JCWS for S/N 57, S/N 11 and S/N 44 were
extended through September 30, 1995, at reduced rent of $46,000, $48,000 and
$46,000, respectively, of which JetFleet II's share is $1,840, $48,000 and
$46,000, respectively. (S/N 72, as discussed below, was returned by JCWS
during 1993). 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 II's management anticipates
that the leases 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. An
agreement recently has been reached to extend the lease for S/N 57, S/N 11 and
S/N 44 through September 30, 1998 at reduced rental rates of $38,500, $41,000
and $38,500 per month, respectively, of which JetFleet II's share is $36,921,
$41,000, and $38,500.
<PAGE>
JetFleet Aircraft II, L.P.
Notes to Financial Statements
September 30, 1996
(Unaudited)
2. Equipment Under Operating Leases (continued)
Aircraft (continued)
S/N 72, which, at the time of purchase, was subject to the same contract
with JCWS as S/N 57, S/N 44 and S/N 11 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 at a monthly rental rate of
$38,800. Upon its return by AGES, S/N 72 underwent 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 at a monthly rental rate of $35,000 to be paid to the Co-Owners based
upon their pro rata ownership of the aircraft. Air Niugini paid a security
deposit of $105,000. The lease was subsequently extended until October 31,
1995. JetFleet collected a total of $189,581 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 $121,058. 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 at a monthly rental rate of $47,500 to be paid
to the Co-Owners based upon their pro rata ownership of the aircraft. Air
Tindi has provided a letter of credit in the amount of $142,000 which serves
as a security deposit under the lease. In addition, Air Tindi pays JetFleet
II its pro-rata share of maintenance costs of $265.00 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.
On April 12, 1995, JetFleet II purchased a 100.00% undivided interest in
a deHavilland DHC-6-310, serial number 666 ("S/N 666") using a portion of the
initial payment received from AGES (see Engines, below). S/N 666 was
purchased from JetFleet Management Corp. ("JMC"), an affiliate of Group, for
$850,000, the same price that JMC paid for the aircraft. In connection with
the acquisition of S/N 666, JetFleet II reimbursed JMC $27,997 for
acquisition costs. JetFleet II also paid an acquisition fee of $12,926 to
Group. As part of the purchase of the aircraft from JMC, JetFleet II
acquired all of JMC's rights and assumed all of JMC's obligations under a
Lease Agreement with Loganair Limited, dated January 31, 1995, for S/N 666
(the "Loganair Lease"). The Loganair Lease is a triple net lease which runs
through January 1998. JetFleet II receives monthly rent in the amount of
$15,000 from the Loganair Lease.
On June 30, 1995, JetFleet II purchased a 100% undivided interest in a
Fairchild Metro III SA-227-AC aircraft, serial number AC-576 ("S/N 576"), at a
cost of $1,140,000. In connection with the purchase, JetFleet II paid $8,500
in chargeable acquisition costs to third parties and an acquisition fee of
$17,250 to Group. At the time of purchase, S/N 576 was subject to a lease
with Merlin Express, Inc., a subsidiary of Fairchild Aircraft Incorporated
("Merlin"), for a term expiring on July 18, 1999 at a monthly rental rate of
$15,000 (the "Merlin Lease"). The Merlin Lease contains a guaranty by
Fairchild Aircraft Incorporated for basic rent in an amount not to exceed a
total aggregate amount of $90,000. As part of the purchase of S/N 576, the
seller, Air Metro III, Inc. ("Air Metro") assigned the Merlin Lease to
JetFleet II . Merlin also pays, on a monthly basis, maintenance costs of $27
per hour of usage. JetFleet II holds a security deposit from Merlin of
$45,000.
<PAGE>
JetFleet Aircraft II, L.P.
Notes to Financial Statements
September 30, 1996
(Unaudited)
2. Equipment Under Operating Leases (continued)
Aircraft (continued)
On February 27, 1996, JetFleet II purchased a 50% undivided interest in
a Fairchild SA226-TC aircraft, serial number TC-370, for $341,750 ("S/N
TC-370") from Air Metro. CMA Capital Management, Inc. ("CMA"), a subsidiary
of CMA Consolidated, Inc., purchased the remaining 50% interest at the same
time (and has subsequently resold its interest to JetFleet III , a subsidiary
of JMC and an affiliate of JetFleet II ). JetFleet II reimbursed Group
$4,533 for costs incurred in connection with the acquisition of the interest
in the S/N TC-370. JetFleet II also paid an acquisition fee of $5,194 to
Group.
At the time S/N TC-370 was purchased, it was subject to a lease with
Sunbird Air Services, Ltd. for a term expiring September 30, 2000 at a monthly
rate of $9,500, of which JetFleet II is entitled to $4,750 (the "Sunbird
Lease"). The Sunbird Lease contains a guaranty by Air Metro for basic rent in
an amount not to exceed a total aggregate amount of $29,250 (which guaranty is
shared equally by JetFleet II and CMA). As part of the purchase of S/N
TC-370 from Air Metro, Air Metro assigned its interests and obligations under
the Sunbird Lease to JetFleet II . Sunbird also pays, on a monthly basis,
maintenance costs of $18 per hour of usage.
Engines
JetFleet II holds 100.00% undivided interests in twenty five used
aircraft engines consisting of twenty three Pratt & Whitney PT6 engines and
two Allison A-250-C30P engines (collectively, the "Airwork Engines").
The Airwork Engines acquired by JetFleet II are leased back to the
seller ("Airwork") pursuant to a master lease (the "Airwork Lease") between
Airwork and JetFleet II . The Airwork Lease is a triple net lease and has an
initial seven-year term, and Airwork has two two-year renewal options. Upon
the purchase of each engine by JetFleet II , Airwork was required to pay a
security deposit equal to one month of rent. JetFleet II receives monthly
rent in the amount of $73,615 from the Airwork Lease.
During January 1996, Airwork notified JetFleet II of the loss of one of
the Airwork Engines (the "First Lost Airwork Engine"). Rather than replace
the First Lost Airwork Engine, Airwork chose to pay $211,000 to JetFleet II
(the stipulated loss value as stated in the Airwork Lease).
During June 1996, Airwork notified JetFleet II of the loss of another
one of the Airwork Engines (the "Second Lost Airwork Engine"). Airwork has
replaced the Second Lost Airwork Engine with an engine of equal value, utility
and operating condition.
During 1993 and 1994, JetFleet II purchased 100.00% undivided interests
in three Pratt & Whitney JT8D-217A engines (the "AGES Engines"). The AGES
Engines were leased to GPA Group plc ("GPA") under a lease expiring on June
15, 1999 (the "GPA Lease"). GPA in turn sub-leased the AGES Engines to
Aerovias de Mexico, S.A. de C.V. ("AeroMexico"). JetFleet II was entitled to
monthly rent of $75,000 in connection with the GPA Lease. GPA's payment
obligations under its lease with JetFleet II were guaranteed by AGES to the
extent that a default in GPA's payment obligations in the GPA Lease were not
due to a default by AeroMexico in its payments to GPA.
<PAGE>
JetFleet Aircraft II, L.P.
Notes to Financial Statements
September 30, 1996
(Unaudited)
2. Equipment Under Operating Leases (continued)
Engines (continued)
At the time the AGES Engines were purchased, AGES assigned its rights as
lessor under the GPA Lease to JetFleet II . The assignment was contingent
upon AGES obtaining the consents of GPA and AeroMexico to the transfer of
ownership. If such consents were not obtained by certain deadlines, JetFleet
II could require AGES to repurchase the AGES Engines. Because AGES did not
obtain such consents, JetFleet II and AGES agreed to rescind the entire AGES
Engines purchase transaction on April 7, 1995. The rescission price for the
AGES Engines of $5,089,344 was based on the original purchase price paid by
JetFleet II , decreased by the amount of rent paid since the purchase of the
AGES Engines, and increased by the cost incurred by AGES in borrowing the
purchase funds. JetFleet II received a total of $5,089,344 in proceeds from
the rescission during the first and second quarters of 1995.
JetFleet II used a portion of the AGES rescission proceeds to purchase
interests in a deHavilland DHC-6-310 aircraft, a Fairchild Metro III SA-227-AC
aircraft and a Fairchild SA226-TC aircraft (discussed above) and to purchase
two DC-9 aircraft (discussed in Note 3).
JetFleet II also holds a 100.00% undivided interest in a Pratt & Whitney
PT6A-50 aircraft engine (the "AEI Engine"). The AEI Engine is one of two
engines purchased from AEI in December 1993. The two engines had been leased
back to AEI for a term of eight months with ten three-month renewal options.
During 1994, both engines were returned to JetFleet II by AEI. On December
1, 1994, JetFleet II sold one of the engines to deHavilland, Inc. for
$190,000. The remaining AEI Engine is currently being held in inventory as a
spare, and JetFleet II management is negotiating lease and/or sale
arrangements for it.
3. Investment in Capital Leases
McDonnell Douglas DC-9 Aircraft
JetFleet II owns a 50.00% interest in a McDonnell Douglas DC-9-32,
serial number 47236 (the "Initial DC-9"). JetFleet owns the remaining 50.00%
interest in the Initial DC-9. The Initial DC-9 is leased back to the seller,
Interglobal, Inc. ("Interglobal") for thirty-six months at a monthly rate of
$30,000 (the "Initial DC-9 Lease"), of which JetFleet II is entitled to
$15,000. The Initial DC-9 is currently sub-leased to and being operated by
Aero California S.A. de CV. Interglobal assigned its rights under the
sublease to the Co-Owners. JetFleet II's investment in the Initial DC-9 is
being accounted for as a capital lease. Interglobal has a purchase option for
a nominal amount which may be exercised upon expiration of the Initial DC-9
Lease. During the three months and nine months ended September 30, 1996,
JetFleet II recorded $10,018 and $34,968, respectively, of interest income
attributable to the Initial DC-9 Lease.
<PAGE>
JetFleet Aircraft II, L.P.
Notes to Financial Statements
September 30, 1996
(Unaudited)
3. Investment in Capital Leases (continued)
McDonnell Douglas DC-9 Aircraft (continued)
On July 13, 1995, JetFleet II purchased a 100.00% interest in a
McDonnell Douglas DC-9-14 aircraft, serial number 45702 (the "Second DC-9"),
for $800,000. In connection with the acquisition of the interest in the
Second DC-9, JetFleet II reimbursed Group for acquisition costs and also paid
an acquisition fee of $12,100 to Group. The Second DC-9 is subject to a lease
and sub-lease with terms identical to those of the Initial DC-9. During the
three months and nine months ended September 30, 1996, JetFleet II recorded
$28,350 and $93,999, respectively, of interest income attributable to the
Second DC-9 Lease.
On August 31, 1995, JetFleet II purchased a 100.00% interest in a
McDonnell Douglas DC-9-32 aircraft, serial number 47553 (the "Third DC-9"),
for $800,000. In connection with the acquisition of the interest in the Third
DC-9, JetFleet II reimbursed Group for acquisition costs and also paid an
acquisition fee of $12,100 to Group. The Third DC-9 was also subject to a
lease and sub-lease with terms identical to those of the Initial DC-9. During
the three months and nine months ended September 30, 1996, JetFleet II
recorded $3,548 and $71,951, respectively, of interest income attributable to
the Third DC-9 Lease.
During the second quarter of 1996, JetFleet II agreed to sell its
interest in the Third DC-9 to Interglobal, the party from which it was
purchased, for $735,000. JetFleet II also agreed to terminate the lease with
Interglobal, reassign the sublease with Aero California S.A. de CV back to
Interglobal and issue a Bill of Sale to Interglobal. Payments collected on
the capital lease, including the sale proceeds, totalled $1,035,000. JetFleet
II management is currently negotiating investment opportunities for the sale
proceeds.
<PAGE>
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 1996, JetFleet II had cash balances
of $1,422,522. A portion of this amount was held for the distribution made to
the Unitholders in October 1996 and to pay for accrued expenses. The
remainder of the cash balance is a result of the prepayment of the Third DC-9
financing lease (discussed in Note 3).
During the quarter, JetFleet II's primary sources of liquidity were cash
flows from leasing operations, capital lease payments and the sale of the
Third DC-9. JetFleet II'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 II uses substantially all its operating cash flow to make cash
distributions to its Unitholders. Since JetFleet II's leases are triple net
leases (the lessee pays operating and maintenance expenses, insurance and
taxes), JetFleet II does not anticipate that it will incur significant
operating expenses in connection with its ownership interest in the Aircraft
as long they remain on lease. However, JetFleet II has incurred repair costs
in 1996 for S/N 72 which are approximately $119,000 in excess of the amounts
collected from lessees. These repair costs are the result of maintenance
performed to enhance the aircraft's marketability.
JetFleet II currently has available adequate reserves to meet its
immediate cash requirements.
From January 1995 through July 1995, JetFleet II made distributions at
an annualized rate of 10%. From August 1995 through December 1995, JetFleet
II made distributions at an annualized rate of 8% primarily because of the
decreased monthly rents on S/N 57, S/N 44 and S/N 11, and because S/N 72,
which had come off lease in September 1995, had not been re-leased. In
addition, although JetFleet II has reinvested the net proceeds received as a
result of the AGES Engine rescission, it did so on a staged basis which was
not completed until early 1996. The level of monthly rent received from these
new assets did not approximate the rent JetFleet II had been receiving from
the AGES Engines until late 1995. Since January 1996, JetFleet II has made
distributions at an annualized rate of 10% primarily because the rent on the
assets purchased using the AGES Engine rescission proceeds is now higher than
the rent received prior to the rescission. Additionally, S/N 72 was delivered
to Air Tindi on April 25, 1996 for a thirty-six month term.
1996 versus 1995
Cash flows from operations decreased by approximately $1,000,000
primarily due to decreases in accrued maintenance costs, unearned income and
depreciation, the effects of which were only partially offset by a decrease in
net loss.
Cash flows from investing activities increased approximately $99,000 in
1996 due to the proceeds received from the AGES Engines rescission, the
stipulated loss value of the First Lost Airwork Engine and the payments from
the DC-9 financing leases, the total of which was only partially offset by the
reinvestment of the AGES Engines and First Lost Airwork Engine proceeds.
In 1996 and 1995, there were no financing sources of cash. Cash
distributions to Unitholders were approximately $113,000 higher in 1996 than
in 1995 because of the lower distribution rate during August and September
1995, discussed above.
<PAGE>
Results of Operations
JetFleet II recorded net losses of ($582,087) and ($1,027,662) or
($0.80) and ($1.41) per Limited Partnership Unit outstanding in the nine
months ended September 30, 1996 and 1995, respectively, and net losses of
($95,665) and ($170,019) or ($0.13) and ($0.23) in the three months ended
September 30, 1996 and 1995, respectively. The decreased losses from 1995 to
1996 during both the nine and three month periods are primarily due to a
decrease in depreciation due to the AGES Engines rescission (JetFleet II does
not incur depreciation related to the DC-9 financing leases which were
purchased using a portion of the AGES Engines rescission proceeds). In
addition, income from the DC-9 financing leases increased.
1996 versus 1995
Rental income increased approximately $38,000 and $21,000 in the three
months and nine months ended September 30, 1996, respectively, versus the same
periods in 1995. The increase from year to year was primarily due to the
additional rent received as a result of the reinvestment of the AGES Engines
rescission proceeds which was not completed until the first quarter of 1996.
Interest income associated with the DC-9 financing leases decreased
approximately $34,000 and $92,000 in the three month and nine month periods.
During July 1996, JetFleet II recognized approximately $94,000 of other
income in connection with the prepayment of the Third DC-9 financing lease.
Depreciation for the nine and three month periods decreased approximately
$258,000 and $40,000, respectively, primarily because JetFleet II does not
incur depreciation related to the DC-9 financing leases which were purchased
using a portion of the AGES Engines rescission proceeds.
Management fees for the three and nine month periods increased
approximately $26,000 and $21,000, respectively. This was primarily due to
the increased payments received from leases of assets acquired with the AGES
Engines rescission proceeds.
General and administrative expenses for the nine and three month periods
increased approximately $79,000 and $20,000, respectively, due to increased
costs associated with the ongoing management of JetFleet II's portfolio,
specifically the maintenance, supervision and remarketing of S/N 72 and the
assets purchased using the AGES Engines rescission proceeds, and the
negotiation with Raytheon regarding rents for S/N 57, S/N 44 and S/N 11. As
mentioned above, JetFleet II has incurred maintenance costs in 1996 for S/N
72 which are approximately $119,000 in excess of the amounts collected from
lessees, approximately the same as in 1995.
<PAGE>
SIGNATURES
<TABLE>
<CAPTION>
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 14, 1996.
Signature Title
<S> <C>
/s/ Neal D. Crispin Chief Executive and Chief Financial
- ---------------------- Officer and Chairman of the Board of
Neal D. Crispin the Managing General Partner
/s/ Richard D. Koehler Executive Vice President and
- ---------------------- Director of the Managing General
Richard D. Koehler Partner
</TABLE>
11
<PAGE> 13
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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,422,522
<SECURITIES> 0
<RECEIVABLES> 540,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,962,522
<PP&E> 24,860,645
<DEPRECIATION> 9,608,586
<TOTAL-ASSETS> 17,555,456
<CURRENT-LIABILITIES> 763,252
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 16,772,286
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<CHANGES> 0
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</TABLE>
