International Aircraft Investors Reports Third-Quarter Earnings.Business Editors TORRANCE Torrance, industrial and residential city (1990 pop. 133,107), Los Angeles co., SW Calif.; inc. 1921. It has large aircraft and electronics industries. Among its many manufactures are aircraft, electronics, communications equipment, aluminum products, steel, and , Calif.--(BUSINESS WIRE)--Oct. 30, 2001 International Aircraft Investors (Nasdaq:IAIS IAIS International Association of Insurance Supervisors IAIS Irish American Information Service IAIS Improved Avionics Intermediate Shop IAIS I Am I Said (Neil Diamond) IAIS Iowa Interstate Railroad System ) today announced third-quarter net income of $581,000, or $.16 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Earnings were reduced by $.07 per diluted share as a result of the loss of one month's rent on a repossessed Boeing (language) BOEING - An early system on the IBM 1130. [Listed in CACM 2(5):16, May 1959]. Model 737-300 and associated maintenance costs. The aircraft was leased for three years to Panair PANAIR Pan American Airways (Brasil) , an Italian airline operating out of Sicily Sicily (sĭs`ĭlē), Ital. Sicilia, region (1991 pop. 4,966,386), 9,925 sq mi (25,706 sq km), S Italy, mainly situated on the island of Sicily, which is bounded by the Mediterranean Sea on the west and south, by the Ionian Sea on the . The company has a 1990 MD-83 on lease to Air Liberte, a French airline, to April 2002. On June June: see month. 19, 2001, Air Liberte filed for bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most under French law. On July 27, 2001, the French courts adopted a plan by which the airline was purchased by an outside investor group. The company is currently in negotiations to restructure and extend the lease of this aircraft to the airline. The results of the negotiations will result in a reduction in monthly rental revenue. Following the terrorist attacks on September 11, the world's airlines have entered into the worst financial crisis in the history of the industry. While governments around the world have agreed to provide assistance to varying degrees, the fate of the individual carriers and the industry is uncertain. The company's lessees have been adversely affected by these events. However, it is too soon to accurately evaluate the extent of the impact on the company. The company faces many risks in the current climate. These risks include, but are not limited to, lease rate reductions, collection of rents, airline bankruptcies, refinancing risk In banking and finance, refinancing risk is the possibility that a borrower cannot refinance by borrowing to repay existing debt. Many types of commercial lending incorporate bullet payments at the point of final maturity; often, the intention or assumption is that the borrower and reductions in the value of aircraft. In order to minimize these risks, the company requires most of its lessees to pay rents in advance, pay lease deposits, and make payments to be applied to scheduled aircraft maintenance. In addition, the company is beginning to reap the benefits of lower interest rates in the refinancing Refinancing An extension and/or increase in amount of existing debt. of its debt. Revenues from rental of flight equipment decreased by 5%, or $509,000, to $9,974,000 in the three months ended Sept. 30, 2001, compared to the same period in 2000 as a result of recording an MD-82 on lease to American Airlines American Airlines Major U.S. airline. American was created through a merger of several smaller U.S. airlines and incorporated in 1934. It continued to buy the routes of other airlines, becoming an international carrier in the 1970s; its routes include South America, the as a direct financing direct financing The raising of funds without using an intermediary. For example, a firm may decide to save an underwriter's fee by offering new securities directly to investors. lease in March 2001 and the reduction of rent on the MD-83 lease to Air Liberte, partially offset by two months rent on the Boeing 737-300 on lease to Panair. The company's lease portfolio consisted of 15 aircraft with a book value of $265,445,000 and one aircraft under a financing lease with a net investment of $16,194,000 at Sept. 30, 2001, compared to 16 aircraft with a book value of $301,882,000 at Sept. 30, 2000. During the third quarter of 2001, the company earned $6,000 of consulting and other fees compared to $200,000 earned in the third quarter of 2000. Quarter-to-quarter comparisons are impacted by the timing and amount of consulting fees, which are earned from time to time. Interest income increased to $423,000 for the three months ended Sept. 30, 2001, from $353,000 for the same period in 2000 principally as a result of interest income from the recording of an MD-82 as a direct financing lease in March 2001, partially offset by lower interest rates and cash balances in 2001. Interest expense decreased to $4,239,000 for the three months ended June 30, 2001, from $4,745,000 for the same period in 2000 as result of the effect of continued loan paydowns and reduced interest rates. The company's composite interest rate was 6.88% at Sept. 30, 2001 and 7.1% at Sept. 30, 2000. Depreciation expense decreased to $4,458,000 in the third quarter of 2001 from $4,661,000 in the third quarter of 2000, primarily as a result of the recording of an MD-82 as a direct financing lease in March 2001. The company incurred $219,000 of repossession The taking back of an item that has been sold on credit and delivered to the purchaser because the payments have not been made on it. For example, if an individual fails to render prompt payments on a new car, the car might be subject to repossession by the finance company, expense in the third quarter of 2001 as a result of a settlement with a repair facility compared to $207,000 in the same period of 2000. The aircraft for which these costs were incurred has now been leased. General and administrative expenses were $519,000 in the three months ended Sept. 30, 2001, and $523,000 in the same period of 2000. During the three months ended Sept. 30, 2001, no stock compensation was incurred compared to $63,000 of non-cash stock compensation incurred in the same period of 2000 related to the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: of options granted to executive officers. Income tax expense increased to $387,000 in the three months ended Sept. 30, 2001, from $314,000 in the same period of 2000 as a result of an increase in income before taxes of $131,000. Income tax expense represents a non-cash provision for deferred income taxes at an effective rate of 40% in 2001 compared to 37.5% in 2000. Net income increased to $581,000 or $.16 per diluted share for the three months ended Sept. 30, 2001, from $523,000, or $.13 per diluted share, for the same period in 2000. The increase in earnings per share was enhanced by the reduction of shares outstanding as a result of the company's stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. Total revenues for the nine months ended Sept. 30, 2001, decreased 8% to $30,141,000. Net income decreased to $755,000, or $.21 per diluted share, primarily as a result of lost rent on two repossessed aircraft and the associated repossession and maintenance costs. The company has repurchased 915,811 shares, or 20% of its outstanding shares, since the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. program was initiated. The company has remaining authorization The right or permission to use a system resource; the process of granting access. See access control. to repurchase 111,568 shares, or approximately 3% of the outstanding common stock. The company's book value increased to $10.08 per share at Sept. 30, 2001, compared to $9.79 at Sept. 30, 2000. IAI IAI Infection And Immunity (journal) IAI International Alliance for Interoperability IAI Institut für Angewandte Informatik IAI Inter-American Institute for Global Change Research IAI International Association for Identification is an owner/lessor of used, single-aisle jet aircraft on lease to domestic and foreign airlines. The company currently leases aircraft to airlines in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Central America Central America, narrow, southernmost region (c.202,200 sq mi/523,698 sq km) of North America, linked to South America at Colombia. It separates the Caribbean from the Pacific. , Europe, Asia and the South Pacific. Except for historical information contained herein, the matters discussed in this release contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which involve risks and uncertainties. The company's actual results may differ from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, the company's ability to re-lease and remarket aircraft; changes in economic conditions in the airline industry; the limited number of aircraft owned and under lease; the company's reliance upon International Lease Finance Corp.; the company's ability to obtain financing and renegotiate re·ne·go·ti·ate tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. loans; and other risks detailed in the company's continuing reports filed with the Securities and Exchange Commission.
INTERNATIONAL AIRCRAFT INVESTORS
FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
2001 2000 2001 2000
Revenues:
Rental of flight equipment $ 9,974 $ 10,483 $ 28,675 $ 31,486
Consulting fees 6 200 151 200
Interest income 423 353 1,315 1,188
Total Revenue 10,403 11,036 30,141 32,874
Expenses:
Interest 4,239 4,745 12,905 14,243
Depreciation and amortization 4,458 4,661 13,458 13,980
Repossession and maintenance
expense 219 207 878 1,045
General and administrative 519 523 1,641 1,626
Stock compensation -- 63 -- 187
Total Expenses 9,435 10,199 28,882 31,081
Income before income taxes 968 837 1,259 1,793
Income tax expense 387 314 504 672
Net Income $ 581 $ 523 $ 755 $ 1,121
Basic Earnings Per Share $ .16 $ .13 $ .21 $ .28
Diluted Earnings Per Share $ .16 $ .13 $ .21 $ .27
Weighted average common
shares outstanding 3,621 3,876 3,661 4,009
Weighted average common
shares outstanding -
assuming dilution 3,626 3,960 3,662 4,109
Sept. 30, Sept. 30,
2001 Dec. 31, 2000 2000
(Unaudited) (Unaudited)
Cash and cash equivalents $ 8,890 $ 11,164 $ 13,560
Short-term investments -- 1,393 --
Investment in financing lease 16,194 -- --
Flight equipment, at cost, net 265,445 295,292 301,882
Cash, restricted 10,361 11,480 12,446
Total assets 302,872 320,356 328,943
Notes payable 239,923 253,700 258,360
Total liabilities 266,753 284,494 291,224
Shareholders' equity 36,119 35,862 37,719
Book value per share $ 10.08 $ 9.70 $ 9.79
Common shares outstanding 3,582 3,696 3,854
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