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 March 31, 2003
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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 27 pages.
PEGASUS AIRCRAFT PARTNERS, L.P.
QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED MARCH 31, 2003
TABLE OF CONTENTS
Page
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PART 1 FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 2003 and December 31, 2002 3
Statements of Income/(Loss) for the three months ended
March 31, 2003 and 2002 4
Statements of Partners' Capital for the three months
ended March 31, 2003 and 2002 5
Statements of Cash Flows for the three months ended
March 31, 2003 and 2002 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 10
Item 4. Controls and Procedures 12
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signature 14
Certifications 15
2
PART I. FINANCIAL INFORMATION
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ITEM 1. Financial Statements
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PEGASUS AIRCRAFT PARTNERS, L.P.
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BALANCE SHEETS -- MARCH 31, 2003 (UNAUDITED) AND DECEMBER 31, 2002
------------------------------------------------------------------
2003 2002
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(in thousands, except unit data)
ASSETS
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Cash and cash equivalents $2,735 $2,599
Rent and other receivable 65 261
Aircraft, net 100 100
Other assets 3 --
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Total Assets $2,903 $2,960
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LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
LIABILITIES:
Accounts payable and accrued expenses 135 127
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Total Liabilities $ 135 $ 127
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PARTNERS' CAPITAL:
General Partners 31 32
Limited Partners (4,000,005 units issued and
outstanding in 2003 and 2002) 2,737 2,801
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Total Partners' Capital 2,768 2,833
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Total Liabilities and Partners' Capital $2,903 $2,960
====== ======
The accompanying notes are an integral part of these financial statements.
3
PEGASUS AIRCRAFT PARTNERS, L.P.
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STATEMENTS OF INCOME/(LOSS)
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FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
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(unaudited)
2003 2002
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(in thousands, except unit
data and per unit amounts)
REVENUE:
Rentals from operating leases $ -- $ 538
Gain on sale of aircraft -- 91
Interest 6 12
Equity in (deficits) of MD-81 Trust -- (11)
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6 630
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EXPENSES:
Depreciation and amortization -- 262
Management and re-lease fees -- 125
General and administrative 69 69
Direct lease 2 18
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71 474
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NET INCOME/(LOSS) $ (65) $ 156
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NET INCOME/(LOSS) ALLOCATED:
To the General Partners $ (1) $ 1
To the Limited Partners (64) 155
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$ (65) $ 156
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NET INCOME/(LOSS) PER LIMITED PARTNERSHIP UNIT $ (0.02) $ 0.04
=========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS ISSUED AND OUTSTANDING 4,000,005 4,000,005
=========== ===========
The accompanying notes are an integral part of hese financial statements.
4
PEGASUS AIRCRAFT PARTNERS, L.P.
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STATEMENTS OF PARTNERS' CAPITAL
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FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
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(unaudited)
General Limited
Partners Partners Total
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(dollar amounts in thousands)
Balance, January 1, 2003 $ 32 $ 2,801 $ 2,833
Net loss (1) (64) (65)
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Balance, March 31, 2003 $ 31 $ 2,737 $ 2,768
======= ======= =======
Balance, January 1, 2002 $ 34 $ 3,024 $ 3,058
Net income 1 155 156
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Balance, March 31, 2002 $ 35 $ 3,179 $ 3,214
======= ======= =======
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 THREE MONTHS ENDED MARCH 31, 2003 AND 2002
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(unaudited)
2003 2002
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(dollar amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) $ (65) $ 156
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of aircraft -- (91)
Depreciation and amortization -- 262
Equity in deficits of MD-81 Trust -- 11
Change in assets and liabilities:
Rent and other receivable 4 --
Other assets (3) (20)
Accounts payable and accrued expenses 8 8
Payable to affiliates -- 125
Maintenance reserves payable -- 77
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Net cash (used in)/ provided by
operating activities (56) 528
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of aircraft 192 1,241
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Net cash provided by investing
activities 192 1,241
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NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS 136 1,769
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 2,599 2,516
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,735 $ 4,285
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SUPPLEMENTAL CASH FLOW INFORMATION:
Non cash investing activities:
Application of maintenance reserves to sale
of aircraft -- 367
Application of security deposit to sale of
aircraft -- 150
The accompanying notes are an integral part of these financial statements.
6
PEGASUS AIRCRAFT PARTNERS, L.P.
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NOTES TO FINANCIAL STATEMENTS
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MARCH 31, 2003
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(unaudited)
1. General
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America 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 unaudited financial statements should be read in conjunction with
the financial statements and footnotes thereto included in the Partnership's
annual report on Form 10-K for the year ended December 31, 2002. Operating
results for the three-month period ended March 31, 2003 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2003.
2. Aircraft
The Partnership's net investment in aircraft as of March 31, 2003 and
December 31, 2002 consisted of the following (in thousands):
2003 2002
---- ----
Aircraft held for sale, at cost 11,915 11,915
Less: Accumulated depreciation (6,365) (6,365)
Write-downs (5,450) (5,450)
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Aircraft, net $ 100 $ 100
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Kitty Hawk Aircargo, Inc. ("Kitty Hawk"). One of the Partnership's
Boeing 727-200 advanced aircraft was hushkitted, converted to a freighter and
delivered to Kitty Hawk in August 1999. The lease agreement was for 84 months,
the lease rate was $117,800 per month, and maintenance reserves were to be paid
at the rate of $375 per flight hour. Kitty Hawk provided a security deposit of
$236,000.
Kitty Hawk filed for protection under Chapter 11 of the U.S. Bankruptcy
Code on May 1, 2000, but stayed current with regard to its rent payment through
September 2001. For the months of October, November, and December 2001, Kitty
Hawk could not make a full payment of the monthly rent, and the Partnership
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agreed to a payment of only half of the amount due. The Partnership also agreed
to a 50% reduction of the maintenance reserves due for the months of September,
October, and November 2001. The Partnership also agreed to a payment of 71% of
the rents of December 2001, and January, February 2002 and no maintenance
reserves payment for these months. However, Kitty Hawk could not make any
payment in March and April 2002. In May 2002, the Partnership agreed to a sale
of the aircraft to Kitty Hawk for a $750,000 note, subject to documentation and
approval of the Bankruptcy court. The lease was reinstated with a per month
lease rate of $65,000, beginning in May 2002. The aircraft was sold to Kitty
Hawk in December 2002 with lease payments made from May 2002 through the
completion of the sale being applied to the note. The remainder of the note was
paid with payments of $65,000 per month from January through March 2003 and the
last payment was in April 2003 (See Note 4. "Subsequent Event").
Vanguard Airlines ("Vanguard") Lease. US Airways returned the MD-81 in
July 2001, and in August 2001, the Trust that owned the MD-81 entered into a
three-year lease of the aircraft with Vanguard Airlines, a Kansas City, Missouri
airline providing passenger services to a number of U.S. cities.
Vanguard, as have many other airlines, had been adversely affected by
events of September 11, 2001. After being denied a loan guarantee for a second
time by the Airline Transportation Stabilization Board, Vanguard Airlines
suspended flights operations on July 30, 2002, dismissed all but 80 employees
and filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Vanguard
rejected the lease and returned the MD-81 aircraft to the Partnership on
September 30, 2002. At the time of its filing, Vanguard was in arrears to the
Trust in the amount of $1,389,000 ($694,500 to the Partnership, for its 50%
interest) in rent and reserves. At March 31, 2003, recovery of any amount is
unlikely. The Partnership wrote down the value of the aircraft by $1,030,000 for
the Trust ($515,000 for the Partnership for its 50% interest) in the third
quarter of 2002.
The Partnership sold the MD-81 aircraft on October 25, 2002 for
$942,000, $500,000 cash ($250,000 for the Partnership for its 50% interest) and
$442,000 of maintenance reserves retained as part of the sales proceeds
($221,000 for the Partnership for its 50% interest).
TNT Transport International B.V. ("TNT") Lease. The TNT lease ended on
March 24, 2002 and the Partnership sold the Boeing 727-200 freighter to TNT. The
Partnership received cash proceeds of $1,241,000 and also applied, as part of
the sale, TNT's maintenance reserves of $367,000 and its security deposit of
$150,000.
Boeing 727-200. The Boeing 727-200, formerly leased to Discovery
Airlines (Sky Trek), was returned in March 2000. During the second quarter 2001,
the Partnership took $848,000 of paid-in maintenance reserves relating to the
aircraft into income and wrote down the aircraft's value by $1,766,000 to
$200,000. During the third quarter of 2002, the Partnership wrote down the
aircraft's value to $100,000. The aircraft and engines are being offered for
sale on an "as-is, where-is" basis.
General. Of the 5.5 aircraft the Partnership originally owned, only one
Boeing 727-200 remains. The Partnership is seeking to dispose of it as soon as
possible.
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3. Transactions With Affiliates
The Management Fee, Incentive Fee and Re-Lease Fee payable to the
General Partners are subordinated to the limited partners receiving an 8%
annual, non-cumulative return based upon Unreturned Capital Contribution, as
Unreturned Capital Contribution as defined in the Partnership Agreement. As the
Partnership had not achieved this level of distribution since 2000, fees were
being accrued but not paid. Based upon the amount of the Preferred Return as
determined pursuant to the Partnership Agreement and the estimated value of the
Partnership's remaining assets, a determination was made to reverse the fees
accrued but unpaid to the General Partners for fiscal years 2000 through the
first quarter of 2002. In June 2002, fees previously accrued of $1,495,000 were
taken into revenue with a corresponding reduction in Payable to affiliates. In
addition, based on anticipated future revenues, the Partnership does not expect
to accrue Management and Re-lease fees in future quarters.
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. Management Fees of $8,000 were accrued for the
three months ended March 31, 2002 and this accrual was reversed at June 30,
2002.
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 flows 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. Incentive Management Fees of $99,000 were
accrued for the three months ended March 31, 2002 and this accrual was reversed
at June 30, 2002 .
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.
Re-lease Fees of $18,000 were accrued for the three months ended March 31, 2002
and this accrual was reversed at June 30, 2002.
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 paid to the
Administrative General Partner in the three months ending March 31, 2003.
4. Subsequent event:
In April 2003, the Partnership received the last installment payment on
the note receivable from Kitty Hawk for sale of the Boeing 727-200 freighter
aircraft.
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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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The following discussion should be read in conjunction with the
Financial Statements of the Partnership and the Notes thereto. 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 the Forward-Looking Statements, if any, 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 one passenger aircraft and makes
distributions to the partners of net cash flows generated by operations in the
current and/or prior periods. In certain situations, the Partnership may retain
cash flow from operations to finance authorized capital expenditures, or for
general working capital purposes. The amount of future cash distributions will
be based on an evaluation of the Partnership's operating results and its current
and expected financial position.
The Partnership invests working capital and cash flow from operations
prior to its distributions to the partners in short-term, highly liquid
investments or a fund that invests in such instruments. At March 31, 2003, the
Partnership's unrestricted cash and cash equivalents of $2,735,000 were
primarily invested in such a fund. This amount was $136,000 more than the
Partnership's unrestricted cash and cash equivalents at December 31, 2002 of
$2,599,000. This increase in unrestricted cash was primarily attributable to
cash from investing activities of $192,000, offset by $56,000 cash used for
operating activities. There were no cash financing activities during the first
quarter of 2003.
For the quarter ended March 31, 2003 (the "2003 Quarter"), net cash
used by operating activities was $56,000, comprising of net loss of $65,000 for
the 2003 Quarter adjusted by changes in Other assets and Accrued Liabilities, as
discussed below.
Other assets increased during the 2003 Quarter by 100%, or $3,000, due
to the recording of a refund from insurance premiums paid in 2002 due to the
Partnership.
Accounts payable and accrued expense increased during the 2003 Quarter
by 6%, or $8,000, due to quarterly accruals for various expenses.
Rent and Other receivables decreased by 75%, or $196,000, due to $4,000
receipt of interest and $192,000 of principal from the note receivable from
Kitty Hawk for the sale of the Boeing 727-200 in December 2002.
Cash flow from investing activities was $192,000 for the 2003 Quarter,
resulting from proceeds of the sale of the Boeing 727, formerly leased to Kitty
Hawk.
10
Partnership capital was $2,768,000, a decrease of approximately $65,000
or 2% from $2,833,000 at December 31, 2002, as a result of net loss of $65,000.
The Partnership paid no distributions during the first quarter of 2003.
The Partnership does not expect to pay a distribution for the first quarter of
2003, historically paid in April.
Results of Operations
The Partnership's net loss was $65,000 for the first quarter 2003 (the
"2003 Period") as compared to net income of $156,000 for the first quarter 2002
(the "2002 Period"). This decrease was principally due to no rental income and
no gain on sale of aircraft, partially offset by no depreciation expense, no
management fees and less direct lease expense in the 2003 Period as compared to
the 2002 Period.
Rentals from operating leases decreased by 100%, or $538,000, from
$538,000 for the 2002 Period to zero for the 2003 Period, as the Partnership has
only one aircraft left with no lessee.
Gain on sale of aircraft decreased by 100%, or $91,000, from $91,000
for the 2002 Period to zero in the 2003 Period. This decrease was due to gain of
$91,000 on the sale of the Boeing 727 to TNT for the 2002 Period as compared to
no sale of aircraft in the 2003 Period.
Equity in deficits of the MD-81 Trust was $11,000 for the 2002 Period
compared to no equity for the 2003 Period, due to the sale of the MD-81 aircraft
in October 2002.
Depreciation decreased by 100 %, or $262,000, from $262,000 for the
2002 Period to zero for the 2003 Period. This decrease was primarily due to the
Partnership having only one off-lease aircraft in the 2003 Period.
Management fees decreased by 100%, or $125,000, from $125,000 in the
2002 Period to zero in the 2003 Period. Based upon the Preferred Return as
determined pursuant to the Partnership Agreement and the estimated value of the
Partnership's remaining assets, a determination was made to reverse the fees
accrued but unpaid to the General Partners for fiscal years 2000 through the
first quarter of 2002. Besides the fee reversal, no new management fees were
accrued in the first quarter of 2003.
Direct Lease expense decreased by 89%, or $ 16,000, from $18,000 for
the 2002 Period to $2,000 for the 2003 Period. This decrease was primarily due
to an inspection of the engines of the Boeing 727 in the 2002 Period.
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ITEM 4. Controls and Procedures
In the 90-day period before filing of this report, the President and
Chairman of the Board of Pegasus Aircraft Management Corporation and the
President of Air Transport Leasing, Inc. (collectively, the "Certifying
Officers") have evaluated the effectiveness of the Partnership's disclosure
controls and procedures. These disclosure controls and procedures are those
controls and procedures which are designed to insure that all the information
required to be disclosed by the Partnership in all its periodic reports filed
with the Securities and Exchange Commission is recorded, processed, summarized
and reported, within the time periods specified by the Commission and that the
information is communicated to the President and Chairman of the Board of
Pegasus Aircraft Management Corporation and the President of Air Transport
Leasing, Inc. on a timely basis.
The Certifying Officers concluded, based on the evaluation, that the
Partnership's disclosure controls and procedures are suitable and effective for
the Partnership, taking into consideration the size and nature of the
Partnership's business and operations. No significant deficiencies or material
weaknesses in the controls or procedures were detected, so no corrective actions
needed to be taken. Subsequent to the date when the disclosure controls and
procedures were evaluated, there have not been any significant changes in the
Partnership's disclosure controls or procedures or in other factors that could
significantly affect such controls or procedures.
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PART II. OTHER INFORMATION
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ITEM 6. Exhibits and Reports on Form 8-K
(a) (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) The Partnership did not file any reports on Form 8-K during the
first quarter of the fiscal year ending December 31, 2003.
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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: May 9, 2003 By: /s/ CLIFFORD B. WATTLEY
Clifford B. Wattley
President and Director
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CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
- -------------
I, Richard S. Wiley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Pegasus Aircraft
Partners, L.P.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us by
others, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
15
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 9, 2003
By: /s/ RICHARD S. WILEY
--------------------
Richard S. Wiley
President and Chairman of the Board of Pegasus Aircraft Management
Corporation, General Partner of Pegasus Aircraft Partners, L.P.
16
CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
- -------------
I, Clifford B. Wattley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Pegasus Aircraft
Partners, L.P.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us by
others, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
17
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 9, 2003
By: /s/ CLIFFORD B. WATTLEY
-----------------------
Clifford B. Wattley
President and Director of Air Transport Leasing, Inc.
Administrative General Partner of Pegasus Aircraft Partners, L.P.
18