Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 10, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AEROCENTURY CORP | |
Entity Central Index Key | 1,036,848 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,566,699 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Assets: | ||
Cash and cash equivalents | $ 3,581,100 | $ 2,721,000 |
Accounts receivable, including deferred rent of $497,600 and $359,200 at September 30, 2016 and December 31, 2015, respectively | 3,717,400 | 5,693,500 |
Finance leases receivable | 18,288,300 | 11,895,600 |
Aircraft and aircraft engines held for lease, net of accumulated depreciation of $29,783,100 and $31,074,600 at September 30, 2016 and December 31, 2015, respectively | 196,507,600 | 155,258,100 |
Assets held for sale | 2,055,000 | 5,228,400 |
Prepaid expenses and other | 289,700 | 228,400 |
Total assets | 224,439,100 | 181,025,000 |
Liabilities: | ||
Accounts payable and accrued expenses | 3,036,700 | 1,138,400 |
Notes payable and accrued interest, net of unamortized debt issuance costs of $2,220,200 and $2,814,000 at September 30, 2016 and December 31, 2015, respectively | 126,613,400 | 107,621,600 |
Maintenance reserves | 30,570,000 | 13,230,000 |
Accrued maintenance costs | 1,935,800 | 382,300 |
Security deposits | 4,050,100 | 3,212,600 |
Unearned revenues | 2,787,800 | 1,957,400 |
Deferred income taxes | 12,863,100 | 12,204,200 |
Taxes payable | 41,700 | 0 |
Total liabilities | 181,898,600 | 139,746,500 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 2,000,000 shares authorized, no shares issued or outstanding | 0 | 0 |
Common stock, $0.001 par value, 10,000,000 shares authorized, 1,629,999 shares issued and outstanding | 1,600 | 1,600 |
Paid-in capital | 14,780,100 | 14,780,100 |
Retained earnings | 28,262,900 | 27,000,900 |
Shareholders equity before treasury stock | 43,044,600 | 41,782,600 |
Treasury stock at cost, 63,300 shares | (504,100) | (504,100) |
Total stockholders' equity | 42,540,500 | 41,278,500 |
Total liabilities and stockholders' equity | $ 224,439,100 | $ 181,025,000 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Assets: | ||
Accounts receivable, deferred rent | $ 497,600 | $ 359,200 |
Aircraft and aircraft engines held for lease, accumulated depreciation | 29,783,100 | 31,074,600 |
Liabilities: | ||
Unamortized debt issuance costs | $ 2,220,200 | $ 2,814,000 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, issued (in shares) | 1,629,999 | 1,629,999 |
Common stock, outstanding (in shares) | 1,629,999 | 1,629,999 |
Treasury stock (in shares) | 63,300 | 63,300 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues and other income: | ||||
Operating lease revenue, net | $ 6,074,600 | $ 6,511,300 | $ 17,054,100 | $ 19,281,500 |
Finance lease revenue | 199,800 | 184,000 | 571,900 | 275,400 |
Net gain on disposal of assets | 2,800 | 0 | 2,149,200 | 460,000 |
Net gain on sales-type finance leases | 1,166,100 | 1,095,400 | 1,213,600 | 5,179,200 |
Maintenance reserves revenue, net | 0 | 0 | 0 | 589,000 |
Other income | 500 | 700 | 2,200 | 1,600 |
Total Income | 7,443,800 | 7,791,400 | 20,991,000 | 25,786,700 |
Expenses: | ||||
Depreciation | 2,332,600 | 2,281,500 | 6,283,100 | 6,931,400 |
Interest | 1,338,500 | 1,458,900 | 3,766,400 | 4,805,300 |
Management fees | 1,249,100 | 1,411,100 | 3,685,600 | 4,260,800 |
Maintenance | 750,700 | 197,300 | 2,571,600 | 3,037,500 |
Professional fees, general and administrative and other | 284,300 | 237,700 | 1,266,900 | 957,700 |
Bad debt expense | 572,900 | 0 | 835,800 | 0 |
Provision for impairment in value of aircraft | 0 | 0 | 321,200 | 147,500 |
Insurance | 79,100 | 242,200 | 229,100 | 330,900 |
Other taxes | 22,500 | 49,500 | 67,800 | 164,700 |
Total expenses | 6,629,700 | 5,878,200 | 19,027,500 | 20,635,800 |
Income before income tax provision | 814,100 | 1,913,200 | 1,963,500 | 5,150,900 |
Income tax provision | 284,400 | 658,200 | 701,500 | 1,788,400 |
Net income | $ 529,700 | $ 1,255,000 | $ 1,262,000 | $ 3,362,500 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.34 | $ 0.81 | $ 0.81 | $ 2.18 |
Diluted (in dollars per share) | $ 0.34 | $ 0.81 | $ 0.81 | $ 2.17 |
Weighted average shares used in earnings per share computations: | ||||
Basic (in shares) | 1,566,699 | 1,543,257 | 1,566,699 | 1,543,257 |
Diluted (in shares) | 1,566,699 | 1,548,469 | 1,566,699 | 1,552,181 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Condensed Consolidated Statements of Cash Flows (Unaudited) [Abstract] | ||
Net cash provided by operating activities | $ 10,816,200 | $ 9,448,500 |
Investing activities: | ||
Proceeds from sale of aircraft and aircraft engines held for lease, net of re-sale fees | 2,611,700 | 1,695,200 |
Proceeds from sale of assets held for sale, net of re-sale fees | 3,396,100 | 1,835,300 |
Proceeds from insurance | 18,886,700 | 0 |
Purchases of aircraft and related acquisition costs | (53,109,100) | (1,333,700) |
Net cash (used in)/provided by investing activities | (28,214,600) | 2,196,800 |
Financing activities: | ||
Issuance of notes payable - Credit Facility | 31,300,000 | 0 |
Repayment of notes payable - Credit Facility | (31,600,000) | (11,000,000) |
Debt issuance costs | (65,000) | (59,600) |
Issuance of notes payable - special purpose financing | 19,609,900 | 0 |
Repayment of notes payable - special purpose financing | (986,400) | 0 |
Net cash provided by/(used in) financing activities | 18,258,500 | (11,059,600) |
Net increase in cash and cash equivalents | 860,100 | 585,700 |
Cash and cash equivalents, beginning of period | 2,721,000 | 1,840,500 |
Cash and cash equivalents, end of period | $ 3,581,100 | $ 2,426,200 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Condensed Consolidated Statements of Cash Flows (Unaudited) [Abstract] | ||
Interest paid | $ 3,211,100 | $ 3,881,200 |
Income taxes paid | $ 800 | $ 800 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Organization and Summary of Significant Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | 1. (a) AeroCentury Corp., a Delaware corporation incorporated in 1997, typically acquires used regional aircraft and engines for lease to foreign and domestic regional carriers. In August 2016, AeroCentury Corp. formed two wholly-owned subsidiaries, ACY 19002 Limited ("ACY 19002") and ACY 19003 Limited ("ACY 19003") for the purpose of acquiring aircraft using a combination of cash and financing separate from the parent's credit facility. Financial information for AeroCentury Corp., ACY 19002 and ACY 19003 (collectively, the "Company") is presented on a consolidated basis in accordance with accounting principles generally accepted in the United States of America ("GAAP") for . All intercompany balances and transactions have been eliminated in consolidation. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2015. (b) The Company's financial statements have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable for making judgments that are not readily apparent from other sources. The most significant estimates with regard to these financial statements are the residual values and useful lives of the assets, the amount and timing of cash flows associated with each asset that are used to evaluate whether assets are impaired, accrued maintenance costs, accounting for income taxes, and the amounts recorded as allowances for doubtful accounts. (c) Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. The fair value hierarchy under GAAP is based on three levels of inputs. Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis The carrying amount of the Company's money market funds included in cash and cash equivalents was $1,547,900 and $1,946,600 at September 30, 2016 and December 31, 2015, respectively. The fair value of the Company's money market funds would be categorized as Level 1 under the GAAP fair value hierarchy. As of September 30, 2016 and December 31, 2015, there were no liabilities that were required to be measured and recorded at fair value on a recurring basis. Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company determines fair value of long-lived assets held and used, such as aircraft and aircraft engines held for lease and assets held for sale, by reference to independent appraisals, quoted market prices (e.g., offers to purchase) and other factors. An impairment charge is recorded when the Company believes that the carrying value of an asset will not be recovered through future net cash flows and that the asset's carrying value exceeds its fair value. Assets held for lease The Company recorded no impairment charges on its aircraft held for lease in the three months ended September 30, 2016 and 2015. The Company recorded an impairment charge of $147,500 on its aircraft held for lease during the nine months ended September 2015. Assets held for sale The Company recorded no impairment charges on its assets held for sale during the three months ended September 30, 2016 or 2015. During the nine months ended September 30, 2016, the Company recorded $321,200 of impairment charges on three aircraft held for sale prior to their sale. Fair Value of Other Financial Instruments The Company's financial instruments, other than cash and cash equivalents, consist principally of finance leases receivable, amounts borrowed under its credit facility (the "Credit Facility") and notes payable under special purpose financing. The fair value of accounts receivable, finance leases receivable, accounts payable and the Company's maintenance reserves and accrued maintenance costs approximates the carrying value of these financial instruments. Borrowings under the Company's Credit Facility bear floating rates of interest that reset periodically to a market benchmark rate plus a credit margin. The Company believes the effective interest rate under the Credit Facility approximates current market rates for such indebtedness at the balance sheet date, and therefore that the outstanding principal and accrued interest of $110,180,000 and $110,435,600 at September 30, 2016 and December 31, 2015, respectively, approximate their fair values on such dates. The fair value of the Company's outstanding balance of its Credit Facility would be categorized as Level 3 under the GAAP fair value hierarchy. The amounts payable under the Company's special purpose financing are payable through the fourth quarter of 2020 and bear a fixed rate of interest, as described in Note 4(b) to the financial statements. The outstanding balance of such financing approximates the fair value of such notes at September 30, 2016. Such fair value would be categorized as Level 3 under the GAAP fair value hierarchy. (d) The Company currently has five aircraft finance leases that contain lessee purchase options at prices substantially below the assets' estimated residual values at the exercise date for the options. Consequently, the Company considers the purchase options to be bargain purchase options and has classified the leases as sales-type finance leases for financial accounting purposes. The Company reports the discounted present value of (i) future minimum lease payments (including the bargain purchase option) and (ii) any residual value not subject to a bargain purchase option as a finance lease receivable on its balance sheet and accrues interest on the balance of the finance lease receivable based on the interest rate inherent in the applicable lease over the term of the lease. For sales-type finance leases, the Company recognizes as a gain or loss the amount equal to (i) the net book value of the aircraft less (ii) the net investment in sales-type finance leases plus any initial direct costs and lease incentives. The Company recognized interest earned on finance leases in the amount of $199,800 and $184,000 in the quarters ended September 30, 2016 and 2015, respectively, and $571,900 and $275,400 in the nine months ended 30, 2016 and 2015, respectively. (e) In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern," which added Subtopic 205-40 to the ASC ("Subtopic 205-40"). Subtopic 205-40 requires management to determine whether substantial doubt exists concerning the reporting entity's ability to continue as a going concern, in which case certain disclosures will be required. Subtopic 205-40 affects financial statement presentation but not methods of accounting, and is effective on a prospective basis for annual periods ending after December 15, 2016 and each reporting period thereafter, although early adoption is permitted. The Company has not early adopted Subtopic 205-40 and is evaluating the impact the adoption of this standard will have on its financial statements. In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments -- Credit Losses (Topic 326) ("ASU 2016-13") In August 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-15, Statement of Cash Flows (Topic 230) ("ASU 2016-15") |
Finance Leases Receivable
Finance Leases Receivable | 9 Months Ended |
Sep. 30, 2016 | |
Finance Leases Receivable [Abstract] | |
Finance Leases Receivable | 2. During the third quarter of 2016, the Company leased two turboprop aircraft pursuant to sales-type finance leases. One of the aircraft was off lease at June 30, 2016, and one was returned during the third quarter of 2016. The Company recorded related gains totaling $1,166,100. During the third quarter of 2015, the Company leased a turboprop aircraft, which was off lease at June 30, 2015, pursuant to a finance lease and recorded a gain of $179,000. The Company also amended and extended the leases for two aircraft that had been subject to operating leases. As a result of the amendments and extensions, the leases for the two aircraft were deemed to be sales-type finance leases, and the Company recorded gains totaling $916,400. At September 30, 2016 and December 31, 2015, the net investment included in sales-type finance leases receivable were as follows: September 30 2016 December 31 2015 Gross minimum lease payments receivable $ 21,952,600 $ 14,074,500 Less unearned interest (3,664,300 ) (2,178,900 ) Finance leases receivable $ 18,288,300 $ 11,895,600 As of September 30, 2016, future minimum lease payments receivable under sales-type finance leases were as follows: Years ending Remainder of 2016 $ 842,900 2017 3,740,100 2018 3,663,600 2019 4,939,600 2020 2,727,600 Thereafter 6,038,800 $ 21,952,600 |
Aircraft and Aircraft Engines H
Aircraft and Aircraft Engines Held for Lease or Sale | 9 Months Ended |
Sep. 30, 2016 | |
Aircraft and Aircraft Engines Held for Lease or Sale [Abstract] | |
Aircraft and Aircraft Engines Held for Lease or Sale | 3. (a) At September 30, 2016 and December 31, 2015, the Company's aircraft and aircraft engines held for lease consisted of the following: September 30, 2016 December 31, 2015 Type Number owned % of net book value Number owned % of net book value Turboprop aircraft 12 23 % 16 45 % Regional jet aircraft 12 73 % 8 49 % Engines 4 4 % 5 6 % In August 2016, the Company purchased two Bombardier CRJ-1000 aircraft on lease to a regional carrier in Europe and assumed the debt related to these aircraft. Each aircraft is held in a single asset special-purpose subsidiary of the Company, funded by the Company. In September 2016, the Company purchased two Bombardier CRJ-900 aircraft on lease to a current customer in Europe. During the third quarter of 2016, the Company used cash of $52,138,000 for acquisition of aircraft and related costs. During the second quarter of 2016, the Company made deposits and paid acquisition costs totaling $971,100 related to aircraft acquired during the third quarter. At the time of purchase, the Company received $17,179,300 of maintenance reserves related to two of the aircraft; such reserves are reflected as a deduction in the amount of cash used for purchases and related acquisition costs in the investing activities section of the Company's statement of cash flows for the nine months ended September 30, 2016. The Company used no cash for aircraft acquisitions during the third quarter of 2015. Six of the Company's assets held for lease, comprised of four turboprop aircraft and two engines, were off lease at September 30, 2016, representing 7% of the net book value of the Company's aircraft and engines held for lease. The Company has a signed lease and deposit for one of the aircraft and expects to deliver it during the fourth quarter of 2016. As of September 30, 2016, minimum future lease revenue payments receivable under noncancelable operating leases were as follows: Years ending Remainder of 2016 $ 7,302,600 2017 26,406,900 2018 22,312,500 2019 21,685,600 2020 19,455,200 Thereafter 43,209,700 $ 140,372,500 (b) During the third quarter of 2016, the Company sold a spare engine that had been written down to its net sales price at June 30, 2016 and classified as held for sale. Assets held for sale at September 30, 2016 included a turboprop aircraft and three turboprop airframes being sold in parts. During the three months ended September 30, 2016 and 2015, the Company received $38,600 and $19,000 respectively, from the sale of parts belonging to the airframes, which proceeds reduced the airframe's carrying values. During the third quarter of 2016, with respect to one of those airframes, the Company received in excess of its carrying value and recorded a gain of $2,800. |
Notes Payable and Accrued Inter
Notes Payable and Accrued Interest | 9 Months Ended |
Sep. 30, 2016 | |
Notes Payable and Accrued Interest [Abstract] | |
Notes Payable and Accrued Interest | 4. At 30, 2016 and December 31, 2015, the Company's notes payable and accrued interest consisted of the following: September 30 2016 December 31 2015 Credit Facility: Principal $ 110,100,000 $ 110,400,000 Unamortized debt issuance costs (2,220,200 ) (2,814,000 ) Accrued interest 80,000 35,600 Special purpose financing: Principal 18,623,600 - Accrued interest 30,000 - $ 126,613,400 $ 107,621,600 (a) The Company's $150 million Credit Facility is provided by a syndicate of banks and is secured by all of the Company's assets, including its aircraft and engine portfolio. The Credit Facility, which expires on May 31, 2019, may be expanded to a maximum of $180 million. The Company was in compliance with all covenants under the Credit Facility at September 30, 2016 and December 31, 2015. The unused amount of the Credit Facility was $39,900,000 and $39,600,000 as of September 30, 2016 and December 31, 2015, respectively. The weighted average interest rate on the Credit Facility was 3.93% and 3.80% at 30, 2016 and 31, 2015, respectively. (b) In August 2016, the Company acquired two regional jet aircraft using cash and financing separate from its Credit Facility. The financing resulted in note obligations of $9,805,600 and $9,804,300, which are being paid from a portion of the rent payments on the related aircraft leases through October 3, 2020 and November 7, 2020, respectively, and which bear interest at the rate of 4.455%. The borrower under each note obligation is the special purpose entity that owns each aircraft. The notes are collateralized by the aircraft and are recourse only to the special purpose entity borrower and its aircraft asset, subject to standard exceptions for this type of financing. Payments due under the notes consist of quarterly principal and interest. The combined balance of the notes payable and accrued interest on these notes at September 30, 2016 was $18,653,600. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Contingencies [Abstract] | |
Contingencies | 5. In the ordinary conduct of the Company's business, the Company is subject to lawsuits, arbitrations and administrative proceedings from time to time. The Company believes that the outcome of any existing or known threatened proceedings, even if determined adversely, will not have a material adverse effect on the Company's business, financial condition, liquidity or results of operations. |
Computation of Earnings Per Sha
Computation of Earnings Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Computation of Earnings Per Share [Abstract] | |
Computation of Earnings Per Share | 6. Basic and diluted earnings per share are calculated as follows: For the Nine Months Ended September 30, For the Three Months Ended September 30, 2016 2015 2016 2015 Net income $ 1,262,000 $ 3,362,500 $ 529,700 $ 1,255,000 Weighted average shares outstanding for the period 1,566,699 1,543,257 1,566,699 1,543,257 Dilutive effect of warrants - 8,924 - 5,212 Weighted average diluted shares used in calculation of diluted earnings per share 1,566,699 1,552,181 1,566,699 1,548,469 Basic earnings per share $ 0.81 $ 2.18 $ 0.34 $ 0.81 Diluted earnings per share $ 0.81 $ 2.17 $ 0.34 $ 0.81 Basic earnings per common share is computed using net income and the weighted average number of common shares outstanding during the period. Diluted earnings per common share are computed using net income and the weighted average number of common shares outstanding, assuming dilution. Weighted average common shares |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 7 The Company's portfolio of leased aircraft assets is managed and administered under the terms of a management agreement with JetFleet Management Corp. ("JMC"), which is an integrated aircraft management, marketing and financing business and a subsidiary of JetFleet Holding Corp. ("JHC"). Certain officers of the Company are also officers of JHC and JMC and one such officer also holds a significant ownership position in both JHC and the Company. Under the management agreement, JMC receives a monthly management fee based on the net asset value of the assets under management. JMC also receives an acquisition fee for locating assets for the Company. Acquisition fees are included in the cost basis of the asset purchased. JMC may receive a remarketing fee in connection with the re-lease or sale of the Company's assets. Remarketing fees are amortized over the applicable lease term or included in the gain or loss on sale. Fees incurred during the nine months and three months ended September 30, 2016 and 2015 were as follows: For the Nine Months Ended September 30, For the Three Months Ended September 30, 2016 2015 2016 2015 Management fees $ 3,685,600 $ 4,260,800 $ 1,249,100 $ 1,411,100 Acquisition fees 1,124,200 - 1,124,200 - Remarketing fees 284,500 517,600 225,700 93,400 |
Organization and Summary of S14
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization and Summary of Significant Accounting Policies [Abstract] | |
The Company and Basis of Presentation | (a) AeroCentury Corp., a Delaware corporation incorporated in 1997, typically acquires used regional aircraft and engines for lease to foreign and domestic regional carriers. In August 2016, AeroCentury Corp. formed two wholly-owned subsidiaries, ACY 19002 Limited ("ACY 19002") and ACY 19003 Limited ("ACY 19003") for the purpose of acquiring aircraft using a combination of cash and financing separate from the parent's credit facility. Financial information for AeroCentury Corp., ACY 19002 and ACY 19003 (collectively, the "Company") is presented on a consolidated basis in accordance with accounting principles generally accepted in the United States of America ("GAAP") for . All intercompany balances and transactions have been eliminated in consolidation. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2015. |
Use of Estimates | (b) The Company's financial statements have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable for making judgments that are not readily apparent from other sources. The most significant estimates with regard to these financial statements are the residual values and useful lives of the assets, the amount and timing of cash flows associated with each asset that are used to evaluate whether assets are impaired, accrued maintenance costs, accounting for income taxes, and the amounts recorded as allowances for doubtful accounts. |
Fair Value Measurements | (c) Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. The fair value hierarchy under GAAP is based on three levels of inputs. Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis The carrying amount of the Company's money market funds included in cash and cash equivalents was $1,547,900 and $1,946,600 at September 30, 2016 and December 31, 2015, respectively. The fair value of the Company's money market funds would be categorized as Level 1 under the GAAP fair value hierarchy. As of September 30, 2016 and December 31, 2015, there were no liabilities that were required to be measured and recorded at fair value on a recurring basis. Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company determines fair value of long-lived assets held and used, such as aircraft and aircraft engines held for lease and assets held for sale, by reference to independent appraisals, quoted market prices (e.g., offers to purchase) and other factors. An impairment charge is recorded when the Company believes that the carrying value of an asset will not be recovered through future net cash flows and that the asset's carrying value exceeds its fair value. Assets held for lease The Company recorded no impairment charges on its aircraft held for lease in the three months ended September 30, 2016 and 2015. The Company recorded an impairment charge of $147,500 on its aircraft held for lease during the nine months ended September 2015. Assets held for sale The Company recorded no impairment charges on its assets held for sale during the three months ended September 30, 2016 or 2015. During the nine months ended September 30, 2016, the Company recorded $321,200 of impairment charges on three aircraft held for sale prior to their sale. Fair Value of Other Financial Instruments The Company's financial instruments, other than cash and cash equivalents, consist principally of finance leases receivable, amounts borrowed under its credit facility (the "Credit Facility") and notes payable under special purpose financing. The fair value of accounts receivable, finance leases receivable, accounts payable and the Company's maintenance reserves and accrued maintenance costs approximates the carrying value of these financial instruments. Borrowings under the Company's Credit Facility bear floating rates of interest that reset periodically to a market benchmark rate plus a credit margin. The Company believes the effective interest rate under the Credit Facility approximates current market rates for such indebtedness at the balance sheet date, and therefore that the outstanding principal and accrued interest of $110,180,000 and $110,435,600 at September 30, 2016 and December 31, 2015, respectively, approximate their fair values on such dates. The fair value of the Company's outstanding balance of its Credit Facility would be categorized as Level 3 under the GAAP fair value hierarchy. The amounts payable under the Company's special purpose financing are payable through the fourth quarter of 2020 and bear a fixed rate of interest, as described in Note 4(b) to the financial statements. The outstanding balance of such financing approximates the fair value of such notes at September 30, 2016. Such fair value would be categorized as Level 3 under the GAAP fair value hierarchy. |
Finance Leases | (d) The Company currently has five aircraft finance leases that contain lessee purchase options at prices substantially below the assets' estimated residual values at the exercise date for the options. Consequently, the Company considers the purchase options to be bargain purchase options and has classified the leases as sales-type finance leases for financial accounting purposes. The Company reports the discounted present value of (i) future minimum lease payments (including the bargain purchase option) and (ii) any residual value not subject to a bargain purchase option as a finance lease receivable on its balance sheet and accrues interest on the balance of the finance lease receivable based on the interest rate inherent in the applicable lease over the term of the lease. For sales-type finance leases, the Company recognizes as a gain or loss the amount equal to (i) the net book value of the aircraft less (ii) the net investment in sales-type finance leases plus any initial direct costs and lease incentives. The Company recognized interest earned on finance leases in the amount of $199,800 and $184,000 in the quarters ended September 30, 2016 and 2015, respectively, and $571,900 and $275,400 in the nine months ended 30, 2016 and 2015, respectively. |
Recent Accounting Pronouncements | (e) In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern," which added Subtopic 205-40 to the ASC ("Subtopic 205-40"). Subtopic 205-40 requires management to determine whether substantial doubt exists concerning the reporting entity's ability to continue as a going concern, in which case certain disclosures will be required. Subtopic 205-40 affects financial statement presentation but not methods of accounting, and is effective on a prospective basis for annual periods ending after December 15, 2016 and each reporting period thereafter, although early adoption is permitted. The Company has not early adopted Subtopic 205-40 and is evaluating the impact the adoption of this standard will have on its financial statements. In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments -- Credit Losses (Topic 326) ("ASU 2016-13") In August 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-15, Statement of Cash Flows (Topic 230) ("ASU 2016-15") |
Finance Leases Receivable (Tabl
Finance Leases Receivable (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Finance Leases Receivable [Abstract] | |
Net investment included in sales-type finance leases receivable | At September 30, 2016 and December 31, 2015, the net investment included in sales-type finance leases receivable were as follows: September 30 2016 December 31 2015 Gross minimum lease payments receivable $ 21,952,600 $ 14,074,500 Less unearned interest (3,664,300 ) (2,178,900 ) Finance leases receivable $ 18,288,300 $ 11,895,600 |
Minimum future lease revenue payments receivable under sales-type finance leases | As of September 30, 2016, future minimum lease payments receivable under sales-type finance leases were as follows: Years ending Remainder of 2016 $ 842,900 2017 3,740,100 2018 3,663,600 2019 4,939,600 2020 2,727,600 Thereafter 6,038,800 $ 21,952,600 |
Aircraft and Aircraft Engines16
Aircraft and Aircraft Engines Held for Lease or Sale (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Aircraft and Aircraft Engines Held for Lease or Sale [Abstract] | |
Aircraft and aircraft engines held for lease | At September 30, 2016 and December 31, 2015, the Company's aircraft and aircraft engines held for lease consisted of the following: September 30, 2016 December 31, 2015 Type Number owned % of net book value Number owned % of net book value Turboprop aircraft 12 23 % 16 45 % Regional jet aircraft 12 73 % 8 49 % Engines 4 4 % 5 6 % |
Minimum future lease revenue payments receivable under noncancelable operating leases | As of September 30, 2016, minimum future lease revenue payments receivable under noncancelable operating leases were as follows: Years ending Remainder of 2016 $ 7,302,600 2017 26,406,900 2018 22,312,500 2019 21,685,600 2020 19,455,200 Thereafter 43,209,700 $ 140,372,500 |
Notes Payable and Accrued Int17
Notes Payable and Accrued Interest (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Notes Payable and Accrued Interest [Abstract] | |
Notes payable and accrued interest | At 30, 2016 and December 31, 2015, the Company's notes payable and accrued interest consisted of the following: September 30 2016 December 31 2015 Credit Facility: Principal $ 110,100,000 $ 110,400,000 Unamortized debt issuance costs (2,220,200 ) (2,814,000 ) Accrued interest 80,000 35,600 Special purpose financing: Principal 18,623,600 - Accrued interest 30,000 - $ 126,613,400 $ 107,621,600 |
Computation of Earnings Per S18
Computation of Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Computation of Earnings Per Share [Abstract] | |
Computation of earnings per share | Basic and diluted earnings per share are calculated as follows: For the Nine Months Ended September 30, For the Three Months Ended September 30, 2016 2015 2016 2015 Net income $ 1,262,000 $ 3,362,500 $ 529,700 $ 1,255,000 Weighted average shares outstanding for the period 1,566,699 1,543,257 1,566,699 1,543,257 Dilutive effect of warrants - 8,924 - 5,212 Weighted average diluted shares used in calculation of diluted earnings per share 1,566,699 1,552,181 1,566,699 1,548,469 Basic earnings per share $ 0.81 $ 2.18 $ 0.34 $ 0.81 Diluted earnings per share $ 0.81 $ 2.17 $ 0.34 $ 0.81 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related party fees | Fees incurred during the nine months and three months ended September 30, 2016 and 2015 were as follows: For the Nine Months Ended September 30, For the Three Months Ended September 30, 2016 2015 2016 2015 Management fees $ 3,685,600 $ 4,260,800 $ 1,249,100 $ 1,411,100 Acquisition fees 1,124,200 - 1,124,200 - Remarketing fees 284,500 517,600 225,700 93,400 |
Organization and Summary of S20
Organization and Summary of Significant Accounting Policies (Details) | Aug. 31, 2016Subsidiary | Sep. 30, 2016USD ($)Aircraft | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)Aircraft | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) |
Organization and Summary of Significant Accounting Policies [Abstract] | ||||||
Number of wholly owned subsidiaries | Subsidiary | 2 | |||||
Capital Leased Assets [Line Items] | ||||||
Impairment charge | $ 0 | $ 0 | $ 321,200 | $ 147,500 | ||
Notes payable and accrued interest | 126,613,400 | $ 126,613,400 | $ 107,621,600 | |||
Finance Leases [Abstract] | ||||||
Number of aircraft with finance leases that contain lessee purchase options | Aircraft | 5 | |||||
Interest earned on finance lease | 199,800 | 184,000 | $ 571,900 | 275,400 | ||
Credit Facility [Member] | ||||||
Capital Leased Assets [Line Items] | ||||||
Notes payable and accrued interest | 110,180,000 | 110,180,000 | 110,435,600 | |||
Recurring [Member] | ||||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis [Abstract] | ||||||
Money market funds included in cash and cash equivalents | 1,547,900 | 1,547,900 | 1,946,600 | |||
Liabilities recorded at fair value | 0 | 0 | $ 0 | |||
Aircraft [Member] | Held for Lease [Member] | ||||||
Capital Leased Assets [Line Items] | ||||||
Impairment charge | 0 | 0 | $ 147,500 | |||
Aircraft [Member] | Held for Sale [Member] | ||||||
Capital Leased Assets [Line Items] | ||||||
Impairment charge | $ 0 | $ 0 | $ 321,200 | |||
Number of aircraft held for sale | Aircraft | 3 | 3 |
Finance Leases Receivable (Deta
Finance Leases Receivable (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016USD ($)Aircraft | Sep. 30, 2015USD ($)Aircraft | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2016Aircraft | Dec. 31, 2015USD ($) | |
Loans And Leases Receivable Disclosure [Line Items] | ||||||
Net gain on sales-type finance leases | $ 1,166,100 | $ 1,095,400 | $ 1,213,600 | $ 5,179,200 | ||
Net Investment [Abstract] | ||||||
Gross minimum lease payments receivable | 21,952,600 | 21,952,600 | $ 14,074,500 | |||
Less unearned interest | (3,664,300) | (3,664,300) | (2,178,900) | |||
Finance leases receivable | 18,288,300 | 18,288,300 | 11,895,600 | |||
Minimum Future Lease Revenue Payments [Abstract] | ||||||
Remainder of 2016 | 842,900 | 842,900 | ||||
2,017 | 3,740,100 | 3,740,100 | ||||
2,018 | 3,663,600 | 3,663,600 | ||||
2,019 | 4,939,600 | 4,939,600 | ||||
2,020 | 2,727,600 | 2,727,600 | ||||
Thereafter | 6,038,800 | 6,038,800 | ||||
Total | $ 21,952,600 | $ 21,952,600 | $ 14,074,500 | |||
Turboprop Aircraft [Member] | Operating Lease [Member] | ||||||
Loans And Leases Receivable Disclosure [Line Items] | ||||||
Number of assets lease extended | Aircraft | 2 | |||||
Turboprop Aircraft [Member] | Financing lease [member] | ||||||
Loans And Leases Receivable Disclosure [Line Items] | ||||||
Number of aircraft leased | Aircraft | 2 | 2 | ||||
Number of aircraft off lease | Aircraft | 1 | |||||
Number of aircraft returned | Aircraft | 1 | |||||
Net gain on sales-type finance leases | $ 1,166,100 | $ 179,000 | ||||
Additional gain on finance lease | $ 916,400 |
Aircraft and Aircraft Engines22
Aircraft and Aircraft Engines Held for Lease or Sale (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2016USD ($)Aircraft | Aug. 31, 2016Aircraft | Sep. 30, 2016USD ($)Aircraft | Jun. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)AircraftAsset | Sep. 30, 2015USD ($) | Dec. 31, 2015Aircraft | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||||||
Remainder of 2016 | $ 7,302,600 | $ 7,302,600 | $ 7,302,600 | |||||
2,017 | 26,406,900 | 26,406,900 | 26,406,900 | |||||
2,018 | 22,312,500 | 22,312,500 | 22,312,500 | |||||
2,019 | 21,685,600 | 21,685,600 | 21,685,600 | |||||
2,020 | 19,455,200 | 19,455,200 | 19,455,200 | |||||
Thereafter | 43,209,700 | 43,209,700 | 43,209,700 | |||||
Total | $ 140,372,500 | $ 140,372,500 | 140,372,500 | |||||
Proceeds from the sale of airframe parts | $ 3,396,100 | $ 1,835,300 | ||||||
Held for Lease [Member] | ||||||||
Aircraft and aircraft engines held for lease or sale [Abstract] | ||||||||
Percentage of net book value | 7.00% | 7.00% | 7.00% | |||||
Number of aircrafts purchased | Aircraft | 2 | 2 | ||||||
Payment for equipment and acquisition costs related to aircraft purchased | $ 52,138,000 | $ 971,100 | $ 0 | |||||
Proceeds from lease payments as maintenance reserves | $ 17,179,300 | |||||||
Number of aircraft for which maintenance reserve received | Aircraft | 2 | |||||||
Number of off leased assets leased | Asset | 6 | |||||||
Number of aircraft, expected to be delivered pursuant to signed lease and deposit | Aircraft | 1 | 1 | 1 | |||||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||||||
Percentage of net book value | 7.00% | 7.00% | 7.00% | |||||
Held for Sale [Member] | ||||||||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||||||
Proceeds from the sale of airframe parts | $ 38,600 | $ 19,000 | ||||||
Turboprop Aircraft [Member] | ||||||||
Aircraft and aircraft engines held for lease or sale [Abstract] | ||||||||
Number owned | Aircraft | 12 | 12 | 12 | 16 | ||||
Percentage of net book value | 23.00% | 23.00% | 23.00% | 45.00% | ||||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||||||
Percentage of net book value | 23.00% | 23.00% | 23.00% | 45.00% | ||||
Turboprop Aircraft [Member] | Held for Lease [Member] | ||||||||
Aircraft and aircraft engines held for lease or sale [Abstract] | ||||||||
Number of off leased assets leased | Asset | 4 | |||||||
Turboprop Airframe [Member] | Held for Sale [Member] | ||||||||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||||||
Number of aircraft sold | Aircraft | 3 | |||||||
Gain on sale of airframes | $ 2,800 | |||||||
Regional Jet Aircraft [Member] | ||||||||
Aircraft and aircraft engines held for lease or sale [Abstract] | ||||||||
Number owned | Aircraft | 12 | 12 | 12 | 8 | ||||
Percentage of net book value | 73.00% | 73.00% | 73.00% | 49.00% | ||||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||||||
Percentage of net book value | 73.00% | 73.00% | 73.00% | 49.00% | ||||
Engines [Member] | ||||||||
Aircraft and aircraft engines held for lease or sale [Abstract] | ||||||||
Number owned | Aircraft | 4 | 4 | 4 | 5 | ||||
Percentage of net book value | 4.00% | 4.00% | 4.00% | 6.00% | ||||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||||||
Percentage of net book value | 4.00% | 4.00% | 4.00% | 6.00% | ||||
Engines [Member] | Held for Lease [Member] | ||||||||
Aircraft and aircraft engines held for lease or sale [Abstract] | ||||||||
Number of off leased assets leased | Asset | 2 |
Notes Payable and Accrued Int23
Notes Payable and Accrued Interest (Details) | Aug. 31, 2016USD ($)Aircraft | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) |
Credit Facility [Abstract] | |||
Unamortized debt issuance costs | $ (2,220,200) | $ (2,814,000) | |
Special Purpose Financing [Abstract] | |||
Notes payable and accrued interest | 126,613,400 | 107,621,600 | |
Special Purpose Financing [Member] | |||
Special Purpose Financing [Abstract] | |||
Principal | 18,623,600 | 0 | |
Interest rate | 4.455% | ||
Accrued interest | 30,000 | 0 | |
Notes payable and accrued interest | 18,653,600 | ||
Special Purpose Financing [Member] | October 3, 2020 [Member] | |||
Special Purpose Financing [Abstract] | |||
Principal | $ 9,805,600 | ||
Special Purpose Financing [Member] | November 7, 2020 [Member] | |||
Special Purpose Financing [Abstract] | |||
Principal | $ 9,804,300 | ||
Special Purpose Financing [Member] | Regional Jet Aircraft [Member] | |||
Special Purpose Financing [Abstract] | |||
Number of aircrafts purchased | Aircraft | 2 | ||
Credit Facility [Member] | |||
Credit Facility [Abstract] | |||
Principal | 110,100,000 | 110,400,000 | |
Unamortized debt issuance costs | (2,220,200) | (2,814,000) | |
Credit facility maximum borrowing capacity | 150,000,000 | ||
Credit facility potential maximum borrowing capacity | 180,000,000 | ||
Unused amount of the credit facility | $ 39,900,000 | $ 39,600,000 | |
Weighted average interest rate on credit facility | 3.93% | 3.80% | |
Special Purpose Financing [Abstract] | |||
Accrued interest | $ 80,000 | $ 35,600 |
Computation of Earnings Per S24
Computation of Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Basic and diluted earning/loss per share [Abstract] | ||||
Net income | $ 529,700 | $ 1,255,000 | $ 1,262,000 | $ 3,362,500 |
Weighted average shares outstanding for the period (in shares) | 1,566,699 | 1,543,257 | 1,566,699 | 1,543,257 |
Dilutive effect of warrants (in shares) | 0 | 5,212 | 0 | 8,924 |
Weighted average diluted shares used in calculation of diluted earnings per share (in shares) | 1,566,699 | 1,548,469 | 1,566,699 | 1,552,181 |
Basic earnings per share (in dollars per share) | $ 0.34 | $ 0.81 | $ 0.81 | $ 2.18 |
Diluted earnings per share (in dollars per share) | $ 0.34 | $ 0.81 | $ 0.81 | $ 2.17 |
Potentially outstanding shares was not included in the calculation of diluted loss per share (in shares) | 0 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Related Party Transaction [Line Items] | ||||
Management fees | $ 1,249,100 | $ 1,411,100 | $ 3,685,600 | $ 4,260,800 |
Jet Fleet Management Corp. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Management fees | 1,249,100 | 1,411,100 | 3,685,600 | 4,260,800 |
Acquisition fees | 1,124,200 | 0 | 1,124,200 | 0 |
Remarketing fees | $ 225,700 | $ 93,400 | $ 284,500 | $ 517,600 |