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| | | | F-1 | | | |
| | | | A-1 | | | |
| | | | B-1 | | |
| AeroCentury Corp. 1440 Chapin Avenue, Suite 310 Burlingame, California 94010 |
| | JetFleet Holding Corp. 1440 Chapin Avenue, Suite 310 Burlingame, California 94010 |
|
| Falcon Landing, Inc. 1440 Chapin Avenue, Suite 310 Burlingame, California 94010 |
| | Fortis Advisors LLC* 12526 High Bluff Drive, #280 San Diego, California 92130 |
|
| | |
Fiscal Years ended December 31
(dollars in thousands) |
| |||||||||||||||||||||||||||
($ in thousands)
|
| |
2018
|
| |
2019
|
| |
2020
|
| |
2021
|
| |
2022
|
| |||||||||||||||
Total Revenue
|
| | | $ | 33,438 | | | | | $ | 36,115 | | | | | $ | 37,860 | | | | | $ | 37,106 | | | | | $ | 38,691 | | |
EBITDA(1) | | | | $ | 24,837 | | | | | $ | 27,368 | | | | | $ | 28,805 | | | | | $ | 27,829 | | | | | $ | 29,143 | | |
Net Income
|
| | | $ | 1,516 | | | | | $ | 2,941 | | | | | $ | 3,542 | | | | | $ | 3,727 | | | | | $ | 4,438 | | |
Levered Free Cash Flow(2)
|
| | | $ | (752) | | | | | $ | 472 | | | | | $ | 435 | | | | | $ | 303 | | | | | $ | 57 | | |
| | |
Fiscal Years ended December 31
(dollars in thousands) |
| |||||||||||||||||||||||||||||||||||||||||||||
($ in thousands)
|
| |
2018
|
| |
2019
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| ||||||||||||||||||||||||
Total Revenue
|
| | | $ | 7,288 | | | | | $ | 7,553 | | | | | $ | 7,992 | | | | | $ | 8,433 | | | | | $ | 8,419 | | | | | $ | 8,672 | | | | | $ | 8,932 | | | | | $ | 6,517 | | |
EBITDA(1) | | | | $ | 1,975 | | | | | $ | 2,036 | | | | | $ | 2,261 | | | | | $ | 2,464 | | | | | $ | 2,202 | | | | | $ | 2,207 | | | | | $ | 2,208 | | | | | $ | 1,562 | | |
Net Income
|
| | | $ | 1,182 | | | | | $ | 1,218 | | | | | $ | 1,353 | | | | | $ | 1,473 | | | | | $ | 1,316 | | | | | $ | 1,318 | | | | | $ | 1,318 | | | | | $ | 932 | | |
Free Cash Flow(2)
|
| | | $ | 1,177 | | | | | $ | 1,214 | | | | | $ | 1,349 | | | | | $ | 1,470 | | | | | $ | 1,313 | | | | | $ | 1,316 | | | | | $ | 1,316 | | | | | $ | 931 | | |
| | |
ACY Historical & Projected Financial Performance
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
($ in thousands)
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
For the Years Ended December 31
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
Actual
|
| |
Estimate
|
| |
ACY Projections
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
2013
|
| |
2014
|
| |
2015
|
| |
2016
|
| |
LTM
|
| |
2017
|
| |
2018
|
| |
2019
|
| |
2020
|
| |
2021
|
| |
2022
|
| |||||||||||||||||||||||||||||||||
Operating Leases
|
| | | $ | 18,794 | | | | | $ | 21,913 | | | | | $ | 25,467 | | | | | $ | 24,464 | | | | | $ | 29,551 | | | | | $ | 29,081 | | | | | $ | 30,267 | | | | | $ | 34,660 | | | | | $ | 36,818 | | | | | $ | 36,470 | | | | | $ | 38,539 | | |
Op. Leases as a % of Average NBV
|
| | | | 12.7% | | | | | | 12.9% | | | | | | 14.9% | | | | | | 14.1% | | | | | | 15.2% | | | | | | 15.2% | | | | | | 15.2% | | | | | | 15.8% | | | | | | 15.8% | | | | | | 15.0% | | | | | | 15.0% | | |
Maintenance Reserves(1)
|
| | | $ | 14,910 | | | | | $ | 3,394 | | | | | $ | 589 | | | | | $ | 0 | | | | | $ | 1,014 | | | | | $ | 3,366 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
Net Gain in Disposal
of Assets |
| | | | 3,808 | | | | | | 3,147 | | | | | | 6,791 | | | | | | 2,195 | | | | | | 167 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
Net Gain on
Sale-Type Finance Leases |
| | | | 0 | | | | | | 0 | | | | | | 5,179 | | | | | | 1,187 | | | | | | 1,725 | | | | | | 167 | | | | | | 1,287 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
Finance Leases
|
| | | | 719 | | | | | | 252 | | | | | | 508 | | | | | | 870 | | | | | | 870 | | | | | | 1,597 | | | | | | 1,884 | | | | | | 1,456 | | | | | | 1,042 | | | | | | 637 | | | | | | 152 | | |
Total Revenue
|
| | | $ | 38,232 | | | | | $ | 28,707 | | | | | $ | 38,534 | | | | | $ | 28,716 | | | | | $ | 33,328 | | | | | $ | 34,211 | | | | | $ | 33,438 | | | | | $ | 36,115 | | | | | $ | 37,860 | | | | | $ | 37,106 | | | | | $ | 38,691 | | |
Growth
|
| | | | | | | | | | (24.9)% | | | | | | 34.2% | | | | | | (25.5)% | | | | | | NA | | | | | | 19.1% | | | | | | (2.3)% | | | | | | 8.0% | | | | | | 4.8% | | | | | | (2.0)% | | | | | | 4.3% | | |
Total Fees to JHC(2)
|
| | | $ | (5,746) | | | | | $ | (6,063) | | | | | $ | (6,466) | | | | | $ | (6,888) | | | | | $ | (8,225) | | | | | $ | (6,953) | | | | | $ | (7,288) | | | | | $ | (7,553) | | | | | $ | (7,992) | | | | | $ | (8,433) | | | | | $ | (8,419) | | |
Growth
|
| | | | NA | | | | | | 5.5% | | | | | | 6.6% | | | | | | 6.5% | | | | | | NA | | | | | | 1.0% | | | | | | 4.8% | | | | | | 3.6% | | | | | | 5.8% | | | | | | 5.5% | | | | | | (0.2)% | | |
Total Operating
Expenses |
| | | $ | (25,559) | | | | | $ | (45,952) | | | | | $ | (28,512) | | | | | $ | (26,744) | | | | | $ | (30,595) | | | | | $ | (30,119) | | | | | $ | (31,921) | | | | | $ | (33,174) | | | | | $ | (34,317) | | | | | $ | (33,380) | | | | | $ | (34,253) | | |
Growth
|
| | | | NA | | | | | | 79.8% | | | | | | (38.0)% | | | | | | (6.2)% | | | | | | NA | | | | | | 12.6% | | | | | | 6.0% | | | | | | 3.9% | | | | | | 3.4% | | | | | | (2.7)% | | | | | | 2.6% | | |
Adjusted EBITDA
|
| | | $ | 24,469 | | | | | $ | 13,924 | | | | | $ | 26,507 | | | | | $ | 18,514 | | | | | $ | 23,582 | | | | | $ | 24,653 | | | | | $ | 24,837 | | | | | $ | 27,368 | | | | | $ | 28,805 | | | | | $ | 27,829 | | | | | $ | 29,143 | | |
Margin
|
| | | | 64.0% | | | | | | 48.5% | | | | | | 68.8% | | | | | | 64.5% | | | | | | 70.8% | | | | | | 72.1% | | | | | | 74.3% | | | | | | 75.8% | | | | | | 76.1% | | | | | | 75.0% | | | | | | 75.3% | | |
Growth
|
| | | | NA | | | | | | NM | | | | | | NM | | | | | | (30.2)% | | | | | | NA | | | | | | 33.2% | | | | | | 0.7% | | | | | | 10.2% | | | | | | 5.3% | | | | | | (3.4)% | | | | | | 4.7% | | |
Adjusted Net Income
|
| | | $ | 8,702 | | | | | $ | 7,443 | | | | | $ | 7,720 | | | | | $ | 3,284 | | | | | $ | 3,629 | | | | | $ | 4,803 | | | | | $ | 1,516 | | | | | $ | 2,941 | | | | | $ | 3,542 | | | | | $ | 3,727 | | | | | $ | 4,438 | | |
Margin
|
| | | | 22.8% | | | | | | 25.9% | | | | | | 20.0% | | | | | | 11.4% | | | | | | 10.9% | | | | | | 14.0% | | | | | | 4.5% | | | | | | 8.1% | | | | | | 9.4% | | | | | | 10.0% | | | | | | 11.5% | | |
Growth
|
| | | | NA | | | | | | (14.5)% | | | | | | 3.7% | | | | | | (57.5)% | | | | | | NA | | | | | | 46.2% | | | | | | (68.4)% | | | | | | 94.0% | | | | | | 20.4% | | | | | | 5.2% | | | | | | 19.1% | | |
| | |
ACY Discounted Cash Flow Analysis
|
| ||||||||||||||||||||||||||||||||||||||||||||||
| | |
($ in thousands)
|
| ||||||||||||||||||||||||||||||||||||||||||||||
| | |
For the Years Ended December 31
|
| ||||||||||||||||||||||||||||||||||||||||||||||
| | |
Estimate
|
| | |
ACY Projections
|
| |
5-YR
CAGR |
| |
5-YR
Average |
| ||||||||||||||||||||||||||||||||||||
| | |
2017E
|
| | |
2018P
|
| |
2019P
|
| |
2020P
|
| |
2021P
|
| |
2022P
|
| ||||||||||||||||||||||||||||||
Revenue
|
| | | $ | 34,211 | | | | | | $ | 33,438 | | | | | $ | 36,115 | | | | | $ | 37,860 | | | | | $ | 37,106 | | | | | $ | 38,691 | | | | | | 3.7% | | | | | | | | |
Growth
|
| | |
|
19.1%
|
| | | | |
|
(2.3)%
|
| | | |
|
8.0%
|
| | | |
|
4.8%
|
| | | |
|
(2.0)%
|
| | | |
|
4.3%
|
| | | | | | | | | | | 2.6% | | |
EBITDA
|
| | | $ | 23,943 | | | | | | $ | 24,837 | | | | | $ | 27,368 | | | | | $ | 28,805 | | | | | $ | 27,829 | | | | | $ | 29,143 | | | | | | 4.1% | | | | | | | | |
EBITDA Margin
|
| | | | 70.0% | | | | | | | 74.3% | | | | | | 75.8% | | | | | | 76.1% | | | | | | 75.0% | | | | | | 75.3% | | | | | | | | | | |
|
75.3%
|
| |
| | |
2018P
|
| |
2019P
|
| |
2020P
|
| |
2021P
|
| |
2022P
|
| |||||||||||||||
Net Income
|
| | | $ | 1,516 | | | | | $ | 2,941 | | | | | $ | 3,542 | | | | | $ | 3,727 | | | | | $ | 4,438 | | |
Plus: Depreciation
|
| | | | 13,907 | | | | | | 15,176 | | | | | | 15,905 | | | | | | 14,889 | | | | | | 15,722 | | |
Plus: Cash Sales Proceeds
|
| | | | 5,702 | | | | | | 6,955 | | | | | | 22,111 | | | | | | 21,284 | | | | | | 7,578 | | |
Less: Debt Repayments
|
| | | | (12,801) | | | | | | (24,498) | | | | | | (38,713) | | | | | | (35,500) | | | | | | (25,000) | | |
Plus: Debt Borrowings
|
| | | | 23,150 | | | | | | 34,050 | | | | | | 34,770 | | | | | | 35,350 | | | | | | 25,160 | | |
Less: Capital Expenditures
|
| | | | (38,000) | | | | | | (39,000) | | | | | | (42,000) | | | | | | (45,000) | | | | | | (34,000) | | |
Plus: Finance Lease Principal Payments
|
| | | | 5,278 | | | | | | 7,102 | | | | | | 5,465 | | | | | | 6,214 | | | | | | 6,664 | | |
Plus: Other Cash Flow Adjustments
|
| | | | 495 | | | | | | (2,254) | | | | | | (645) | | | | | | (661) | | | | | | (505) | | |
Levered Free Cash Flow
|
| | | $ | (752) | | | | | $ | 472 | | | | | $ | 435 | | | | | $ | 303 | | | | | $ | 57 | | |
Equity Value
|
| |
Low
|
| |
Mid
|
| |
High
|
| |||||||||
Price to Book Value (“P/BV”) Multiple(1)
|
| | | | 0.95x | | | | | | 1.00x | | | | | | 1.05x | | |
Cost of Equity
|
| | | | 15.50% | | | | | | 15.00% | | | | | | 14.50% | | |
Present Value of Terminal Value
|
| | | $ | 24,543 | | | | | $ | 26,401 | | | | | $ | 28,332 | | |
PV of Discrete Cash Flow – Annual
|
| | | | 198 | | | | | | 205 | | | | | | 213 | | |
Indicated Equity Value Range
|
| | | $ | 24,700 | | | | | $ | 26,600 | | | | | $ | 28,500 | | |
|
| | |
Implied Multiples
|
| |||||||||||||||||||||
Book Value of Equity
|
| | | $ | 41,461 | | | | | | 0.60x | | | | | | 0.64x | | | | | | 0.69x | | |
LTM Net Income
|
| | | | 3,629 | | | | | | 6.8x | | | | | | 7.3x | | | | | | 7.9x | | |
2017 Net Income
|
| | | | 4,803 | | | | | | 5.1x | | | | | | 5.5x | | | | | | 5.9x | | |
2018 Net Income
|
| | | | 1,516 | | | | | | 16.3x | | | | | | 17.5x | | | | | | 18.8x | | |
LTM Revenue(2)
|
| | | | 33,328 | | | | | | 5.24x | | | | | | 5.29x | | | | | | 5.35x | | |
2017 Revenue(2)
|
| | | | 34,211 | | | | | | 5.10x | | | | | | 5.16x | | | | | | 5.21x | | |
LTM Adj. EBITDA(2)
|
| | | | 23,582 | | | | | | 7.4x | | | | | | 7.5x | | | | | | 7.6x | | |
2017 Adj. EBITDA(2)
|
| | | | 24,653 | | | | | | 7.1x | | | | | | 7.2x | | | | | | 7.2x | | |
|
•
ALAFCO Aviation Lease and Finance
•
Avation PLC
•
DP Aircraft I Limited
•
AerCap Holdings N.V.
|
| |
•
Air Lease Corporation
•
FLY Leasing Limited
•
Willis Lease Finance Corporation
•
Aircastle Limited
|
|
| | |
Selected Public Companies Analysis
|
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COMPANY INFORMATION
|
| |
REVENUE GROWTH
|
| |
LTM RETURNS
|
| |
EBITDA MARGIN
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Name
|
| |
3-YR
CAGR |
| |
LTM
|
| |
2017
|
| |
2018
|
| |
ROA
|
| |
ROE
|
| |
EBT to
Equity |
| |
3-YR
AVG |
| |
LTM
|
| |
2017
|
| |
2018
|
| |||||||||||||||||||||||||||||||||
ALAFCO Aviation Lease
and Finance |
| | | | 6.0% | | | | | | 22.7% | | | | | | NA | | | | | | NA | | | | | | 4.3% | | | | | | 9.0% | | | | | | 9.0% | | | | | | 90.7% | | | | | | 92.8% | | | | | | NA | | | | | | NA | | |
Avation PLC
|
| | | | 24.7 | | | | | | 32.7 | | | | | | 15.1 | | | | | | 10.7 | | | | | | 7.3 | | | | | | 14.2 | | | | | | 14.2 | | | | | | 93.0 | | | | | | 103.1 | | | | | | NA | | | | | | NA | | |
DP Aircraft I Limited
|
| | | | NM | | | | | | 0.1 | | | | | | NA | | | | | | NA | | | | | | 6.0 | | | | | | 9.0 | | | | | | 9.0 | | | | | | 92.8 | | | | | | 96.5 | | | | | | NA | | | | | | NA | | |
AerCap Holdings N.V.
|
| | | | 67.5 | | | | | | -3.8 | | | | | | -2.1 | | | | | | 2.9 | | | | | | 4.4 | | | | | | 11.5 | | | | | | 13.7 | | | | | | 60.9 | | | | | | 81.3 | | | | | | 81.3 | | | | | | 84.6 | | |
Air Lease Corporation
|
| | | | 16.9 | | | | | | 7.2 | | | | | | 9.5 | | | | | | 15.8 | | | | | | 3.8 | | | | | | 9.7 | | | | | | 15.9 | | | | | | 70.4 | | | | | | 92.3 | | | | | | 92.7 | | | | | | 93.2 | | |
FLY Leasing Limited
|
| | | | -1.4 | | | | | | -12.9 | | | | | | 0.2 | | | | | | 13.9 | | | | | | 4.3 | | | | | | 6.8 | | | | | | 5.5 | | | | | | 69.1 | | | | | | 86.8 | | | | | | 89.7 | | | | | | 94.6 | | |
Willis Lease Finance Corporation
|
| | | | 8.7 | | | | | | 16.4 | | | | | | NA | | | | | | NA | | | | | | 4.8 | | | | | | 10.3 | | | | | | 17.6 | | | | | | 65.7 | | | | | | 70.8 | | | | | | NA | | | | | | NA | | |
Aircastle Limited
|
| | | | 4.7 | | | | | | 9.2 | | | | | | 0.2 | | | | | | 4.7 | | | | | | 6.5 | | | | | | 12.5 | | | | | | 13.0 | | | | | | 67.9 | | | | | | 93.1 | | | | | | 95.6 | | | | | | 91.3 | | |
Mean | | | | | 18.1% | | | | | | 9.0% | | | | | | 4.6% | | | | | | 9.6% | | | | | | 5.2% | | | | | | 10.4% | | | | | | 12.2% | | | | | | 76.3% | | | | | | 89.6% | | | | | | 89.8% | | | | | | 90.9% | | |
Median | | | | | 8.7% | | | | | | 8.2% | | | | | | 0.2% | | | | | | 10.7% | | | | | | 4.6% | | | | | | 10.0% | | | | | | 13.3% | | | | | | 69.7% | | | | | | 92.5% | | | | | | 91.2% | | | | | | 92.2% | | |
High | | | | | 67.5% | | | | | | 32.7% | | | | | | 15.1% | | | | | | 15.8% | | | | | | 7.3% | | | | | | 14.2% | | | | | | 17.6% | | | | | | 93.0% | | | | | | 103.1% | | | | | | 95.6% | | | | | | 94.6% | | |
Low | | | | | -1.4% | | | | | | -12.9% | | | | | | -2.1% | | | | | | 2.9% | | | | | | 3.8% | | | | | | 6.8% | | | | | | 5.5% | | | | | | 60.9% | | | | | | 70.8% | | | | | | 81.3% | | | | | | 84.6% | | |
ACY(1) | | | | | -9.1% | | | | | | NA | | | | | | 19.1% | | | | | | -2.3% | | | | | | 1.8% | | | | | | 8.7% | | | | | | 6.6% | | | | | | 35.3% | | | | | | 70.8% | | | | | | 72.1% | | | | | | 74.3% | | |
ACY & JHC(1)
|
| | | | -9.1% | | | | | | NA | | | | | | 19.1% | | | | | | -2.3% | | | | | | 3.3% | | | | | | 15.6% | | | | | | 14.9% | | | | | | NA | | | | | | 81.1% | | | | | | 77.0% | | | | | | 80.3% | | |
|
| | |
Selected Public Companies Analysis
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
(US$ in millions, except per share data)
|
| | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMPANY
INFORMATION |
| |
MARKET DATA
|
| |
EQUITY VALUE AS A MULITPLE OF
|
| |
ENTERPRISE VALUE AS A MULITPLE OF
|
| | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Name
|
| |
Common
Stock Price on 10/20/2017 |
| |
% of
52-Week High |
| |
Market
Capitalization |
| |
Enterprise
Value |
| |
Book
Value of Equity |
| |
Tangible
Book Value of Equity |
| |
LTM
Net Income |
| |
2017
Net Income |
| |
2018
Net Income |
| |
LTM
EBITDA |
| |
2017
EBITDA |
| |
2018
EBITDA |
| |
LTM
Revenue |
| |
2017
Revenue |
| |
2018
Revenue |
| | |||||||||||||||||||||||||||||||||||||||||||||||
ALAFCO Aviation Lease and Finance
|
| | | $ | 1.28 | | | | | | 99.2% | | | | | $ | 1,218 | | | | | $ | 2,690 | | | | | | 1.36x | | | | | | 1.36x | | | | | | 15.6x | | | | | | NA | | | | | | NA | | | | | | 10.8x | | | | | | NA | | | | | | NA | | | | | | 10.01x | | | | | | NA | | | | | | NA | | | | ||
Avation PLC
|
| | | | 3.02 | | | | | | 93.5 | | | | | | 186 | | | | | | 745 | | | | | | 0.92 | | | | | | 0.93 | | | | | | 8.5 | | | | | | 10.9 | | | | | | 10.8x | | | | | | 7.6 | | | | | | NA | | | | | | NA | | | | | | 7.88 | | | | | | 7.60 | | | | | | 6.87 | | | | ||
DP Aircraft I Limited
|
| | | | 1.11 | | | | | | 98.9 | | | | | | 232 | | | | | | 478 | | | | | | 1.11 | | | | | | 1.36 | | | | | | 12.6 | | | | | | NA | | | | | | NA | | | | | | 8.6 | | | | | | NA | | | | | | NA | | | | | | 8.34 | | | | | | NA | | | | | | NA | | | | ||
AerCap Holdings N.V.
|
| | | | 53.06 | | | | | | 100.4 | | | | | | 8,671 | | | | | | 34,290 | | | | | | 1.11 | | | | | | 1.55 | | | | | | 9.8 | | | | | | 8.7 | | | | | | 7.9 | | | | | | 8.6 | | | | | | 8.5x | | | | | | 8.0x | | | | | | 6.97 | | | | | | 6.95 | | | | | | 6.75 | | | | ||
Air Lease Corporation
|
| | | | 44.14 | | | | | | 98.6 | | | | | | 4,556 | | | | | | 13,667 | | | | | | 1.38 | | | | | | 1.38 | | | | | | 15.0 | | | | | | 12.7 | | | | | | 10.6 | | | | | | 10.6 | | | | | | 9.8 | | | | | | 8.4 | | | | | | 9.82 | | | | | | 9.11 | | | | | | 7.87 | | | | ||
FLY Leasing Limited
|
| | | | 14.03 | | | | | | 95.8 | | | | | | 423 | | | | | | 2,670 | | | | | | 0.78 | | | | | | 0.96 | | | | | | 11.0 | | | | | | 14.7 | | | | | | 7.0 | | | | | | 9.0 | | | | | | 8.7 | | | | | | 7.2 | | | | | | 7.80 | | | | | | 7.77 | | | | | | 6.83 | | | | ||
Willis Lease Finance
Corporation |
| | | | 25.25 | | | | | | 90.0 | | | | | | 162 | | | | | | 1,047 | | | | | | 0.76 | | | | | | 0.83 | | | | | | 8.0 | | | | | | NA | | | | | | NA | | | | | | 6.0 | | | | | | NA | | | | | | NA | | | | | | 4.22 | | | | | | NA | | | | | | NA | | | | ||
Aircastle Limited
|
| | | | 23.56 | | | | | | 90.7 | | | | | | 1,854 | | | | | | 5,634 | | | | | | 1.00 | | | | | | 1.00 | | | | | | 8.1 | | | | | | 12.3 | | | | | | 10.1 | | | | | | 7.1 | | | | | | 7.3 | | | | | | 7.3 | | | | | | 6.60 | | | | | | 7.02 | | | | | | 6.70 | | | | ||
Mean | | | | | | | | | | | 95.9% | | | | | $ | 2,163 | | | | | $ | 7,652 | | | | | | 1.05x | | | | | | 1.17x | | | | | | 11.1x | | | | | | 11.9x | | | | | | 9.3x | | | | | | 8.5x | | | | | | 8.6x | | | | | | 7.7x | | | | | | 7.70x | | | | | | 7.69x | | | | | | 7.00x | | | | ||
Median | | | | | | | | | | | 97.2% | | | | | $ | 821 | | | | | $ | 2,680 | | | | | | 1.06x | | | | | | 1.18x | | | | | | 10.4x | | | | | | 12.3x | | | | | | 10.1x | | | | | | 8.6x | | | | | | 8.6x | | | | | | 7.7x | | | | | | 7.84x | | | | | | 7.60x | | | | | | 6.83x | | | | ||
High | | | | | | | | | | | 100.4% | | | | | $ | 8,671 | | | | | $ | 34,290 | | | | | | 1.38x | | | | | | 1.55x | | | | | | 15.6x | | | | | | 14.7x | | | | | | 10.8x | | | | | | 10.8x | | | | | | 9.8x | | | | | | 8.4x | | | | | | 10.01x | | | | | | 9.11x | | | | | | 7.87x | | | | ||
Low | | | | | | | | | | | 90.0% | | | | | $ | 162 | | | | | $ | 478 | | | | | | 0.76x | | | | | | 0.83x | | | | | | 8.0x | | | | | | 8.7x | | | | | | 7.0x | | | | | | 6.0x | | | | | | 7.3x | | | | | | 7.2x | | | | | | 4.22x | | | | | | 6.95x | | | | | | 6.70x | | | | ||
Aerocentury Corp. (1)(2)
|
| | | $ | 13.55 | | | | | | 84.2% | | | | | $ | 19 | | | | | $ | 162 | | | | | | 0.46x | | | | | | 0.46x | | | | | | 5.3x | | | | | | 4.0x | | | | | | 12.7x | | | | | | 7.2x | | | | | | 6.9x | | | | | | 6.8x | | | | | | 5.07x | | | | | | 4.94x | | | | | | 5.06x | | | | ||
|
| | |
Selected M&A Transaction Analysis
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
| | |
($ in millions)
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Announced
|
| |
Target Name
|
| |
Target Business Description
|
| |
Acquirer Name
|
| |
Enterprise
Value |
| |
LTM
Revenue |
| |
LTM
EBITDA |
| |
EBITDA
Margin |
| |
EV/
Revenue |
| |
EV/
EBITDA |
| |
Price/
Book Value |
| |||||||||||||||||||||
12/11/2016 | | | Deao Import & Export Co., Ltd. |
| | Deao Import & Export Co., Ltd. engages in trading of aircraft, engines, and other related parts. | | | Zhuhai Jinyu Investment Consulting Co., Ltd. | | | | $ | 6.5 | | | | | $ | 0.2 | | | | | | NM | | | | | | NA | | | | | | NM | | | | | | NA | | | | | | NA | | |
12/02/2016 | | | CK Capital Limited | | | CK Capital Limited is an investment holding company, which through its subsidiaries, owns and leases aircraft. |
| | Accipiter Investments Limited | | | | $ | 973.0 | | | | | | NA | | | | | | NM | | | | | | NA | | | | | | NA | | | | | | NA | | | | | | 0.70x | | |
10/06/2016 | | | C2 Aviation Capital, Inc. | | | C2 Aviation Capital, Inc., an aircraft leasing company, focuses on acquiring, leasing, and managing commercial aircraft in the United States and internationally. |
| | Avolon Holdings Limited |
| | | $ | 13,355.5 | | | | | $ | 1,234.3 | | | | | $ | 619.4 | | | | | | 50.2% | | | | | | 10.82x | | | | | | 21.6x | | | | | | 1.40x | | |
07/14/2015 | | | Avolon Holdings Limited |
| | Avolon Holdings Limited acquires, manages, leases, and sells commercial jet aircraft to various airlines and lessees in the United States and internationally. |
| | Global Aviation Leasing Co., Ltd. |
| | | $ | 7,504.7 | | | | | $ | 696.6 | | | | | $ | 628.2 | | | | | | 90.2% | | | | | | 10.77x | | | | | | 11.9x | | | | | | 1.70x | | |
9/22/2014 | | | Capital Lease Aviation Plc (nka:Capital Lease Aviation Limited) | | | Capital Lease Aviation Limited owns and leases a portfolio of commercial jet aircrafts to regional and international airlines in Singapore. | | | Avation PLC | | | | $ | 76.4 | | | | | $ | 11.7 | | | | | $ | 10.4 | | | | | | 89.2% | | | | | | 6.53x | | | | | | 7.3x | | | | | | 0.80x | | |
12/16/2013 | | | International Lease Finance Corporation | | | AerCap Global Aviation Trust, together with its subsidiaries, acquires, leases, and sells commercial aircraft worldwide. | | | AerCap Ireland Limited | | | | $ | 26,090.6 | | | | | $ | 4,347.1 | | | | | | NM | | | | | | NA | | | | | | 6.00x | | | | | | NA | | | | | | 0.70x | | |
| | | | | | | | | Mean | | | | $ | 8,001.1 | | | | | $ | 1,258.0 | | | | | $ | 419.4 | | | | | | 76.5% | | | | | | 8.53x | | | | | | 13.6x | | | | | | 1.06x | | |
Source: Capital IQ and company filings
|
| | Median | | | | $ | 4,238.9 | | | | | $ | 696.6 | | | | | $ | 619.4 | | | | | | 89.2% | | | | | | 8.65x | | | | | | 11.9x | | | | | | 0.80x | | |
| | |
ACY Orderly Liquidation(1)
|
| |||||||||||||||
| | |
($ in thousands)
|
| |||||||||||||||
| | |
Book Value(2)
|
| |
Adjustment(3)
|
| |
Estimated
Liquidation Value |
| |||||||||
Cash
|
| | | $ | 8,280 | | | | | | 100.0% | | | | | $ | 8,280 | | |
Accounts Receivable
|
| | | | 4,664 | | | | | | 100.0% | | | | | | 4,664 | | |
Finance Leases Receivable
|
| | | | 24,673 | | | | | | 75.0% | | | | | | 18,505 | | |
Aircraft and Aircraft Engines
|
| | | | 206,096 | | | | | | 106.0% | | | | | | 218,385 | | |
Assets Held for Sale
|
| | | | 7,429 | | | | | | 80.0% | | | | | | 5,943 | | |
Prepaid Expenses and Other
|
| | | | 362 | | | | | | 0.0% | | | | | | 0 | | |
Total Assets
|
| | | $ | 251,504 | | | | | | | | | | | $ | 255,777 | | |
Accounts Payable and Accrued
|
| | | $ | 713 | | | | | | 100.0% | | | | | $ | 713 | | |
Note Payable
|
| | | | 158,149 | | | | | | 100.0% | | | | | | 158,149 | | |
Maintenance reserves
|
| | | | 29,700 | | | | | | 100.0% | | | | | | 29,700 | | |
Accrued Maintenance Costs
|
| | | | 363 | | | | | | 100.0% | | | | | | 363 | | |
Security Deposits
|
| | | | 3,968 | | | | | | 100.0% | | | | | | 3,968 | | |
Unearned Revenues
|
| | | | 3,343 | | | | | | 100.0% | | | | | | 3,343 | | |
Deferred Income Taxes
|
| | | | 13,481 | | | | | | 100.0% | | | | | | 13,481 | | |
Taxes Payable
|
| | | | 326 | | | | | | 100.0% | | | | | | 326 | | |
Total Liabilities
|
| | | $ | 210,042 | | | | | | | | | | | $ | 210,042 | | |
Shareholders’ Equity (Net Asset Value)
|
| | | | 41,461 | | | | | | | | | | | | 45,734 | | |
Total Liabilities and Shareholders’ Equity
|
| | | $ | 251,504 | | | | | | | | | | | $ | 255,777 | | |
|
| | |
Estimated
Liquidation Value |
| |||
Net Asset Value
|
| | | $ | 45,700 | | |
Less: Estimated Fees to the Manager(4)
|
| | | | (18,300) | | |
Less: Estimated Costs to Liquidate the Assets(5)
|
| | | | (7,300) | | |
Estimated Liquidation Value
|
| | | $ | 20,100 | | |
Percentage of Book Value
|
| | | | 48.5% | | |
| | |
Preliminary ACY Valuation Indications
|
| |||||||||||||||||||||||||||
| | |
($ in thousands, except per share values)
|
| |||||||||||||||||||||||||||
| | |
Current Market Value
|
| |||||||||||||||||||||||||||
| | |
Low
|
| |
Mid
|
| |
High
|
| |
30-day
|
| |
10/20/2017
|
| |||||||||||||||
Equity Value
|
| | | | | | | | | | | | | | | | | | | | |
|
(1
)
|
| | | |
|
(2
)
|
| |
Discounted Cash Flow Analysis
|
| | | $ | 24,700 | | | | | $ | 26,600 | | | | | $ | 28,500 | | | | | | | | | | | | | | |
Estimated Orderly Liquidation Value
|
| | | | | | | | | | 20,100 | | | | | | | | | | | | | | | | | | | | |
Indicated Equity Value
|
| | | $ | 24,700 | | | | | $ | 26,600 | | | | | $ | 28,500 | | | | | $ | 20,200 | | | | | $ | 19,200 | | |
Fully Diluted Shares Outstanding(3)
|
| | | | 1,416,699 | | | | | | 1,416,699 | | | | | | 1,416,699 | | | | | | 1,416,699 | | | | | | 1,416,699 | | |
Resulting Implied Per Share Price
|
| | | $ | 17.43 | | | | | $ | 18.78 | | | | | $ | 20.12 | | | | | $ | 14.26 | | | | | $ | 13.55 | | |
| | |
Implied Multiples
|
| |||||||||||||||||||||||||||||||||
Book Value of Equity(4)
|
| | | $ | 41,461 | | | | | | 0.60x | | | | | | 0.64x | | | | | | 0.69x | | | | | | 0.49x | | | | | | 0.46x | | |
LTM Adj. Net Income(4)
|
| | | | 3,629 | | | | | | 6.8x | | | | | | 7.3x | | | | | | 7.9x | | | | | | 5.6x | | | | | | 5.3x | | |
2017 Est. Net Income(4)
|
| | | | 4,803 | | | | | | 5.1x | | | | | | 5.5x | | | | | | 5.9x | | | | | | 4.2x | | | | | | 4.0x | | |
2018 Proj. Net Income(4)
|
| | | | 1,516 | | | | | | 16.3x | | | | | | 17.5x | | | | | | 18.8x | | | | | | 13.3x | | | | | | 12.7x | | |
LTM Revenue(5)
|
| | | | 33,328 | | | | | | 5.24x | | | | | | 5.29x | | | | | | 5.35x | | | | | | 5.10x | | | | | | 5.07x | | |
2017 Est. Revenue(5)
|
| | | | 34,211 | | | | | | 5.10x | | | | | | 5.16x | | | | | | 5.21x | | | | | | 4.97x | | | | | | 4.94x | | |
2018 Proj. Revenue(5)
|
| | | | 33,438 | | | | | | 5.22x | | | | | | 5.28x | | | | | | 5.33x | | | | | | 5.09x | | | | | | 5.06x | | |
LTM Adj. EBITDA(5)
|
| | | | 23,582 | | | | | | 7.4x | | | | | | 7.5x | | | | | | 7.6x | | | | | | 7.2x | | | | | | 7.2x | | |
2017 Est. Adj. EBITDA(5)
|
| | | | 24,653 | | | | | | 7.1x | | | | | | 7.2x | | | | | | 7.2x | | | | | | 6.9x | | | | | | 6.9x | | |
2018 Proj. EBITDA(5)
|
| | | | 24,837 | | | | | | 7.0x | | | | | | 7.1x | | | | | | 7.2x | | | | | | 6.8x | | | | | | 6.8x | | |
| | |
Merger Consideration
|
| |||||||||
| | |
($ in thousands, except per share values)
|
| |||||||||
| | |
30-day Avg.
Trading Value(1) |
| |
D&P per-Share
Value Estimate(2) |
| ||||||
Stock Consideration | | | | | | | | | | | | | |
Number of Shares(3)
|
| | | | 129,286 | | | | | | 129,286 | | |
Price per Share
|
| | | $ | 14.26 | | | | | $ | 18.78 | | |
Stock Consideration
|
| | | $ | 1,844 | | | | | $ | 2,427 | | |
Cash Consideration
|
| | | $ | 3,500 | | | | | $ | 3,500 | | |
Merger Consideration (rounded)
|
| | | $ | 5,350 | | | | | $ | 5,950 | | |
|
JHC Historical & Projected Financial Performance
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands)
|
| |
For the Years Ended December 31
|
| | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |
Actual
|
| | | | | | | |
Estimate
|
| |
Management Projections
|
| |
Long-Term Projections
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
2013A
|
| |
2014A
|
| |
2015A
|
| |
2016A
|
| |
LTM(1)
|
| |
2017E
|
| |
2018P
|
| |
2019P
|
| |
2020P
|
| |
2021P
|
| |
2022P
|
| |
2023P
|
| |
2024P
|
| |
2025P(2)
|
| ||||||||||||||||||||||||||||||||||||||||||
Management Fees
|
| | | $ | 4,352 | | | | | $ | 3,892 | | | | | $ | 5,581 | | | | | $ | 5,205 | | | | | $ | 6,109 | | | | | $ | 6,103 | | | | | $ | 6,148 | | | | | $ | 6,383 | | | | | $ | 6,732 | | | | | $ | 7,083 | | | | | $ | 7,399 | | | | | $ | 7,621 | | | | | $ | 7,850 | | | | | $ | 5,727 | | |
Growth
|
| | | | NA | | | | | | (10.6)% | | | | | | 43.4% | | | | | | (6.8)% | | | | | | NA | | | | | | 17.3% | | | | | | 0.7% | | | | | | 3.8% | | | | | | 5.5% | | | | | | 5.2% | | | | | | 4.5% | | | | | | 3.0% | | | | | | 3.0% | | | | | | 3.0% | | |
% of
Average NBV |
| | | | NA | | | | | | 2.3% | | | | | | 3.3% | | | | | | 2.0% | | | | | | 2.4% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.4% | | | | | | 2.4% | | | | | | 2.5% | | | | | | 2.5% | | | | | | 2.5% | | | | | | 2.5% | | |
Acquisition &
Other Fees |
| | | $ | 1,393 | | | | | $ | 2,171 | | | | | $ | 885 | | | | | $ | 1,683 | | | | | $ | 2,116 | | | | | $ | 851 | | | | | $ | 1,140 | | | | | $ | 1,170 | | | | | $ | 1,260 | | | | | $ | 1,350 | | | | | $ | 1,020 | | | | | $ | 1,051 | | | | | $ | 1,082 | | | | | $ | 789 | | |
Growth
|
| | | | NA | | | | | | 55.8% | | | | | | (59.3)% | | | | | | 90.3% | | | | | | NA | | | | | | (49.5)% | | | | | | 34.0% | | | | | | 2.6% | | | | | | 7.7% | | | | | | 7.1% | | | | | | (24.4)% | | | | | | 3.0% | | | | | | 3.0% | | | | | | 3.0% | | |
Total Revenue
|
| | | $ | 5,746 | | | | | $ | 6,063 | | | | | $ | 6,466 | | | | | $ | 6,888 | | | | | $ | 8,225 | | | | | $ | 7,017 | | | | | $ | 7,288 | | | | | $ | 7,553 | | | | | $ | 7,992 | | | | | $ | 8,433 | | | | | $ | 8,419 | | | | | $ | 8,672 | | | | | $ | 8,932 | | | | | $ | 6,517 | | |
Growth
|
| | | | NA | | | | | | 5.5% | | | | | | 6.6% | | | | | | 6.5% | | | | | | NA | | | | | | 1.9% | | | | | | 3.9% | | | | | | 3.6% | | | | | | 5.8% | | | | | | 5.5% | | | | | | (0.2)% | | | | | | 3.0% | | | | | | 3.0% | | | | | | 3.0% | | |
Operating Expenses(3)
|
| | | $ | (4,778) | | | | | $ | (4,949) | | | | | $ | (5,011) | | | | | $ | (5,293) | | | | | $ | (4,788) | | | | | $ | (5,346) | | | | | $ | (5,319) | | | | | $ | (5,523) | | | | | $ | (5,738) | | | | | $ | (5,977) | | | | | $ | (6,227) | | | | | $ | (6,475) | | | | | $ | (6,735) | | | | | $ | (4,963) | | |
Margin
|
| | | | 83.2% | | | | | | 81.6% | | | | | | 77.5% | | | | | | 76.8% | | | | | | 58.2% | | | | | | 76.2% | | | | | | 73.0% | | | | | | 73.1% | | | | | | 71.8% | | | | | | 70.9% | | | | | | 74.0% | | | | | | 74.7% | | | | | | 75.4% | | | | | | 76.2% | | |
Growth
|
| | | | NA | | | | | | 3.6% | | | | | | 1.3% | | | | | | 5.6% | | | | | | NA | | | | | | 1.0% | | | | | | (0.5)% | | | | | | 3.9% | | | | | | 3.9% | | | | | | 4.2% | | | | | | 4.2% | | | | | | 4.0% | | | | | | 4.0% | | | | | | 4.0% | | |
EBITDA
|
| | | $ | 975 | | | | | $ | 1,122 | | | | | $ | 1,463 | | | | | $ | 1,601 | | | | | $ | 3,436 | | | | | $ | 1,675 | | | | | $ | 1,975 | | | | | $ | 2,036 | | | | | $ | 2,261 | | | | | $ | 2,464 | | | | | $ | 2,202 | | | | | $ | 2,207 | | | | | $ | 2,208 | | | | | $ | 1,562 | | |
Margin
|
| | | | 17.0% | | | | | | 18.5% | | | | | | 22.6% | | | | | | 23.2% | | | | | | 41.8% | | | | | | 23.9% | | | | | | 27.1% | | | | | | 27.0% | | | | | | 28.3% | | | | | | 29.2% | | | | | | 26.2% | | | | | | 25.4% | | | | | | 24.7% | | | | | | 24.0% | | |
Growth
|
| | | | NA | | | | | | 15.0% | | | | | | 30.4% | | | | | | 9.4% | | | | | | NA | | | | | | 4.7% | | | | | | 17.9% | | | | | | 3.1% | | | | | | 11.1% | | | | | | 8.9% | | | | | | (10.6)% | | | | | | 0.2% | | | | | | 0.1% | | | | | | (0.1)% | | |
Net Income
|
| | | $ | 595 | | | | | $ | 667 | | | | | $ | 918 | | | | | $ | 1,008 | | | | | $ | 2,855 | | | | | $ | 1,002 | | | | | $ | 1,182 | | | | | $ | 1,218 | | | | | $ | 1,353 | | | | | $ | 1,473 | | | | | $ | 1,316 | | | | | $ | 1,318 | | | | | $ | 1,318 | | | | | $ | 932 | | |
Margin
|
| | | | 10.4% | | | | | | 11.0% | | | | | | 14.2% | | | | | | 14.6% | | | | | | 34.7% | | | | | | 14.3% | | | | | | 16.2% | | | | | | 16.1% | | | | | | 16.9% | | | | | | 17.5% | | | | | | 15.6% | | | | | | 15.2% | | | | | | 14.8% | | | | | | 14.3% | | |
Growth
|
| | | | NA | | | | | | 12.1% | | | | | | 37.6% | | | | | | 9.7% | | | | | | NA | | | | | | (0.5)% | | | | | | 17.9% | | | | | | 3.1% | | | | | | 11.1% | | | | | | 8.9% | | | | | | (10.7)% | | | | | | 0.2% | | | | | | 0.0% | | | | | | (0.2)% | | |
Discounted Cash Flow Analysis
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands)
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
Estimate
|
| | |
Management Projections
|
| |
Long-Term Projections
|
| |||||||||||||||||||||||||||||||||||||||||||||
| | |
2017E
|
| | |
2018P
|
| |
2019P
|
| |
2020P
|
| |
2021P
|
| |
2022P
|
| |
2023P
|
| |
2024P
|
| |
2025P(1)
|
| |||||||||||||||||||||||||||
Total Revenue
|
| | | $ | 7,017 | | | | | | $ | 7,288 | | | | | $ | 7,553 | | | | | $ | 7,992 | | | | | $ | 8,433 | | | | | $ | 8,419 | | | | | $ | 8,672 | | | | | $ | 8,932 | | | | | $ | 6,517 | | |
Growth
|
| | | | 1.9% | | | | | | | 3.9% | | | | | | 3.6% | | | | | | 5.8% | | | | | | 5.5% | | | | | | (0.2)% | | | | | | 3.0% | | | | | | 3.0% | | | | | | (27.0)% | | |
EBITDA
|
| | | | 1,675 | | | | | | | 1,975 | | | | | | 2,036 | | | | | | 2,261 | | | | | | 2,464 | | | | | | 2,202 | | | | | | 2,207 | | | | | | 2,208 | | | | | | 1,562 | | |
EBITDA Margin
|
| | | | 23.9% | | | | | | | 27.1% | | | | | | 27.0% | | | | | | 28.3% | | | | | | 29.2% | | | | | | 26.2% | | | | | | 25.4% | | | | | | 24.7% | | | | | | 24.0% | | |
| | | | | |
2018P
|
| |
2019P
|
| |
2020P
|
| |
2021P
|
| |
2022P
|
| |
2023P
|
| |
2024P
|
| |
2025P(1)
|
| ||||||||||||||||||||||||
Earnings Before Interest and Taxes
|
| | | | | | $ | 1,969 | | | | | $ | 2,030 | | | | | $ | 2,254 | | | | | $ | 2,456 | | | | | $ | 2,193 | | | | | $ | 2,197 | | | | | $ | 2,197 | | | | | $ | 1,554 | | |
Pro Forma Taxes @ 40.0%
|
| | | | | | | (788) | | | | | | (812) | | | | | | (902) | | | | | | (982) | | | | | | (877) | | | | | | (879) | | | | | | (879) | | | | | | (621) | | |
Net Operating Profit After Tax
|
| | | | | | | 1,182 | | | | | | 1,218 | | | | | | 1,353 | | | | | | 1,473 | | | | | | 1,316 | | | | | | 1,318 | | | | | | 1,318 | | | | | | 932 | | |
Depreciation
|
| | | | | | | 6 | | | | | | 6 | | | | | | 7 | | | | | | 8 | | | | | | 9 | | | | | | 10 | | | | | | 11 | | | | | | 8 | | |
Capital Expenditures
|
| | | | | | | (10) | | | | | | (10) | | | | | | (11) | | | | | | (12) | | | | | | (12) | | | | | | (12) | | | | | | (13) | | | | | | (9) | | |
(Increase) Decrease in Working Capital
|
| | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
Free Cash Flow
|
| | | | | | $ | 1,177 | | | | | $ | 1,214 | | | | | $ | 1,349 | | | | | $ | 1,470 | | | | | $ | 1,313 | | | | | $ | 1,316 | | | | | $ | 1,316 | | | | | $ | 931 | | |
| | | |
No Renewal(2)
|
| | |
25% Renewal Probability(3)
|
| | |
50% Renewal Probability(4)
|
| |||||||||||||||||||||||||||||||||||||||||||||
Equity Value
|
| | |
Low
|
| |
Mid
|
| |
High
|
| | |
Low
|
| |
Mid
|
| |
High
|
| | |
Low
|
| |
Mid
|
| |
High
|
| |||||||||||||||||||||||||||
Probability of Renewal
|
| | | | | 0.0% | | | | | | 0.0% | | | | | | 0.0% | | | | | | | 25.0% | | | | | | 25.0% | | | | | | 25.0% | | | | | | | 50.0% | | | | | | 50.0% | | | | | | 50.0% | | |
Terminal Growth Rate
|
| | | |
|
NA
|
| | | |
|
NA
|
| | | |
|
NA
|
| | | | | | 2.00% | | | | | | 2.00% | | | | | | 2.00% | | | | | | | 2.00% | | | | | | 2.00% | | | | | | 2.00% | | |
Cost of Equity
|
| | | | | 15.50% | | | | | | 15.00% | | | | | | 14.50% | | | | | | | 15.50% | | | | | | 15.00% | | | | | | 14.50% | | | | | | | 15.50% | | | | | | 15.00% | | | | | | 14.50% | | |
Indicated Equity Value Ranges
|
| | | | $ | 6,000 | | | | | $ | 6,100 | | | | | $ | 6,200 | | | | | | $ | 7,000 | | | | | $ | 7,150 | | | | | $ | 7,300 | | | | | | $ | 7,850 | | | | | $ | 8,050 | | | | | $ | 8,250 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Implied Multiples
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
LTM Revenue
|
| | | | 8,225 | | | | | | | 0.73x | | | | | | 0.74x | | | | | | 0.75x | | | | | | | 0.85x | | | | | | 0.87x | | | | | | 0.89x | | | | | | | 0.95x | | | | | | 0.98x | | | | | | 1.00x | | | | | | | | | | | | | ||||||||||||||||||||
|
2017 Revenue
|
| | | | 7,017 | | | | | | | 0.86x | | | | | | 0.87x | | | | | | 0.88x | | | | | | | 1.00x | | | | | | 1.02x | | | | | | 1.04x | | | | | | | 1.12x | | | | | | 1.15x | | | | | | 1.18x | | | | | | | | | | | | | ||||||||||||||||||||
|
2018 Revenue
|
| | | | 7,288 | | | | | | | 0.82x | | | | | | 0.84x | | | | | | 0.85x | | | | | | | 0.96x | | | | | | 0.98x | | | | | | 1.00x | | | | | | | 1.08x | | | | | | 1.10x | | | | | | 1.13x | | | | | | | | | | | | | ||||||||||||||||||||
|
LTM EBITDA
|
| | | | 3,436 | | | | | | | 1.7x | | | | | | 1.8x | | | | | | 1.8x | | | | | | | 2.0x | | | | | | 2.1x | | | | | | 2.1x | | | | | | | 2.3x | | | | | | 2.3x | | | | | | 2.4x | | | | | | | | | | | | | ||||||||||||||||||||
|
2017 EBITDA
|
| | | | 1,675 | | | | | | | 3.6x | | | | | | 3.6x | | | | | | 3.7x | | | | | | | 4.2x | | | | | | 4.3x | | | | | | 4.4x | | | | | | | 4.7x | | | | | | 4.8x | | | | | | 4.9x | | | | | | | | | | | | | ||||||||||||||||||||
|
2018 EBITDA
|
| | | | 1,975 | | | | | | | 3.0x | | | | | | 3.1x | | | | | | 3.1x | | | | | | | 3.5x | | | | | | 3.6x | | | | | | 3.7x | | | | | | | 4.0x | | | | | | 4.1x | | | | | | 4.2x | | | | | | | | | | | | |
Accretion/Dilution Analysis
|
| ||||||||||||||||||||||||||||||||||||
($ in thousands, except per share values)
|
| ||||||||||||||||||||||||||||||||||||
PRE-TRANSACTION
|
| |
2018(1)
|
| |
2019
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
Cumulative
|
| ||||||||||||||||||
ACY Projected Pre-Tax Income(2)
|
| | | $ | 1,516 | | | | | $ | 2,941 | | | | | $ | 3,542 | | | | | $ | 3,727 | | | | | $ | 4,438 | | | | | | | | |
Less: Taxes(3)
|
| | | | (525) | | | | | | (1,018) | | | | | | (1,226) | | | | | | (1,289) | | | | | | (1,536) | | | | | | | | |
ACY Net Income
|
| | | $ | 992 | | | | | $ | 1,924 | | | | | $ | 2,317 | | | | | $ | 2,437 | | | | | $ | 2,903 | | | | | | | | |
Number of Shares (ACY)(4)
|
| | | | 1,417 | | | | | | 1,417 | | | | | | 1,417 | | | | | | 1,417 | | | | | | 1,417 | | | | | | | | |
EPS – Standalone | | | | $ | 0.70 | | | | | $ | 1.36 | | | | | $ | 1.64 | | | | | $ | 1.72 | | | | | $ | 2.05 | | | | | $ | 7.46 | | |
POST-TRANSACTION(5)
|
| |
2018
|
| |
2019
|
| |
2020
|
| |
2021
|
| |
2022
|
| | ||||||||||||||||||||
ACY Projected Pre-Tax Income(2)
|
| | | $ | 1,516 | | | | | $ | 2,941 | | | | | $ | 3,542 | | | | | $ | 3,727 | | | | | $ | 4,438 | | | | | | | | |
Add: JHC’s Projected Pre-Tax Income(2)
|
| | | | 1,969 | | | | | | 2,030 | | | | | | 2,254 | | | | | | 2,456 | | | | | | 2,193 | | | | | | | | |
Combined ACY+JHC Pre-Tax Income
|
| | | $ | 3,486 | | | | | $ | 4,971 | | | | | $ | 5,796 | | | | | $ | 6,182 | | | | | $ | 6,631 | | | | | | | | |
Less: Taxes(3)
|
| | | | (1,206) | | | | | | (1,720) | | | | | | (2,006) | | | | | | (2,139) | | | | | | (2,294) | | | | | | | | |
Net Income (Combined)
|
| | | $ | 2,280 | | | | | $ | 3,251 | | | | | $ | 3,791 | | | | | $ | 4,043 | | | | | $ | 4,337 | | | | | | | | |
Number of Shares (Combined)(5)
|
| | | | 1,546 | | | | | | 1,546 | | | | | | 1,546 | | | | | | 1,546 | | | | | | 1,546 | | | | | | | | |
EPS – Pro-Forma | | | | $ | 1.47 | | | | | $ | 2.10 | | | | | $ | 2.45 | | | | | $ | 2.62 | | | | | $ | 2.81 | | | | | $ | 11.45 | | |
Cumulative 5-year Accretion/(Dilution)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 53.4% | | |
JHC Valuation Range Conclusions
|
| ||||||||||||||||||||||||||||||
($ in thousands, except per share values)
|
| ||||||||||||||||||||||||||||||
| | |
D&P Estimate
|
| |
Merger Consideration
|
| ||||||||||||||||||||||||
| | |
30-day Avg.
Trading Value(1) |
| |
D&P per-Share
Value Estimate |
| ||||||||||||||||||||||||
| | |
Low
|
| | | | | | | |
High
|
| ||||||||||||||||||
JHC Indicated Equity Value | | | | | | | |||||||||||||||||||||||||
No Renewal of Management Agreement(2)
|
| | | $ | 6,000 | | | | | | - | | | | | $ | 6,200 | | | | | ||||||||||
25% Renewal Probability(2)
|
| | | | 7,000 | | | | | | - | | | | | | 7,300 | | | | | ||||||||||
50% Renewal Probability(2)
|
| | | | 7,850 | | | | | | - | | | | | | 8,250 | | | | | | | | | | | | | | |
Concluded JHC Equity Value Range(3)
|
| | | $ | 6,000 | | | | | | - | | | | | $ | 8,250 | | | | | $ | 5,350 | | | | | $ | 5,950 | | |
|
|
Implied Multiples
|
| ||||||||||||||||||||||||||||||
|
LTM Revenue
|
| | | $ | 8,225 | | | | | | 0.73x | | | | | | 1.00x | | | | | | 0.65x | | | | | | 0.72x | | |
|
2017 Est. Revenue
|
| | | | 7,017 | | | | | | 0.86x | | | | | | 1.18x | | | | | | 0.76x | | | | | | 0.85x | | |
|
2018 Proj. Revenue
|
| | | | 7,288 | | | | | | 0.82x | | | | | | 1.13x | | | | | | 0.73x | | | | | | 0.82x | | |
|
LTM EBITDA
|
| | | | 3,436 | | | | | | 1.7x | | | | | | 2.4x | | | | | | 1.6x | | | | | | 1.7x | | |
|
2017 Est. EBITDA
|
| | | | 1,675 | | | | | | 3.6x | | | | | | 4.9x | | | | | | 3.2x | | | | | | 3.6x | | |
|
2018 Proj. EBITDA
|
| | | | 1,975 | | | | | | 3.0x | | | | | | 4.2x | | | | | | 2.7x | | | | | | 3.0x | | |
|
| |
Year Ended
December 31, 2015 (Unaudited) |
| |
Year Ended
December 31, 2016 |
| |
Year Ended
December 31, 2017 |
| |
Quarter Ended
March 31, 2018 (Unaudited) |
| ||||||||||||
| | |
(in thousands)
|
| |
(in thousands)
|
| |
(in thousands)
|
| |
(in thousands)
|
| ||||||||||||
Total Revenues
|
| | | $ | 6,466 | | | | | $ | 6,888 | | | | | $ | 7,023 | | | | | $ | 1,449,800 | | |
Total Expenses
|
| | | $ | 5,011 | | | | | $ | 5,296 | | | | | $ | 5,327 | | | | | $ | 1,140,700 | | |
Income Tax Expense
|
| | | $ | 537 | | | | | $ | 585 | | | | | $ | 481 | | | | | $ | 83,000 | | |
Net Income
|
| | | $ | 918 | | | | | $ | 1,007 | | | | | $ | 1,215 | | | | | $ | 226,100 | | |
Total Assets
|
| | | $ | 5,893 | | | | | $ | 6,437 | | | | | $ | 8,975 | | | | | $ | 8,877,300 | | |
Total Liabilities
|
| | | $ | 1,171 | | | | | $ | 1,180 | | | | | $ | 1,743 | | | | | $ | 1,101,900 | | |
Shareholders’ Equity
|
| | | $ | 4,722 | | | | | $ | 5,257 | | | | | $ | 7,232 | | | | | $ | 7,775,400 | | |
Name
|
| |
JetFleet Position
|
| |
Biography
|
|
Toni M. Perazzo | | | Chairman, President, Secretary & Treasurer | | | Chief Financial Officer & Member, Board of Directors of AeroCentury Corp. | |
Christopher J. Hughes | | | Director and Vice President Finance | | | Tax Manager, AeroCentury Corp. | |
Hurdle H. Lee, III | | | Director | | | Co-founder, Chief Financial Officer & Secretary, NuCapital Inc. BV | |
| | |
As of March 1, 2018
|
| |
As of Immediately
Following the Closing |
| ||||||||||||||||||
Name, Position & Address of
Beneficial Owner |
| |
No. of
Shares(1) |
| |
% of
Common Stock(2) |
| |
No. of
Shares(3) |
| |
% of
Common Stock(4) |
| ||||||||||||
Michael G. Magnusson,
President(5) |
| | | | 0 | | | | |
|
*
|
| | | | | 0 | | | | | | * | | |
Toni M. Perazzo
Director, Sr. Vice President-Finance, Secretary and Principal Stockholder(5)(6)(7) |
| | | | 366,554 | | | | | | 25.9% | | | | | | 343,665 | | | | | | 22.2% | | |
Evan M. Wallach
Director(5) |
| | | | 770 | | | | | | * | | | | | | 770 | | | | | | * | | |
Roy E. Hahn
Director(5) |
| | | | 0 | | | | | | * | | | | | | 0 | | | | | | * | | |
David P. Wilson
Director(5) |
| | | | 215 | | | | | | * | | | | | | 215 | | | | | | * | | |
All directors and executive officers as a group (5 persons)
|
| | | | 367,539 | | | | | | 25.9% | | | | | | 344,650 | | | | | | 22.3% | | |
JetFleet Holding Corp.
Principal Stockholder(8) |
| | | | 214,876 | | | | | | 15.2% | | | | | | 0 | | | | | | * | | |
Dimensional Fund Advisors LP(8)
|
| | | | 77,485 | | | | | | 5.5% | | | | | | 77,485 | | | | | | 5.01% | | |
| | |
Page
|
| |||
JetFleet Audited Financial Statements | | | | | | | |
| | | | F-2 | | | |
| | | | F-16 | | | |
JetFleet Unaudited Financial Statements | | | | | | | |
| | | | F-30 | | | |
| | | | F-42 | | | |
| | | | F-55 | | | |
| | | | F-57 | | | |
| | | | F-58 | | | |
| | | | F-59 | | |
|
ASSETS
|
| ||||||
| Assets: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 4,866,000 | | |
|
Marketable securities
|
| | | | 3,407,600 | | |
|
Receivable from affiliates
|
| | | | 496,600 | | |
|
Accounts receivable
|
| | | | 3,400 | | |
|
Taxes receivable
|
| | | | 24,600 | | |
|
Note receivable
|
| | | | 32,800 | | |
|
Prepaid expenses and other assets
|
| | | | 121,300 | | |
|
Equipment (net of accumulated depreciation of $62,200)
|
| | | | 22,700 | | |
|
Total assets
|
| | | $ | 8,975,000 | | |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| ||||||
| Liabilities: | | | | | | | |
|
Accounts payable and accrued liabilities
|
| | | $ | 202,300 | | |
|
Accrued payroll
|
| | | | 908,400 | | |
|
Income taxes payable
|
| | | | 600 | | |
|
Deferred tax liabilities
|
| | | | 631,900 | | |
|
Total liabilities
|
| | | | 1,743,200 | | |
| Shareholders’ equity: | | | |||||
|
Series A Redeemable Preferred stock, 200,000 shares authorized, no shares issued and outstanding
|
| | | | — | | |
|
Common stock, no par value, 1,000,000 shares authorized,
362,194 issued and outstanding |
| | | | 1,261,600 | | |
|
Retained earnings
|
| | | | 4,267,100 | | |
|
Accumulated other comprehensive income:
|
| | |||||
|
Foreign currency translation adjustments
|
| | | | 300 | | |
|
Unrealized gain on marketable securities
|
| | | | 1,702,800 | | |
|
Total shareholders’ equity
|
| | | | 7,231,800 | | |
|
Total liabilities and shareholders’ equity
|
| | | $ | 8,975,000 | | |
|
| Revenues: | | | |||||
|
Management fees
|
| | | $ | 6,109,100 | | |
|
Acquisition and remarketing fees
|
| | | | 901,600 | | |
|
Dividends, interest and other income
|
| | | | 12,700 | | |
|
Total revenues
|
| | | | 7,023,400 | | |
| Costs and expenses: | | | |||||
|
Salaries and employee benefits
|
| | | | 3,459,700 | | |
|
Rent
|
| | | | 423,600 | | |
|
Consulting fees
|
| | | | 524,700 | | |
|
Travel, meals and entertainment
|
| | | | 334,500 | | |
|
Interest
|
| | | | 19,600 | | |
|
General and administrative
|
| | | | 564,600 | | |
|
Total costs and expenses
|
| | | | 5,326,700 | | |
|
Income before income taxes
|
| | | | 1,696,700 | | |
|
Income tax expense
|
| | | | 481,400 | | |
|
Net income
|
| | | $ | 1,215,300 | | |
|
|
Net income
|
| | | $ | 1,215,300 | | |
| Other comprehensive income, net of tax: | | | |||||
|
Foreign currency translation adjustments
|
| | | | 300 | | |
|
Unrealized gain on securities
|
| | | | 759,200 | | |
|
Other comprehensive income
|
| | | | 759,500 | | |
|
Comprehensive income
|
| | | $ | 1,974,800 | | |
|
| | |
Common Stock
Number of Shares |
| |
Common
Stock Amount |
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Income |
| |
Total
|
| |||||||||||||||
Balance at December 31, 2016
|
| | | | 362,194 | | | | | $ | 1,261,600 | | | | | $ | 3,319,200 | | | | | $ | 676,200 | | | | | $ | 5,257,000 | | |
Net income
|
| | | | — | | | | | | — | | | | | | 1,215,300 | | | | | | — | | | | | | 1,215,300 | | |
Foreign currency translation
adjustments, net of tax expense of $100 |
| | | | — | | | | | | — | | | | | | — | | | | | | 300 | | | | | | 300 | | |
Unrealized gain on securities, net of tax expense of $481,300
|
| | | | — | | | | | | — | | | | | | — | | | | | | 759,200 | | | | | | 759,200 | | |
Reclassification of stranded tax effects pursuant to ASU 2018-02
|
| | | | — | | | | | | — | | | | | | (267,400) | | | | | | 267,400 | | | | | | — | | |
Balance at December 31, 2017
|
| | | | 362,194 | | | | | $ | 1,261,600 | | | | | $ | 4,267,100 | | | | | $ | 1,703,100 | | | | | $ | 7,231,800 | | |
|
| Operating activities: | | | | | | | |
|
Net income
|
| | | $ | 1,215,300 | | |
|
Adjustments to reconcile net income tonet cash provided by operating activities:
|
| | |||||
|
Depreciation
|
| | | | 5,300 | | |
|
Deferred income taxes
|
| | | | (243,900) | | |
|
Changes in operating assets and liabilities:
|
| | |||||
|
Receivable from affiliates
|
| | | | 517,100 | | |
|
Accounts receivable
|
| | | | 6,900 | | |
|
Taxes receivable
|
| | | | (24,600) | | |
|
Prepaid expenses and other assets
|
| | | | (17,100) | | |
|
Accounts payable and accrued liabilities
|
| | | | 121,900 | | |
|
Accrued payroll
|
| | | | 310,400 | | |
|
Income taxes payable
|
| | | | (106,300) | | |
|
Net cash provided by operating activities
|
| | | | 1,785,000 | | |
| Investing activities: | | | | | | | |
|
Investment in capital assets
|
| | | | (11,000) | | |
|
Repayments on note receivable
|
| | | | 8,700 | | |
|
Net cash used in investing activities
|
| | | | (2,300) | | |
|
Net increase in cash and cash equivalents
|
| | | | 1,782,700 | | |
|
Exchange gains on cash and cash equivalents
|
| | | | 500 | | |
|
Cash and cash equivalents, beginning of period
|
| | | | 3,082,800 | | |
|
Cash and cash equivalents, end of period
|
| | | $ | 4,866,000 | | |
| Supplemental disclosures of cash flow information: | | | | | | | |
| Cash paid during the year for: | | | |||||
|
Income taxes
|
| | | $ | 790,200 | | |
|
Foreign taxes
|
| | | | 600 | | |
| | |
December 31, 2017
|
| |||||||||||||||||||||
| | |
Total
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| ||||||||||||
Marketable securities
|
| | | $ | 3,407,600 | | | | | $ | 3,274,700 | | | | | $ | 0 | | | | | $ | 132,900 | | |
Money market funds
|
| | | | 273,000 | | | | | | 273,000 | | | | | | 0 | | | | | | 0 | | |
Total
|
| | | $ | 3,680,600 | | | | | $ | 3,547,700 | | | | | $ | 0 | | | | | $ | 132,900 | | |
|
Description
|
| |
Total
Cost |
| |
Fair
Market Value |
| |
Gross
Unrealized Gain |
| |||||||||
Cumulative gross unrealized gains on marketable securities
|
| | | $ | 1,043,300 | | | | | $ | 3,407,600 | | | | | $ | 2,364,400 | | |
|
Year Ended December 31:
|
| |
Amount
|
| |||
2018
|
| | | $ | 440,300 | | |
2019
|
| | | | 442,000 | | |
2020
|
| | | | 222,600 | | |
Total
|
| | | $ | 1,104,900 | | |
|
| Current tax provision: | | | | | | | |
|
Federal
|
| | | $ | 552,400 | | |
|
State
|
| | | | 106,300 | | |
|
Foreign
|
| | | | 66,600 | | |
|
Current tax provision
|
| | | | 725,300 | | |
| Deferred tax provision: | | | |||||
|
Federal
|
| | | $ | 2,300 | | |
|
State
|
| | | | 500 | | |
|
Foreign
|
| | | | 1,300 | | |
|
Net legislative change in corporate tax rate
|
| | | | (246,400) | | |
|
Change in valuation allowance
|
| | | | (1,600) | | |
|
Deferred tax provision
|
| | | | (243,900) | | |
|
Total provision for income taxes
|
| | | $ | 481,400 | | |
|
|
Income tax expense at thestatutory federal income tax rate
|
| | | $ | 576,900 | | |
|
State tax expense net of federal benefit
|
| | | | 66,500 | | |
|
Non-deductible expenses
|
| | | | 19,500 | | |
|
Non-taxable income
|
| | | | (3,200) | | |
|
Net legislative change in corporate tax rate
|
| | | | (246,400) | | |
|
Foreign tax on Canadian operations
|
| | | | 66,000 | | |
|
Other tax rate differences
|
| | | | 3,700 | | |
|
Change in valuation allowance
|
| | | | (1,600) | | |
|
Total income tax provision
|
| | | $ | 481,400 | | |
|
| Gross deferred tax assets: | | | | | | | |
|
Franchise taxes
|
| | | $ | 20,600 | | |
|
Deferred compensation
|
| | | | 15,400 | | |
|
Deferred tax assets
|
| | | | 36,000 | | |
|
Valuation allowance
|
| | | | — | | |
|
Net deferred tax asset
|
| | | | 36,000 | | |
| Gross deferred tax liabilities: | | | |||||
|
Unrealized gains on securities
|
| | | | (661,700) | | |
|
Depreciation and impairment
|
| | | | (6,200) | | |
|
Net deferred tax liabilities
|
| | | $ | (631,900) | | |
|
| | |
Before-tax
Amount |
| |
Tax
(Expense) |
| |
Net-of-tax
Amount |
| |||||||||
Foreign currency translation adjustments
|
| | | $ | 400 | | | | | $ | (100) | | | | | $ | 300 | | |
Unrealized gains on securities
|
| | | | 2,364,400 | | | | | | (661,600) | | | | | | 1,702,800 | | |
Total accumulated comprehensive income
|
| | | $ | 2,364,800 | | | | | $ | (661,700) | | | | | $ | 1,703,100 | | |
|
|
ASSETS
|
| ||||||
|
Assets:
|
| | | | | | |
|
Cash and cash equivalents
|
| | | $ | 3,082,800 | | |
|
Marketable securities
|
| | | | 2,167,100 | | |
|
Receivable from affiliates
|
| | | | 1,013,700 | | |
|
Accounts receivable and other receivables
|
| | | | 10,300 | | |
|
Note receivable
|
| | | | 41,500 | | |
|
Prepaid expense and other assets
|
| | | | 104,200 | | |
|
Equipment (net of accumulated depreciation of $56,200)
|
| | | | 17,100 | | |
|
Total assets
|
| | | $ | 6,436,700 | | |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| ||||||
| Liabilities: | | | | | | | |
|
Accounts payable
|
| | | $ | 80,400 | | |
|
Accrued payroll
|
| | | | 598,000 | | |
|
Taxes payable
|
| | | | 106,900 | | |
|
Deferred tax liabilities
|
| | | | 394,400 | | |
|
Total liabilities
|
| | | | 1,179,700 | | |
| Shareholders’ equity: | | | | | | | |
|
Series A Redeemable Preferred stock, 200,000
shares authorized, no shares issued and outstanding |
| | | | — | | |
|
Common stock, no par value, 1,000,000 shares authorized,
362,194 issued and outstanding |
| | | | 1,261,600 | | |
|
Retained earnings
|
| | | | 3,319,200 | | |
|
Accumulated other comprehensive income:
|
| | | | | | |
|
Foreign currency translation adjustments
|
| | | | 100 | | |
|
Unrealized gain on securities
|
| | | | 676,100 | | |
|
Total shareholders’ equity
|
| | | | 5,257,000 | | |
|
Total liabilities and shareholders’ equity
|
| | | $ | 6,436,700 | | |
|
| Revenues: | | | | | | | |
|
Management fees
|
| | | $ | 5,204,400 | | |
|
Acquisition and remarketing fees
|
| | | | 1,408,700 | | |
|
Gain on sale of assets
|
| | | | 154,200 | | |
|
Income from partnership investment
|
| | | | 107,200 | | |
|
Dividends, interest and other income
|
| | | | 13,000 | | |
|
Total revenues
|
| | | | 6,887,500 | | |
| Costs and expenses: | | | | | | | |
|
Salaries and employee benefits
|
| | | | 2,947,900 | | |
|
Rent
|
| | | | 433,000 | | |
|
Consulting fees
|
| | | | 870,500 | | |
|
Travel, meals and entertainment
|
| | | | 327,700 | | |
|
General and administrative
|
| | | | 716,600 | | |
|
Total costs and expenses
|
| | | | 5,295,700 | | |
|
Income before income taxes
|
| | | | 1,591,800 | | |
|
Income tax expense
|
| | | | 584,800 | | |
|
Net income
|
| | | $ | 1,007,000 | | |
|
|
Net income
|
| | | $ | 1,007,000 | | |
| Other comprehensive income (loss), net of tax: | | | | | | | |
|
Foreign currency translation adjustments
|
| | | | (200) | | |
|
Unrealized loss on securities
|
| | | | (421,700) | | |
|
Other comprehensive loss
|
| | | | (421,900) | | |
|
Comprehensive income
|
| | | $ | 585,100 | | |
|
| | |
Number of
Shares |
| |
Common
Stock |
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Income |
| |
Total
|
| |||||||||||||||
Balance at December 31, 2015
|
| | | | 362,194 | | | | | $ | 1,261,600 | | | | | $ | 2,312,200 | | | | | $ | 1,098,100 | | | | | $ | 4,671,900 | | |
Net income
|
| | | | — | | | | | | — | | | | | | 1,007,000 | | | | | | — | | | | | | 1,007,000 | | |
Foreign currency translation adjustments, net of tax benefit of $100
|
| | | | — | | | | | | — | | | | | | — | | | | | | (200) | | | | | | (200) | | |
Unrealized loss on securities, net of tax benefit of $279,100
|
| | | | — | | | | | | — | | | | | | — | | | | | | (421,700) | | | | | | (421,700) | | |
Balance at December 31, 2016
|
| | | | 362,194 | | | | | $ | 1,261,600 | | | | | $ | 3,319,200 | | | | | $ | 676,200 | | | | | $ | 5,257,000 | | |
|
| Operating activities: | | | | | | | |
|
Net income
|
| | | $ | 1,007,000 | | |
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
| | | | | | |
|
Gain on sale of assets
|
| | | | (154,200) | | |
|
Depreciation
|
| | | | 5,900 | | |
|
Share of income upon termination of partnership investment
|
| | | | (107,200) | | |
|
Deferred income taxes
|
| | | | 2,000 | | |
|
Changes in operating assets and liabilities:
|
| | | | | | |
|
Receivable from affiliates
|
| | | | (609,100) | | |
|
Accounts receivable and other receivables
|
| | | | (1,700) | | |
|
Taxes receivable
|
| | | | 82,900 | | |
|
Prepaid expenses and other assets
|
| | | | 2,700 | | |
|
Accounts payable
|
| | | | (27,300) | | |
|
Accrued payroll
|
| | | | 156,400 | | |
|
Income taxes payable
|
| | | | 106,900 | | |
|
Net cash provided by operating activities
|
| | | | 464,300 | | |
| Investing activities: | | | | | | | |
|
Proceeds from asset sales
|
| | | | 211,500 | | |
|
Investment in capital assets
|
| | | | (15,600) | | |
|
Repayments on note receivable
|
| | | | 16,100 | | |
|
Distribution upon termination of partnership investment
|
| | | | 208,600 | | |
|
Net cash provided by investing activities
|
| | | | 420,600 | | |
|
Net increase in cash and cash equivalents
|
| | | | 884,900 | | |
|
Cash and cash equivalents, beginning of year
|
| | | | 2,198,300 | | |
|
Exchange losses on cash and cash equivalents
|
| | | | (400) | | |
|
Cash and cash equivalents, end of year
|
| | | $ | 3,082,800 | | |
| Supplemental disclosures of cash flow information: | | | | | | | |
| Cash paid during the year for: | | | | | | | |
|
Income taxes
|
| | | $ | 391,900 | | |
|
Foreign taxes
|
| | | | 1,300 | | |
| | |
December 31, 2016
|
| |||||||||||||||||||||
| | |
Total
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| ||||||||||||
Marketable securities
|
| | | $ | 2,167,100 | | | | | $ | 2,030,600 | | | | | $ | 0 | | | | | $ | 136,500 | | |
Money market funds
|
| | | | 272,700 | | | | | | 272,700 | | | | | | 0 | | | | | | 0 | | |
Total
|
| | | $ | 2,439,800 | | | | | $ | 2,303,300 | | | | | $ | 0 | | | | | $ | 136,500 | | |
|
Description
|
| |
Total
Cost |
| |
Fair
Market Value |
| |
Gross
Unrealized Gain |
| |||||||||
Cumulative gross unrealized gains on marketable securities
|
| | | $ | 1,043,300 | | | | | $ | 2,167,100 | | | | | $ | 1,123,800 | | |
|
Year Ended December 31:
|
| |
Amount
|
| |||
2017
|
| | | $ | 437,700 | | |
2018
|
| | | | 441,800 | | |
2019
|
| | | | 449,100 | | |
2020
|
| | | | 230,700 | | |
Total
|
| | | $ | 1,559,300 | | |
|
| Current tax provision: | | | | | | | |
|
Federal
|
| | | $ | 476,700 | | |
|
State
|
| | | | 104,800 | | |
|
Foreign
|
| | | | 1,300 | | |
|
Current tax provision
|
| | | | 582,800 | | |
|
| Deferred tax provision: | | | | | | | |
|
Federal
|
| | | | 3,000 | | |
|
State
|
| | | | 500 | | |
|
Change in valuation allowance
|
| | | | (1,500) | | |
|
Deferred tax provision
|
| | | | 2,000 | | |
|
Total provision for income taxes
|
| | | $ | 584,800 | | |
|
|
Income tax benefit statutory federal income tax rate
|
| | | $ | 541,200 | | |
|
State tax benefit net of federal benefit
|
| | | | 66,100 | | |
|
Meals and entertainment
|
| | | | 11,400 | | |
|
Non-taxable income
|
| | | | (40,900) | | |
|
Tax rate differences
|
| | | | 8,500 | | |
|
Change in valuation allowance
|
| | | | (1,500) | | |
|
Total income tax provision
|
| | | $ | 584,800 | | |
|
| Gross deferred tax assets: | | | | | | | |
|
Net operating loss carry-forwards
|
| | | $ | 3,000 | | |
|
Deferred compensation
|
| | | | 28,900 | | |
|
Franchise taxes and other
|
| | | | 32,600 | | |
|
Deferred tax assets
|
| | | | 64,500 | | |
|
Valuation allowance
|
| | | | (1,700) | | |
|
Net deferred tax asset
|
| | | | 62,800 | | |
| Gross deferred tax liabilities: | | | | | | | |
|
Unrealized gains on securities
|
| | | | (447,600) | | |
|
Depreciation and impairment
|
| | | | (9,600) | | |
|
Net deferred tax liabilities
|
| | | $ | (394,400) | | |
|
| | |
Before-tax
Amount |
| |
Tax
(Expense) |
| |
Net-of-tax
Amount |
| |||||||||
Foreign currency translation adjustments
|
| | | $ | 100 | | | | | $ | 0 | | | | | $ | 100 | | |
Unrealized gains on securities
|
| | | | 1,123,800 | | | | | | (447,700) | | | | | | 676,100 | | |
Total accumulated comprehensive income
|
| | | $ | 1,123,900 | | | | | $ | (447,700) | | | | | $ | 676,200 | | |
|
|
ASSETS
|
| ||||||
| Assets: | | | |||||
|
Cash and cash equivalents
|
| | | $ | 4,283,600 | | |
|
Marketable securities
|
| | | | 3,848,600 | | |
|
Receivable from affiliates
|
| | | | 479,000 | | |
|
Accounts receivable
|
| | | | 1,100 | | |
|
Taxes receivable
|
| | | | 200 | | |
|
Note receivable
|
| | | | 27,500 | | |
|
Prepaid expenses and other assets
|
| | | | 215,700 | | |
|
Equipment (net of accumulated depreciation of $63,100)
|
| | | | 21,600 | | |
|
Total assets
|
| | | $ | 8,877,300 | | |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| ||||||
| Liabilities: | | | |||||
|
Accounts payable and accrued liabilities
|
| | | $ | 189,100 | | |
|
Accrued payroll
|
| | | | 99,500 | | |
|
Income taxes payable
|
| | | | 56,000 | | |
|
Deferred tax liabilities
|
| | | | 757,300 | | |
|
Total liabilities
|
| | | | 1,101,900 | | |
| Shareholders’ equity: | | | |||||
|
Series A Redeemable Preferred stock, 200,000 shares authorized,
no shares issued and outstanding |
| | | | — | | |
|
Common stock, no par value, 1,000,000 shares authorized,
362,194 issued and outstanding |
| | | | 1,261,600 | | |
|
Retained earnings
|
| | | | 4,493,200 | | |
|
Accumulated other comprehensive income:
|
| | |||||
|
Foreign currency translation adjustments
|
| | | | 300 | | |
|
Unrealized gain on marketable securities
|
| | | | 2,020,300 | | |
|
Total shareholders’ equity
|
| | | | 7,775,400 | | |
|
Total liabilities and shareholders’ equity
|
| | | $ | 8,877,300 | | |
|
| Revenues and other income: | | | |||||
|
Management fees
|
| | | $ | 1,446,700 | | |
|
Dividends, interest and other income
|
| | | | 3,100 | | |
|
Total revenues and other income
|
| | | | 1,449,800 | | |
| Costs and expenses: | | | |||||
|
Salaries and employee benefits
|
| | | | 739,800 | | |
|
Rent
|
| | | | 101,700 | | |
|
Consulting fees
|
| | | | 62,000 | | |
|
Travel, meals and entertainment
|
| | | | 95,500 | | |
|
General and administrative
|
| | | | 141,700 | | |
|
Total costs and expenses
|
| | | | 1,140,700 | | |
|
Income before income taxes
|
| | | | 309,100 | | |
|
Income tax expense
|
| | | | 83,000 | | |
|
Net income
|
| | | $ | 226,100 | | |
|
|
Net income
|
| | | $ | 226,100 | | |
| Other comprehensive income, net of tax: | | | |||||
|
Unrealized gain on securities
|
| | | | 317,500 | | |
|
Comprehensive income
|
| | | $ | 543,600 | | |
|
| | |
Common Stock
Number of Shares |
| |
Common
Stock Amount |
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Income |
| |
Total
|
| |||||||||||||||
Balance at December 31, 2017
|
| | | | 362,194 | | | | | $ | 1,261,600 | | | | | $ | 4,267,100 | | | | | $ | 1,703,100 | | | | | $ | 7,231,800 | | |
Net income
|
| | | | — | | | | | | — | | | | | | 226,100 | | | | | | — | | | | | | 226,100 | | |
Unrealized gain on securities, net of tax expense of $123,400
|
| | | | — | | | | | | — | | | | | | — | | | | | | 317,500 | | | | | | 317,500 | | |
Balance at March 31, 2018
|
| | | | 362,194 | | | | | $ | 1,261,600 | | | | | $ | 4,493,200 | | | | | $ | 2,020,600 | | | | | $ | 7,775,400 | | |
|
| Operating activities: | | | |||||
|
Net income
|
| | | $ | 226,100 | | |
| Adjustments to reconcile net income to net cash used in operating activities: | | | |||||
|
Depreciation
|
| | | | 1,100 | | |
|
Deferred income taxes
|
| | | | 2,000 | | |
|
Changes in operating assets and liabilities:
|
| | |||||
|
Receivable from affiliates
|
| | | | 17,600 | | |
|
Accounts receivable
|
| | | | 2,300 | | |
|
Taxes receivable
|
| | | | 24,400 | | |
|
Prepaid expenses and other assets
|
| | | | (94,400) | | |
|
Accounts payable and accrued liabilities
|
| | | | (13,200) | | |
|
Accrued payroll
|
| | | | (808,900) | | |
|
Income taxes payable
|
| | | | 55,400 | | |
|
Net cash used in operating activities
|
| | | | (587,600) | | |
| Investing activities: | | | |||||
|
Repayments on note receivable
|
| | | | 5,300 | | |
|
Net cash provided by investing activities
|
| | | | 5,300 | | |
|
Net decrease in cash and cash equivalents
|
| | | | (582,300) | | |
|
Exchange losses on cash and cash equivalents
|
| | | | (100) | | |
|
Cash and cash equivalents, beginning of period
|
| | | | 4,866,000 | | |
|
Cash and cash equivalents, end of period
|
| | | $ | 4,283,600 | | |
| Supplemental disclosures of cash flow information: | | | |||||
| Cash paid during the period for: | | | |||||
|
Income taxes
|
| | | $ | 900 | | |
|
Foreign taxes
|
| | | | 300 | | |
| | |
March 31, 2018
|
| |||||||||||||||||||||
| | |
Total
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| ||||||||||||
Marketable securities
|
| | | $ | 3,848,600 | | | | | $ | 3,717,400 | | | | | $ | — | | | | | $ | 131,200 | | |
Money market funds
|
| | | | 273,000 | | | | | | 273,000 | | | | | | — | | | | | | — | | |
Total
|
| | | $ | 4,121,600 | | | | | $ | 3,990,400 | | | | | $ | — | | | | | $ | 131,200 | | |
|
Description
|
| |
Total
Cost |
| |
Fair
Market Value |
| |
Gross
Unrealized Gain |
| |||||||||
Cumulative gross unrealized gains on marketable securities
|
| | | $ | 1,043,300 | | | | | $ | 3,848,600 | | | | | $ | 2,805,300 | | |
|
Year Ended December 31:
|
| |
Amount
|
| |||
2018 (9 months remaining)
|
| | | $ | 330,200 | | |
2019 | | | | | 442,000 | | |
2020 | | | | | 222,600 | | |
Total
|
| | | $ | 994,800 | | |
|
| Current tax provision: | | | |||||
|
Federal
|
| | | $ | 54,400 | | |
|
State
|
| | | | 24,500 | | |
|
Foreign
|
| | | | 2,100 | | |
|
Current tax provision
|
| | | | 81,000 | | |
| Deferred tax provision: | | | |||||
|
Federal
|
| | | $ | 11,200 | | |
|
Foreign
|
| | | | (9,200) | | |
|
Deferred tax provision
|
| | | | 2,000 | | |
|
Total provision for income taxes
|
| | | $ | 83,000 | | |
|
|
Income tax expense at the statutory federal income tax rate
|
| | | $ | 64,900 | | |
|
State tax expense net of federal benefit
|
| | | | 15,800 | | |
|
Non-deductible expenses
|
| | | | 500 | | |
|
Non-taxable income
|
| | | | (400) | | |
|
Other tax rate differences
|
| | | | 2,200 | | |
|
Total income tax provision
|
| | | $ | 83,000 | | |
|
| Deferred tax assets: | | | |||||
|
Franchise taxes
|
| | | $ | 4,800 | | |
|
Prepaid income
|
| | | | 7,400 | | |
|
Deferred compensation
|
| | | | 21,600 | | |
|
Deferred tax assets
|
| | | | 33,800 | | |
| Deferred tax liabilities: | | | |||||
|
Unrealized gains on securities
|
| | | | (785,100) | | |
|
Depreciation and impairment
|
| | | | (6,000) | | |
|
Net deferred tax liabilities
|
| | | $ | (757,300) | | |
|
| | |
Before-tax
Amount |
| |
Tax
(Expense) |
| |
Net-of-tax
Amount |
| |||||||||
Foreign currency translation adjustments
|
| | | $ | 400 | | | | | $ | (100) | | | | | $ | 300 | | |
Unrealized gains on securities
|
| | | | 2,805,300 | | | | | | (785,000) | | | | | | 2,020,300 | | |
Total accumulated comprehensive income
|
| | | $ | 2,805,700 | | | | | $ | (785,100) | | | | | $ | 2,020,600 | | |
|
|
ASSETS
|
| ||||||
| Assets: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 2,198,300 | | |
|
Marketable securities
|
| | | | 2,867,900 | | |
|
Receivable from affiliates
|
| | | | 404,600 | | |
|
Accounts receivable
|
| | | | 6,000 | | |
|
Taxes receivable
|
| | | | 85,500 | | |
|
Note receivable
|
| | | | 57,600 | | |
|
Other investments
|
| | | | 101,400 | | |
|
Equipment (net of accumulated depreciation of $120,600)
|
| | | | 108,000 | | |
|
Prepaid expenses and other assets
|
| | | | 63,600 | | |
|
Total assets
|
| | | $ | 5,892,900 | | |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| ||||||
| Liabilities: | | | | | | | |
|
Accounts payable
|
| | | $ | 107,700 | | |
|
Accrued payroll
|
| | | | 355,300 | | |
|
Deferred tax liabilities
|
| | | | 707,700 | | |
|
Total liabilities
|
| | | | 1,170,700 | | |
| Shareholders’ equity: | | | | | | | |
|
Series A Redeemable Preferred stock, 200,000 shares authorized, no shares issued and outstanding
|
| | | | — | | |
|
Common stock, no par value, 1,000,000 shares authorized, 363,791 issued and outstanding
|
| | | | 1,261,600 | | |
|
Retained earnings
|
| | | | 2,356,400 | | |
|
Accumulated other comprehensive income:
|
| | | | | | |
|
Foreign currency translation adjustments
|
| | | | 6,400 | | |
|
Unrealized gain on securities
|
| | | | 1,097,800 | | |
|
Total shareholders’ equity
|
| | | | 4,722,200 | | |
|
Total liabilities and shareholders’ equity
|
| | | $ | 5,892,900 | | |
|
| Revenues: | | | | | | | |
|
Management fees
|
| | | $ | 5,581,400 | | |
|
Acquisition and remarketing fees
|
| | | | 871,600 | | |
|
Dividends, interest and other income
|
| | | | 13,100 | | |
|
Equity in subsidiary
|
| | | | (100) | | |
|
Total revenues
|
| | | | 6,466,000 | | |
| Costs and expenses: | | | | | | | |
|
Salaries and employee benefits
|
| | | | 2,645,300 | | |
|
Rent
|
| | | | 449,600 | | |
|
Consulting fees
|
| | | | 858,500 | | |
|
Travel, meals and entertainment
|
| | | | 412,400 | | |
|
Depreciation
|
| | | | 6,100 | | |
|
Interest
|
| | | | 1,500 | | |
|
General and administrative
|
| | | | 637,800 | | |
|
Total costs and expenses
|
| | | | 5,011,200 | | |
|
Income before income taxes
|
| | | | 1,454,800 | | |
|
Income tax expense
|
| | | | 537,100 | | |
|
Net income
|
| | | $ | 917,700 | | |
|
|
Net income
|
| | | $ | 917,700 | | |
| Other comprehensive income, net of tax: | | | | | | | |
|
Foreign currency translation adjustments
|
| | | | (1,300) | | |
|
Unrealized gain on securities
|
| | | | 462,000 | | |
|
Other comprehensive income
|
| | | | 460,700 | | |
|
Comprehensive income
|
| | | $ | 1,378,400 | | |
|
| | |
Number of
Shares |
| |
Common
Stock |
| |
Preferred
Stock |
| |
Retained
Earnings/ (Deficit) |
| |
Accumulated
Other Comprehensive Income |
| |
Total
|
| ||||||||||||||||||
Balance at December 31, 2014
|
| | | | 363,791 | | | | | $ | 1,261,600 | | | | | $ | — | | | | | $ | 1,438,700 | | | | | $ | 643,500 | | | | | $ | 3,343,800 | | |
Net income for the year
|
| | | | — | | | | | | — | | | | | | — | | | | | | 917,700 | | | | | | — | | | | | | 917,700 | | |
Foreign currency translation adjustments, net of tax benefit of $700
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,300) | | | | | | (1,300) | | |
Unrealized gain on securities, net of tax expense of $305,900
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | 462,000 | | | | | | 462,000 | | |
Balance at December 31, 2015
|
| | | | 363,791 | | | | | $ | 1,261,600 | | | | | $ | — | | | | | $ | 2,356,400 | | | | | $ | 1,104,200 | | | | | $ | 4,722,200 | | |
|
| Operating activities: | | | | | | | |
|
Net income from operations
|
| | | $ | 917,700 | | |
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
| | | | | | |
|
Depreciation
|
| | | | 6,100 | | |
|
Share of loss of partnership investment
|
| | | | 100 | | |
|
Changes in operating assets and liabilities:
|
| | | | | | |
|
Receivable from affiliates
|
| | | | 1,089,400 | | |
|
Accounts receivable
|
| | | | (6,000) | | |
|
Taxes receivable
|
| | | | (82,100) | | |
|
Prepaid expenses
|
| | | | (11,100) | | |
|
Accounts payable
|
| | | | 4,800 | | |
|
Accrued payroll
|
| | | | (30,600) | | |
|
Income taxes payable
|
| | | | (186,900) | | |
|
Deferred income taxes
|
| | | | 1,000 | | |
|
Net cash provided by operating activities
|
| | | | 1,702,400 | | |
| Investing activities: | | | | | | | |
|
Investment in marketable securities
|
| | | | (228,400) | | |
|
Investment in capital assets
|
| | | | (13,900) | | |
|
Repayments on note receivable
|
| | | | 15,900 | | |
|
Net cash used by investing activities
|
| | | | (226,400) | | |
|
Net increase in cash
|
| | | | 1,476,000 | | |
|
Cash and cash equivalents, beginning of period
|
| | | | 724,200 | | |
|
Exchange losses on cash
|
| | | | (1,900) | | |
|
Cash and cash equivalents, end of period
|
| | | $ | 2,198,300 | | |
| Supplemental disclosures of cash flow information: | | | | | | | |
| Cash paid during the period for: | | | | | | | |
|
Income taxes paid, net of refund of $25,800
|
| | | $ | 801,700 | | |
|
Foreign taxes
|
| | | | 3,600 | | |
|
Interest expense
|
| | | | 1,500 | | |
| | | | | | | | |
December 31, 2015
|
| |||||||||||||||
| | |
Total
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| ||||||||||||
Marketable securities
|
| | | $ | 2,867,900 | | | | | $ | 2,728,900 | | | | | $ | 0 | | | | | $ | 139,000 | | |
Limited partnership investment
|
| | | | 101,400 | | | | | | 0 | | | | | | 0 | | | | | | 101,400 | | |
Money market funds
|
| | | | 272,600 | | | | | | 272,600 | | | | | | 0 | | | | | | 0 | | |
Total
|
| | | $ | 3,241,900 | | | | | $ | 3,001,500 | | | | | $ | 0 | | | | | $ | 240.400 | | |
|
| | |
Comprehensive
Income |
| |||
Change in unrealized gains or losses relating to assets still held at reporting date (before income tax)
|
| | | $ | 767,900 | | |
|
|
Total assets
|
| | | $ | 2,028,000 | | |
|
Total liabilities
|
| | | | 0 | | |
|
Net Assets
|
| | | $ | 2,028,000 | | |
|
Revenues
|
| | | $ | 0 | | |
|
Expenses
|
| | | | 1,075 | | |
|
Net loss
|
| | | $ | (1,075) | | |
| Company’s interest: | | | | | | | |
|
Share of net loss
|
| | | $ | (100) | | |
|
Share of net equity
|
| | | $ | 101,400 | | |
|
Year Ended December 31:
|
| |
Amount
|
| |||
2016
|
| | | $ | 409,400 | | |
2017
|
| | | | 415,600 | | |
2018
|
| | | | 421,700 | | |
2019
|
| | | | 428,100 | | |
2020
|
| | | | 217,200 | | |
Total
|
| | | $ | 1,892,000 | | |
|
|
JHC
|
| | | $ | 0 | | |
|
JMC
|
| | | | 1,842,100 | | |
|
EZLease
|
| | | | (29,600) | | |
|
JetFleet Canada
|
| | | | (345,000) | | |
|
JMC USVI
|
| | | | (25,700) | | |
|
Total
|
| | | $ | 1,441,800 | | |
|
| Current tax provision: | | | | | | | |
|
Federal
|
| | | $ | 467,300 | | |
|
State
|
| | | | 65,000 | | |
|
Foreign
|
| | | | 3,800 | | |
|
Current tax provision
|
| | | | 536,100 | | |
| Deferred tax provision: | | | | | | | |
|
Federal
|
| | | | 2,000 | | |
|
State
|
| | | | 200 | | |
|
Change in valuation allowance
|
| | | | (1,200) | | |
|
Deferred tax provision
|
| | | | 1,000 | | |
|
Total provision for income taxes
|
| | | $ | 537,100 | | |
|
|
Income tax benefit statutory federal income tax rate
|
| | | $ | 494,600 | | |
|
State tax benefit net of federal benefit
|
| | | | 57,500 | | |
|
Meals and entertainment
|
| | | | 13,000 | | |
|
Tax rate differences
|
| | | | (26,800) | | |
|
Change in valuation allowance
|
| | | | (1,200) | | |
|
Total income tax provision
|
| | | $ | 537,100 | | |
|
| Gross deferred tax assets: | | | | | | | |
|
Net operating loss carry-forwards
|
| | | $ | 3,200 | | |
|
Franchise taxes and other
|
| | | | 31,000 | | |
|
Deferred tax assets
|
| | | | 34,200 | | |
|
Valuation allowance
|
| | | | (3,100) | | |
|
Net deferred tax asset
|
| | | | 31,100 | | |
| Gross deferred tax liabilities: | | | | | | | |
|
Unrealized gains on securities
|
| | | | (726,800) | | |
|
Depreciation and impairment
|
| | | | (8,700) | | |
|
Other
|
| | | | (3,300) | | |
|
Net deferred tax liabilities
|
| | | $ | (707,700) | | |
|
| | |
Before-tax
Amount |
| |
Tax
(Expense) |
| |
Net-of-tax
Amount |
| |||||||||
Foreign currency translation adjustments
|
| | | $ | 9,700 | | | | | $ | (3,300) | | | | | $ | 6,400 | | |
Unrealized gains on securities
|
| | | | 1,824,600 | | | | | | (726,800) | | | | | | 1,097,800 | | |
Total accumulated comprehensive income
|
| | | $ | 1,834,300 | | | | | $ | (730,100) | | | | | $ | 1,104,200 | | |
|
| | |
AeroCentury
historical |
| |
JetFleet
historical |
| |
Pro forma
adjustments |
| |
Notes
|
| |
Pro forma
combined |
| ||||||||||||
ASSETS
|
| |||||||||||||||||||||||||||
Cash and cash equivalents
|
| | | $ | 4,793,100 | | | | | $ | 4,283,600 | | | | | $ | (6,927,700) | | | |
(a)
|
| | | $ | 2,149,000 | | |
Marketable securities
|
| | | | — | | | | | | 3,848,600 | | | | | | (3,713,200) | | | |
(b)
|
| | | | 135,400 | | |
Accounts receivable
|
| | | | 3,159,000 | | | | | | 1,300 | | | | | | — | | | | | | | | | 3,160,300 | | |
Receivable – AeroCentury
|
| | | | — | | | | | | 479,000 | | | | | | (479,000) | | | |
(c)
|
| | | | — | | |
Finance leases receivable
|
| | | | 22,893,400 | | | | | | — | | | | | | — | | | | | | | | | 22,893,400 | | |
Note receivable
|
| | | | — | | | | | | 27,500 | | | | | | — | | | | | | | | | 27,500 | | |
Aircraft, net of accumulated depreciation
|
| | | | 188,858,000 | | | | | | — | | | | | | — | | | | | | | | | 188,858,000 | | |
Assets held for sale
|
| | | | 4,821,800 | | | | | | — | | | | | | — | | | | | | | | | 4,821,800 | | |
Equipment, net of depreciation
|
| | | | — | | | | | | 21,600 | | | | | | — | | | | | | | | | 21,600 | | |
Prepaid expenses and other
|
| | | | 1,662,600 | | | | | | 215,700 | | | | | | — | | | | | | | | | 1,878,300 | | |
Total assets
|
| | | $ | 226,187,900 | | | | | $ | 8,877,300 | | | | | $ | (11,119,900) | | | | | | | | $ | 223,945,300 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| |||||||||||||||||||||||||||
Accounts payable and accrued expenses
|
| | | $ | 341,100 | | | | | $ | 189,100 | | | | | $ | 500,000 | | | |
(d)
|
| | | $ | 1,030,200 | | |
Payable – JetFleet
|
| | | | 479,000 | | | | | | — | | | | | | (479,000) | | | |
(c)
|
| | | | — | | |
Accrued payroll
|
| | | | — | | | | | | 99,500 | | | | | | — | | | | | | | | | 99,500 | | |
Notes payable and accrued interest
|
| | | | 133,768,100 | | | | | | — | | | | | | — | | | | | | | | | 133,768,100 | | |
Security deposits
|
| | | | 2,968,800 | | | | | | — | | | | | | — | | | | | | | | | 2,968,800 | | |
Unearned revenues
|
| | | | 4,398,600 | | | | | | — | | | | | | — | | | | | | | | | 4,398,600 | | |
Maintenance reserves
|
| | | | 27,113,600 | | | | | | — | | | | | | — | | | | | | | | | 27,113,600 | | |
Accrued maintenance costs
|
| | | | 294,300 | | | | | | — | | | | | | — | | | | | | | | | 294,300 | | |
Deferred income taxes
|
| | | | 8,583,900 | | | | | | 757,300 | | | | | | (785,000) | | | |
(e)
|
| | | | 8,556,200 | | |
Income taxes payable
|
| | | | 556,500 | | | | | | 56,000 | | | | | | 785,000 | | | |
(e)
|
| | | | 1,397,500 | | |
Total liabilities
|
| | | | 178,503,900 | | | | | | 1,101,900 | | | | | | 21,000 | | | | | | | | | 179,626,800 | | |
Stockholders’ equity: | | | | | | | ||||||||||||||||||||||
Common stock
|
| | | | 1,600 | | | | | | 1,261,600 | | | | | | (1,261,500) | | | |
(f)
|
| | | | 1,700 | | |
Paid-in capital
|
| | | | 14,780,100 | | | | | | — | | | | | | 2,236,500 | | | |
(g)
|
| | | | 17,016,600 | | |
Retained earnings
|
| | | | 35,939,100 | | | | | | 4,493,200 | | | | | | (10,095,300) | | | |
(h)
|
| | | | 30,337,000 | | |
Foreign currency translation adjustments
|
| | | | — | | | | | | 300 | | | | | | (300) | | | |
(i)
|
| | | | — | | |
Unrealized gain on securities
|
| | | | — | | | | | | 2,020,300 | | | | | | (2,020,300) | | | |
(j)
|
| | | | — | | |
| | | | | 50,720,800 | | | | | | 7,775,400 | | | | | | (11,140,900) | | | | | | | | | 47,355,300 | | |
Treasury stock
|
| | | | (3,036,800) | | | | | | — | | | | | | — | | | | | | | | | (3,036,800) | | |
Total stockholders’ equity
|
| | | | 47,684,000 | | | | | | 7,775,400 | | | | | | (11,140,900) | | | | | | | | | 44,318,500 | | |
Total liabilities and stockholders’ equity
|
| | | $ | 226,187,900 | | | | | $ | 8,877,300 | | | | | $ | (11,119,900) | | | | | | | | $ | 223,945,300 | | |
|
| | |
AeroCentury
historical |
| |
JetFleet
historical |
| |
Pro forma
adjustments |
| |
Notes
|
| |
Pro forma
combined |
| ||||||||||||
Revenues and other income: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating lease revenue
|
| | | $ | 29,002,700 | | | | | $ | — | | | | | $ | — | | | | | | | | $ | 29,002,700 | | |
Maintenance reserves revenue
|
| | | | 3,886,900 | | | | | | — | | | | | | — | | | | | | | | | 3,886,900 | | |
Finance lease revenue
|
| | | | 1,571,500 | | | | | | — | | | | | | 60,000 | | | |
(k)
|
| | | | 1,631,500 | | |
Net loss on disposal of assets
|
| | | | 791,500 | | | | | | — | | | | | | — | | | | | | | | | 791,500 | | |
Net gain on sales-type finance leases
|
| | | | 297,400 | | | | | | — | | | | | | 51,100 | | | |
(k)
|
| | | | 348,500 | | |
Other income
|
| | | | 3,800 | | | | | | 12,700 | | | | | | — | | | | | | | | | 16,500 | | |
Management fee income
|
| | | | | | | | | | 6,109,100 | | | | | | (6,109,100) | | | |
(l)
|
| | | | — | | |
Acquisition and re-sale fee income
|
| | | | | | | | | | 901,600 | | | | | | (901,600) | | | |
(k)
|
| | | | — | | |
| | | | | 35,553,800 | | | | | | 7,023,400 | | | | | | (6,899,600) | | | | | | | | | 35,677,600 | | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management fees
|
| | | | 6,109,200 | | | | | | — | | | | | | (6,109,200) | | | |
(l)
|
| | | | — | | |
Depreciation
|
| | | | 12,025,600 | | | | | | — | | | | | | (39,000) | | | |
(k)
|
| | | | 11,986,600 | | |
Provision for impairment
|
| | | | 1,002,100 | | | | | | — | | | | | | — | | | | | | | | | 1,002,100 | | |
Interest
|
| | | | 7,753,200 | | | | | | 19,600 | | | | | | — | | | | | | | | | 7,772,800 | | |
Maintenance
|
| | | | 2,924,300 | | | | | | — | | | | | | — | | | | | | | | | 2,924,300 | | |
Professional fees, general and administrative and other
|
| | | | 1,945,100 | | | | | | 899,100 | | | | | | (619,400) | | | |
(m)
|
| | | | 2,224,800 | | |
Other taxes
|
| | | | 90,300 | | | | | | — | | | | | | — | | | | | | | | | 90,300 | | |
Insurance
|
| | | | 271,300 | | | | | | — | | | | | | — | | | | | | | | | 271,300 | | |
Salaries and employee benefits
|
| | | | — | | | | | | 3,459,700 | | | | | | — | | | | | | | | | 3,459,700 | | |
Rent | | | | | — | | | | | | 423,600 | | | | | | — | | | | | | | | | 423,600 | | |
Consulting fees
|
| | | | — | | | | | | 524,700 | | | | | | — | | | | | | | | | 524,700 | | |
| | | | | 32,121,100 | | | | | | 5,326,700 | | | | | | (6,767,600) | | | | | | | | | 30,680,200 | | |
Income before income tax provision
|
| | | | 3,432,700 | | | | | | 1,696,700 | | | | | | (132,000) | | | | | | | | | 4,997,400 | | |
Income tax provision
|
| | | | (3,966,500) | | | | | | 481,400 | | | | | | (262,900) | | | |
(n)
|
| | | | (3,748,000) | | |
Net income
|
| | | $ | 7,399,200 | | | | | $ | 1,215,300 | | | | | $ | 130,900 | | | | | | | | $ | 8,745,400 | | |
Earnings per share
|
| | | | 5.10 | | | | | | | | | | | | | | | | | | | | | 5.54 | | |
Weighted average shares outstanding
|
| | | | 1,449,576 | | | | | | | | | | | | 129,286 | | | |
(o)
|
| | | | 1,578,862 | | |
|
| | |
AeroCetury
historical |
| |
JetFleet
historical |
| |
Pro forma
adjustments |
| |
Notes
|
| |
Pro forma
combined |
| ||||||||||||
Revenues and other income: | | | | | | | ||||||||||||||||||||||
Operating lease revenue
|
| | | $ | 6,462,900 | | | | | $ | — | | | | | $ | — | | | | | | | | $ | 6,462,900 | | |
Maintenance reserves revenue
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Finance lease revenue
|
| | | | 379,000 | | | | | | — | | | | | | 18,000 | | | | (k) | | | | | 397,000 | | |
Net loss on disposal of assets
|
| | | | (8,200) | | | | | | — | | | | | | — | | | | | | | | | (8,200) | | |
Net gain on sales-type finance leases
|
| | | | — | | | | | | — | | | | | | — | | | | (k) | | | | | — | | |
Other income
|
| | | | 1,051,400 | | | | | | 3,100 | | | | | | — | | | | | | | | | 1,054,500 | | |
Management fee income
|
| | | | — | | | | | | 1,446,700 | | | | | | (1,446,700) | | | | (l) | | | | | — | | |
Acquisition and re-sale fee income
|
| | | | — | | | | | | — | | | | | | — | | | | (k) | | | | | — | | |
| | | | | 7,885,100 | | | | | | 1,449,800 | | | | | | (1,428,700) | | | | | | | | | 7,906,200 | | |
Expenses: | | | | | | | ||||||||||||||||||||||
Management fees
|
| | | | 1,446,800 | | | | | | — | | | | | | (1,446,800) | | | | (l) | | | | | — | | |
Depreciation
|
| | | | 2,941,900 | | | | | | — | | | | | | (20,000) | | | | (k) | | | | | 2,921,900 | | |
Provision for impairment
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Interest
|
| | | | 2,254,100 | | | | | | — | | | | | | — | | | | | | | | | 2,254,100 | | |
Maintenance
|
| | | | 91,200 | | | | | | — | | | | | | — | | | | | | | | | 91,200 | | |
Professional fees, general and administrative
and other |
| | | | 577,400 | | | | | | 237,200 | | | | | | (200,000) | | | | (m) | | | | | 614,600 | | |
Other taxes
|
| | | | 22,600 | | | | | | — | | | | | | — | | | | | | | | | 22,600 | | |
Insurance
|
| | | | 79,700 | | | | | | — | | | | | | — | | | | | | | | | 79,700 | | |
Bad debt expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Salaries and employee benefits
|
| | | | — | | | | | | 739,800 | | | | | | — | | | | | | | | | 739,800 | | |
Rent
|
| | | | — | | | | | | 101,700 | | | | | | — | | | | | | | | | 101,700 | | |
Consulting fees
|
| | | | — | | | | | | 62,000 | | | | | | — | | | | | | | | | 62,000 | | |
| | | | | 7,413,700 | | | | | | 1,140,700 | | | | | | (1,666,800) | | | | | | | | | 6,887,600 | | |
Income before income tax provision
|
| | | | 471,400 | | | | | | 309,100 | | | | | | 238,100 | | | | | | | | | 1,018,600 | | |
Income tax provision
|
| | | | 154,100 | | | | | | 83,000 | | | | | | 13,400 | | | | (n) | | | | | 250,500 | | |
Net income
|
| | | $ | 317,300 | | | | | $ | 226,100 | | | | | $ | 224,700 | | | | | | | | $ | 768,100 | | |
Earnings per share
|
| | | | 0.22 | | | | | | | | | | | | | | | | | | | | | 0.50 | | |
Weighted average shares outstanding
|
| | | | 1,416,699 | | | | | | | | | | | | 129,286 | | | | (o) | | | | | 1,545,985 | | |
|
| | |
December 31,
2017 |
| |||
Cash
|
| | | $ | 3,500,000 | | |
AeroCentury common stock (129,286 shares)
|
| | | | 2,236,600 | | |
Total purchase price
|
| | | | 5,736,600 | | |
Cash
|
| | | | 841,000 | | |
Marketable securities
|
| | | | 135,400 | | |
Accounts receivable, net
|
| | | | 1,300 | | |
Receivable-AeroCentury
|
| | | | 493,900 | | |
Note receivable
|
| | | | 27,500 | | |
Deferred taxes
|
| | | | 27,700 | | |
Equipment
|
| | | | 21,600 | | |
Other assets
|
| | | | 215,700 | | |
Total identifiable assets(*)
|
| | | | 1,764,100 | | |
Accounts payable
|
| | | | (189,100) | | |
Accrued payroll
|
| | | | (99,500) | | |
Taxes payable
|
| | | | (841,000) | | |
Total identifiable liabilities(*)
|
| | | | (1,129,600) | | |
Total pro forma settlement loss(**)
|
| | | $ | 5,102,100 | | |
|
|
AeroCentury
|
| |
JetFleet
|
| |
Total
|
| |||||||||||||||
|
Accrued management and
acquisition fees due to JetFleet |
| | | $ | (479,000) | | | | Accrued management and acquisition fees due from AeroCentury | | | | $ | 479,000 | | | | | | | | |
|
Cash consideration related to acquisition
|
| | | | (3,500,000) | | | | Cash consideration related to acquisition | | | | | 3,500,000 | | | | | | | | |
| | | | | | | | | | Pre-Closing Cash Dividend to JetFleet shareholders prior to acquisition |
| | | | (6,927,700) | | | | | | | | |
| | | | | $ | (3,979,000) | | | | | | | | $ | (2,948,700) | | | | | $ | (6,927,700) | | |
|
|
AeroCentury
|
| |
JetFleet
|
| |
Total
|
| |||||||||||||||
|
Common stock issued to JetFleet, $0.001 par value
|
| | | $ | 100 | | | | Elimination of subsidiary equity on consolidation | | | | $ | (1,261,600) | | | | | $ | (1,261,500) | | |
|
AeroCentury
|
| |
JetFleet
|
| |
Total
|
| |||||||||||||||
| Estimated settlement loss | | | | | (5,102,100) | | | | Cumulative effect of JetFleet portion of pro forma adjustments (notes a, b, c, d, f, i and j), net of taxes | | | | | (3,858,700) | | | | |||||
|
Estimated non-recurring transaction costs
|
| | | | (500,000) | | | | Net effect of the identifiable assets acquired and liabilities assumed by AeroCentury as a result of its acquisition of JetFleet |
| | | | (634,500) | | | | |||||
| | | | | $ | (5,602,100) | | | | | | | | $ | (4,493,200) | | | | | $ | (10,095,300) | | |
|
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| | | | | A-50 | | | |
| | | | | A-51 | | | |
| | | | | A-51 | | | |
| | | | | A-52 | | |
Term
|
| |
Section
|
|
Advisory Group | | | Section 9.1(c) | |
Aggregate Number of Released Parent Shares | | | Section 8.8(g)(i) | |
Aggregate Pending Claim Amount | | | Section 8.8(e) | |
Aggregate Release Amount | | | Section 8.8(g) | |
Agreement | | | Preamble | |
Agreement of Merger | | | Section 2.2(a) | |
Audited Company Financial Statements | | | Section 3.4 | |
Breach | | | Section 8.4(b) | |
California Commissioner | | | Section 5.2(a) | |
California Permit | | | Section 5.2(a) | |
Claimed Amount | | | Section 8.8(a) | |
Closing | | | Section 2.2(a) | |
Closing Consideration Schedule | | | Section 2.5(a) | |
Closing Date | | | Section 2.2(a) | |
Closing Tax Liability | | | Section 5.12(g) | |
Company | | | Preamble | |
Company Balance Sheet | | | Section 3.4 | |
Company Board | | | Recitals | |
Company Calculated Purchase Price | | | Section 2.5 | |
Company Compliance Certificate | | | Section 2.2(b)(ii) | |
Company Financial Statements | | | Section 3.4 | |
Company IP Rights | | | Section 3.8(a) | |
Company Returns | | | Section 3.19(a) | |
Company Shareholder Notices | | | Section 5.4 | |
Conclusive Cash Consideration Shortfall | | | Section 2.6(e) | |
Conclusive Cash True-Up Amount | | | Section 2.6(e) | |
Confidentiality Obligation | | | Section 5.5 | |
Contested Amount | | | Section 8.8(b) | |
Credit Agreement | | | Section 5.11 | |
Dissenting Shares | | | Section 2.4(k) | |
D&O Tail Policy | | | Section 5.10(d) | |
Effective Time | | | Section 2.2(a) | |
End Date | | | Section 7.1(b) | |
Environmental Requirements | | | Section 3.21 | |
Escrow Agent | | | Recitals | |
Escrow Agreement | | | Recitals | |
Escrow Release Date | | | Section 8.1 | |
Estimated Aggregate Cash Consideration | | | Section 2.5(a) | |
Estimated Cash Consideration Adjustment Amount | | | Section 2.5(a) | |
Estimated Consideration Adjustment Amount | | | Section 2.5(a) | |
Estimated Stock Consideration Adjustment Amount | | | Section 2.5(a) | |
Exchange Agent | | | Section 2.3(a) | |
Term
|
| |
Section
|
|
Exchange Agent | | | Section 2.3(a) | |
Exchange Fund | | | Section 2.3(a) | |
Exchange Fund | | | Section 2.3(a) | |
Fairness Hearing | | | Section 5.2(a) | |
Fairness Hearing Law | | | Section 5.2(a) | |
Indemnification Claim | | | Section 8.8(a) | |
Indemnified Parties | | | Section 5.10(a) | |
Information Statement | | | Section 5.3 | |
Letter of Transmittal | | | Section 2.4(g) | |
Loss and Losses | | | Section 8.2 | |
Lubin Olson | | | Section 9.1(g) | |
Merger | | | Recitals | |
Merger Sub | | | Preamble | |
Merger Sub | | | Recitals | |
Neutral Accounting Arbitrator | | | Section 2.6(c) | |
Non-Compete Agreement | | | Recitals | |
Non-Merger D&O Claims | | | Section 8.2(h) | |
Non-Solicit Agreement | | | Recitals | |
Notice of Indemnification Claim | | | Section 8.8(a) | |
Objection Statement | | | Section 2.6(b) | |
Parent | | | Preamble | |
Parent Board | | | Recitals | |
Parent Calculated Cash Consideration Shortfall | | | Section 2.6(a) | |
Parent Calculated Cash True-Up Amount | | | Section 2.6(a) | |
Parent Prepared Consideration Schedule | | | Section 2.6(a) | |
Payoff Letter | | | Section 6.1(d) | |
Permit Information Statement | | | Section 5.2(a) | |
Pre-Closing Dividend | | | Section 5.9 | |
Pre-Closing Period | | | Section 5.1 | |
Requisite Bank Consent | | | Section 5.11 | |
Resolution Period | | | Section 2.6(b) | |
Response Notice | | | Section 8.8(b) | |
Schedule of Escrow Participants | | | Section 2.5(b) | |
Shareholder Representative | | | Section 9.1(a) | |
Shareholder Representative Engagement Agreement | | | Section 9.1(c) | |
Shareholder Representative Group | | | Section 9.1(c) | |
Significant Breach | | | Section 8.4(b) | |
Significant Contract | | | Section 3.16(a) | |
Straddle Period | | | Section 5.12(c) | |
Subsidiary Shares | | | Section 3.3(a) | |
Supplemental Disclosure Schedule | | | Section 5.14 | |
Surviving Corporation | | | Section 2.1(a) | |
Tax Reserve | | | Section 5.12(f) | |
Third-Party Claim | | | Section 8.5 | |
Transaction Documents | | | Section 8.2 | |
Unresolved Escrow Claim | | | Section 8.8(e) | |
Written Consent | | | Recitals | |
| Confidential | | |
October 26, 2017
|
|
|