EX-99 2 acy2q06press.htm SECOND QUARTER 2006 EARNINGS PRESS RELEASE Second Quarter 2006 Earnings Press Release





       

Toni Perazzo
Chief Financial Officer 
(650) 340-1888
FOR IMMEDIATE RELEASE


AEROCENTURY CORP. REPORTS SECOND QUARTER 2006 RESULTS

(BURLINGAME, CA), August 10, 2006 — AeroCentury Corp. (ASE:ACY), an independent aircraft leasing company, today reported its operating results for the second quarter ended June 30, 2006.

For the quarter ended June 30, 2006, the Company reported total revenues of $4.2 million compared with revenues of $2.8 million for the same period a year ago. For the six months ended June 30, 2006, the Company reported revenues of $10.3 million compared with revenues of $5.3 million for the first six months of 2005.

The Company reported net income of $85,600 or $0.06 per share for the second quarter of 2006 compared to net income of $45,900 or $0.03 per share for the second quarter of 2005. The Company had net income of $190,600 or $0.12 per share for the first six months of 2006 versus $85,700 or $0.06 per share for the first six months of 2005.

Operating lease revenue was approximately $1,095,000 and $2,275,000 higher in the three months and six months ended June 30, 2006, respectively, versus the same periods in 2005, primarily because of additional lease revenue from aircraft purchased beginning in April 2005.

Revenue from gain on sale of aircraft was approximately $409,000 for the three months and six months ended June 30, 2006 as a result of the profit from the sale of an aircraft in April 2006 compared to a loss in the prior year.

In the three months and six months ended June 30, 2006, the Company accrued approximately $780,000 and $941,000, respectively, of expense to prepare several aircraft for re-lease. In addition, during the six months ended June 30, 2006, the Company retained non-refundable maintenance reserves when two aircraft were returned at lease end and the Company recorded such amounts as other income. Based on the condition of these two aircraft at the time of return, the Company accrued approximately $2,392,000 of maintenance expense for which the Company is responsible. In the three months and six months ended June 30, 2005, the Company accrued approximately $34,000 and $50,000 of maintenance expense, primarily for the storage of several aircraft.
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Interest expense was approximately $434,000 and $836,000 higher in the three months and six months ended June 30, 2006 versus 2005, respectively, primarily as a result of increases in the index upon which the Company’s interest rates are based and a higher average principal balance in 2006 compared to 2005, the effect of which was partially offset by a lower margin in 2006 than in 2005.

Depreciation was approximately $251,000 and $556,000 higher in the three months and six months ended June 30, 2006 versus 2005, respectively, and management fees were approximately $118,000 and $272,000 higher in the three months and six months ended June 30, 2006 versus 2005, respectively, primarily because of purchases of aircraft beginning in April 2005, the effect of which was partially offset by the sale of two aircraft, one in November 2005 and the second in April 2006.

The Company's insurance expense consists primarily of insurance for off-lease aircraft, which varies depending on the type of assets insured during each period and the length of time each asset is insured. As a result of the combination of assets insured during each period and the length of time each was insured, insurance expense was approximately $23,000 and $38,000 lower in the three months and six months ended June 30, 2006, respectively, versus the same periods in 2005.

During the first quarter of 2006, the Company recorded bad debt expense of approximately $49,000 for rent receivable which was written off in connection with a lessee’s early return of an aircraft. During the second quarter of 2005, the Company recorded bad debt expense of approximately $88,000, to fully reserve the balance of a note receivable a former lessee, based on a notice received from the lessee that it had filed for reorganization.

The Company did not record any impairment charges in the first six months of 2006. In the first six months of 2005, the Company recorded an impairment charge of approximately $12,000 for one of its aircraft, based on the estimated net sale proceeds pursuant to an agreement to sell the aircraft.

AeroCentury is an aircraft operating lessor and finance company specializing in leasing regional aircraft and engines utilizing triple net leases. The Company’s aircraft and engines are on lease to regional airlines and commercial users worldwide.

(See tables following.)



AeroCentury Corp.
Selected Financial Information
(Unaudited)

 
  
   
  Three Months Ended 
      
Six Months Ended
      
 
 
June 30,
 
March 31,
 
June 30,
 
Annual
  
June 30,
  
Annual
  
   
2006
  
2006
  
2005
  
% Change
  
2006
  
2005
  
% Change
  
Summary of Operations:
                                            
Operating lease revenue
  
$
3,833,940
  
$
3,701,000
  
$
2,738,480
    
40.0
%
$
7,534,940
  
$
5,260,090
    
43.2
%
Gain (Loss) on disposal of aircraft
and aircraft engines
    
408,840
    
-
    
-
    
100.0
%
  
408,840
    
( 59,550
)
  
786.5
%
Other income
    
3,810
    
2,387,380
    
16,390
   
-76.8
%
  
2,391,190
   
94,470
    
2,431.2
%
Total revenues
    
4,246,590
    
6,088,380
    
2,754,870
   
54.1
%
  
10,334,970
   
5,295,010
    
95.2
%
                                             
Interest
    
1,251,370
    
1,164,260
    
817,140
    
53.1
%
  
2,415,630
    
1,579,860
    
52.9
%
Depreciation
    
1,230,770
    
1,230,190
    
980,270
    
25.6
%
  
2,460,960
    
1,905,400
    
29.2
%
Maintenance
    
779,490
    
2,553,830
    
33,820
    
2,204.8
%
  
3,333,320
    
50,430
    
6,509.8
%
Management fees
    
685,100
    
698,150
    
567,140
    
20.8
%
  
1,383,250
    
1,111,490
    
24.5
%
Professional fees and
                                            
general and administrative
    
122,690
    
166,080
    
137,470
    
-10.8
%
  
288,770
    
275,920
    
4.7
%
Insurance expense
    
51,210
    
78,040
    
74,360
    
-31.1
%
  
129,250
    
166,970
    
-22.6
%
Bad debt expense
    
-
    
48,820
    
88,110
    
-100.0
%
  
48,820
    
88,110
    
-44.6
%
Provision for impairment
    
-
   
-
    
-
         
-
    
12,180
   
-100.0
%
Total expenses
    
4,120,630
   
5,939,370
    
2,698,310
   
52.7
%
  
10,060,000
   
5,190,360
   
93.8
%
                                             
Income before taxes
    
125,960
    
149,010
    
56,560
    
122.7
%
  
274,970
    
104,650
    
162.8
%
                                             
Tax provision
    
40,360
   
44,020
    
10,690
   
277.5
%
  
84,380
   
18,940
   
345.5
%
                                             
Net income
  
$
85,600
  
$
104,990
  
$
45,870
    
86.6
%
$
190,590
  
$
85,710
    
122.4
%
Weighted average common
                                            
shares outstanding
    
1,543,257
    
1,543,257
    
1,543,257
          
1,543,257
    
1,543,257
        
Earnings per share
  
$
0.06
  
$
0.07
  
$
0.03
    
100.0
%
$
0.12
  
$
0.06
    
100.0
%
                                             


Summary Balance Sheet:
  
June 30, 2006
  
December 31, 2005
  
June 30, 2005
  
                     
Total assets
  
$
96,082,270
  
$
96,546,700
  
$
84,007,520
  
Total liabilities
  
$
76,901,590
  
$
77,556,610
  
$
65,124,630
  
Shareholders’ equity
  
$
19,180,680
  
$
18,990,090
  
$
18,882,890
  

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