Toni Perazzo
Chief Financial Officer
(650) 340-1888
FOR IMMEDIATE RELEASE
AEROCENTURY CORP. REPORTS FOURTH QUARTER AND FULL YEAR 2005 RESULTS
(BURLINGAME, CA), February 8, 2006 - AeroCentury Corp. (ASE:ACY), an independent aircraft leasing company, today reported its operating results for the fourth quarter and the year ended December 31, 2005.
For the quarter, the Company reported increased revenues of $5.2 million compared with revenues of $4.0 million for the same period a year ago. For the year ended December 31, 2005, the Company reported increased revenues of $13.5 million compared with revenues of $10.9 million for 2004.
The Company reported net income of $55,090 or $0.04 per share for the fourth quarter of 2005 versus net income of $743,370 or $0.48 per share for the fourth quarter of 2004. For the year ended December 31, 2005, the Company reported net income of $192,910 or $0.13 per share versus net income of $266,370 or $0.17 per share for 2004.
Operating lease revenue was approximately $739,000 and $2,391,000 higher in the fourth quarter and year 2005, respectively, versus 2004, primarily because of increased revenue from aircraft purchased beginning in April 2004 and during 2005. This increase was partially offset by decreases resulting from the sale of a pool of turboprop engines in December 2004 as well as aircraft that were on lease for longer periods in 2004 than 2005 and lower lease rates for several aircraft in 2005.
Revenues for the fourth quarter of 2005 included a gain on sale of aircraft and aircraft engines of approximately $11,000 as a result of the sale of a Shorts SD-360 aircraft. Net loss on sale of aircraft and aircraft engines of approximately $48,000 for the twelve months ended December 31, 2005 also included the sale of a deHavilland DHC-7 aircraft which resulted in a loss of approximately $60,000. The fourth quarter of 2004 included a net gain on sale of aircraft and aircraft engines of approximately $1,727,000 as a result of the sale of a pool of twenty-four turboprop engines.
During the fourth quarter 2005, two aircraft were returned at lease end. In connection with these returns and under the Company's policy regarding maintenance accruals at lease end, the Company recognized lessee-reimbursed maintenance costs of approximately $1,902,000 in other income and, at the same time, recognized estimated maintenance expense for which the Company is responsible of approximately $1,862,000. In 2005, the Company also accrued maintenance expense to prepare two other aircraft for re-lease. In 2004, the Company's maintenance accruals were primarily in connection with the early return of two aircraft, preparation of two aircraft for re-lease and amounts resulting from its periodic review of the adequacy of its maintenance accruals.
Depreciation was approximately $179,000 and $476,000 higher in the three-month and twelve-month periods, respectively, in 2005 versus the same periods in 2004 and management fees were approximately $105,000 and $351,000 higher in the three-month and twelve-month periods, respectively, in 2005 versus the same periods in 2004 primarily because of the purchase of aircraft beginning in April 2004 and during 2005, the effect of which was partially offset by asset sales.
Interest expense was approximately $338,000 and $1,064,000 higher in the three-month and twelve-month periods, respectively, in 2005 versus the same periods in 2004 primarily as a result of higher market interest rates and a higher average principal balance during 2005.
The Company's insurance expense for off-lease aircraft and aircraft engines varies depending on the type of aircraft and engines insured during each period and the length of time each asset is insured. As a result, insurance expense was approximately $16,000 lower in the three-month period in 2005 versus the same period in 2004 and approximately $24,000 higher in the twelve-month period in 2005 versus the same period in 2004.
Professional fees and general and administrative expenses were approximately $60,000 higher in the three-month period in 2005 versus the same period in 2004 primarily because of a change in collection costs associated with a note receivable in 2004. This increase was partially offset by lower estimated accounting fees. Professional fees and general and administrative expenses were approximately $85,000 lower in the twelve-month period in 2005 versus the same period in 2004 primarily because of lower legal fees.
Bad debt expense for the three-month period in 2005 was approximately $79,000 to fully reserve the amount of foreign taxes due from a lessee and which was recorded as other income in the same period. The twelve-month period in 2005 also included expense of approximately $88,000 to fully reserve the balance of a note receivable from a former lessee which filed for reorganization in May 2005. There were no bad debt charges in the three-month period in 2004. Bad debt expense for 2004 was approximately $147,000 in connection with the early return during September 2004 of two aircraft.
There were no impairment charges in the three-month period in 2005. During 2005, an impairment charge of approximately $12,000 was recognized for one aircraft, based on its estimated net sale proceeds pursuant to an agreement to sell the aircraft in April 2005. During the fourth quarter of 2004, the Company recognized an impairment charge of approximately $193,000 related to one of the Company's Dash-7 aircraft which was sold in early 2005. The twelve-month period of 2004 also included an impairment charge of approximately $463,000 related to one of the Company's leased 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.
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