Toni Perazzo
Chief Financial Officer
(650) 340-1888
FOR IMMEDIATE RELEASE
AEROCENTURY CORP. REPORTS SECOND QUARTER 2007 RESULTS
(BURLINGAME, CA), August 8, 2007 - AeroCentury Corp. (ASE:ACY), an independent aircraft leasing company, today reported its operating results for the second quarter ended June 30, 2007. As discussed and shown in the tables below, comparative information for the second quarter of 2006 and first six months of 2006 has been restated in connection with the Company's adoption of Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements ("SAB 108") and Financial Accounting Standard Board Staff Position AUG AIR-1, Accounting for Planned Major Maintenance Activities ("FSP AUG AIR-1").
For the quarter ended June 30, 2007, the Company reported total revenues of $5.0 million compared with revenues of $4.6 million for the same period a year ago. For the six months ended June 30, 2007, the Company reported total revenues of $10.0 million compared with revenues of $9.1 million for the same period a year ago.
The Company reported net income of $463,000 or $0.30 per basic share and $0.29 per diluted share for the second quarter of 2007 compared to a net loss of $(207,000) or $(0.13) per basic and diluted share for the second quarter of 2006. The Company reported net income of $1,437,000 or $0.93 per basic share and $0.91 per diluted share for the six months ended June 30, 2007 compared to a net loss of $(155,000) or $(0.10) per basic and diluted share for the same period a year ago.
Operating lease revenue was approximately $318,000 and $824,000 higher in the three months and six months ended June 30, 2007, respectively, versus the same periods in 2006, primarily because of increased operating lease revenue from aircraft purchased in the fourth quarter of 2006, rent increases for several of the Company's aircraft, and revenue from several aircraft which had been off lease for part of the 2006 periods. The effect of these increases was partially offset by a decrease in revenue related to aircraft which were off lease for part of the 2007 periods.
Total expenses were approximately $613,000 and $1,438,000 less in the three months and six months ended June 30, 2007, respectively, versus the same periods in 2006, primarily because of the change in maintenance expense from year to year. The Company's maintenance expense is dependent on the aggregate maintenance claims submitted by lessees and expenses incurred in connection with off-lease aircraft. As a result of lower total lessee claims and less expense incurred for off-lease aircraft in 2007, the Company incurred approximately $944,000 and $1,811,000 less in maintenance expense in the three months and six months ended June 30, 2007, respectively, versus the same periods in 2006.
Due to the recent adoption of FSP AUG AIR-1, the Company was required to discontinue the accrue-in-advance method of accounting for planned major maintenance for financial reporting periods beginning on January 1, 2007. The Company has adopted the direct expensing method, under which actual costs incurred are expensed directly when maintenance is performed and the accrual of non-refundable maintenance reserves from the Company's lessees for planned major maintenance is reflected as income. Because the net effect of recognizing income when maintenance reserves are received and accruing maintenance expense as incurred within any given period will vary, it is likely that the new accounting method will result in uneven effects on the Company's results of operations.
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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