9. Aircraft Portfolio

Within our Aviation Services segment, we own commercial aircraft with joint venture partners as well as aircraft that are wholly-owned. These aircraft are available for lease or sale to commercial air carriers.

Aircraft Owned through Joint Ventures

As of May 31, 2013 and 2012, we had ownership interests in four and 18 aircraft, respectively, with joint venture partners. As of May 31, 2013 and 2012, our equity investment in the aircraft owned with joint venture partners was approximately $27.5 million and $41.3 million, respectively, and is included in Investment in joint ventures on the Consolidated Balance Sheet. Included in the May 31, 2013 amount is notes receivable in the amount of $15.3 million for aircraft which the joint ventures have sold. Our aircraft joint ventures represent investments in limited liability companies that are accounted for under the equity method of accounting. Our membership interest in each of these limited liability companies is 50%, and the primary business of these companies is the acquisition, ownership, lease and disposition of certain commercial aircraft. Aircraft were purchased with cash contributions by the members of the companies and debt financing provided to the limited liability companies on a limited recourse basis. Under the terms of servicing agreements with certain of the limited liability companies, we provide administrative services and technical advisory services, including aircraft evaluations, oversight and logistical support of the maintenance process and records management. We also provide remarketing services with respect to the divestiture of aircraft by the limited liability companies. During fiscal 2013, 2012 and 2011, we were paid $0.5 million, $0.6 million and $1.3 million, respectively, for such services. The income tax benefit or expense related to the operations of the ventures is recorded by the member companies.

Distributions from joint ventures are classified as operating or investing activities in the Consolidated Statements of Cash Flows based upon an evaluation of the specific facts and circumstances of each distribution.

Summarized financial information for these limited liability companies is as follows:

	For the Year Ended May 31,

	2013		2012		2011
Sales	$	115.2	$	45.7	$	65.2
Income before provision for income taxes		13.5		3.7		7.4

During the third quarter of fiscal 2013, the joint ventures partners sold ten aircraft for $64.0 million, and during the second quarter of fiscal 2013 the joint venture partners sold two aircraft for $13.9 million.

	May 31,

	2013		2012
Balance sheet information:
Assets	$	91.3	$	169.6
Debt		26.8		75.6
Members' capital		61.4		88.8

Wholly-Owned Aircraft

In addition to the aircraft owned with joint venture partners, we own two aircraft at May 31, 2013 and 2012 for our own account that are considered wholly-owned. Our investment in the wholly-owned aircraft, after consideration of financing, is comprised of the following components:

	May 31,

	2013		2012
Gross carrying value	$	23.0	$	25.2
Debt		—		(8.4	)

Net AAR investment	$	23.0	$	16.8

We repaid $8.4 million principal amount of our 7.22% note when due in July 2012.

Included in Other on the May 31, 2013 Consolidated Balance Sheet is $10.2 million of notes receivable due from customers for aircraft sold from our wholly-owned portfolio.

Information relating to aircraft type, year of manufacture, lessee, lease expiration date and expected disposition upon lease expiration for the four aircraft owned with joint venture partners and two wholly-owned aircraft is as follows:

Aircraft owned with joint venture partners

	Aircraft Type	Year Manufactured	Lessee	Lease Expiration Date (FY)	Post-Lease Disposition

2	767-300	1991	United Airlines	2016 and 2017	Re-lease
2	737-400	1993 and 1997	Malaysia Airlines	2014	Sale/Re-lease

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Wholly-owned aircraft

	Aircraft Type	Year Manufactured	Lessee		Post-Lease Disposition

1	737-300	1997	Small Planet Airlines	2015	Re-lease
1	A320	1997	Aviatrans K	2016	Re-lease

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