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Aircraft Portfolio

9 Months Ended

Feb. 29, 2012

Note 11 —Aircraft Portfolio

Within our Aviation Supply Chain 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 February 29, 2012, the Company had ownership interests in 19 aircraft with joint venture partners. As of February 29, 2012, our equity investment in the 19 aircraft owned with joint venture partners was approximately $37,008 and is included in Investment in joint ventures on the condensed consolidated balance sheet. 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 are 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. For the nine-month periods ended February 29, 2012 and 2011, we were paid $500 and $635, 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 condensed 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:

	Three Months Ended				Nine Months Ended
	February 29/28,				February 29/28,
	2012		2011		2012		2011
Sales	$	7,643	$	10,484	$	29,117	$	48,339
Income before provision for income taxes	356		290		1,535		5,792

	February 29,		May 31,
	2012		2011
Balance sheet information:
Assets	$	174,369	$	219,810
Debt	79,499		127,037
Members’ capital	88,624		89,375

Wholly-Owned Aircraft

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

	February 29,			May 31,
	2012			2011
Gross carrying value	$	26,413		$	44,586
Debt	(8,907		)	(14,072		)
Capital lease obligation	—			(6,716		)
Net AAR investment	$	17,506		$	23,798

Information relating to aircraft type, year of manufacture, lessee, lease expiration date and expected disposition upon lease expiration for the 19 aircraft owned with joint venture partners and three wholly-owned aircraft is as follows:

Aircraft Owned through Joint Ventures

		Year		Lease Expiration	Post-Lease
Quantity	Aircraft Type	Manufactured	Lessee	Date (FY)	Disposition
2	767-300	1991	United Airlines	2016 and 2017	Re-lease
3	737-400	1992-1994	Available	—	Sale
14	737-400	1992-1997	Malaysia Airlines	Various(1)	Sale/Re-lease
19

(1) 6 aircraft in 2012; 4 aircraft in 2013 and 4 aircraft in 2014

Wholly-Owned Aircraft

		Year		Lease Expiration	Post-Lease
Quantity	Aircraft Type	Manufactured	Lessee	Date (FY)	Disposition
1	MD83	1989	Meridiana	2012	Disassemble
1	737-300	1997	Small Planet Airlines	2015	Re-lease
1	A320	1997	Donbassaero Airlines	2017	Re-lease
3