Note 11 —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 February 28, 2013, we had ownership interests in four aircraft with joint venture partners. As of February 28, 2013 and May 31, 2012, our equity investment in aircraft owned with joint venture partners was approximately $26.7 million and $41.3 million, respectively, and is included in Investment in joint ventures on the condensed consolidated balance sheet. Included in these amounts are notes receivables for six 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 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 28, 2013 and February 29, 2012, we were paid $0.4 million and $0.5 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 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 28/29,				February 28/29,
	2013		2012		2013		2012
Sales	$	83.0	$	7.6	$	113.1	$	29.1
Income before provision for income taxes	6.7		0.4		12.1		1.5

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

	February 28,		May 31,
	2013		2012
Balance sheet information:
Assets	$	93.5	$	169.6
Debt	29.4		75.6
Members’ capital	60.5		88.8

Wholly-Owned Aircraft

In addition to the aircraft owned with joint venture partners, we owned two aircraft at February 28, 2013 and at May 31, 2012, for our own account that are considered wholly-owned. Our investment in the two wholly-owned aircraft, after consideration of financing, is comprised of the following components:

	February 28,		May 31,
	2013		2012
Gross carrying value	$	22.3	$	25.2
Debt	—		(8.4		)
Net AAR investment	$	22.3	$	16.8

During the nine-month period ended February 28, 2013, we paid $8.4 million principal amount of our 7.22% note due July 19, 2012.

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 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
2	737-400	1993 and 1997	Malaysia Airlines	2013	Sale/Re-lease
4

Wholly-Owned Aircraft

		Year		Lease Expiration	Post-Lease
Quantity	Aircraft Type	Manufactured	Lessee	Date (FY)	Disposition
1	737-300	1997	Small Planet Airlines	2015	Re-lease
1	A320	1997	Available	—	Re-lease
2