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Aircraft Portfolio | 6 Months Ended
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Nov. 30, 2012
Aircraft Portfolio |
Aircraft Portfolio | 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 November 30, 2012, we had ownership interests in 16 aircraft with joint venture partners. In the second quarter of fiscal 2013, the joint venture partners agreed to sell ten of these aircraft. As of November 30, 2012 and May 31, 2012, our equity investment in aircraft owned with joint venture partners was approximately $41.8 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 receivables for four aircraft which the joint venture has sold and is financing. 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 six-month periods ended November 30, 2012 and 2011, we were paid $0.3 million and $0.4 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 |  | Six Months Ended |
|  | November 30, |  | November 30, |
|  | 2012 |  | 2011 |  | 2012 |  | 2011 |
Sales |  | $ | 21.3 |  | $ | 12.0 |  | $ | 30.1 |  | $ | 21.5 |
Income before provision for income taxes |  | 2.6 |  | 0.6 |  | 5.4 |  | 1.2 |
The joint venture partners sold two aircraft during the second quarter of fiscal 2013 for $13.9 million in revenue.
|  | November 30, |  | May 31, |
|  | 2012 |  | 2012 |
Balance sheet information: |  |  |  |  |
Assets |  | $ | 158.0 |  | $ | 169.6 |
Debt |  | 65.4 |  | 75.6 |
Members’ capital |  | 87.7 |  | 88.8 |
Wholly-Owned Aircraft In addition to the aircraft owned with joint venture partners, we owned two aircraft at November 30, 2012 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:
|  | November 30, |  | May 31, |
|  | 2012 |  | 2012 |
Gross carrying value |  | $ | 22.9 |  | $ | 25.2 |
Debt |  | — |  | (8.4 | )
Net AAR investment |  | $ | 22.9 |  | $ | 16.8 |
During the six-month period ended November 30, 2012, we paid $8.4 million principal amount of our 7.22% debt due July 19, 2012. Information relating to aircraft type, year of manufacture, lessee, lease expiration date and expected disposition upon lease expiration for the 16 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
14 |  | 737-400 |  | Various (1) |  | Malaysia Airlines |  | Various(2) |  | Sale/Re-lease
16 |  |  |  |  |  |  |  |  |  |
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 |  | Donbassaero Airlines |  | 2017 |  | Re-lease
2 |  |  |  |  |  |  |  |  |  |
(1) Five aircraft in 1992; six aircraft in 1993; two aircraft in 1994; and one aircraft in 1997 (2) Ten aircraft in 2013 and four aircraft in 2014. The joint venture partners have entered into an agreement to sell the ten aircraft with leases ending in fiscal 2013 to Malaysian Airlines which is expected to close during fiscal 2013.

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