How to Pay for Your

NetJets Share
®

Learn about which

financing option
best suits your needs

For more information, call 877-NETJETS(638-5387)

or visit us online at www.netjets.com
NetJets Inc. is a Berkshire Hathaway company BFBG06
 INTRODUCTION
Once you have made the decision to acquire a fractional share and have determined
your aircraft type and share size, your next decision may be how to pay for it. You may be
surprised to learn that there are many options available to you. Although many companies
and individuals purchase their shares outright, more and more Owners choose to lease
or finance their fractional aircraft share. In fact, over half the corporate jets sold in the
United States are leased or financed and this is expected to continue to grow.

NetJets – the pioneer and worldwide leader in fractional aircraft ownership – created
this guide to educate NetJets share Owners and prospective Owners on the many
different types of financing options available. It provides a comprehensive review of
the wide range of leasing and financing options, and it explains how each of these
can provide you with financial flexibility. Of course, we always recommend that you
discuss this information with your financial advisor or accountant.

NetJets can help you customize

a financial solution to make

acquiring your fractional

share an easy and simple

process. We work directly

with our financing partner,

CIT, to offer a wide range of

competitive, easy-to-use

lease and loan options that

can provide you with the

financial flexibility to meet

your specific needs.

©Copyright 2006 NetJets Inc. All rights reserved. No part of this book may be reproduced or transmitted in any form or by
any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system,
without permission in writing from the publisher.

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WHICH FINANCING OPTION WORKS BEST FOR YOU—LEASING OR FINANCING?
Each individual or company has their own set of financial objectives. Some companies
or individuals may choose to lease their share to avoid tapping into their cash reserves
while others may choose to finance their share. To gain a better understanding of which
financing option may best suit your specific financial needs, ask yourself and/or your
financial advisor the following basic questions:
DIFFERENT TYPES OF LEASES
The chart below provides an overview of different financial situations, the leasing
solution, and accounting advantages. We recommend you have a tax advisor or your
accountant review your particular situation.

How do you plan to use your aircraft? FINANCIAL SITUATION SOLUTION ADVANTAGES
If you plan to use your aircraft for business purposes, you may be able to take advantage
of certain tax benefits, best maximized with an outright purchase or loan financing. If you Do you have a balance Operating An Operating Lease transfers the aircraft detail to the foot-
sheet consideration? Lease notes in your financial statement rather than on the balance
will be using the aircraft primarily for personal use, a lease may be a compelling alternative,
sheet. This may improve your financial ratios or help to sat-
whereby the Lessor will pass on the depreciation to you in your lease payment. isfy certain bank covenants. The Lessor transfers only the
Do you want to preserve a line of credit to acquire a share? right to use the share for a fraction of its useful life. Lease
If restrictive bank covenants require your company to maintain certain financial ratios payments can be expensed on your income statement with
or if you prefer to preserve your credit lines for other purposes, leasing may be your no debt on your balance sheet, which may also help preserve
best option. existing lines of credit. You are not considered the owner of
the aircraft for either book or tax purposes but retain all of the
What is your financial status? rights under the NetJets Program as it relates to the service.
Before you choose a lease or loan program to meet your financial needs, you need to
evaluate your financial status. To do this, you need to know whether or not: Would you prefer no Operating An Operating Lease enables you to simply walk away from
• your cash flow is cyclical or predictable. responsibility for the Lease the lease with no further obligations to the Lessor at the end
• you have the ability to take full advantage of depreciation for tax purposes. future value of the of the term, regardless of what the aircraft share is worth.
• you have any accounting (balance sheet) or residual value considerations. aircraft share?

The next two sections will provide you with an overview on leasing and financing. Are you able to use Tax Lease A Tax Lease will meet IRS guidelines and allow the Lessor to
After reading the following information, you should have a better understanding of the the tax benefits of depreciate the share, and will pass on the benefits in a lower
different options available for paying for your share. depreciation? monthly lease payment.

LEASING Can you use the tax Hybrid or The Hybrid or Synthetic Lease is treated as a lease for
Leasing allows a company or individual to secure the benefits of a fractional share benefits, but also prefer Synthetic accounting purposes under FASB guidelines and therefore
without a large cash outlay. By leasing, you pay only for the use of the aircraft, retaining an off balance sheet Lease remains off-balance sheet. For tax purposes, this is treated as
working capital for other uses. Leasing your fractional share can often be less expensive product? a loan, not a lease, and entitles the lessee to be the Owner of
than buying or financing when you consider the effect of taxes and the value of money the share for tax purposes, and entitles you to the tax benefits
over time. Your specific situation and time frame will determine whether leasing of ownership. For some companies, a Synthetic Lease is the
makes sense for you. Leasing may be a good option if you: best of both worlds, from a tax and accounting perspective

• are unable to take advantage of accelerated tax depreciation. Under a lease Is your business Step Down A Step Down Lease allows for specified decreases in pay-
scenario, the Lessor (and Title owner of the share) takes the depreciation credit, subjected to seasonal or Step Up ments at certain dates in the future, while Step Up Leases
and can pass it on to you in lower monthly payments. cash flow fluctuations? Lease allow for specified increases.
• prefer not to be subject to residual value risk. At the end of your contract, the
If you already own your Sale and A Sale and Leaseback enables the Lessor to buy the share
Lessor, as owner, will bear the full asset risk or differential on the aircraft.
share, but want to turn Leaseback from you for its current value, then lease it back to you for
• have certain restrictive bank covenants that prohibit the assumption of additional it into a lease to benefit the balance of the existing Management Agreement term,
debt or require you to maintain certain balances. With leasing, you acquire no from any of the scenarios or possibly over an extended term. A Sale and Leaseback
new debt and you can maintain your cash balances for other uses. The obligation outlined above, then a will transfer title from you to Lessor.
will not appear on your balance sheet but will instead be listed in the footnotes. Sale and Leaseback
Historically, leasing has been the overwhelming preference for publicly traded may be right for you.
companies or for private companies with such bank covenants.
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LOAN FINANCING
If you plan to keep your aircraft for a long time, financing your aircraft share purchase
may be the right solution. Loan financing is also a good option if you have no balance
sheet considerations and a strong cash position. When you finance your aircraft
share, your financing source will perform credit due diligence, and you will have to
decide the parameters of the loan that will work best for your specific situation.
There are many benefits to financing your aircraft share. Financing allows your equity to
increase with each payment and frees up cash for working capital versus an outright
purchase. Payment terms can be matched to your financial needs and goals. Loans can
be used to acquire new shares or to refinance existing shares. In addition, refinancing
enables you to use the equity built up in your aircraft assets to consolidate other
existing aircraft loans you may have into one monthly payment. Your cash balances
may improve and your financing costs may be lowered.
You will have to decide how much to borrow and whether to select a fixed or floating
interest rate. Your ultimate decision will most likely depend on the rates available to
you at that time. You will also have to consider how long you want your loan to
amortize. Through amortization, you will be repaying your loan in equal installments
with some of the payment going toward interest due for the period and the rest going
toward reduction of your principal, or loan balance. As the loan balance goes down,
more of each payment goes toward reducing the principal until it is 100% fully
amortized and you own the share outright at the end of the loan payment schedule.
Or if you renew your Management Agreement, any loan balances or balloons can be
refinanced over the extended period.
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DIFFERENT TYPES OF LOANS
Loan candidates often ask how rate structures work. It is difficult to answer this
question because so many factors are involved in setting interest rates. The size of
your transaction, length of term, and whether you select a fixed or floating rate all
come into play. Another common question is how much of a down payment is
required. The answer depends on the individual’s or company’s credit rating and the
value of the aircraft being considered for purchase. Within these basic guidelines, a
loan can be structured to accommodate a variety of your financial and business
needs. The chart below explains the different types of financing available.
HOW IT WORKS
TYPE OF LOAN
Conventional Financing You can finance any amount up to and including 100% of the share
cost, amortizing to a balloon payment comparable to the aircraft’s
value at the end of the term.
Interest-only Financing Loans with limited cash down can be arranged, where your
payments consist only of the amount of interest accrued. Subject
to credit review, these loans usually require 20-35% cash down.
Sometimes, 70% or more of the share cost may be financed on an
interest-only basis, again subject to credit approval, and up to
100% financing on an interest-only basis may be available to those
with exceptionally low credit risk.
Variable Payments Loan financing, like leasing, can also accommodate seasonal cash
flow fluctuations with step down or step up payments to meet your
company’s business needs. Variable payment periods (monthly,
quarterly, etc.), deferred payment, no down payment, or fixed
monthly payments options can be incorporated as part of any loan
structure.
 FINANCIAL COMPARISON OF LEASE AND LOAN OPTIONS
Below is a general comparison of sample costs between some of the more commonly Residual values of NetJets
used financial products. Actual proposals will be customized to suit your unique needs
and objectives to address individual tax, accounting, cash flow and credit profiles. The shares have historically been
following assumptions apply to a hypothetical share at $500,000 for an outright purchase.
The aircraft is assumed to be newly delivered by the manufacturer and assumes a standard very strong in comparison to
five year term. Note: With NetJets, you are free to sell back your share without penalty at
any time after two or three years depending on the aircraft type. the general aviation market-

place and to other fractional

Outright Purchase – The benefit of
ownership is that you have no debt
associated with the asset. However
there are opportunity costs and your
capital may be put to better use
since there are other means avail-
able to pay for your share.
Initial outlay Monthly cost Total payments End of term options
programs. Because NetJets buys
$500,000 N/A $500,000 You own the share and can either
sell it back to NetJets or renew the most desirable aircraft and
your share over a new extended
period at the end of 5 years. maintains them well, they’ve
historically held a significant

Typical Operating Lease –The
benefits of leasing include: low monthly
payments, potential tax benefits,
“off-balance sheet” financing, and
you do not bear any residual risk at
end of term, thereby hedging any
downturn in the market.
Conventional Financing Loan – The $0
benefits of conventional financing
are that you may finance up to 100%
of the share cost and the value of
the share drives the amortization.
The asset would appear on your
balance sheet as an asset and liability.
If the share is used for business
purposes, then the asset can be
depreciated on an accelerated basis.
Fully Amortizing Loan
Interest Only Loan
$0 $4,950 per $297,000 You can purchase the share for its portion of their value.
month (fixed then Fair Market Value from CIT,
payment you can walk away having made
subject to your lease payments, or you can
standard renew the lease subject to a renewal
indexing) of the Management Agreement Another alternative to fly with NetJets
with NetJets.
An alternative for flyers who have flying needs less than 50 hours per year and/or are
$5,313.40 $643,490 You can sell the share back to not sure of their long term requirements, is the Marquis Jet Card. With the Marquis
amortizing NetJets and use the proceeds to Jet Card, you can have access to the NetJets fleet in 25-hour increments for a one-time
to 66% pay off the loan, or you can renew prepaid lease. Each Marquis Jet Card represents a sublease of a NetJets fractional
balloon in the Management Agreement with share for which Marquis Jet Partners is the Owner. All Marquis Jet Card flights are
month 60. NetJets and refinance the balloon
operated by NetJets under its FAR Part 135 Air Carrier Certificate. By purchasing a
($330,000) with the lender.
Marquis Jet Card, you have no responsibility for the aircraft value at the end of the
term and no long term commitment, but will pay more per hour of flight time.
CONSULT YOUR ACCOUNTANT OR FINANCIAL ADVISOR
$0 $9,783 $586,980 You own the share and will have no
Once you have had a chance to review this guide, we recommend you share the
balloon payment due at maturity,
so you have full equity in the share information with your accountant or financial advisor who can give you more specific
value – you can sell the share to information about the various options and help you determine the one that best
NetJets or you can renew your maximizes your resources and uses of capital. No one structure is best for all
Management Agreement. individuals or all companies, and NetJets does not advocate one over another. Only
you and your financial advisor can decide what is right for you.
25-35% $2,021 $619,240 You own the share but have the full
down (includes 25% principal balance due and payable
down and the at maturity – you can sell the share
In short, an outright purchase is not your only option to fly with NetJets. We would be
principal back to NetJets or renew the more than happy to help you customize a financial solution that works for you.
balance due Management Agreement, in which NetJets has always been about choice. We offer the most aircraft choices, the ability to
at maturity) case, the principal balance can be exchange between aircraft types, and programs in the U.S., Europe and the Middle
refinanced under the new term. East. Similiarly, you can choose the financial terms that are right for you.

6 7
THE NETJETS-CIT PARTNERSHIP
This guide was written in cooperation with CIT, NetJets' financing partner. CIT is a
national leader in the highly specialized fractional aircraft leasing and financing
marketplace with more experience arranging fractional aircraft financing than any other
company. They can assist you in creating a lease structure or financing solution that
will enable you to make payments that are in line with your unique business or
personal situation.

ABOUT NETJETS
NetJets Inc. (formerly Executive Jet, Inc.) was founded in 1964 as the first private
business jet charter and aircraft management company in the world. The NetJets
program was created in 1986 by Richard Santulli, the Chairman and CEO of NetJets
Inc., as the world’s first fractional aircraft ownership program. In 1998, after being a
satisfied NetJets customer for three years, Warren Buffett, Chairman and CEO of the
Berkshire Hathaway company, acquired NetJets Inc.

NetJets is the pioneer and worldwide leader in fractional aircraft ownership programs.
The NetJets fleet is the largest and most diversified. It includes 14 of the most popular
business jets. NetJets is the only worldwide fractional ownership program and is
available in the U.S., Europe, and the Middle East. NetJets has the most experience of
any fractional program provider. Last year, NetJets flew over 300,000 flights to more
than 140 countries for its Owners.

ABOUT CIT
CIT had closed nearly $700 million in NetJets share transactions by 2004, with over
400 of our Owners taking advantage of their products and services to date. CIT (NYSE:
CIT) is a member of both the Fortune 500 and the S&P 500, with origins dating back
to 1908. Today, the company manages $60 billion in assets, and has a market
capitalization exceeding $9 billion. CIT has over 6,000 employees and has offices
throughout North America and Europe.

NetJets Owners are free to work with any financing sources they wish. However, since
1995, CIT has handled more than 90% of NetJets financing transactions, principally
because they offer the widest range of easy to use products with the fewest limitations,
delivered with the world class service NetJets clients expect and require.

Because of CIT’s level of expertise in fractional aircraft lending with NetJets, they have
the ability to lend you up to 100% of the share cost. As with any financing arrangement,
CIT considers your credit worthiness and will perform a simple and standard credit due
diligence and review before issuing you a timely credit decision.

For more information, call:

NetJets Management Ltd. and NetJets Middle East are subsidiaries or affiliates of NetJets Inc. The Gulfstream Large Cabin Fleet
is operated by NetJets International. The BBJ is operated by NetJets Large Aircraft Company. All other aircraft offered by NetJets
1-877-NETJETS (877-638-5387) in the United States are operated by NetJets Aviation. Each of these operating companies is a wholly owned subsidiary of NetJets
Inc. All aircraft offered by NetJets in Europe are operated by NetJets Transportes Aéreos, SA, an E.U. air carrier. The Marquis Jet
or visit www.netjets.com Card Program is operated by NetJets under its FAR Part 135 Air Carrier Certificate. While the representations contained in this
guide are accurate, the actual terms and conditions are subject to the definitive agreements with individual NetJets Owners.
NetJets is a registered trademark of NetJets Inc.
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