SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File
December 31, 1996 Number 0-15643
NATIONAL LEASE INCOME FUND 6 L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3275922
(State or other jurisdiction (IRS Employer
of incorporation or organization Identification Number)
411 West Putnam Avenue, Greenwich, CT 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code 203-862-7000
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST, $500 PER UNIT
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES [ X ] NO [ ]
There is no public market for the Limited Partnership Units.
Accordingly, information with respect to the aggregate market value of Limited
Partnership Units held by non-affiliates of Registrant has not been supplied.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X]. Documents Incorporated by Reference
Location in Form 10-K in Which
Document Document is Incorporated
-------- ------------------------
Registrant's Prospectus, dated Parts I, II and III
December 31, 1986 as supple-
mented on March 13, 1987,
July 6, 1987, September 1,
1987, November 30, 1987,
March 25, 1988 and May 16, 1988 Exhibit Index: page IV-1
<PAGE>
PART I
Item 1. Business
General
Registrant was organized as a Delaware limited partnership on July 11, 1986 with
ALI Equipment Management Corp. (the "Managing General Partner"), ALI Capital
Corp. (the "Corporate General Partner"), and Z Square G Partners II (the
"Associate General Partner"), as general partners. The Associate General
Partner, the Managing General Partner and the Corporate General Partner are
collectively referred to herein as the "General Partners".
Through November 2, 1994, the Managing General Partner and the Corporate General
Partner were wholly-owned subsidiaries of Integrated Resources, Inc.
("Integrated"). On November 3, 1994, as a result of the consummation of the
reorganization plan relating to Integrated's bankruptcy, indirect ownership of
the Managing General Partner and the Corporate General Partner was purchased by
Presidio Capital Corp. ("Presidio"). Presidio is managed by Presidio Management
Company, LLC ("Presidio Management"), a company controlled by a director of
Presidio. Presidio is also party to an administrative services agreement with
Wexford Management LLC ("Wexford") pursuant to which Wexford is responsible for
the day-to-day management of Presidio and, among other things, has authority to
designate directors of the Managing General Partner, the Corporate General
Partner and the Associate General Partner. As of February 28, 1995, Presidio
Boram Corp., a subsidiary of Presidio, replaced Z Square G Partners II as the
Associate General Partner.
In an offering which terminated on June 30, 1988, Registrant sold 300,000 units
of limited partnership interest (the "Units") for gross proceeds aggregating
$150,000,000. As of December 31, 1988, substantially all of the net proceeds
available for investment had been invested in equipment. Reference is made to
the Prospectus of Registrant, dated December 31, 1986, as supplemented by
supplements dated March 13, 1987, July 6, 1987, September 1, 1987, November 30,
1987, March 25, 1988 and May 16, 1988 (the "Prospectus"). The Prospectus is
incorporated by reference (see Exhibit 28).
Registrant owns and leases to third parties equipment manufactured by
non-affiliated companies. The original equipment owned by Registrant, consisting
of aircraft and related aircraft engines, equipment for management information
systems, motor coaches and telecommunication switching equipment, was originally
leased to various lessees for periods of 36 to 96 months. As of December 31,
1996, Registrant had acquired equipment at a cost of approximately $189,236,000
(of which approximately $24,264,000 had been originally accounted for as
financing leases for financial statement purposes) (all inclusive of acquisition
fees and expenses), of which approximately $131,625,000 of the purchase prices
represented the investment of the original net offering proceeds, approximately
$39,229,000 was provided by nonrecourse financing and approximately $18,382,000
was provided from cash from operations and cash from sales generated in excess
of distributions through 1996. As of December 31, 1996, Registrant had sold or
disposed of equipment with an original cost of approximately $132,223,000 (of
which approximately $24,264,000 had been originally accounted for as financing
leases).
In May 1992, the Board of Directors of the Managing General Partner of
Registrant decided to discontinue reinvestment in additional equipment and to
distribute cash from operations and sales not required as reserves commencing
with the quarter ended June 30, 1992. This was due to the lower cash flow level
caused by the continued decline in interest rates and the corresponding decline
<PAGE>
in lease rates, compounded by higher than anticipated technological obsolescence
resulting in lower residual values, as well as by the weakness in the airline
industry resulting in financial difficulties for various lessees and a decline
in the value of all of Registrant's aircraft. Acquisitions during the years
ended December 31, 1996, 1995 and 1994 were made to satisfy prior purchase
commitments, including modifications made to certain aircraft and upgrades to
equipment currently on lease.
At January 1, 1996, Registrant's remaining portfolio (inclusive of approximately
$413,000 of equipment originally accounted for as financing leases) consisted of
equipment with an original cost of approximately $59,495,000 (net carrying value
of approximately $14,058,000), of which approximately $4,440,000 (fully
depreciated at January 1, 1996) was off-lease and equipment with an original
cost of approximately $321,000 (fully depreciated at January 1, 1996) was leased
on a month-to-month basis.
During the year ended December 31, 1996 (the "1996 Period"), Registrant sold or
disposed of equipment originally purchased for prices aggregating approximately
$2,384,000 (of which approximately $413,000 had been originally accounted for as
financing leases) and which had an aggregate net carrying value at the time of
disposition of approximately $296,000 (which included the net investment in
equipment originally accounted for as financing leases) (net of allowances for
equipment impairment aggregating approximately $229,000 provided in prior
periods with respect to such equipment), for sale proceeds of approximately
$249,000, or approximately $.82 per Unit. Additionally, Registrant generated
distributable cash from operations of approximately $3,063,000, or approximately
$10.11 per Unit, during 1996. Registrant made cash distributions of $9.85 per
Unit for the 1996 Period.
At December 31, 1996, equipment with an original cost of approximately
$57,013,000 (net carrying value of approximately $11,477,000) remained in
Registrant's portfolio, of which approximately $52,637,000 (net carrying value
of approximately $11,477,000 was generating rentals of approximately $240,000
per month (approximately $2,000 of which is generated by month-to-month leases).
As of December 31, 1996, Registrant was the owner of four aircraft and related
engines as well as two additional aircraft engines, which in the aggregate
represented nearly 100% of its remaining equipment on an original cost basis.
Included within the foregoing equipment are two Rolls Royce engines (the
"Hawaiian Engines") that had previously been leased to Hawaiian Airlines, Inc.
("Hawaiian") with an original purchase cost of approximately $4,376,000 (at
December 31, 1995, the Hawaiian Engines were fully depreciated) which are
currently off-lease. See "Recent Developments -- Hawaiian Airlines, Inc." below.
During 1997, excluding rents on a month-to-month basis and future renewals,
Registrant anticipates receiving approximately $2,762,000 of rentals generated
by non-cancelable leases accounted for as operating leases which represents
approximately $9.11 per Unit. The foregoing per Unit amount does not reflect
deductions for operating expenses and is not sufficient to maintain previous
distribution levels. Distribution levels may fluctuate based upon remarketing
success, the proceeds generated by the sales of significant assets (such as
aircraft) and requirements for operating reserves, if any. Of the foregoing
rentals, approximately $1,662,000 is associated with leases with firm terms
ending in 1998 and approximately $1,100,000 is associated with leases that will
expire during 1997. Additionally, equipment with an original cost of
approximately $4,376,000 was off-lease and equipment originally purchased for
<PAGE>
approximately $194,000 (fully depreciated at December 31, 1996) was leased on a
month-to-month basis. For the 1996 Period, Registrant provided allowances for
equipment impairment aggregating $50,000 to recognize the loss in value with
respect to certain equipment. Such impairment was measured based on current
appraisals, a view of the markets and an analysis of the leases encumbering such
equipment. The net carrying values above reflect such provisions.
Description of Business
See the material contained in the Prospectus under the heading INVESTMENT
OBJECTIVES AND POLICIES, which is incorporated herein by reference, for a
description of the business of Registrant.
Registrant's revenues from equipment are derived primarily from lease payments
from lessees. None of such lessees are affiliated with Registrant. During the
1996 Period, lease payments from the following lessees were the source of 10% or
more of Registrant's leasing revenues: Continental Micronesia, Inc. ("Air
Micronesia") (54%) and Southwest Airlines Co. ("Southwest") (39%).
Competition
The leasing industry offers users an alternative to the outright purchase of
virtually all types of equipment and has traditionally been a highly competitive
industry, although competitive conditions vary depending on the type of
equipment in question. Although Registrant's leasing activities are diminishing
because it is in the liquidating stage of its operating cycle, Registrant
nonetheless competes with manufacturers which provide leasing programs as well
as with other lessors of similar equipment as Registrant attempts to remarket
its equipment coming off-lease.
The market for the types of equipment in which Registrant has invested can be
affected by factors such as changes in manufacturers' pricing policies,
technological advances in equipment and economic conditions in the industries in
which Registrant leases equipment. As a result, it is impossible to forecast
with any certainty what residual values will be available on any individual item
or type of equipment.
Registrant has encountered severe competition in attempting to re-lease its
aircraft as they have come off-lease due to a surplus in the market of
narrow-body aircraft similar to four of the aircraft owned by Registrant. The
substantial costs required to maintain and bring used aircraft into compliance
with United States Federal Aviation Administration ("FAA") noise and maintenance
requirements are the primary factors which have adversely affected the narrow
body aircraft market. In addition, in re-leasing aircraft, Registrant's aircraft
will also have to compete with newer, more fuel efficient aircraft which comply
with the FAA noise requirements. Registrant also believes that as a result of
the factors listed above there has been a significant decline in the re-sale
value of narrow-body aircraft of the types owned by Registrant.
As Registrant's aircraft come off-lease, Registrant may need to use a portion of
its operating reserves and/or its cash flow, which would otherwise be available
for distribution, to upgrade or enhance these aircraft if Registrant determines
that such expenditures are in its best interest in order to maximize the
remarketing value. Registrant is currently evaluating strategies, including
potential engine upgrades for certain aircraft, to increase marketability and is
reviewing its ability to pay for bridging costs in order to facilitate
remarketing. Upgrades to aircraft may include "Hush Kits", which reduce the
<PAGE>
noise levels of engines. The estimated costs of the Hush Kits range from
approximately $1,200,000 for Boeing 737 aircraft to approximately $2,000,000 for
Boeing 727 aircraft. Furthermore, because of market conditions, Registrant may
be required to bear some of the related costs of compliance with mandatory
federal regulations covering maintenance and upgrading of aging aircraft. In
determining what may be in its best interests, Registrant's ability to make
distributions may be impacted by its obligation to pay such costs.
See Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations", and Item 8, "Financial Statements and Supplemental
Data", for further information.
In addition, there are numerous other potential competitors, including but not
limited to public and private partnerships affiliated with Registrant, which are
seeking to sell or lease equipment, some of which have greater financial
resources and more experience than Registrant or the Managing General Partner.
Employees
Registrant does not have any employees. Wexford currently performs accounting,
secretarial, transfer and administrative services for Registrant. Wexford also
performs similar services for other affiliates of the Managing General Partner.
Integrated Resources Equipment Group, Inc. ("IREG"), which, as a result of the
Acquisition, became an indirect subsidiary of Presidio, manages Registrant's
equipment portfolio pursuant to a management agreement. See Item 10, "Directors
and Executive Officers of Registrant", Item 11, "Executive Compensation", and
Item 13, "Certain Relationships and Related Transactions".
In April 1995, the Managing General Partner and certain affiliates entered into
an agreement with Fieldstone Private Capital Group, L.P. ("Fieldstone") pursuant
to which Fieldstone performs certain management and administrative services
relating to Registrant as well as certain other partnerships in which the
Managing General Partner serves as general partner. Substantially all costs
associated with the retention of Fieldstone are paid by the Managing General
Partner.
Foreign Operations
Registrant owns two aircraft which are currently being operated by Air
Micronesia in Southeast Asia. (See Item 1, "Business" and Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations").
<PAGE>
Item 2. Properties
The following table sets forth the equipment owned by Registrant as of March 1,
1997 (see "General" under Item 1 hereof):
<TABLE>
<CAPTION>
Type of Equipment Date of Purchase Type of Ownership or Interest
----------------- ---------------- -----------------------------
<S> <C> <C>
Equipment for Management Information Systems June 1, 1988 Full ownership, not subject to any lien.
- ---------------------------------------------- ------------------------------------------ ----------------------------------------
Two Rolls Royce Aircraft Engines (A) March 31, 1987 and September 30, 1987 Full ownership, not subject to any lien.
- ---------------------------------------------- ------------------------------------------ ----------------------------------------
Two Boeing 727-227 Aircraft July 1987 Full ownership, not subject to any lien.
- ---------------------------------------------- ------------------------------------------ ----------------------------------------
Two Boeing 737-200 Aircraft February 28, 1989 Full ownership, not subject to any lien.
- ---------------------------------------------- ------------------------------------------------------------------------------------
</TABLE>
(A) See Item 1, "Business", Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Item 8, "Financial Statements
and Supplemental Data" for information regarding such engines.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
There is no developed public market for the Units of Registrant.
As of March 1, 1997, there were approximately 10,300 record holders of Units of
Registrant, owning an aggregate of 300,005 Units.
During the past two fiscal years, Registrant has made the following cash
distributions with respect to the Units to holders thereof as of the dates set
forth below in the amounts set forth opposite such dates:
<TABLE>
<CAPTION>
Distribution with
Respect to Quarter Ended Amount of Distribution Per Unit(1)
------------------------ ----------------------------------
1996 1995
------- -------
<S> <C> <C>
March 31 $ 2.50 $ 10.00
------------------------------------------------------------------
June 30 $ 2.35 $ 8.00
------------------------------------------------------------------
September 30 $ 2.50 $ 14.00
------------------------------------------------------------------
December 31 $ 2.50 $ 4.00
------------------------------------------------------------------
<PAGE>
(1) The amounts listed represent distributions of cash from operations and cash
from sales. Reference is made to the Partnership Agreement of Registrant,
included as Exhibit A to the Prospectus, for information with respect to
the determination of cash from operations and cash from sales.
</TABLE>
See Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for additional information relating to Registrant's
ability to make future cash distributions.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues (2) ......... $ 3,274,777 $ 4,794,552 $ 10,230,235 $ 12,557,663 $ 15,678,881
Net Income (Loss)
(2) (3) (4) (5) $ 235,176 $ 1,732,664 $ 2,258,086 $ (5,791,665) $ (9,881,777)
Net income (Loss)
Per Unit (1) .. $ .78 $ 5.72 $ 7.45 $ (19.11) $ (32.61)
Distribution Per Unit $ 9.85 $ 36.00 $ 19.50 $ 30.00 $ 45.63
Total Assets ......... $ 15,492,237 $ 19,014,283 $ 29,268,853 $ 37,307,008 $ 58,418,191
Long-Term Obligations $ -- $ -- $ -- $ 3,725,300 $ 10,659,787
Total Partners' Equity $ 14,384,855 $ 17,134,577 $ 26,311,188 $ 29,962,292 $ 44,845,018
(1) Calculated on a weighted average basis.
(2) Included in these amounts are $218,863, $380,660, $225,255, $138,460 and
$267,558 of interest income from short-term investments for the years
ended December 31, 1996, 1995, 1994, 1993 and 1992, respectively.
Additionally, revenues include interest income from leases accounted for
under the financing method of $776, $43,006, $251,463, $405,470 and
$628,156, for the years ended December 31, 1996, 1995, 1994, 1993 and
1992, respectively. Such amounts are included in Net Income (Loss).
(3) Reflected in such amounts are provisions for equipment impairments
aggregating $50,000, $8,000, $1,740,000, $11,805,000 and $12,081,000, for
the years ended December 31, 1996, 1995, 1994, 1993 and 1992,
respectively, with respect to certain equipment.
(4) Included in such amounts are (losses)/gains on the disposition of
equipment of $(46,643), $562,932, $54,420 and $248,275, for the years
ended December 31, 1996, 1995, 1994 and 1993, respectively. Additionally,
the Registrant realized a gain from the sale of the marketable securities
of $398,377 for the year ended December 31, 1995.
(5) Included in such amounts is a loss on lease restructuring of $1,024,677
for the year ended December 31, 1992. Additionally, included in such
amounts are provisions for doubtful accounts of $202,626, $994,660 and
$431,000 for the years ended December 31, 1994, 1993 and 1992,
respectively. In addition, included in such amounts is other income
relating to net proceeds, received as a result of a bankruptcy
settlement, of $1,770,419 for the year ended December 31, 1993.
<PAGE>
See Item 8, "Financial Statements and Supplemental Data" and Item 7,
"Management's Discussion and Analysis of Financial Condition and Results
of Operations," for a discussion of certain dispositions of equipment
which might cause the data reflected herein not to be indicative of
Registrant's future financial condition or results of operations.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
In May 1992, the Board of Directors of the Managing General Partner of
Registrant decided that it was in the best interest of Registrant and its
investors to terminate Registrant's policy of reinvesting in additional
equipment and to distribute thereafter cash from operations and sales not
required as reserves, commencing with the quarter ended June 30, 1992. This was
due to the lower cash flow level caused by the decline in lease rates compounded
by higher than anticipated technological obsolescence resulting in lower
residual values, as well as by the weakness in the airline industry resulting in
financial difficulties for various lessees and a decline in the value of all of
Registrant's aircraft. Acquisitions during the years ended December 31, 1996,
1995 and 1994 were made to satisfy prior purchase commitments, including
modifications made to certain aircraft and upgrades to equipment currently on
lease.
The leasing arrangements entered into by Registrant with respect to its
equipment generally provide for fixed or minimum rentals, and as such, provide
reasonable assurance that all of Registrant's operating needs, such as
administrative costs and management fees, will be met in the foreseeable future.
During the 1996 Period, Registrant generated distributable cash from operations
of approximately $3,063,000 or approximately $10.11 per Unit and distributable
sales proceeds of approximately $249,000, or approximately $.82 per Unit.
Registrant made cash distributions to limited partners with respect to the 1996
Period of $9.85 per Unit, which was consistent with the May 1992 decision to
distribute all cash generated not required for reserves. As of December 31,
1996, Registrant had operating reserves of approximately $1,604,000 (or
approximately $5.29 per Unit) which was comprised of undistributed cash from
operations and sales of approximately $104,000, as well as the original working
capital of $1,500,000 (1% of original offering proceeds). Although expense
levels have been reduced, Registrant anticipates that most of its future
administrative expenses (i.e., accounting and investor services including
printing) are fixed and thus will not decrease significantly during Registrant's
future operating periods. Other expenses such as insurance and fees to
affiliates will decline during such period.
Set forth below is a description of various transactions which have impacted the
liquidity of Registrant during 1996 and 1995:
(i) On September 21, 1993, Hawaiian Airlines, Inc. ("Hawaiian"),
filed for reorganization under Chapter 11 of the United States
Bankruptcy Code. Hawaiian had leased two Rolls Royce aircraft
engines (the "Hawaiian Engines"), owned by the Registrant,
under two separate engine leases (the "Hawaiian Leases"). The
Hawaiian Engines were not encumbered by third party debt.
<PAGE>
Hawaiian had suffered serious financial difficulties since at
least 1990 and had, through June 1994, made rental payments
that were less than the scheduled amounts due, based on a
series of proposed restructuring plans whereby lease rentals
under the Hawaiian Leases were reduced. Hawaiian continued to
remit weekly payments relating to the Hawaiian Engines through
June 9, 1994.
On June 27, 1994, Hawaiian filed a motion with the bankruptcy
court to reject the Hawaiian Leases and on July 11, 1994, the
bankruptcy court approved such motion.
The Registrant had filed proofs of claims in Hawaiian's
bankruptcy case. Hawaiian emerged from bankruptcy on September
12, 1994. Hawaiian and the Registrant entered into an
agreement to settle the Registrant's claims with respect to
the Hawaiian Engines. Hawaiian has settled the claims through
the issuance of Hawaiian stock to the Registrant. In June
1995, the Registrant received approximately 86,000 shares of
Class A Common stock in the reorganized Hawaiian Airlines,
Inc., in consideration of its general unsecured claims filed
against Hawaiian. During 1995, the Registrant sold all shares
for net proceeds aggregating $398,377. The Registrant
anticipates that it will encounter severe competition in
attempting to sell the Hawaiian Engines due to their condition
as well as due to a surplus in the market with respect to such
engines.
At December 31, 1996, the Hawaiian Engines (net of allowances
for equipment impairment aggregating $2,595,000 previously
provided) were fully depreciated.
(ii) On March 31, 1993, the Registrant leased two Boeing 727-227
Advance aircraft to Continental Airlines, Inc. ("Continental")
for a term of approximately 69 months to be used by
Continental's Air Micronesia operation (the "Air Mike
Leases").
Such aircraft had been originally leased to Alaska Airlines,
Inc. ("Alaska") through August 14, 1992. In conjunction with
the return of such aircraft, it was determined that certain
physical attributes of the aircraft exceeded the related
minimum return conditions provided for in the leases. As a
result, the Registrant paid Alaska approximately $647,000 to
reflect the enhanced value of the aircraft. Such amount has
been reflected on the balance sheets on a gross basis, net of
amortization, at December 31, 1996 and December 31, 1995, as
Deferred Costs and will be amortized over the term of the
lease renewal with Continental.
Each Air Mike Lease provides for a monthly base rent of
$69,250, subject to adjustments for rental credits relating to
initial modifications (the "Initial Modifications") which
include Traffic Collision Avoidance Systems, windshear
detection and upgraded avionics, aggregating approximately
$1,308,000 for both aircraft. Such modifications were funded
by Continental and are being repaid by the Registrant through
the application of rental credits such that Continental will
recoup the aggregate cost of the Initial Modifications over a
<PAGE>
36-month period with interest at 9.31% per annum. As of
December 31, 1996, the remaining balance of credit to be
applied by Continental towards such modifications costs was
approximately $100,000 and was included on the balance sheets
as Deferred Aircraft Upgrade Payable.
Further Continental has made certain other modifications to
the aircraft which the Registrant has agreed to provide
financing for through credits ("Lessor Financing Credits")
against base rental payments due under the Air Mike Leases.
The lessee is currently repaying Lessor Financing Credits
through monthly payments which are being amortized at the rate
of 9.31% per annum over 36 months. Through December 31, 1996,
the Registrant had provided financing aggregating
approximately $1,443,000. Such amount, net of amounts repaid,
was reflected on the balance sheet at December 31, 1996 as
Note Receivable. At December 31, 1996, the net carrying value
of both aircraft aggregated approximately $7,963,000 (net of
allowances for equipment impairment aggregating approximately
$10,000,000 provided in prior periods).
(iii) On November 30, 1994, the leases with Southwest Airlines, Co.
("Southwest") of two Boeing 737-200 aircraft (the "Southwest
Aircraft") were scheduled to expire in accordance with their
original terms. The associated nonrecourse debt was repaid
upon the receipt of the final rental installment for the
initial lease term. Southwest and the Registrant agreed to
extend Southwest's leases for one additional year for a
monthly rent of approximately 28% of the original lease rate.
On November 30, 1995, the extension with Southwest was
scheduled to expire in accordance with its terms, and
Southwest and the Registrant agreed to extend the leases for
two additional years at 125% of the current lease rate. At
December 31, 1996, the net carrying value of the Southwest
Aircraft aggregated approximately $3,514,000 (net of
allowances for equipment impairment aggregating of $10,400,000
previously provided).
(iv) On October 31, 1994, the lease with Simmons Airlines, Inc.
("Simmons") of two Shorts 360 aircraft (the "Simmons
Aircraft") expired in accordance with its original terms. The
associated nonrecourse debt was repaid upon the receipt of the
final rental installment. In conjunction with the return of
the Simmons Aircraft, it was determined that certain
attributes of two of the engines were below certain
thresholds. The Registrant contributed approximately $133,000
in order to enhance the value of such engines. In April 1995,
the Simmons Aircraft were sold to an unaffiliated third party
for net sales proceeds of $1,425,000. Such aircraft had net
carrying values aggregating approximately $1,493,000 (net of
allowances for equipment impairment aggregating of $2,930,000
previously provided) when sold.
(v) On July 31, 1995 the lease with Aloha Airlines, Inc. ("Aloha")
for a Boeing 737-200 Advanced aircraft was scheduled to expire
in accordance with its original terms. The Registrant and
Aloha entered into a short-term lease extension of a maximum
of two and a half months terminating on October 15, 1995.
<PAGE>
During the lease extension Aloha paid rent on a utilization
arrangement based on $225 per cycle with a monthly minimum of
$53,500 and a monthly maximum of $90,000. The Registrant had
the option, which it exercised, to early terminate the lease
on September 7, 1995. Aloha paid the Registrant a financial
adjustment of $515,000 in lieu of existing return conditions
provided for in the lease. Aloha also made an additional
payment of $15,000 for a damaged Auxiliary Power Unit. In
September 1995, the Registrant sold the Aloha aircraft to an
unaffiliated third party for net sales proceeds of $2,461,000.
Such aircraft had a net carrying value of approximately
$2,719,000 (net of allowances for equipment impairment
aggregating of $3,500,000 previously provided) when sold.
As of December 31, 1996, Registrant was the owner of four aircraft and related
engines as well as two additional aircraft engines, which in the aggregate
represented approximately 100% of its remaining equipment, on an original cost
basis. Such foregoing aircraft and engines had an original cost of approximately
$56,820,000 (net carrying value of approximately $11,477,000). All associated
nonrecourse debt related to the aircraft has been repaid.
The substantial costs required to maintain and bring used aircraft into
compliance with FAA noise and maintenance requirements are the primary factors
which have adversely affected the narrow body aircraft market. Registrant has
encountered severe competition in attempting to re-lease its aircraft as they
have come off lease due to a surplus in the market of narrow-body aircraft
similar to four of the aircraft owned by Registrant. Additionally, there is
competition from newer and more fuel efficient aircraft which comply with the
FAA noise requirements. Registrant also believes that as a result of the factors
listed above there has been a significant decline in the re-sale value of
narrow-body aircraft.
As Registrant's aircraft come off-lease, Registrant may need to use a portion of
its operating reserves and/or its cash flow, which would otherwise be available
for distribution, to upgrade or enhance these aircraft if Registrant determines
that such expenditures are in its best interest in order to maximize the
remarketing value. Registrant is currently evaluating strategies, including
potential engine upgrades to conform to regulations covering maintenance and
upgrading of aging aircraft. Registrant's ability to make distributions may be
impacted by its obligation to pay such costs.
At December 31, 1996, equipment with an original cost of approximately
$57,013,000 (net carrying value of approximately $11,477,000) remained in
Registrant's portfolio and was generating rentals of approximately $240,000
(approximately $2,000 of which is generated by month-to-month leases) per month.
During 1997, excluding rents on a month-to-month basis and future renewals,
Registrant anticipates receiving approximately $2,762,000 of rentals generated
by non-cancelable leases accounted for as operating leases, which represents
approximately $9.11 per Unit after deducting the above-mentioned rental credits.
The foregoing per Unit amount does not reflect deductions for operating expenses
and is not sufficient to maintain previous distribution levels. Distribution
levels may fluctuate based upon remarketing success, the proceeds generated by
the sales of significant assets (such as aircraft) and requirements for
operating reserves, if any. Of the foregoing rentals, approximately $1,662,000
is associated with leases with firm terms ending in 1998 and approximately
$1,100,000 is associated with leases that expire during 1997. Additionally,
<PAGE>
equipment with an original cost of approximately $4,376,000 was off-lease and
equipment originally purchased for approximately $194,000 (fully depreciated at
December 31, 1996) was leased on a month-to-month basis. For the 1996 Period,
Registrant provided allowances for equipment impairment aggregating $50,000 to
recognize the loss in value with respect to certain equipment. Such impairment
was measured based on current appraisals, a view of the markets and an analysis
of the leases encumbering such equipment. The net carrying values above reflect
such provisions.
During 1996, Registrant sold or disposed of equipment originally purchased for
prices aggregating approximately $2,384,000 (of which approximately $413,000 had
been originally accounted for as financing leases) and which had an aggregate
net carrying value at the time of disposition of approximately $296,000 (which
included the net investment in equipment accounted for as financing leases) (net
of allowances for equipment impairment aggregating approximately $229,000
provided with respect to such equipment) for sale proceeds of approximately
$249,000, or approximately $.82 per Unit.
At the present time, the level of fees payable to IREG for services rendered to
Registrant and other affiliated equipment leasing partnerships is declining. The
effect of this situation cannot be determined at this point. The management
agreements between Registrant and IREG may be terminated by either party to such
agreements.
In April 1995, the Managing General Partner and certain affiliates entered into
an agreement with Fieldstone pursuant to which Fieldstone performs certain
management and administrative services relating to Registrant as well as certain
other partnerships in which the Managing General Partner serves as general
partner. Substantially all costs associated with the retention of Fieldstone are
paid by the Managing General Partner.
On February 28, 1995, Presidio Boram Corp., a subsidiary of Presidio, became the
Associate General Partner, upon the withdrawal of Z Square G Partners II, the
former Associate General Partner.
Inflation and changing prices have not had any material effect on Registrant's
revenues since its inception nor does Registrant anticipate any material effect
on its business from these factors.
Results of Operations - 1996 as Compared to 1995
Rental revenues decreased by approximately 30% for the 1996 Period as compared
to the year ended December 31, 1995 ("1995 Period"), due to the expiration of
certain leases in accordance with the original terms of such leases subsequent
to the 1995 Period (some of which were renewed at lower lease rates in
accordance with current market conditions), as well as to the sale or
disposition of certain equipment during or subsequent to the 1995 Period.
Interest income decreased by approximately 43% for the 1996 Period, as compared
to the 1995 Period, primarily because of higher balances available for
investment in 1995 and decreased payments by Air Mike with regard to certain
loans as discussed previously.
Interest income on financing leases decreased by approximately 98% for the 1996
Period as compared to the 1995 Period due to the expiration of all such leases
in accordance with their original terms subsequent to the 1995 Period.
<PAGE>
Operating expenses decreased by approximately 15% for the 1996 Period as
compared to the 1995 Period, due to the increase in expenses relating to the
return and storage of two Shorts 360 Aircraft in the 1995 Period. These Aircraft
were sold in April 1995.
Fees to affiliates decreased by approximately 34% for the 1996 Period as
compared to the 1995 Period, due primarily to a decrease in equipment management
fees resulting from the reduction in rentals (which include operating and
financing leases) on which such fees are based.
Depreciation expense decreased by approximately 27% for the 1996 Period as
compared to 1995 Period, due to the disposition or sale of certain equipment
during and subsequent to the 1995 Period, as well as to the fact that certain
equipment was fully depreciated during or prior to the 1996 Period.
Additionally, Registrant provided allowances for equipment aggregating $50,000
and $8,000 for the 1996 and 1995 Periods, respectively, to recognize the loss in
value of certain telephone equipment and equipment for management information
systems.
General and administrative expenses decreased 16% for the 1996 Period as
compared to the 1995 Period, primarily due to a decrease in reimbursements due
to less personnel.
Interest expense decreased by approximately 82% for the 1996 Period as compared
to the 1995 Period, due to the reduction of financed rent credits given to Air
Mike in the 1996 Period.
Realized gain on the sale of marketable securities was approximately $398,000 in
the 1995 Period. The gain represents the settlement of general unsecured claims
the Registrant had against Hawaiian Airlines. Hawaiian issued the Registrant
approximately 86,000 shares of Class A Common stock in the reorganized Hawaiian
Airlines. Through December 31, 1995 the Registrant sold all shares. No such gain
was recognized in the 1996 Period.
Registrant recognized aggregate net (loss)/gains of approximately $(47,000) and
$563,000 for the 1996 and 1995 Periods, respectively, in connection with its
sales of equipment. During the 1996 Period, Registrant sold equipment which it
had originally purchased for purchase prices aggregating approximately
$2,384,000 (of which approximately $413,000 had been accounted for as financing
leases) inclusive of associated acquisition fees, for sales proceeds aggregating
approximately $249,000.
The principal reasons for the change in Registrant's net income of approximately
$235,000 recognized for the 1996 Period as compared to the net income of
approximately $1,733,000 recognized for the 1995 Period are:
(i) the reduction in rental revenue, approximately $3,052,000 for the 1996
Period compared to approximately $4,366,000 for the 1995 Period, as
well as a reduction on interest income recognized of approximately
$219,000 for the 1996 Period as compared with approximately $381,000
for 1995 Period; and
(ii) the decrease with regard to (losses) gains on the sale of equipment,
approximately $(47,000) in the 1996 Period compared to approximately
$563,000 for the 1995 Period, and approximately $398,000 recognized in
the 1995 Period for the gain on sale of marketable securities with
regard to the settlement of the unsecured Hawaiian claims; offset by
<PAGE>
(iii) the decrease in depreciation, fees to affiliates, general and
administrative interest expense and operating expense, offset by an
increase in equipment impairment expense.
Results of Operations - 1995 as Compared to 1994
Rental revenues decreased by approximately 55% for the 1995 Period as compared
to the year ended December 31, 1994 ("1994 Period"), due to the expiration of
certain leases in accordance with the original terms of such leases subsequent
to the 1994 Period (some of which were renewed at lower lease rates in
accordance with current market conditions), as well as to the sale or
disposition of certain equipment during or subsequent to the 1994 Period.
Interest income increased by approximately 69% for the 1995 Period, as compared
to the 1994 Period, primarily because of higher market interest rates during
1995 Period as well as higher balances available for investment in 1995 and
increased payments by Air Mike with regard to certain loans as discussed
previously.
Interest income on financing leases decreased by approximately 83% for the 1995
Period as compared to the 1994 period due to the expiration of certain leases
with the original terms of such leases, subsequent to the 1994 Period.
Operating expenses increased by approximately 42% for the 1995 Period as
compared to the 1994 Period, due to the increase in expenses relating to the
return and storage of the Simmons Aircraft, as well as increased broker fees
paid on cash received in the 1995 Period relating to the Air Mike Leases. In
addition, during the 1994 Period, Registrant provided allowance for
uncollectible accounts aggregating approximately $203,000 with respect to the
Hawaiian Leases, as discussed above. No such allowance was considered necessary
for the 1995 Period.
Fees to affiliates decreased by approximately 43% for the 1995 Period as
compared to the 1994 Period, due primarily to a decrease in equipment management
fees resulting from the reduction in rentals (as defined, which include
operating and financing leases) on which such fees are based.
Depreciation expense decreased by approximately 32% for the 1995 Period as
compared to 1994 Period, due to the disposition or sale of certain equipment
during and subsequent to the 1994 Period, as well as to the fact that certain
equipment was fully depreciated during or prior to the 1995 Period.
Additionally, Registrant provided allowances for equipment aggregating $8,000
and $1,740,000 for the 1995 and 1994 Periods, respectively, to recognize the
loss in value of certain aircraft, telephone equipment and equipment for
management information systems.
General and administrative expenses decreased 31% for the 1995 Period as
compared to the 1994 Period, primarily due to a decrease in legal expense in
regard to the Hawaiian and Skyhook issues in 1994.
Interest expense decreased by approximately 86% for the 1995 Period as compared
to the 1994 Period, due to the retirement of debt with regard to the Simmons
Aircraft and the Southwest Aircraft in the fourth quarter of the 1994 Period.
<PAGE>
Realized gain on the sale of marketable securities was approximately $398,000 in
the 1995 Period. The gain represents the settlement of general unsecured claims
the Registrant had against Hawaiian Airlines. Hawaiian issued the Registrant
approximately 86,000 shares of Class A Common stock in the reorganized Hawaiian
Airlines. Through December 31, 1995 the Registrant sold all shares. No such gain
was recognized in the 1994 Period.
Registrant recognized aggregate net gains of approximately $563,000 and $54,000
for the 1995 and 1994 Periods, respectively, in connection with its sales of
equipment. During the 1995 Period, Registrant sold equipment which it had
originally purchased for purchase prices aggregating approximately $27,813,000
(of which approximately $5,549,000 had been accounted for as financing leases)
inclusive of associated acquisition fees, for sales proceeds aggregating
approximately $6,551,000.
The principal reasons for the change in Registrant's net income of approximately
$1,733,000 recognized for the 1995 Period as compared to the net income
approximately $2,258,000 recognized for the 1994 Period are:
(i) the reduction in rental revenue, approximately $4,366,000 for the 1995
Period compared to approximately $9,743,000 for the 1994 Period as well
as a reduction on interest income recognized on finance leases, of
approximately $43,000 for the 1995 Period as compared with
approximately $251,000 for 1994 Period; offset by
(ii) the increase in interest income, approximately $381,000 for the 1995
Period as compared to approximately $225,000 for the 1994 Period as
well as an increase with regard to gains on the sale of equipment,
approximately $563,000 in the 1995 Period compared to approximately
$54,000 for the 1994 Period, and approximately $398,000 recognized in
the 1995 Period for the gain on sale of marketable securities with
regard to the settlement of the unsecured Hawaiian claims; and
(iii) the decrease in depreciation and equipment impairment expense, fees to
affiliates, general and administrative interest expense and bad debt
expense, offset by an increase in operating expense.
<PAGE>
Item 8. Financial Statements and Supplemental Data.
NATIONAL LEASE INCOME FUND 6 L.P.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
INDEX
Independent Auditor's Report
Independent Auditors' Report
Financial statements - years ended
December 31, 1996, 1995 and 1994
Balance sheets
Statements of operations
Statement of partners' equity
Statements of cash flows
Notes to financial statements
Schedule:
II -- Valuation and Qualifying Accounts
All other schedules have been omitted because they are inapplicable or because
they are included in the financial statements or notes thereto.
<PAGE>
To the Partners of
National Lease Income Fund 6 L.P.
Greenwich, Connecticut
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of National Lease Income Fund 6
L.P. (a limited partnership) as of December 31, 1996 and 1995, and the related
statements of operations, partners' equity and cash flows for the years then
ended. Our audits also included the financial statement schedule listed in the
Index at Item 14(a)2. These financial statements and the financial statement
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Lease Income Fund 6
L.P. as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles. Also, in our opinion, such financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
Hays & Company
February 21, 1997
New York, New York
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
National Lease Income Fund 6 L.P.
We have audited the accompanying statements of operations, partners' equity and
cash flows of National Lease Income Fund 6 L.P. for the year ended December 31,
1994. Our audit also included the financial statement schedule listed in the
Index at Item 14(a)2 as it relates to the year ended December 31, 1994. These
financial statements and the financial statement schedule are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements and the financial statement schedule based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of National Lease Income Fund
6 L.P. for the year ended December 31, 1994 in conformity with generally
accepted accounting principles. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
March 17, 1995
/s/Deloitte & Touche LLP
- -------------------------
Deloitte & Touche LLP
New York, New York
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
BALANCE SHEETS
December 31,
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Leased equipment - net
Accounted for under the operating method $ 11,477,127 $ 13,966,770
Accounted for under the financing method -- 90,976
Equipment held for lease or sale - net ........ -- --
Cash and cash equivalents ..................... 3,481,745 3,810,827
Note receivable ............................... 271,288 770,784
Deferred costs ................................ 224,677 337,193
Other receivables and prepaid expenses ........ 34,612 31,105
Accounts receivable ........................... 2,788 6,628
------------ ------------
$ 15,492,237 $ 19,014,283
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Distributions payable ......................... $ 757,588 $ 1,212,141
Deferred aircraft upgrade payable ............. 100,000 361,539
Accounts payable and accrued expenses ......... 109,017 171,432
Deferred income ............................... 69,250 110,853
Due to affiliates ............................. 71,527 23,741
------------ ------------
Total liabilities ...................... 1,107,382 1,879,706
------------ ------------
Commitments and contingencies (Note 3, 4, 13 and 14)
Partners' equity
Limited partners' equity (300,005 units issued
and outstanding) ....................... 15,731,182 18,453,407
General partners' deficit ..................... (1,346,327) (1,318,830)
------------ ------------
Total partners' equity ................. 14,384,855 17,134,577
------------ ------------
$ 15,492,237 $ 19,014,283
============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF OPERATIONS
Year ended December 31,
--------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Rental ................................. $ 3,051,681 $ 4,366,436 $ 9,743,352
Interest
Other ........................... 218,863 380,660 225,255
Financing leases ................ 776 43,006 251,463
Other operating income ................. 3,457 4,450 10,165
----------- ----------- -----------
3,274,777 4,794,552 10,230,235
----------- ----------- -----------
Costs and expenses
Depreciation ........................... 2,226,515 3,041,304 4,466,015
Fees to affiliates ..................... 265,386 403,747 708,515
General and administrative ............. 229,571 271,718 395,451
Operating .............................. 213,307 251,914 176,788
Interest ............................... 8,179 46,514 337,174
Provision for equipment impairment ..... 50,000 8,000 1,740,000
Provision for doubtful accounts ........ -- -- 202,626
----------- ----------- -----------
2,992,958 4,023,197 8,026,569
----------- ----------- -----------
281,819 771,355 2,203,666
----------- ----------- -----------
(Loss) gain on sale of equipment - net ......... (46,643) 562,932 54,420
Realized gain from sale of marketable securities -- 398,377 --
----------- ----------- -----------
(46,643) 961,309 54,420
----------- ----------- -----------
Net income ..................................... $ 235,176 $ 1,732,664 $ 2,258,086
=========== =========== ===========
Net income attributable to
Limited partners ....................... $ 232,824 $ 1,715,337 $ 2,235,505
General partners ....................... 2,352 17,327 22,581
----------- ----------- -----------
$ 235,176 $ 1,732,664 $ 2,258,086
=========== =========== ===========
Net income per unit of limited partnership
interest (300,005 units outstanding) ... $ 0.78 $ 5.72 $ 7.45
=========== =========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENT OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
Limited General Total
Partners' Partners' Partners'
Equity Deficit Equity
------------ ------------ ------------
<S> <C> <C> <C>
Balance, January 1, 1994 .................... $ 31,152,843 $ (1,190,551) $ 29,962,292
Net income - 1994 ........................... 2,235,505 22,581 2,258,086
Distributions to partners ($19.50 per limited
partnership unit) ................... (5,850,098) (59,092) (5,909,190)
------------ ------------ ------------
Balance, December 31, 1994 .................. 27,538,250 (1,227,062) 26,311,188
Net income - 1995 ........................... 1,715,337 17,327 1,732,664
Distributions to partners ($36.00 per limited
partnership unit) ................... (10,800,180) (109,095) (10,909,275)
------------ ------------ ------------
Balance, December 31, 1995 .................. 18,453,407 (1,318,830) 17,134,577
Net income - 1996 ........................... 232,824 2,352 235,176
Distributions to partners ($9.85 per limited
partnership unit) ................... (2,955,049) (29,849) (2,984,898)
------------ ------------ ------------
Balance, December 31, 1996 .................. $ 15,731,182 $ (1,346,327) $ 14,384,855
============ ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF CASH FLOWS
Year ended December 31,
---------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
Cash flows from operating activities
Net income ...................................................... $ 235,176 $ 1,732,664 $ 2,258,086
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation ............................................ 2,226,515 3,041,304 4,466,015
Amortization of deferred costs .......................... 112,516 112,516 112,516
Loss (gain) on sale of equipment - net .................. 46,643 (562,932) (54,420)
Realized gain from sale of marketable securities ........ -- (398,377) --
Provision for equipment impairment ...................... 50,000 8,000 1,740,000
Provision for doubtful accounts ......................... -- -- 202,626
Changes in assets and liabilities
Accounts receivable ..................................... 3,840 294,843 315,855
Other receivables and prepaid expenses .................. (3,507) (15,779) 8,958
Accounts payable and accrued expenses ................... (748) (40,911) 13,917
Deferred income ......................................... (41,603) 41,603 (12,607)
Due to affiliates ....................................... 47,786 6,813 (18,484)
Accrued interest payable ................................ -- (169,524) (44,309)
----------- ----------- -----------
Net cash provided by operating activities 2,676,618 4,050,220 8,988,153
----------- ----------- -----------
Cash flows from investing activities
Purchase of leased equipment - upgrades ......................... (261,539) (550,052) (381,626)
Proceeds from disposition of leased equipment ................... 249,161 6,550,722 283,385
Note receivable ................................................. 499,496 352,893 (928,997)
Minimum lease payments received on financing
leases, net of interest earned .............. 8,300 241,170 1,455,112
Other non-operating payments .................................... (61,667) (62,852) (82,947)
Proceeds from sale of marketable securities ..................... -- 398,377 --
----------- ----------- -----------
Net cash provided by investing activities 433,751 6,930,258 344,927
----------- ----------- -----------
(continued)
<PAGE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF CASH FLOWS
Year ended December 31,
------------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (continued)
Cash flows from financing activities
Distributions to partners ................................. (3,439,451) (11,212,304) (6,212,225)
Principal payments on notes payable ....................... -- -- (3,725,300)
------------ ------------ ------------
Net cash used in financing activities (3,439,451) (11,212,304) (9,937,525)
------------ ------------ ------------
Net decrease in cash and
cash equivalents .......................................... (329,082) (231,826) (604,445)
Cash and cash equivalents, beginning of year ...................... 3,810,827 4,042,653 4,647,098
------------ ------------ ------------
Cash and cash equivalents, end of year ............................ $ 3,481,745 $ 3,810,827 $ 4,042,653
============ ============ ============
Supplemental disclosure of cash flow information
Interest paid ............................................. $ 8,179 $ 216,038 $ 381,483
============ ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1 ORGANIZATION
National Lease Income Fund 6 L.P., (the "Partnership"), was formed as
of July 11, 1986, under the Delaware Revised Uniform Limited
Partnership Act for the purpose of engaging in the business of
investing in and leasing equipment. The Partnership will terminate on
December 31, 2010, or sooner, in accordance with the terms of the
Agreement of Limited Partnership (the "Limited Partnership
Agreement").
Limited partners' units were originally issued at a price value of
$500 per unit. A total of 300,005 units of limited partnership
interest were issued for aggregate capital contributions of
$150,002,500. In addition, the general partners contributed a total
of $9,950 to the Partnership.
In May 1992, the Board of Directors of ALI Equipment Management
Corp., the managing general partner of the Partnership, decided that
the Partnership would discontinue reinvestment in additional
equipment and thereafter distribute cash from operations and sales
not required as reserves commencing with the quarter ended June 30,
1992. This was due to the lower cash flow level, caused by lower
lease rates, compounded by higher than anticipated technological
obsolescence resulting in lower residual values, as well as by the
weakness in the airline industry resulting in problems for various
lessees and a decline in the value of all of the Partnership's
aircraft.
Acquisitions of equipment during the years ended December 31, 1996,
1995 and 1994 were made to satisfy prior purchase commitments
including modifications made to certain aircraft and upgrades to
equipment currently on lease.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Leases
The Partnership accounts for all of its leases in accordance with the
operating and financing methods. For operating leases, rental revenue
is recognized on a straight-line basis and expenses (including
depreciation) are charged to operations as incurred. For financing
leases, unearned income is recognized as revenue over the respective
lease term so as to produce a constant rate of return on the net
investment.
Leased equipment and equipment held for lease or sale
The cost of leased equipment and equipment held for lease or sale
represents the initial cost of the equipment to the Partnership plus
miscellaneous acquisition and closing costs, and is carried at the
lower of depreciated cost or net realizable value.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Leased equipment and equipment held for lease or sale (continued)
Depreciation is computed using the straight-line method over the
estimated useful lives of such assets (five years for equipment for
management information systems, eight years for telephone equipment
and aerial lift platforms, 12 years for intercity buses and 13 to 18
years for aircraft and aircraft-related equipment). The Partnership
capitalizes major additions to its aircraft and depreciates such
capital improvements over the remaining estimated useful life of such
aircraft.
When equipment is sold or otherwise disposed of, the cost and
accumulated depreciation (and any related allowance for equipment
impairment) are removed from the accounts and any gain or loss on
such sale or disposal is reflected in operations. Normal maintenance
and repairs are charged to operations as incurred. The Partnership
provides allowances for equipment impairment based upon a quarterly
review of all equipment in its portfolio, when management believes
that, based upon market analysis, appraisal reports and leases
currently in place with respect to specific equipment, the investment
in such equipment may not be recoverable.
The allowance is inherently subjective and is based upon management's
best estimate of current conditions and assumptions about expected
future conditions. The Partnership may provide for additional losses
in subsequent years and such provisions could be material.
Financial statements
The financial statements include only those assets, liabilities, and
results of operations which relate to the business of the
Partnership.
Cash and cash equivalents
For the purpose of the statements of cash flows, the Partnership
considers all short-term investments which have original maturities
of three months or less to be cash equivalents.
Substantially all of the Partnership's cash and cash equivalents are
held at one financial institution.
Fair value of financial instruments
The fair value of financial instruments is determined by reference to
market data and other valuation techniques as appropriate. The
Partnership's financial instruments include cash and cash equivalents
and a note receivable. Unless otherwise disclosed, the fair value of
financial instruments approximates their recorded values.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Note receivable
Note receivable represents financing provided by the Partnership to a
lessee of certain aircraft for modifications made to such aircraft.
Such note is being repaid with interest at a rate of 9.31% per annum.
Deferred costs
Deferred costs represent the payment made by the Partnership, based
upon the terms of a certain lease, for maintenance which enhanced the
marketability with respect to the return of certain aircraft leased
to Alaska Airlines, Inc. Deferred costs are amortized over the terms
of the remarketed lease.
Deferred aircraft upgrade payable
Deferred aircraft upgrade payable represents obligations for
upgrades, relating to certain aircraft, which had been acquired and
in service at such date.
Deferred income
Deferred income is comprised of the unearned portion of advance
rentals received with respect to the leases of certain equipment.
Net income and distributions per unit of limited partnership interest
Net income and distributions per unit of limited partnership interest
are computed based upon the number of units outstanding (300,005),
during the years ended December 31, 1996, 1995 and 1994.
Income taxes
No provisions has been made for federal, state and local income
taxes, since they are the personal responsibility of the partners.
The income tax returns of the Partnership are subject to examination
by federal, state and local taxing authorities. Such examinations
could result in adjustments to Partnership income or losses, which
changes could effect the income tax liability of the individual
partners.
Reclassifications
Certain classifications have been made to the financial statements
shown for the prior years in order to conform to the current year's
classifications.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The corporate general partner of the Partnership, ALI Capital Corp.
(the "Corporate General Partner"), the managing general partner of
the Partnership, ALI Equipment Management Corp. ("Equipment
Management") and Integrated Resources Equipment Group, Inc. ("IREG")
were wholly owned subsidiaries of Integrated Resources, Inc.
("Integrated") through November 2, 1994. On November 3, 1994, as a
result of the consummation of the reorganization plan relating to
Integrated's bankruptcy, indirect ownership of the Corporate General
Partner, Equipment Management and IREG was purchased by Presidio
Capital Corp. ("Presidio"). Z Square G Partners II, was the associate
general partner of the Partnership, through February 27, 1995. On
February 28, 1995, Presidio Boram Corp., a subsidiary of Presidio,
became the associate general partner. Other limited partnerships and
similar investment programs have been formed by Equipment Management
or its affiliates to acquire equipment and, accordingly, conflicts of
interest may arise between the Partnership and such other limited
partnerships. Affiliates of Equipment Management have also engaged in
businesses related to the management of equipment and the sale of
various types of equipment and may transact business with the
Partnership.
Subject to the rights of the Limited Partners under the Limited
Partnership Agreement, Presidio will control the Partnership through
its direct or indirect ownership of all of the shares of Equipment
Management, the Corporate General Partner and, as of February 28,
1995, the associate general partner. Presidio is managed by Presidio
Management Company, LLC ("Presidio Management"), a company controlled
by a director of Presidio. Presidio Management is responsible for the
day-to-day management of Presidio and, among other things, has
authority to designate directors of Equipment Management, the
Corporate General Partner and the associate general partner. In March
1996, Presidio Management assigned its agreement for the day-to-day
management of Presidio to Wexford Management LLC ("Wexford").
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
(continued)
Presidio is a liquidating company. Although Presidio has no immediate
plans to do so, it will ultimately seek to dispose of the interests
it acquired from Integrated through liquidation; however, there can
be no assurance of the timing of such transaction or the effect it
may have on the Partnership.
The Partnership has a management agreement with IREG, pursuant to
which IREG receives 5% of annual gross rental revenues on operating
leases; 2% of annual gross rental revenues on full payout leases
which contain net lease provisions; and 1% of gross rental revenues
if services are performed by third parties under the active
supervision of IREG as defined in the Limited Partnership Agreement.
During the years ended December 31, 1996, 1995 and 1994, the
Partnership incurred expenses of $149,445, $208,747 and $476,015
respectively, for such management services.
During the operating and liquidating stage of the Partnership, IREG
is entitled to a partnership management fee equal to 4% of
distributable cash from operations as defined in the Limited
Partnership Agreement, subject to possible increase after the limited
partners have received certain specified minimum returns on their
investment. For the years ended December 31, 1996, 1995 and 1994, the
Partnership incurred partnership management fees of $115,941,
$195,000 and $232,500, respectively. Such amounts are included in
fees to affiliates in the statements of operations.
At the present time, the level of fees payable to IREG for services
rendered to the Partnership and other affiliated equipment leasing
partnerships is declining. The effect of this situation cannot be
determined at this point. The management agreements between the
Partnership and IREG may be terminated by either party to such
agreements.
The general partners are entitled to 1% of distributable cash from
operations and cash from sales or financing and cash from equipment
reserve accounts and an allocation of 1% of taxable net income or
loss of the Partnership.
During the operating and liquidating stage of the Partnership, IREG
may be entitled to receive certain other fees which are subordinated
to the receipt by the limited partners of their original invested
capital and certain specified minimum returns on their investment.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
(continued)
Upon the ultimate liquidation of the Partnership, the general
partners may be required to remit to the Partnership certain payments
representing capital account deficit restoration based upon a formula
provided within the Limited Partnership Agreement. Such restoration
amount may be less than the recorded general partners' deficit, which
could result in distributions to the limited partners of less than
their recorded equity.
In April 1995, Equipment Management and certain affiliates entered
into an agreement with Fieldstone Private Capital Group, L.P.
("Fieldstone") pursuant to which Fieldstone performs certain
management and administrative services relating to the Partnership as
well as certain other partnerships in which Equipment Management
serves as general partner. Substantially all costs associated with
the retention of Fieldstone will be paid by Equipment Management.
4 LEASED EQUIPMENT
Accounted for under the operating method
Leased equipment, is summarized as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------
1996 1995
---------- -----------
<S> <C> <C>
Transportation and related equipment (net of
accumulated depreciation of $20,557,076
and $18,409,711 and an allowance for
equipment impairment of $20,409,450 and
$20,409,450).................................. $11,477,127 $13,624,508
Equipment for management information
systems (net of accumulated depreciation
of $171,095 and $1,671,817 and an
allowance for equipment impairment of
$22,435 and $183,951) ........................ -- 342,262
---------- -----------
$11,477,127 $13,966,770
=========== ===========
</TABLE>
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 LEASED EQUIPMENT (continued)
The minimum future rentals receivable on noncancelable leases as of
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Year ending
December 31, Amount
------------ ------
<S> <C>
1997 $ 2,762,000
1998 1,523,000
-------------
$ 4,285,000
=============
</TABLE>
The above amounts do not reflect any potential rent credits, as
provided under certain aircraft leases, to fund the Partnership's
obligations under such leases.
In addition, rental revenue received on leases that go beyond the
firm term (lessee does not supply notice of termination or renewal as
required by the lease) is recognized as earned. For the years ended
December 31, 1996, 1995 and 1994, rental revenue earned on a
month-to-month basis comprised approximately 3%, 3% and 4% of total
rental revenue, respectively.
Maintenance and repairs expense incurred for the years ended December
31, 1995 and 1994 was $22,257 and $2,589, respectively. There was no
maintenance and repairs expense incurred during the year ended
December 31, 1996.
Accounted for under the financing method
Consists of certain transportation equipment and equipment for
management information systems, which is summarized as follows as of
December 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
Minimum lease payments receivable $ 9,076
Unguaranteed residual value (A) 82,661
-----------
91,737
Less unearned income 761
-----------
$ 90,976
===========
</TABLE>
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 LEASED EQUIPMENT (continued)
(A) Certain equipment for management information systems, as of
December 31, 1994, which had been accounted for under the
financing method was reclassified, after the respective leases
had gone beyond their firm term, to equipment accounted for
under the operating method. In addition, certain equipment
with a net carrying value of $82,661 and $1,600,764 was
disposed of during the years ended December 31, 1996 and 1995,
respectively.
Equipment held for lease or sale
Consists of certain equipment for management information systems and
transportation equipment, with an aggregate net carrying value of $0
(net of accumulated depreciation of $1,781,000 and $1,827,573 and an
allowance for equipment impairment of $2,595,000 and $2,612,619) at
December 31, 1996 and 1995, respectively.
5 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1996 1995
------- -------
<S> <C> <C>
Professional fees .......................... $84,378 $82,288
Sales and property taxes ................... -- 52,701
Operating .................................. 24,639 24,752
Lease overpayments ......................... -- 11,691
------- -------
$ 109,017 $171,432
========== ========
</TABLE>
6 DISTRIBUTIONS TO PARTNERS
Distributions payable to partners represent distributable
cash from operations and cash from sales, as defined in the Limited
Partnership Agreement, for the fourth quarter of 1996 and 1995.
Distributions payable to limited partners were $2.50 and $4.00 per
limited partnership unit and distributions payable to general
partners aggregated $7,576 and $12,121 as of December 31, 1996 and
1995, respectively.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
7 RECONCILIATION OF NET INCOME AND NET ASSETS PER FINANCIAL STATEMENTS
TO TAX BASIS
The Partnership files its tax return on the accrual basis. A
reconciliation of net income per financial statements to the tax
basis of accounting is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Net income per financial statements ............. $ 235,176 $ 1,732,664 $ 2,258,086
Difference between financial statements and tax
basis treatment of advanced rental payments (41,603) 41,603 (160,607)
Difference between financial statements and tax
basis of equipment sold or disposed of .... 67,088 2,306,854 (263,282)
Provision for equipment impairment provided
for financial statement purposes .......... 50,000 8,000 1,740,000
Minimum lease payments received, net of
income earned on leases accounted
for under the financing method ............ 8,300 241,170 1,455,112
Difference between advanced payments
made over the amount recognized ratably
over the respective periods for financial
statements ................................ 112,516 112,516 112,516
Tax depreciation in excess of financial
statement depreciation .................... (336,825) (646,079) (2,651,847)
Deficiency (excess) of income accruals
over expense accruals ..................... (11) 798 3,259
----------- ----------- -----------
Net income per tax basis ........................ $ 94,641 $ 3,797,526 $ 2,493,237
=========== =========== ===========
</TABLE>
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
7 RECONCILIATION OF NET INCOME AND NET ASSETS PER FINANCIAL STATEMENTS
TO TAX BASIS (continued)
The differences between the Partnership's net assets per financial
statements and tax basis of accounting are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net assets per financial statements .... $ 14,384,855 $ 17,134,577
Net carrying value of equipment ........ (6,503,033) (6,291,586)
Syndication costs ...................... 16,875,000 16,875,000
Advanced rental payments ............... 69,250 110,853
Deferred costs ......................... (224,677) (337,193)
------------ ------------
Net assets per tax basis ............... $ 24,601,395 $ 27,491,651
============ ============
</TABLE>
8 MAJOR LESSEES
Revenues from equipment leased to individual lessees, which generated
10% or more of leasing revenues, are as follows:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Two Boeing 737-200 aircraft ........ $1,200,000 $ 980,000 $3,179,000
% of leasing revenues ....... 39% 22% 32%
One Boeing 737-200 aircraft ........ $ -- $1,079,000 $1,673,000
% of leasing revenues ....... -% 25% 17%
Two Boeing 727-227 Advanced aircraft $1,662,000 $1,662,000 $1,662,000
% of leasing revenues ....... 54% 38% 17%
</TABLE>
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
9 BUSINESS SEGMENTS
The Partnership leases certain equipment domestically and
internationally. Below is a breakdown of the Partnership's equipment
and operating results by geographic location:
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------------------------------------------------
1996 1995 1994
--------------------------------------------------------------------------------------------
United Western United Western United Western
States Pacific States Pacific States Pacific
<S> <C> <C> <C> <C> <C> <C>
Rental revenues .......... $ 1,389,681 $ 1,662,000 $ 2,704,436 $ 1,662,000 $ 8,081,352 $ 1,662,000
Net income (loss) ........ $ (499,448) $ 734,624 $ 1,132,344 $ 600,320 $ 1,650,023 $ 608,063
Leased equipment
Accounted for under
the operating method $ 3,513,607 $ 7,963,520 $ 5,255,356 $ 8,711,414 $10,355,577 $ 9,459,293
Accounted for under the
financing method .... $ -- $ -- $ 90,976 $ -- $ 1,932,910 $ --
Equipment held for
lease or sale ......... $ -- $ -- $ -- $ -- $ 1,588,237 $ --
</TABLE>
10 EQUIPMENT SALES - 1994
During the year ended December 31, 1994, the Partnership sold
certain equipment for management information systems (originally
accounted for as operating and financing leases), which it had
originally purchased for purchase prices aggregating $8,713,497,
inclusive of associated acquisition fees to unaffiliated third
parties, for an aggregate sales price of $277,185. Such equipment
had net carrying values aggregating $222,765 (net of allowances for
equipment impairment aggregating approximately $857,000 provided in
prior periods with respect to such equipment) when sold.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
11 EQUIPMENT SALES - 1995
During the year ended December 31, 1995, the Partnership sold
certain equipment for management information systems and
telecommunication equipment (originally accounted for as operating
and financing leases), which it had originally purchased for
purchase prices aggregating $7,698,560 inclusive of associated
acquisition fees to unaffiliated third parties, for an aggregate
sales price of $2,134,973. Such equipment had net carrying values
aggregating $1,775,400 (net of allowances for equipment impairment
aggregating approximately $407,000 provided in prior periods with
respect to such equipment) when sold.
On October 31, 1994, the lease with Simmons Airlines, Inc.
("Simmons") of two Shorts 360 aircraft (the "Simmons Aircraft")
expired in accordance with its original terms. The associated
nonrecourse debt was repaid upon the receipt of the final rental
installment. In conjunction with the return of the Simmons Aircraft,
it was determined that certain attributes of two of the engines were
below certain thresholds. The Partnership contributed approximately
$133,000 in order to enhance the value of such engines. In April
1995, the Simmons Aircraft were sold to an unaffiliated third party
for net sales proceeds of $1,425,000. Such aircraft had net carrying
values aggregating approximately $1,493,000 (net of allowances for
equipment impairment aggregating $2,930,000 previously provided)
when sold.
On July 31, 1995 the lease with Aloha Airlines, Inc. ("Aloha") for a
Boeing 737-200 Advanced aircraft was scheduled to expire in
accordance with its original terms. The Partnership and Aloha then
entered into a short-term lease extension of a maximum of two and a
half months terminating on October 15, 1995. During the lease
extension Aloha paid rent on a utilization arrangement based on $225
per cycle with a monthly minimum of $53,500 and a monthly maximum of
$90,000. The Partnership had the option, which it exercised, as of
September 7, 1995 to early terminate the lease. Aloha paid the
Partnership a financial adjustment of $515,000 in lieu of existing
return conditions provided for in the lease. Aloha has also made an
additional payment of $15,000 for a damaged Auxiliary Power Unit. In
September 1995, the Partnership sold the Aloha aircraft to an
unaffiliated third party for net sales proceeds of $2,461,000. Such
aircraft had a net carrying value aggregating approximately
$2,719,000 (net of allowance for equipment impairment aggregating
$3,500,000 previously provided) when sold.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
12 EQUIPMENT SALES 1996
During the year ended December 31, 1996, the Partnership sold
certain equipment for management information systems (originally
accounted for as operating and financing leases), which it had
originally purchased for purchase prices aggregating $2,384,124,
inclusive of associated acquisition fees to unaffiliated third
parties, for an aggregate sales price of $249,161. Such equipment
had net carrying values aggregating $295,804 (net of allowances for
equipment impairment aggregating approximately $229,135 provided
with respect to such equipment) when sold.
13 COMMITMENTS AND CONTINGENCIES
a Greyhound Lines, Inc.
On June 5, 1990, Greyhound Lines, Inc. ("Greyhound"), formerly the
lessee of 30 MCI intercity motor coaches (the "Buses"), filed for
protection from its creditors pursuant to the provisions of Chapter
11 of the United States Bankruptcy Code, along with certain of its
affiliates. The Buses were acquired new by the Partnership during
July 1987, and were scheduled to be on lease through July 1995 (the
"Greyhound Lease"). Greyhound paid the rent due on the Buses through
September 30, 1990. Pursuant to a bankruptcy court order, Greyhound
rejected the Greyhound Lease and returned the Buses to the
Partnership in October 1990. The Partnership filed a claim for
liquidated damages in the Greyhound bankruptcy case based upon the
lease rejection. In early 1991, the Partnership sold the Buses to an
unaffiliated third party for sales proceeds aggregating approximately
$3,521,000; Greyhound was entitled to offset a portion of such sales
price against the Partnership's claim.
In July 1992, the Partnership received an assessment for state use
tax of approximately $343,000 (including interest and penalties)
relating to the Buses. While the Greyhound Lease had provided that
Greyhound was responsible for such tax, the obligation is ultimately
the Partnership's as owner and lessor. The Partnership had accrued
such amount in 1992 and the Partnership's claim in the Greyhound
bankruptcy case included this tax, penalties and interest. In
September 1993, the bankruptcy court approved a negotiated settlement
of the proof of claim, pursuant to which, during October 1993, the
Partnership received a distribution of $1,770,419 in full
satisfaction of its claims. In February 1995, the Partnership's
request for redetermination of the state use tax issue was denied.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
b Hawaiian Airlines, Inc.
On September 21, 1993, Hawaiian Airlines, Inc. ("Hawaiian"), filed
for reorganization under Chapter 11 of the Unites States Bankruptcy
Code. Hawaiian had leased two Rolls Royce aircraft engines (the
"Hawaiian Engines") and one McDonnell Douglas DC9-51 aircraft (the
"Hawaiian Aircraft"), owned by the Partnership, under two separate
engine leases and one aircraft lease (the "Hawaiian Engine Leases"
and the "Hawaiian Aircraft Lease," respectively, and collectively,
the "Hawaiian Leases").
The Hawaiian Engines and the Hawaiian Aircraft were acquired by the
Partnership during 1987 and 1988 from Hawaiian and were net leased
back to Hawaiian for terms ranging from approximately 84 to 96
months. The Hawaiian Engines were not encumbered by third party debt,
while the Hawaiian Aircraft was subject to nonrecourse financing (the
"Hawaiian Loan") provided by an unaffiliated third party lender (the
"Hawaiian Lender").
Hawaiian had suffered serious financial difficulties since at least
1990 and, through June 1994, made rental payments that were less than
the scheduled amounts due, based on a series of proposed
restructuring plans whereby lease rentals under the Hawaiian Leases
were reduced. The reduced rentals relating to the Hawaiian Aircraft
Lease were sufficient only to repay the amounts due under the
Hawaiian Loan plus any associated expenses but not to provide
additional cash flow to the Partnership.
During 1993, despite the efforts by Hawaiian to reorganize its
business and to restructure all of its obligations, Hawaiian
continued to have significant financial and liquidity difficulties,
which led to Hawaiian's Chapter 11 Bankruptcy filing.
The events associated with the Partnership's efforts and results in
negotiating with Hawaiian and the Hawaiian Lender with respect to the
Hawaiian Leases differ somewhat because of the fact that the Hawaiian
Engines were unencumbered and the Hawaiian Aircraft Lease involved a
third party lender whose loan was secured by the Hawaiian Aircraft.
Hawaiian Aircraft Lease
On February 4, 1993, the Hawaiian Lender notified Hawaiian and the
Partnership that Hawaiian was in default for failure to make its
January 1993 scheduled payment pursuant to its lease. On February 17,
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1993, the Hawaiian Lender declared the Hawaiian Loan in default and
accelerated the principal amount of the debt. On March 15, 1993, by
notice to Hawaiian, with copies to the Partnership, the Hawaiian
Lender exercised its right to terminate the Hawaiian Aircraft Lease,
effective March 31, 1993, and demanded the return of the Hawaiian
Aircraft.
On June 7, 1993, the Hawaiian Lender filed suit against Hawaiian
seeking, among other relief, to restrain Hawaiian from operating the
Hawaiian Aircraft, to obtain possession of the Hawaiian Aircraft, and
to obtain damages, including unpaid rents, interest and costs. As
beneficial owner of the Hawaiian Aircraft, at the time the suit was
commenced, the Partnership was included in such lawsuit as a named
defendant, as was the trustee of the trust through which the
Partnership owned the Hawaiian Aircraft. On June 25, 1993, the
above-mentioned parties entered into the following stipulations: (i)
confirming, as of March 31, 1993, the termination of the Hawaiian
Aircraft Lease; (ii) ordering surrender of the Hawaiian Aircraft not
later than October 15, 1993; and (iii) confirming the Hawaiian
Lender's forbearance from pursuing repossession until such date in
consideration of certain payments by Hawaiian and its performance of
certain other obligations with respect to the Hawaiian Aircraft.
Hawaiian made such payments, aggregating approximately $167,000, to
the Hawaiian Lender pursuant to the stipulation, which were applied
by the Hawaiian Lender to the accrued interest on the Hawaiian Loans.
Because the value of the Hawaiian Aircraft was estimated to be less
than the value of the associated nonrecourse debt, the Partnership
determined not to make any payments to cure the defaults on the
related debt. The Hawaiian Lender foreclosed on the Hawaiian Aircraft
on December 3, 1993. The Partnership removed the net carrying value
of the Hawaiian Aircraft of $3,580,903 (net of allowances for
equipment impairment aggregating $5,760,000 provided in prior
periods) and the related debt of $3,580,903 from its respective
accounts as of December 31, 1993.
Hawaiian Engine Leases
During January 1993, Equipment Management, on behalf of the
Partnership, along with certain affiliated entities, entered into a
settlement agreement with Hawaiian, pursuant to which Hawaiian agreed
to reimburse the Partnership for expenses, including reasonable
attorneys' fees incurred in connection with the preparation and
implementation of the restructuring of the Hawaiian Engine Leases.
Further, Hawaiian consented to the issuance of a temporary
restraining order (the "Consent Decree"), with the First Circuit
Court of Hawaii, requiring Hawaiian to cease operating the Hawaiian
Engines without compensation to the Partnership. During March 1993,
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
13 COMMITMENTS AND CONTINGENCIES (continued)
the Partnership agreed to forebear from filing the Consent Decree in
consideration of Hawaiian's agreement to make four weekly rental
payments aggregating $20,000. All four payments were made by
Hawaiian. During the remainder of 1993, Hawaiian made payments
aggregating approximately $202,000.
On July 25, 1993, the Partnership served Hawaiian with notices of
termination for the Hawaiian Engine Leases. However, the Partnership
did not attempt to enforce such lease terminations through judicial
proceedings.
In September 1993, the Partnership discovered that one of the
Hawaiian Engines had been substantially damaged and was of nominal
net carrying value. Although such engine was held in storage by
Hawaiian, Hawaiian had continued to remit payments on such engine as
if it were in use.
On September 14, 1993, the Partnership commenced an action against
Hawaiian in the First Circuit Court of Hawaii alleging, among other
claims, breach of contract, fraud and negligent misrepresentation in
connection with Hawaiian's lease of the damaged Hawaiian Engine. The
Partnership sought damages of $1,900,000, representing the agreed
casualty value of such engine, as well as punitive damages,
attorneys' fees and costs, based on the concealment by Hawaiian of
the destruction of such engine. The Partnership's action was stayed
as a result of Hawaiian's bankruptcy filing and, in connection with
Hawaiian's emergence from bankruptcy, has been dismissed without
prejudice by agreement of the Partnership and Hawaiian.
In March 1994, the Partnership was notified by Hawaiian that the
second engine was also in storage and in need of substantial repairs
(estimated by the Partnership to cost approximately $800,000).
Hawaiian continued to remit weekly payments relating to the Hawaiian
Engines through June 9, 1994.
On June 27, 1994, Hawaiian filed a motion with the bankruptcy court
to reject the Hawaiian Engine Leases and on July 11, 1994, the
bankruptcy court approved such motion. During the years ended
December 31, 1994 and 1993, the Partnership recognized approximately
$309,000 and $1,383,000, respectively, of rental revenue with respect
to the Hawaiian Engines and the Hawaiian Aircraft, of which $202,626
and $994,660, respectively, was provided as an additional allowance
for doubtful accounts.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
13 COMMITMENTS AND CONTINGENCIES (continued)
Hawaiian Engine Leases (continued)
The Partnership filed proofs of claim in Hawaiian's bankruptcy case
covering the outstanding rentals from October 2, 1990 through
September 21, 1993 and covering the casualty value of the damaged
engine, as well as administrative claims covering the use of the
remaining Hawaiian Engine and the Hawaiian Aircraft for periods
subsequent to September 21, 1993. The proofs of claim and the
administrative claims also include claims for any other damages
resulting from Hawaiian's actions with respect to the Hawaiian
Engines and the Hawaiian Aircraft either pre-petition or
post-petition. Because of the foreclosure on the Hawaiian Aircraft,
the Partnership has agreed to withdraw its claims as to the Hawaiian
Aircraft, since the Hawaiian Lender filed substantially duplicate
claims.
During 1994, Hawaiian and the Partnership entered into an agreement
to settle the Partnership's claims with respect to the Hawaiian
Engines. Hawaiian has settled the claims through the issuance of
Hawaiian stock to the Partnership. In June 1995, the Partnership
received approximately 86,000 shares of Class A Common stock in the
reorganized Hawaiian Airlines, Inc., in consideration of its general
unsecured claims filed against Hawaiian. During 1995, the Partnership
sold all shares for net proceeds aggregating $398,377.
The Partnership anticipates it will encounter severe competition in
attempting to sell the Hawaiian Engines due to their current
condition and a surplus in the market with respect to such engines.
Hawaiian emerged from bankruptcy on September 12, 1994.
At December 31, 1995, the Hawaiian Engines (net of allowances for
equipment impairment aggregating $2,595,000 provided in prior
periods) were fully depreciated and are included in Equipment held
for sale or lease.
c Skyhook, Inc.
During December 1989, Skyhook, Inc., the lessee of certain aerial
lift platforms, defaulted on its lease with the Partnership and
shortly thereafter filed for protection from its creditors pursuant
to the provisions of Chapter 11 of the United States Bankruptcy Code.
The Partnership recovered and disposed of all of the aerial lift
platforms. The lease was guaranteed by the individual owner of the
lessee. The Partnership filed suit against the individual guarantor
in New York State Supreme Court, Westchester County. The associated
equipment was originally purchased for a price of approximately
$1,523,000 (inclusive of associated acquisition fees and expenses).
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
13 COMMITMENTS AND CONTINGENCIES (continued)
Skyhook, Inc. (continued)
During 1993, the guarantor served an amended answer and counterclaim
against the Partnership alleging lack of commercial reasonableness in
the Partnership's disposition of the equipment and that the original
lease transaction was usurious. The amended answer and counterclaim
sought approximately $1,200,000 in damages. In March 1996, the
Partnership and the defendant settled the litigation. The settlement
provides for a payment of $7,000 to the Partnership and a full and
final release of any claims against the Partnership. The action has
been dismissed with prejudice.
d Continental Micronesia, Inc.
On August 14, 1992, the leases to Alaska Airlines, Inc. ("Alaska") of
two Boeing 727-227 Advanced aircraft expired in accordance with their
original terms. Upon the receipt of the final rental payment, the
associated nonrecourse debt was repaid. In conjunction with the
return of such aircraft, it was determined that certain physical
attributes of the aircraft exceeded the related minimum return
conditions provided for in the leases. As a result, and in accordance
with such leases, the Partnership paid Alaska approximately $647,000
to reflect the enhanced value of the aircraft. Such amount is
reflected on the balance sheets, net of amortization, as Deferred
costs and are being amortized over the term of the lease renewal, as
mentioned below. Upon delivery of such aircraft to a storage
facility, but prior to remarketing the aircraft, the Partnership
performed a boroscope inspection on the engines which revealed
substantial damage to one of the engines. The Partnership and Alaska
agreed to allocate the costs of such engine repairs and provide for
equal sharing of disputed items, pursuant to which the Partnership
paid $38,000 in January 1993 as its share of the total cost, with
Alaska paying the balance of the repair costs.
On March 31, 1993, the Partnership leased the two Boeing 727-227
Advanced aircraft to Continental Airlines, Inc. ("Continental") for a
term of approximately 69 months to be used by Continental's Air
Micronesia operation (the "Air Mike Leases"). Each Air Mike Lease
provides for a monthly base rent of $69,250, subject to adjustments
for rent credits relating to initial modifications (the "Initial
Modifications") which include Traffic Collision Avoidance Systems,
windshear detection and upgraded avionics, aggregating approximately
$1,308,000 for both aircraft. Such modifications were funded by
Continental and are being repaid by the Partnership through the
application of rent credits such that Continental will recoup the
aggregate cost of the Initial Modifications over a 36-month period
with interest at 9.31% per annum. The remaining balance of rent
credits to be applied by Continental towards such modifications was
$100,000 and $361,539 as of December 31, 1996 and 1995, respectively.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
13 COMMITMENTS AND CONTINGENCIES (continued)
Continental Micronesia, Inc. (continued)
In addition, Continental has made certain other modifications to such
aircraft. The Partnership has agreed to provide financing for the
rent credits ("Lessor Financing Credits") against the base rental
payments due under the Air Mike Leases. The lessee is currently
repaying Lessor Financing Credits through monthly installments which
are being amortized at the rate of 9.31% per annum over 36 months.
Through December 31, 1996, the Partnership had provided all the
required financing aggregating approximately $1,443,000. Such amount,
net of amounts repaid, is reflected on the balance sheet at December
31, 1996 and 1995 as Note receivable. The net carrying value of both
aircraft aggregated approximately $7,963,000 and $8,711,000 (net of
allowances for equipment impairment aggregating approximately
$10,000,000 provided in prior periods) at December 31, 1996 and 1995,
respectively.
In April 1993, Continental transferred all of its rights and
obligations under the Air Mike Leases to Air Micronesia, a
stand-alone air carrier affiliated with Continental.
e Southwest Airlines Co.
On November 30, 1994, the leases with Southwest Airlines, Co.
("Southwest") of two Boeing 737-200 aircraft (the "Southwest
Aircraft") were schedule to expire in accordance with their original
terms. The associated nonrecourse debt was repaid upon the receipt of
the final rental installment. Southwest and the Partnership agreed to
extend Southwest's leases for one additional year for a monthly rent
of approximately 28% of the original lease rate. The Partnership
provided an allowance for equipment impairment of $750,000 to
recognize the loss in value of such aircraft for the year ended
December 31, 1994.
On November 30, 1995, the lease extensions with Southwest were
scheduled to expire in accordance with their terms. Southwest and the
Partnership agreed to a two year extension of each lease which
provides for monthly rentals of 125% of the previous lease rate.
The net carrying value of the Southwest Aircraft aggregated
approximately $3,514,000 and $4,913,000 (net of allowances for
equipment impairment aggregating approximately $10,400,000 previously
provided) at December 31, 1996 and 1995, respectively.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
14 STATUS OF INTEGRATED
On February 13, 1990, Integrated, the former parent of Equipment
Management, the Corporate General Partner and IREG, filed a
voluntary petition for reorganization under Chapter 11 of the United
States Bankruptcy Code. While the Integrated bankruptcy did not
directly affect the Partnership's operations, it has resulted in
certain changes.
On August 8, 1994, the Bankruptcy Court confirmed a Plan of
Reorganization (the "Steinhardt Plan") proposed by Steinhardt
Management Company and the Official Committee of Subordinated
Bondholders, and on November 3, 1994, the Steinhardt Plan was
consummated. Presidio purchased substantially all of the assets of
Integrated, including its interest in Equipment Management, the
Corporate General Partner and IREG. Presidio is a British Virgin
Islands corporation owned 12% by IR Partners, a general partnership,
and 88% by former creditors of Integrated.
In March 1995, Presidio elected new directors for Equipment
Management. However, some of its executive officers remain the same
and certain of Integrated's former employees who performed services
with respect to the Partnership have been hired by Wexford
Management Corp., formerly Concurrency Management Corp., which
provides management and administrative services to Presidio, its
direct and indirect subsidiaries, as well as to the Partnership.
Effective January 1, 1996, Wexford Management Corp. assigned its
agreement to provide management and administrative services to
Presidio and its subsidiaries to Wexford.
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Additions
-------------------------
Balance at Charged to Charged Balance
Beginning of Costs and to Other Additions at End
Description Period Expenses Accounts (Deductions) of Period
----------- ------ -------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Leased equipment accounted for
under the operating method -
valuation allowance for equipment
impairment
Equipment for management
information systems ......... $ 183,951 $ 50,000 $ -- $ (211,516) (A) $ 22,435
Transportation and related equipment 20,409,450 -- -- -- 20,409,450
Equipment held for lease or sale -
valuation allowance for equipment
impairment
Equipment for management
information systems ......... 17,619 -- -- (17,619) (A) --
Transportation and related equipment 2,595,000 -- -- -- 2,595,000
Allowance for uncollectible accounts -
accounts receivable ................ -- -- -- -- --
------------ ------------ --------- ----------- ------------
$ 23,206,020 $ 50,000 $ -- $ (229,135) $ 23,026,885
------------ ------------ --------- ----------- ------------
<PAGE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Additions
-------------------------
Balance at Charged to Charged Balance
Beginning of Costs and to Other Additions at End
Description Period Expenses Accounts (Deductions) of Period
----------- ------ -------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
Leased equipment accounted for
under the operating method -
valuation allowance for equipment
impairment
Equipment for management
information systems ......... $ 338,978 $ 7,000 $ -- $ (162,027) (A) $ 183,951
Transportation and related equipment 23,909,450 -- -- (3,500,000) (A) 20,409,450
Telephone equipment ................ 210,363 1,000 -- (211,363) (A) --
Equipment held for lease or sale -
valuation allowance for equipment
impairment
Equipment for management
information systems ......... 51,289 -- -- (33,670) (A) 17,619
Transportation and related equipment 5,525,000 -- -- (2,930,000) (A) 2,595,000
Allowance for uncollectible accounts -
accounts receivable ................ 1,628,286 -- -- (1,628,286) (C) --
------------ ------------ --------- ----------- ------------
$ 31,663,366 $ 8,000 $ -- $(8,465,346) $ 23,206,020
============ ============ ======== =========== ============
<PAGE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Additions
-------------------------
Balance at Charged to Charged Balance
Beginning of Costs and to Other Additions at End
Description Period Expenses Accounts (Deductions) of Period
----------- ------ -------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Leased equipment accounted for
under the operating method -
valuation allowance for equipment
impairment
Equipment for management
information systems ......... $ 901,880 $ 159,000 $ -- $ (721,902) (A) $ 338,978
Transportation and related equipment 27,934,450 1,250,000 -- (5,275,000) (B) 23,909,450
Telephone equipment ................ 129,363 81,000 -- -- 210,363
Equipment held for lease or sale -
valuation allowance for equipment
impairment
Equipment for management
information systems ......... 186,611 -- -- (135,322) (A) 51,289
Transportation and related equipment -- 250,000 -- 5,275,000 (B) 5,525,000
Allowance for uncollectible accounts -
accounts receivable ................ 1,425,660 202,626 -- -- 1,628,286
------------ ------------ --------- ------------- ------------
$ 30,577,964 $ 1,942,626 $ -- $ (857,224) $ 31,663,366
============ ============ ========= ============== ============
(A) Amounts represent valuation allowances for equipment impairment relating to
certain equipment sold during 1996, 1995 and 1994.
(B) Amounts represent reclassification of valuation allowance for equipment
impairment relating to certain equipment held for lease or sale at December 31,
1994.
(C) Amounts represent allowance for uncollectible acounts written off during
1995.
</TABLE>
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of Registrant
Registrant has no officers or directors. The Managing General Partner manages
and controls substantially all of Registrant's affairs and has general
responsibility and ultimate authority in all matters affecting its business. The
officers and directors of the Corporate General Partner and the Associate
General Partner, in their respective capacities as such, do not devote any
material amount of their business time and attention to Registrant's affairs.
The names and positions held by the officers and directors of the Managing
General Partner are described below. The officers and directors of the Corporate
General Partner are the same as the officers and directors of the Managing
General Partner.
<TABLE>
<CAPTION>
Has served as a Director and/or
Officer of the Managing General
Name Positions Held Partner Since
- ---- -------------- -------------
<S> <C> <C>
Robert Holtz Director and Vice President November 1994
- --------------------------- -------------------------------------------- ------------------------
Mark Plaumann Director and Vice President March 1995
- --------------------------- -------------------------------------------- ------------------------
Douglas J. Lambert President, Treasurer and Secretary March 1995
- --------------------------- -------------------------------------------- ------------------------
Jay L. Maymudes Vice President November 1994
- --------------------------- -------------------------------------------- ------------------------
Arthur H. Amron Vice President and Assistant Secretary November 1994
- --------------------------- -------------------------------------------- ------------------------
</TABLE>
Each director and officer of the Managing General Partner will hold office until
the next annual meeting of stockholders of the Managing General Partner and
until his successor is elected and qualified.
The Managing General Partner also acts as the managing general partner of
American Leasing Investors VIII-B L.P.. The foregoing partnership is or was in
the past engaged in the acquisition, leasing and disposition of equipment.
There are no family relationships between or among any of the directors and/or
executive officers of the Managing General Partner.
Robert Holtz, age 29, has been a Vice President and Director of the Managing
General Partner since November 1994, a Vice President and Secretary of Presidio
since its formation in August 1994 and a Vice President and Assistant Secretary
of Resurgence Properties, Inc. ("Resurgence"), a company engaged in diversified
real estate activities since its formation in March 1994. Mr. Holtz is also a
Director and Vice President of XRC Corp., a holding company that holds certain
former assets of Integrated, since its formation in October 1994. Mr. Holtz has
been a Member and Senior Vice President of Wexford since January 1996. From May
1994 through December 1995, Mr. Holtz was employed as a Vice President of
Wexford Management Corp., the advisor and manager of Presidio and Resurgence.
From 1989 through May 1994, Mr. Holtz was employed by, and since 1993 was a Vice
President of, Bear Stearns Real Estate, a firm engaged in all aspects of real
estate, where he was responsible for analysis, acquisitions and management of
the assets owned by Bear Stearns Real Estate and its clients.
<PAGE>
Mark Plaumann, age 41, has been a Director and Vice President of the Managing
General Partner since March 1995. Mr. Plaumann has been a Senior Vice President
of Wexford since January 1996. Mr. Plaumann has been a director of Technology
Service Group, Inc., a comany engaged in the design, development, manufacturing
and sale of public communications products and services, since March 1997, and a
director in Wahlco Environmental Systems, Inc., a company engaged in the sale of
air pollution control and specialty engineered products, since June 1996. From
February 1995 through December 1995, Mr. Plaumann was employed by Wexford
Management Corp. as a Vice President. Mr. Plaumann was employed by Alvarez &
Marsal, Inc., a crisis management consultant, as a Managing Director from
February 1990 through January 1995, by American Healthcare Management, Inc., an
owner operator of hospitals from February 1985 to January 1990, and by Ernst &
Young from January 1973 to February 1985.
Douglas J. Lambert, age 39, was elected President, Treasurer and Secretary of
the Managing General Partner in March 1995. Mr. Lambert has been a Vice
President of Wexford since January 1996. From November 1994 through December
1995, Mr. Lambert was employed by Wexford Management Corp. as an officer of the
various equipment leasing subsidiaries of Presidio. Mr. Lambert joined
Integrated in 1983, and has held various financial reporting positions for both
public and private equipment leasing affiliates of Integrated. In 1992, Mr.
Lambert became Senior Vice President in charge of finance in the Aircraft
Group/Private Placement Division.
Jay L. Maymudes, age 36, has been a Vice President of the Managing General
Partner since November 1994, the Chief Financial Officer, a Vice President and
Treasurer of Presidio since its formation in August 1994 and the Chief Financial
Officer and a Vice President of Resurgence since July 1994. In addition, he
served as Assistant Secretary of Resurgence until February 1995, when he became
Secretary. Mr. Maymudes is also a Vice President, Secretary and Treasurer of XRC
Corp., since its formation in October 1994. Mr. Maymudes has been a Senior Vice
President and Chief Financial Officer of Wexford since January 1996. From July
1994 through December 1995, Mr. Maymudes was employed by Wexford Management
Corp. as the Chief Financial Officer and a Vice President. From December 1988
through June 1994, Mr. Maymudes was the Secretary and Treasurer, and since
February 1990 was the Senior Vice President of Dusco, Inc., a real estate
investment advisor.
Arthur H. Amron, age 40, has been a Vice President and Assistant Secretary of
the Managing General Partner and certain other subsidiaries of Presidio since
November 1994. Mr. Amron has been a Senior Vice President and General Counsel of
Wexford since January 1996. From November 1994 through December 1995, Mr. Amron
was employed by Wexford Management Corp. as Vice President and General Counsel.
From 1992 through November 1994, Mr. Amron was an attorney with the law firm of
Schulte, Roth & Zabel. From 1984 through 1992, Mr. Amron was an attorney with
the law firm of Debevoise & Plimpton.
Messrs. Holtz and Plaumann also serve as directors of the general partners of
the following limited partnerships whose limited partnership units are
registered under Section 12 of the Exchange Act: Aircraft Income Partners L.P.
(Holtz and Plaumann), High Cash Partners, L.P. (Holtz and Plaumann), Resources
Pension Shares 5, L.P. (Holtz) and Vista Properties (Plaumann). Each of the
foregoing general partners is affiliated with the Managing General Partner.
Presidio Boram Corp., the Associate General Partner, is a wholly owned
subsidiary of Presidio, whose directors are Messrs. Holtz and Plaumann.
Registrant believes, based on written representations received by it, that for
the 1995 Period all filing requirements under Section 16(a) of the Securities
Exchange Act of 1934 applicable to beneficial owners of Registrant's securities,
Registrant's general partners and the officers and directors of such general
partners, were complied with.
<PAGE>
Item 11. Executive Compensation
Registrant is not required to pay the officers or directors of the Managing
General Partner, the Corporate General Partner, the Associate General Partner or
the general partners of the former Associate General Partner any remuneration.
The Managing General Partner does not presently pay any remuneration to any of
its officers or directors. (See Item 13, "Certain Relationships and Related
Transactions".)
Certain officers and directors of the Managing General Partner receive
compensation from affiliates of the Managing General Partner (but not from
Registrant) for services performed for various affiliated entities, which may
include services performed for Registrant; however, the Managing General partner
believes that any compensation attributable to services performed for Registrant
is immaterial. See Item 13, "Certain Relationships and Related Transactions".
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 1, 1997, no person owned of record or was known by Registrant to own
beneficially more than 5% of the Units of Registrant.
As of March 1, 1997, none of the officers and directors of the Managing General
Partner or the Corporate General Partner was known by Registrant to beneficially
own Units or shares of Presidio, the parent of the Managing General Partner and
the Corporate General Partner.
The following table sets forth certain information known to Registrant with
respect to beneficial ownership of the Class A Shares of Presidio as of March 1,
1997, by each person who beneficially owns 5% or more of the Class A Shares,
U.S. $.01 par value. The holders of Class A Shares are entitled to elect three
out of the five members of Presidio's Board of Directors with the remaining two
directors being elected by holders of the Class B Shares, U.S. $.01 par value of
Presidio.
<TABLE>
<CAPTION>
Beneficial Ownership
Name of Beneficial Owner Number of Shares Percentage Outstanding
- ------------------------ ---------------- ----------------------
<S> <C> <C>
Thomas F. Steyer/Fleur A. Fairman 4,553,560(1) 51.8%
- -----------------------------------------------------------------------------------------------
John M. Angelo/Michael L. Gordon 1,231,762(2) 14.0%
- -----------------------------------------------------------------------------------------------
Intermarket Corp. 1,000,918(3) 11.4%
- -----------------------------------------------------------------------------------------------
M. H. Davidson and Co. 474,205(4) 5.4%
- -----------------------------------------------------------------------------------------------
(1) As the managing partners of each of Farallon Capital Partners, L.P.
("FCP"), Farallon Capital Institutional Partners, L.P. ("FCIP"), Farallon
Capital Institutional Partners II, L.P. ("FCIP II") and Tinicum Partners,
L.P. ("Tinicum"), (collectively, the "Farallon Partnerships"), may each
be deemed to own beneficially for purposes of Rule 13d-3 of the Exchange
Act the 1,397,318, 1,610,730, 607,980 and 241,671 shares held,
respectively, by each of such Farallon Partnerships.
<PAGE>
Farallon Capital Management, LLC ("FCMLLC"), the investment advisor to
certain discretionary accounts which collectively hold 695,861 shares and
Enrique H. Boilini, David I. Cohen, Joseph F. Downes, Jason M. Fish,
Andrew B. Fremder, William F. Mellin, Steven L. Millham, Meridee A. Moore
and Thomas F. Steyer, as a managing member of FCMLLC (collectively, the
"Managing Members") may be deemed to be the beneficial owner of all of
the shares owned by such discretionary accounts. FCMLLC and each Managing
Member disclaims any beneficial ownership of such shares.
Farallon Partners, LLC ("FPLLC") (the general partner of FCP, FCIP, FCIP
II and Tinicum), and each of Fleur A. Fairman, Mr. Boilini, Mr. Cohen,
Mr. Downes, Mr. Fish, Mr. Fremder, Mr. Mellin, Mr. Millham, Ms. Moore and
Mr. Steyer, each as managing member of FPLLC (collectively, the "Managing
Members"), may be deemed to be the beneficial owner of all of the shares
owned by FCP, FCIP, FCIP II and Tinicum. FPLLC and each managing Member
disclaims any beneficial ownership of such shares.
(2) John M. Angelo and Michael L. Gordon, the general partners and
controlling persons of AG Partners, L.P., which is the general partner of
Angelo, Gordon & Co., L.P., may be deemed to have beneficial ownership
under Section 13(d) of the Exchange Act of the securities beneficially
owned by Angelo, Gordon & Co., L.P. and its affiliates. Angelo, Gordon &
Co., L.P., a registered investment advisor, serves as general partner of
various limited partnerships and as investment advisor of third party
accounts with power to vote and direct the disposition of Class A Shares
owned by such limited partnerships and third party accounts.
(3) Intermarket Corp. serves as General Partner for certain limited
partnerships and as investment advisor to certain corporations and
foundations. As a result of such relationships, Intermarket Corp. may be
deemed to have the power to vote and the power to dispose of Class A
shares held by such partnerships, corporations and foundations.
(4) Marvin H. Davidson, Thomas L. Kempner Jr., Stephen M. Dowicz, Scott E.
Davidson and Michael J. Leffell, the general partners, members and
stockholders of certain entities that are general partners or investment
advisors of Davidson Kempner Endowment Partners, L.P., Davidson Kempner
Partners, L.P., Davidson Kempner Institutional Partners, L.P., M.H.
Davidson and Co., Davidson Kempner International Ltd. (collectively, the
"Investment Funds"), may be deemed to be the beneficial owners under
Section 13(d) of the Exchange Act of the securities beneficially owned
by the Investment Funds and their affiliates.
In addition, Mr. Kempner owns 800 shares and may be deemed to
beneficially own certain securities held by certain foundations and
trusts. Mr. Kempner disclaims beneficial ownership of such shares.
</TABLE>
All of Presidio's Class B Shares are owned by IR Partners. Such Class B Shares
are convertible in certain circumstances into 1,200,000 Class A Shares; however,
such shares are not convertible at present. IR Partners is a general partnership
whose general partners are Steinhardt Management, certain of its affiliates and
accounts managed by it and Roundhill Associates. Roundhill Associates, is a
limited partnership whose general partner is Charles E. Davidson, the principal
of Presidio Management, the Chairman of the Board of Presidio and a Member of
Wexford. Joseph M. Jacobs, the Chief Executive Officer and President of Presidio
<PAGE>
and a Member and the President of Wexford, has a limited partner's interest in
Roundhill Associates. Pursuant to Rule 13d-3 under the Exchange Act, each of
Michael H. Steinhardt, the controlling person of Steinhardt Management and its
affiliates and Charles E. Davidson may be deemed to be beneficial owners of such
1,200,000 shares.
Shares held by each Class A Director of Presidio were issued pursuant to a
Memorandum of Understanding Regarding Compensation of Class A Directors of
Presidio. (See "Executive Compensation - Compensation of Directors.")
The address of Thomas F. Steyer and the other individuals mentioned in footnote
1 to the table above (other than Fleur A. Fairman) is c/o Farallon Capital
Partners, L.P., One Maritime Plaza, San Francisco, California 94111 and the
address of Fleur A. Fairman is c/o Farallon Capital Management, Inc., 800 Third
Avenue, 40th Floor, New York, New York 10022. The address of Angelo, Gordon &
Co., L.P. and its affiliates is 245 Park Avenue, 26th Floor, New York, New York
10167. The address for Intermarket Corp. Is 667 Madison Avenue, New York, New
York 10021. The address for M.H. Davidson and Co. is 885 Third Ave., New York,
New York, 10022.
Item 13. Certain Relationships and Related Transactions
The Managing General Partner, the Corporate General Partner and the Associate
General Partner received $24,128, $2,985 and $2,736, respectively, from
Registrant as their share of distributions of cash from operations and cash from
sales for the 1996 Period. No director or officer of the Managing General
Partner received any direct remuneration from Registrant during the 1996 Period.
For a description of the interest of the Managing General Partner, the Corporate
General Partner and the Associate General Partner in cash from operations, cash
from sales and cash from equipment reserve account, reference is made to the
material contained in the Prospectus under the heading MANAGEMENT COMPENSATION,
which is incorporated herein by reference.
IREG provides equipment management services to Registrant pursuant to the
Management Agreement for a fee based upon a percentage of Registrant's gross
revenues from the equipment in its portfolio. Such equipment management fees
aggregated $149,445 for the 1996 Period. Pursuant to the Management Agreement
referred to above, IREG is also entitled to receive (i) partnership management
fees of 4% of cash from operations and (ii) a subordinated incentive fee equal
to 14% of distributions to partners of cash from sales and cash from equipment
reserve account (and an additional 10% of cash from operations) after certain
returns have been achieved. See the material contained in the Prospectus under
the heading MANAGEMENT COMPENSATION, which is incorporated herein by reference,
for a description of the agreement. During the 1996 Period, Registrant had paid
or accrued for payment $115,941 as partnership management fees under this
agreement. See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for the discussion of the possible impact
of declining management fees on IREG and Registrant.
Certain officers and/or directors of the Managing General Partner receive
compensation from affiliates of the Managing General Partner (but not from
Registrant) for services performed for various affiliated entities, which may
include services performed for Registrant.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
1. Financial Statements
See Index to Financial Statements in Part II, Item 8.
2. Financial Statement Schedule
Schedule II. Valuation and Qualifying Accounts (see Index
to Financial Statements in Part II, Item 8).
3. Exhibits
3.1 Certificate of Limited Partnership of Registrant, filed on
July 11, 1986.*
3.2 Partnership Agreement of Registrant, dated as of July 21,
1986, as amended and restated as of December 22, 1986
(included as Exhibit A to Exhibit 28).**
3.3 Amendment to Certificate of Limited Partnership.
10.1 Participation Agreement, dated as of June 1, 1988, among First
Security Bank of Utah, N.A. (the "Bank"), Registrant and
Midway Airlines, Inc.***
10.2 Lease Agreement, dated as of June 1, 1988, between the Bank
and Midway Airlines, Inc.***
10.3 Aircraft Purchase Agreement, dated as of June 1, 1988, among
the Bank, Registrant and Midway Airlines, Inc.***
10.4 Participation Agreement, dated as of July 15, 1988, among the
Bank, Registrant and Aloha Airlines, Inc.***
10.5 Lease Agreement, dated as of July 15, 1988, between the Bank
and Aloha Airlines, Inc.***
10.6 Aircraft Purchase Agreement, dated as of July 15, 1988,
between the Bank and Aloha Airlines, Inc.***
10.7 Participation Agreement, dated as of October 25, 1988, among
the Bank, Registrant, Security Pacific Equipment Leasing, Inc.
and Hawaiian Airlines.***
10.8 Aircraft Lease, dated as of October 25, 1988, between the Bank
and Hawaiian Airlines, Inc.***
10.9 Aircraft Purchase Agreement, dated as of May 5, 1988, between
Hawaiian Airlines, Inc. and Trust Company for USL, Inc.***
10.10 Lease Agreement, dated as of January 3, 1989, between the Bank
and Southwest Airlines Co.***
10.11 Mortgage and Security Agreement, dated as of January 3, 1989,
between the Bank and John Hancock Leasing Corporation.***
<PAGE>
10.12 Participation Agreement, dated as of January 3, 1989, among
the Bank, Registrant, Southwest Airlines Co. and John Hancock
Leasing Corporation.***
10.13 Lease Agreement, dated as of January 4, 1989, between the Bank
and Southwest Airlines Co.***
10.14 Mortgage and Security Agreement, dated as of January 4, 1989,
between the Bank and John Hancock Leasing Corporation.***
10.15 Participation Agreement, dated as of January 4, 1989, among
the Bank, Registrant, Southwest Airlines Co. and John Hancock
Leasing Corporation.***
10.16 Loan Agreement, dated as of January 17, 1989, among
Registrant, the Bank, John Hancock Leasing Corporation, New
England Mutual Life Insurance Company and Meridian Trust
Company.***
10.17 Loan Agreement, dated as of January 18, 1989, among
Registrant, the Bank, John Hancock Leasing Corporation, New
England Mutual Life Insurance Company and Meridian Trust
Company.***
10.18 Management Agreement between Registrant and ALI Leasing
Service Corp., dated July 20, 1986.****
10.19 Acquisition and Disposition Services Agreement between
Registrant and ALI Leasing Service Corp., dated July 20,
1986.*****
10.20 Settlement Agreement, dated as of August 21, 1992, between
First Security Bank of Utah, N.A. and Alaska Airlines,
Inc.******
10.21 Escrow Agreement, dated August 21, 1992, between Alaska
Airlines, Inc. and First Security Bank of Utah, N.A.******
10.22 Lease Amendment No. 2, dated as of November 5, 1992, between
Hawaiian Airlines, Inc. and First Security Bank of Utah,
N.A.******
10.23 Mortgage Amendment No. 2, dated as of November 5, 1992 between
First Security Bank of Utah, N.A. and Security Pacific
Equipment Leasing, Inc.******
10.24 Interim Settlement Agreement, dated as of January 27, 1993
between Integrated Aircraft Corp., IAC Leasing Corp. IV, IAC
Leasing Corp V, Integrated Aircraft Fund Management Corp and
ALI Equipment Management Corp. and Hawaiian Airlines,
Inc.******
10.25 Agreement dated as of March 4, 1993, between Aircraft Income
Partners, L.P., Aircraft Income Partners II, L.P., and
National Lease Income Fund 6, L.P. and HAL, Inc. and Hawaiian
Airlines, Inc.******
<PAGE>
10.26 Form of Lease Agreement, dated as of January 5, 1993, between
First Security Bank of Utah, N.A., as Trustee for the benefits
of Registrant and Continental Airlines. Note: substantially
identical leases in all material respects except for aircraft
specific references were entered into with respect to two
aircraft owned by First Security Bank of Utah, N.A., for the
benefit of Registrant.******
10.27 Form of Participation Agreement, dated as of January 5, 1993,
among First Security Bank of Utah, N.A., Registrant and
Continental Airlines. Note: substantially identical agreements
in all material respects except for aircraft specific
references were entered into with respect to two aircraft
owned by First Security Bank of Utah, N.A., for the benefit of
Registrant.******
10.28 Second Lease Extension Agreement, dated as of July 5, 1995,
between First Security Bank of Utah, National Association and
Southwest Airlines Co.
10.29 Second Lease Extension Agreement, dated as of July 5, 1995,
between First Security Bank of Utah, National Association and
Southwest Airlines Co.
10.30 Second Lease Amendment and Extension Agreement, dated as of
July 12, 1995, between First Security Bank of Utah, National
Association and Aloha Airlines Inc.
10.31 Purchase Agreement, dated as of March 31, 1995, between
Coastal Airlines ("Purchaser"), First Security Bank of Utah,
National Association ("Trustee") and National Lease Income
Fund 6 L.P. ("Beneficiary").
10.32 Amended and Restated Aircraft Purchase Agreement, dated as of
September 7, 1995, between ELTA Electronics Industries Ltd.
("Purchaser Beneficiary"), First Security Bank of Utah,
National Association ("Purchaser"), National Lease Income Fund
6 L.P. ("Seller Beneficiary") and First Security Bank of Utah,
National Association ("Seller").
28 Prospectus of Registrant, dated December 31, 1986, as
supplemented by supplements dated March 13, 1987, July 6,
1987, September 1, 1987, November 30, 1987, March 25, 1988 and
May 16, 1988.***
(b). Current Reports on Form 8-K filed during the last quarter of
Registrant's fiscal year.
None.
<PAGE>
* Incorporated by reference to Exhibit 4 to Registrant's Registration
Statement on Form S-1, dated August 13, 1986.
** Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form S-1, dated May 20, 1988.
*** Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form S-1, dated May 20, 1988.
**** Incorporated by reference to Exhibit 10(b) to Registrant's Registration
Statement on Form S-1, dated May 20, 1988.
***** Incorporated by reference to Exhibit 10(c) to Registrant's Registration
Statement on Form S-1, dated May 20, 1988.
****** Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, File No. 0-15643.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized on the 29th day of March, 1997.
NATIONAL LEASE INCOME FUND 6, L.P.
By: ALI EQUIPMENT MANAGEMENT CORP.
Managing General Partner
Date
By: /s/ Douglas J. Lambert March 29, 1997
----------------------
Douglas J. Lambert
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant in their
capacities as directors and/or officers (as to the Managing General Partner) on
the date indicated below.
Signature Title Date
--------- ----- ----
/s/Douglas J. Lambert President March 29, 1997
- ---------------------
Douglas J. Lambert (Principal Executive and
Financial Officer)
/s/Robert Holtz Director and Vice President March 29, 1997
- ---------------
Robert Holtz
/s/Mark Plaumann Director and Vice President March 29, 1997
- ----------------
Mark Plaumann
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- -------
3.1 Certificate of Limited Partnership of Registrant, filed on July 11,
1986.*
3.2 Partnership Agreement of Registrant, dated as of July 21, 1986, as
amended and restated as of December 22, 1986 (included as Exhibit A to
Exhibit 28).**
3.3 Amendment to Certificate of Limited Partnership.
10.1 Participation Agreement, dated as of June 1, 1988, among First Security
Bank of Utah, N.A. (the "Bank"), Registrant and Midway Airlines, Inc.***
10.2 Lease Agreement, dated as of June 1, 1988, between the Bank and Midway
Airlines, Inc.***
10.3 Aircraft Purchase Agreement, dated as of June 1, 1988, among the Bank,
Registrant and Midway Airlines, Inc.***
10.4 Participation Agreement, dated as of July 15, 1988, among the Bank,
Registrant and Aloha Airlines, Inc.***
10.5 Lease Agreement, dated as of July 15, 1988, between the Bank and Aloha
Airlines, Inc.***
10.6 Aircraft Purchase Agreement, dated as of July 15, 1988, between the Bank
and Aloha Airlines, Inc.***
10.7 Participation Agreement, dated as of October 25, 1988, among the Bank,
Registrant, Security Pacific Equipment Leasing, Inc. and Hawaiian
Airlines.***
10.8 Aircraft Lease, dated as of October 25, 1988, between the Bank and
Hawaiian Airlines, Inc.***
10.9 Aircraft Purchase Agreement, dated as of May 5, 1988, between Hawaiian
Airlines, Inc. and Trust Company for USL, Inc.***
10.10 Lease Agreement, dated as of January 3, 1989, between the Bank and
Southwest Airlines Co.***
10.11 Mortgage and Security Agreement, dated as of January 3, 1989, between the
Bank and John Hancock Leasing Corporation.***
10.12 Participation Agreement, dated as of January 3, 1989, among the Bank,
Registrant, Southwest Airlines Co. and John Hancock Leasing
Corporation.***
10.13 Lease Agreement, dated as of January 4, 1989, between the Bank and
Southwest Airlines Co.***
10.14 Mortgage and Security Agreement, dated as of January 4, 1989, between the
Bank and John Hancock Leasing Corporation.***
<PAGE>
10.15 Participation Agreement, dated as of January 4, 1989, among the Bank,
Registrant, Southwest Airlines Co. and John Hancock Leasing Corporation.
***
10.16 Loan Agreement, dated as of January 17, 1989, among Registrant, the Bank,
John Hancock Leasing Corporation, New England Mutual Life Insurance
Company and Meridian Trust Company.***
10.17 Loan Agreement, dated as of January 18, 1989, among Registrant, the Bank,
John Hancock Leasing Corporation, New England Mutual Life Insurance
Company and Meridian Trust Company.***
10.18 Management Agreement between Registrant and ALI Leasing Service Corp.,
dated July 20, 1986.****
10.19 Acquisition and Disposition Services Agreement between Registrant and ALI
Leasing Service Corp., dated July 20, 1986.*****
10.20 Settlement Agreement, dated as of August 21, 1992, between First Security
Bank of Utah, N.A. and Alaska Airlines, Inc.******
10.21 Escrow Agreement, dated August 21, 1992, between Alaska Airlines, Inc.
and First Security Bank of Utah, N.A.******
10.22 Lease Amendment No. 2, dated as of November 5, 1992, between Hawaiian
Airlines, Inc. and First Security Bank of Utah, N.A.******
10.23 Mortgage Amendment No. 2, dated as of November 5, 1992 between First
Security Bank of Utah, N.A. and Security Pacific Equipment Leasing,
Inc.******
10.24 Interim Settlement Agreement, dated as of January 27, 1993 between
Integrated Aircraft Corp., IAC Leasing Corp. IV, IAC Leasing Corp V,
Integrated Aircraft Fund Management Corp and ALI Equipment Management
Corp. and Hawaiian Airlines, Inc.******
10.25 Agreement dated as of March 4, 1993, between Aircraft Income Partners,
L.P., Aircraft Income Partners II, L.P., and National Lease Income Fund
6, L.P. and HAL, Inc. and Hawaiian Airlines, Inc.******
10.26 Form of Lease Agreement, dated as of January 5, 1993, between First
Security Bank of Utah, N.A., as Trustee for the benefits of Registrant
and Continental Airlines. Note: substantially identical leases in all
material respects except for aircraft specific references were entered
into with respect to two aircraft owned by First Security Bank of Utah,
N.A., for the benefit of Registrant.******
10.27 Form of Participation Agreement, dated as of January 5, 1993, among First
Security Bank of Utah, N.A., Registrant and Continental Airlines. Note:
substantially identical agreements in all material respects except for
aircraft specific references were entered into with respect to two
aircraft owned by First Security Bank of Utah, N.A., for the benefit of
Registrant.******
10.28 Second Lease Extension Agreement, dated as of July 5, 1995, between First
Security Bank of Utah, National Association and Southwest Airlines Co.
10.29 Second Lease Extension Agreement, dated as of July 5, 1995, between First
Security Bank of Utah, National Association and Southwest Airlines Co.
<PAGE>
10.30 Second Lease Amendment and Extension Agreement, dated as of July 12,
1995, between First Security Bank of Utah, National Association and Aloha
Airlines Inc.
10.31 Purchase Agreement, dated as of March 31, 1995, between Coastal Airlines
("Purchaser"), First Security Bank of Utah, National Association
("Trustee") and National Lease Income Fund 6 L.P. ("Beneficiary").
10.32 Amended and Restated Aircraft Purchase Agreement, dated as of September
7, 1995, between ELTA Electronics Industries Ltd. ("Purchaser
Beneficiary"), First Security Bank of Utah, National Association
("Purchaser"), National Lease Income Fund 6 L.P. ("Seller Beneficiary")
and First Security Bank of Utah, National Association ("Seller").
28 Prospectus of Registrant, dated December 31, 1986, as supplemented by
supplements dated March 13, 1987, July 6, 1987, September 1, 1987,
November 30, 1987, March 25, 1988 and May 16, 1988.***
- ------------------------
* Incorporated by reference to Exhibit 4 to Registrant's Registration
Statement on Form S-1, dated August 13, 1986.
** Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form S-1, dated May 20, 1988.
*** Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form S-1, dated May 20, 1988.
**** Incorporated by reference to Exhibit 10(b) to Registrant's Registration
Statement on Form S-1, dated May 20, 1988.
*****Incorporated by reference to Exhibit 10(c) to Registrant's Registration
Statement on Form S-1, dated May 20, 1988.
****** Incorporated by reference to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992, File No. 0-15643.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the financial
statements of the December 31, 1996 Form 10-K of National Income Fund 6 L.P. and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,481,745
<SECURITIES> 0
<RECEIVABLES> 274,076
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,015,110
<PP&E> 33,986,314
<DEPRECIATION> 22,509,187
<TOTAL-ASSETS> 15,492,237
<CURRENT-LIABILITIES> 1,107,382
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,384,855
<TOTAL-LIABILITY-AND-EQUITY> 15,492,237
<SALES> 0
<TOTAL-REVENUES> 3,228,134
<CGS> 0
<TOTAL-COSTS> 708,264
<OTHER-EXPENSES> 2,276,515
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,179
<INCOME-PRETAX> 235,176
<INCOME-TAX> 0
<INCOME-CONTINUING> 235,176
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 235,176
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
