UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
Commission file 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 of (I.R.S. Employer
incorporation or organization) Identification No.)
411 West Putnam Avenue, Suite 270 Greenwich, CT 06830
(Address of principal executive offices)
(203) 862-7444
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check whether the 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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
FORM 10-Q - MARCH 31, 1998
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS - March 31, 1998 and December 31, 1997 .................
STATEMENTS OF OPERATIONS - For the three months ended
March 31, 1998 and 1997 ..........................................
STATEMENT OF PARTNERS' EQUITY - For the three months ended
March 31, 1998 ...................................................
STATEMENTS OF CASH FLOWS - For the three months ended
March 31, 1998 and 1997 ..........................................
NOTES TO FINANCIAL STATEMENTS .........................................
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ............................
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS ...............................................
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K ................................
SIGNATURES .....................................................................
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
BALANCE SHEETS
March 31, December 31,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Leased equipment
Accounted for under the operating method, net of
accumulated depreciation of $16,533,756 and
$16,346,755 and allowance for equipment
impairment of $15,209,450 .................... $ 8,260,636 $ 9,679,601
Equipment held for lease or sale - net of accumulated
depreciation of $6,809,320 and an allowance
for equipment impairment of $6,367,750 ........... 1,231,964 --
Cash and cash equivalents ........................... 5,364,134 4,796,456
Deferred costs ...................................... 112,161 112,161
Other receivables and prepaid expenses .............. 37,823 26,188
Note receivable ..................................... -- 3,481
----------- -----------
$15,006,718 $14,617,887
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Deferred aircraft upgrade payable ................... $ 100,000 $ 100,000
Accounts payable and accrued expenses ............... 165,729 120,608
Deferred income ..................................... 69,250 69,250
----------- -----------
Total liabilities ................................ 334,979 289,858
----------- -----------
Commitments and contingencies
Partners' equity
Limited partners' equity (300,005 units issued
and outstanding) ................................. 14,515,171 14,174,898
General partners' equity ............................ 156,568 153,131
----------- -----------
Total partners' equity ........................... 14,671,739 14,328,029
----------- -----------
$15,006,718 $14,617,887
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF OPERATIONS
For the three months ended
March 31,
1998 1997
-------- --------
<S> <C> <C>
Revenues
Rental .......................................... $615,500 $721,289
Interest ........................................ 64,024 45,846
Other ........................................... 2,240 --
-------- --------
681,764 767,135
-------- --------
Costs and expenses
Depreciation .................................... 187,001 536,841
Operating ....................................... 83,297 55,335
General and administrative ...................... 36,981 54,748
Fees to affiliates .............................. 30,775 65,065
-------- --------
338,054 711,989
-------- --------
Net income ........................................... $343,710 $ 55,146
======== ========
Net income attributable to
Limited partners ................................ $340,273 $ 54,595
General partners ................................ 3,437 551
-------- --------
$343,710 $ 55,146
======== ========
Net income per unit of limited partnership interest
(300,005 units outstanding) ..................... $ 1.13 $ 0.18
======== ========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENT OF PARTNERS' EQUITY
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
----------- ----------- -----------
<S> <C> <C> <C>
Balance, January 1, 1998 ....... $14,174,898 $ 153,131 $14,328,029
Net income for the three months
ended March 31, 1998 ...... 340,273 3,437 343,710
----------- ----------- -----------
Balance, March 31, 1998 ........ $14,515,171 $ 156,568 $14,671,739
=========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF CASH FLOWS
For the three months ended
March 31,
1998 1997
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net income ......................................... $ 343,710 $ 55,146
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation .................................... 187,001 536,841
Amortization of deferred costs .................. -- 28,129
Changes in assets and liabilities
Other receivables and prepaid expenses .......... (11,635) 18,881
Accounts payable and accrued expenses ........... 45,121 (29,927)
Due to affiliates ............................... -- (67,936)
----------- -----------
Net cash provided by operating activities 564,197 541,134
----------- -----------
Cash flows from investing activities
Note receivable collections ........................ 3,481 104,944
----------- -----------
Cash flows from financing activities
Distributions to partners .......................... -- (757,588)
----------- -----------
Net increase (decrease) in cash and cash equivalents .... 567,678 (111,510)
Cash and cash equivalents, beginning of period .......... 4,796,456 3,481,745
----------- -----------
Cash and cash equivalents, end of period ................ $ 5,364,134 $ 3,370,235
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
1 INTERIM FINANCIAL INFORMATION
The summarized financial information contained herein is unaudited;
however, in the opinion of management, all adjustments (consisting only
of recurring accruals) necessary for a fair presentation of such
financial information have been included. The accompanying financial
statements, footnotes and discussion should be read in conjunction with
the financial statements, related footnotes and discussions contained
in the National Lease Income Fund 6 L.P. (the "Partnership") annual
report on Form 10-K for the year ended December 31, 1997. The results
of operations for the three months ended March 31, 1998 are not
necessarily indicative of the results to be expected for the full year.
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.
For the three months ended March 31, 1998 and 1997, rental revenue
earned on a month-to-month basis comprised approximately 0% and 1%,
respectively, of total rental revenue recognized.
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.
Depreciation is computed using the straight-line method over the
estimated useful lives of such assets (five years for equipment for
management information systems 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.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 periods and such losses could be material.
Deferred costs
Deferred costs represent the payments 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. ("Alaska"). Deferred costs are amortized over the
terms of the remarketed lease.
Note receivable
Note receivable represents financing provided by the Partnership to a
lessee of certain aircraft for modifications made to such aircraft.
Such note was repaid at a rate of 9.31% per annum.
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") are wholly
owned subsidiaries of 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 business 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 the associate general
partner. On August 28, 1997, an affiliate of NorthStar Capital Partners
acquired all of the Class B shares of Presidio, the corporate parent of
the general partners. This acquisition, when aggregated with previous
acquisitions, caused NorthStar Capital Partners to acquire indirect
control of the general partners. On November 2, 1997, the
Administrative Services Agreement between Presidio and Wexford
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES(continued)
Management LLC ("Wexford"), the administrator for Presidio expired.
Pursuant to that agreement Wexford had authority to designate directors
of Equipment Management, the Corporate General Partner and the
associate general partner. Effective November 3, 1997, Wexford and
Presidio entered into a new Administrative Services Agreement, dated as
of November 3, 1997 (the "ASA"), which expired on May 3, 1998. Under
the terms of the ASA, Wexford provided consulting and administrative
services to Presidio and its affiliates, including Equipment
Management, the Corporate General Partner, the associate general
partner and the Partnership. Presidio also entered into a management
agreement with NorthStar Presidio Management Company, LLC ("NorthStar
Presidio"). Under the terms of the management agreement, NorthStar
Presidio provides the day-to-day management of Presidio and its direct
and indirect subsidiaries and affiliates. During the three months ended
March 31, 1998 and 1997, reimbursable expenses due to NorthStar
Presidio (1998) and Wexford (1997) from the Partnership amounted to
$2,596 and $4,922, respectively.
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 annual gross rental revenues if
services are performed by third parties under the active supervision of
Equipment Management, as defined in the Limited Partnership Agreement.
The Partnership incurred equipment management fees of $30,775 and
$36,065 for the three months ended March 31, 1998 and 1997,
respectively.
During the operating and liquidating stage of the Partnership, IREG is
entitled to a partnership management fee equal to 4% of cash from
operations as defined in the Limited Partnership Agreement, subject to
increase after the limited partners have received certain specified
minimum returns on their investment. The Partnership incurred
partnership management fees of $29,000 for the three months ended March
31, 1997. No partnership management fees were incurred for the three
months ended March 31, 1998.
The general partners are entitled to 1% of distributable cash from
operations, cash from sales or financing and cash from the equipment
reserve account and, in general, an allocation of 1% of taxable net
income or loss of the Partnership.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES(continued)
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.
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
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, other than legal fees, are paid by Equipment Management.
The agreement with Fieldstone was scheduled to terminate November 3,
1997. Equipment Management and certain affiliates are currently
negotiating a possible extension of the agreement. Fieldstone has
indicated that it will continue to perform services in respect of the
Partnership pending the conclusion of such negotiation.
4 COMMITMENTS AND CONTINGENCIES
a. Continental Micronesia, Inc.
On March 31, 1993, the Partnership leased 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 would recoup the aggregate cost of the Initial
Modifications over a 36-month period with interest at 9.31% per annum.
The remaining balance of available rent credits to be applied by
Continental towards such modifications was $100,000 as of March 31,
1998 and December 31, 1997.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
4 COMMITMENTS AND CONTINGENCIES (continued)
a. 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 has repaid Lessor Financing
Credits through monthly installments which were being amortized at the
rate of 9.31% per annum over 36 months. Through March 31, 1998, the
Partnership had provided financing aggregating approximately
$1,308,000. Such amount, net of amounts repaid, is reflected on the
accompanying balance sheets as Note Receivable at March 31, 1998 and
December 31, 1997. The net carrying value of both aircraft aggregated
approximately $8,260,636 and $8,447,630 (net of allowances for
equipment impairment aggregating approximately $15,209,450 provided in
prior periods) at March 31, 1998 and December 31, 1997 , 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.
b. 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.
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 provided
for monthly rentals of 125% of the previous lease rate. These leases
were scheduled to expire in December 1997.
The Partnership and Southwest have agreed to a short term extension of
the leases to facilitate the return of the aircraft. In January 1998,
one of the aircraft was returned and the second is scheduled to be
returned in August 1998. The Partnership is actively remarketing the
aircraft.
The net carrying value of the Southwest Aircraft aggregated
approximately $1,231,964 and $1,231,971 (net of allowances for
equipment impairment aggregating approximately $10,400,000 previously
provided) at March 31, 1998 and December 31, 1997, respectively.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership did not declare a cash distribution for the quarter ended March
31, 1998. As of March 31, 1998, the Partnership had operating reserves of
approximately $5,152,000 or $17.00 per unit, which was comprised of
undistributed cash from operations and sales, aggregating approximately
$3,652,000 as well as the general working capital reserve of $1,500,000.
The Partnership has not made any distributions with respect to the last 4
quarterly periods. Instead, it has increased operating reserves in order to have
funds available to make improvements to off-lease aircraft. During the quarter
ended March 31, 1998, operating reserves increased by approximately $616,000. As
the Partnership's aircraft come off-lease, the Partnership may need to use a
portion of its operating reserves and/or its cash flow, which would otherwise be
availabale for distribution, to upgrade or enhance these aircraft if the
Partnership determines that such expenditures are in its best interest in order
to maximize the remarketing value of such aircraft. The Partnership 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. Upgrade to aircraft may include "Hush Kits",
which reduce the 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,
the Partnership may be required to bear some of the related costs of compliance
with mandatory federal regulations covering maintenance and upgrading of aging
aircraft. The Partnership has decided to suspend distributions pending a
determination of the necessity to fund the foregoing costs.
The leasing arrangements entered into by the Partnership with respect to its
equipment generally provide for fixed or minimum rentals, and together with
available reserves, provide reasonable assurance that all of the Partnership's
operating needs, such as administrative costs and management fees, will be met
in the foreseeable future.
Although expense levels have been reduced, most of the Partnership's future
administrative expenses (i.e., accounting and investor services including
printing) are fixed and will not decrease significantly during the Partnership's
future operating period. 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 the Partnership during 1998 and 1997:
(i) On March 31, 1993, the Partnership leased 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").
Such aircraft had been originally leased to Alaska Airlines, Inc.
("Alaska") through August 14, 1992. In connection with the return of
such aircraft, it was determined that certain physical attributes of
the aircraft exceeded the related minimum return conditions provided
<PAGE>
Liquidity and Capital Resources (continued)
(i) (continued)
for in the leases. As a result, the Partnership paid Alaska
approximately $647,000 to reflect the value associated with such
attributes. Such amount has been reflected on the balance sheets on a
gross basis, net of amortization, at March 31, 1998 and December 31,
1997, 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
Partnership through the application of rental credits such that
Continental would recoup the aggregate cost of the Initial
Modifications over a 36-month period with interest at 9.31% per annum.
As of March 31, 1998, the remaining balance of available credit to be
applied by Continental towards such modifications costs was $100,000
and was included on the balance sheets as Deferred Aircraft Upgrade
Payable.
Further, Continental has made certain other modifications to the
aircraft for which the Partnership has agreed to provide financing
through credits ("Lessor Financing Credits") against base rental
payments due under the Air Mike Leases. The lessee will then repay any
Lessor Financing Credits through monthly payments which will be
amortized at the rate of 9.31% per annum over 36 months. Through March
31, 1998, the Partnership had provided financing aggregating
approximately $1,308,000 and all of such amount, have been repaid. At
March 31, 1998, the net carrying value of both aircraft aggregated
approximately $8,260,636 (net of allowances for equipment impairment
aggregating approximately $15,209,450 provided in prior periods).
(ii) 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
Partnership 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 extensions with Southwest were scheduled to
expire in accordance with their terms, and Southwest and the
Partnership agreed to extend the leases for two additional years at
125% of the then current lease rate. On December 5, 1997, the leases of
the Southwest Aircraft were scheduled to expire in accordance with
their terms. The Partnership and Southwest have agreed to a short term
extension of such leases to facilitate the orderly return of the
aircraft. In January 1998, one of the aircraft was returned and the
second is scheduled to be returned in August 1998. At March 31, 1998,
the net carrying value of the Southwest Aircraft aggregated
approximately $1,231,964 (net of allowances for equipment impairment
aggregating $10,400,000 previously provided).
<PAGE>
Liquidity and Capital Resources (continued)
As of March 31, 1998, the Partnership remained the owner of four aircraft and
related engines as well as one additional aircraft engine and components, which
in the aggregate represented 100% of its remaining equipment, on an original
cost basis. Such aircraft and engine had an original cost of approximately
$54,413,000 (net carrying value of approximately $9,493,000). All associated
nonrecourse debt related to the aircraft has been repaid. At March 31, 1998,
equipment with an original cost of approximately $8,041,000 is off-lease (on an
original cost basis).
The Partnership is currently investigating remarketing opportunities for the
Southwest Aircraft. There can be no assurance that the Partnership will be
successful with respect to its remarketing activities. The Partnership will
continue with its efforts to maximize the value of its remaining equipment
portfolio.
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. The Partnership
has encountered competition in attempting to lease its aircraft as they come off
lease due to a surplus in the market of narrow-body aircraft similar to four of
the aircraft owned by the Partnership . Additionally, there is competition from
newer and more fuel efficient aircraft which comply with the FAA noise
requirements. The Partnership 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.
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.
Inflation and changing prices have not had any material effect on the
Partnership's revenues since its inception nor does the Partnership anticipate
any material effect on its business from these factors.
Results of Operations
Net income increased for the three months ended March 31, 1998 as compared to
the three months ended March 31, 1997, as the reduction in revenue was more than
offset by the overall reduction in expenses. Additionally, there were no
dispositions of equipment during the three months ended March 31, 1998 and March
31, 1997.
<PAGE>
Results of Operations (continued)
Revenues decreased overall for the three months ended March 31, 1998 compared to
the corresponding period of the prior year. Rental income decreased due to the
expiration of Southwest lease in accordance with its terms subsequent to the
prior year's period.
Interest income increased for the three months ended March 31, 1998 compared to
the corresponding period of the prior year due to higher cash balances available
for short term investments.
Expenses decreased overall for the three months ended March 31, 1998 as compared
to the corresponding period of the prior year as follows:
Depreciation expense decreased due to the elimination of depreciation expense
resulting from the disposition of certain equipment subsequent to the prior
year's period, as well as to the fact that certain equipment was fully
depreciated prior to the current year's period.
General and administrative expenses decreased for the current period due to
lower administrative costs incurred as compared to the prior year's period.
Fees to affiliates decreased due to lower equipment management fees due to
reduced rentals on which such fee is based as well as a decrease in partnership
management fees resulting from a decrease in cash from operations attributable
to the establishment of additional reserves.
This general decrease in expenses was offset slightly by an increase in
operating expenses due to the expenses related to the return and storage of one
aircraft returned by Southwest in January 1998.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on form 8-K: None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
National Lease Income Fund 6 L.P.
By: ALI Equipment Management Corp.
Managing General Partner
/s/Richard Sabella
------------------
Richard Sabella
President
/s/Lawrence Schachter
---------------------
Lawrence Schachter
Senior Vice President and
Chief Financial Officer
Date: May 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the financial
statements of the March 31, 1998 Form 10-Q of National Income Fund 6 L.P. and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,364,134
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,514,118
<PP&E> 32,835,676
<DEPRECIATION> 23,343,076
<TOTAL-ASSETS> 15,006,718
<CURRENT-LIABILITIES> 334,979
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,671,739
<TOTAL-LIABILITY-AND-EQUITY> 15,006,718
<SALES> 0
<TOTAL-REVENUES> 681,764
<CGS> 0
<TOTAL-COSTS> 151,053
<OTHER-EXPENSES> 187,001
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 343,710
<INCOME-TAX> 0
<INCOME-CONTINUING> 343,710
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 343,710
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
