SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
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, 1997 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 203-862-7444
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"). As of February 28, 1995, Presidio Boram
Corp., a subsidiary of Presidio, replaced Z Square G Partners II as 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. Presidio was also party to an Administrative Services
Agreement with Wexford Management LLC ("Wexford") pursuant to which Wexford was
responsible for the day-to-day management of Presidio and, among other things,
had authority to designate directors of the General Partners.
On November 2, 1997, the Administrative Services Agreement between Presidio and
Wexford expired. Effective November 3, 1997, Wexford and Presidio entered into a
new Administrative Services Agreement (the "ASA"), which expires on May 3, 1998.
Under the terms of the ASA, Wexford will provide consulting and administrative
services to Presidio and its affiliates, including the General Partners and
Registrant. Presidio also entered into a management agreement with NorthStar
Presidio Management Company, LLC ("NorthStar Presidio"). Under the terms of the
management agreement, NorthStar Presidio will provide the day-to-day management
of Presidio and its direct and indirect subsidiaries and affiliates.
Effective November 3, 1997, the officers and employees of Wexford that had
served as officers and/or directors of the General Partners tendered their
resignations. On the same date, the Board of Directors of Presidio appointed new
individuals to serve as officers and/or directors of the General Partners.
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 herein 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,
<PAGE>
1997, 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 1997. As of December 31, 1997, Registrant had sold or
disposed of equipment with an original cost of approximately $137,725,000 (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
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, 1997, 1996 and 1995 were made to satisfy prior purchase
commitments, including modifications made to certain aircraft and upgrades to
equipment currently on lease.
At January 1, 1997, Registrant's remaining portfolio consisted of equipment with
an original cost of approximately $57,013,000 (net carrying value of
approximately $11,477,000), of which approximately $4,440,000 (fully depreciated
at January 1, 1997) was off-lease and equipment with an original cost of
approximately $194,000 (fully depreciated at January 1, 1997) was leased on a
month-to-month basis.
During the year ended December 31, 1997, Registrant sold or disposed of
equipment originally purchased for prices aggregating approximately $2,600,000
and which had a zero net carrying value at the time of disposition (net of
allowances for equipment impairment aggregating approximately $1,452,000
provided in prior years with respect to such equipment), for net sale proceeds
of approximately $10,600, or approximately $.03 per Unit. Additionally,
Registrant generated distributable cash from operations of approximately
$4,183,000, or approximately $13.80 per Unit, during 1997. Registrant made cash
distributions of $2.30 per Unit during 1997.
Registrant's remaining portfolio consists of four aircraft, one of which was
returned in January 1998, one which lease is scheduled to expire in June 1998
and two which leases are scheduled to expire in December 1998.
At December 31, 1997, equipment with an original cost of approximately
$54,413,000 (net carrying value of approximately $9,680,000) remained in
Registrant's portfolio, of which approximately $52,444,000 (net carrying value
of approximately $9,680,000, was generating rentals of approximately $239,000
per month. As of December 31, 1997, Registrant was 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. 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
$1,969,000 (at December 31, 1997, the Hawaiian Engines were fully depreciated)
which are currently off-lease.
<PAGE>
In November 1997, Registrant sold certain engine components to an unaffiliated
third party for net sale proceeds aggregating $6,737. Such equipment, net of
allowances for equipment impairment aggregating $1,427,250 previously provided,
has a zero carrying value when sold.
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 1997,
lease payments from the following lessees were the source of 10% or more of
Registrant's leasing revenues: Continental Micronesia, Inc. ("Air Micronesia")
(58%) and Southwest Airlines Co. ("Southwest") (42%).
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 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 the four 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.
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.
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.
Employees
Registrant does not have any employees. NorthStar Presidio currently performs
accounting, secretarial, transfer and administrative services for Registrant.
NorthStar Presidio also performs similar services for other affiliates of the
Managing General Partner. Integrated Resources Equipment Group, Inc. ("IREG"),
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. The agreement with Fieldstone was scheduled to expired on November 3,
1997. The Managing General Partner and certain affiliates are currently
negotiating a possible extension of the agreement. Fieldstone has indicated that
it will continue to perform services with respect to Registrant pending the
conclusion of such negotiation.
<PAGE>
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").
Item 2. Properties
The following table sets forth the equipment owned by Registrant as of March 1,
1998 (see "General" under Item 1 hereof):
<TABLE>
<CAPTION>
Type of Equipment (A) Date of Purchase Type of Ownership or Interest
--------------------- ---------------- -----------------------------
<S> <C> <C>
One Rolls Royce Aircraft Engine September 30, 1987 Full ownership, not subject to any lien.
and Components
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 engine and components.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders.
None.
<PAGE>
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, 1998, there were approximately 10,200 record holders of Units of
Registrant, owning an aggregate of 300,005 Units.
During the past two years, Registrant 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)
---------------- ----------------------------------
1997 1996
<S> <C> <C>
March 31 $ 2.30 $ 2.50
June 30 $ - $ 2.35
September 30 $ - $ 2.50
December 31 $ - $ 2.50
</TABLE>
(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.
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,
1997 1996 1995 1994 1993
--------------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues (1) $ 3,069,420 $ 3,274,777 $ 4,794,552 $ 10,230,235 $ 12,557,663
Net Income (Loss)
(1) (2) (3) (4) $ 640,155 $ 235,176 $ 1,732,664 $ 2,258,086 $ (5,791,665)
Net income (Loss)
Per Unit (1) (2) (3) (4) $ 2.11 $ .78 $ 5.72 $ 7.45 $ (19.11)
Distribution Per Unit $ 2.30 $ 9.85 $ 36.00 $ 19.50 $ 30.00
Total Assets $ 14,617,887 $ 15,492,237 $ 19,014,283 $ 29,268,853 $ 37,307,008
Long-Term Obligations $ - $ - $ - $ - $ 3,725,300
Total Partners' Equity $ 14,328,029 $ 14,384,855 $ 17,134,577 $ 26,311,188 $ 29,962,292
</TABLE>
(1) Included in these amounts are $198,047, $218,863, $380,660, $225,255
and $138,460 of interest income from short-term investments for the
years ended December 31, 1997, 1996, 1995, 1994 and 1993, respectively.
Additionally, revenues include interest income from leases accounted
for under the financing method of $776, $43,006, $251,463 and $405,470,
for the years ended December 31, 1996, 1995, 1994 and 1993,
respectively. Such amounts are included in Net Income (Loss).
(2) Reflected in such amounts are provisions for equipment impairments
aggregating $50,000, $8,000, $1,740,000 and $11,805,000, for the years
ended December 31, 1996, 1995, 1994 and 1993, respectively, with
respect to certain equipment.
(3) Included in such amounts are gains (losses) on the disposition of
equipment of $10,597, $(46,643), $562,932, $54,420 and $248,275 for the
years ended December 31, 1997, 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.
(4) Included in such amounts are provisions for doubtful accounts of
$202,626 and $994,660 for the years ended December 31, 1994 and 1993,
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.
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.
<PAGE>
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 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 and 1995 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 1997, Registrant generated distributable cash from operations of
approximately $4,183,000 or approximately $ 13.80 per Unit and distributable
cash from sales of approximately $10,600 or approximately $.03 per Unit.
Registrant made cash distributions to limited partners in 1997 of $2.30 per
Unit, which was consistent with the May 1992 decision to distribute all cash
generated not required for reserves. As of December 31, 1997, Registrant had
operating reserves of approximately $4,536,000 (or approximately $14.97 per
Unit) which was comprised of undistributed cash from operations and sales of
approximately $3,036,000, 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.
During 1998, excluding rents on a month-to-month basis and future renewals,
Registrant anticipates receiving approximately $1,962,000 of rentals generated
by non-cancelable leases accounted for as operating leases which represents
approximately $6.48 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 $1,962,000 is associated with leases with firm terms
ending in 1998. Additionally, equipment with an original cost of approximately
$1,969,000 was off-lease (fully depreciated at December 31, 1997).
Set forth below is a description of various transactions which have impacted the
liquidity of Registrant during 1997 and 1996:
<PAGE>
(i) The Registrant anticipates that it will encounter 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. In
November 1997, Registrant sold certain engine components to an
unaffiliated third party for net sale proceeds aggregating $6,737. Such
equipment, net of allowances for equipment impairment aggregating
$1,427,250 previously provided, has a zero carrying value when sold.
At December 31, 1997, the Hawaiian Engines (net of allowances for
equipment impairment aggregating $1,167,750 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, 1997 and 1996, 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 36-month period with interest at 9.31% per annum. As of December
31, 1997, the remaining balance of credits to be applied by Continental
towards such modification costs was approximately $100,000 and is
included on the balance sheets as Deferred Aircraft Upgrade Payable.
In addition, 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, 1997, 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, 1997 as Note Receivable.
At December 31, 1997, the net carrying value of both aircraft
aggregated approximately $7,216,000 (net of allowances for equipment
impairment aggregating approximately $10,000,000 provided in prior
periods).
<PAGE>
(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. Registrant 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 June 1998. Registrant is actively
remarketing the aircraft. At December 31, 1997, the net carrying value
of the Southwest Aircraft aggregated approximately $2,464,000 (net of
allowances for equipment impairment aggregating of $10,400,000
previously provided).
As of December 31, 1997, Registrant was 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 $9,679,000). 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 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 will be
impacted by its obligation to pay such costs.
During 1997, Registrant sold or disposed of equipment originally purchased for
prices aggregating approximately $2,600,000 and which had a zero net carrying
value at the time of disposition (net of allowances for equipment impairment
aggregating approximately $1,452,000 provided with respect to such equipment)
for net sale proceeds of approximately $10,600, or approximately $.03 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.
<PAGE>
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.
Year 2000
Costs associated with the year 2000 conversion are not expected to have any
impact on the Registrant's operations.
Results of Operations - 1997 as Compared to 1996
Rental revenues decreased by approximately 6% for the year ended December 31,
1997 as compared to the year ended December 31, 1996, due to the expiration of
certain leases in accordance with the original terms of such leases, as well as
the sale or disposition of certain equipment during 1996 and 1997.
Interest income decreased by approximately 10% for 1997, as compared to 43% for
1996, primarily because of lower balances available for investment in 1997 and
decreased payments by Air Mike with regard to certain loans as discussed
previously.
Operating expenses increased by approximately 8% for 1997 as compared to 1996,
due to the increase in expenses relating to the return of the Southwest
Aircraft.
Fees to affiliates decreased by approximately 35% for 1997 as compared to 34%
for 1996, 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 19% for 1997 as compared to 27%
for 1996, due to the disposition or sale of certain equipment during and
subsequent to 1996, as well as to the fact that certain equipment was fully
depreciated during or prior to 1997.
Additionally, Registrant did not provide allowances for equipment in 1997 as
compared to providing a provision of $50,000 in 1996, to recognize the loss in
value of certain telephone equipment and equipment for management information
systems.
General and administrative expenses increased 4% for 1997 as compared to a
decrease of 16% for the 1996, primarily due to an increase in legal fees.
Registrant did not incur any interest expense for 1997 as compared to a decrease
of 82% for 1996, due to the reduction of financed rent credits given to Air Mike
in 1996.
Registrant recognized aggregate net gains of approximately $11,000 for 1997 and
aggregate net losses of approximately $47,000 for 1996, in connection with its
sales of equipment. During 1997, Registrant sold equipment which it had
originally purchased for purchase prices aggregating approximately $2,600,000
inclusive of associated acquisition fees, for net sales proceeds aggregating
approximately $10,600.
The principal reasons for the change in Registrant's net income of approximately
$640,000 recognized for 1997 as compared to the net income of approximately
$235,000 recognized for 1996 are:
<PAGE>
(i) the reduction in rental revenue, approximately $2,876,000 for 1997
compared to approximately $3,052,000 for 1996, as well as a reduction
on interest income recognized of approximately $198,000 for 1997 as
compared with approximately $219,000 for 1996; and
(ii) the decrease with regard to (losses) gains on the sale of equipment,
approximately $11,000 for 1997 compared to a loss of approximately
$(47,000) for 1996; offset by
(iii) the decrease in depreciation, fees to affiliates, interest expense and
equipment impairment expense offset by an increase in general and
administrative and operating expenses.
Results of Operations - 1996 as Compared to 1995
Rental revenues decreased by approximately 30% for the year ended December 31,
1996 as compared to the year ended December 31, 1995, due to the expiration of
certain leases in accordance with the original terms of such leases (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
1995 and 1996.
Interest income decreased by approximately 43% for 1996, as compared to 1995,
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 1996 as
compared to 1995 due to the expiration of all such leases in accordance with
their original terms subsequent to 1995.
Operating expenses decreased by approximately 15% for 1996 as compared to 1995,
due to the increase in expenses relating to the return and storage of two Shorts
360 Aircraft in 1995. These Aircraft were sold in April 1995.
Fees to affiliates decreased by approximately 34% for 1996 as compared to 1995,
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 1996 as compared to
1995, due to the disposition or sale of certain equipment during 1995 and 1996,
as well as to the fact that certain equipment was fully depreciated during or
prior to 1996.
Additionally, Registrant provided allowances for equipment aggregating $50,000
and $8,000 for 1996 and 1995, respectively, to recognize the loss in value of
certain telephone equipment and equipment for management information systems.
General and administrative expenses decreased 16% for 1996 as compared to 1995,
primarily due to a decrease in reimbursements due to less personnel.
Interest expense decreased by approximately 82% for 1996 as compared to 1995,
due to the reduction of financed rent credits given to Air Mike in 1996.
Realized gain on the sale of marketable securities was approximately $398,000 in
1995. 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.
<PAGE>
Registrant recognized aggregate net (loss)/gains of approximately $(47,000) and
$563,000 for 1996 and 1995, respectively, in connection with its sales of
equipment. During 1996, 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 1996 as compared to the net income of approximately
$1,733,000 recognized for 1995 are:
(i) the reduction in rental revenue, approximately $3,052,000 for 1996
compared to approximately $4,366,000 for 1995, as well as a reduction
on interest income recognized of approximately $219,000 for 1996 as
compared with approximately $381,000 for 1995; and
(ii) the decrease with regard to (losses) gains on the sale of equipment,
approximately $(47,000) for 1996 compared to approximately $563,000 for
1995, and approximately $398,000 recognized in 1995 for the gain on
sale of marketable securities with regard to the settlement of the
unsecured Hawaiian claims; offset by
(iii) the decrease in depreciation, fees to affiliates, general and
administrative interest expense and operating expense, offset by an
increase in equipment impairment expense.
<PAGE>
Item 8. Financial Statements and Supplemental Data.
NATIONAL LEASE INCOME FUND 6 L.P.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
INDEX
Independent Auditor's Report
Financial statements - years ended
December 31, 1997, 1996 and 1995
Balance sheets
Statements of income
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>
NATIONAL LEASE INCOME FUND 6 L.P.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<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, 1997 and 1996, and the related
statements of income, partners' equity and cash flows for each of the three
years in the period ended December 31, 1997. 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, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997 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.
/s/Hays & Company
- -----------------
Hays & Company
February 16, 1998
New York, New York
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
BALANCE SHEETS
December 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Leased equipment - net ..................................... $ 9,679,601 $11,477,127
Equipment held for lease or sale - net ..................... -- --
Cash and cash equivalents .................................. 4,796,456 3,481,745
Deferred costs ............................................. 112,161 224,677
Other receivables and prepaid expenses ..................... 26,188 34,612
Note receivable ............................................ 3,481 271,288
Accounts receivable ........................................ -- 2,788
----------- -----------
$14,617,887 $15,492,237
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Deferred aircraft upgrade payable .......................... $ 100,000 $ 100,000
Accounts payable and accrued expenses ...................... 120,608 109,017
Deferred income ............................................ 69,250 69,250
Distributions payable ...................................... -- 757,588
Due to affiliates .......................................... -- 71,527
----------- -----------
Total liabilities ....................................... 289,858 1,107,382
----------- -----------
Commitments and contingencies (Note 3, 4, 5, 6, 9 and 14)
Partners' equity
Limited partners' equity (as restated) (300,005 units issued
and outstanding) ........................................ 14,174,898 14,231,157
General partners' equity (as restated) ..................... 153,131 153,698
----------- -----------
Total partners' equity .................................. 14,328,029 14,384,855
----------- -----------
$14,617,887 $15,492,237
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF INCOME
Year ended December 31,
---------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Rental .................................... $ 2,875,508 $ 3,051,681 $ 4,366,436
Interest
Other .................................. 198,047 218,863 380,660
Financing leases ....................... -- 776 43,006
Other ..................................... (4,135) 3,457 4,450
----------- ----------- -----------
3,069,420 3,274,777 4,794,552
----------- ----------- -----------
Costs and expenses
Depreciation .............................. 1,797,526 2,226,515 3,041,304
General and administrative ................ 237,974 229,571 271,718
Operating ................................. 231,105 213,307 251,914
Fees to affiliates ........................ 173,257 265,386 403,747
Interest .................................. -- 8,179 46,514
Provision for equipment impairment ........ -- 50,000 8,000
----------- ----------- -----------
2,439,862 2,992,958 4,023,197
----------- ----------- -----------
629,558 281,819 771,355
----------- ----------- -----------
Gain (loss) on sale of equipment - net ......... 10,597 (46,643) 562,932
Realized gain from sale of marketable securities -- -- 398,377
----------- ----------- -----------
10,597 (46,643) 961,309
----------- ----------- -----------
Net income ..................................... $ 640,155 $ 235,176 $ 1,732,664
=========== =========== ===========
Net income attributable to
Limited partners .......................... $ 633,753 $ 232,824 $ 1,715,337
General partners .......................... 6,402 2,352 17,327
----------- ----------- -----------
$ 640,155 $ 235,176 $ 1,732,664
=========== =========== ===========
Net income per unit of limited partnership
interest (300,005 units outstanding) ...... $ 2.11 $ .78 $ 5.72
=========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENT OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
------------ ------------ ------------
<S> <C> <C> <C>
Balance, January 1, 1995 .................... $ 27,538,250 $ (1,227,062) $ 26,311,188
Reallocation of partners' equity (Note 7) ... (1,500,025) 1,500,025 --
------------ ------------ ------------
Balance, January 1, 1995 (as restated) ...... 26,038,225 272,963 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 (as restated) .... 16,953,382 181,195 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 (as restated) .... 14,231,157 153,698 14,384,855
Net income - 1997 ........................... 633,753 6,402 640,155
Distributions to partners ($2.30 per limited
partnership unit) ...................... (690,012) (6,969) (696,981)
------------ ------------ ------------
Balance, December 31, 1997 .................. $ 14,174,898 $ 153,131 $ 14,328,029
============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF CASH FLOWS
Year ended December 31,
------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net income ......................................... $ 640,155 $ 235,176 $ 1,732,664
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation .................................... 1,797,526 2,226,515 3,041,304
Amortization of deferred costs .................. 112,516 112,516 112,516
(Gain) loss on sale of equipment - net .......... (10,597) 46,643 (562,932)
Realized gain from sale of marketable securities -- -- (398,377)
Provision for equipment impairment .............. -- 50,000 8,000
Changes in assets and liabilities
Other receivables and prepaid expenses .......... 8,424 (3,507) (15,779)
Accounts receivable ............................. 2,788 3,840 294,843
Accounts payable and accrued expenses ........... 11,591 (748) (40,911)
Deferred income ................................. -- (41,603) 41,603
Due to affiliates ............................... (71,527) 47,786 6,813
Accrued interest payable ........................ -- -- (169,524)
------------ ------------ ------------
Net cash provided by operating activities 2,490,876 2,676,618 4,050,220
------------ ------------ ------------
Cash flows from investing activities
Purchase of leased equipment - upgrades ............ -- (261,539) (550,052)
Proceeds from disposition of leased equipment ...... 10,597 249,161 6,550,722
Note receivable collections ........................ 267,807 499,496 352,893
Minimum lease payments received on financing
leases, net of interest earned .................. -- 8,300 241,170
Other non-operating payments ....................... -- (61,667) (62,852)
Proceeds from sale of marketable securities ........ -- -- 398,377
------------ ------------ ------------
Net cash provided by investing activities 278,404 433,751 6,930,258
------------ ------------ ------------
Cash flows from financing activities
Distributions to partners .......................... (1,454,569) (3,439,451) (11,212,304)
------------ ------------ ------------
Net increase (decrease) in cash and
cash equivalents ................................... 1,314,711 (329,082) (231,826)
Cash and cash equivalents, beginning of year ............ 3,481,745 3,810,827 4,042,653
------------ ------------ ------------
Cash and cash equivalents, end of year .................. $ 4,796,456 $ 3,481,745 $ 3,810,827
============ ============ ============
Supplemental disclosure of cash flow information
Interest paid ...................................... $ -- $ 8,179 $ 216,038
============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
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 and
1995 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, 1997, 1996 AND 1995
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, 1997, 1996 AND 1995
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
year.
Income taxes
No provisions have 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, which changes could effect
the income tax liability of the individual partners.
Reclassifications
Certain reclassifications 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, 1997, 1996 AND 1995
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.
Recently issued accounting pronouncements
The Financial Accounting Standards Board has recently issued several new
accounting pronouncements. Statement No. 128, "Earnings Per Share"
established standards for computing and presenting earnings per share, and
became effective for financial statements for both interim and annual
periods ending after December 15, 1997. Statement No. 129, "Disclosure of
Information about Capital Structure" established standards for disclosing
information about an entity's capital structure, and became effective for
financial statements for periods ending after December 15, 1997. Statement
No. 130, "Reporting Comprehensive Income" establishes standards for
reporting and display of comprehensive income and its components, and is
effective for fiscal years beginning after December 15, 1997. Statement
No. 131, "Disclosures about Segments of an Enterprise and Related
Information" establishes standards for the way that public business
enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued
to shareholders. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers, and is
effective for financial statements for periods beginning after December
15, 1997.
Management of the Partnership does not believe that these new standards
have, or will have a material effect on the Partnership's reported
operating results, per unit amounts, financial position or cash flows.
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
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
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. 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. Presidio was also a party to an
Administrative Services Agreement with Wexford Management LLC ("Wexford")
pursuant to which Wexford was responsible for the day-to-day management of
Presidio and, among other things, had authority to designate directors of
the General Partners.
On November 2, 1997, the Administrative Services Agreement between
Presidio and Wexford expired. Effective November 3, 1997, Wexford and
Presidio entered into a new Administrative Services Agreement (the "ASA"),
which expires on May 3, 1998. Under the terms of the ASA, Wexford will
provide consulting and administrative services to Presidio and its
affiliates, including the 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 will provide the day-to-day
management of Presidio and its direct and indirect subsidiaries and
affiliates.
Effective November 3, 1997, the officers and employees of Wexford that had
served as officers and/or directors of the general partners tendered their
resignations. On the same date, the Board of Directors of Presidio
appointed new individuals to serve as officers and/or directors of the
general partners.
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.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
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,
1997, 1996 and 1995, the Partnership incurred expenses of $144,257,
$149,445 and $208,747, 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, 1997, 1996 and 1995, the Partnership incurred partnership
management fees of $29,000, $115,941 and $195,000, respectively. Such
amounts are included in fees to affiliates in the statements of income.
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.
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.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
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 are paid by Equipment Management. The agreement with Fieldstone
was scheduled to expire on 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 with respect to the Partnership pending the conclusion of such
negotiation.
4 LEASED EQUIPMENT
Leased equipment is summarized as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Transportation and related equipment (net of
accumulated depreciation of $22,354,618
and $20,557,076 and an allowance for
equipment impairment of $20,409,450 and
$20,409,450).................................. $ 9,679,601 $11,477,127
Equipment for management information
systems (net of accumulated depreciation
of $0 and $171,095 and an allowance for
equipment impairment of $0 and $22,435) ...... -- --
----------- -----------
$ 9,679,601 $11,477,127
=========== ===========
</TABLE>
Leases on the Partnership's transportation equipment are scheduled to
expire during 1998.
Equipment held for lease or sale
Equipment held for lease or sale consists of certain transportation
equipment, with an aggregate net carrying value of $0 (net of accumulated
depreciation of $801,450 and $1,781,000 and an allowance for equipment
impairment of $1,167,750 and $2,595,000) at December 31, 1997 and 1996,
respectively.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
5 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
-------- --------
<S> <C> <C>
Professional fees ........................ $107,345 $ 84,378
Lease overpayments ....................... 8,835 --
Operating expenses ....................... 2,928 24,639
Sales and property taxes ................. 1,500 --
-------- --------
$120,608 $109,017
======== ========
</TABLE>
6 DISTRIBUTIONS PAYABLE
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. Distributions payable to
limited partners was $2.50 per limited partnership unit and distributions
payable to general partners aggregated $7,576 at December 31, 1996. There
were no distributions declared during the fourth quarter of 1997.
7 PARTNERS' EQUITY
The General Partners hold a 1% equity interest in the Partnership. At the
inception of the Partnership, the General Partners' equity account was
credited with only the actual capital contributed in cash, $9,950. The
Partnership's management determined that this accounting does not
appropriately reflect the limited partners' and the General Partners'
relative participations in the Partnership's net assets, since it does not
reflect the General Partners' 1% equity interest in the Partnership. Thus,
the Partnership has restated its financial statements to reallocate
$1,500,025 (1% of the gross proceeds raised at the Partnership's
formation) of the partners' equity to the General Partners' equity
account. This reallocation was made as of the inception of the Partnership
and all periods presented in the financial statements have been restated
to reflect this reallocation. The reallocation has no impact on the
Partnership's financial position, results of operations, cash flows,
distributions to partners, or the partners' tax basis capital accounts.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
8 RECONCILIATION OF NET INCOME AND NET ASSETS PER FINANCIAL
STATEMENTS TO TAX BASIS
A reconciliation of net income per financial statements to the tax basis
of accounting is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net income per financial statements ........... $ 640,155 $ 235,176 $ 1,732,664
Difference between financial statements and tax
basis treatment of advanced rental payments -- (41,603) 41,603
Difference between financial statements and tax
basis of equipment sold or disposed of ..... -- 67,088 2,306,854
Provision for equipment impairment provided
for financial statement purposes ........... -- 50,000 8,000
Minimum lease payments received, net of
income earned on leases accounted
for under the financing method ............. -- 8,300 241,170
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 ..................... (602,489) (336,825) (646,079)
Deficiency (excess) of income accruals
over expense accruals ...................... -- (11) 798
----------- ----------- -----------
Net income per tax basis ...................... $ 150,182 $ 94,641 $ 3,797,526
=========== =========== ===========
</TABLE>
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
8 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,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Net assets per financial statements $ 14,328,029 $ 14,384,855
Net carrying value of equipment ... (7,105,522) (6,503,033)
Syndication costs ................. 16,875,000 16,875,000
Advanced rental payments .......... 69,250 69,250
Deferred costs .................... (112,161) (224,677)
------------ ------------
Net assets per tax basis .......... $ 24,054,596 $ 24,601,395
============ ============
</TABLE>
9 MAJOR LESSEES
Revenues from equipment leased to individual lessees, which generated 10%
or more of rental revenues, are as follows:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Two Boeing 737-200 aircraft ........ $1,200,000 $1,200,000 $ 980,000
% of leasing revenues .......... 42% 39% 22%
One Boeing 737-200 aircraft ........ $ -- $ -- $1,079,000
% of leasing revenues .......... -% -% 25%
Two Boeing 727-227 Advanced aircraft $1,662,000 $1,662,000 $1,662,000
% of leasing revenues .......... 58% 54% 38%
</TABLE>
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
10 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,
--------------------------------------------------------------------------------------
1997 1996 1995
-------------------------- -------------------------- ---------------------------
United Western United Western United Western
States Pacific States Pacific States Pacific
<S> <C> <C> <C> <C> <C> <C>
Rental revenues $ 1,213,508 $ 1,662,000 $ 1,389,681 $ 1,662,000 $ 2,704,436 $ 1,662,000
Net (loss) income $ (78,349) $ 718,504 $ (499,448) $ 734,624 $ 1,132,344 $ 600,320
Leased equipment
accounted for under
the operating method $ 2,463,944 $ 7,215,657 $ 3,513,607 $ 7,963,520 $ 5,255,356 $ 8,711,414
</TABLE>
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 $407,000 previously provided 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.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
11 EQUIPMENT SALES - 1995 (continued)
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 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 allowances for equipment
impairment aggregating $3,500,000 previously provided) when sold.
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 $229,135
previously provided) when sold.
13 EQUIPMENT SALES - 1997
In August 1997, the Partnership sold certain equipment for management
information systems which it had originally purchased for purchase prices
aggregating $3,096,362, inclusive of associated acquisition fees to
unaffiliated third parties, for an aggregate sales price of $3,860. Such
equipment had net carrying value of $0 (net of allowances for equipment
impairment aggregating $22,435 previously provided) when sold.
In November 1997, the Partnership sold certain engine components which it
had originally purchased for a purchase price aggregating $2,406,000,
inclusive of associated acquisition fees to unaffiliated third parties,
for an aggregate sales price of $6,737. Such equipment had a net carrying
value of $0 (net of allowances for equipment impairment aggregating
$1,427,250 previously provided) when sold.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
14 COMMITMENTS AND CONTINGENCIES
a Hawaiian Airlines, Inc.
During 1994, Hawaiian Airlines, Inc. ("Hawaiian") and the Partnership
entered into an agreement to settle the Partnership's claims with
respect to the two Rolls Royce aircraft engines (the "Hawaiian
Engines") previously leased to Hawaiian. The Partnership filed its
claims against Hawaiian due to substantial damage caused to the
Hawaiian Engines during the periods the engines were leased to
Hawaiian. Hawaiian has settled these 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
Hawaiian, in consideration of its general unsecured claims. During
1995, the Partnership sold all of these shares for net proceeds
aggregating $398,377.
The Partnership anticipates it will encounter competition in
attempting to sell the Hawaiian Engines due to their current
condition and a surplus in the market with respect to such engines.
In November 1997, the Partnership sold certain engine components to
an unaffiliated third party for net sale proceeds aggregating $6,737.
Such equipment, net of allowances for equipment impairment
aggregating $1,427,250 previously provided, had a zero carrying
value.
At December 31, 1997 and 1996, the Hawaiian Engines (net of
allowances for equipment impairment aggregating $1,167,750 in 1997
and $2,595,000 in 1996 provided in prior periods) were fully
depreciated and are included in equipment held for sale or lease.
b 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 accumulated 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.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
14 COMMITMENTS AND CONTINGENCIES (continued)
b Continental Micronesia, Inc. (continued)
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 at December 31, 1997 and 1996, respectively.
In addition, Continental has made certain other modifications to the
aircraft. The Partnership has agreed to provide financing for the
modifications ("Lessor Financing Credits") against the base rental
payments due under the Air Mike Leases. The lessee is currently
repaying the Lessor Financing Credits through monthly installments
which are being amortized at the rate of 9.31% per annum over 36
months. Through December 31, 1997, the Partnership had provided all
the required financing aggregating approximately $1,443,000. Such
amount, net of amounts repaid, is reflected in the balance sheet at
December 31, 1997 and 1996 as Note receivable. The net carrying value
of both aircraft aggregated approximately $7,216,000 and $7,963,000
(net of allowances for equipment impairment aggregating approximately
$10,000,000 provided in prior periods) at December 31, 1997 and 1996,
respectively.
In April 1993, Continental transferred all of its rights and
obligations under the Air Mike Leases to Air Micronesia Inc., a
stand-alone air carrier affiliated with Continental.
c 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
provides for monthly rentals of 125% of the previous lease rate.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
14 COMMITMENTS AND CONTINGENCIES (continued)
c Southwest Airlines Co. (continued)
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 June 1998. The Partnership is actively remarketing the
aircraft.
The net carrying value of the Southwest Aircraft aggregated
approximately $2,464,000 and $3,514,000 (net of allowances for
equipment impairment aggregating approximately $10,400,000 previously
provided) at December 31, 1997 and 1996, respectively.
<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, 1997
Leased equipment accounted for
under the operating method -
valuation allowance for equipment
impairment
Equipment for management
information systems ............. $ 22,435 $ -- $ -- $ (22,435) (A) $ --
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 ............. -- -- -- -- --
Transportation and related equipment 2,595,000 -- -- (1,427,250)(A) 1,167,750
----------- -------- ----------- ----------- -----------
$23,026,885 $ -- $ -- $(1,449,685) $21,577,200
=========== ======== =========== =========== ===========
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
----------- -------- ----------- ----------- -----------
$23,206,020 $ 50,000 $ -- $ (229,135) $23,026,885
=========== ======== =========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (continued)
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) (B) --
----------- ----------- ----------- --------------- -----------
$31,663,366 $ 8,000 $ -- $ (8,465,346) $23,206,020
=========== =========== =========== =============== ===========
</TABLE>
(A) Represents valuation allowances for equipment impairment relating to certain
equipmnet sold during 1997, 1996 and 1995.
(B) Represents allowance for uncollectable accounts written off during 1995.
See notes to financial statements.
<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 Age Position Held Partner since
---- --- ------------- -------------
<S> <C> <C> <C>
W. Edward Scheetz 33 Director November 1997
David Hamamoto 38 Director November 1997
Richard Sabella 42 President, Director November 1997
David King 35 Executive VP, Director, Assistant November 1997
Treasurer
Lawrence R. Schachter 41 Senior VP, Chief Financial Officer January 1998
Kevin Reardon 39 VP, Secretary, Treasurer, Director November 1997
Allan B. Rothschild 36 Executive VP December 1997
Marc Gordon 33 VP November 1997
Charles Humber 24 VP November 1997
Adam Anhang 24 VP November 1997
Gregory Peck 23 Assistant Secretary November 1997
</TABLE>
Each director and officer of the Managing General Partner will hold office 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.
W. Edward Scheetz co-founded NorthStar Capital Partners with David Hamamoto in
July 1997, having previously been a partner at Apollo Real Estate Advisors L.P.
since 1993. From 1988 to 1993, Mr. Scheetz was a principal with Trammell Crow
Ventures.
David Hamamoto co-founded NorthStar Capital Partners with W. Edward Scheetz in
July 1997, having previously been a partner and a co-head of the Real Estate
Principal Investment Area at Goldman, Sachs & Co., where he initiated the effort
to build a real estate principal investment business in 1988 under the auspices
of the Whitehall Funds.
<PAGE>
Richard Sabella joined NorthStar Capital Partners in November 1997, having
previously been the head of real estate and a partner at the law firm of Cahill,
Gordon & Reindel since 1989. Mr. Sabella has also been associated with the law
firms of Milgrim, Thomajian, Jacobs & Lee, P.C. and Cravath, Swaine & Moore.
David King joined NorthStar Capital Partners in November 1997, having previously
been a Senior Vice President of Finance at Olympia & York Companies (USA). Prior
to joining Olympia & York in 1990, Mr. King worked for Bankers Trust in its real
estate finance group.
Lawrence R. Schachter joined NorthStar Presidio in January 1998, having
previously held the position as Controller at CB Commercial/Hampshire, LLC from
1996 to 1997. Prior to joining CB, Mr. Schachter held the position of Controller
at Goodrich Associates in 1996 and at Greenthal/Harlan Realty Services Co. from
1992 to 1995. Mr. Schachter, who holds a CPA, graduated from Miami University
(Ohio).
Kevin Reardon joined NorthStar Capital Partners in October 1997, having
previously held the position of Controller at Lazard Freres Real Estate
Investors from 1996 to 1997. Prior to joining Lazard Freres, Mr. Reardon was the
Director of Finance in charge of European expansion at the law firm of Dewey
Ballantine from 1993 to 1996. Prior to 1993, Mr. Reardon held a financial
position at Hearst - ABC - Viacom Entertainment Services. Mr. Reardon, who holds
a CPA, graduated from Fordham University with a B.S. in Accounting.
Allan B. Rothschild joined NorthStar Presidio in December 1997, having
previously been the Senior Vice President and General Counsel of Newkirk Limited
Partnership where he managed a large portfolio of net-leased real estate assets.
Prior to joining Newkirk in September 1995, Mr. Rothschild was associated with
the law firm of Proskauer, Rose LLP in its real estate group.
Marc Gordon joined NorthStar Capital Partners in October 1997, having previously
been a Vice President in the Real Estate Investment Banking Group at Merrill
Lynch where he executed corporate finance and strategic transactions for public
and private real estate ownership companies, including REITs, real estate
service companies, and real estate intensive operating companies. Prior to
joining Merrill Lynch in 1993, Mr. Gordon was in the Real Estate and Banking
Group at the law firm of Irell & Manella. Mr. Gordon graduated from Dartmouth
College with an A.B. in economics and also holds a J.D. from the UCLA School of
Law.
Charles Humber joined NorthStar Capital Partners in September 1997, having
previously worked for Merrill Lynch's Real Estate Investment Banking Group from
1996 to 1997. Mr. Humber graduated from Brown University with a B.A. in
international relations and organizational behavior and management which is
where he was prior to 1996.
Adam Anhang joined NorthStar Capital Partners in August 1997, having previously
worked for The Athena Group's Russia and Former Soviet Union development team
from 1996 to 1997. Mr. Anhang graduated from the Wharton School of the
University of Pennsylvania with a B.S. in economics with concentrations in
finance and real estate, which is where he was prior to 1996.
Gregory Peck joined NorthStar Capital Partners in July 1997, having previously
worked for the Morgan Stanley Realty Real Estate Funds (MSREF) and Morgan
Stanley's Real Estate Investment Banking Group from 1996 to 1997. Prior to
joining Morgan Stanley, Mr. Peck worked for Lazard Freres & Co. LLC in the Real
Estate Investment Banking Group from 1994 to 1996. Mr. Peck graduated from
Columbia College with an A.B. in mathematics and an A.B. in economics.
<PAGE>
Messrs. Scheetz, Hamamoto, Sabella, King and Reardon 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., Resources Pension Shares 5, L.P., Vista Properties,
Resources Accrued Mortgage Investors 2, L.P., Resources Accrual Mortgage
Investors Series 86, L.P., Integrated Resources High Equity Partners - Series
85, High Equity Partners, L.P. - Series 86 and High Equity Partners, L.P. -
Series 88.
Presidio Boram Corp., the Associate General Partner, is a wholly-owned
subsidiary of Presidio whose directors are Messrs. Scheetz, Hamamoto, Sabella,
King and Reardon.
Registrant believes, based on written representations received by it, that for
1997 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.
Item 11. Executive Compensation
Registrant is not required to pay the officers or directors of the General
Partners 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, 1998, 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, 1998, neither the General Partners nor their officers and
directors were known by Registrant to beneficially own Units or shares of
Presidio, the parent of the General Partners.
<PAGE>
To the knowledge of the Registrant, the following sets forth
certain information regarding ownership of the Class A shares of Presidio as of
March 11, 1998 (except as otherwise noted) by (i) each person or entity who owns
of record or beneficially five percent or more of the Class A shares, (ii) each
director and executive officer of Presidio, and (iii) all directors and
executive officers of Presidio as a group. To the knowledge of Presidio, each of
such shareholders has sole voting and investment power as to the shares shown
unless otherwise noted.
All outstanding shares of Presidio are owned by Presidio
Capital Investment Company, LLC ("PCIC"), a Delaware limited liability company.
The interest in PCIC (and beneficial ownership in Presidio) are held as follows:
<TABLE>
<CAPTION>
Percentage Ownership
in PCIC and Percentage
Beneficial Ownership
Name of Beneficial Owner in Presidio
------------------------ -----------------------
<S> <C>
Five Percent Holders:
Presidio Holding Company, LLC(1) 71.93%
AG Presidio Investors, LLC(2) 14.12%
DK Presidio Investors, LLC(3) 8.45%
Stonehill Partners, L.P.(4) 5.50%
</TABLE>
The holdings of the directors and executive officers of Presidio are as follows:
<TABLE>
<CAPTION>
<S> <C>
Directors and Officers:
Adam Anhang(5) 0%
Marc Gordon(5) 0%
David Hamamoto(5) 71.93%
Charles Humber(5) 0%
David King(5) 0%
Gregory Peck(5) 0%
Kevin Reardon(5) 0%
Allan Rothschild(5) 0%
Richard J. Sabella(5) 0%
Lawrence Schachter(5) 0%
W. Edward Scheetz(5) 71.93%
Directors and Officers as a group: 71.93%
</TABLE>
(1) Presidio Holding Company, LLC is a New York limited liability
company whose address is 527 Madison Avenue, 16th Floor, New
York, New York 10022. PHC has two members, Polaris Operating
LLC ("Polaris") which holds a 1% interest, and Northstar
Operating, LLC ("Northstar") which holds a 99% interest.
Polaris is a Delaware limited liability company whose address
is 527 Madison Avenue, 16th Floor, New York, New York 10022.
Polaris has two members, Sextant Operating Corp. ("Sextant"),
<PAGE>
which holds a 1% interest, and Northstar, which holds a 99%
interest. Sextant is a Delaware corporation whose address is
527 Madison Avenue, 16th Floor, New York, New York 10022 and
whose sole shareholder is Northstar. Northstar is a Delaware
limited liability company whose address is 527 Madison Avenue,
16th Floor, New York, New York 10022. Northstar has two
members, Northstar Capital Partners ("NCP"), which holds a 99%
interest, and Northstar Capital Holdings I, LLC ("NCHI"),
which holds a 1% interest. Both NCP and NCHI are Delaware
limited liability companies, whose business address is 527
Madison Avenue, 16th Floor, New York, New York 10022. NCP has
two members, NCHI, which holds a 74.75% interest, and
Northstar Capital Holdings II, LLC ("NCHII"), which holds a
25.25% interest. The business address for NCHII, a Delaware
limited liability company is 527 Madison Avenue, 16th Floor,
New York, New York 10022. NCHII has three members, NCHI, which
holds a 99% interest, Edward Scheetz, who holds a 0.5%
interest and David Hamamoto, who holds a 0.5% interest. Mr.
Scheetz, a U.S. citizen whose business address is 527 Madison
Avenue, 16th Floor, New York, New York 10022, is a founding
member of NCP. Mr. Hamamoto, a U.S. citizen whose business
address is 527 Madison Avenue, 16th Floor, New York, New York
10022, is a founding member of NCP. NCHI has two members, Mr.
Scheetz and Mr. Hamamoto, each of whom holds a 50% interest.
Pursuant to that certain Amended and Restated Pledge and
Security Agreement (the "Pledge Agreement") dated March 5,
1998 made by PHC in favor of Credit Suisse First Boston
Mortgage Capital LLC ("CSFB"), PHC pledged all of its
membership interest in PCIC to CSFB as security for loans
issued under the Loan Agreement dated as of February 20, 1998
by and among PHC and CSFB and the First Amendment thereon
dated March 5, 1998 (together, the "Loan Agreement"). The
Pledge Agreement and Loan Agreement contain standard default
and event of default provisions which may at a subsequent date
result in a change of control of PCIC and, therefore, the
Registrant.
(2) Each of Angelo, Gordon & Co., L.P., as sole manager of AG
Presidio Investors, LLC, and John M. Angelo and Michael L.
Gordon, as general partners of the general partner of Angelo,
Gordon & Co., L.P. may be deemed to beneficially own for
purposes of Rule 13d-3 of the Exchange Act the securities
beneficially owned by AG Presidio Investors, LLC. Each of John
M. Angelo and Michael L. Gordon disclaim such beneficial
ownership. The business address for such persons is c/o
Angelo, Gordon & Co., L.P., 345 Park Avenue, 26th Floor, New
York, New York 10167.
(3) M.H. Davidson & Company, Inc., as sole manager of DK Presidio
Investors, LLC may be deemed to beneficially own for purposes
of Rule 13d-3 of the Exchange Act the securities beneficially
owned by DK Presidio Investors, LLC. The business address for
such person is c/o M.H. Davidson & Company, 885 Third Avenue,
New York, New York 10022.
<PAGE>
(4) Includes shares of PCIC beneficially owned by Stonehill
Offshore Partners Limited and Stonehill Institutional
Partners, L.P. John A. Motulsky is a managing general partner
of Stonehill Partners, L.P., a managing member of the
investment advisor to Stonehill Offshore Partners Limited and
is a general partner of Stonehill Institutional Partners, L.P.
John A. Motulsky disclaims beneficial ownership of the shares
held by these entities. The business address for such person
is c/o Stonehill Investment Corporation, 110 East 59th Street,
New York, New York 10022.
(5) The business address for such person is 527 Madison Avenue,
16th Floor, New York, New York 10022.
<PAGE>
Item 13. Certain Relationships and Related Transactions
The Managing General Partner, the Corporate General Partner and the Associate
General Partner received $5,576, $697 and $697, respectively, from Registrant as
their share of distributions of cash from operations during 1997. No director or
officer of the Managing General Partner received any direct remuneration from
Registrant during 1997.
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 $144,257 during 1997. 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 1997, Registrant had paid or accrued for
payment $29,000 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.
<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.******
10.24 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.******
<PAGE>
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.
- ------------------------
* 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 14th day of April, 1998.
NATIONAL LEASE INCOME FUND 6, L.P.
By: ALI EQUIPMENT MANAGEMENT CORP.
Managing General Partner
Date
By: /s/ Richard Sabella April 14, 1998
-------------------
Richard Sabella
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/ Lawrence Schachter Senior Vice President and April 14, 1998
- ---------------------- Chief Financial Officer
Lawrence Schachter
/s/ Richard Sabella Director and President April 14, 1998
- -------------------
Richard Sabella
/s/ David King Director and Executive April 14, 1998
- -------------- Vice President
David King
/s/ Kevin Reardon Director and Vice President, April 14, 1998
- ----------------- Treasurer and Secretary
Kevin Reardon
<PAGE>
EXHIBIT INDEX
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.***
10.15 Participation Agreement, dated as of January 4, 1989, among the Bank,
Registrant, Southwest Airlines Co. and John Hancock Leasing
Corporation. ***
<PAGE>
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, 1997 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-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,796,456
<SECURITIES> 0
<RECEIVABLES> 3,481
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,938,286
<PP&E> 32,034,219
<DEPRECIATION> 22,354,618
<TOTAL-ASSETS> 14,617,887
<CURRENT-LIABILITIES> 289,858
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,328,029
<TOTAL-LIABILITY-AND-EQUITY> 14,617,887
<SALES> 0
<TOTAL-REVENUES> 3,080,017
<CGS> 0
<TOTAL-COSTS> 642,336
<OTHER-EXPENSES> 1,797,526
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 640,155
<INCOME-TAX> 0
<INCOME-CONTINUING> 640,155
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 640,155
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
