<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
Commission file number 0-15643
NATIONAL LEASE INCOME FUND 6 L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3275922
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Cambridge Center, 9th Floor, Cambridge Massachusetts 02142
----------------------------------------------------------
(Address of principal executive offices)
(617) 234-3000
----------------------------------------------------
(Registrant's telephone number, including area code)
411 West Putnam Avenue, Suite 270, Greenwich, CT 06830
------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
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<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
FORM 10-Q - SEPTEMBER 30, 1999
INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS - September 30, 1999 and December 31, 1998........................................ 1
STATEMENTS OF OPERATIONS - For the three months ended September 30, 1999
and 1998 and for the nine months ended September 30, 1999 and 1998 ......................... 2
STATEMENT OF PARTNERS' EQUITY - For the nine months ended
September 30, 1999 ......................................................................... 3
STATEMENTS OF CASH FLOWS - For the nine months ended
September 30, 1999 and 1998 ................................................................ 4
NOTES TO FINANCIAL STATEMENTS ................................................................... 5-9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ...................................................... 10-11
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS ......................................................................... 12
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K .......................................................... 12
SIGNATURES ............................................................................................... 13
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NATIONAL LEASE INCOME FUND 6 L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 4,803,079 $ 2,287,311
Leased equipment, net 2,136,434 3,233,889
Restricted cash - sale deposit 130,000 -
Deferred costs 61,889 28,354
Other receivables and prepaid expenses 18,958 8,377
Equipment held for lease or sale, net - 2,463,781
----------- -----------
$ 7,150,360 $ 8,021,712
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 97,475 $ 249,040
Sale deposit payable 130,000 -
Due to affiliates 10,388 25,329
Deferred income 34,625 34,625
----------- -----------
Total liabilities 272,488 308,994
----------- -----------
Commitments and contingencies
Partners' equity
Limited partners' equity (300,005 units issued
and outstanding) 6,799,242 7,625,740
General partners' equity 78,630 86,978
----------- -----------
Total partners' equity 6,877,872 7,712,718
----------- -----------
$ 7,150,360 $ 8,021,712
=========== ===========
</TABLE>
See notes to financial statements.
1
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
-------------------------- --------------------------
1999 1998 1999 1998
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Revenues
Rental $ 207,750 $ 298,827 $ 623,250 $ 1,479,827
Interest 57,031 48,888 124,387 181,892
Other 2,206 - 49,731 2,240
---------- ---------- ---------- -----------
266,987 347,715 797,368 1,663,959
---------- ---------- ---------- -----------
Costs and expenses
Provision for equipment impairment 245,000 - 1,032,000 -
Depreciation 93,485 109,075 280,455 483,069
General and administrative 63,700 2,587 181,679 122,684
Operating 30,331 354,136 129,626 906,773
Fees to affiliates 10,388 14,941 31,163 199,991
---------- ---------- ---------- -----------
442,904 480,739 1,654,923 1,712,517
---------- ---------- ---------- -----------
(175,917) (133,024) (857,555) (48,558)
Gain on sale of aircraft, net 22,709 357,966 22,709 357,966
---------- ---------- ---------- -----------
Net (loss) income $ (153,208) $ 224,942 $ (834,846) $ 309,408
========== ========== ========== ===========
Net (loss) income attributable to
Limited partners $ (151,676) $ 222,693 $ (826,498) $ 306,314
General partners (1,532) 2,249 (8,348) 3,094
---------- ---------- ---------- -----------
$ (153,208) $ 224,942 $ (834,846) $ 309,408
========== ========== ========== ===========
Net (loss) income per unit of limited partnership
interest (300,005 units outstanding) $ (.50) $ .74 $ (2.75) $ 1.02
========== ========== ========== ===========
</TABLE>
See notes to financial statements.
2
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENT OF PARTNERS' EQUITY
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
----------- -------- -----------
Balance, January 1, 1999 $ 7,625,740 $ 86,978 $ 7,712,718
Net loss for the nine months
ended September 30, 1999 (826,498) (8,348) (834,846)
----------- -------- -----------
Balance, September 30, 1999 $ 6,799,242 $ 78,630 $ 6,877,872
=========== ======== ===========
See notes to financial statements.
3
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the nine months ended
September 30,
-----------------------------
1999 1998
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net (loss) income $ (834,846) $ 309,408
Adjustments to reconcile net (loss) income to net
cash provided by operating activities
Provision for equipment impairment 1,032,000 -
Depreciation 280,455 483,069
Gain on sale of aircraft, net (22,709) (357,966)
Amortization of deferred costs - 84,209
Changes in assets and liabilities
Deferred costs (33,535) -
Other receivables and prepaid expenses (10,581) (1,935)
Accounts payable and accrued expenses (151,565) 134,610
Due to affiliates (14,941) 14,941
Deferred income - (34,625)
Deferred aircraft upgrade payable - (100,000)
----------- -----------
Net cash provided by operating activities 244,278 531,711
----------- -----------
Cash flows from investing activities
Proceeds from sale of aircraft, net 2,271,490 3,763,343
Note receivable collections - 3,481
----------- -----------
Net cash provided by investing activities 2,271,490 3,766,824
----------- -----------
Cash flows from financing activities
Distributions to partners - (3,030,354)
----------- -----------
Net increase in cash and cash equivalents 2,515,768 1,268,181
Cash and cash equivalents, beginning of period 2,287,311 4,796,456
----------- -----------
Cash and cash equivalents, end of period $ 4,803,079 $ 6,064,637
=========== ===========
</TABLE>
See notes to financial statements.
4
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
1 INTERIM FINANCIAL INFORMATION
The summarized financial information contained herein is unaudited;
however, in the opinion of management, all adjustments (consisting only
of recurring accruals) necessary for a fair presentation of such
financial information have been included. The accompanying financial
statements, footnotes and discussions should be read in conjunction
with the financial statements, related footnotes and discussions
contained in the National Lease Income Fund 6 L.P. (the "Partnership")
annual report on Form 10-K for the year ended December 31, 1998. The
results of operations for the nine months ended September 30, 1999 are
not necessarily indicative of the results to be expected for the full
year.
When used in this quarterly report on Form 10-Q, the words "believes,"
"anticipates," "expects" and similar expressions are intended to
identify forward-looking statements. Statements looking forward in time
are included in this quarterly report on Form 10-Q pursuant to the
"safe harbor" provision on the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties
which could cause actual results to differ materially, including, but
not limited to, those set forth in "management's discussion and
analysis of financial condition and results of operations." Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Partnership
undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances occurring after the date
hereof or to reflect the occurrence of unanticipated events.
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 fair value.
Depreciation is computed using the straight-line method over the
estimated useful lives of such assets (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. Depreciation
is not computed for equipment held for sale.
5
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Leased equipment and equipment held for lease or sale (continued)
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 periodic 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 Partnership may provide for additional losses in
subsequent periods and such losses could be material.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The general partners of the Partnership are ALI Equipment Management
Corp. ("Equipment Management"), ALI Capital Corp. and Presidio Boram
Corp., all of whom are direct or indirect subsidiaries of Presidio
Capital Corp. ("Presidio"). Other limited partnerships and similar
investment programs have been formed by affiliates of the general
partners to acquire equipment and, accordingly, conflicts of interest
may arise between the Partnership and such other limited partnerships.
Affiliates of the general partners 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 controls 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. Effective July 31, 1998, Presidio is indirectly controlled by
NorthStar Capital Investment Corp. ("NorthStar"), a Maryland
corporation.
Presidio entered into a management agreement with NorthStar Presidio
Management Company, LLC ("NorthStar Presidio"). Under the terms of the
management agreement, NorthStar Presidio provides the day-to-day
management of Presidio and its direct and indirect subsidiaries and
affiliates. During the nine months ended September 30, 1999 and 1998
reimbursable expenses to NorthStar Presidio from the Partnership
amounted to $15,000 and $9,172, respectively.
On October 21, 1999, Presidio entered into a new Services Agreement
with AP-PCC III, L.P. (the "Agent") pursuant to which the Agent was
retained to provide asset management and investor relation services to
the Partnership and other entities affiliated with the Partnership.
As a result of this agreement, the Agent has the duty to direct the day
to day affairs of the Partnership, including, without limitation,
reviewing and analyzing potential sale, financing or restructuring
proposals regarding the Partnership's assets, preparation of all
Partnership reports, maintaining Partnership records and maintaining
bank accounts of the Partnership. The Agent is not permitted, however,
without the consent of Presidio, or as otherwise required under the
6
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
terms of the Partnership's Agreement of Limited Partnership (the
"Partnership Agreement") to, among other things, cause the Partnership
to sell or acquire an asset or file for bankruptcy.
In order to facilitate the provision by the Agent of the asset
management services and the investor relation services, effective
October 25,1999, the officers and directors of the General Partner
resigned and nominees of the Agent were elected as the officers and
directors of the General Partner. The Agent is an affiliate of Winthrop
Financial Associates, a Boston based company that provides asset
management services, investor relation services and property management
services to over 150 limited partnerships which own commercial property
and other assets. The General Partner does not believe that this
transaction will have a material effect on the operations of the
Partnership.
The Partnership has a management agreement with Integrated Resources
Equipment Group, Inc. ("IREG"), pursuant to which IREG receives
equipment management fees of 5% of annual gross rental revenues on
operating leases; 2% of annual gross rental revenues on full payout
leases which contain net lease provisions; and 1% of annual gross
rental revenues if services are performed by third parties under the
active supervision of Equipment Management, as defined in the Limited
Partnership Agreement. The Partnership incurred equipment management
fees of $31,163 and $73,991 for the nine months ended September 30,
1999 and 1998, respectively.
During the operating and liquidating stage of the Partnership, IREG may
be entitled to a partnership management fee equal to 4% of cash from
operations as defined in the Limited Partnership Agreement, subject to
increase after the limited partners have received certain specified
minimum returns on their investment. The Partnership did not incur any
partnership management fees for the nine months ended September 30,
1999. For the nine months ended September 30, 1998, partnership
management fees amounted to $126,000.
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, cash from sales or financing and cash from the 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. Such restoration
amount may be less than the recorded general partners' deficit, which
could result in distributions to the limited partners of less than
recorded equity.
7
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
4 COMMITMENTS AND CONTINGENCIES
Continental Micronesia, Inc.
On March 31, 1993, the Partnership leased two Boeing 727-227 Advanced
aircraft to Continental Airlines, Inc. ("Continental") for a term of
approximately 69 months to be used by Continental's Air Micronesia
operation (the "Air Mike Leases"). Each Air Mike Lease provided 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 were repaid
by the Partnership through the application of rent credits such that
Continental recouped the aggregate cost of the Initial Modifications
over a 36-month period with interest at 9.31% per annum. In April 1993,
Continental transferred all of its rights and obligations under the Air
Mike Leases to Air Micronesia, a stand-alone air carrier affiliated
with Continental.
In addition, Continental has made certain other modifications to such
aircraft. The Partnership provided financing for the modifications
("Lessor Financing Credits") against the base rental payments due under
the Air Mike Leases. The lessee repaid Lessor Financing Credits through
monthly installments which were being amortized at the rate of 9.31%
per annum over 36 months. Through September 30, 1999, the Partnership
had provided financing aggregating approximately $1,308,000. The
Partnership sold one aircraft to an unaffiliated third party during the
third quarter of 1998. Additionally, the Partnership has agreed to
extend the term of the lease with respect to the second aircraft until
December 31, 1999 at the same lease rate.
On October 20, 1999, the Partnership closed the sale of the second
aircraft to an unaffiliated third party for proceeds of approximately
$2,261,000, exclusive of selling expenses of approximately $125,000. At
the time of sale, the aircraft had a net carrying value of
approximately $2,136,000, inclusive of provisions for equipment
impairment aggregating approximately $5,822,000 to recognize the
decrease in value of the aircraft which management believed reflected
the fair selling price of the aircraft. The provision for equipment
impairment includes $245,000 recorded during the three months ended
September 30, 1999 to reflect the current fair selling price of the
aircraft.
Tax assessment
In July 1998, the Partnership received proposed notices of assessment
from the State of Hawaii with respect to general excise tax ("GET")
aggregating approximately $1,757,000 (including interest and penalties)
for the years 1987 through 1995. The state is alleging that the
Partnership owes GET with respect to rents received from Aloha
Airlines, Inc. ("Aloha") and Hawaiian Airlines, Inc. ("Hawaiian") under
the leases between the Partnership and each of the airlines.
The leases with both Aloha and Hawaiian provided for full
indemnification of the Partnership for such taxes, but the bankruptcy
of Hawaiian may relieve Hawaiian of its indemnification obligation for
any periods prior to September 21, 1993, when Hawaiian and its
affiliates sought bankruptcy protection. In any event, it is the
Partnership, as taxpayer, which is ultimately liable for GET, if it is
applicable.
8
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
4 COMMITMENTS AND CONTINGENCIES (continued)
Tax assessment (continued)
The State of Hawaii has not previously applied the GET to rentals
received by a lessor of aircraft where the lessor's only contact with
the State of Hawaii is that it has leased its aircraft to airlines
which are based in the state. Aloha and Hawaiian, as well as the
Partnership, have separately engaged tax counsel and both airlines are
cooperating with the Partnership in vigorously contesting the proposed
assessments.
Final notices of assessment have not yet been issued. Although there
can be no assurance that the contest of the assessments will be
successful, the Partnership believes that the state's position on the
applicability of GET in this instance is without merit. The Partnership
has not recorded any provision or liability as a result of the proposed
notices of assessment.
5 AIRCRAFT SALES
On April 20, 1999, the Partnership sold one Boeing 737-200 aircraft to
an unaffiliated third party for proceeds of approximately $1,250,000,
exclusive of selling expenses of approximately $52,000. At the time of
sale, the aircraft had a net carrying value of approximately
$1,198,000. At March 31, 1999, the Partnership recorded a provision for
equipment impairment of approximately $34,000 with respect to this
aircraft.
On May 5, 1999, a Boeing 737-200 aircraft owned by the Partnership was
sold to an unaffiliated third party for proceeds of approximately
$1,100,000, exclusive of selling expenses of approximately $49,000. At
the time of sale, the aircraft had a net carrying value of
approximately $1,051,000. At March 31, 1999, the Partnership recorded a
provision for equipment impairment of approximately $181,000 with
respect to this aircraft.
On September 23, 1999, the Partnership sold an aircraft engine and
components to an unaffiliated third party for proceeds of $22,709. At
the time of sale, the engine and components had a net carrying value of
zero.
6 SUBSEQUENT EVENT
On October 20, 1999, the Partnership sold one Boeing 727-227 aircraft
to an unaffiliated third party for proceeds of approximately
$2,261,000, exclusive of selling expenses of approximately $125,000. At
the time of sale, the aircraft had a net carrying value of
approximately $2,136,000. At September 30, 1999, the Partnership
recorded an additional provision for equipment impairment of $245,000
with respect to this aircraft.
9
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of June 30, 1999, the Partnership had operating reserves of approximately
$4,696,000, which was comprised of undistributed cash from operations and sales,
aggregating approximately $3,196,000, as well as the general working capital
reserve of $1,500,000.
On September 23, 1999, the Partnership sold an aircraft engine and components to
an unaffiliated third party for sale proceeds of $22,709. At the time of sale,
the engine and components had a net carrying value of zero.
On October 20, 1999, the Partnership sold one Boeing 727-227 aircraft to an
unaffiliated third party for proceeds of approximately $2,261,000, exclusive of
selling expenses of approximately $125,000. At the time of sale, the aircraft
had a net carrying value of approximately $2,136,000. At September 30, 1999, the
Partnership recorded an additional provision for equipment impairment of
$245,000 with respect to this aircraft.
The sales described above complete the sale of the Partnership's equipment
portfolio. The Partnership does not anticipate that it will make any
distributions until it resolves the issues associated with the tax examinations
with respect to the general excise tax ("GET") as discussed in Note 4,
Commitments and Contingencies - Tax Assessment.
Upon resolution of the tax examination relating to the GET, the managing general
partner will then prepare a final accounting of the Partnership's assets and
liabilities, commence the dissolution and termination of the Partnership and
make a final distribution to partners.
Inflation and changing prices have not had any material effect on the
Partnership's revenues since its inception nor does the Partnership anticipate
any material effect on its business from these factors. The market softness in
the aircraft industry and resulting decline in value of the aircraft owned by
the Partnership have resulted in the Partnership providing allowances for
equipment impairment.
Year 2000 compliance
The Year 2000 compliance issue concerns the inability of computerized
information systems and programs to accurately calculate, store or use a date
after December 31, 1999, as a result of the year being stored as a two digit
number. The Partnership is dependent upon the General Partner and its affiliates
for management and administrative services. This could result in system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
During the third quarter of 1999, the General Partner and its affiliates
completed their assessment of computer systems used in connection with the
management of the Partnership. The General Partner and its affiliates have
completed upgrading those systems where required. The Partnership has to date
not borne, nor is it expected that the Partnership will bear, any significant
costs in connection with the upgrade of those systems requiring remediation.
10
<PAGE>
Year 2000 compliance (continued)
To date, the General Partner is not aware of any external agent or service
provider with a Year 2000 issue that would materially impact the Partnership's
results of operations, liquidity or capital resources. However, the General
Partner has no means of ensuring that external agents and service providers will
be Year 2000 compliant. The General Partner does not believe that the inability
of external agents or servive providers to complete their Year 2000 resolution
process in a timely manner will have a material impact on the financial
position or results of operations of the Partnership. However, the effect of
non-compliance by external agents is not readily determinable.
Results of Operations
Net income decreased for the three and nine month periods ended September 30,
1999 as compared to the corresponding periods of the prior year principally due
to a decrease in revenues and reduced gains on the sale of aircraft, partially
offset by a decrease in costs and expenses.
Revenues decreased for the three and nine month periods ended September 30, 1999
as compared to the corresponding periods of the prior year. Rental income
decreased due to the expiration in January and August 1998 of the leases with
Southwest Airlines, Co. in accordance with their terms and the sale in 1998 of
one Boeing 727 aircraft which was leased to Continental Micronesia Inc.
Interest income decreased for the nine month period ended September 30, 1999
compared to the corresponding period of the prior year due to lower cash
balances available for short term investments, but increased slightly for the
three month period ended September 30, 1999 compared to the same period in 1998.
Expenses decreased for the three and nine month periods ended September 30, 1999
as compared to the corresponding periods of the prior year as follows:
Operating expenses decreased for the three and nine month periods ended
September 30, 1999 as compared to the corresponding periods of the prior year
due to lower costs associated with the Partnership's off-lease aircraft in order
to comply with certain airworthiness directives issued by the Federal Aviation
Authority in 1998 as well as expenses related to the return and storage of the
aircraft.
Depreciation expense decreased resulting from the disposition of certain
equipment subsequent to the prior year's period, as well as to the fact that
certain equipment reached salvage value prior to the current year's period.
Fees to affiliates decreased due to the decrease in distributable cash from
operations resulting in lower partnership management fees as well as lower
equipment management fees due to reduced rentals on which such fee is based.
Through September 30, 1999, the Partnership recorded provisions for equipment
impairment aggregating approximately $5,822,000 to recognize the decrease in
value of one Boeing 727-227 aircraft which the Partnership owned on that date,
inclusive of $245,000 recorded during the three months ended September 30, 1999
to reflect the current fair selling price of the aircraft.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on form 8-K: None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL LEASE INCOME FUND 6 L.P.
By: ALI Equipment Management Corp.
Managing General Partner
/s/ Allan Rothschild
---------------------------------------------------
Allan Rothschild
Duly Authorized Officer
/s/ Lawrence Schachter
---------------------------------------------------
Lawrence Schachter
Principal Financial and Accounting
Officer
Date: November 11, 1999
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information extracted from the Financial
Statements of the September 30, 1999 Form 10-Q of National Lease Income Fund 6
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 4,803,079
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,013,926
<PP&E> 7,960,276
<DEPRECIATION> 5,823,840
<TOTAL-ASSETS> 7,150,360
<CURRENT-LIABILITIES> 272,488
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,877,872
<TOTAL-LIABILITY-AND-EQUITY> 7,150,360
<SALES> 0
<TOTAL-REVENUES> 797,368
<CGS> 0
<TOTAL-COSTS> 342,468
<OTHER-EXPENSES> 1,312,455
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (834,846)
<INCOME-TAX> 0
<INCOME-CONTINUING> (834,846)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (834,846)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
