UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File
December 31, 1998 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 No.)
411 West Putnam Avenue, Suite 270, 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
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 ].
<PAGE>
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".
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).
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 expired on May 3, 1998.
Under the terms of the ASA, Wexford provided 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 provides the day-to-day management of
Presidio and its direct and indirect subsidiaries and affiliates.
Effective July 31, 1998, Presidio is indirectly controlled by NorthStar Capital
Investment Corp. ("NorthStar"), a Maryland corporation.
At January 1, 1998, Registrant's remaining portfolio consisted of equipment with
an original cost of approximately $54,413,000 (net carrying value of
approximately $9,680,000) of which approximately $1,969,000 (fully depreciated
at January 1, 1998) was off-lease.
<PAGE>
During the year ended December 31, 1998, Registrant sold one Boeing 727-227
aircraft originally purchased for approximately $13,782,000 and which had a net
carrying value of $3,405,000 at the time of disposition (net of allowances for
equipment impairment aggregating approximately $5,005,000 provided in prior
years with respect to such equipment), for net sale proceeds of approximately
$3,763,000, or approximately $12.42 per Unit.
As of December 31, 1998, Registrant was the owner of three 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.
The lease of two aircraft expired in January 1998 and August 1998 and the third
lease is scheduled to expire on December 31, 1999. Registrant also owns one
Rolls Royce engine (the "Hawaiian Engine") that had previously been leased to
Hawaiian Airlines, Inc. ("Hawaiian") and which is currently off-lease.
Registrant is attempting to sell the three remaining aircraft as promptly as
possible with a view towards liquidating Registrant's entire portfolio and
winding up its business prior to the end of 1999.
Description of Business
Registrant's revenues from equipment are derived primarily from lease payments
from lessees. None of such lessees are affiliated with Registrant. During 1998,
lease payments from the following lessees were the source of 10% or more of
Registrant's leasing revenues: Continental Micronesia, Inc. ("Air Micronesia")
(76%) and Southwest Airlines Co. ("Southwest") (24%). Registrant's sole
remaining lease is with Air Micronesia.
Competition
The equipment leasing industry, particularly as it relates to aircraft, is
highly competitive. The aircraft leasing industry offers users an alternative to
the purchase of nearly every type of aircraft. The competitive conditions vary
considerably depending on the type of aircraft and the nature of the prospective
user.
Registrant has encountered competition in attempting to re-lease or sell its
aircraft as they have come off-lease due to a surplus in the market of
narrow-body aircraft similar to the aircraft owned by Registrant. The
substantial costs required to maintain and bring used aircraft into compliance
with United States Federal Aviation Administration ("FAA") noise and maintenance
requirements are the primary factors, which have adversely affected the narrow
body aircraft market. In addition, 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.
Registrant may need to use cash, which would otherwise be available for
distribution, to upgrade or enhance off-lease aircraft if Registrant determines
that such expenditures are in its best interest in order to maximize the
remarketing value of such 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.
<PAGE>
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 performed 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".
Foreign Operations
Registrant owns one aircraft, which is 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,
1999:
<TABLE>
<CAPTION>
Type of Equipment 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
One 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>
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.
(a) There is no developed public market for the Units of Registrant.
As of March 1, 1999, 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 Amount of Distribution Per Unit(1)
to Quarter Ended
- --------------------------------------------------------------------------------
1998 1997
---------- ----------
<S> <C> <C>
March 31 $ - $ 2.30
June 30 $ 10.00 $ -
September 30 $ 12.40 $ -
December 31 $ - $ -
</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.
(b) Not applicable.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues (1) ............. $ 1,917,930 $ 3,069,420 $ 3,274,777 $ 4,794,552 $10,230,235
Net Income (Loss)
(1) (2) (3) (4) ........ $ 172,681 $ 640,155 $ 235,176 $ 1,732,664 $ 2,258,086
Net income (Loss)
Per Unit (1) (2) (3) (4) $ .57 $ 2.11 $ .78 $ 5.72 $ 7.45
Distribution Per Unit .... $ 22.40 $ 2.30 $ 9.85 $ 36.00 $ 19.50
Total Assets ............. $ 8,021,712 $14,617,887 $15,492,237 $19,014,283 $29,268,853
Long-Term Obligations .... $ -- $ -- $ -- $ -- $ --
Total Partners' Equity ... $ 7,712,718 $14,328,029 $14,384,855 $17,134,577 $26,311,188
</TABLE>
(1) Included in these amounts are $228,113, $198,047, $218,863, $380,660
and $225,255 of interest income from short-term investments for the
years ended December 31, 1998, 1997, 1996, 1995 and 1994, respectively.
Additionally, revenues include interest income from leases accounted
for under the financing method of $776, $43,006 and $251,463, for the
years ended December 31, 1996, 1995 and 1994, respectively. Such
amounts are included in Net Income (Loss).
(2) Reflected in such amounts are provisions for equipment impairments
aggregating $50,000, $8,000 and $1,740,000, for the years ended
December 31, 1996, 1995 and 1994, respectively, with respect to certain
equipment.
(3) Included in such amounts are gains (losses) on the disposition of
equipment of $357,966, $10,597, $(46,643), $562,932 and $54,420 for the
years ended December 31, 1998, 1997, 1996, 1995 and 1994, respectively.
Additionally, 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 is a provision for doubtful accounts of
$202,626 for the year ended December 31, 1994.
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
During 1998, Registrant generated distributable cash from operations of
approximately $512,000 or approximately $1.69 per Unit and distributable cash
from sales of approximately $3,763,000 or approximately $12.42 per Unit.
Registrant made cash distributions to limited partners in 1998 of $22.40 per
Unit, which included $8.31 per Unit attributable to undistributed cash from
operations from prior periods. As of December 31, 1998, Registrant had operating
reserves of approximately $2,020,000 (or approximately $6.67 per Unit) which was
comprised of undistributed cash from operations and sales of approximately
$520,000 as well as the original working capital of $1,500,000 (1% of original
offering proceeds). Although expense levels have been reduced, most of
Registrant's future administrative expenses (i.e., accounting and investor
services, including printing) are fixed and thus will not decrease significantly
during future operating periods. Other expenses such as insurance and fees to
affiliates will decline during such periods.
During 1999, Registrant anticipates receiving approximately $831,000 of rentals
from one non-cancelable lease accounted for as an operating lease which
represents approximately $2.74 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 the
proceeds generated by the sales of Registrant's remaining assets (such as
aircraft) and requirements for operating reserves, if any. Equipment with an
original cost of approximately $26,849,000 was off-lease at December 31, 1998.
Set forth below is a description of various transactions, which have impacted
the liquidity of Registrant during 1998 and 1997:
(i) Registrant anticipates that it will encounter competition in attempting
to sell the Hawaiian Engine due to its condition as well as due to a
surplus in the market for 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, had a
zero carrying value when sold.
At December 31, 1998, the Hawaiian Engine (net of allowances for
equipment impairment aggregating $1,167,750 previously provided) was
fully depreciated.
(ii) On March 31, 1993, Registrant 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 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 were repaid by Registrant
through the application of rental credits such that Continental
recouped the aggregate cost of the Initial Modifications over a
36-month period with interest at 9.31% per annum.
<PAGE>
Further, Continental has made certain other modifications to the
aircraft which Registrant provided financing through credits ("Lessor
Financing Credits") against base rental payments due under the Air Mike
Leases. The lessee repaid Lessor Financing Credits through monthly
payments which were amortized at the rate of 9.31% per annum over 36
months. Through December 31, 1998, Registrant had provided financing
aggregating approximately $1,308,000. Such amount, net of amounts
repaid, was reflected on the balance sheets at December 31, 1997 as
Note Receivable. Registrant sold one aircraft to an unaffiliated third
party during the third quarter of 1998. Additionally, Registrant has
agreed to extend the term of the lease with respect to the second
aircraft until December 31, 1999 at the same lease rate.
At December 31, 1998, the net carrying value of the aircraft aggregated
approximately $3,233,900 (net of allowances for equipment impairment
aggregating approximately $5,005,000 provided in prior periods).
(iii) On November 30, 1994, the leases with Southwest Airlines, Co.
("Southwest") of two Boeing 737-200 aircraft (the "Southwest Aircraft")
were scheduled to expire in accordance with their original terms. The
associated nonrecourse debt was repaid upon the receipt of the final
rental installment for the initial lease term. Southwest and 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 Registrant agreed to
extend the leases for two additional years at 125% of the then current
lease rate. Registrant and Southwest had 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 was
returned in August 1998. At December 31, 1998, the net carrying value
of the Southwest Aircraft aggregated approximately $2,463,800 (net of
allowances for equipment impairment aggregating of $10,400,000
previously provided).
As of December 31, 1998, Registrant was the owner of three 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
$40,631,000 (net carrying value of approximately $5,698,000).
Registrant may need to use cash, which would otherwise be available for
distribution, to upgrade or enhance off-lease aircraft if Registrant determines
that such expenditures are in its best interest in order to maximize the
remarketing value of such aircraft.
During 1998, Registrant sold one Boeing 727-227 aircraft originally purchased
for approximately $13,782,000 and which had a net carrying value of $3,405,000
at the time of disposition (net of allowances for equipment impairment
aggregating approximately $5,005,000 provided with respect to such equipment)
for net sale proceeds of approximately $3,763,000, or approximately $12.42 per
Unit.
Registrant is attempting to sell its three remaining aircraft and Hawaiian
Engine as promptly as possible with a view towards liquidating Registrant's
entire portfolio and winding up the business of Registrant prior to the end of
1999.
<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 compliance
The Year 2000 compliance issue concerns the inability of computerized
information systems and equipment 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. This could result in a system failure or miscalculations causing
disruptions of operations. Registrant and NorthStar Presidio recognize the
importance of ensuring that its business operations are not disrupted as a
result of Year 2000 related computer system and software issues.
NorthStar Presidio is in the process of assessing its internal computer
information systems and is taking the steps necessary to remediate these systems
so that they will be Year 2000 compliant. In connection therewith, NorthStar
Presidio has installed a new fully compliant accounting and reporting system.
NorthStar Presidio is also reviewing its other internal systems and programs,
along with those of its unaffiliated third party service providers, in order to
ensure compliance.
Because this assessment is ongoing, the total cost of bringing all systems and
equipment into Year 2000 compliance has not been fully quantified. Based upon
available information, NorthStar Presidio does not believe that these costs will
have a material adverse effect on Registrant's business, financial condition or
results. Where Registrant's present intention is to wind up its business prior
to the end of 1999, it is possible that there could be adverse consequences to
Registrant as a result of Year 2000 issues that are outside Registrant's
control. NorthStar Presidio is in the preliminary stages of evaluating these
issues and will be developing contingency plans.
Results of Operations - 1998 as Compared to 1997
Rental revenues decreased by approximately 41% for the year ended December 31,
1998 as compared to the year ended December 31, 1997, due to the expiration of
certain leases in accordance with the terms of such leases.
Interest income increased by approximately 15% for 1998, as compared to 1997,
primarily because of higher balances available for investment in 1998.
Operating expenses significantly increased for 1998 as compared to 1997, due to
the increase in costs associated with the off-lease aircraft in order to comply
with certain airworthiness directives issued by the Federal Aviation Authority
as well as expenses related to the return and storage of the aircraft.
Fees to affiliates increased by approximately 21% for 1998 as compared to 1997,
due primarily to an increase in partnership management fees in 1998 offset by 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 68% for 1998 as compared to
1997, due to the disposition or sale of certain equipment during 1998, as well
as to the fact that certain equipment was fully depreciated during or prior to
1998.
<PAGE>
Additionally, Registrant did not provide any allowances for equipment in 1998.
General and administrative expenses decreased 27% for 1998 as compared to 1997,
primarily due to a decrease in investor relations expenses.
Registrant recognized aggregate net gain of approximately $358,000 for 1998 and
$11,000 for 1997, in connection with its sales of equipment. During 1998,
Registrant sold equipment, which it had originally purchased for approximately
$13,782,000 inclusive of associated acquisition fees, for net sales proceeds of
approximately $3,763,000.
The principal reasons for the change in Registrant's net income of approximately
$173,000 recognized for 1998 as compared to the net income of approximately
$640,000 recognized for 1997 are:
(i) the reduction in rental revenue, approximately $1,688,000 for 1998
compared to approximately $2,875,000 for 1997, and an increase in
interest income recognized of approximately $228,000 for 1998 as
compared with approximately $198,000 for 1997; and
(ii) the decrease in depreciation and general and administrative expense
offset by an increase in operating and fees to affiliates; offset by
(iii) the increase with regard to gains on the sale of equipment,
approximately $358,000 for 1998 compared to approximately $11,000 for
1997.
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. This was 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.
<PAGE>
General and administrative expenses increased 4% for 1997 as compared to a
decrease of 16% for 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:
(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.
Item 7a. Quantitative and Qualitative Disclosure About Market Risk
Not applicable
<PAGE>
Item 8. Financial Statements and Supplemental Data.
NATIONAL LEASE INCOME FUND 6 L.P.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
INDEX
Page
Number
------
Independent Auditor's Report F-1
Financial statements - years ended
December 31, 1998, 1997 and 1996
Balance sheets F-2
Statements of income F-3
Statement of partners' equity F-4
Statements of cash flows F-5
Notes to financial statements F-6 through F-18
Schedule:
II -- Valuation and Qualifying Accounts F-19 through F-20
All other schedules have been omitted because they are inapplicable or because
they are included in the financial statements or notes thereto.
<PAGE>
To the Partners of
National Lease Income Fund 6 L.P.
Greenwich, Connecticut
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of National Lease Income Fund 6
L.P. (a limited partnership) as of December 31, 1998 and 1997, and the related
statements of income, partners' equity and cash flows for each of the three
years in the period ended December 31, 1998. 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, 1998 and 1997, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1998 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 19, 1999
New York, New York
F-1
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
BALANCE SHEETS
December 31,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Leased equipment - net $ 3,233,889 $ 9,679,601
Equipment held for sale - net 2,463,781 --
Cash and cash equivalents 2,287,311 4,796,456
Deferred costs 28,354 112,161
Other receivables and prepaid expenses 8,377 26,188
Note receivable -- 3,481
----------- -----------
$ 8,021,712 $14,617,887
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 249,040 $ 220,608
Deferred income 34,625 69,250
Due to affiliates 25,329 --
----------- -----------
Total liabilities 308,994 289,858
----------- -----------
Commitments and contingencies (Notes 3, 4, 5, 8 and 10)
Partners' equity
Limited partners' equity (300,005 units issued
and outstanding) 7,625,740 14,174,898
General partners' equity 86,978 153,131
----------- -----------
Total partners' equity 7,712,718 14,328,029
----------- -----------
$ 8,021,712 $14,617,887
=========== ===========
</TABLE>
F-2
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF INCOME
Year ended December 31,
---------------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Rental $ 1,687,577 $ 2,875,508 $ 3,051,681
Interest 228,113 198,047 219,639
Other 2,240 (4,135) 3,457
----------- ----------- -----------
1,917,930 3,069,420 3,274,777
----------- ----------- -----------
Costs and expenses
Operating 1,142,790 231,105 213,307
Depreciation 576,554 1,797,526 2,226,515
Fees to affiliates 210,379 173,257 265,386
General and administrative 173,492 237,974 229,571
Provision for equipment impairment -- -- 50,000
Interest -- -- 8,179
----------- ----------- -----------
2,103,215 2,439,862 2,992,958
----------- ----------- -----------
(185,285) 629,558 281,819
Gain (loss) on sale of equipment - net 357,966 10,597 (46,643)
----------- ----------- -----------
Net income $ 172,681 $ 640,155 $ 235,176
=========== =========== ===========
Net income attributable to
Limited partners $ 170,954 $ 633,753 $ 232,824
General partners 1,727 6,402 2,352
----------- ----------- -----------
$ 172,681 $ 640,155 $ 235,176
=========== =========== ===========
Net income per unit of limited partnership
interest (300,005 units outstanding) $ .57 $ 2.11 $ .78
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENT OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
------------ ------------ ------------
<S> <C> <C> <C>
Balance, January 1, 1996 $ 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 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
Net income - 1998 170,954 1,727 172,681
Distributions to partners ($22.40 per limited
partnership unit) (6,720,112) (67,880) (6,787,992)
------------ ------------ ------------
Balance, December 31, 1998 $ 7,625,740 $ 86,978 $ 7,712,718
============ ============ ============
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF CASH FLOWS
Year ended December 31,
---------------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net income $ 172,681 $ 640,155 $ 235,176
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 576,554 1,797,526 2,226,515
Amortization of deferred costs 112,161 112,516 112,516
(Gain) loss on sale of equipment - net (357,966) (10,597) 46,643
Provision for equipment impairment -- -- 50,000
Changes in assets and liabilities
Other receivables and prepaid expenses 17,811 8,424 (3,507)
Accounts receivable -- 2,788 3,840
Accounts payable and accrued expenses 78 11,591 (748)
Deferred income (34,625) -- (41,603)
Due to affiliates 25,329 (71,527) 47,786
----------- ----------- -----------
Net cash provided by operating activities 512,023 2,490,876 2,676,618
----------- ----------- -----------
Cash flows from investing activities
Purchase of leased equipment - upgrades -- -- (261,539)
Proceeds from disposition of leased equipment 3,763,343 10,597 249,161
Note receivable collections 3,481 267,807 499,496
Minimum lease payments received on financing
leases, net of interest earned -- -- 8,300
Other non-operating payments -- -- (61,667)
----------- ----------- -----------
Net cash provided by investing activities 3,766,824 278,404 433,751
----------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF CASH FLOWS
Year ended December 31,
---------------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from financing activities
Distributions to partners (6,787,992) (1,454,569) (3,439,451)
----------- ----------- -----------
Net (decrease) increase in cash and
cash equivalents (2,509,145) 1,314,711 (329,082)
Cash and cash equivalents, beginning of year 4,796,456 3,481,745 3,810,827
----------- ----------- -----------
Cash and cash equivalents, end of year $ 2,287,311 $ 4,796,456 $ 3,481,745
=========== =========== ===========
Supplemental disclosure of cash flow information
Interest paid $ -- $ -- $ 8,179
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
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 year ended December 31, 1996 were
made to satisfy prior purchase commitments including modifications made to
certain aircraft and upgrades to equipment currently on lease.
The Partnership is attempting to sell the three remaining aircraft as
promptly as possible with a view towards liquidating the Partnership's
entire portfolio and winding up its business prior to the end of 1999.
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 sale
The cost of leased equipment and equipment held for 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.
F-6
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Leased equipment and equipment held for 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. Depreciation is not
computed for equipment held for sale.
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 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.
Unless otherwise disclosed, the fair value of financial instruments
approximates their recorded values.
F-7
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Note receivable
Note receivable represented financing provided by the Partnership to a
lessee of certain aircraft for modifications made to such aircraft. Such
note was repaid in January 1998 with interest at a rate of 9.31% per
annum.
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.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The corporate general partner of the Partnership, ALI Capital Corp. (the
"Corporate General Partner"), the managing general partner of the
Partnership, ALI Equipment Management Corp. ("Equipment Management") and
Integrated Resources Equipment Group, Inc. ("IREG") were wholly owned
subsidiaries of Integrated Resources, Inc. ("Integrated") through November
F-8
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
2, 1994. On November 3, 1994, as a result of the consummation of the
reorganization plan relating to Integrated's bankruptcy, indirect
ownership of the Corporate General Partner, Equipment Management and IREG
was purchased by Presidio Capital Corp. ("Presidio"). Z Square G Partners
II, was the associate general partner of the Partnership, through February
27, 1995. On February 28, 1995, Presidio Boram Corp., a subsidiary of
Presidio, became the associate general partner. Other limited partnerships
and similar investment programs have been formed by Equipment Management
or its affiliates to acquire equipment and, accordingly, conflicts of
interest may arise between the Partnership and such other limited
partnerships. Affiliates of Equipment Management have also engaged in
businesses related to the management of equipment and the sale of various
types of equipment and may transact business with the Partnership.
Subject to the rights of the Limited Partners under the Limited
Partnership Agreement, Presidio will control the Partnership through its
direct or indirect ownership of all of the shares of Equipment Management,
the Corporate General Partner and, as of February 28, 1995, the associate
general partner. 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 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 expired on May 3, 1998. Under the terms of the ASA, Wexford provided
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 provides 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
resignation. On the same date, the Board of Directors of Presidio
appointed new individuals to serve as officers and/or directors of the
general partners.
F-9
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
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,
1998, 1997 and 1996, the Partnership incurred expenses of $84,379,
$144,257 and $149,445, 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, 1998, 1997 and 1996, the Partnership incurred partnership
management fees of $126,000, $29,000 and $115,941, respectively. Such
amounts are included in fees to affiliates in the statements of income.
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. Such restoration amount may be less
than the recorded general partners' deficit which could result in
distributions to the limited partners of less than recorded equity.
In April 1995, Equipment Management and certain affiliates entered into an
agreement with Fieldstone Private Capital Group, L.P. ("Fieldstone")
pursuant to which Fieldstone performed certain management and
administrative services relating to the Partnership as well as certain
other partnerships in which Equipment Management serves as general
partner. Fieldstone continued to perform such services until July 31,
1998.
F-10
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
4 LEASED EQUIPMENT
Leased equipment
<TABLE>
<CAPTION>
December 31,
-------------------------------------
1998 1997
----------------- ---------------
<S> <C> <C>
Transportation and related equipment (net of
accumulated depreciation of $5,543,386 and
$22,354,618 and an allowance for
equipment impairment of $5,004,725 and
$20,409,450) $ 3,233,889 $ 9,679,601
================= ================
</TABLE>
Leases on the Partnership's transportation equipment expired during 1998.
The Partnership agreed to extend the term of one lease until December 31,
1999 at the same lease rate.
Equipment held for sale
Equipment held for sale consists of certain transportation equipment, with
an aggregate net carrying value of $2,463,781 and $0 (net of accumulated
depreciation of $12,817,338 and $801,450 and an allowance for equipment
impairment of $11,567,750 and $1,167,750) at December 31, 1998 and 1997,
respectively.
F-11
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
5 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
Professional fees $ 116,956 $ 107,345
Lease overpayments 8,835 8,835
Operating expenses 121,749 102,928
Sales and property taxes 1,500 1,500
--------------- ---------------
$ 249,040 $ 220,608
=============== ===============
</TABLE>
6 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.
During 1997 the Partnership 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 retroactively as of the
inception of the Partnership. 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.
F-12
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
7 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,
---------------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net income per financial statements $ 172,681 $ 640,155 $ 235,176
Difference between financial statements and tax
basis treatment of advanced rental payments (34,625) -- (41,603)
Difference between financial statements and tax
basis of equipment sold or disposed of 3,285,671 -- 67,088
Provision for equipment impairment provided
for financial statement purposes -- -- 50,000
Minimum lease payments received, net of
income earned on leases accounted
for under the financing method -- -- 8,300
Difference between advanced payments
made over the amount recognized ratably
over the respective periods for financial
statements 112,161 112,516 112,516
Tax depreciation in excess of financial
statement depreciation (1,788,251) (602,489) (336,825)
Deficiency (excess) of income accruals
over expense accruals -- -- (11)
----------- ----------- -----------
Net income per tax basis $ 1,747,637 $ 150,182 $ 94,641
=========== =========== ===========
</TABLE>
F-13
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
7 RECONCILIATION OF NET INCOME AND NET ASSETS PER FINANCIAL
STATEMENTS TO TAX BASIS (continued)
The differences between the Partnership's net assets per financial
statements and tax basis of accounting are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
Net assets per financial statements $ 7,712,718 $ 14,328,029
Net carrying value of equipment (5,608,102) (7,105,522)
Syndication costs 16,875,000 16,875,000
Advanced rental payments 34,625 69,250
Deferred costs -- (112,161)
--------------- ----------------
Net assets per tax basis $ 19,014,241 $ 24,054,596
=============== ===============
</TABLE>
8 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,
-------------------------------------------------
1998 1997 1996
------------- ------------- --------------
<S> <C> <C> <C>
Two Boeing 737-200 aircraft $ 406,000 $ 1,200,000 $ 1,200,000
% of leasing revenues 24% 42% 39%
(Southwest Airlines, Co.)
Two Boeing 727-227 Advanced aircraft $ 1,281,000 $ 1,662,000 $ 1,662,000
% of leasing revenues 76% 58% 54%
(Continental Airlines, Inc.)
</TABLE>
F-14
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
9 EQUIPMENT SALES
Year ended December 31, 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.
Year ended December 31, 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.
Year ended December 31, 1998
On September 23, 1998, the Partnership closed the sale of one Boeing
727-227 aircraft to an unaffiliated third party for proceeds of
approximately $3,893,000, exclusive of selling expenses of approximately
$130,000. At the time of sale, the aircraft had a net carrying value of
approximately $3,405,000.
10 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.
F-15
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
10 COMMITMENTS AND CONTINGENCIES (continued)
a Hawaiian Airlines, Inc. (continued)
The Partnership anticipates it will encounter competition in
attempting to sell one remaining Hawaiian Engine due to its 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, 1998 and 1997, the one remaining Hawaiian Engine (net
of allowances for equipment impairment aggregating $1,167,750 in 1998
and 1997 provided in prior periods) was fully depreciated and is
included in equipment held for sale or lease.
b 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 addition, Continental has made certain other modifications to the
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 the Lessor Financing
Credits through monthly installments which were being amortized at
the rate of 9.31% per annum over 36 months. Through December 31,
1998, the Partnership had provided financing aggregating
approximately $1,308,000. As discussed in Note 9, 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. The net carrying value of
the aircraft aggregated approximately $3,234,000 and $7,216,000 (net
of allowances for equipment impairment aggregating approximately
$5,005,000 and $10,009,000 provided in prior periods) at December 31,
1998 and 1997, respectively.
F-16
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
10 COMMITMENTS AND CONTINGENCIES (continued)
b Continental Micronesia, Inc. (continued)
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
provided for monthly rentals of 125% of the previous lease rate.
The Partnership and Southwest 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 was returned in August
1998. The Partnership is actively remarketing the aircraft.
The net carrying value of the Southwest Aircraft aggregated
approximately $2,464,000 (net of allowances for equipment impairment
aggregating approximately $10,400,000 previously provided) at
December 31, 1998 and 1997.
d 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 GET is owed by the Partnership with respect to rents received
from Aloha Airlines, Inc. ("Aloha") and 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.
F-17
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
10 COMMITMENTS AND CONTINGENCIES (continued)
d 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.
F-18
<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, 1998
Leased equipment accounted for
under the operating method -
valuation allowance for equipment
impairment
Transportation and related equipment $ 20,409,450 $ -- $ -- $ (5,004,725)(A) $ 5,004,725
(10,400,000)(B)
Equipment held for sale -
valuation allowance for equipment
impairment
Transportation and related equipment $ 1,167,750 $ -- $ -- $ 10,400,000 (B) $ 11,567,750
------------- ------------- ------------- ------------- -------------
$ 21,577,200 $ -- $ -- $ (5,004,725) $ 16,572,475
------------- ------------- ------------- ------------- -------------
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 $ -- $ -- $ -- (B) $ 20,409,450
Equipment held for lease or sale -
valuation allowance for equipment
impairment
Transportation and related equipment $ 2,595,000 $ -- $ -- $ (1,427,250)(B) $ 1,167,750
------------- ------------- ------------- ------------- -------------
$ 23,026,885 $ -- $ -- $ (1,449,685) $ 21,577,200
------------- ------------- ------------- ------------- -------------
</TABLE>
F-19
<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, 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>
(A) Represents valuation allowances for equipment relating to certain
equipment sold during 1998, 1997 and 1996.
(B) Represents valuation allowance for equipment that was transferred to
Equipment Held for Sale during 1998.
See notes to financial statements.
F-20
<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>
Name Age Position Held Has served as a
Director and/or
Officer of the
Managing General
Partner since
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
W. Edward Scheetz 34 Director November 1997
David Hamamoto 39 Director November 1997
Dallas E. Lucas 36 Director August 1998
David King 36 Executive Vice President and Assistant November 1997
Treasurer, Director
Lawrence R. Schachter 42 Senior Vice President and Chief January 1998
Financial Officer
J. Peter Paganelli 40 Senior Vice President, Secretary and March 1998
Treasurer
Allan B. Rothschild 37 President and Director December 1997
Marc Gordon 34 Vice President November 1997
Charles Humber 25 Vice President November 1997
Adam Anhang 25 Vice President November 1997
Gregory Peck 24 Assistant Secretary November 1997
</TABLE>
- ------------------
Each director and officer of the General Partner will hold office until the next
annual meeting of stockholders of the General Partner and until his successor is
elected and qualified.
There are no family relationships between or among any of the directors and/or
executive officers of the General Partner.
W. Edward Scheetz co-founded NorthStar Capital Partners LLC with David Hamamoto
in July 1997, From 1993 through 1997, Mr. Scheetz was a partner at Apollo Real
Estate Advisors L.P. From 1989 to 1993, Mr. Scheetz was a principal with
Trammell Crow Ventures.
David Hamamoto co-founded NorthStar Capital Partners LLC with W. Edward Scheetz
in July 1997. From 1988 to 1997, Mr Hamamoto was a partner and a co-head of the
real estate principal investment area at Goldman, Sachs & Co.
<PAGE>
Dallas E. Lucas joined Northstar Capital Partners LLC in August 1998. From 1994
until then he was the Chief Financial Officer of Crescent Real Estate Equities
Company. Prior to that he was a financial consulting and audit manager in the
real estate services group of Arthur Anderson LLP.
David King joined NorthStar Capital Partners LLC in November 1997. From 1990 to
1997, Mr. King was associated with Olympia & York Companies (USA) where he held
the position of Senior Vice President of Finance. Prior to that Mr. King was
employed with Bankers Trust in its real estate finance group.
Lawrence R. Schachter joined NorthStar Presidio in January 1998 From 1996 to
1998, Mr. Schachter was Controller at CB Commercial/Hampshire LLC. From 1995 to
1996, Mr. Schachter was Controller at Goodrich Associates. From 1992 to 1995,
Mr. Schachter was Controller at Greenthal/Harlan Realty Services Co.
J. Peter Paganelli joined NorthStar Presido in March 1998. From 1997 to 1998,
Mr. Paganelli was Director of Asset Management at Argent Ventures LLC, a private
real estate company. From 1994 to 1997, Mr. Paganelli was a Vice President at
Starwood Capital Group, LLC in its Asset Management Group. From 1986 to 1994,
Mr. Paganelli was an Associate Director at Cushman & Wakefield, Inc. in its
Financial Services and Asset Services Groups.
Allan B. Rothschild joined NorthStar Presidio in December 1997. From 1995 to
1997, Mr. Rothschild was Senior Vice President and General Counsel of Newkirk
Limited Partnership. From 1987 to 1995, Mr. Rothschild was associated with the
law firm of Proskauer, Rose LLP in its real estate group.
Marc Gordon joined NorthStar Capital Partners LLC in October 1997 From 1993 to
1997, Mr. Gordon was Vice President in the real estate investment banking group
at Merrill Lynch. Prior to that, Mr. Gordon was associated with the law firm of
Irell & Manella in its real estate and banking group.
Charles Humber joined NorthStar Capital Partners LLC in September 1997. From
1996 to 1997, Mr Humber was employed with Merrill Lynch in its real estate
investment banking group. Prior to that, Mr. Humber was a student at Brown
University.
Adam Anhang joined NorthStar Capital Partners LLC in August 1997. From 1996 to
1997, Mr. Anhang was employed by The Athena Group as part of its Russia and
former Soviet Union development team. Prior to that, Mr. Anhang was a student at
the Wharton School of the University of Pennsylvania.
Gregory Peck joined NorthStar Capital Partners LLC in July 1997. From 1996 to
1997, Mr. Peck was employed by Morgan Stanley as part of Morgan Stanley Realty
Real Estate Funds (MSREF) and Morgan Stanley's Real Estate Investment Banking
Group. From 1994 to 1996, Mr. Peck worked for Lazard Freres & Co. LLC in the
Real Estate Investment Banking Group.
Messrs. Scheetz, Hamamoto, Lucas, King and Rothschild 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., Resources Accrued
Mortgage Investors 2, L.P., Resources Accrued Mortgage Investors - Series 86,
L.P., Integrated Resources High Equity Partners - Series 85, L.P., High Equity
Partners, L.P. - Series 86, and High Equity Partners, L.P. - Series 88.
<PAGE>
Presidio Boram Corp., the Associate General Partner, is a wholly-owned
subsidiary of Presidio whose directors are Messrs. Scheetz, Hamamoto, Lucas,
Rothschild and King.
Registrant believes, based on written representations received by it, that for
1998 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, 1999, 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, 1999, neither the General Partners nor their officers and
directors were known by Registrant to be beneficially own Units or shares of
Presidio, the parent of the General Partners.
To the knowledge of the Registrant, the following sets forth certain information
regarding ownership of the Class A shares of Presidio as of March 1, 1999,
(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 share-holders
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 interests in
PCIC (and beneficial ownership in Presidio) are held as follows:
<PAGE>
<TABLE>
<CAPTION>
Percentage Ownership in PCIC
and Percentage Beneficial
Ownership
Name of Beneficial Owner in Presidio
------------------------ -----------
<S> <C>
Five Percent Holders:
NorthStar Presidio Capital Holding Corp.(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>
Directors and Officers:
-----------------------
<S> <C>
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%
J. Peter Paganelli (5) 0%
Allan Rothschild (5) 0%
Dallas Lucas (5) 0%
Lawrence Schachter (5) 0%
W. Edward Scheetz (5) 71.93%
Directors and Officers as a group: 71.93%
----------------------------------
</TABLE>
(1) NorthStar Presidio Capital Holding Corp. ("NS Presidio") is a Delaware
corporation whose address is c/o NorthStar Capital Investment Corp.,
527 Madison Avenue, 16th Floor, New York, New York 10022. NS Presidio
has three shareholders: (i) NorthStar Parnership, L.P., a Delaware
limited partnership whose address is c/o NorthStar Captital Investment
Corp. 527 Madison Avenue, 16th floor, New York, New York 10022, holds
99% of the common stock (non-voting); (ii) David T. Hamamoto holds 0.5%
of the common stock (voting); and (iii) W. Edward Scheetz holds 0.5% of
the common stock (voting).
<PAGE>
(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 disclaims such beneficial
ownership. The business address for such persons is c/o Angelo, Gordon
& Co., L.P., 245 Park Avenue, 26th Floor, New York, New York 10167.
(3) M.H. Davidson & Company, 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 persons is c/o M.H.
Davidson & Company, 885 Third Avenue, New York, New York 10022.
(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 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 persons is
c/o Stonehill Investment Corporation, 110 East 59th Street, New York,
New York 10022.
(5) The business address for such persons 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 $54,304, $6,788 and $6,788, respectively, from
Registrant as their share of distributions of cash from operations during 1998.
No director or officer of the Managing General Partner received any direct
remuneration from Registrant during 1998.
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 $84,379 during 1998. 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 1998, Registrant had paid or accrued for
payment $126,000 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.******
10.23 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.******
<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>
EXHIBIT INDEX
Page
Exhibit Number
- ------- ------
3.1 Certificate of Limited Partnership of Registrant, filed on
July 11, 1986.*
3.2 Partnership Agreement of Registrant, dated as of July 21,
1986, as amended and restated as of December 22, 1986
(included as Exhibit A to Exhibit 28).**
3.3 Amendment to Certificate of Limited Partnership.
10.1 Participation Agreement, dated as of June 1, 1988, among
First Security Bank of Utah, N.A. (the "Bank"), Registrant
and Midway Airlines, Inc.***
10.2 Lease Agreement, dated as of June 1, 1988, between the Bank
and Midway Airlines, Inc.***
10.3 Aircraft Purchase Agreement, dated as of June 1, 1988, among
the Bank, Registrant and Midway Airlines, Inc.***
10.4 Participation Agreement, dated as of July 15, 1988, among the
Bank, Registrant and Aloha Airlines, Inc.***
10.5 Lease Agreement, dated as of July 15, 1988, between the Bank
and Aloha Airlines, Inc.***
10.6 Aircraft Purchase Agreement, dated as of July 15, 1988,
between the Bank and Aloha Airlines, Inc.***
10.7 Participation Agreement, dated as of October 25, 1988, among
the Bank, Registrant, Security Pacific Equipment Leasing,
Inc. and Hawaiian Airlines.***
10.8 Aircraft Lease, dated as of October 25, 1988, between the
Bank and Hawaiian Airlines, Inc.***
10.9 Aircraft Purchase Agreement, dated as of May 5, 1988, between
Hawaiian Airlines, Inc. and Trust Company for USL, Inc.***
10.10 Lease Agreement, dated as of January 3, 1989, between the
Bank and Southwest Airlines Co.***
10.11 Mortgage and Security Agreement, dated as of January 3, 1989,
between the Bank and John Hancock Leasing Corporation.***
10.12 Participation Agreement, dated as of January 3, 1989, among
the Bank, Registrant, Southwest Airlines Co. and John Hancock
Leasing Corporation.***
10.13 Lease Agreement, dated as of January 4, 1989, between the
Bank and Southwest Airlines Co.***
<PAGE>
10.14 Mortgage and Security Agreement, dated as of January 4, 1989,
between the Bank and John Hancock Leasing Corporation.***
10.15 Participation Agreement, dated as of January 4, 1989, among
the Bank, Registrant, Southwest Airlines Co. and John Hancock
Leasing Corporation. ***
10.16 Loan Agreement, dated as of January 17, 1989, among
Registrant, the Bank, John Hancock Leasing Corporation, New
England Mutual Life Insurance Company and Meridian Trust
Company.***
10.17 Loan Agreement, dated as of January 18, 1989, among
Registrant, the Bank, John Hancock Leasing Corporation, New
England Mutual Life Insurance Company and Meridian Trust
Company.***
10.18 Management Agreement between Registrant and ALI Leasing
Service Corp., dated July 20, 1986.****
10.19 Acquisition and Disposition Services Agreement between
Registrant and ALI Leasing Service Corp., dated July 20,
1986.*****
10.20 Settlement Agreement, dated as of August 21, 1992, between
First Security Bank of Utah, N.A. and Alaska Airlines,
Inc.******
10.21 Escrow Agreement, dated August 21, 1992, between Alaska
Airlines, Inc. and First Security Bank of Utah, N.A.******
10.22 Lease Amendment No. 2, dated as of November 5, 1992, between
Hawaiian Airlines, Inc. and First Security Bank of Utah,
N.A.******
10.23 Mortgage Amendment No. 2, dated as of November 5, 1992
between First Security Bank of Utah, N.A. and Security
Pacific Equipment Leasing, Inc.******
10.24 Interim Settlement Agreement, dated as of January 27, 1993
between Integrated Aircraft Corp., IAC Leasing Corp. IV, IAC
Leasing Corp V, Integrated Aircraft Fund Management Corp and
ALI Equipment Management Corp. and Hawaiian Airlines,
Inc.******
10.25 Agreement dated as of March 4, 1993, between Aircraft Income
Partners, L.P., Aircraft Income Partners II, L.P., and
National Lease Income Fund 6, L.P. and HAL, Inc. and Hawaiian
Airlines, Inc.******
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.***
- ------------------------
* Incorporated by reference to Exhibit 4 to Registrant's Registration
Statement on Form S-1, dated August 13, 1986.
** Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form S-1, dated May 20, 1988.
*** Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form S-1, dated May 20, 1988.
**** Incorporated by reference to Exhibit 10(b) to Registrant's Registration
Statement on Form S-1, dated May 20, 1988.
***** Incorporated by reference to Exhibit 10(c) to Registrant's Registration
Statement on Form S-1, dated May 20, 1988.
****** Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, File No. 0-15643.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on the 29th
day of March 1999.
NATIONAL LEASE INCOME FUND 6, L.P.
By: ALI EQUIPMENT MANAGEMENT CORP.
Managing General Partner
Date
By: /s/ Allan B. Rothschild March 29, 1999
-----------------------
Allan B. Rothschild
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/ Dallas Lucas Director March 29, 1999
- ----------------
Dallas Lucas
/s/ Lawrence R. Schachter Senior Vice President and March 29, 1999
- ------------------------- Chief Financial Officer
Lawrence R. Schachter
/s/ Allan B. Rothschild Director and President March 29, 1999
- ------------------------
Allan B. Rothschild
/s/ David King Director and Executive March 29, 1999
- --------------- Vice President and
David King Assistant Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the financial
statements of the December 31, 1998 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-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,287,311
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,324,042
<PP&E> 24,058,394
<DEPRECIATION> 18,360,724
<TOTAL-ASSETS> 8,021,712
<CURRENT-LIABILITIES> 308,994
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,712,718
<TOTAL-LIABILITY-AND-EQUITY> 8,021,712
<SALES> 0
<TOTAL-REVENUES> 2,275,896
<CGS> 0
<TOTAL-COSTS> 1,526,661
<OTHER-EXPENSES> 576,554
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 172,681
<INCOME-TAX> 0
<INCOME-CONTINUING> 172,681
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 172,681
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
