<PAGE>
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, 1999 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.)
5 Cambridge Center 9th Floor, Cambridge, MA 02142
- ------------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code 617-234-3000
--------------
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].
Documents Incorporated by Reference
None
Exhibit Index: page 40
<PAGE>
PART I
Item 1. Business
General
National Lease Income Fund L.P. 6 (the "Registrant") was organized as a Delaware
limited partnership on July 11, 1986. The general partners of the Registrant are
ALI Equipment Management Corp. (the "Managing General Partner"), ALI Capital
Corp. (the "Corporate General Partner"), and Presidio Boram Corp. (the
"Associate General Partner"). The Associate General Partner, the Managing
General Partner and the Corporate General Partner are collectively referred to
herein as the "General Partners". The General Partners are all ultimately
wholly-owned subsidiaries of Presidio Capital Corporation, a British Virgin
Islands corporation ("Presidio"). See "Management/Employees" below.
In 1988, the Registrant sold, pursuant to a registration statement filed with
the Securities Exchange Commission, 300,000 units of limited partnership
interest (the "Units") for gross proceeds aggregating $150,000,000. The
principal business of the Registrant is and has been to hold for investment and
ultimately sell equipment. Substantially all of the net proceeds available for
investment had been invested in equipment by December 1988. During the year
ended December 31, 1999, the Registrant sold the balance of its remaining
equipment and it is anticipated that the Registrant will be dissolved during
2000. See "Equipment" below.
Management/Employees
Registrant does not have any employees. The business of the Registrant is
managed by the General Partners, their affiliates and agents. 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. Further, on
February 28, 1995, the Associate General Partner replaced Z Square G Partners II
as the associate general partner of Registrant. As a result, all of the General
Partners became ultimately wholly-owned by Presidio. Presidio, in turn, is
controlled by NorthStar Capital Investment Corp., a Maryland corporation
("NorthStar").
Presidio previously retained Wexford Management LLC ("Wexford") to provide
consulting and administrative services to Presidio and its affiliates, including
the General Partners and Registrant. The agreement with Wexford expired on May
3, 1998 at which time Presidio entered into a management agreement with
NorthStar Presidio Management Company, LLC ("NorthStar Presidio"). Under the
terms of the management agreement, NorthStar Presidio provided the day-to-day
management of Presidio and its direct and indirect subsidiaries and affiliates.
On October 21, 1999, Presidio entered into a Services Agreement with AP-PCC III,
L.P. (the "Agent") pursuant to which the Agent was retained to provide asset
management and investor relation services to Registrant and other entities
affiliated with Registrant.
As a result of this agreement, the Agent has the duty to direct the day to day
affairs of Registrant, including, without limitation, reviewing and analyzing
potential sale, financing or restructuring proposals regarding the Registrant's
assets, preparation of all reports, maintaining records and maintaining bank
accounts of Registrant. The Agent is not permitted, however, without the consent
of Presidio, or as otherwise required under the terms of the Limited Partnership
Agreement to, among other things, cause Registrant to sell or acquire an asset
or file for bankruptcy protection.
I-1
<PAGE>
In order to facilitate the Agent's provision of the asset management services
and the investor relation services, effective October 25, 1999, the officers and
directors of the General Partners resigned and nominees of the Agent were
elected as the officers and directors of the General Partners. The Agent is an
affiliate of Winthrop Financial Associates, a Boston based company that provides
asset management services, investor relation services and property management
services to over 150 limited partnerships which own commercial property and
other assets. The General Partners do not believe this transaction will have a
material effect on the operations of Registrant.
Equipment
As of January 1, 2000, all of Registrant's equipment had been liquidated.
In August 1997, the Registrant 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 Registrant 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.
On September 23, 1998, the Registrant 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.
On April 20, 1999, the Registrant sold one Boeing 737-200 aircraft to an
unaffiliated third party for proceeds of approximately $1,250,000, exclusive of
selling expenses of approximately $52,000. At the time of sale, the aircraft had
a net carrying value of approximately $1,198,000.
On May 5, 1999, a Boeing 737-200 aircraft owned by the Registrant was sold to an
unaffiliated third party for proceeds of approximately $1,100,000, exclusive of
selling expenses of approximately $49,000. At the time of sale, the aircraft had
a net carrying value of approximately $1,051,000.
On September 23, 1999, the Registrant sold an aircraft engine and components to
an unaffiliated third party for proceeds of approximately $23,000. At the time
of sale, the engine and components had a net carrying value of zero.
On October 20, 1999, the Registrant sold one Boeing 727-227 aircraft to an
unaffiliated third party for proceeds of approximately $2,261,000, exclusive of
selling expenses of approximately $125,000. At the time of sale, the aircraft
had a net carrying value of approximately $2,136,000.
Foreign Operations
Registrant sold its aircraft that was 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").
I-2
<PAGE>
Item 2. Properties
See "Item 1. Business-Equipment" for information relating to the sales of
Registrant's remaining equipment.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
I-3
<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, 2000, there were approximately 10,100 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:
- ---------------------------------------------------------
Distribution with Amount of Distribution Per
respect Unit (1)(2)
to Quarter Ended
- ---------------------------------------------------------
1999 1998
- ---------------------------------------------------------
March 31 $ - $ -
- ---------------------------------------------------------
June 30 $ - $ 10.00
- ---------------------------------------------------------
September 30 $ - $ 12.40
- ---------------------------------------------------------
December 31 $ - $ -
- ---------------------------------------------------------
(1) The amounts listed represent distributions of cash from operations and
cash from sales.
(2) During February 2000, Registrant declared a distribution in the amount of
$9.90 per Unit for holders of record as of January 1, 2000.
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.
II-1
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- ---------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues (1) $ 918,693 $ 1,917,930 $ 3,069,420 $ 3,274,777 $ 4,794,552
Net (loss) income
(1) (2) (3) $ (718,412) $ 172,681 $ 640,155 $ 235,176 $ 1,732,664
Net income (loss)
per Unit (1) (2) (3) $ (2.37) $ .57 $ 2.11 $ .78 $ 5.72
Distribution per Unit $ - $ 22.40 $ 2.30 $ 9.85 $ 36.00
Total Assets $ 7,082,635 $ 8,021,712 $ 14,617,887 $ 15,492,237 $ 19,014,283
Total Partners' Equity $ 6,994,306 $ 7,712,718 $ 14,328,029 $ 14,384,855 $ 17,134,577
</TABLE>
(1) Included in these amounts are $206,882, $228,113, $198,047, $218,863 and
$380,660 of interest income from short-term investments for the years
ended December 31, 1999, 1998, 1997, 1996 and 1995, respectively.
(2) Reflected in such amounts are provisions for equipment impairments
aggregating $902,000, $50,000 and $8,000, for the years ended December 31,
1999, 1996 and 1995, respectively, with respect to certain equipment.
(3) Included in such amounts are gains (losses) on the disposition of
equipment of $22,709, $357,966, $10,597, $(46,643) and $562,932 for the
years ended December 31, 1999, 1998, 1997, 1996 and 1995, respectively.
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.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The matters discussed in this Form 10-K contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-K and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's liquidity, capital resources and results of
operations, including forward-looking statements pertaining to such matters,
does not take into account the effects of any changes to the Partnership's
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
II-2
<PAGE>
Liquidity and Capital Resources
During 1999, Registrant generated cash from operations of $239,027 and cash from
the disposition of equipment of $4,537,925. Registrant made no cash
distributions to limited partners in 1999. Registrant had $7,064,263 of cash
and cash equivalents as compared to $2,289,311 of cash and cash equivalents at
December 31, 1998. Expense levels have been reduced and 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 periods.
In February 2000, Registrant declared and paid a distribution of $3,000,000, of
which the limited partners received $2,970,000 or $9.90 per Unit.
Set forth below is a description of various transactions, which have impacted
the liquidity of Registrant during 1999 and 1998:
(i) 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. On September 23, 1999, Registrant sold the engine and
components for proceeds and a gain of $22,709.
(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.
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 September
30, 1999, Registrant had provided financing aggregating approximately
$1,308,000. 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 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.
On October 20, 1999, the Partnership closed the sale of the second
aircraft to an unaffiliated third party for proceeds of approximately
$2,261,000, exclusive of selling expenses of approximately $125,000. At
the time of sale, the aircraft had a net carrying value approximately
$2,136,000, inclusive of provisions for equipment impairment aggregating
approximately $5,822,000 to recognize the decrease in value of the
aircraft which management believed reflected the fair selling price of the
aircraft.
II-3
<PAGE>
(iii) On November 30, 1994, the leases with Southwest Airlines, Co.
("Southwest") of two Boeing 737-200 aircraft (the "Southwest Aircraft")
were scheduled to expire in accordance with their original terms. The
associated nonrecourse debt was repaid upon the receipt of the final
rental installment for the initial lease term. Southwest and 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).
On April 20, 1999, the Partnership sold one Boeing 737-200 aircraft to an
unaffiliated third party for proceeds of approximately $1,250,000,
exclusive of selling expenses of approximately $52,0000. At the time of
sale, the aircraft had a net carrying value of approximately $1,198,000.
At March 31, 1999, the Partnership recorded a provision for equipment
impairment of approximately $34,000 with respect to this aircraft.
On May 5, 1999, a Boeing 737-200 aircraft owned by the Partnership was
sold to an unaffiliated third party for proceeds of approximately
$1,100,000 exclusive of selling expenses of approximately $49,000. At the
time of sale, the aircraft had a net carrying value of approximately
$1,051,000. At March 31, 1999, the Partnership recorded a provision for
equipment impairment of approximately $181,000 with respect to this
aircraft.
As of December 31, 1999, Registrant had sold all of its equipment with a view
towards winding up the business affairs of Registrant during the first half of
2000.
Inflation and changing prices have not had any material effect on Registrant's
revenues since its inception nor does Registrant anticipate any material effect
on its business from these factors.
Results of Operations - 1999 as Compared to 1998
Registrant generated a net loss of $718,412 for the year ended December 31,
1999, as compared to net income of $172,681 for the year ended December 31,
1998. Net income decreased primarily due to a decrease in revenues of $999,237
and reduced gains on the sale of equipment of $335,257, partially offset by a
decrease in costs and expenses of $443,401.
Rental revenue decreased for the year ended December 31, 1999 compared to the
corresponding period in 1998 due to the expiration in January and August 1998 of
leases with Southwest Airlines in accordance with the terms and the sale of the
equipment. Interest income decreased by approximately 9% due to lower cash
balances available for investment.
Operating expenses decreased compared to the corresponding periods of the prior
year due to lower costs associated with the Partnership's off-leases aircraft in
order to comply with certain airworthiness directives issued by the Federal
Aviation Authority in 1998 as well as expenses related to the return and storage
of the aircraft.
II-4
<PAGE>
Depreciation expense decreased by $296,100 resulting from the disposition of
certain equipment subsequent to the prior year's period, as well as to the fact
that certain equipment reached salvage value prior to the current year's period.
Fees to affiliates decreased by $176,983 due to the decrease in distributable
cash from operations, resulting in lower partnership management fees, as all as
lower equipment fees due to reduced certain rentals on which such fee is based.
General and administrative expenses increased by $150,588 due to a higher legal
expenses.
Registrant recorded provisions for equipment impairment aggregating $908,000 to
record the decrease in value of the aircraft to reflect the fair selling price
of the aircraft.
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.
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-5
<PAGE>
(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.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
Not applicable
II-6
<PAGE>
Item 8. Financial Statements and Supplemental Data.
NATIONAL LEASE INCOME FUND 6 L.P.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
INDEX
Page
Number
------
Independent Auditor's Report F-1
Financial statements - years ended
December 31, 1999, 1998 and 1997
Balance sheets F-2
Statements of operations F-3
Statement of partners' equity F-4
Statements of cash flows F-5
Notes to financial statements F-6 through F-17
Schedule:
II -- Valuation and Qualifying Accounts F-18 through F-19
All other schedules have been omitted because they are inapplicable or because
they are included in the financial statements or notes thereto.
II-7
<PAGE>
To the Partners of
National Lease Income Fund 6 L.P.
Cambridge, Massachusetts
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, 1999 and 1998, and the related
statements of operations, partners' equity and cash flows for each of the three
years in the period ended December 31, 1999. 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, 1999 and 1998, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1999 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.
During 1999, the Partnership sold its three remaining aircraft and is expecting
to wind up its business affairs and liquidate during the first half of 2000. In
that regard, the Partnership declared and paid a cash distribution of $3,000,000
during February 2000 for unitholders of record as of January 1, 2000.
/s/ Hays & Company
March 15, 2000
New York, New York
F-1
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
BALANCE SHEETS
December 31,
---------------------------
1999 1998
------------ ------------
ASSETS
<S> <C> <C>
Leased equipment - net $ - $ 3,233,889
Equipment held for sale - net - 2,463,781
Cash and cash equivalents 7,064,263 2,287,311
Deferred costs - 28,354
Other assets 18,372 8,377
------------ ------------
$ 7,082,635 $ 8,021,712
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 88,329 $ 249,040
Deferred income - 34,625
Due to affiliates - 25,329
------------ ------------
Total liabilities 88,329 308,994
------------ ------------
Commitments and contingencies (Notes 3, 4, 5, 8 and 10)
Partners' equity
Limited partners' equity (300,005 units issued
and outstanding) 6,914,512 7,625,740
General partners' equity 79,794 86,978
------------ ------------
Total partners' equity 6,994,306 7,712,718
------------ ------------
$ 7,082,635 $ 8,021,712
============ ============
</TABLE>
See notes to financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
STATEMENTS OF OPERATIONS
Year ended December 31,
---------------------------------------
1999 1998 1997
----------- ----------- ------------
<S> <C> <C> <C>
Revenues
Rental $ 658,380 $ 1,687,577 $ 2,875,508
Interest 206,882 228,113 198,047
Other 53,431 2,240 (4,135)
----------- ----------- -----------
918,693 1,917,930 3,069,420
----------- ----------- -----------
Costs and expenses
Operating 119,934 1,142,790 231,105
Depreciation 280,454 576,554 1,797,526
Fees to affiliates 33,396 210,379 173,257
General and administrative 324,030 173,492 237,974
Provision for equipment impairment 902,000 - -
----------- ----------- -----------
1,659,814 2,103,215 2,439,862
----------- ----------- -----------
(741,121) (185,285) 629,558
Gain on sale of equipment - net 22,709 357,966 10,597
----------- ----------- -----------
Net (loss) income $ (718,412) $ 172,681 $ 640,155
=========== =========== ===========
Net (loss) income attributable to
Limited partners $ (711,228) $ 170,954 $ 633,753
General partners (7,184) 1,727 6,402
----------- ----------- -----------
$ (718,412) $ 172,681 $ 640,155
=========== =========== ===========
Net (loss) income per unit of limited partnership
interest (300,005 units outstanding) $ (2.37) $ .57 $ 2.11
======== ====== =======
</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, 1997, 1998 AND 1999
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
------------- ------------- ------------
<S> <C> <C> <C>
Balance, January 1, 1997 $ 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
Net loss - 1999 (711,228) (7,184) (718,412)
------------ ------------ ------------
Balance, December 31, 1999 $ 6,914,512 $ 79,794 $ 6,994,306
============ ============ ============
</TABLE>
* During February 2000, the Partnership declared and paid a $3,000,000
distribution to unitholders of record as of January 1, 2000
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,
------------------------------------------------
INCREASE (DECREASE) IN CASH AND 1999 1998 1997
------------ ------------- -------------
CASH EQUIVALENTS
Cash flows from operating activities
<S> <C> <C> <C>
Net (loss) income $ (718,412) $ 172,681 $ 640,155
Adjustments to reconcile net (loss) income to net
cash provided by operating activities
Depreciation 280,454 576,554 1,797,526
Amortization of deferred costs 28,354 112,161 112,516
Gain on sale of equipment - net (22,709) (357,966) (10,597)
Provision for equipment impairment 902,000 - -
Changes in operating assets and liabilities
Other assets (9,995) 17,811 8,424
Accounts receivable - - 2,788
Accounts payable and accrued expenses (160,711) 78 11,591
Deferred income (34,625) (34,625) -
Due to affiliates (25,329) 25,329 (71,527)
------------ ------------- -------------
Net cash provided by operating activities 239,027 512,023 2,490,876
------------ ------------- -------------
Cash flows from investing activities
Proceeds from disposition of leased equipment 4,537,925 3,763,343 10,597
Note receivable collections - 3,481 267,807
------------ ------------- -------------
Net cash provided by investing activities 4,537,925 3,766,824 278,404
------------ ------------- -------------
Cash flows from financing activities
Distributions to partners - (6,787,992) (1,454,569)
------------ ------------- -------------
Net increase (decrease) in cash and
cash equivalents 4,776,952 (2,509,145) 1,314,711
Cash and cash equivalents, beginning of year 2,287,311 4,796,456 3,481,745
------------ ------------- -------------
Cash and cash equivalents, end of year $7,064,263 $ 2,287,311 $ 4,796,456
============ ============= =============
</TABLE>
See notes to financial statements.
F-5
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
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.
During 1999, the Partnership sold its the three remaining aircraft and is
expecting to wind up its business affairs and liquidate during the first
half of 2000.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Leases
The Partnership accounted for all of its leases in accordance with the
operating and financing methods. For operating leases, rental revenue was
recognized on a straight-line basis and expenses (including depreciation)
was charged to operations as incurred. For financing leases, unearned income
was 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 represented the
initial cost of the equipment to the Partnership plus miscellaneous
acquisition and closing costs, and was 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, 1999, 1998 AND 1997
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Leased equipment and equipment held for sale (continued)
Depreciation was 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 capitalized major additions to
its aircraft and depreciated such capital improvements over the remaining
estimated useful life of such aircraft. Depreciation was not computed for
equipment held for sale.
When equipment was sold or otherwise disposed of, the cost and accumulated
depreciation (and any related allowance for equipment impairment) were
removed from the accounts and any gain or loss on such sale or disposal is
reflected in operations. Normal maintenance and repairs were charged to
operations as incurred. The Partnership provided allowances for equipment
impairment based upon a periodic review of all equipment in its portfolio,
when management believed that, based upon market analysis, appraisal reports
and leases currently in place with respect to specific equipment, the
investment in such equipment might not be recoverable.
The allowance was inherently subjective and was based upon management's best
estimate of then current conditions and assumptions about expected future
conditions.
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.
Net income (loss) and distributions per unit of limited partnership
interest
Net income (loss) 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.
F-7
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes (continued)
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
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.
F-8
<PAGE>
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
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.
On October 21, 1999, Presidio entered into a new Services Agreement with
AP-PCC III, L.P. (the "Agent") pursuant to which the Agent was retained to
provide asset management and investor relation services to the Partnership
and other entities affiliated with the Partnership.
As a result of this agreement, the Agent has the duty to direct the day to
day affairs of the Partnership, including, without limitation, reviewing and
analyzing potential sale, financing or restructuring proposals regarding the
Partnership's assets, preparation of all reports, maintaining Partnership
records and maintaining bank accounts of the Partnership. The Agent is not
permitted, however, without the consent of Presidio, or as otherwise
required under the terms of the Limited Partnership Agreement to, among
other things, cause the Partnership to sell or acquire an asset or file for
bankruptcy protection.
In order to facilitate the Agent's provision of asset management services
and the investor relation services, effective October 25, 1999, the officers
and directors of the General Partners resigned and nominees of the Agent
were elected as the officers and directors of the General Partners. The
Agent is an affiliate of Winthrop Financial Associates, a Boston based
company that provides asset management services, investor relation services
and property management services to over 150 limited partnerships which own
commercial property and other assets. The General Partners do not believe
this transaction will have a material effect on the operations of the
Partnership.
The Partnership has a management agreement with IREG, pursuant to which IREG
receives 5% of annual gross rental revenues on operating leases; 2% of
annual gross rental revenues on full payout leases which contain net lease
provisions; and 1% of gross rental revenues if services are performed by
third parties under the active supervision of IREG as defined in the Limited
Partnership Agreement. During the years ended December 31, 1999, 1998 and
1997, the Partnership incurred expenses of $33,396, $84,379 and $144,257,
respectively, for such management services.
F-9
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
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
and 1997, the Partnership incurred partnership management fees of $126,000
and $29,000, respectively. There were no such fees for 1999. Such amounts
are included in fees to affiliates in the statements of operations.
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, 1999, 1998 AND 1997
4 LEASED EQUIPMENT
Leased equipment
December 31,
------------------------
1999 1998
------------ -----------
Transportation and related equipment (net of
accumulated depreciation of $5,543,386 and
an allowance for equipment impairment of
$5,004,725 at December 31, 1998) $ - $3,233,889
============ ===========
Leases on the Partnership's transportation equipment expired during 1998.
The Partnership sold its remaining aircraft during 1999.
Equipment held for sale
Equipment held for sale at December 31, 1998 consisted of certain
transportation equipment, with an aggregate net carrying value of $2,463,781
(net of accumulated depreciation of $12,817,338 and an allowance for
equipment impairment of $11,567,750).
5 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
December 31,
------------------------
1999 1998
----------- ----------
Professional fees $ 40,000 $ 116,956
Lease overpayments - 8,835
Operating expenses 48,329 123,249
----------- ----------
$ 88,329 $ 249,040
=========== ==========
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 did 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. The
Partnership reallocated $1,500,025 (1% of the gross proceeds raised at the
Partnership's formation) of the partners' equity to the General Partners'
equity account. This reallocation was made as of the inception of the
Partnership. The reallocation had no impact on the Partnership's financial
position, results of operations, cash flows, distributions to partners, or
the partners' tax basis capital accounts.
F-11
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
7 RECONCILIATION OF NET (LOSS) INCOME AND NET ASSETS PER FINANCIAL STATEMENTS
TO TAX BASIS
A reconciliation of net (loss) income per financial statements to the tax
basis of accounting is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------
1999 1998 1997
--------- --------- --------
<S> <C> <C> <C>
Net (loss) income per financial statements $ (718,412) $ 172,681 $ 640,155
Difference between financial statements and tax
basis treatment of advanced rental payments (34,625) (34,625) -
Difference between financial statements and tax
basis of equipment sold or disposed of 4,454,812 3,285,671 -
Provision for equipment impairment provided
for financial statement purposes 902,000 - -
Difference between advanced payments
made over the amount recognized ratably
over the respective periods for financial
statements - 112,161 112,516
Tax depreciation in excess of financial
statement depreciation 251,271 (1,788,251) (602,489)
--------- ----------- ---------
Net income per tax basis $4,855,046 $1,747,637 $ 150,182
========== ========== =========
</TABLE>
F-12
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
7 RECONCILIATION OF NET (LOSS) 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,
------------------------
1999 1998
----------- ----------
<S> <C> <C>
Net assets per financial statements $ 6,994,306 $7,712,718
Net carrying value of equipment - (5,608,083)
Syndication costs 16,875,000 16,875,000
Advanced rental payments - 34,625
----------- ----------
Net assets per tax basis $23,869,306 $19,014,260
=========== ===========
</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,
---------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Two Boeing 737-200 aircraft $ - $ 406,000 $ 1,200,000
% of leasing revenues -% 24% 42%
(Southwest Airlines, Co.)
One (1999) and two (1998) Boeing 727-227 $ 658,380 $ 1,281,000 $ 1,662,000
Advanced Aircraft
% of leasing revenues 100% 76% 58%
(Continental Airlines, Inc.)
</TABLE>
9 EQUIPMENT SALES
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.
F-13
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
9 EQUIPMENT SALES (continued)
Year ended December 31, 1997 (continued)
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.
Year ended December 31, 1999
On April 20, 1999, the Partnership sold one Boeing 737-200 aircraft to an
unaffiliated third party for proceeds of approximately $1,250,000, exclusive
of selling expenses of approximately $52,000. At the time of sale, the
aircraft had a net carrying value of approximately $1,198,000.
On May 5, 1999, a Boeing 737-200 aircraft owned by the Partnership was sold
to an unaffiliated third party for proceeds of approximately $1,100,000,
exclusive of selling expenses of approximately $49,000. At the time of sale,
the aircraft had a net carrying value of approximately $1,051,000.
On September 23, 1999, the Partnership sold an aircraft engine and
components to an unaffiliated third party for proceeds of approximately
$23,000. At the time of sale, the engine and components had a net carrying
value of zero.
On October 20, 1999, the Partnership sold one Boeing 727-227 aircraft to an
unaffiliated third party for proceeds of approximately $2,261,000, exclusive
of selling expenses of approximately $125,000. At the time of sale, the
aircraft had a net carrying value of approximately $2,136,000.
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-14
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
10 COMMITMENTS AND CONTINGENCIES (continued)
a Hawaiian Airlines, Inc. (continued)
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, the one remaining Hawaiian Engine (net of
allowances for equipment impairment aggregating $1,167,750 was fully
depreciated and was included in equipment held for sale or lease. The
Hawaiian Engine was sold in September 1999 (Note 9)
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 had 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 (net of allowances for equipment impairment aggregating
approximately $5,005,000 provided in prior periods) at December 31,
1998.
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.
On October 20, 1999, the Partnership closed the sale of the second
aircraft to an unaffiliated third party for proceeds of approximately
$2,261,000, exclusive of selling expenses of approximately $125,000. At
the time of sale, the aircraft had a net carrying value of approximately
$2,136,000, inclusive of provisions for equipment impairment aggregating
approximately $5,822,000 to recognize the decrease in value of the
aircraft which management believed reflected the fair selling price of
the aircraft. The provision for equipment impairment includes $245,000
recorded during the three months ended September 30, 1999 to reflect the
current fair selling price of the aircraft.
F-15
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
10 COMMITMENTS AND CONTINGENCIES (continued)
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 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. The Southwest Aircraft were subsequently sold during 1999
(Note 9).
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.
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-16
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
11 Subsequent event
During February 2000, the Partnership declared and paid a $3,000,000
distribution to the Unitholders of record as of January 1, 2000. Of this
amount, the limited partners collectively received $2,970,000 or $9.90 per
Unit.
F-17
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Additions
--------------------------------
Balance at Charged to Balance
Beginning of Costs and Additions at End
Description Period Expenses (Deductions) of Period
- ---------------------------------------------- -------------- ------------ ---------------- ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Leased equipment accounted for
under the operating method -
valuation allowance for equipment
impairment
Transportation and related equipment $ 5,004,725 $ 687,000 (C) $ (5,691,725) (A) $ -
Equipment held for sale - valuation
allowance for equipment
impairment
Transportation and related equipment 11,567,750 215,000 (C) (11,782,750) (A) -
----------- --------- ------------ -
$ 16,572,475 $ 902,000 $ (17,474,475) $ -
============= ========== ============== ============
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 $ - (A) $ (5,004,725) $ 5,004,725
(B) (10,400,000)
Equipment held for sale - valuation
allowance for equipment
impairment
Transportation and related equipment 1,167,750 - (B) 10,400,000 11,567,750
------------- ---------- ------------ ------------
$ 21,577,200 $ - $ (5,004,725) $ 16,572,475
============= ========== ============= ============
(continued)
</TABLE>
F-18
<PAGE>
<TABLE>
<CAPTION>
NATIONAL LEASE INCOME FUND 6 L.P. Schedule II
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, 1997
Leased equipment accounted for
under the operating method -
valuation allowance for equipment
impairment
Equipment for management
information systems $ 22,435 $ - $ - $ (22,435) (A) $ -
Transportation and related equipment 20,409,450 - - - 20,409,450
Equipment held for lease or sale -
valuation allowance for equipment
impairment
Transportation and related equipment 2,595,000 - - (1,427,250) (A) 1,167,750
---------- ---------- ------------- ------------ ------------
$ 23,026,885 $ - $ - $(1,449,685) $ 21,577,200
============== ========== ============= ============= ============
</TABLE>
(A) Represents elimination of valuation allowances for equipment
impairments due to the sale of certain equipment during 1999, 1998 and
1997.
(B) Represents valuation allowance for equipment that was transferred to
Equipment Held for Sale during 1998.
(C) Represents additional valuation allowances recorded on equipment during
1999.
See notes to financial statements.
F-19
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
II-8
<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 and the Associate General Partner are the same as the officers
and directors of the Managing General Partner.
Has Served as
Position Held with the Has Served as a
Director
Name Managing General Partner or Officer Since
- ---- ------------------------ -------------------
Michael L. Ashner President and Director 10-99
David G. King, Jr. Vice President 11-97
Peter Braverman Executive Vice President 10-99
Lara K. Sweeney Vice President and Secretary 10-99
Carolyn Tiffany Vice President and Treasurer 10-99
Michael L. Ashner, age 47, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") since January 15,
1996. From June 1994 until January 1996, Mr. Ashner was a Director, President
and Co-chairman of National Property Investors, Inc., a real estate investment
company ("NPI"). Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until January
1996. In addition, since 1981 Mr. Ashner has been President of Exeter Capital
Corporation, a firm which has organized and administered real estate limited
partnerships.
David G. King, Jr., 37, has been a Vice President and Assistant Treasurer
of NorthStar Capital Investment Corp. since November 1997. He is also a Vice
President of the General Partner. For more than the previous five years he was a
Senior Vice President of Finance at Olympia & York Companies (USA).
Peter Braverman, age 48, has been a Vice President of WFA since January
1996. From June 1995 until January 1996, Mr. Braverman was a Vice President of
NPI and NPI Management. From June 1991 until March 1994, Mr. Braverman was
President of the Braverman Group, a firm specializing in management consulting
for the real estate and construction industries. From 1988 to 1991, Mr.
Braverman was a Vice President and Assistant Secretary of Fischbach Corporation,
a publicly traded, international real estate and construction firm.
Lara K. Sweeney, age 27, has been a Senior Vice President of WFA since
January 1996. Prior to joining WFA, Ms. Sweeney was an officer of NPI and NPI
Management in the asset management and investor relations departments.
III-1
<PAGE>
Carolyn Tiffany, age 33, has been employed with WFA since January 1993.
From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and Associate in
WFA's accounting and asset management departments. From October 1995 to present
Ms. Tiffany was a Vice President in the asset management and investor relations
departments of WFA until December 1997, at which time she became the Chief
Operating Officer of WFA.
Each director and officer of the General Partners will hold office until the
next annual meeting of stockholders of the General Partners and until his
successor is elected and qualified.
One or more of the above persons are also directors or officers of a general
partner (or general partner of a general partner) of a number of limited
partnerships which either have a class of securities registered pursuant to
Section 12(g) of the Securities and Exchange Act of 1934, or are subject to the
reporting requirements of Section 15(d) of such Act.
There are no family relationships among the officers and directors of the
General Partners.
III-2
<PAGE>
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
(a) Security Ownership of Certain Beneficial Owners.
No person or group is known by the Registrant to be the beneficial owner
of more than 5% of the outstanding Units at March 1, 2000.
(b) Security Ownership of Management.
At March 1, 2000, Presidio, the Managing General Partner and their
affiliates, officers and directors owned as a group no Units.
(c) Changes in Control.
There exists no arrangement known to the Registrant the operation of which
may at a subsequent date result in a change in control of the Registrant.
Item 13. Certain Relationships and Related Transactions
Registrant does not have any employees. The business of the Registrant is
managed by the General Partners, their affiliates and agents. Effective October
21, 1999, Presidio, entered into a Services Agreement with AP-PCC III, L.P. (the
"Agent") pursuant to which the Agent was retained to provide asset management
and investor relation services to the Partnership and other entities affiliated
with the Partnership. As a result of this agreement, the Agent has the duty to
direct the day to day affairs of the Partnership, including, without limitation,
reviewing and analyzing potential sale, financing or restructuring proposals
regarding the Partnership's assets, preparation of all reports, maintaining
Partnership records and maintaining bank accounts of the Partnership. The Agent
is not permitted, however, without the consent of Presidio, or as otherwise
required under the terms of the Limited Partnership Agreement to, among other
things, cause the Partnership to sell or acquire an asset or file for bankruptcy
protection.
The Registrant is party to a management agreement with Integrated Resources
Equipment Group, Inc. ("IREG"), an affiliate of the General Partners, 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, 1999, 1998 and 1997,
the Registrant incurred expenses of $33,396, $84,379 and $144,257, respectively,
for such management services.
IV-1
<PAGE>
During the operating and liquidating stage of the Registrant, 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 and 1997, the
Registrant incurred partnership management fees of $126,000 and $29,000,
respectively. There were no such fees for 1999.
The management agreements between the Registrant 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 Registrant. There were no
distributions made to the Managing General Partner, the Corporate General
Partner and the Associate General Partner during 1999. No director or officer of
the Managing General Partner received any direct remuneration from Registrant
during 1999.
During the operating and liquidating stage of the Registrant, 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 Registrant, the General Partners may be
required to remit to the Registrant 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.
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.***
IV-2
<PAGE>
10.3 Aircraft Purchase Agreement, dated as of June 1, 1988, among the Bank,
Registrant and Midway Airlines, Inc.***
10.4 Participation Agreement, dated as of July 15, 1988, among the Bank,
Registrant and Aloha Airlines, Inc.***
10.5 Lease Agreement, dated as of July 15, 1988, between the Bank and Aloha
Airlines, Inc.***
10.6 Aircraft Purchase Agreement, dated as of July 15, 1988, between the Bank
and Aloha Airlines, Inc.***
10.7 Participation Agreement, dated as of October 25, 1988, among the Bank,
Registrant, Security Pacific Equipment Leasing, Inc. and Hawaiian
Airlines.***
10.8 Aircraft Lease, dated as of October 25, 1988, between the Bank and
Hawaiian Airlines, Inc.***
10.9 Aircraft Purchase Agreement, dated as of May 5, 1988, between Hawaiian
Airlines, Inc. and Trust Company for USL, Inc.***
10.10 Lease Agreement, dated as of January 3, 1989, between the Bank and
Southwest Airlines Co.***
10.11 Mortgage and Security Agreement, dated as of January 3, 1989, between the
Bank and John Hancock Leasing Corporation.***
10.12 Participation Agreement, dated as of January 3, 1989, among the Bank,
Registrant, Southwest Airlines Co. and John Hancock Leasing
Corporation.***
10.13 Lease Agreement, dated as of January 4, 1989, between the Bank and
Southwest Airlines Co.***
10.14 Mortgage and Security Agreement, dated as of January 4, 1989, between the
Bank and John Hancock Leasing Corporation.***
10.15 Participation Agreement, dated as of January 4, 1989, among the Bank,
Registrant, Southwest Airlines Co. and John Hancock Leasing
Corporation.***
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.******
IV-3
<PAGE>
10.23 Mortgage Amendment No. 2, dated as of November 5, 1992 between First
Security Bank of Utah, N.A. and Security Pacific Equipment Leasing,
Inc.******
10.24 Interim Settlement Agreement, dated as of January 27, 1993 between
Integrated Aircraft Corp., IAC Leasing Corp. IV, IAC Leasing Corp V,
Integrated Aircraft Fund Management Corp and ALI Equipment Management
Corp. and Hawaiian Airlines, Inc.******
10.25 Agreement dated as of March 4, 1993, between Aircraft Income Partners,
L.P., Aircraft Income Partners II, L.P., and National Lease Income Fund
6, L.P. and HAL, Inc. and Hawaiian Airlines, Inc.******
10.26 Form of Lease Agreement, dated as of January 5, 1993, between First
Security Bank of Utah, N.A., as Trustee for the benefits of Registrant
and Continental Airlines. Note: substantially identical leases in all
material respects except for aircraft specific references were entered
into with respect to two aircraft owned by First Security Bank of Utah,
N.A., for the benefit of Registrant.******
10.27 Form of Participation Agreement, dated as of January 5, 1993, among
First Security Bank of Utah, N.A., Registrant and Continental
Airlines. Note: substantially identical agreements in all
material respects except for aircraft specific references were entered
into with respect to two aircraft owned by First Security Bank of Utah,
N.A., for the benefit of Registrant.******
10.28 Second Lease Extension Agreement, dated as of July 5, 1995, between First
Security Bank of Utah, National Association and Southwest Airlines Co.
10.29 Second Lease Extension Agreement, dated as of July 5, 1995, between First
Security Bank of Utah, National Association and Southwest Airlines Co.
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.
IV-4
<PAGE>
** 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.
IV-5
<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, 2000.
NATIONAL LEASE INCOME FUND 6, L.P.
By: ALI EQUIPMENT MANAGEMENT CORP.
Managing General Partner
Date
By: /s/ Michael L. Ashner March 29, 2000
---------------------------
Michael L. Ashner
President and Director
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/ Michael L. Ashner President and Director March 29, 2000
- ----------------------
Michael L. Ashner
/s/ Carolyn Tiffany Vice President March 29, 2000
- ---------------------- and Treasurer
Carolyn Tiffany
<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.******
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.******
<PAGE>
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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from audited financial statements for the
year ended December 31, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 7,064,263
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,082,635
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 6,994,306
<TOTAL-LIABILITY-AND-EQUITY> 7,082,635
<SALES> 0
<TOTAL-REVENUES> 711,811
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,335,784
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (718,412)
<INCOME-TAX> 0
<INCOME-CONTINUING> (718,412)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (718,412)
<EPS-BASIC> (2.37)
<EPS-DILUTED> (2.37)
</TABLE>
