<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 0-15643
NATIONAL LEASE INCOME FUND 6 L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3275922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Cambridge Center, 9th Floor
Cambridge Massachusetts 02142
(Address of principal executive offices)
(617) 234-3000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS - March 31, 2000 and December 31, 1999 ............ 1
STATEMENTS OF OPERATIONS - For the three months ended March 31, 2000
and 1999 ...................................................... 2
STATEMENT OF PARTNERS' EQUITY - For the three months ended
March 31, 2000 ................................................ 3
STATEMENTS OF CASH FLOWS - For the three months ended
March 31, 2000 and 1999 ....................................... 4
NOTES TO FINANCIAL STATEMENTS .................................... 5-7
ITEM 2 MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................ 8
ITEM 3 Quantitative and Qualitative Disclosures
About Market Risk ........................................... 8
PART II - OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K ............................ 9
SIGNATURES ............................................................. 10
<PAGE>
NATIONAL LEASE INCOME FUND 6
NOTES TO FINANCIAL STATEMENTS
BALANCE SHEETS
March 31, December 31,
2000 1999
---- ----
ASSETS
Cash and cash equivalents $ 4,208,110 $ 7,064,263
Prepaid expenses and other assets - 18,372
----------- -----------
$ 4,208,110 $ 7,082,635
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 80,425 $ 88,329
----------- -----------
Commitments and contingencies
Partners' equity
Limited partners' equity (300,005 units issued
and outstanding) 4,076,557 6,914,512
General partners' equity 51,128 79,794
----------- -----------
Total partners' equity 4,127,685 6,994,306
----------- -----------
$ 4,208,110 $ 7,082,635
=========== ===========
See notes to financial statements.
<PAGE>
NATIONAL LEASE INCOME FUND 6
NOTES TO FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
For the three months ended
March 31,
---------
2000 1999
---- ----
Revenues
Rental $ - $ 207,750
Interest 78,573 24,689
Other 36,933 42,905
---------- ----------
115,506 275,344
---------- ----------
Costs and expenses
Provision for equipment impairment - 215,000
Operating, net of refunds (57,024) 53,008
Depreciation - 93,485
Fees to affiliates - 10,388
General and administrative 39,151 58,017
---------- ----------
(17,873) 429,898
---------- ----------
Net income (loss) $ 133,379 $ (154,554)
========== ==========
Net income (loss) attributable to
Limited partners $ 132,045 $ (153,008)
General partners 1,334 (1,546)
---------- ----------
$ 133,379 $ (154,554)
========== ==========
Net income (loss) per unit of limited
partnership interest (300,005 units
outstanding) $ .44 $ (.51)
========== ==========
See notes to financial statements.
<PAGE>
NATIONAL LEASE INCOME FUND 6
NOTES TO FINANCIAL STATEMENTS
STATEMENT OF PARTNERS' EQUITY
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
------ ------ ------
Balance, January 1, 2000 $ 6,914,512 $ 79,794 $ 6,994,306
Net income for the three months
ended March 31, 2000 132,045 1,334 133,379
Distribution to Partners ($9.90 per
limited partnership unit) (2,970,000) (30,000) (3,000,000)
----------- --------- -----------
Balance, March 31, 2000 $ 4,076,557 $ 51,128 $ 4,127,685
=========== ========= ===========
See notes to financial statements.
<PAGE>
NATIONAL LEASE INCOME FUND 6
NOTES TO FINANCIAL STATEMENTS
STATEMENTS OF CASH FLOWS
For the three months ended
March 31,
---------
2000 1999
---- ----
DECREASE IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net income (loss) $ 133,379 $ (154,554)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities
Provision for equipment impairment - 215,000
Depreciation - 93,485
Changes in operating assets and liabilities
Prepaid expenses and other assets 18,372 (35,981)
Accounts payable and accrued expenses (7,904) (152,618)
Due to affiliates - (25,328)
----------- -----------
Net cash provided by (used in)
operating activities 143,847 (59,996)
----------- -----------
Cash flows from financing activities
Distribution to partners (3,000,000) -
----------- -----------
Net decrease in cash and cash equivalents (2,856,153) (59,996)
Cash and cash equivalents, beginning of period 7,064,263 2,287,311
----------- -----------
Cash and cash equivalents, end of period $ 4,208,110 $ 2,227,315
=========== ===========
See notes to financial statements.
<PAGE>
NATIONAL LEASE INCOME FUND 6
NOTES TO FINANCIAL STATEMENTS
1 INTERIM FINANCIAL INFORMATION
The summarized financial information of National Lease Income Fund 6, L.P.
(the "Partnership") contained herein is unaudited; however, in the opinion
of management, all adjustments (consisting only of recurring accruals)
necessary for a fair presentation of such financial information have been
included. The accompanying financial statements, footnotes and discussions
should be read in conjunction with the financial statements, related
footnotes and discussions contained in the Partnership's annual report on
Form 10-K for the year ended December 31, 1999. The accounting policies
used in preparing these financial statements are consistent with those
described in the December 31, 1999 financial statements. The results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the results to be expected for the year ending December 31,
2000.
2 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The general partners of the Partnership are ALI Equipment Management
Corp. ("Equipment Management"), ALI Capital Corp. and Presidio Boram
Corp., all of who are direct or indirect subsidiaries of Presidio
Capital Corp. ("Presidio").
Subject to the rights of the Limited Partners under the Limited
Partnership Agreement, Presidio controls the Partnership through its
direct or indirect ownership of all of the shares of Equipment Management,
the Corporate General Partner and, as of February 28, 1995, the associate
general partner. On August 28, 1997, an affiliate of NorthStar Capital
Partners acquired all of the Class B shares of Presidio, the corporate
parent of the general partners. This acquisition, when aggregated with
previous acquisitions, caused NorthStar Capital Partners to acquire
indirect control of the general partners. Effective July 31, 1998,
Presidio is indirectly controlled by NorthStar Capital Investment Corp.
("NorthStar"), a Maryland corporation.
In August 28, 1997, 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. During the three months ended March 31, 2000 and 1999
reimbursable expenses to NorthStar Presidio from the Partnership amounted
to $0 and $1,200, respectively.
On October 21, 1999, Presidio entered into a new Services Agreement with
AP-PCC III, L.P. (the "Agent") pursuant to which the Agent was retained to
provide asset management and investor relation services to the Partnership
and other entities affiliated with the Partnership.
As a result of this agreement, the Agent has the duty to direct the day to
day affairs of the Partnership, including, without limitation, reviewing
and analyzing potential sale, financing or restructuring proposals
regarding the Partnership's assets, preparation of all Partnership
reports, maintaining Partnership records and maintaining bank accounts of
the Partnership. The Agent is not permitted, however, without the consent
of Presidio, or as otherwise required under the terms of the Partnership's
Agreement of Limited Partnership (the "Partnership Agreement") to, among
other things, cause the Partnership to sell or acquire an asset or file
for bankruptcy.
<PAGE>
NATIONAL LEASE INCOME FUND 6
NOTES TO FINANCIAL STATEMENTS
2 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
(continued)
In order to facilitate the provision by the Agent of the asset management
services and the investor relation services, effective October 25,1999,
the officers and directors of the General Partner resigned and nominees of
the Agent were elected as the officers and directors of the General
Partner. The Agent is an affiliate of Winthrop Financial Associates, a
Boston based company that provides asset management services, investor
relation services and property management services to over 150 limited
partnerships which own commercial property and other assets. The General
Partner does not believe that this transaction will have a material effect
on the operations of the Partnership.
The Partnership has a management agreement with Integrated Resources
Equipment Group, Inc. ("IREG"), pursuant to which IREG receives equipment
management fees of 5% of annual gross rental revenues on operating leases;
2% of annual gross rental revenues on full payout leases which contain net
lease provisions; and 1% of annual gross rental revenues if services are
performed by third parties under the active supervision of Equipment
Management, as defined in the Limited Partnership Agreement. The
Partnership incurred equipment management fees of $10,388, for the three
months ended March 31, 1999. No such fees were incurred during 2000.
During the operating and liquidating stage of the Partnership, IREG may be
entitled to a partnership management fee equal to 4% of cash from
operations as defined in the Limited Partnership Agreement, subject to
increase after the limited partners have received certain specified
minimum returns on their investment.
The management agreements between the Partnership and IREG may be
terminated by either party to such agreements.
The general partners are entitled to 1% of distributable cash from
operations, cash from sales or financing and cash from the equipment
reserve accounts and an allocation of 1% of taxable net income or loss of
the Partnership. The general partner received $30,000 in distributions for
the three months ended March 31, 2000.
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.
3 COMMITMENTS AND CONTINGENCIES
Tax assessment
In July 1998, the Partnership received proposed notices of assessment from
the State of Hawaii with respect to general excise tax ("GET") aggregating
approximately $1,757,000 (including interest and penalties) for the years
1987 through 1995. The state is alleging that the Partnership owes GET
with respect to rents received from Aloha Airlines, Inc. ("Aloha") and
Hawaiian Airlines, Inc. ("Hawaiian") under the leases between the
Partnership and each of the airlines.
The leases with both Aloha and Hawaiian provided for full indemnification
of the Partnership for such taxes, but the bankruptcy of Hawaiian may
relieve Hawaiian of its indemnification obligation for any periods prior
to September 21, 1993, when Hawaiian and its affiliates sought bankruptcy
<PAGE>
NATIONAL LEASE INCOME FUND 6
NOTES TO FINANCIAL STATEMENTS
3 COMMITMENTS AND CONTINGENCIES (continued)
Tax assessment (continued)
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.
The Partnership recently reached a settlement with Aloha pursuant to which
Aloha agreed to indemnify the Partnership for any costs it may ultimately
incur. The Partnership has further been advised that Hawaiian is pursuing
a legislative remedy. 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.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
FORM 10-Q - MARCH 31, 2000
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The matters discussed in this form 10-Q contain certain forward-looking
statements and involve risks uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-Q 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.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in the report.
Liquidity and Capital Resources
The Partnership's level of liquidity based upon cash and cash equivalents
decreased by $2,856,153 during the three months ended March 31, 2000, as
compared to December 31, 1999. The decrease is due to a $3,000,000 distribution
to partners which was partially offset by $143,847 of cash provided by operating
activities.
As of December 31, 1999, the Partnership had sold all of its equipment with a
view towards wrapping up the business affairs of the Partnership.
In February 2000, the Partnership declared and paid a $3,000,000 distribution to
partners of record as of January 1, 2000 of this amount, the Limited Partners
collectively received $2,970,000 or $9.90 per unit. It is not anticipated at
this time that any further distributions will be made to partners until the
resolution of the Hawaiian GET matter (see below).
In July 1998, the Partnership received proposed notices of assessment from the
State of Hawaii with respect to general excise tax ("GET") aggregating
approximately $1,757,000 (including interest and penalties) for the years 1987
through 1995. The state is alleging that the Partnership owes GET with respect
to rents received from Aloha Airlines, Inc. ("Aloha") and Hawaiian Airlines,
Inc. ("Hawaiian") under the leases between the Partnership and each of the
airlines.
The leases with both Aloha and Hawaiian provided for full indemnification of the
Partnership for such taxes, but the bankruptcy of Hawaiian may relieve Hawaiian
of its indemnification obligation for any periods prior to September 21, 1993,
when Hawaiian and its affiliates sought bankruptcy protection. In any event, it
is the Partnership, as taxpayer, which is ultimately liable for GET, if it is
applicable.
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.
The Partnership recently reached a settlement with Aloha pursuant to which Aloha
agreed to indemnify the Partnership for any costs it may ultimately incur. The
Partnership has further been advised that Hawaiian is pursuing a legislative
remedy. 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.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
FORM 10-Q - MARCH 31, 2000
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Liquidity and Capital Resources (continued)
Upon resolution of the tax examination relating to the GET, the managing general
partner will then prepare a final accounting of the Partnership's assets and
liabilities, commence the dissolution and termination of the Partnership and
make a final distribution to partners.
Inflation and changing prices have not had any material effect on the
Partnership's revenues since its inception nor does the Partnership anticipate
any material effect on its business from these factors.
Results of Operations
Net income increased for the three-month period ended March 31, 2000 as compared
to the corresponding period of the prior year principally due to a decrease in
costs and expenses partially offset by decreased revenues.
Revenues decreased for the three-month period ended March 31, 2000 as compared
to the corresponding period of the prior year by $159,838. Rental income
decreased due to the sale of all equipment prior to 2000.
Interest income increased for the three-month period ended March 31, 2000
compared to the corresponding period of the prior year due to higher cash
balances available for short term investments.
Expenses decreased by $447,771 for the three-month period ended March 31, 2000
as compared to the corresponding period of the prior year primarily due to no
equipment operations in 2000. General and administrative expense decreased due
to lower professional fees.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Partnership is not subject to market risk as its cash and cash equivalents
are invested in short term money market mutual funds. The Partnership has no
loans outstanding.
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
FORM 10-Q - MARCH 31, 2000
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: 27. Financial Data Schedule
(b) Reports on form 8-K: None
<PAGE>
NATIONAL LEASE INCOME FUND 6 L.P.
FORM 10-Q - MARCH 31, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL LEASE INCOME FUND 6 L.P.
By: ALI Equipment Management Corp.
Managing General Partner
May 14, 2000 By: /S/ Michael L. Ashner
---------------------
Michael L. Ashner
President and Director
(Principal Executive Officer)
May 14, 2000 By: /S/ Carolyn B. Tiffany
----------------------
Carolyn B. Tiffany
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from unaudited
financial statements for the three month period ended March 31, 2000 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 4,208,110
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,208,110
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,127,685
<TOTAL-LIABILITY-AND-EQUITY> 4,208,110
<SALES> 0
<TOTAL-REVENUES> 115,506
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (57,024)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 133,379
<INCOME-TAX> 0
<INCOME-CONTINUING> 133,379
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 133,379
<EPS-BASIC> .44
<EPS-DILUTED> .44
</TABLE>
