<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 0-14695
NTS-PROPERTIES VI, a Maryland Limited Partnership
(Exact name of registrant as specified in its charter)
Maryland 61-1066060
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10172 Linn Station Road
Louisville, Kentucky 40223
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code (502) 426-4800
Not Applicable
-------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark 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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Exhibit Index: See page 15
Total Pages: 16
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
As of June 30, 1996 and December 31, 1995 3
Statements of Operations
For the three months and six months ended
June 30, 1996 and 1995 4
Statements of Cash Flows
For the three months and six months ended
June 30, 1996 and 1995 5
Notes to Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-14
PART II
1. Legal Proceedings 15
2. Changes in Securities 15
3. Defaults upon Senior Securities 15
4. Submission of Matters to a Vote of Security Holders 15
5. Other Information 15
6. Exhibits and Reports on Form 8-K 15
Signatures 16
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<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NTS-PROPERTIES VI,
A Maryland Limited Partnership
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
<CAPTION>
As of As of
June 30, 1996 December 31, 1995*
------------- ------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 672,148 $ 867,902
Cash and equivalents - restricted 618,007 301,650
Investment securities 1,029,030 1,151,355
Accounts receivable 150,736 158,429
Land, buildings and amenities,
net 41,304,744 42,196,272
Assets held for development, net 1,732,873 1,751,234
Other assets 317,509 386,949
--------------- --------------
$ 45,825,047 $ 46,813,791
=============== ==============
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $ 27,530,657 $ 27,653,044
Accounts payable - operations 335,627 305,779
Accounts payable - construction -- 70,456
Distributions payable 224,808 239,571
Security deposits 238,324 235,187
Other liabilities 295,588 21,122
--------------- --------------
28,625,004 28,525,159
Partners' equity 17,200,043 18,288,632
--------------- --------------
$ 45,825,047 $ 46,813,791
=============== ==============
</TABLE>
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
<S> <C> <C> <C>
Capital contributions, net of
offering costs $ 40,518,631 $ 100 $ 40,518,731
Net income (loss) - prior years (12,533,124) (78,207) (12,611,331)
Net income - current year 97,756 987 98,743
Cash distributions declared to
date (9,806,921) (99,060) (9,905,981)
Repurchase of limited partnership
units (900,119) -- (900,119)
------------- ----------- --------------
Balances at June 30, 1996 $ 17,376,223 $ (176,180) $ 17,200,043
============= =========== ==============
<FN>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 29, 1996.
</FN>
</TABLE>
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<PAGE>
<TABLE>
NTS-PROPERTIES VI,
A Maryland Limited Partnership
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
REVENUES:
<S> <C> <C> <C> <C>
Rental income $ 2,338,541 $ 2,169,004 $ 4,684,905 $ 4,293,331
Interest and other income 27,807 32,567 59,618 56,262
----------- ----------- ----------- -----------
2,366,348 2,201,571 4,744,523 4,349,593
EXPENSES:
Operating expenses 656,194 578,828 1,182,707 1,114,140
Operating expenses - affiliated 256,734 270,368 539,377 541,217
Interest expense 586,004 592,095 1,173,817 1,185,289
Management fees 122,178 109,653 237,966 216,039
Real estate taxes 194,740 183,396 382,126 371,182
Professional and administrative
expenses 36,872 33,703 73,048 70,968
Professional and administrative
expenses - affiliated 47,377 48,192 97,867 96,142
Depreciation and amortization 479,390 485,159 958,872 982,666
----------- ----------- ----------- -----------
2,379,489 2,301,394 4,645,780 4,577,643
----------- ----------- ----------- -----------
Net income (loss) $ (13,141) $ (99,823) $ 98,743 $ (228,050)
=========== =========== =========== ===========
Net income (loss) allocated to the
limited partners $ (13,010) $ (98,825) $ 97,756 (225,769)
=========== =========== =========== ========
Net income (loss) per limited
partnership unit $ (0.29) $ (2.08) $ 2.11 $ (4.76)
=========== =========== =========== ===========
Weighted average number of limited
partnership units 45,410 47,435 46,332 47,435
=========== =========== =========== ===========
</TABLE>
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<PAGE>
<TABLE>
NTS-PROPERTIES VI,
A Maryland Limited Partnership
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income (loss) $ (13,141) $ (99,823) $ 98,743 $ (228,050)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Accrued interest on investment
securities (5,831) (11,789) 3,285 (11,789)
Depreciation and amortization 479,390 485,159 958,872 982,666
Changes in assets and liabilities:
Cash and equivalents -
restricted (87,278) (65,522) (277,757) (245,601)
Accounts receivable 80,791 4,155 7,693 235,310
Other assets 28,645 18,515 25,139 (11,716)
Accounts payable - operations 13,048 (14,452) 29,846 40,329
Security deposits 5,695 (3,994) 3,137 (26,870)
Other liabilities 86,111 67,301 274,464 256,362
---------- ---------- ---------- ----------
Net cash provided by operating
activities 587,430 379,550 1,123,422 990,641
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (1,219) (25,788) (75,137) (30,194)
Purchase of investment securities (652,246) (1,100,701) (1,587,438) (1,100,701)
Maturity of investment securities 570,000 -- 1,706,480 --
---------- ---------- ---------- ----------
Net cash provided by (used in)
investing activities (83,465) (1,126,489) 43,905 (1,130,895)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages
payable (61,832) (56,884) (122,387) (112,594)
Cash distributions (231,773) (239,571) (471,344) (479,142)
Repurchase of limited partnership
units (344,750) -- (730,750) --
Cash and equivalents - restricted (24,600) -- (38,600) --
---------- ---------- ---------- ----------
Net cash used in financing
activities (662,955) (296,455) (1,363,081) (591,736)
---------- ---------- ---------- ----------
Net decrease in cash and equivalents (158,990) (1,043,394) (195,754) (731,990)
CASH AND EQUIVALENTS, beginning of
period 831,138 1,929,008 867,902 1,617,604
---------- ---------- ---------- ----------
CASH AND EQUIVALENTS, end of period
$ 672,148 $ 885,614 $ 672,148 $ 885,614
========== ========== ========== ==========
Interest paid on a cash basis $ 587,327 $ 592,491 $ 1,175,929 $ 1,186,074
========== ========== ========== ==========
</TABLE>
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<PAGE>
NTS-PROPERTIES VI,
A Maryland Limited Partnership
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein should be read in conjunction with the
Partnership's 1995 Annual Report. In the opinion of the general partner, all
adjustments (only consisting of normal recurring accruals) necessary for a fair
presentation have been made to the accompanying financial statements for the
three months and six months ended June 30, 1996 and 1995.
1. Cash and Equivalents - Restricted
- --------------------------------------
Cash and equivalents - restricted represents funds received for residential
security deposits, funds which have been escrowed with mortgage companies
for property taxes and insurance in accordance with the loan agreements and
funds reserved by the Partnership for the repurchase of limited partnership
Units.
2. Investment Securities
- --------------------------
Investment securities represent investments in Certificates of Deposit or
securities issued by the U.S. Government and its agencies with initial
maturities of greater than three months. The investments are carried at
cost which approximates market value. The Partnership intends to hold the
securities until maturity. During the six months ended June 30, 1996 and
1995, the Partnership sold no investment securities. The following provides
details regarding the investments held at June 30, 1996:
Amortized Maturity Value At
Type Cost Date Maturity
---- ---- ---- --------
Certificate of Deposit $ 167,797 07/03/96 $ 167,841
U.S. Treasury Bill 203,157 08/01/96 204,000
Certificate of Deposit 202,065 09/03/96 203,782
Certificate of Deposit 151,222 10/03/96 150,426
FHLMC Discount Note 304,789 11/01/96 310,000
----------- ------------
$ 1,029,030 $ 1,036,049
=========== ============
3. New Accounting Pronouncement
- ---------------------------------
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121 (the "Statement") on accounting for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to assets to
be held and used. The Statement also establishes accounting standards for
long-lived assets and certain identifiable intangibles to be disposed of.
The Partnership adopted the Statement as of January 1, 1996 as required. No
adjustments were required.
-6-
<PAGE>
4. Mortgages Payable
- -----------------------
Mortgages payable consist of the following:
June 30, December 31,
1996 1995
---- ----
Mortgage payable with an insurance
certain land, buildings and amenities $ 9,200,000 $ 9,200,000
Mortgage payable with an insurance
company bearing interest at 9.20%, due
November 1, 1997, secured by
certain land, buildings and amenities 8,581,055 8,631,951
Mortgage payable with an insurance
company bearing interest at 8.375%, due
October 5, 2002, secured by
certain land, buildings and amenities 4,023,519 4,050,879
Mortgage payable with an insurance
company bearing interest at 8.375%, due
October 5, 2002, secured by
certain land, buildings and amenities 957,980 964,495
Mortgage payable with an insurance
company bearing interest at 7.25%, due
January 5, 2003, secured by
certain land, buildings and amenities 2,860,862 2,883,431
Mortgage payable with an insurance
company, bearing interest at 7.25%, due
January 5, 2003, secured by
certain land, buildings and amenities 1,907,241 1,922,288
-------------- -------------
$ 27,530,657 $ 27,653,044
============== =============
Based on the borrowing rates currently available to the Partnership for
mortgages with similar terms and average maturities, the fair value of
long-term debt is approximately $32,800,000.
5. Interest Repurchase Reserve
- ---------------------------------
As of December 31, 1995, the Partnership had established an Interest
Repurchase Reserve in the amount of $474,350 pursuant to Section 16.4 of
the Partnership's Amended and Restated Agreement of Limited Partnership.
On May 24, 1996, the Partnership elected to fund an additional amount of
$455,380 to its Interest Repurchase Reserve. With these funds, the
Partnership will be able to repurchase up to 3,718 Units at a price of
$250 per Unit. As of June 30, 1996, the Partnership had repurchased a
total of 2,923 Units. Repurchased Units are retired by the Partnership,
thus increasing the share of ownership of each remaining investor.
6. Related Party Transactions
- --------------------------------
Pursuant to the partnership agreement, property management fees of
$237,966 and $216,039 for the six months ended June 30, 1996 and 1995,
respectively, were paid to NTS Development Company, an affiliate of the
General Partner of the Partnership.
-7-
<PAGE>
6. Related Party Transactions - Continued
- --------------------------------------------
The fee is equal to 5% of gross revenues of the residential properties and
6% of gross revenues of the commercial property. Also permitted by the
partnership agreement, NTS Development Company will receive a repair and
maintenance fee equal to 5.9% of costs incurred which relate to capital
improvements and major repair and renovation projects. The Partnership has
incurred $1,098 for the six months ended June 30, 1995 as a repair and
maintenance fee. The Partnership has expensed as an operating expense
affiliated $561 as a repair and maintenance fee and has capitalized $537
as part of land, buildings and amenities during the six months ended June
30, 1995. There was no similar expense during the six months ended June
30, 1996.
The Partnership was also charged the following amounts from NTS
Development Company for the six months ended June 30, 1996 and 1995. These
charges include items which have been expensed as operating expenses -
affiliated or professional and administrative expenses - affiliated and
items which have been capitalized as other assets or as land, buildings
and amenities.
1996 1995
---- ----
Administrative
$ 126,588 $ 124,087
Property manager 412,381 408,241
Leasing 113,847 101,408
Other 425 3,062
--------------- --------------
$ 653,241 $ 636,798
=============== ==============
7. Reclassification of 1995 Financial Statements
- ---------------------------------------------------
Certain reclassifications have been made to the June 30, 1995 financial
statements to conform with the June 30, 1996 classifications. These
reclassifications have no effect on previously reported operations.
-8-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The occupancy levels at the Partnership's properties as of June 30 were as
follows:
1996 1995
---- ----
Wholly-Owned Properties
- -----------------------
Sabal Park Apartments 94% 92%
Park Place Apartments Phase I 89% 94%
Willow Lake Apartments 92% 91%
Properties Owned in Joint Venture
with NTS- Properties IV (Ownership % at
June 30, 1996)
- ---------------------------------------
Golf Brook Apartments (96%) 91% 93%
Plainview Point III Office Center (95%) 87% 48%
Rental and other income generated by the Partnership's properties for the three
months and six months ended June 30, 1996 and 1995 was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
Wholly-Owned Properties
- -----------------------
Sabal Park Apartments
$ 430,567 $ 406,706 $ 871,982 $ 816,467
Park Place Apartments
Phase I $ 447,133 $ 435,090 $ 880,125 $ 851,782
Willow Lake Apartments $ 608,825 $ 571,445 $ 1,220,738 $ 1,111,593
Properties Owned in Joint
Venture with NTS-
Properties IV (ownership %
at June 30, 1996)
- --------------------------
Golf Brook Apartments
(96%) $ 676,329 $ 671,368 $ 1,348,535 $ 1,328,230
Plainview Point III Office
Center (95%) $ 183,842 $ 93,694 $ 380,747 $ 203,557
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
-9-
<PAGE>
Results of Operations - Continued
- ---------------------------------
Sabal Park Apartments' occupancy increased from 92% at June 30, 1995 to 94% at
June 30, 1996. Average occupancy for the six month period ended June 30
increased from 91% in 1995 to 93% in 1996. Average occupancy for the three month
period ended June 30 increased from 92% in 1995 to 93% in 1996. Occupancy at
residential properties fluctuate on a continuous basis. Period-ending occupancy
percentages represent occupancy only on a specific date; therefore, it is more
meaningful to consider average occupancy percentages which are more
representative of the entire period's results. Rental and other income at Sabal
Park Apartments increased for the three months and six months ended June 30,
1996 as compared to the same periods in 1995 as a result of the increase in
average occupancy, increased rental rates and increased fees collected upon
early lease termination.
Park Place Apartments Phase I's occupancy decreased from 94% at June 30, 1995 to
89% at June 30, 1996. Average occupancy for the three month and six month
periods ended June 30 decreased from 94% in 1995 to 91% in 1996. In the opinion
of the General Partner of the Partnership, the decrease in occupancy is only a
temporary fluctuation and does not represent a downward occupancy trend. Rental
and other income at Park Place Apartments Phase I increased for the three months
and six months ended June 30, 1996 as compared to the same periods in 1995 as a
result of increased rental rates, increased fees collected for short term leases
and early lease terminations and increased income from fully furnished units.
Fully furnished units are apartments which rent at an additional premium above
base rent. Therefore, it is possible for average occupancy to decrease and
revenues to increase when the number of fully furnished units occupied has
increased. The increase in rental and other income for the three month and six
month periods at Park Place Apartments Phase I are partially offset by the
decrease in average occupancy.
Willow Lake Apartments' occupancy increased from 91% at June 30, 1995 to 92% at
June 30, 1996. Average occupancy for the six month period ended June 30
increased from 90% in 1995 to 94% in 1996. Average occupancy for the three month
period ended June 30 increased from 91% in 1995 to 93% in 1996. Rental and other
income increased for the three months and six months ended June 30, 1996 as
compared to the same periods in 1995 as a result of the increase in average
occupancy, increased rental rates, increased income from fully furnished units
and increased income collected for short term leases.
Golf Brook Apartments' occupancy decreased from 93% at June 30, 1995 to 91% at
June 30, 1996. Average occupancy for the six month period ended June 30
decreased from 94% in 1995 to 92% in 1996. Average occupancy for the three month
period ended June 30 decreased from 94% in 1995 to 90% in 1996. Rental and other
income at Golf Brook Apartments increased for the three months and six months
ended June 30, 1996 as compared to the same periods in 1995 as a result of
increased rental rates. Rental and other income increased for the six months
ended June 30, 1996 as compared to the six months ended June 30, 1995 also as a
result of increased fees collected for short term leases and for early lease
terminations.
The 39% increase in occupancy at Plainview Point III Office Center from June 30,
1995 to June 30, 1996 is primarily the result of two new leases totalling 27,070
square feet. The new leases consist of a 10,343 square foot 63-month lease (took
occupancy September 1, 1995) and a 16,727 square foot five-year lease (took
occupancy December 27, 1995). The increase in occupancy can also be attributed
to an expansion by a current tenant of its existing space by approximately 4,400
square feet. Partially offsetting the new leases is one tenant move-out at the
end of the lease term totalling 6,900 square feet. Average occupancy increased
from 48% (1995) to 94% (1996) for the three months ended June 30 and increased
from 51% (1995) to 95% (1996) for the six month period. Rental and other income
increased at Plainview Point III Office Center for the three months and six
months ended June 30, 1996 as compared to the same periods in 1995 as a result
of the increase in average occupancy.
-10-
<PAGE>
Results of Operations - Continued
- ---------------------------------
If present trends continue, the Partnership will be able to continue at its
current level of operations without the need of any additional financing.
Current occupancy levels are considered adequate to continue the operation of
the Partnership's properties.
Interest and other income includes income from investments made by the
Partnership with cash reserves. The increase in interest income for the six
months ended June 30, 1996 as compared to the same period in 1995 is a result of
increased cash reserves being available for investment. The decrease in interest
income for the three months ended June 30, 1996 as compared to the three months
ended June 30, 1995 is a result of decreased cash available for investment due
to the funding of the Partnership's Interest Repurchase Reserve. See the
Liquidity and Capital Resources section of this item for details regarding the
Interest Repurchase Reserve.
Operating expenses increased for the three months and six months ended June 30,
1996 as compared to the three months and six months ended June 30, 1995 as a
result of increased utility costs and increased building repair and maintenance
costs at all the Partnership's properties. Also contributing to the three month
and six month increases are increased furniture rental costs associated with
fully furnished units at Willow Lake and Park Place Apartments, increased
parking lot repair costs at Golf Brook and Sabal Park Apartments and increased
roof repairs at Park Place Apartments. These increases are partially offset by
decreased landscaping costs at all the Partnership's properties.
The change in operating expenses - affiliated for the six months ended June 30,
1996 as compared to the same period in 1995 was not significant. Operating
expenses - affiliated decreased for the three months ended June 30, 1996 as
compared to the same period in 1995 due to decreased property management costs.
Operating expenses - affiliated are expenses incurred for services performed by
employees of NTS Development Company, an affiliate of the General Partner of the
Partnership.
The decrease in interest expense for the three months and six months ended June
30, 1996 as compared to the same periods in 1995 is due to the Partnership's
decreasing debt level as a result of principal payments made. See the Liquidity
and Capital Resources section of this item for details regarding the
Partnership's debt.
Management fees are calculated as a percentage of cash collections, however,
revenue for reporting purposes is on the accrual basis. As a result, the
fluctuations of revenues between periods will differ from the fluctuations of
management fee expense.
The increase in real estate taxes for the three months and six months ended June
30, 1996 as compared to the same periods in 1995 is a result of an increased
property assessment for Golf Brook Apartments. The increase in real estate taxes
for both periods is partially offset by a decreased property assessment and
decreased tax rate for Willow Lake Apartments.
Professional and administrative expenses and professional and administrative
expenses - affiliated have remained fairly constant for the three months and six
months ended June 30, 1996 as compared to the same periods in 1995. Professional
and administrative expenses - affiliated are expenses incurred for services
performed by employees of NTS Development Company, an affiliate of the General
Partner of the Partnership.
-11-
<PAGE>
Results of Operations - Continued
- ---------------------------------
Depreciation and amortization decreased for the three months and six months
ended June 30, 1996 as compared to the same periods in 1995 due to a portion of
the assets with shorter lives at the Partnership's residential properties having
become fully depreciated. Depreciation at Plainview Point III Office Center
remained fairly constant for the three months and six months ended June 30, 1996
as compared to the same periods in 1995. Depreciation is computed using the
straight-line method over the useful lives of the assets which are 5 - 30 years
for land improvements, 30 years for buildings, 5 - 30 years for building and
improvements and 5 - 30 years for amenities. The aggregate cost of the
Partnership's properties for Federal tax purposes is approximately $59,300,000.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operations was $1,123,422 and $990,641 for the six months ended
June 30, 1996 and 1995, respectively. These funds in conjunction with cash on
hand were used to make a 2% (annualized) cash distribution of $456,581 and
$479,142 for the six months ended June 30, 1996 and 1995, respectively. The
annualized distribution rate is calculated as a percent of the original capital
contribution. The limited partners received 99% and the general partner received
1% of the distributions. The primary source of future liquidity and
distributions is expected to be derived from cash generated by the Partnership's
properties after adequate cash reserves are established for future leasing and
tenant finish costs. Cash reserves (which are unrestricted cash and equivalents
and investment securities as shown on the Partnership's balance sheet as of June
30) were $1,701,178 and $1,998,104 at June 30, 1996 and 1995, respectively.
As of June 30, 1996, the Partnership had a mortgage payable to an insurance
company in the amount of $9,200,000. The mortgage bears interest at a fixed rate
of 8.625% and is secured by the land, buildings and amenities of Golf Brook
Apartments. The unpaid balance of the loan is due August 1, 1997.
As of June 30, 1996, the Partnership had a mortgage payable to an insurance
company in the amount of $8,581,055. The mortgage payable is due November 1,
1997, bears interest at a fixed rate of 9.20% and is secured by the land,
buildings and amenities of Willow Lake Apartments. Current monthly principal
payments are based upon a 25-year amortization schedule. The outstanding balance
at maturity based on the current rate of amortization will be $8,433,356.
As of June 30, 1996, the Partnership had two mortgage loans each with an
insurance company in the amount of $4,023,519 and $957,980. Both mortgages are
due October 5, 2002, currently bear interest at a fixed rate of 8.375% and are
secured by the land, buildings and amenities of Park Place Apartments Phase I.
Current monthly principal payments on both mortgages are based upon a 27-year
amortization schedule. The outstanding balance at maturity based on the current
rate of amortization would be $4,413,955 ($3,565,118 and $848,837).
As of June 30, 1996, the Partnership also had two mortgage loans each with an
insurance company in the amount of $2,860,862 and $1,907,241. Both mortgages are
due January 5, 2003, currently bear interest at a fixed rate of 7.25% and are
secured by the land, buildings and amenities of Sabal Park Apartments. Current
monthly principal payments on both mortgages are based upon a 27-year
amortization schedule. The outstanding balance at maturity based on the current
rate of amortization would be $4,122,326 ($2,473,396 and $1,648,930).
As previously discussed in the Partnership's Form 10-K for the year ended
December 31, 1995, the General Partner of the Partnership was exploring the
possibility of refinancing the current mortgages payable encumbering the
Partnership's properties. As a result of an increase in current interest rates,
the Partnership has suspended inquiries into alternative financings.
-12-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
As of December 31, 1995, the Partnership had established an Interest Repurchase
Reserve in the amount of $474,350 pursuant to Section 16.4 of the Partnership's
Amended and Restated Agreement of Limited Partnership. On May 24, 1996, the
Partnership elected to fund an additional amount of $455,380 to its Interest
Repurchase Reserve. With these funds, the Partnership will be able to repurchase
up to 3,718 Units at a price of $250 per Unit. As of June 30, 1996, the
Partnership had repurchased a total of 2,923 Units. Repurchased Units are
retired by the Partnership, thus increasing the share of ownership of each
remaining investor. The Interest Repurchase Reserve was funded from cash
reserves.
The majority of the Partnership's cash flow is derived from operating
activities. The decrease in accounts receivable during 1995 represents a
settlement received from the insurance company of the manufacturer of the pipe
fittings which were used in the construction of Willow Lake Apartments. Cash
flows used in investing activities are for tenant finish improvements and other
capital additions at the Partnership's properties. Changes to current tenant
improvements at commerical properties are a typical part of any lease
negotiation. Improvements generally include a revision to the current floor plan
to accomodate a tenant's needs, new carpeting and paint and/or wallcovering. The
extent and cost of these improvements are determined by the size of the space
and whether the improvements are for a new tenant or incurred because of a lease
renewal. The tenant finish improvements and other capital additions are funded
by cash flow from operations. Cash flows used in investing activities are also
for the purchase of investment securities. As part of its cash management
activities, the Partnership has purchased Certificates of Deposit or securities
issued by the U.S. Government with initial maturities of greater than three
months to improve the return on its cash reserves. The Partnership intends to
hold the securities until maturity. Cash flows provided by investing activities
are derived from the maturity of investment securities. Cash flows used in
financing activities are for cash distributions, principal payments on mortgages
payable and repurchases of limited partnership Units. Cash flows used in
financing activities also include cash which has been reserved by the
Partnership for the repurchase of limited partnership Units. The Partnership
does not expect any material changes in the mix and relative cost of capital
resources from those in 1995.
The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the six
months ended June 30, 1996 and 1995. These distributions were funded by cash
flow derived from operating activities.
Net Income Cash
(Loss) Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1996 $ 97,756 $ 452,015 $ 354,259
1995 (225,769) 474,351 474,351
General Partner:
1996 $ 987 $ 4,566 $ 3,579
1995 (2,281) 4,791 4,791
In an effort to continue to improve occupancy at the Partnership's residential
properties, the Partnership has an on-site leasing staff, employees of NTS
Development Company, at each of the apartment communities. The staff handles all
on-site visits from potential tenants, coordinates local advertising with NTS
Development Company's marketing staff, makes visits to local companies to
promote fully furnished units and negotiates lease renewals with current
residents.
-13-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
The leasing and renewal negotiations for the Partnership's commercial property
are handled by leasing agents, employees of NTS Development Company, located in
Louisville, Kentucky. The leasing agents are located in the same city as the
commercial property. All advertising for the commercial property is coordinated
by NTS Development Company's marketing staff located in Louisville, Kentucky.
Leases at Plainview Point III Office Center provide for tenants to contribute
toward the payment of increases in common area maintenance expenses, insurance,
utilities and real estate taxes. Leases at the office center also provide for
rent increases which are based upon increases in the consumer price index. These
lease provisions, along with the fact that residential leases are generally for
a period of one year, should protect the Partnership's operations from the
impact of inflation and changing prices.
The Partnership owns approximately 15 acres of land, adjacent to the Park Place
Apartments development, in Lexington, Kentucky which is zoned for 163 apartment
units (Park Place Apartments Phase III). Included in the cost of approximately
$1,730,000 is land cost, capitalized interest, common area costs and amenity
costs. The Partnership continues to evaluate whether to sell or develop the
tract of land. At this time, no final decision has been made.
-14-
<PAGE>
PART II. OTHER INFORMATION
1. Legal Proceedings
None
2. Changes in Securities
None
3. Defaults upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
5. Other Information
None
6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K, dated April 25, 1996, was filed to report in Item 5
that under Items 1, 2, 7 and 8 in the Partnership's Annual
Report Form 10- K, filed March 29, 1996, the General Partner of
the Partnership indicated that it intends to use the
approximately 15 acres of land adjacent to the Park Place
Apartments development in Lexington, Kentucky for the
construction of Park Place Apartments Phase III. Although the
General Partner of the Partnership believes that construction of
Park Place Apartments Phase III is in the best interest of the
Partnership, it will continue to evaluate its options concerning
this property which includes its sale.
Form 8-K, dated May 24, 1996, was filed to report in Item 5 the
fact that the Partnership has elected to fund an additional
amount of $455,380 to its Interest Repurchase Reserve.
-15-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
NTS-PROPERTIES VI,
a Maryland Limited Partnership
(Registrant)
BY: NTS-Properties Associates VI
BY: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: August 13 , 1996
-16-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF JUNE 30, 1996 AND FROM THE STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,290,155
<SECURITIES> 1,029,030
<RECEIVABLES> 150,736
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 41,304,744
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 45,825,047
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 27,530,657
0
0
<COMMON> 0
<OTHER-SE> 17,200,043
<TOTAL-LIABILITY-AND-EQUITY> 45,825,047
<SALES> 4,684,905
<TOTAL-REVENUES> 4,744,523
<CGS> 0
<TOTAL-COSTS> 3,301,048
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,173,817
<INCOME-PRETAX> 98,743
<INCOME-TAX> 0
<INCOME-CONTINUING> 98,743
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 98,743
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>THE PARTNERSHIP HAS AN UNCLASSIFIED BALANCE SHEET; THEREFORE, THE VALUE
IS $0.
<F2>THIS INFORMATION IS NOT DISCLOSED IN THE PARTNERSHIP'S FORM 10-Q FILING.
</FN>
</TABLE>
