<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 June 30, 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 0-14695
----------------------------------------------------------
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
incorporation or organization) Identification No.)
10172 Linn Station Road
Louisville, Kentucky 40223
------------------------------------- -------------------------------------
(Address of principal executive offices) (Zip Code)
(502) 426-4800
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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.
[X] Yes [ ] No
<PAGE>
TABLE OF CONTENTS
-----------------
PART I
------
Pages
-----
Item 1. Financial Statements
Balance Sheets as of June 30, 2000 and December 31, 1999 3
Statement of Partners' Equity as of June 30, 2000 3
Statements of Operations for the three months and six months ended
June 30, 2000 and 1999 4
Statements of Cash Flows for the six months ended
June 30, 2000 and 1999 5
Notes to Financial Statements 6-16
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 17-24
Item 3. Quantitative and Qualitative Disclosures About Market Risk 25
PART II
-------
Item 1. Legal Proceedings 26
Item 2. Changes in Securities 26
Item 3. Defaults Upon Senior Securities 26
Item 4. Submission of Matters to a Vote of Security Holders 26
Item 5. Other Information 26
Item 6. Exhibits and Reports on Form 8-K 26
Signatures 27
2
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
<TABLE>
NTS-PROPERTIES VI,
------------------
A Maryland Limited Partnership
------------------------------
BALANCE SHEETS
--------------
<CAPTION>
As of As of
June 30, December 31,
2000 1999*
---- -----
(Unaudited)
ASSETS
------
<S> <C> <C>
Cash and equivalents $ 361,205 $ --
Cash and equivalents - restricted 343,708 206,697
Accounts receivable 124,410 195,399
Land, buildings and amenities, net 49,160,845 48,357,129
Other assets 519,064 451,425
----------- -----------
TOTAL ASSETS $50,509,232 $49,210,650
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Mortgages and note payable $35,533,316 $33,312,443
Accounts payable 923,319 1,650,675
Security deposits 227,104 214,523
Other liabilities 482,715 221,597
----------- -----------
TOTAL LIABILITIES 37,166,454 35,399,238
COMMITMENTS AND CONTINGENCIES (Note 9)
PARTNERS' EQUITY 13,342,778 13,811,412
----------- -----------
TOTAL LIABILITIES AND PARTNER'S EQUITY $50,509,232 $49,210,650
=========== ===========
</TABLE>
<TABLE>
STATEMENT OF PARTNERS' EQUITY
-----------------------------
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
PARTNERS' EQUITY/(DEFICIT)
--------------------------
<S> <C> <C> <C>
Capital contributions, net of offering costs $ 40,518,631 $ 100 $ 40,518,731
Net loss - prior years (11,934,430) (72,160) (12,006,590)
Net loss - current year (463,947) (4,686) (468,633)
Cash distributions declared to date (12,006,384) (121,277) (12,127,661)
Repurchase of Limited Partnership Units (2,573,069) -- (2,573,069)
------------- ------------- -------------
BALANCES AT JUNE 30, 2000 $ 13,540,801 $ (198,023) $ 13,342,778
============= ============= =============
</TABLE>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 29, 2000.
The accompanying notes to financial statements are an integral part of these
statements.
3
<PAGE>
<TABLE>
NTS-PROPERTIES VI,
------------------
A Maryland Limited Partnership
------------------------------
STATEMENTS OF OPERATIONS
------------------------
(UNAUDITED)
-----------
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
REVENUES
--------
<S> <C> <C> <C> <C>
Rental income $ 2,567,798 $ 2,404,522 $ 5,019,259 $ 4,728,974
Interest and other income 13,992 12,400 26,306 19,918
Gain on sale of assets -- -- 5,188 --
------------ ------------ ------------ ------------
TOTAL REVENUES 2,581,790 2,416,922 5,050,753 4,748,892
------------ ------------ ------------ ------------
EXPENSES
--------
Operating expenses 665,761 375,598 1,258,107 1,166,941
Operating expenses - affiliated 331,780 311,160 674,113 653,902
Loss on disposal of assets 137,759 218,497 137,831 234,539
Interest expense 671,160 486,060 1,303,704 958,371
Management fees 132,711 124,396 259,440 244,514
Real estate taxes 238,803 203,311 496,534 406,621
Professional and administrative
expenses 55,038 79,107 112,846 136,458
Professional and administrative
expenses - affiliated 81,410 54,873 154,092 114,533
Depreciation and amortization 576,933 456,971 1,122,719 908,756
------------ ------------ ------------ ------------
TOTAL EXPENSES 2,891,355 2,309,973 5,519,386 4,824,635
------------ ------------ ------------ ------------
Net (loss) income $ (309,565) $ 106,949 $ (468,633) $ (75,743)
============ ============ ============ ============
Net (loss) income allocated to the
Limited Partners $ (306,469) $ 105,879 $ (463,947) $ (74,986)
============ ============ ============ ============
Net (loss) income per Limited
Partnership Unit $ (7.84) $ 2.65 $ (11.87) $ (1.88)
============ ============ ============ ============
Weighted average number of
Limited Partnership Units 39,089 39,939 39,089 39,938
============ ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
4
<PAGE>
<TABLE>
NTS-PROPERTIES VI,
------------------
A Maryland Limited Partnership
------------------------------
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
-----------
<CAPTION>
Six Months Ended
June 30,
--------
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
<S> <C> <C>
Net loss $ (468,633) $ (75,743)
Adjustment to reconcile net loss to net cash provided by
operating activities:
Loss on disposal of assets 137,831 234,539
Gain on sale of assets (5,188) --
Depreciation and amortization 1,122,719 908,756
Changes in assets and liabilities:
Cash and equivalents - restricted (99,011) (85,398)
Accounts receivable 70,989 (9,657)
Other assets (4,066) (47,517)
Accounts payable (727,356) 222,299
Security deposits 12,581 (12,077)
Other liabilities 261,119 294,428
------------ ------------
Net cash provided by operating activities 300,985 1,429,630
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Additions to land, buildings, and amenities (2,045,357) (4,087,251)
Proceeds from sale of assets 8,736 --
------------ ------------
Net cash used in investing activities (2,036,621) (4,087,251)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Principal payments on mortgages and note payable (632,409) (1,061,467)
Proceeds from mortgage loan 2,853,282 4,283,395
Cash distributions -- (203,100)
Repurchase of Limited Partnership Units -- (262,500)
Cash and equivalents - restricted (38,000) 87,500
Additions to loan costs (86,032) --
------------ ------------
Net cash provided by financing activities 2,096,841 2,843,828
------------ ------------
Net increase in cash and equivalents 361,205 186,207
CASH AND EQUIVALENTS, beginning of period -- 362,822
------------ ------------
CASH AND EQUIVALENTS, end of period $ 361,205 $ 549,029
============ ===========
Interest paid on a cash basis $ 1,309,912 $ 963,459
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
5
<PAGE>
NTS-PROPERTIES VI,
------------------
A Maryland Limited Partnership
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
The unaudited financial statements included herein should be read in conjunction
with the Partnership's 1999 Form 10-K as filed with the Securities and Exchange
Commission on March 29, 2000. 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 six
months ended June 30, 2000 and 1999.
1. Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles ("GAAP") 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.
2. Concentration of Credit Risk
----------------------------
The Partnership owns and operates, either wholly or through a joint
venture, residential rental properties, all of which are apartment
communities, in Kentucky (Lexington), Indiana (Indianapolis) and Florida
(Orlando). The Partnership also owns and operates, through a joint venture,
a commercial rental property in Louisville, Kentucky. Substantially all of
the tenants are local business or are businesses which have operations in
the Louisville area.
3. Reclassifications of 1999 Financial Statements
----------------------------------------------
Certain reclassifications have been made to the June 30, 1999 financial
statements to conform with June 30, 2000 classifications. These
reclassifications have no effect on previously reported operations.
4. 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 in accordance with the loan agreements, and funds
reserved by the Partnership for the purchase of Limited Partnership Units
through tender offers (See Notes to Financial Statements - Note 7).
5. Basis of Property and Depreciation
----------------------------------
Land, buildings and amenities are stated at historical cost, less
accumulated depreciation, to the Partnership. Costs directly associated
with the acquisition, development and construction of a project are
capitalized. Depreciation is computed using the straight-line method over
the
6
<PAGE>
5. Basis of Property and Depreciation - Continued
----------------------------------------------
estimated useful lives of the assets which are 10-30 years for land
improvements, 7-30 years for buildings and improvements, 5-30 years for
amenities and the applicable lease term for tenant improvements.
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of," specifies circumstances in which certain long-lived assets
must be reviewed for impairment. If the carrying amount of an asset exceeds
the sum of its expected future cash flows, the asset's carrying value must
be written down to fair value. Application of this standard during the
periods ended June 30, 2000 and 1999 did not result in any impairment loss.
6. Mortgages and Note Payable
--------------------------
Mortgages and note payable consist of the following:
June 30, December 31,
2000 1999
---- ----
Mortgage payable with an insurance company,
bearing interest at 7.74%, due October 15, 2012,
secured by certain land, buildings and amenities. $11,922,346 $11,186,637
Mortgage payable with an insurance company,
bearing interest at 7.43%, until February 2, 2000
when the loan was refinanced. The interest rate
after February 2, 2000 is 7.57%, due May 15,
2009, secured by certain land, buildings and
amenities. 8,773,857 7,677,179
Mortgage payable with an insurance company,
bearing interest at 7.32%, due October 15, 2012,
secured by certain land, buildings and amenities. 7,581,877 7,767,882
Mortgage payable to a bank, currently bearing
interest at the Euro-Rate plus 225 basis points,
due June 23, 2002, secured by certain land,
buildings and amenities. At June 30, 2000, the
interest rate was approximately 8.875%. 3,000,000 2,298,001
Mortgage payable with an insurance company,
bearing interest at 7.38%, due December 5, 2012,
secured by certain land, buildings and amenities. 2,537,392 2,598,146
Mortgage payable with an insurance company,
bearing interest at 7.38%, due December 5, 2012,
secured by certain land, buildings and amenities. 1,691,594 1,732,098
(Continued on next page)
7
<PAGE>
6. Mortgages and Note Payable - Continued
--------------------------------------
June 30, December 31,
2000 1999
---- ----
Note payable to a bank, bearing interest at the
Prime Rate + 1%, due June 14, 2001, secured by
certain land, buildings and amenities.
At June 30, 2000, the interest rate was 10.50%. $ 26,250 $ 52,500
----------- -----------
$35,533,316 $33,312,443
=========== ===========
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 $34,928,000.
The mortgage payable with an outstanding balance of $11,922,346 as of June
30, 2000, has an additional availability of $231,144. The proceeds are
being used to fund the construction of Park Place Apartments Phase III (See
Notes to Financial Statements - Note 9).
On February 2, 2000, the Partnership obtained additional financing in the
amount of $1,369,064 by refinancing an existing loan secured by the land,
buildings and amenities of Golf Brook Apartments. The refinancing resulted
in an increase in the interest rate from 7.43% to 7.57%. The maturity date
remained the same (May 15, 2009).
On May 17, 2000, the Partnership obtained additional financing in the
amount of $500,000 by amending the mortgage note for Plainview Point III
Office Center. The amendment increased the monthly payment from $31,000 to
$37,000. The interest rate and the maturity date remained the same.
On June 22, 2000, the Partnership submitted an application with a mortgage
company for a first mortgage loan commitment in the amount of $3,200,000 to
be secured by land and buildings known as Plainview Point III Office
Center. The mortgage would be for a term of 10 years with an interest rate
of 8.375%, amortized over 20 years. If the application is approved, the
Partnership will use the proceeds to pay off the present mortgage of
$3,000,000 on Plainview Point III Office Center.
7. Tender Offer
------------
On March 24, 2000, the Partnership and ORIG, LLC, an affiliate of the
Partnership (the "Offerors"), filed a tender offer (the "Fourth Tender
Offer") with the Securities and Exchange Commission, commencing on March
27, 2000, to purchase up to 200 of the Partnership's Limited Partnership
Units at a price of $380 per Unit as of the date of the Fourth Tender
Offer. Approximately $94,000 ($76,000 to purchase 200 Units plus
approximately $18,000 for expenses associated with the Fourth Tender Offer)
is required to purchase all 200 Units. The Fourth Tender Offer stated that
the Partnership will purchase the first 100 Units tendered and will fund
its purchase and its portion of the expenses from cash flow from
operations. If more than 100 Units are tendered, ORIG, LLC. will purchase
up to an additional 100 Units. If more than 200 Units are tendered, the
Offerors may choose to acquire the additional Units on a pro rata basis.
Units that are acquired by the Partnership will be retired. Units that are
acquired by
8
<PAGE>
7. Tender Offer- Continued
-----------------------
ORIG, LLC. will be held by it. The General Partner, NTS-Properties
Associates VI, does not intend to participate in the Fourth Tender Offer.
The Fourth Tender Offer was scheduled to expire on June 27, 2000.
On June 23, 2000, the Partnership filed an amendment to the Fourth Tender
Offer with the Securities and Exchange Commission. The amendment
supplements and amends the Fourth Tender Offer to extend the expiration
date to August 15, 2000 and to expand the definition of Offerors to include
Mr. J.D. Nichols and Mr. Brian F. Lavin, each an affiliate of the issuer.
As of the date of this filing, 3,164 Units have been tendered.
8. Related Party Transactions
--------------------------
Pursuant to an agreement with the Partnership, property management fees of
$259,440 and $244,514 for the six months ended June 30, 2000 and 1999,
respectively, were paid to NTS Development Company, an affiliate of the
General Partner. The fee is equal to 5% of gross revenues of the
residential properties and 6% of the gross revenues of the commercial
property. Also pursuant to an agreement, NTS Development Company will
receive a repair and maintenance fee equal to 5.9% of costs incurred which
relate to capital improvements and maintenance fees of $29,118 and $14,870
paid during the six months ended June 30, 2000 and 1999, respectively. The
Partnership was also charged the following amounts from NTS Development
Company for the six months ended June 30, 2000 and 1999, respectively.
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.
Six Months Ended
June 30,
--------
2000 1999
---- ----
Administrative $ 302,416 $ 252,069
Property Management 438,199 387,672
Leasing 86,848 137,148
Construction Management 68,752 245,625
Other 5,688 11,054
----------- ----------
$ 901,903 $1,033,568
=========== ==========
On February 7, 2000, ORIG, LLC. (the "Affiliate") purchased Interests in
the Partnership pursuant to an Agreement, Bill of Sale and Assignment by
and among the Affiliate and four investors in the Partnership. The
Affiliate purchased 675 Interests in the Partnership for a total
consideration of $281,128 or an average price of $416 per Interest. The
Affiliate paid these investors a premium above the purchase price
previously offered for Interests pursuant to prior tender offers because
this purchase allowed the Affiliate to purchase substantial numbers of
Interests without incurring the significant expenses involved with a tender
offer and multiple transfers.
9
<PAGE>
9. Commitments and Contingencies
-----------------------------
The Partnership, as an owner of real estate, is subject to various
environmental laws of federal and local governments. Compliance by the
Partnership with existing laws has not had a material adverse effect on the
Partnership's financial condition and results of operations. However, the
Partnership cannot predict the impact of new or changed laws or regulations
on its current properties or on properties that it may acquire in the
future.
The Partnership does not believe there is any litigation threatened against
the Partnership other than routine litigation arising out of the ordinary
course of business some of which is expected to be covered by insurance,
none of which is expected to have a material effect on the consolidated
financial statements of the Partnership except as discussed herein.
The Partnership began the construction of Park Place Apartments Phase III
(152 units) during 1999 on the 15 acres of land it owns, which is adjacent
to the existing Park Place Apartments in Lexington, Kentucky. It is
currently estimated that the construction cost of the project will be
$11,200,000. Construction costs will be funded by loan proceeds of
$7,200,000 from a mortgage loan obtained during 1997 and cash reserves.
Through June 30, 2000, approximately $11,114,000 of the cost has been
incurred.
As of June 30, 2000, all 13 buildings (152 apartment units) at Park Place
Apartments Phase III have been certified for occupancy. As a result of
units being turned over, all construction costs incurred as of June 30,
2000, approximately $11,114,000, have been reclassed from construction in
progress to land, buildings and amenities, net.
The Partnership plans to replace the roofs at both Willow Lake Apartments
(26 buildings) and Park Place Apartments Phase I (24 buildings) all of
which were installed using shingles produced by a single manufacturer. The
shingles appear to contain defects which may cause the roofs to fail before
the end of their expected useful lives. As the manufacturer has declared
bankruptcy, the Partnership does not expect to be able to recover any of
the costs of the roof replacements. The Partnership does not have
sufficient working capital to make all of the roof replacements at once and
intends to make the replacements over the next 36 months. As of June 30,
2000, four buildings at Willow Lake Apartments have had roofs replaced. The
total cost of replacing all the remaining roofs is estimated to be $920,000
($20,000 per building).
The roof replacements discussed above will be managed by the General
Partner via funds from operations or additional borrowings secured by the
Partnership's properties. There can be no guarantee that such funds will be
available at which time the General Partner will manage the demand on
liquidity according to the best interest of the Partnership.
The Partnership has been sued by Elder Construction and Associates, Inc. in
Jefferson Circuit Court, Louisville, Kentucky, in a lawsuit styled Elder
-----
Construction & Associates, Inc. V. NTS Development Company, Frontier
---------------------------------------------------------------------------
Insurance Company, NTS-Properties VI, a Maryland limited partnership, NTS
---------------------------------------------------------------------------
Properties Associates VI, and NTS Capital Corporation. All of the named NTS
------------------------------------------------------
entities are represented by Middleton and Reutlinger, a local law firm.
10
<PAGE>
9. Commitments and Contingencies - Continued
-----------------------------------------
Elder Construction was hired to be the framing subcontractor with respect
to certain improvements at Phase III of Park Place Apartments in Lexington,
Kentucky. After being removed from the job for its failure to provide its
services in a professional, diligent and workmanlike manner, a complaint
was filed on behalf of Elder Construction in November 1999, alleging, inter
-----
alia, breach of contract. The complaint requested judgement against the
----
defendants in the amount of $233,122 plus interest and other relief against
the defendants.
The Partnership and the other defendants have answered the complaint, and
have asserted counterclaims against the plaintiff for, inter alia, breach
----------
of contract. Discovery is proceeding, but because the case is in the early
discovery phase an outcome cannot be predicted at present. The principals
of the NTS defendants have indicated that the suit brought by Elder
Construction is without merit and will be vigorously defended, including
the prosecution by the defendants of counterclaims against Elder
Construction. No amounts have been provided for in the accompanying
statements regarding this matter.
10. Segment Reporting
-----------------
The Partnership's reportable operating segments include residential and
commercial real estate operations. The residential operations represent the
Partnership's ownership and operating results relative to apartment
complexes known as Willow Lake, Park Place Phase I, Park Place Phase III,
Sabal Park and Golf Brook. The commercial operations represent the
Partnership's ownership and operating results relative to suburban
commercial office space known as Plainview Point III Office Center.
The financial information of the operating segments has been prepared using
a management approach, which is consistent with the basis and manner in
which the Partnership's management internally reports financial information
for the purposes of assisting in making operating decisions. The
Partnership evaluates performance based on stand-alone operating segment
net income.
11
<PAGE>
10. Segment Reporting - Continued
-----------------------------
<TABLE>
Three Months Ended June 30, 2000
--------------------------------
Residential Commercial Total
----------- ---------- -----
<CAPTION>
<S> <C> <C> <C>
Rental income $2,369,006 $ 198,792 $2,567,798
Interest and other income 6,614 345 6,959
---------- ---------- ----------
Total net revenues $2,375,620 $ 199,137 $2,574,757
---------- ---------- ----------
Operating expense and operating expenses -
affiliated $ 915,511 $ 82,030 $ 997,541
Loss on disposal of assets 134,539 3,220 137,759
Management fees 120,714 11,997 132,711
Real estate taxes 230,560 8,243 238,803
Interest expense 217,127 -- 217,127
Depreciation and amortization 495,160 48,582 543,742
---------- ---------- ----------
Total expenses $2,113,611 $ 154,072 $2,267,683
---------- ---------- ----------
Net income $ 262,009 $ 45,065 $ 307,074
========== ========== ==========
</TABLE>
<TABLE>
Three Months Ended June 30, 1999
--------------------------------
Residential Commercial Total
----------- ---------- -----
<CAPTION>
<S> <C> <C> <C>
Rental income $2,218,652 $ 185,870 $2,404,522
Interest and other income 7,173 690 7,863
---------- ---------- ----------
Total net revenues $2,225,825 $ 186,560 $2,412,385
---------- ---------- ----------
Operating expenses and operating expenses -
affiliated $ 605,384 $ 81,374 $ 686,758
Loss on disposal of assets 218,497 -- 218,497
Management fees 114,398 9,998 124,396
Real estate taxes 195,037 8,274 203,311
Depreciation and amortization 385,967 39,209 425,176
---------- ---------- ----------
Total expenses $1,519,283 $ 138,855 $1,658,138
---------- ---------- ----------
Net Income $ 706,542 $ 47,705 $ 754,247
========== ========== ==========
</TABLE>
12
<PAGE>
10. Segment Reporting - Continued
-----------------------------
<TABLE>
Six Months Ended June 30, 2000
------------------------------
Residential Commercial Total
----------- ---------- -----
<CAPTION>
<S> <C> <C> <C>
Rental income $4,633,700 $ 385,559 $5,019,259
Interest and other income 17,659 1,034 18,693
Gain on sale of assets 5,188 -- 5,188
---------- ---------- ----------
Total net revenues $4,656,547 $ 386,593 $5,043,140
---------- ---------- ----------
Operating expenses and operating expenses -
affiliated $1,769,108 $ 163,112 $1,932,220
Loss on disposal of assets 134,611 3,220 137,831
Interest expense 436,253 -- 436,253
Management fees 235,977 23,463 259,440
Real estate taxes 480,048 16,486 496,534
Depreciation and amortization 961,502 95,294 1,056,796
---------- ---------- ----------
Total expenses $4,017,499 $ 301,575 $4,319,074
---------- ---------- ----------
Net income $ 639,048 $ 85,018 $ 724,066
========== ========== ==========
</TABLE>
<TABLE>
Six Months Ended June 30, 1999
------------------------------
Residential Commercial Total
----------- ---------- -----
<CAPTION>
<S> <C> <C> <C>
Rental income $4,363,339 $ 365,635 $4,728,974
Interest and other income 13,790 1,002 14,792
---------- ---------- ----------
Total net revenue $4,377,129 $ 366,637 $4,743,766
---------- ---------- ----------
Operating expenses and operating expenses -
affiliated $1,656,326 $ 164,517 $1,820,843
Loss on disposal of assets 234,539 -- 234,539
Management fees 221,786 22,728 244,514
Real estate taxes 390,073 16,548 406,621
Depreciation and amortization 768,783 76,382 845,165
---------- ---------- ----------
Total expenses $3,271,507 $ 280,175 $3,551,682
---------- ---------- ----------
Net income $1,105,622 $ 86,462 $1,192,084
========== ========== ==========
</TABLE>
13
<PAGE>
10. Segment Reporting - Continued
-----------------------------
A reconciliation of the totals reported for the operating segments to the
applicable line items in the consolidated financial statements for the
three months and six months ended June 30, 2000 and 1999 is necessary given
amounts recorded at the Partnership level and not allocated to the
operating properties for internal reporting purposes.
<TABLE>
Three Months Ended June 30,
---------------------------
2000 1999
---- ----
<CAPTION>
NET REVENUES
------------
<S> <C> <C>
Total revenues for reportable segments $ 2,574,757 $ 2,412,385
Other income for Partnership 7,033 4,537
----------- -----------
Total net revenues $ 2,581,790 $ 2,416,922
=========== ===========
INTEREST EXPENSE
----------------
Interest expense for reportable segments $ 217,127 $ --
Interest expense for Partnership 454,033 486,060
----------- -----------
Total interest expense $ 671,160 $ 486,060
=========== ===========
DEPRECIATION AND AMORTIZATION
-----------------------------
Total depreciation and amortization
for reportable segments $ 543,742 $ 425,176
Depreciation and amortization for Partnership 33,191 31,795
----------- -----------
Total depreciation and amortization $ 576,933 $ 456,971
=========== ===========
NET INCOME (LOSS)
-----------------
Total net income for reportable segments $ 307,074 $ 754,247
Net loss for Partnership (426,120) (336,599)
Eliminations (190,519) (310,699)
----------- -----------
Total net (loss) income $ (309,565) $ 106,949
=========== ===========
</TABLE>
14
<PAGE>
10. Segment Reporting - Continued
-----------------------------
<TABLE>
Six Months Ended June 30,
-------------------------
2000 1999
---- ----
<CAPTION>
NET REVENUES
------------
<S> <C> <C>
Total revenues for reportable segments $ 5,043,140 $ 4,743,766
Other income for Partnership 7,613 5,126
----------- -----------
Total consolidated net revenues $ 5,050,753 $ 4,748,892
=========== ===========
INTEREST EXPENSE
----------------
Interest expense for reportable segments $ 436,253 $ --
Interest expense for Partnership 867,451 958,371
----------- -----------
Total interest expense $ 1,303,704 $ 958,371
=========== ===========
DEPRECIATION AND AMORTIZATION
-----------------------------
Total depreciation and amortization
for reportable segments $ 1,056,796 $ 845,165
Depreciation and amortization for Partnership 65,923 63,591
----------- -----------
Total depreciation and amortization $ 1,122,719 $ 908,756
=========== ===========
NET INCOME (LOSS)
-----------------
Total net income for reportable segments $ 724,066 $ 1,192,084
Net loss for Partnership (664,244) (771,388)
Eliminations (528,455) (496,439)
----------- -----------
Total net loss $ (468,633) $ (75,743)
=========== ===========
</TABLE>
11. Recent Accounting Pronouncement
-------------------------------
The Emerging Issues Task Force ("EITF") of the Financial Accounting
Standards Board ("FASB") has reached a consensus on Issue No. 00-1,
"Applicability of the Pro Rata Method of Consolidation to Investments in
Certain Partnerships and Other Unincorporated Joint Ventures." The EITF
reached a consensus that a proportionate gross financial statement
presentation (referred to as "proportionate consolidation" in the
Partnership's 1999 Form 10-K Notes to Financial Statements) is not
appropriate for an investment in an unincorporated legal entity accounted
for by the equity method of accounting, unless the investee is in either
the construction industry or an extractive industry where there is a
longstanding practice of its use.
The consensus is applicable to financial statements for annual periods
ending after June 15, 2000. Upon application of the consensus, all
comparative financial statements shall be restated to conform with the
consensus. The application of this consensus will not result in a
restatement of previously reported partners' equity or results of
operations, but will result in a recharacterization or reclassification of
certain financial statements' captions and amounts. The Partnership plans
to restate its financial statements using the equity method to account for
its joint venture investments for the year ending December 31, 2000.
15
<PAGE>
12. Subsequent Events
-----------------
On July 14, 2000, a settlement agreement relative to a class action suit
was executed in a claim the Partnership had against Masonite Corporation
for defective hardboard siding installed at Golf Brook Apartments. Masonite
Corporation settled on 15 of 19 buildings at Golf Brook Apartments for a
total of approximately $253,700. An agreement has not been reached, at this
time for the remaining four buildings.
On July 19, 2000, there was a fire at Golf Brook Apartments. Eight
apartment units sustained fire and/or smoke damage. The Partnership has an
insurance deductible of $5,000 and has filed a claim with its insurance
company. At this time, it is unknown how much it will cost to repair the
eight apartment units.
16
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is structured in four major sections. The first section
provides information related to occupancy levels and rental and other income
generated by the Partnership's properties. The second analyzes results of
operations on a consolidated basis. The final sections address consolidated cash
flows and financial condition. A discussion of certain market risks also
follows. MD&A should be read in conjunction with the Financial Statements in
Item 1 and the Cautionary Statements below.
Cautionary Statements
---------------------
Some of the statements included in this Item 2 may be considered to be
"forward-looking statements" since such statements relate to matters which have
not yet occurred. For example, phrases such as "the Partnership anticipates,"
"believes" or "expects," indicate that it is possible that the event
anticipated, believed or expected may not occur. Should such event not occur,
then the result which the Partnership expected also may not occur or occur in a
different manner, which may be more or less favorable to the Partnership. The
Partnership does not undertake any obligations to publicly release the result of
any revisions to these forward-looking statements that may be made to reflect
any future events or circumstances.
Any forward-looking statements included in MD&A, or elsewhere in this report,
which reflect management's best judgement, based on factors known, involve risks
and uncertainties. Actual results could differ materially from those anticipated
in any forward-looking statements as a result of a number of factors including
but not limited to those discussed below. Any forward-looking information
provided by the Partnership pursuant to the safe harbor established by recent
securities legislation should be evaluated in the context of these factors.
The Partnership's liquidity, capital resources and results of operations are
subject to a number of risks and uncertainties including, but not limited to the
following: the ability of the Partnership to achieve planned revenues; the
ability of the Partnership to make payments due under its debt agreements; the
ability of the Partnership to negotiate and maintain terms with vendors and
service providers for operating expenses; competitive pressures from the other
real estate companies, including large commercial and residential real estate
companies, which may affect the nature and viability of the Partnership's
business strategy; trends in the economy as a whole which may affect consumer
confidence and demand for the types of rental property held by the Partnership;
the ability of the Partnership to predict the demand for specific rental
properties; the ability of the Partnership to attract and retain tenants;
availability and costs of management and labor employed; real estate occupancy
and development costs, including the substantial fixed investment costs
associated with renovations necessary to obtain new tenants and retain existing
tenants; and the risk of a major commercial tenant defaulting on its lease due
to risks generally associated with real estate, many of which are beyond the
control of the Partnership, including general or local economic conditions,
competition, interest rates, real estate tax rates, other operating expenses and
acts of God.
17
<PAGE>
Results of Operations
---------------------
The occupancy levels at Partnership's properties as of June 30 were as follows:
Six Months Ended June 30,
-------------------------
2000 (1) 1999
-------- ----
Wholly-owned Properties
-----------------------
Sabal Park Apartments 98% 96%
Park Place Apartments Phase I (2) 83% 92%
Willow Lake Apartments 97% 78%
Park Place Apartments Phase III (3) 27% N/A
Property Owned in Joint Venture with NTS-Properties IV
------------------------------------------------------
(Ownership % at June 30, 2000)
------------------------------
Golf Brook Apartments (96.03%) 94% 89%
Plainview Point III Office Center (95.04%) 91% 91%
(1) Current occupancy levels are considered adequate to continue operation of
all the underlying properties except Park Place Apartments Phase III. Park
Place Apartments Phase III is currently undergoing an effort to lease the
recently completed apartments.
(2) In the opinion of the General Partner of the Partnership, the decrease in
occupancy is only a temporary fluctuation and does not represent a
permanent downward occupancy trend.
(3) On May 19, 2000, the last building at Park Place Apartments Phase III was
certified for occupancy. As of June 30, 2000, there are 152 apartment units
available for lease of which 41 are occupied. There were no apartment units
certified for occupancy as of June 30, 1999.
The average occupancy levels at the Partnership's properties during the three
months and six months ended June 30 were as follows:
Three Months Six Months
Ended Ended
June 30, June 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
Wholly-owned Properties
-----------------------
Sabal Park Apartments 96% 96% 97% 96%
Park Place Apartments Phase I (1) 86% 89% 86% 86%
Willow Lake Apartments 93% 78% 90% 77%
Park Place Apartments Phase III (2) N/A N/A N/A N/A
Property Owned in Joint Venture
-------------------------------
with NTS-Properties IV
----------------------
(Ownership % at June 30, 2000)
------------------------------
Golf Brook Apartments (96.03%) (1) 91% 93% 92% 94%
Plainview Point III Office Center (95.04%) (1) 90% 89% 88% 90%
(1) In the opinion of the General Partner of the Partnership, the decrease in
average occupancy is only a temporary fluctuation and does not represent a
permanent downward occupancy trend.
(2) Average occupancy is not applicable for Park Place Apartments Phase III due
to the fact that units were turned over for leasing at different times
during the three months and six months ended June 30, 2000. There were no
apartment units available for leasing during the three months and six
months ended June 30, 1999.
18
<PAGE>
Results and Operations - Continued
----------------------------------
Rental and other income generated by the Partnership's properties for the three
months and six months ended June 30, 2000 and 1999 were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
Wholly-owned Properties
-----------------------
Sabal Park Apartments $ 494,950 $ 472,145 $ 972,805 $ 931,783
Park Place Apartments Phase I $ 462,383 $ 463,875 $ 910,122 $ 900,082
Willow Lake Apartments $ 602,011 $ 555,069 $1,164,932 $1,091,800
Park Place Apartments Phase III $ 111,404 N/A $ 173,829 N/A
Property Owned in Joint Venture with
------------------------------------
NTS-Properties IV
-----------------
(Ownership % at June 30, 2000)
------------------------------
Golf Brook Apartments (96.03%) $ 704,872 $ 734,736 $1,434,859 $1,453,464
Plainview Point III
Office Center (95.04%) $ 199,137 $ 186,560 $ 386,593 $ 366,637
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
The following is an analysis of material changes in results of operations for
the periods ending June 30, 2000 and 1999. Items that did not have a material
impact on operations for the periods listed above have been excluded from this
discussion.
Rental income increased approximately $163,300 or 7% and $290,300 or 6% for the
three months and six months ended June 30, 2000, respectively, as compared to
the same periods in 1999. The increase in rental income was primarily a result
of rental income collected at Park Place Apartments Phase III (Park Place
Apartments Phase III was not in operation during the three months or six months
ended June 30, 1999), increased average occupancy at Willow Lake Apartments and
increased rental rates at Plainview Point III Office Center and Sabal Park
Apartments. The increase is partially offset by decreased average occupancy at
Golf Brook Apartments.
Period-ending occupancy percentages represent occupancy only on a specific date;
therefore, the above analysis considers average occupancy percentages that are
representative of the entire year's results.
Operating expenses increased approximately $290,200 or 77% for the three months
ended June 30, 2000, as compared to the same period in 1999, primarily due to
the following: 1) expenses incurred by Park Place Apartments Phase III (Park
Place Apartments Phase III was not in operation during the three months ended
June 30, 1999) mainly for advertising, landscaping and utility expenses, 2)
increased repairs and maintenance costs at Sabal Park Apartments (wood
replacement, painting and appliances) and Golf Brook Apartments (wood
replacement, painting, heating and air conditioning repairs, and floor covering)
and 3) increased advertising costs at Willow Lake Apartments and Golf Brook
Apartments. The increase is partially offset by: 1)decreased landscaping
19
<PAGE>
Results of Operations - Continued
---------------------------------
at Park Place Apartments Phase I, Willow Lake Apartments and Sabal Park
Apartments, 2) decreased signage at Plainview Point III Office Center and 3)
decreased utilities at Willow Lake Apartments.
Operating expenses increased approximately $91,200 or 8% for the six months
ended June 30, 2000, as compared to the same period in 1999, primarily due to
the following: 1) expenses incurred by Park Place Apartments Phase III (Park
Place Apartments Phase III was not in operation during the six months ended June
30, 1999), 2) increased advertising at Willow Lake Apartments and Golf Brook
Apartments, 3) increased repairs and maintenance costs at Park Place Apartments
Phase I (wood replacement), Sabal Park Apartments (appliances and heating and
air conditioning expenses), and at Willow Lake Apartments (interior painting and
repairs and floor covering) and 4) increased amortization of prepaid leasing
commissions at Plainview Point III Office Center. The increase is partially
offset by: 1) decreased landscaping at Sabal Park Apartments and Park Place
Apartments Phase I, 2) decreased signage at Plainview Point III Office Center
and 3) decreased employee training at Sabal Park Apartments and Golf Brook
Apartments.
Operating expenses - affiliated increased approximately $20,600 or 7% and
$20,200 or 3% for the three months and six months ended June 30, 2000,
respectively, as compared to the same periods in 1999. The increases were
primarily a result of expenses incurred by Park Place Apartments Phase III (Park
Place Apartments Phase III was not in operation during the three or six months
ended June 30, 1999) and increased overhead costs and personnel costs at
Plainview Point III Office Center due to changes in allocation of the costs. The
increase is partially offset by decreased overhead costs allocated at Park Place
Apartments Phase I, Willow Lake Apartments and Golf Brook Apartments. Operating
expenses - affiliated are expenses incurred for services performed by employees
of NTS Development Company, an affiliate of the General Partner.
The 2000 loss on disposal of assets can be attributed to Golf Brook Apartments
and Sabal Park Apartments. The loss is a result of the retirement of assets due
to the renovation of the clubhouses.
The 1999 loss on disposal of assets can be attributed to Sabal Park Apartments
and Golf Brook Apartments. The loss is the result of a signage replacement
project at Sabal Park Apartments and a exterior wood replacement and painting
project at Sabal Park Apartments and Golf Brook Apartments.
Interest expense increased approximately $185,100 or 38% and $345,300 or 36% for
the three months and six months ended June 30, 2000, respectively, as compared
to the same periods in 1999, as a result of the Partnership's increased mortgage
debt. The increase is also due to interest capitalized on the Park Place
Apartments Phase III construction decreasing from approximately $97,000 for the
six months ended June 30, 1999, to approximately $25,600 for the same period in
2000. This reduction in capitalized interest has effectively increased interest
expense for the three months and six months ended June 30, 2000, as compared to
the same periods in 1999. The increase in debt level is partially offset by
continued principal payments.
20
<PAGE>
Results of Operations - Continued
---------------------------------
Real estate taxes increased approximately $35,500 or 17% and $89,900 or 22% for
the three months and six months ended June 30, 2000, respectively, as compared
to the same periods in 1999, primarily as a result of the following: 1) real
estate taxes for Park Place Apartment Phase III (Park Place Apartments Phase III
was not in operation during the three months or six months ended June 30, 2000),
2) increased estimated property taxes for Willow Lake Apartments and 3)
increased assessments at Golf Brook Apartments and Sabal Park Apartments.
Professional and administrative expenses decreased approximately $24,100 or 30%
and $23,600 or 17% for the three months and six months ended June 30, 2000,
respectively, as compared to the same periods in 1999. This decrease is due
primarily to decreased legal fees in relation to tender offers and general
services.
Professional and administrative expenses - affiliated increased approximately
$26,500 or 48% and $39,600 or 35% for the three months and six months ended June
30, 2000, respectively, as compared to the same periods in 1999, primarily as a
result of increased finance and accounting salary costs due to changes in staff.
Professional and administrative expenses - affiliated are expenses incurred for
services performed by employees of NTS Development Company, an affiliate of the
General Partner.
Depreciation expense increased approximately $120,000 or 26% and $214,000 or 24%
for the three months and six months ended June 30, 2000, respectively, as
compared to the same periods in 1999, primarily as a result of the following: 1)
capitalization of Park Place Apartments Phase III's construction costs
(approximately $11,114,000), 2) tenant finish and common area replacements at
Plainview Point III Office Center, net of retirements, and 3) building
improvements and fitness center renovation costs, net of retirements, at Golf
Brook Apartments and Sabal Park Apartments. The increase is partially offset by
a portion of the original land improvements, building improvements and amenities
at the Partnership's underlying properties becoming fully depreciated.
Consolidated Cash Flows and Financial Condition
-----------------------------------------------
Cash flows provided by (used in):
Six Months Ended June 30,
-------------------------
2000 1999
---- ----
Operating activities $ 300,985 $ 1,429,630
Investing activities (2,036,621) (4,087,251)
Financing activities 2,096,841 2,843,828
------------ ------------
Net increase in cash and equivalents $ 361,205 $ 186,207
============ ============
Net cash provided by operating activities decreased approximately $1,128,600 or
79% for the six months ended June 30, 2000, as compared to the same period in
1999. The decrease in net cash provided by operating activities was driven
primarily by a decrease in accounts payable.
21
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
-----------------------------------------------------------
The decrease in net cash used in investing activities during the six months
ended June 30, 2000, as compared to the same period in 1999, was primarily due
to decreased capital expenditures (construction of Park Place Apartments Phase
III is in its final stage).
The decrease in net cash provided by financing activities, during the six months
ended June 30, 2000, as compared to the same period in 1999, was primarily due
to a decrease in proceeds from mortgage loans (there was only one draw made on
the Park Place Apartments Phase I and III loan during the six months ended June
30, 2000). The decrease is partially offset by decreased cash distributions.
On March 21, 2000, the Partnership notified its Limited Partners that it would
be suspending distributions starting January 1, 2000. The suspension is
necessary due to significant capital improvements essential to maintaining the
buildings and facilities owned by the Partnership at Willow Lake Apartments,
Park Place Apartments Phase I, Sabal Park Apartments and Golf Brook Apartments.
The Partnership's cash position will be evaluated on an ongoing basis to
determine when resumption of distributions is appropriate.
The Partnership used cash flow from operations and cash on hand to pay a 1%
(annualized) distribution of $201,207 for the six months ended June 30, 1999.
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 these distributions.
The table below presents that portion of the distributions that represent a
return of capital on a GAAP basis for the six months ended June 30, 2000 and
1999. These distributions were funded by cash flow derived from operating
activities.
Net Cash
Loss Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
2000 $ (463,947) $ -- $ --
1999 (74,986) 199,195 199,195
General Partner:
2000 $ (4,686) $ -- $ --
1999 (757) 2,012 2,012
The demand on future liquidity is anticipated to increase as a result of the
replacement of roofs at both Willow Lake Apartments (26 buildings) and Park
Place Apartments Phase I (24 buildings) all of which were installed using
shingles produced by a single manufacturer. The shingles appear to contain
defects which may cause the roofs to fail before the end of their expected
useful lives. As the manufacturer has declared bankruptcy, the Partnership does
not expect to be able to recover any of the costs of the roof replacements. The
Partnership does not have sufficient working capital to make all of the roof
replacements at once and intends to make the replacements over the next 36
months. As of June 30, 2000, four buildings at Willow Lake Apartments have had
roofs replaced. The total cost of replacing the remaining roofs is estimated to
be $920,000 ($20,000 per building).
22
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
-----------------------------------------------------------
In the next 12 months, the demand on future liquidity is also anticipated to
increase as the Partnership continues its efforts in the leasing of Plainview
Point III Office Center. At this time, the future leasing and tenant finish
costs, which will be required to renew the current leases that expire during
2000 or obtain new tenants, are unknown.
On March 24, 2000, the Partnership and ORIG, LLC, an affiliate of the
Partnership (the "Offerors"), filed a tender offer (the "Fourth Tender Offer")
with the Securities and Exchange Commission, commencing on March 27, 2000, to
purchase up to 200 of the Partnership's limited partnership Units at a price of
$380 per Unit as of the date of the Fourth Tender Offer. Approximately $94,000
($76,000 to purchase 200 Units plus approximately $18,000 for expenses
associated with the Fourth Tender Offer) is required to purchase all 200 Units.
The Fourth Tender Offer stated that the Partnership will purchase the first 100
Units tendered and will fund its purchase and its portion of the expenses from
cash flow from operations. If more than 100 Units are tendered, ORIG, LLC. will
purchase up to an additional 100 Units. If more than 200 Units are tendered, the
Offerors may choose to acquire the additional Units on a pro-rata basis. Units
that are acquired by the Partnership will be retired. Units that are acquired by
ORIG, LLC. will be held by it. The General Partner, NTS- Properties Associates
VI, does not intend to participate in the Fourth Tender Offer. The Fourth Tender
Offer was scheduled to expire on June 27, 2000.
On June 23, 2000, the Partnership filed an amendment to the Fourth Tender Offer
with the Securities and Exchange Commission. The amendment supplements and
amends the Offer to extend the expiration date of the Fourth Tender Offer to
August 15, 2000 and to expand the definition of Offerors to include Mr. J.D.
Nichols and Mr. Brian F. Lavin, each an affiliate of the issuer. As of the date
of this filing, 3,164 Units have been tendered.
On July 14, 2000, a settlement agreement relative to a class action suit was
executed in a claim the Partnership had against Masonite Corporation for
defective hardboard siding installed at Golf Brook Apartments. Masonite
Corporation settled on 15 of 19 buildings at Golf Brook Apartments for a total
of approximately $253,700. An agreement has not been reached, at this time for
the remaining four buildings.
On July 19, 2000, there was a fire at Golf Brook Apartments. Eight apartment
units sustained fire and/or smoke damage. The Partnership has an insurance
deductible of $5,000 and has filed a claim with its insurance company. At this
time, it is unknown how much it will cost to repair the eight apartment units.
In an effort to continue to improve occupancy at the Partnership's residential
properties, the Partnership has an on-site leasing staff, who are 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 apartments, and negotiates lease renewals with current
residents.
23
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
-----------------------------------------------------------
The leasing and renewal negotiations for the Partnership's commercial property
are handled by leasing agents, who are 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. 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.
24
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The Partnership's primary risk exposure with regard to financial instruments is
changes in interest rates. All of the Partnership's debt bears interest at a
fixed rate with the exception of the $3,000,000 note payable that bear interest
at the Euro-Rate plus 225 basis points and the $26,250 note payable that bears
interest at the Prime Rate + 1%. At June 30, 2000, a hypothetical 100 basis
point increase in interest rates would result in approximately $30,300
additional annual interest expense on the variable rate mortgages. The same
increase in interest rates would also result in an approximate $906,300 decrease
in the fair value of debt held by the Partnership.
25
<PAGE>
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
-----------------
Not applicable.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits:
Exhibit 27. Financial Data Schedule
b) Reports on Form 8-K:
Not applicable.
26
<PAGE>
SIGNATURES
----------
Pursuant to the requirements 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,
General Partner
By: NTS Capital Corporation
General Partner
/s/ Gregory A. Wells
-----------------------------------------
Gregory A. Wells
Senior Vice President and
Chief Financial Officer of
NTS Capital Corporation
Date: August 11, 2000
27
<PAGE>
