<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
--------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------------- -------------------------
Commission File Number 0-18952
----------------------------------------------------------
NTS-PROPERTIES PLUS, LTD.
- --------------------------------------------------------------------------------
(Exact name of the registrant as specified in its charter)
Florida 61-1126478
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10172 Linn Station Road
Louisville, KY 40223
- ------------------------------- -------------------------------
(Address of principal executive (Zip Code)
offices)
(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 the 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
----- -----
<PAGE>
TABLE OF CONTENTS
-----------------
PART I
Item 1. Financial Statements Pages
Balance Sheets and Statement of Partners' Deficit
as of March 31, 2000 and December 31, 1999 3
Statements of Operations
for the three months ended March 31, 2000 and 1999 4
Statements of Cash Flows
for the three months ended March 31, 2000 and 1999 5
Notes to Financial Statements 6-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-17
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 17
PART II
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
2
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
<TABLE>
NTS-PROPERTIES PLUS, LTD.
-------------------------
BALANCE SHEETS AND STATEMENT OF PARTNERS' DEFICIT
-------------------------------------------------
<CAPTION>
As of As of
March 31, 2000 December 31, 1999*
-------------- ------------------
(Unaudited)
ASSETS
- ------
<S> <C> <C>
Cash and equivalents $ 126,940 $ 163,798
Cash and equivalents - restricted 32,015 18,719
Accounts receivable 6,182 3,763
Land, buildings and amenities, net 1,449,677 1,423,671
Deferred leasing commissions 90,081 88,665
Other assets 48,480 38,235
----------- -----------
TOTAL ASSETS $ 1,753,375 $ 1,736,851
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
- ---------------------------------
Mortgages and note payable $ 2,126,306 $ 2,160,294
Accounts payable 180,449 134,091
Security deposits 14,189 13,091
Other liabilities 42,369 25,669
----------- -----------
TOTAL LIABILITIES 2,363,313 2,333,145
COMMITMENTS AND CONTINGENCIES (Note 9)
Partners' deficit (609,938) (596,294)
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
DEFICIT $ 1,753,375 $ 1,736,851
=========== ===========
</TABLE>
<TABLE>
Limited General
Partners Partner Total
-------- ------- -----
<CAPTION>
PARTNERS' DEFICIT
- -----------------
<S> <C> <C> <C>
Capital contributions, net of
offering costs $ 11,784,521 $ 100 $ 11,784,621
Net loss - prior years (10,178,579) (102,814) (10,281,393)
Net loss - current year (13,508) (136) (13,644)
Cash distributions declared to
date (2,038,520) (20,592) (2,059,112)
Repurchase of Limited
Partnership Units (40,410) -- (40,410)
------------ ------------ ------------
Balances at March 31, 2000 $ (486,496) $ (123,442) $ (609,938)
============ ============ ============
</TABLE>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 30, 2000. The auditors' report on these
statements was qualified with respect to the Partnership continuing as a
going concern. See Notes to Financial Statements "1. Partnership's Plan
Relative to Continuing Operations."
The accompanying notes to financial statements are an integral part of these
statements.
3
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS, LTD.
-------------------------
STATEMENTS OF OPERATIONS
------------------------
<CAPTION>
Three Months Ended
March 31,
---------
(Unaudited)
2000 1999
---- ----
REVENUES:
- ---------
<S> <C> <C>
Rental income $ 134,871 $ 178,015
Interest and other income 2,170 3,817
--------- ---------
137,041 181,832
--------- ---------
EXPENSES:
- ---------
Operating expenses 19,934 26,494
Operating expenses - affiliated 8,930 18,458
Loss on disposal of assets 11,046 --
Interest expense 45,041 56,388
Management fees 8,323 10,189
Real estate taxes 13,350 16,795
Professional and administrative expenses 15,737 15,265
Professional and administrative
expenses - affiliated 4,807 11,061
Depreciation and amortization 23,517 29,181
--------- ---------
150,685 183,831
--------- ---------
Net loss $ (13,644) $ (1,999)
========= =========
Net loss allocated to the Limited Partners $ (13,508) $ (1,979)
========= =========
Net loss per Limited Partnership Unit $ (0.02) $ --
========= =========
Weighted average number of Limited
Partnership Units 643,645 658,402
========= =========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
4
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS, LTD.
-------------------------
STATEMENTS OF CASH FLOWS
------------------------
<CAPTION>
Three Months Ended
March 31,
---------
(Unaudited)
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
<S> <C> <C>
Net loss $ (13,644) $ (1,999)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 23,517 29,181
Loss on disposal of assets 11,046 --
Changes in assets and liabilities:
Cash and equivalents - restricted (13,296) (15,838)
Accounts receivable (2,419) (3,837)
Deferred leasing commissions (1,416) (638)
Other assets (10,245) (19,407)
Accounts payable 46,358 17,314
Security deposits 1,098 968
Other liabilities 16,700 16,149
--------- ---------
Net cash provided by
operating activities 57,699 21,893
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Additions to land, buildings,
amenities and construction in
progress (60,569) (7,739)
--------- ---------
Net cash used in investing activities (60,569) (7,739)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Increase in note payable 20,000 24,527
Principal payments on mortgages
payable (53,988) (56,960)
Cash and equivalents - restricted -- (10,000)
--------- ---------
Net cash used in financing activities (33,988) (42,433)
--------- ---------
Net decrease in cash and equivalents (36,858) (28,279)
--------- ---------
CASH AND EQUIVALENTS, beginning of
period 163,798 53,634
--------- ---------
CASH AND EQUIVALENTS, end of period $ 126,940 $ 25,355
========= =========
Interest paid on a cash basis $ 41,606 $ 55,399
========= =========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
5
<PAGE>
NTS-PROPERTIES PLUS, LTD.
-------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
The unaudited financial statements and schedules included herein should be read
in conjunction with the Partnership's 1999 Form 10-K as filed with the
Commission on March 30, 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
three months ended March 31, 2000 and 1999.
1. Partnership's Plans Relative to Continuing Operations
-----------------------------------------------------
The Partnership currently holds minority interests in three properties and
thus cannot effect decisions made by NTS affiliate partnerships holding a
majority position in these properties. The Partnership does not possess the
resources to contribute to improvements of any significant amount and has
seen its minority interest further decline as a result of the contributions
made by the financially stronger majority interest affiliated partnerships.
Prior to December 31, 1999, NTS Development Company, an affiliate of the
General Partner ("NTS"), agreed to defer amounts owed to it by the
Partnership. NTS, prior to January 1, 2000, also agreed to provide the
financial support necessary for the Partnership to pay its non-affiliated
operating expenses as they came due through January 1, 2000. NTS did not
extend the commitment past January 1, 2000.
NTS Development Company after January 1, 2000, will not defer amounts owed
to it or renew its commitment to provide financial support for
non-affiliated expenses of the Partnership. As of March 31, 2000, the
Partnership owes approximately $70,820 to NTS Development Company.
Accordingly, without an infusion of cash or a sale of Partnership assets,
the Partnership may not be able to meet its obligations as they come due in
the normal course of business. As a result, the auditors' report in the
Partnership's 1999 Form 10-K was qualified with respect to the Partnership
continuing as a going concern. The Partnership is evaluating alternatives
and expects to decide on a course of action during the second quarter of
2000.
2. Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. Concentration of Credit Risk
----------------------------
NTS-Properties Plus, Ltd. has joint venture investments in commercial
rental properties in Kentucky (Louisville) and Florida (Ft. Lauderdale).
One tenant occupies 100% of the net rentable area in Blankenbaker Business
Center 1A. Substantially all of the tenants are local businesses or are
businesses which have operations in the location in which they lease space.
6
<PAGE>
4. Cash and Equivalents - Restricted
---------------------------------
Cash and equivalents - restricted represents funds escrowed with mortgage
companies for property taxes in accordance with the loan agreements with
such mortgage companies and funds which the Partnership has reserved for
the repurchase of Limited Partnership Units (1999 balance only).
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 estimated
useful lives of the assets which are 10-30 years for land improvements,
5-30 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 March 31, 2000 and 1999 did not result in any impairment
loss.
6. Mortgages and Note Payable
--------------------------
Mortgages and note payable consist of the following:
March 31, December 31,
2000 1999
---- ----
Mortgage payable to an insurance
company, bearing interest at a
fixed rate of 8.5%, due November
15, 2005, secured by land and
building. $ 1,164,953 $ 1,203,015
Mortgage payable to an insurance
company, bearing interest at a
fixed rate of 8.125%, due August
1, 2008, secured by land and
building. 402,368 410,622
Mortgage payable to an insurance
company, bearing interest at a
fixed rate of 8.125%, due August
1, 2008, secured by land and
buildings. 373,985 381,657
(Continued on next page)
7
<PAGE>
6. Mortgages and Note Payable - Continued
--------------------------------------
March 31, December 31,
2000 1999
---- ----
Note payable to a bank, bearing
interest at a fixed rate of
8.75%, due January 29, 2001,
collateral provided by NTS
Financial Partnership, an
affiliate of NTS Development
Company. 185,000 165,000
------------- -------------
$ 2,126,306 $ 2,160,294
============= =============
Based on the borrowing rates currently available to the Partnership for
loans with similar terms and average maturities, the fair value of
long-term debt is approximately $2,154,000.
7. Related Party Transactions
--------------------------
Property management fees of $8,323 and $10,189 for the three months ended
March 31, 2000 and 1999, respectively, were paid to NTS Development
Company, an affiliate of the General Partner, pursuant to an agreement with
the Partnership. The fee is equal to 6% of gross revenues from the
Partnership's properties. Also permitted by an agreement, NTS Development
Company will receive a repair and maintenance fee equal to 5.9% of costs
which relate to capital improvements. The Partnership has incurred $3,042
and $315 as repair and maintenance fees during the three months ended March
31, 2000 and 1999, respectively, and has capitalized these costs as part of
land, buildings and amenities.
As permitted by an agreement, the Partnership was also charged the
following amounts from NTS Development Company for the three months ended
March 31, 2000 and 1999. These charges include items which have been
expensed as operating expenses - affiliated or professional and
administrative expenses - affiliated and items that have been capitalized
as deferred leasing commissions, other assets or as land, buildings and
amenities.
Three Months Ending
March 31,
---------
2000 1999
---- ----
Administrative $ 6,909 $ 12,938
Leasing 4,428 9,291
Property Management 5,405 11,111
Other 93 1,219
-------- --------
$ 16,835 $ 34,559
======== ========
8
<PAGE>
7. Related Party Transactions - Continued
--------------------------------------
Accounts payable includes approximately $70,820 and $61,600 due to NTS
Development Company on March 31, 2000 and December 31, 1999, respectively.
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
"Purchase Agreement"). The Affiliate purchased 2,536 Interests in the
Partnership for a total consideration of $2,536 or an average price of
$1.00 per Interest.
8. Transactions Affecting the Investment in Lakeshore/University II Joint
----------------------------------------------------------------------
Venture
-------
On July 1, 1999, NTS-Properties V contributed $1,737,000 to the
Lakeshore/University II Joint Venture (L/U II Joint Venture). The other
Partners in the Joint Venture, including NTS-Properties Plus, did not make
capital contributions at that time. Accordingly, the ownership percentages
of the other Partners in the Joint Venture decreased. Effective July 1,
1999, NTS-Properties Plus' percentage of ownership in the Joint Venture is
8.40%, as compared to 12.57% prior to July 1, 1999.
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 adverse effect on the
consolidated financial statements of the Partnership.
Pursuant to a contract signed on December 6, 1999, the Lakeshore/University
II Joint Venture has a commitment to construct a building to be known as
Lakeshore Business Center Phase III on 3.8 acres of land it owns at the
Lakeshore Business Center Development. The construction cost is currently
estimated to be $4,000,000 and will be funded by working capital and
approximately $2,680,000 in debt financing. See Notes to Financial
Statements "11. Subsequent Event."
10. Segment Reporting
-----------------
The Partnership's reportable operating segments include one segment-
Commercial Real Estate Operations.
9
<PAGE>
11. Subsequent Event
----------------
On April 24, 2000, the Partnership, with the Lakeshore/University II Joint
Venture, serving as guarantor obtained a commitment from a bank for an
amount not exceeding $2,680,000 to fund the construction of Lakeshore
Business Center Phase III. The funds will be used by the
Lakeshore/University II Joint Venture to construct Lakeshore Business
Center Phase III. The loan bears a variable interest rate equal to a daily
floating LIBOR rate as quoted for 30-day investments, plus 230 basis points
and is secured by 3.8 acres of land located at the Lakeshore Business
Center Development and the improvements now and hereafter located on the
land.
10
<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 judgment 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 continue as a going concern; 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 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 or 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.
11
<PAGE>
Cautionary Statements - Continued
- ---------------------------------
The Partnership currently holds minority interests in three properties and thus
cannot effect decisions made by NTS affiliate partnerships holding a majority
position in these properties. The Partnership does not possess the resources to
contribute to improvements of any significant amount and has seen its minority
interest further decline as a result of the contributions made by the
financially stronger majority interest affiliated partnership.
Prior to December 31, 1999, NTS Development Company, an affiliate of the General
Partner ("NTS"), agreed to defer amounts owed to it by the Partnership. NTS,
prior to January 1, 2000, also agreed to provide the financial support necessary
for the Partnership to pay its non-affiliated operating expenses as they came
due through January 1, 2000. NTS did not extend the commitment past January 1,
2000.
NTS Development Company after January 1, 2000, will not defer amounts owed to it
or renew its commitment to provide financial support for non-affiliated expenses
of the Partnership. As of March 31, 2000, the Partnership owes approximately
$70,820 to NTS Development Company.
Accordingly, without an infusion of cash or a sale of partnership assets, the
Partnership may not be able to meet its obligations as they come due in the
normal course of business. As a result, the auditors' report in the
Partnership's Form 10-K was qualified with respect to the Partnership continuing
as a going concern. The Partnership is evaluating alternatives and expects to
decide on a course of action during the second quarter of 2000.
Results of Operations
- ---------------------
The occupancy levels at the Partnership's properties as of March 31 were as
follows:
2000 (1) 1999
Property owned in Joint Venture with NTS-Properties IV and
- ----------------------------------------------------------
NTS-Properties VII, Ltd. (Ownership % at March 31, 2000)
- --------------------------------------------------------
Blankenbaker Business Center 1A (39.05%) 100% 100%
Properties owned through Lakeshore/University II Joint
- ------------------------------------------------------
Venture (L/U II Joint Venture)
- ------------------------------
Lakeshore Business Center Phase I (2) 76% 72%
Lakeshore Business Center Phase II (2)(3) 79% 85%
1) Current occupancy levels are considered adequate to continue the operation of
Blankenbaker Business Center 1A and Lakeshore Business Center Phases I and
II.
2) Ownership percentage was 8.40% as of March 31, 2000 and 12.57% as of March
31, 1999. See Notes to Financial Statements "8. Transactions Affecting
the Investment in Lakeshore/University II Joint Venture."
3) In the opinion of the General Partner of the Partnership, the decrease in
period ending occupancy is only a temporary fluctuation and does not
represent a permanent downward occupancy trend.
12
<PAGE>
Results of Operations - Continued
- ---------------------------------
Average occupancy levels at the Partnership's properties during the three months
ended March 31 were as follows:
Three Months Ended
March 31,
---------
2000 1999
---- ----
Property owned in Joint Venture with NTS-Properties IV and
- ----------------------------------------------------------
NTS-Properties VII, Ltd. (Ownership % at March 31, 2000)
- --------------------------------------------------------
Blankenbaker Business Center 1A (39.05%) 100% 100%
Properties owned through Lakeshore/University II Joint
- ------------------------------------------------------
Venture (L/U II Joint Venture)
- ------------------------------
Lakeshore Business Center Phase I (1)(2) 76% 79%
Lakeshore Business Center Phase II (1)(2) 78% 85%
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) Ownership percentage was 8.40% as of March 31, 2000 and 12.57% as of
March 31, 1999. See Notes to Financial Statements "8. Transactions
Affecting the Investment in Lakeshore/University II Joint Venture."
The rental and other income generated by the Partnership's properties for the
three months ended March 31 were as follows:
Three Months Ended
March 31,
---------
2000 1999
---- ----
Property owned in Joint Venture with NTS-Properties IV and
- ----------------------------------------------------------
NTS-Properties VII, Ltd. (Ownership % at March 31, 2000)
- --------------------------------------------------------
Blankenbaker Business Center 1A (39.05%) $78,169 $92,907
Properties owned through Lakeshore/University II Joint
- ---------------------------------------------------------
Venture (L/U II Joint Venture)
- ------------------------------
Lakeshore Business Center Phase I (1) $28,833 $43,772
Lakeshore Business Center Phase II (1) $28,343 $41,936
1) Represents ownership percentage of 8.40% for the three months ended March 31,
2000 and 12.57% for the three months March 31, 1999. See Notes to Financial
Statements "8. Transactions Affecting the Investment in Lakeshore/University
II Joint Venture."
Revenues shown in the table above, for properties owned through a joint venture,
represent only the Partnership's percentage interest in those revenues.
13
<PAGE>
Results of Operations - Continued
- ---------------------------------
The following is an analysis of material changes in results of operations for
the periods ending March 31, 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 and other income decreased approximately $45,000 or 25% for the three
months ended March 31, 2000, as compared to the same period in 1999. Partially
contributing to the decrease is decreased common area maintenance income at
Blankenbaker Business Center 1A and Lakeshore Business Center Phase II and a
decrease in average occupancy at Lakeshore Business Center Phases I and II. The
decrease is also due to a decrease in ownership of the Lakeshore/University II
Joint Venture, as a result of a capital contribution made by NTS-Properties V to
the Joint Venture on July 1, 1999.
Period ending occupancy percentages represent occupancy only on a specific date;
therefore, the above analysis considers average occupancy percentages, which are
representative of the entire period's results.
In cases of tenants who cease making rental payments or abandon the premises in
breach of the lease terms, the Partnership pursues collection through the use of
collection agencies or other remedies available by law when practical. In cases
where tenants have vacated as a result of bankruptcy, the Partnership has taken
legal action when it was thought there could be a possible collection. There
have been no funds recovered as a result of these actions during the three
months ended March 31, 2000 or 1999. As of March 31, 2000 no action is being
taken against any tenants to collect funds through the remedies discussed above.
Operating expenses decreased approximately $6,600 or 25% for the three months
ended March 31, 2000, as compared to the same period in 1999, due to the
decrease in ownership of the Lakeshore/University II Joint Venture as discussed
above.
Operating expenses - affiliated decreased approximately $9,500 or 52% for the
three months ended March 31, 2000, as compared to the same period in 1999, due
to decreased overhead costs allocated to the Partnership as a result of
personnel status changes and to the decreased ownership of the
Lakeshore/University II Joint Venture. Operating expenses - affiliated are
expenses for services performed by employees of NTS Development Company, an
affiliate of the General Partner of the Partnership.
Interest expense decreased approximately $11,300 or 20% for the three months
ended March 31, 2000 as compared to the same period in 1999, as a result of the
decrease in ownership of the Lakeshore/University II Joint Venture and from
regular principal payments on the Joint Venture debt. The decrease is partially
offset by interest incurred on the note that the Partnership obtained in January
1998, which bears interest at 8.75%. The balance on the note payable was
$185,000 and $165,000, as of March 31, 2000 and December 31, 1999, respectively.
Real estate taxes decreased approximately $3,400 or 21% for the three months
ended March 31, 2000, as compared to the same period in 1999, as a result of the
decrease in ownership of the Lakeshore/University II Joint Venture and the sale
of 2.4 acres of land owned by the Lakeshore/University II Joint Venture in July
1999.
14
<PAGE>
Results of Operations - Continued
- ---------------------------------
Professional and administrative expenses - affiliated decreased approximately
$6,300 or 57% for the three months ended March 31, 2000 as compared to the same
period in 1999, as a result of decreased salary costs due to personnel changes.
Professional and administrative expenses - affiliated are expenses incurred for
services performed by employees of NTS Development Company, an affiliate of the
General Partner.
Depreciation and amortization decreased approximately $5,700 or 19% for the
three months ended March 31, 2000, as compared to the same period in 1999, as a
result of the decrease in ownership of the Lakeshore/University II Joint
Venture.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets which are 10-30 years for land improvements, 5-30
years for buildings and improvements, 5-30 years for amenities and the
applicable lease term for tenant improvements. The aggregate cost of the
Partnership's properties for Federal tax purposes is approximately $4,868,000.
Consolidated Cash Flows and Financial Condition
- -----------------------------------------------
In the next 12 months, the Partnership expects the demand on future liquidity to
increase as a result of future leasing activity at Lakeshore Business Center
Phases I, II and III. At this time, the future leasing and tenant finish costs,
which will be required to renew the current leases or obtain new tenants, are
unknown.
Cash flows provided by (used in):
2000 1999
---- ----
Operating activities $ 57,699 $ 21,893
Investing activities (60,569) (7,739)
Financing activities (33,988) (42,433)
--------- ---------
Net decrease in cash and
equivalents $ (36,858) $ (28,279)
========= =========
Net cash provided by operating activities increased approximately $35,800 for
the three months ended March 31, 2000, as compared to the same period in 1999.
This increase was primarily driven by changes in the level of accounts payable,
offset partially by increased net loss.
Net cash used in investing activities for the three months ended March 31, 2000
increased approximately $52,800 as compared to the same period in 1999. The
increase is due to increased capital expenditures at Lakeshore Business Center
Phase I and II and the inclusion of Lakeshore Business Center Phase III
construction costs.
15
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
- -----------------------------------------------------------
Net cash used in financing activities decreased approximately $8,400 for the
three months ended March 31, 2000 as compared to the same period in 1999. The
decrease is due partially to a decrease in cash reserved for the repurchase of
Limited Partnership Units. The net cash provided by financing activities in 2000
and 1999 was the result of additional funds received on the note obtained by the
Partnership in January 1998. The principal amount of the note was increased in
order to cover interest owed as of the original maturity date in January 1999.
The Partnership also received an additional $20,000 on the note in March 2000.
The Partnership has not made any cash distributions since the quarter ended June
30, 1991. Cash reserves (which are unrestricted cash and equivalents as shown on
the Partnership's balance sheet) as of March 31, 2000 were $126,940.
Due to the fact that no distributions were made during the three months ended
March 31, 2000 or 1999, the table, which presents that portion of the
distribution, that represents a return of capital on a Generally Accepted
Accounting Principle basis has been omitted.
Currently, the Partnership's plans for renovations and other major capital
expenditures include tenant improvements at the Partnership's properties as
required by lease negotiations, and the construction of Lakeshore Business
Center Phase III as described later in this discussion. Changes to current
tenant finish improvements are a typical part of any lease negotiation.
Improvements generally include a revision to the current floor plan to
accommodate a tenant's needs, new carpeting and paint and/or wall covering. The
extent and costs of the improvements are determined by the size of the space
being leased and whether the improvements are for a new tenant or incurred
because of a lease renewal. The tenant finish improvements will be funded by
cash flow from operations and cash reserves.
Pursuant to a contract signed on December 6, 1999, the Lakeshore/University II
Joint Venture has a commitment to construct a building to be known as Lakeshore
Business Center Phase III on 3.8 acres of land it owns at the Lakeshore Business
Center Development. The construction cost is currently estimated to be
$4,000,000 and will be funded by the Joint Venture's working capital and
approximately $2,680,000 in debt financing.
The Partnership has no other material commitments for renovations or capital
improvements as of March 31, 2000.
The following describes the efforts being taken by the Partnership to increase
the occupancy levels at the Partnership's properties. At Lakeshore Business
Center Phases I, II and III, the Partnership has an on-site leasing agent, an
employee of NTS Development Company (an affiliate of the General Partner), who
makes calls to potential tenants, negotiates lease renewals with current tenants
and manages local advertising with the assistance of NTS Development Company's
marketing staff.
Leases at the Partnership's properties provide for tenants to contribute toward
the payment of increases in common area expenses, insurance and real estate
taxes. These lease provisions should protect the Partnership's operations from
the impact of inflation and changing prices.
16
<PAGE>
Year 2000
- ---------
During 1999, all divisions of NTS Corporation, including NTS-Properties Plus,
the General Partner of the Partnership, reviewed the effort necessary to prepare
NTS' information systems (IT) and non-information technology with embedded
technology (ET) for the Year 2000. The information technology solutions were
addressed separately for the Year 2000 since the Partnership saw the need to
move to more advanced management and accounting systems made available by new
technology and software development during the decade of the 1990's. NTS'
property management staff surveyed vendors to evaluate embedded technology in
our alarm systems, HVAC controls, telephone systems and other computer
associated facilities. Some equipment was replaced, while others had circuitry
upgrades.
In 1999, the PILOT software system, purchased in the early 1990's, was replaced
by a Windows based network system both for NTS' headquarters functions and other
locations. The real estate accounting system developed, sold, and supported by
the Yardi Company of Santa Barbara, California replaced PILOT. The Yardi system
was fully implemented and operational as of December 31, 1999. There have been
no Year 2000 related problems with the system.
The costs of these advances in NTS' systems technology are not all attributable
to the Year 2000 issue since NTS had already identified the need to move to a
network based system regardless of the Year 2000. The Partnership's share of the
costs involved were approximately $5,000 during 1999 and 1998. These costs
include primarily purchase, lease and maintenance of hardware and software.
At the date of this filing the Partnership did not experience any significant
operating issues relative to the Year 2000 issue. Despite diligent preparation,
unanticipated third-party failures, inability of our tenants to pay rent when
due, more general public infrastructure failures or failure of our remediation
efforts as planned could have a material adverse impact on our results of
operations, financial conditions and/or cash flows in 2000 and beyond.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Our primary market risk exposure with regards to financial instruments is
changes in interest rates. All of the Partnership's debt bears interest at a
fixed rate. At March 31, 2000, a hypothetical 100 basis point increase in
interest rates would result in an approximate $98,000 decrease in the fair value
of debt.
17
<PAGE>
PART II. OTHER INFORMATION
-----------------
Item 3. Defaults Upon Senior Securities
-------------------------------
None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit 27. Financial Data Schedule.
b) Reports on Form 8-K
None.
Items 1,2 and 4 are not applicable and have been omitted.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, NTS-
Properties Plus has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NTS-PROPERTIES PLUS, LTD.
-----------------------------------------
(Registrant)
BY: NTS-Properties Plus Associates,
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: May 12, 2000
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 2000 AND FROM THE STATEMENT OF OPERATIONS FROM THE THREE
MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 126,940
<SECURITIES> 0
<RECEIVABLES> 6,182
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,449,677
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 1,753,375
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 2,126,306
0
0
<COMMON> 0
<OTHER-SE> (609,938)
<TOTAL-LIABILITY-AND-EQUITY> 1,753,375
<SALES> 134,871
<TOTAL-REVENUES> 137,041
<CGS> 0
<TOTAL-COSTS> 105,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,041
<INCOME-PRETAX> (13,644)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,644)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,644)
<EPS-BASIC> 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>
