<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 0-18952
----------------------------------------------------------
NTS-PROPERTIES PLUS LTD.
--------------------------------------------------------------------------------
(Exact name of 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, 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 Deficit 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 6-10
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 18
PART II
-------
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
2
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
BALANCE SHEETS
--------------
<CAPTION>
As of As of
June 30, December 31,
2000 1999*
---- -----
(Unaudited)
ASSETS
------
<S> <C> <C>
Cash and equivalents $ 59,678 $ 163,798
Cash and equivalents - restricted 32,267 18,719
Accounts receivable 15,599 3,763
Land, buildings and amenities, net 1,530,172 1,423,671
Deferred leasing commissions 89,282 88,665
Other assets 43,998 38,235
------------ ------------
TOTAL ASSETS $ 1,770,996 $ 1,736,851
============ ============
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Mortgages and note payable $ 2,116,584 $ 2,160,294
Accounts payable 177,007 134,091
Security deposits 13,625 13,091
Other liabilities 58,598 25,669
------------ ------------
TOTAL LIABILITIES 2,365,814 2,333,145
COMMITMENTS AND CONTINGENCIES (Note 9)
PARTNERS' DEFICIT (594,818) (596,294)
------------ ------------
TOTAL LIABILITIES AND PARTNERS' DEFICIT $ 1,770,996 $ 1,736,851
============ ============
</TABLE>
STATEMENT OF PARTNERS' DEFICIT
------------------------------
<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 income - current year 1,461 15 1,476
Cash distributions declared to date (2,038,520) (20,592) (2,059,112)
Repurchase of Limited Partnership Units (40,410) -- (40,410)
------------- ------------- -------------
BALANCES JUNE 30, 2000 $ (471,527) $ (123,291) $ (594,818)
============= ============= =============
</TABLE>
* Reference is made to the audited financial statements in Form 10-K as filed
with the Securities and Exchange Commission on March 30, 2000. The
auditor's report on these statements was qualified with respect to the
Partnership continuing as a going concern (See Notes to Financial
Statements - Note 1).
The accompanying notes to financial statements are an integral part of these
statements.
3
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
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 $ 155,915 $ 182,465 $ 290,787 $ 361,072
Interest and other income 1,479 (2,980) 3,650 245
---------- ---------- ---------- ----------
TOTAL REVENUES 157,394 179,485 294,437 361,317
---------- ---------- ---------- ----------
EXPENSES
--------
Operating expenses 20,176 24,933 40,114 50,837
Operating expenses - affiliated 9,376 12,880 18,306 31,338
Loss on disposal of assets 94 -- 11,141 --
Interest expense 42,737 56,718 87,777 113,106
Management fees 8,700 11,037 17,023 21,226
Real estate taxes 12,299 16,801 25,648 33,596
Professional and administrative expenses 19,413 17,971 35,149 33,221
Professional and administrative expenses
- affiliated 5,514 9,229 10,321 20,290
Depreciation and amortization 23,965 29,535 47,482 59,319
---------- ---------- ---------- ----------
TOTAL EXPENSES 142,274 179,104 292,961 362,933
---------- ---------- ---------- ----------
Net income (loss) $ 15,120 $ 381 $ 1,476 $ (1,616)
========== ========== ========== ==========
Net income (loss) allocated to the Limited Partners $ 14,969 $ 377 $ 1,461 $ (1,600)
========== ========== ========== ==========
Net income (loss) per Limited Partnership Unit $ 0.02 $ 0.0 $ 0.00 $ (0.00)
========== ========== ========== ==========
Weighted average number of Limited
Partnership Units 643,645 654,999 643,645 656,691
========== ========== ========== ==========
</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
------------------------
(UNAUDITED)
-----------
<CAPTION>
Six Months Ended
June 30,
--------
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
<S> <C> <C>
Net income (loss) $ 1,476 $ (1,616)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 47,482 59,319
Loss of disposal of assets 11,141 --
Changes in assets and liabilities:
Cash and equivalents - restricted (13,548) (32,494)
Accounts receivable (11,836) (1,502)
Deferred leasing commissions (617) 591
Other assets (8,946) (21,189)
Accounts payable 42,916 18,196
Security deposits 534 6,068
Other liabilities 32,929 31,441
---------- ----------
Net cash provided by operating activities 101,531 58,814
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Additions to land, buildings and amenities (161,941) (16,859)
---------- ----------
Net cash used in investing activities (161,941) (16,859)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Principal payments on mortgages payable (110,710) (116,553)
Increase in note payable 67,000 54,527
Repurchase of Limited Partnership Units -- (9,988)
Contributions to Partnership -- 12,570
---------- ----------
Net cash used in financing activities (43,710) (59,444)
---------- ----------
Net decrease in cash and equivalents (104,120) (17,489)
CASH AND EQUIVALENTS, beginning of period 163,798 53,634
---------- ----------
CASH AND EQUIVALENTS, end of period $ 59,678 $ 36,145
========== ==========
Interest paid on a cash basis $ 82,500 $ 108,812
========== ==========
</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
Securities and Exchange 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 and six months ended June 30, 2000 and 1999.
1. Partnership's Plans Relative to Continuing Operations
-----------------------------------------------------
The Partnership currently holds minority interests in four 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 interests further decline as a result of the
contributions made by the financially stronger majority interest affiliate
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, 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 June 30, 2000, the Partnership owes approximately
$177,000 to NTS.
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
with its assets, debt and capital structure to remedy this situation.
2. 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.
6
<PAGE>
3. Concentration of Credit Risk
----------------------------
NTS-Properties Plus Ltd. has joint venture investments in one commercial
rental property in Kentucky (Louisville) and three commercial rental
properties in Florida (Ft. Lauderdale). A single tenant occupies the
property in Kentucky.
4. Cash and Equivalents - Restricted
---------------------------------
Cash and equivalents - restricted represents 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 (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 5-30 years for land
improvements, 7-30 years for buildings and improvements, 3-7 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
period 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 to an insurance company,
bearing interest at a fixed rate of 8.5%,
due November 15, 2005, secured by land and
a building. $1,124,483 $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
a building. 393,945 410,622
Mortgage payable to an insurance company,
bearing interest at a fixed rate of 8.125%,
due August 1, 2008, secured by land and
buildings. 366,156 381,657
(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 a fixed rate of 8.75%, due January 29, 2001,
collateral provided by NTS Financial Partnership,
an affiliate of NTS Development Company. $ 232,000 $ 165,000
---------- ----------
$2,116,584 $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 $2,104,600.
7. Related Party Transactions
--------------------------
Property management fees of $17,023 and $21,226 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 paid monthly in an amount
equal to 6% of the gross revenues from the Partnership's properties
pursuant to an agreement with the Partnership. 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.
The Partnership has incurred $8,590 and $479 for the six months ended June
30, 2000 and 1999, respectively, as repair and maintenance fees, and has
capitalized these costs as part of land, buildings and amenities. The
Partnership was also charged the following amounts from NTS Development
Company for the six months ended June 30, 2000 and 1999. 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
---- ----
Leasing $ 8,589 $ 14,896
Administrative 14,524 25,868
Property Management 9,905 15,266
Other 191 2,515
-------- --------
$ 33,209 $ 58,545
======== ========
On February 7, 2000, ORIG, LLC. (the "Affiliate") purchased Interests in
the Partnership and pursuant to an Agreement, Bill of Sale and Assignment
by and among the Affiliate and four investors in the Partnership. 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
<PAGE>
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 Ltd. 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. See Note 12
for details of a contribution made to the L/U II Joint Venture subsequent
to June 30, 2000.
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 properties 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 L/U 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. As of June 30, 2000, the L/U II Joint Venture
has incurred approximately $1,761,000 in expenses for the construction of
Lakeshore Business Center Phase III.
On April 24, 2000, the Partnership, obtained a commitment from a bank for
an amount not exceeding $2,680,000 to fund the construction of Lakeshore
Business Center Phase III. This commitment is to be guaranteed by the L/U
II Joint Venture, NTS-Properties V, NTS-Properties IV, Ltd., and NTS-Ft.
Lauderdale, Ltd. The funds will be used by the L/U 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.
As of June 30, 2000, the L/U II Joint Venture has a commitment for
approximately $66,000 for tenant improvements on 31,338 square feet at
Lakeshore Business Center Phases I and II. The Partnership's share of this
commitment is approximately $5,550 and will be funded from cash flows from
operations. The L/U II Joint Venture also has a commitment for
approximately $45,700 for tenant improvements on 4,689 square feet at
Lakeshore Business Center Phase III. The Partnership's share of this
commitment is approximately $3,840 and will be funded from
9
<PAGE>
9. Commitments and Contingencies - Continued
-----------------------------------------
the debt financing discussed above. The construction for these projects has
commenced and is expected to be completed during the third quarter of 2000.
The L/U II Joint Venture anticipates replacing the roofs at Lakeshore
Business Center Phase I for a cost of approximately $200,000. The
Partnership's share of this project will be $16,800 and will be funded from
cash flows from operations.
10. Segment Reporting
-----------------
The Partnership's reportable operating segments include only one segment -
Commercial Real Estate Operations.
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.
12. Subsequent Event
----------------
On July 1, 2000, NTS-Properties V contributed $500,000 to the L/U II Joint
Venture. The other partners in the L/U II Joint Venture, including
NTS-Properties Plus Ltd., did not make capital contributions at that time.
Accordingly the ownership percentages of the other partners in the L/U II
Joint Venture decreased. Effective July 1, 2000, NTS Plus' percentage of
ownership in the L/U II Joint Venture is 7.69%, as compared to 8.40% prior
to July 1, 2000.
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 revision 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 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 agreement; 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 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 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 four 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
interests further decline as a result of the contributions made by the
financially stronger majority interest affiliate 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, 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 June 30, 2000, the Partnership owes approximately $177,000 to
NTS.
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 (See Notes to Financial Statements - Note 1).
Results of Operations
---------------------
The occupancy levels at the Partnership's properties as of June 30 were as
follows:
Six Months Ended June 30,
-------------------------
2000 (1) 1999
-------- ----
Property Owned in Joint Venture
-------------------------------
with NTS-Properties IV and NTS-
-------------------------------
Properties VII, Ltd.
--------------------
(Ownership % at June 30, 2000)
------------------------------
Blankenbaker Business Center 1A (39.05%) 100% 100%
Property Owned through Lakeshore/University II
----------------------------------------------
Joint Venture (L/U II Joint Venture)
------------------------------------
Lakeshore Business Center Phase I (2) 75% 71%
Lakeshore Business Center Phase II (2) (3) 82% 86%
Lakeshore Business Center Phase III (4) 0% N/A
(1) Current occupancy levels are considered adequate to continue the operation
of Blankenbaker Business Center 1A and Lakeshore Business Center Phases I
and II. Lakeshore Business Center Phase III is currently under
construction.
(2) Ownership percentage was 8.40% as of June 30, 2000 and 12.57% as of June
30, 1999 (See Notes to Financial Statements - Note 8).
(3) 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.
(4) Ownership percentage was 8.4% as of June 30, 2000. Property was not under
construction until December 1999. As of June 30, 2000, one lease for 4,689
square feet has been signed and the tenant is expected to take occupancy
during the third quarter of 2000.
12
<PAGE>
Results of Operations - Continued
---------------------------------
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
---- ---- ---- ----
Property Owned in Joint Venture
-------------------------------
with NTS-Properties IV and
--------------------------
NTS-Properties VII, Ltd.
------------------------
(Ownership % at June 30, 2000)
------------------------------
Blankenbaker Business Center 1A (39.05%) 100% 100% 100% 100%
Property Owned through Lakeshore/University II
----------------------------------------------
Joint Venture (L/U II Joint Venture)
------------------------------------
Lakeshore Business Center Phase I (1) 76% 72% 76% 76%
Lakeshore Business Center Phase II (1) (2) 78% 86% 81% 85%
Lakeshore Business Center Phase III (3) 0% N/A 0% N/A
(1) Ownership percentage was 8.40% for the three months and six months ended
June 30, 2000 and 12.57% for the three months and six months ended June 30,
1999 (See Notes to Financial Statements - Note 8).
(2) 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.
(3) Ownership percentage was 8.4% as of June 30, 2000. Property was not under
construction until December 1999.
The rental and other income generated by the Partnership's properties for 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
---- ---- ---- ----
Property Owned in Joint Venture
-------------------------------
with NTS-Properties IV and
--------------------------
NTS-Properties VII, Ltd.
------------------------
(Ownership % at June 30, 2000)
------------------------------
Blankenbaker Business Center 1A (39.05%) $ 97,162 $ 92,916 $175,331 $185,823
Property Owned through Lakeshore/University
-------------------------------------------
II Joint Venture (L/U II Joint Venture)
---------------------------------------
Lakeshore Business Center Phase I (1) $ 29,202 $ 40,494 $ 58,035 $ 84,266
Lakeshore Business Center Phase II (1) $ 29,935 $ 49,055 $ 58,278 $ 90,991
Lakeshore Business Center Phase III (2) $ 0 N/A $ 0 N/A
(1) Represents ownership percentage of 8.40% for the three months and six
months ended June 30, 2000 and 12.57% for the three months and six months
ended June 30, 1999 (See Notes to Financial Statements - Note 8).
(2) Building is currently under construction. As of June 30, 2000, one lease
for 4,689 square feet has been signed and the tenant is scheduled to take
occupancy during the third quarter of 2000.
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 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 and other income decreased approximately $26,600 or 15% and $70,300 or
19% for the three months and six months ended June 30, 2000, as compared to the
same periods in 1999. The decrease is primarily due to a decrease in ownership
of the L/U II Joint Venture, as a result of a capital contribution made by
NTS-Properties V to the Joint Venture on July 1, 1999. (See Notes to Financial
Statements - Note 8).
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 and six months ended June 30, 2000 or 1999. As of June 30, 2000, no
action is being taken against any tenants to collect funds through the remedies
discussed above.
Operating expenses decreased approximately $4,800 or 19% and $10,700 or 21% for
the three months and six months ended June 30, 2000, as compared to the same
periods in 1999, due to the decrease in ownership of the L/U II Joint Venture as
discussed above.
Operating expenses - affiliated decreased approximately $3,500 or 27% and
$13,000 or 41% for the three months and six months ended June 30, 2000, as
compared to the same periods 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 L/U II Joint Venture. Operating expenses - affiliated are
expenses for services performed by employees of NTS Development Company, an
affiliate of the General Partner.
The 2000 loss on disposal of assets is the result of retirements of original
building costs at Lakeshore Business Center Phases I and II resulting from the
renovation of the common areas of these properties. The loss represents the
costs of the assets which were not fully depreciated at the time of their
retirement.
Interest expense decreased approximately $14,000 or 25% and $25,300 or 22% for
the three months and six months ended June 30, 2000, as compared to the same
periods in 1999, as a result of the decrease in ownership of the L/U II Joint
Venture and from regular principal payments made on the Joint Venture debt. The
decrease is partially offset by an increase in interest incurred on the
Partnership's note payable, which bears interest at 8.75%. The balance on the
note payable was approximately $165,000, as of June 30, 1999, and increased to
$232,000 as of June 30, 2000.
14
<PAGE>
Results of Operations - Continued
---------------------------------
Real estate taxes decreased approximately $4,500 or 27% and $7,900 or 24% for
the three months and six months ended June 30, 2000, as compared to the same
periods in 1999, as a result of the decrease in ownership of the L/U II Joint
Venture and the sale of 2.4 acres of land owned by the L/U II Joint Venture in
July 1999.
Professional and administrative expenses - affiliated decreased approximately
$3,700 or 40% and $9,970 or 49% for the three months and six months ended June
30, 2000, as compared to the same periods in 1999, as a result of decreased
salary costs due to personnel changes and the decrease in ownership of the L/U
II Joint Venture. Professional and administrative expenses - affiliated are
expenses incurred for the services performed by employees of NTS Development
Company, an affiliate of the General Partner.
Depreciation and amortization decreased approximately $5,600 or 19% and $11,800
or 20% for the three months and six months ended June 30, 2000, as compared to
the same periods in 1999, as a result of the decrease in ownership of the L/U II
Joint Venture. 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):
Six Months Ended June 30,
-------------------------
2000 1999
---- ----
Operating activities $ 101,531 $ 58,814
Investing activities (161,941) (16,859)
Financing activities (43,710) (59,444)
------------ ------------
Net decrease in cash and equivalents $ (104,120) $ (17,489)
============ ============
Net cash provided by operating activities increased approximately $42,700 or 73%
for the six months ended June 30, 2000, as compared to the same period in 1999.
This increase was primarily driven by changes in the level of accounts payable
and restricted cash.
Net cash used in investing activities for the six months ended June 30, 2000,
increased approximately $145,000, as compared to the same period in 1999. The
increase is due to increased capital expenditures at Lakeshore Business Center
Phases 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 $15,700 or 26% for
the six months ended June 30, 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 payable
obtained by the Partnership in January 1998. The principal amount of the note
payable was increased in order to cover interest due as of the original maturity
date in January 1999. The Partnership also received an additional $20,000 on the
note payable in March 2000 and $47,000 in June 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 June 30, 2000 were $59,678.
Due to the fact that no distributions were made during the six months ended June
30, 2000 or 1999, the table which presents that portion of the distribution that
represents a return of capital on a GAAP 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 wallcovering. 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 L/U 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. As of June 30, 2000, the L/U II Joint Venture
incurred approximately $1,761,000 in expenses for the construction of Lakeshore
Business Center Phase III.
As of June 30, 2000, the L/U II Joint Venture has a commitment for approximately
$66,000 for tenant improvements on 31,338 square feet at Lakeshore Business
Center Phases I and II. The Partnership's share of this commitment is
approximately $5,550 and will be funded from cash flows from operations. The L/U
II Joint Venture also has a commitment for approximately $45,700 for tenant
improvements on 4,689 square feet at Lakeshore Business Center Phase III. The
Partnership's share of this commitment is approximately $3,840 and will be
funded from debt financing. The construction for these projects has commenced
and is expected to be completed during the third quarter of 2000.
16
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
-----------------------------------------------------------
The L/U II Joint Venture anticipates replacing the roofs at Lakeshore Business
Center Phase I for a cost of approximately $200,000. The Partnership's share of
this project will be $16,800 and will be funded from cash flows from operations.
The Partnership has no other material commitments for renovations or capital
improvements as of June 30, 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.
17
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Our primary market risk exposure with regard to financial instruments is changes
in interest rates. All of the Partnership's debt bears interest at a fixed rate.
At June 30, 2000, a hypothetical 100 basis point increase in interest rates
would result in an approximate $54,600 decrease in the fair value of debt.
18
<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.
19
<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 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: August 11, 2000
20
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