SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 15, 1996
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 33-15479
LIBERTY TAX CREDIT PLUS L.P.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2641866
- - --------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
625 Madison Avenue, New York, New York 10022
- - ---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 15, March 15,
1996 1996
-------- ---------
<S> <C> <C>
ASSETS
Property and equipment, at cost, net of accumulated depreciation
of $65,678,281 and $63,484,987, respectively $188,209,133 $190,117,455
Cash and cash equivalents 2,673,502 2,780,280
Cash held in escrow 9,197,186 9,493,952
Accounts receivable - tenants 614,709 527,513
Deferred costs - net of accumulated amortization of $3,494,836
and $3,520,961, respectively 3,908,346 3,811,548
Other assets 1,610,711 1,607,470
------------ ------------
Total assets $206,213,587 $208,338,218
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $158,782,727 $158,390,811
Accounts payable and other liabilities 7,729,098 7,413,973
Due to local general partners and affiliates 13,627,329 13,458,747
Due to general partners and affiliates 1,745,975 2,381,554
Due to selling partners 922,023 994,583
------------ ------------
Total liabilities 182,807,152 182,639,668
------------ ------------
Minority interest 6,910,639 7,133,812
------------ ------------
Commitments and contingencies (Note 4)
Partners' capital:
Limited partners (15,987.5 BACs issued and outstanding) 17,060,682 19,108,935
General partners (564,886) (544,197)
------------ ------------
Total partners' capital 16,495,796 18,564,738
------------ ------------
Total liabilities and partners' capital $206,213,587 $208,338,218
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
-2-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 15,
-------------------------------
1996 1995*
------------ ------------
<S> <C> <C>
Revenues
Rental income $ 8,341,970 $ 8,265,632
Other 294,371 478,693
------------ ------------
8,636,341 8,744,325
------------ ------------
Expenses
General and administrative 1,374,500 1,256,161
General and administrative-
related parties (Note 2) 417,574 466,554
Repairs and maintenance 1,553,783 1,436,011
Operating and other 1,108,648 1,164,352
Real estate taxes 363,138 395,199
Insurance 336,916 335,497
Interest 3,345,000 3,463,867
Depreciation and amortization 2,291,735 2,376,715
------------ ------------
10,791,294 10,894,356
------------ ------------
Minority interest in loss of subsidiaries 86,011 103,506
------------ ------------
Net loss (2,068,942) (2,046,525)
============ ============
Number of BAC's outstanding 15,987.5 15,987.5
============ ============
Net loss-limited partners $ (2,048,253) $ (2,026,060)
============ ============
Net loss per BAC $ (128.12) $ (126.73)
============ ============
</TABLE>
*Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
Total Limited Partners General Partners
----------- ---------------- ----------------
<S> <C> <C> <C>
Partners' capital - March 16, 1996 $18,564,738 $19,108,935 $(544,197)
Net loss, three months ended June 15, 1996 (2,068,942) (2,048,253) (20,689)
----------- ----------- ---------
Partners' capital - June 15, 1996 $16,495,796 $17,060,682 $(564,886)
=========== =========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 15,
-----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows (used in) provided by operating activities:
Net loss $(2,068,942) $(2,046,525)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 2,291,735 2,376,715
Minority interest in loss of subsidiaries (86,011) (103,506)
Increase in accounts receivable-tenants (87,196) (18,737)
Increase in other assets (3,241) (54,968)
Increase in accounts payable and other liabilities 315,124 1,075,039
(Decrease) increase in due to general partners and affiliates (635,579) 139,196
Decrease (increase) in cash held in escrow 247,999 (462,854)
----------- -----------
Net cash (used in) provided by operating activities (26,111) 904,360
----------- -----------
Cash flows used in investing activities:
Increase in deferred costs 0 (17,500)
Decrease (increase) in cash held in escrow 48,767 (366,021)
Acquisition of property and equipment (284,972) (186,327)
----------- -----------
Net cash used in investing activities (236,205) (569,848)
----------- -----------
Cash flows provided by (used in) financing activities:
Increase in deferred costs (195,239) 0
Decrease in due to selling partners (72,560) 0
Proceeds from mortgage notes 4,480,000 0
Repayments of mortgage notes (4,088,083) (522,295)
Increase in due to local general partners and affiliates 269,104 239,814
Decrease in due to local general partners and affiliates (100,522) (12,026)
Decrease in capitalization of consolidated subsidiaries
attributable to minority interest (137,162) (27,146)
----------- -----------
Net cash provided by (used in) financing activities 155,538 (321,653)
----------- -----------
Net (decrease) increase in cash and cash equivalents (106,778) 12,859
Cash and cash equivalents at beginning of period 2,780,280 2,928,833
----------- -----------
Cash and cash equivalents at end of period $ 2,673,502 $ 2,941,692
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 15, 1996
(Unaudited)
NOTE 1 - General
The consolidated financial statements include the accounts of the
Partnership and 31 subsidiary partnerships ("subsidiary partnerships" or Local
Partnerships) in which the Partnership is a limited partner. All intercompany
accounts and transactions with the subsidiary partnerships have been eliminated
in consolidation.
The Partnership's fiscal quarter ends on June 15. All subsidiary
partnerships have fiscal quarters ending March 31. Accounts of the subsidiary
partnerships have been adjusted for intercompany transactions from April 1
through June 15.
In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Asset and for Long-Lived Assets to Be Disposed
Of". Under SFAS No. 121, the Partnership is required to review long-lived assets
and certain identifiable intangibles for impairment whenever events or changes
in circumstances indicate that the book value of an asset may not be
recoverable. An impairment loss should be recognized whenever the review
demonstrates that the book value of a long-lived asset is not recoverable.
Effective March 16, 1996, the Partnership adopted SFAS No. 121, consistent with
the required adoption period.
Property and equipment are carried at the lower of depreciated
cost or estimated amounts recoverable through future operations and ultimate
disposition of the property. Cost includes the purchase price, acquisition fees
and expenses, and any other costs incurred in acquiring the properties. As
required by SFAS 121, a provision for loss on impairment of assets is recorded
when estimated amounts recoverable through future operations and sale of the
property on an undiscounted basis are below depreciated cost. However,
depreciated cost, adjusted for such reductions in value, if any, may be greater
than the fair value. Property investments themselves are reduced to estimated
fair value (generally using discounted cash flows) when the property is
considered to be impaired and the depreciated cost exceeds estimate fair value.
Through June 15, 1996, the Partnership has not recorded and provisions for loss
in impairment of assets or reduction to estimated fair value.
In the opinion of the general partners of the Partnership, the
accompanying unaudited financial statements contain all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the financial
position of the Partnership as of June 15, 1996 and the results of operations
and cash flows for the three months ended June 15, 1996 and 1995. However, the
operating results for the three months ended June 15, 1996 may not be indicative
of the results for the year.
Certain information and note disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principals have been omitted or condensed. These consolidated financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Partnership's Annual Report on Form 10-K for the period
ended March 15, 1996.
Increases (decreases) in the capitalization of consolidated
subsidiary partnerships attributable to minority interest arises from cash
contributions and cash distributions to the minority interest partners.
Losses attributable to minority interests which exceed the
minority interests' investment in subsidiary partnerships have been charged to
the Partnership. Such losses aggregated $67,000 and $51,000 for the three months
ended June 15, 1996 and 1995, respectively. The Partnership's investment in each
subsidiary partnership is equal to the respective subsidiary partnership's
partners' equity less minority interest capital, if any. In consolidation, all
subsidiary partnership losses are included in the Partnership's capital account
except for losses allocated to minority interest capital.
-6-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 15, 1996
(Unaudited)
NOTE 2 - Related Party Transactions
An affiliate of the General Partners has a 1% interest as a
special limited partner, in each of the subsidiary partnerships. An affiliate of
the General Partners also has a minority interest in certain subsidiary
partnerships.
The General Partners and their affiliates perform services for the
Partnership. The costs incurred for the three months ended June 15, 1996 and
1995 are as follows:
Three Months Ended
June 15,
------------------
1996 1995*
------- -------
Partnership management fees (a) $ 50,000 $ 81,500
Expense reimbursement (b) 47,325 72,495
Property management fees (c) 300,249 296,559
Local administrative fee (d) 20,000 16,000
-------- --------
$417,574 $466,554
======== ========
*Reclassified for comparative purposes.
(a) The General Partners are entitled to receive a partnership
management fee, after payment of all Partnership expenses, which together with
the local annual administrative fees will not exceed a maximum of 0.5% per annum
of invested assets (as defined in the Partnership Agreement), for administering
the affairs of the Partnership. The partnership management fee, subject to the
foregoing limitation, will be determined by the general partners in their sole
discretion based upon their review of the Partnership's investments. Partnership
management fees owed to the General Partners amounting to approximately $900,000
and $850,000 were accrued and unpaid as of June 15, 1996 and March 15, 1996,
respectively.
(b) The Partnership reimburses the General Partners and their
affiliates for actual Partnership operating expenses incurred by the General
Partners and their affiliates on the Partnership's behalf. The amount of
reimbursement from the Partnership is limited by the provisions of the
Partnership Agreement. Another affiliate of the General Partners performs asset
monitoring for the Partnership. These services include site visits and
evaluations of the subsidiary partnerships' performance. Expense reimbursements
and asset monitoring fees owed to the Related General Partner amounting to
approximately $219,000 and $172,000 were accrued and unpaid as of June 15, 1996
and March 15, 1996, respectively.
The General Partners have continued advancing and allowing the
accrual without payment of these amounts but are under no obligation to do so.
(c) Property management fees incurred by subsidiary partnerships
amounted to $460,386 and $444,453 for the three months ended June 15, 1996, and
1995, respectively. Of these fees $280,122 and $278,296 were incurred to
affiliates of the subsidiary partnerships' general partners. In addition,
$20,127 and $18,263 were incurred to affiliates of the Partnership.
(d) Liberty Associates III L.P., the special limited partner of
the subsidiary partnerships is entitled to receive a local administrative fee of
up to $2,500 per year from each subsidiary partnership.
-7-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 15, 1996
(Unaudited)
NOTE 3 - Mortgage Notes Payable
In March 1996, 2108 Bolton Drive Associates, L.P. ("2108")
refinanced its mortgage payable of approximately $3,500,000. The new mortgage
note in the amount of $4,480,000 paid off the former mortgage note and
approximately $900,000 of debt due to an affiliate of the Partnership. The
mortgage bears interest at the rate of 8.64% per annum and is payable in monthly
installments of $36,105 which includes principal and interest through March
2006, when the remaining principal balance of approximately $3,700,000 will be
due.
NOTE 4 - Commitments and Contingencies
The following disclosures include changes and/or additions to
disclosures regarding the subsidiary partnerships which were included in the
Partnership's Annual Report on Form 10-K for the period ended March 15, 1996.
2108 Bolton Drive Associates, L.P.
----------------------------------
2108 Bolton Drive Associates, L.P. ("2108"), has experienced
recurring operating losses and had a working capital deficit at December 31,
1995. The auditors for this subsidiary partnership modified their report on the
1995 and 1994 Fiscal Year financial statements due to the uncertainty of the
subsidiary partnership's ability to continue as a going concern. In March 1996,
2108 refinanced its mortgage payable of approximately $3,500,000 (see Note 3
above). The Partnership's investment in 2108 at June 15, 1996 and March 15, 1996
was approximately $1,961,000 and $2,204,000, respectively and the minority
interest balance was approximately $1,692,000 and $1,695,000. 2108's net loss
after minority interest amounted to approximately $242,000 and $188,000 for the
three months ended June 15, 1996 and 1995, respectively.
Regent Street Associates, L.P.
-------------------------------
Regent Street Associates, L.P. ("Regent Street") has received
from the Internal Revenue Service a notice of final partnership administrative
adjustment. Pursuant to the notice the Internal Revenue Service has challenged
the method in which the subsidiary partnership has allocated the below-market
federal financing to its properties, which challenge, if successful, would
result in the subsidiary partnership only being able to claim a 4% Low Income
Housing Tax Credit rather than a 9% Low Income Housing Tax Credit. The Internal
Revenue Service has also challenged the inclusion of a portion of the
developer's fee and legal costs in qualified expenditures for the purpose of
determining Low Income Housing and Historic Rehabilitation Tax Credits and
depreciable basis. The general partners of the Regent Street subsidiary
partnership have filed a petition for readjustment challenging each of the
positions taken by the Internal Revenue Service. The Partnership's investment in
Regent Street at June 15, 1996 and March 15, 1996 was approximately $1,099,000
and $1,153,000, respectively, and the minority interest balance was zero at each
date. Regent Street's net loss after minority interest amounted to approximately
$53,000 and $80,000 for the three months ended June 15, 1996 and 1995,
respectively.
-8-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
- - -------------------------------
The Partnership's capital has been invested in 31 Local
Partnerships.
The Partnership's primary sources of funds are the cash
distributions from operations of the Local Partnerships in which the Partnership
has invested. These sources are available to meet obligations of the
Partnership. However, the cash distributions received from the Local
Partnerships to date have not been sufficient to meet all such obligations of
the Partnership. During the three months ended June 15, 1996 and 1995 such
distributions amounted to approximately $32,000 and $80,000 respectively.
Accordingly, the Related General Partner advanced funds totaling approximately
$118,000 and $59,000 at June 15, 1996 and March 15, 1996 respectively, to meet
the Partnership's third party obligations. In addition, certain fees and expense
reimbursements owed to the General Partners amounting to approximately
$1,119,000 and $1,022,000 were accrued and unpaid as of June 15, 1996 and March
15, 1996, respectively. Without the General Partner's advances and continued
accrual without payment of certain fees and expense reimbursements, the
Partnership will not be in a position to meet its obligations, The General
Partners have continued advancing and allowing the accrual without payment of
these amounts but are under no obligation to do so.
For the three months ended June 15, 1996, cash and cash
equivalents of the Partnership and its 31 consolidated subsidiary partnerships
decreased approximately $107,000. This decrease is primarily attributable to
cash used in operating activities ($26,000), acquisition of property and
equipment ($285,000), an increase in deferred costs ($195,000) and a decrease in
capitalization of consolidated subsidiaries attributable to minority interest
($137,000) which exceeded net proceeds from mortgage notes ($392,000) and a net
increase in due to local general partners and affiliates ($169,000). Included in
the adjustments to reconcile the net loss to cash used in the operating
activities is depreciation and amortization in the amount of approximately
$2,292,000.
For a discussion of contingencies affecting certain Local
Partnerships, see Note 4 to the financial statements. Since the maximum loss the
Partnership would be liable for is its net investment in the respective Local
Partnerships, the resolution of the existing contingencies is not anticipated to
impact future results of operations, liquidity or financial condition in a
material way.
Except as described above, management is not aware of any trends
or events, commitments or uncertainties that will impact liquidity in a material
way. Management believes the only impact would be from laws that have not yet
been adopted. The portfolio is diversified by the location of the properties
around the United States so that if one area of the country is experiencing
downturns in the economy, the remaining properties in the portfolio may be
experiencing upswings. However, the geographic diversifications of the portfolio
may not protect against a general downturn in the national economy. The
Partnership has fully invested the proceeds of its offerings in 31 Local
Partnerships, all of which fully have their tax credits in place. The tax
credits are attached to the project for a period of ten years and are
transferable with the property during the remainder of the ten year period. If
trends in the real estate market warranted the sale of a property, the remaining
tax credits would transfer to the new owner, thereby adding significant value to
the property on the market, which are not included in the financial statement
carrying amount.
Results of Operations
- - ---------------------
In March 1995, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Asset and for Long-Lived Assets to
Be Disposed Of". Under SFAS No. 121, the Partnership is required to review
long-lived assets and certain identifiable intangibles for impairment whenever
events or changes in circumstances indicate that the book value of
-9-
<PAGE>
an asset may not be recoverable. An impairment loss should be recognized
whenever the review demonstrates that the book value of a long-lived asset is
not recoverable. Effective March 16, 1996, the Partnership adopted SFAS No. 121,
consistent with the required adoption period.
Property and equipment are carried at the lower of depreciated
cost or estimated amounts recoverable through future operations and ultimate
disposition of the property. Cost includes the purchase price, acquisition fees
and expenses, and any other costs incurred in acquiring the properties. A
provision for loss on impairment of assets is recorded when estimated amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. However, depreciated cost,
adjusted for such reductions in value, if any, may be greater than the fair
value. Property investments themselves are reduced to estimated fair value
(generally using discounted cash flows) when the property is considered to be
impaired and the depreciated cost exceeds estimated fair value. Through June 15,
1996, the Partnership has not recorded any provisions for loss on impairment of
assets or reduction to estimated fair value.
Results of operations for the three months ended June 15, 1996 and
1995 consisted primarily of the results of the Partnership's investment in the
consolidated Local Partnerships.
Rental income increased less than 1% for the three months ended
June 15, 1996 as compared to the corresponding period in 1995 primarily due to
annual rental rate increases.
Other income decreased approximately $184,000 for the three months
ended June 15, 1996 as compared to the corresponding period in 1995 primarily
due to one Local Partnership being awarded a one time special grant for property
improvements in 1995.
Total expenses excluding general and administrative-related
parties remained fairly consistent with a decrease of approximately 2% for the
three months ended June 15, 1996 as compared to 1995.
General and administrative expenses-related parties decreased
approximately $49,000 for the three months ended June 15, 1996 as compared to
the corresponding period in 1995 primarily due to decreases in partnership
management fees and expense reimbursements.
-10-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The litigation described in Note 4 to the financial statements
contained in Part 1, Item I is incorporated herein by reference.
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K - None
(a) Exhibits:
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
LIBERTY TAX CREDIT PLUS L.P.
----------------------------
(Registrant)
By: RELATED CREDIT PROPERTIES L.P.,
a General Partner
By: RELATED CREDIT PROPERTIES INC.,
a General Partner
Date: July 29, 1996 By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Vice President
Date: July 29, 1996 By: /s/ Lawrence J. Lipton
----------------------
Lawrence J. Lipton,
Treasurer (principal financial and
accounting officer) of Related Credit
Properties, Inc.
and
By: LIBERTY G.P. INC.,
a General Partner
Date: July 29, 1996 By: /s/ Paul L. Abbott
------------------
Paul L. Abbott,
Chairman of the Board, President,
Chief Operating Officer and Director
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The Schedule contains summary
financial information extracted
from the financial statements
for Liberty Tax Credit Plus L.P.
and is qualified in its entirety
by reference to such financial
statements
</LEGEND>
<CIK> 0000818020
<NAME> Liberty Tax Credit Plus L.P
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-15-1997
<PERIOD-START> MAR-16-1996
<PERIOD-END> JUN-15-1996
<CASH> 11,870,688
<SECURITIES> 0
<RECEIVABLES> 614,709
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,519,057
<PP&E> 253,887,414
<DEPRECIATION> 65,678,281
<TOTAL-ASSETS> 206,213,587
<CURRENT-LIABILITIES> 23,102,401
<BONDS> 159,704,751
0
0
<COMMON> 0
<OTHER-SE> 23,406,435
<TOTAL-LIABILITY-AND-EQUITY> 206,213,587
<SALES> 0
<TOTAL-REVENUES> 8,636,341
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,446,294
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,345,000
<INCOME-PRETAX> (2,154,953)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,154,953)
<EPS-PRIMARY> (128.12)
<EPS-DILUTED> 0
</TABLE>
