UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
- - ----- OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 15, 1998
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-17015
LIBERTY TAX CREDIT PLUS L.P.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3446500
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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,
1998 1998
----------- -------------
<S> <C> <C>
ASSETS
Property and equipment, at cost,
net of accumulated depreciation
of $83,096,011 and $80,873,882,
respectively $173,280,542 $175,421,110
Cash and cash equivalents 4,658,748 2,852,210
Cash held in escrow 10,341,852 10,072,081
Accounts receivable - tenants 572,881 602,311
Deferred costs - net of accumulated
amortization of $3,929,153
and $3,939,244, respectively 3,579,416 3,551,003
Other assets 1,382,914 1,187,963
------------ ------------
Total assets $193,816,353 $193,686,678
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $159,830,878 $155,846,595
Accounts payable and other
liabilities 9,122,589 8,530,428
Due to local general partners and
affiliates 14,440,187 14,186,745
Due to general partners and
affiliates 4,367,873 4,236,430
Due to selling partners 943,617 987,711
------------ ------------
Total liabilities 188,705,144 183,787,909
------------ ------------
Minority interest 3,862,269 6,127,247
------------ ------------
Commitments and contingencies (Note 4)
Partners' capital:
Limited partners (15,987.5 BACs
issued and outstanding) 1,966,295 4,463,651
General partners (717,355) (692,129)
------------ -------------
Total partners' capital 1,248,940 3,771,522
------------ ------------
Total liabilities and partners'
capital $193,816,353 $193,686,678
============ ============
</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,
-------------------------
1998 1997
-------------------------
<S> <C> <C>
Revenues
Rental income $ 8,446,189 $ 8,348,040
Other 260,773 279,544
----------- -----------
8,706,962 8,627,584
----------- -----------
Expenses
General and administrative 1,483,738 1,449,958
General and administrative-
related parties (Note 2) 613,132 657,165
Repairs and maintenance 1,267,161 1,402,811
Operating and other 1,283,003 1,233,813
Taxes 360,026 367,455
Insurance 309,956 336,683
Financial 3,714,973 3,203,371
Depreciation and amortization 2,293,202 2,213,327
----------- -----------
Total expenses 11,325,191 10,864,583
----------- -----------
Minority interest in loss of
subsidiaries 95,647 93,425
----------- -----------
Net loss $(2,522,582) $(2,143,574)
========== ==========
Net loss-limited partners $(2,497,356) $(2,122,138)
----------- -----------
Number of BACs outstanding 15,987.5 15,987.5
============ ===========
Net loss per BAC $ (156.21) $ (132.74)
============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-3-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Capital
(Deficit)
(Unaudited)
<TABLE>
<CAPTION>
========================================
Limited General
Total Partners Partners
-----------------------------------------
<S> <C> <C> <C>
Partners' capital
(deficit) -
March 16, 1998 $ 3,771,522 $ 4,463,651 $(692,129)
Net loss, three
months ended
June 15, 1998 (2,522,582) (2,497,356) (25,226)
----------- ----------- ---------
Partners' capital
(deficit) -
June 15, 1998 $ 1,248,940 $ 1,966,295 $(717,355)
=========== =========== =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-4-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
==========================
Three Months Ended
June 15,
--------------------------
1998 1997
--------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,522,582) $(2,143,574)
Adjustments to reconcile net loss
to net cash provided
by operating activities:
Depreciation and amortization 2,293,202 2,213,327
Minority interest in loss of
subsidiaries (95,647) (93,425)
Decrease (increase) in accounts
receivable-tenants 29,430 (111,368)
Increase in other assets (194,951) (120,467)
Increase in accounts payable and
other liabilities 592,161 289,744
Increase in due to general partners
and affiliates 131,443 331,755
Decrease in cash held in escrow 298,231 220,115
----------- -----------
Net cash provided by
operating activities 531,287 586,107
----------- -----------
Cash flows from investing activities:
Increase in cash held in escrow (568,002) (454,362)
Improvements to property and
equipment (81,561) (223,736)
----------- -----------
Net cash used in investing activities (649,563) (678,098)
----------- -----------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-5-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (decrease) in Cash and Cash Equivalents
(continued)
(Unaudited)
<TABLE>
<CAPTION>
==========================
Three Months Ended
June 15,
--------------------------
1998 1997
--------------------------
<S> <C> <C>
Cash flows from financing activities:
Increase in deferred costs (99,486) 0
Decrease in due to selling partners (44,094) (57,528)
Proceeds from mortgage notes 10,600,000 0
Repayments of mortgage notes (6,615,717) (571,694)
Increase in due to local general
partners and affiliates 291,453 251,259
Decrease in due to local general
partners and affiliates (38,011) (6,696)
Decrease in capitalization of
consolidated subsidiaries
attributable to minority interest (2,169,331) (53,835)
----------- ---------
Net cash provided by (used in)
financing activities 1,924,814 (438,494)
----------- ---------
Net increase (decrease) in cash and
cash equivalents 1,806,538 (530,485)
Cash and cash equivalents at
beginning of period 2,852,210 2,918,344
------------ ----------
Cash and cash equivalents at
end of period $ 4,658,748 $2,387,859
============ ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-6-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 15, 1998
(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. Through the rights of the
Partnership and/or a General Partner, which General Partner has a contractual
obligation to act on behalf of the Partnership, to remove the local general
partner of the subsidiary partnerships and to approve certain major operating
and financial decisions, the Partnership has a controlling financial interest in
the subsidiary partnerships. All intercompany accounts and transactions with the
subsidiary partnerships have been eliminated in consolidation.
For financial reporting purposes 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. The Partnership's quarter ends on June 15, in
order to allow adequate time for the subsidiary partnerships financial
statements to be prepared and consolidated. The books and records of the
Partnership are maintained on the accrual basis of accounting, in accordance
with generally accepted accounting principles ("GAAP").
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, 1998 and the results of operations and cash
flows for the three months ended June 15, 1998 and 1997. However, the operating
results for the three months ended June 15, 1998 may not be indicative of the
results for the year.
Certain information and note disclosures 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 conjunc-
-7-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 15, 1998
(Unaudited)
tion with the financial statements and notes thereto included in the
Partnership's Annual Report on Form 10-K for the period ended March 15, 1998.
Increases (decreases) in the capitalization of consolidated subsidiary
partnerships attributable to minority interest arise from cash contributions
from and cash distributions to the minority interest partners.
The Partnership's investment in each subsidiary partnership is equal to the
respective subsidiary partnership's partners' equity less minority interest
capital, if any. Losses attributable to minority interests which exceed the
minority interests' investment in subsidiary partnerships have been charged to
the Partnership. Such losses aggregated $56,000 and $51,000, for the three
months ended June 15, 1998 and 1997, respectively. In consolidation, all
subsidiary partnership losses are included in the Partnership's capital account
except for losses allocated to minority interest capital.
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.
-8-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 15, 1998
(Unaudited)
The costs incurred to related parties for the three months ended June 15, 1998
and 1997 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
June 15,
----------------------
1998 1997
----------------------
<S> <C> <C>
Partnership management fees (a) $284,500 $284,500
Expense reimbursement (b) 22,000 45,713
Property management fees (c) 287,632 307,952
Local administrative fee (d) 19,000 19,000
-------- --------
$613,132 $657,165
======== ========
</TABLE>
(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 $3,410,000 and
$3,126,000 were accrued and unpaid as of June 15, 1998 and March 15, 1998,
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 Related Credit Properties L.P. amounting to approximately $426,000 and
$404,000 were accrued and unpaid as of June 15, 1998 and March 15, 1998,
respectively.
-9-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 15, 1998
(Unaudited)
The General Partners have continued advancing and allowing the accrual without
payment of the amounts set forth in (a) and (b) but are under no obligation to
do so.
(c) Property management fees incurred by subsidiary partnerships amounted to
$431,338 and $454,972 for the three months ended June 15, 1998 and 1997,
respectively. Of these fees $264,826 and $286,800 were incurred to affiliates of
the subsidiary partnerships' general partners. In addition, $22,806 and $21,152
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.
Note 3 - Mortgage Notes Payable
In April 1998, Bayridge Associates, L.P. ("Bayridge") refinanced its mortgage
note payable of approximately $6,150,000. The new mortgage note in the amount of
$10,600,000 paid off the former mortgage note and paid a distribution from
refinancing proceeds of approximately $1,800,000 to the Partnership. This new
mortgage bears interest at the rate of 6.96% per annum and is payable in monthly
installments of $70,238 which includes principal and interest. Any remaining
principal and interest shall be due and payable May 1, 2008.
Note 4 - Commitments and Contingencies
There have not been any material changes and/or additions to the disclosures
regarding the subsidiary partnerships which were included in the Partnership's
Annual Report on Form 10-K for the period ended March 15, 1998.
-10-
<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. During the
three months ended June 15, 1998 and 1997 such distributions amounted to
approximately $1,883,000 and $14,000, respectively. To date, the Related General
Partner and its affiliates have advanced funds totaling approximately $42,000
and $119,000 at June 15, 1998 and March 15, 1998 respectively, to meet the
Partnership's third party obligations. In addition, certain fees and expense
reimbursements owed to the General Partners amounting to approximately
$3,860,000 and $3,553,000 were accrued and unpaid as of June 15, 1998 and March
15, 1998, respectively. Without the General Partners' 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. The Partnership will use a
portion of the refinancing proceeds received from the Bayridge Associates, L.P.
mortgage refinancing (see Note 3) to pay down some of the outstanding amounts
owed to the General Partners. The General Partners believe the remaining
proceeds will be adequate for the Partnership's current operating needs and plan
to invest the reserves in short-term investments.
For the three months ended June 15, 1998, cash and cash equivalents of the
Partnership and its 31 subsidiary partnerships increased approximately
$1,807,000. This increase was primarily due to cash provided by operating
activities of approximately ($531,000), a net increase in due to Local General
Partners and affiliates of approximately ($253,000), and net proceeds from
mortgage notes of approximately ($3,984,000), which exceeded an increase in cash
held in escrow for investing activities of approximately ($568,000),
improvements to property and equipment ($82,000), an increase in deferred costs
of approximately ($99,000) and a decrease in capitalization of consolidated
subsidiaries attributable to minority interest of approximately ($2,169,000).
Included in the adjustments to reconcile the net loss to cash pro-
-11-
<PAGE>
vided by operating activities is depreciation and amortization of approximately
$2,293,000.
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.
However, the Partnership's loss of its investment in a Local Partnership will
eliminate the ability to generate future tax credits from such Local Partnership
and may also result in recapture of tax credits if the investment is lost before
the expiration of the compliance period.
Management is not aware of any other 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 such ten year period. If
the General Partners determined that a sale of a property is warranted, 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. The tax credits relating to 12 of the 31
Local Partnerships have expired at the end of the 1997 tax year. The remaining
Local Partnership's Tax Credits will expire over the next three years.
Results of Operations
Results of operations for the three months ended June 15, 1998 and 1997
consisted primarily of the results of the Partnership's investment in the
consolidated Local Partnerships.
-12-
<PAGE>
Rental income increased approximately 1% for the three months ended June 15,
1998 as compared to the corresponding period in 1997 primarily due to rental
rate increases.
Total expenses excluding repairs and maintenance and financial expense remained
fairly consistent with an increase of approximately 1% as compared to 1997.
Repairs and maintenance decreased approximately $136,000 for the three months
ended June 15, 1998 as compared to the corresponding period in 1997 primarily
due to emergency sewer repairs at Grove Park Associates ("Woodlawn") which were
completed in 1997.
Financial expense increased approximately $512,000 for the three months ended
June 15, 1998 as compared to the corresponding period in 1997 primarily due to a
prepayment penalty from the Bayridge Associates, L.P. mortgage note refinancing.
(See Note 3).
Year 2000 Compliance
- - --------------------
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The General Partners are in the process of working with the
Partnership's service providers to prepare for the year 2000. Based on
information currently available, the Partnership does not expect that it will
incur significant operating expenses or be required to incur material costs to
be year 2000 compliant.
-13-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
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
(a) Exhibits:
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K - None.
-14-
<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.
LIBERTY TAX CREDIT PLUS L.P.
----------------------------
(Registrant)
By: RELATED CREDIT PROPERTIES L.P.,
a General Partner
By: Related Credit Properties Inc.,
its General Partner
Date: July 27, 1998
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
Vice President
(Principal Financial Officer)
Date: July 27, 1998
By: /s/ Glenn F. Hopps
------------------
Glenn F. Hopps,
Treasurer
(Principal Accounting Officer)
By: LIBERTY ASSOCIATES III, L.P.,
a General Partner
By: Related Credit Properties L.P.,
its General Partner
By: Related Credit Properties Inc.,
its General Partner
Date: July 27, 1998
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
Vice President
(Principal Financial Officer)
Date: July 27, 1998
By: /s/ Glenn F. Hopps
------------------
Glenn F. Hopps,
Treasurer
(Principal Accounting Officer)
<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-15-1999
<PERIOD-START> MAR-16-1998
<PERIOD-END> JUN-15-1998
<CASH> 15,000,600
<SECURITIES> 0
<RECEIVABLES> 572,881
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,382,914
<PP&E> 256,916,553
<DEPRECIATION> 83,096,110
<TOTAL-ASSETS> 193,816,353
<CURRENT-LIABILITIES> 28,906,265
<BONDS> 159,830,878
0
0
<COMMON> 0
<OTHER-SE> 5,111,209
<TOTAL-LIABILITY-AND-EQUITY> 193,816,353
<SALES> 0
<TOTAL-REVENUES> 8,706,962
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,610,218
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,714,973
<INCOME-PRETAX> (2,618,229)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,618,229)
<EPS-PRIMARY> (156.21)
<EPS-DILUTED> 0
</TABLE>
