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 September 15, 1999
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 Securi-
ties 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>
<TABLE>
PART I - Financial Information
Item 1. Financial Statements
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<CAPTION>
September 15, March 15,
1999 1999
<S> <C> <C>
ASSETS
Property and equipment, at cost,
net of accumulated depreciation
of $94,705,230 and $90,282,855,
respectively $163,108,968 $167,048,236
Cash and cash equivalents 3,664,240 3,824,051
Cash held in escrow 11,236,190 10,347,465
Accounts receivable - tenants 659,620 797,885
Deferred costs - net of accumulated
amortization of $4,229,569
and $4,100,618, respectively 3,253,650 3,382,601
Other assets 1,292,694 1,233,370
Total assets $183,215,362 $186,633,608
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable $156,888,407 $158,224,324
Accounts payable and other
liabilities 9,996,438 8,922,248
Due to local general partners and
affiliates 15,125,592 14,835,837
Due to general partners and
affiliates 5,140,217 4,567,075
Due to selling partners 981,509 1,009,374
Total liabilities 188,132,163 187,558,858
Minority interest 3,234,555 3,561,993
Commitments and contingencies
(Note 3)
Partners' (deficit):
Limited partners (15,987.5 BACs
issued and outstanding) (7,339,998) (3,712,526)
General partners (811,358) (774,717)
Total partners' (deficit) (8,151,356) (4,487,243)
Total liabilities and partners'
(deficit) $183,215,362 $186,633,608
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
September 15, September 15,
1999 1998* 1999 1998*
<S> <C> <C> <C> <C>
Revenues
Rental income $ 8,717,274 $ 8,572,471 $17,195,143 $17,018,660
Other 279,525 275,870 530,099 536,643
8,996,799 8,848,341 17,725,242 17,555,303
Expenses
General and
administrative 1,341,929 1,231,077 2,909,325 2,691,369
General and
administrative-
related parties
(Note 2) 675,855 684,287 1,344,398 1,307,745
Repairs and
maintenance 1,560,410 1,416,483 2,921,792 2,696,764
Operating and
other 877,122 975,408 2,058,893 2,258,411
Taxes 469,927 460,082 838,125 820,108
Insurance 323,303 347,035 647,022 656,991
Financial 3,179,930 3,138,943 6,322,385 6,853,916
Depreciation and
amortization 2,278,196 2,242,102 4,551,326 4,535,304
Total expenses 10,706,672 10,495,417 21,593,266 21,820,608
Loss before
minority
interest (1,709,873) (1,647,076) (3,868,024) (4,265,305)
Minority interest
in loss of
subsidiaries 91,971 67,238 203,911 162,885
Net loss $(1,617,902) $(1,579,838) $(3,664,113) $(4,102,420)
Net loss-limited
partners $(1,601,723) $(1,564,040) $(3,627,472) $(4,061,396)
Number of BACs
outstanding 15,987.5 15,987.5 15,987.5 15,987.5
Net loss per BAC $(100.18) $(97.83) $(226.89) $(254.04)
*Reclassified for comparative purposes.
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' (Deficit)
(Unaudited)
<CAPTION>
Limited General
Total Partners Partners
<S> <C> <C> <C>
Partners'
(deficit) -
March 16, 1999 $(4,487,243) $(3,712,526) $(774,717)
Net loss (3,664,113) (3,627,472) (36,641)
Partners'
(deficit) -
September 15,
1999 $(8,151,356) $(7,339,998) $(811,358)
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (decrease) in Cash and Cash Equivalents
(Unaudited)
<CAPTION>
Six Months Ended
September 15,
1999 1998
<S> <C> <C>
Cash flows from
operating activities:
Net loss $(3,664,113) $(4,102,420)
Adjustments to reconcile net loss
to net cash provided
by operating activities:
Depreciation and amortization 4,551,326 4,535,304
Minority interest in loss of
subsidiaries (203,911) (162,885)
Decrease in accounts
receivable-tenants 138,265 36,787
(Increase) decrease in other assets (59,324) 8,442
Increase in accounts payable and
other liabilities 1,074,190 809,749
Increase in due to general partners
and affiliates 573,142 214,584
Increase in cash held
in escrow (748,512) (380,945)
Net cash provided by
operating activities 1,661,063 958,616
Cash flows from investing activities:
Increase in cash held in escrow (140,213) (904,140)
Improvements to property and
equipment (483,107) (423,831)
Net cash used in investing activities (623,320) (1,327,971)
Cash flows from financing activities:
Increase in deferred costs 0 (107,364)
Decrease in due to selling partners (27,865) (44,094)
Proceeds from mortgage notes 0 10,600,000
Repayments of mortgage notes (1,335,917) (6,978,682)
Increase in due to local general
partners and affiliates 472,553 542,298
Decrease in due to local general
partners and affiliates (182,798) (240,306)
Decrease in capitalization of
consolidated subsidiaries
attributable to minority interest (123,527) (2,195,683)
Net cash (used in) provided by
financing activities (1,197,554) 1,576,169
Net (decrease) increase in cash and cash
equivalents (159,811) 1,206,814
Cash and cash equivalents at
beginning of period 3,824,051 2,852,210
Cash and cash equivalents at
end of period $3,664,240 $4,059,024
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 15, 1999
(Unaudited)
Note 1 - General
The consolidated financial statements include the accounts of
Liberty Tax Credit Plus L.P. (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 of the Partnership ("Gen-
eral 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 ma-
jor operating and financial decisions, the Partnership has a con-
trolling financial interest in the subsidiary partnerships. All inter-
company accounts and transactions with the subsidiary partner-
ships have been eliminated in consolidation.
For financial reporting purposes the Partnership's fiscal quarter
ends on September 15. All subsidiary partnerships have fiscal
quarters ending June 30. Accounts of the subsidiary partnerships
have been adjusted for intercompany transactions from July 1
through September 15. The Partnership's quarter ends on Sep-
tember 15, in order to allow adequate time for the subsidiary part-
nerships 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, the accompanying unau-
dited financial statements contain all adjustments (consisting only
of normal recurring adjustments) necessary to present fairly the
financial position of the Partnership as of September 15, 1999, the
results of operations for the three and six months ended Septem-
ber 15, 1999 and 1998 and cash flows for the six months ended
September 15, 1999 and 1998. However, the operating results for
the six months ended September 15, 1999 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 ac-
cepted accounting principals have been omitted or condensed.
These consolidated financial statements should be read in conjunc-
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, 1999.
Increases (decreases) in the capitalization of consolidated subsidi-
ary 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 minor-
ity interests which exceed the minority interests' investment in
subsidiary partnerships have been charged to the Partnership.
Such losses aggregated $49,000 and $48,000 and $113,000 and
$104,000 for the three and six months ended September 15, 1999
and 1998, respectively. In consolidation, all subsidiary partner-
ship 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 sub-
sidiary partnerships.
<TABLE>
The costs incurred to related parties for the three and six months
ended September 15, 1999 and 1998 were as follows:
<CAPTION>
Three Months Ended Six Months Ended
September 15, September 15,
1999 1998* 1999 1998*
<S> <C> <C> <C> <C>
Partnership manage-
ment fees (a) $ 284,500 $ 284,500 $ 569,000 $ 569,000
Expense reimburse-
ment (b) 37,860 53,764 71,656 75,764
Property manage-
ment fees incurred
to affiliates of
the General
Partners (c) 24,114 22,807 48,227 45,613
Local administra-
tive fee (d) 18,500 19,000 37,000 38,000
Total general and
administrative-
General Partners 364,974 380,071 725,883 728,377
Property manage-
ment fees
incurred to
affiliates of the
subsidiary
partnerships'
general
partners (c) 310,881 304,216 618,515 579,368
Total general and
administrative-
related parties $ 675,855 $ 684,287 $1,344,398 $1,307,745
</TABLE>
*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 fore-
going 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 $4,583,000 and $4,014,000
were accrued and unpaid as of September 15, 1999 and March 15,
1999, 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 Partner-
ship. These services include site visits and evaluations of the sub-
sidiary partnerships' performance. Expense reimbursements and
asset monitoring fees owed to Related Credit Properties L.P.
amounting to approximately $43,000 and $75,000 were accrued
and unpaid as of September 15, 1999 and March 15, 1999, respec-
tively.
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 $477,785 and $472,680 and $951,683 and $904,018 for
the three and six months ended September 15, 1999 and 1998,
respectively. Of these fees $310,881 and $304,216 and $618,515
and $579,368 were incurred to affiliates of the subsidiary partner-
ships' general partners. In addition, $24,114 and $22,807 and
$48,227 and $45,613 were incurred to affiliates of the General
Partners.
(d) Liberty Associates III L.P., the special limited partner of the
subsidiary partnerships, is entitled to receive a local administra-
tive fee of up to $2,500 per year from each subsidiary partnership.
Note 3 - 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
fiscal year ended March 15, 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Con-
dition and Results of Operations
Liquidity and Capital Resources
The Partnership's capital has been invested in 31 Local Partner-
ships.
The Partnership's primary sources of funds are the cash distribu-
tions from operations of the Local Partnerships in which the Part-
nership has invested. These sources are available to meet obliga-
tions of the Partnership. During the six months ended September
15, 1999 and 1998 such distributions amounted to approximately
$86,000 and $2,006,000, respectively. In addition, certain fees and
expense reimbursements owed to the General Partners amounting
to approximately $4,626,000 and $4,089,000 were accrued and
unpaid as of September 15, 1999 and March 15, 1999, respectively.
Without the General Partners' 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 allowing the accrual without payment of these
amounts but are under no obligation to continue to do so.
For the six months ended September 15, 1999, cash and cash
equivalents of the Partnership and its 31 subsidiary partnerships
decreased approximately $160,000. This decrease is attributable to
an increase in property and equipment ($483,000), an increase in
cash held in escrow for investing activities ($140,000), repayments
of mortgage notes ($1,336,000), a decrease in due to selling part-
ners ($28,000) and a decrease in capitalization of consolidated
subsidiaries attributable to minority interest ($124,000) which
exceeded cash provided by operating activities ($1,661,000) and a
net increase in due to local general partners and affiliates
($290,000). Included in adjustments to reconcile the net loss to
cash provided by operating activities is depreciation and amorti-
zation of approximately $4,551,000.
For a discussion of contingencies affecting certain Local Partner-
ships, see Note 3 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 con-
tingencies 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 trends or events, commitments
or uncertainties which have not otherwise been disclosed that will,
or are likely to 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 coun-
try is experiencing downturns in the economy, the remaining
properties in the portfolio may be experiencing upswings. How-
ever, the geographic diversifications of the portfolio may not pro-
tect against a general downturn in the national economy.
All 31 Local Partnerships fully have or had 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 Local Partnership's tax credits
will expire over the next two years.
Results of Operations
Results of operations for the three and six months ended Septem-
ber 15, 1999 and 1998 consisted primarily of the results of the
Partnership's investment in the consolidated Local Partnerships.
Rental income increased approximately 2% and 1% for the three
and six months ended September 15, 1999 as compared to the
corresponding periods in 1998 primarily due to rental rate in-
creases.
Total expenses excluding repairs and maintenance and operating
remained fairly consistent with an increase of approximately 2%
and a decrease of approximately 1% for the three and six months
ended September 15, 1999 as compared to the corresponding peri-
ods in 1998.
Repairs and maintenance increased approximately $144,000 for
the three months ended September 15, 1999 as compared to the
corresponding period in 1998 primarily due to an increase due to a
change in the security agency at one Local Partnership.
Operating expenses decreased approximately $98,000 for the three
months ended September 15, 1999 as compared to the corre-
sponding period in 1998 primarily due to a decrease in utilities at
one Local Partnership.
Year 2000 Compliance
The Partnership utilizes the computer services of affiliates of the
General Partners. The affiliates of the General Partners have up-
graded their computer information systems to be year 2000 com-
pliant. The most likely worst case scenario that the General Part-
ners face is that computer operations will be suspended for a few
days to a week commencing on January 1, 2000. The Partnership's
contingency plan is to have (i) a complete backup done on De-
cember 31, 1999 and (ii) both electronic and printed reports gener-
ated for all critical data up to and including December 31, 1999.
In regard to third parties, the General Partners are in the process
of evaluating the potential adverse impact that could result from
the failure of material service providers to be year 2000 compliant.
A detailed survey and assessment was sent to material third par-
ties in the fourth quarter of 1998. The Partnership has received
assurances from a majority of the material service providers with
which it interacts that they have addressed the year 2000 issues
and is evaluating these assurances for their adequacy and accu-
racy. In cases where the Partnership has not received assurances
from third parties, it is initiating further mail and/or phone corre-
spondence. The Partnership relies heavily on third parties and is
vulnerable to the failures of third parties to address their year 2000
issues. There can be no assurance given that the third parties will
adequately address their year 2000 issues.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
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
<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: October 18, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President
(Principal Financial Officer)
Date: October 18, 1999
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: October 18, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President
(Principal Financial Officer)
Date: October 18, 1999
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> 6-MOS
<FISCAL-YEAR-END> MAR-15-2000
<PERIOD-START> MAR-16-1999
<PERIOD-END> SEP-15-1999
<CASH> 14,900,430
<SECURITIES> 0
<RECEIVABLES> 659,620
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,292,694
<PP&E> 257,814,198
<DEPRECIATION> 94,705,230
<TOTAL-ASSETS> 183,215,362
<CURRENT-LIABILITIES> 30,262,247
<BONDS> 157,869,916
0
0
<COMMON> 0
<OTHER-SE> (4,916,801)
<TOTAL-LIABILITY-AND-EQUITY> 183,215,362
<SALES> 0
<TOTAL-REVENUES> 17,725,242
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 15,270,881
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,322,385
<INCOME-PRETAX> 0
<INCOME-TAX> (3,868,024)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,868,024)
<EPS-BASIC> (226.89)
<EPS-DILUTED> 0
</TABLE>
