<PAGE>
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, 2000
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>
============ ============
September 15, March 15,
2000 2000
------------ ------------
<S> <C> <C>
ASSETS
Property and equipment, at cost,
net of accumulated depreciation
of $104,314,413 and $99,818,713
respectively $154,537,403 $158,760,665
Cash and cash equivalents 4,884,404 5,940,310
Cash held in escrow 12,295,117 10,986,005
Accounts receivable - tenants 779,263 790,793
Deferred costs - net of accumulated
amortization of $3,128,474
and $2,998,109, respectively 3,532,298 3,182,228
Other assets 1,317,619 1,051,471
------------ ------------
Total assets $177,346,104 $180,711,472
============ ============
</TABLE>
-2-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(continued)
<TABLE>
<CAPTION>
============ ============
September 15, March 15,
2000 2000
------------ ------------
<S> <C> <C>
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable $157,743,263 $158,415,982
Accounts payable and other
liabilities 12,060,641 10,762,116
Due to local general partners and
affiliates 16,279,618 15,510,722
Due to general partners and
affiliates 5,367,139 5,092,462
Due to selling partners 1,058,257 1,058,257
------------ ------------
Total liabilities 192,508,918 190,839,539
------------ ------------
Minority interest 2,689,535 2,947,532
------------ ------------
Commitments and contingencies
(Note 4)
Partners' deficit:
Limited partners (15,987.5 BACs
issued and outstanding) (16,943,981) (12,214,998)
General partners (908,368) (860,601)
------------ ------------
Total partners' deficit (17,852,349) (13,075,599)
------------ ------------
Total liabilities and partners'
deficit $177,346,104 $180,711,472
============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-3-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
============================ ===========================
Three Months Ended Six Months Ended
September 15, September 15,
---------------------------- ---------------------------
2000 1999* 2000 1999
---------------------------- ---------------------------
<S> <C> <C> <C> <C>
Revenues
Rental income $ 8,863,576 $ 8,717,274 $17,693,992 $17,195,143
Other 268,012 279,525 565,950 530,099
----------- ----------- ----------- -----------
9,131,588 8,996,799 18,259,942 17,725,242
----------- ----------- ----------- -----------
Expenses
General and
administrative 1,622,951 1,381,810 3,247,350 2,909,325
General and
administrative-
related parties
(Note 2) 669,904 675,855 1,336,781 1,344,398
Repairs and
maintenance 1,793,523 1,520,529 3,459,873 2,921,792
Operating and other 1,016,509 877,122 2,282,814 2,058,893
Taxes 508,207 469,927 880,397 838,125
Insurance 312,869 323,303 664,730 647,022
Financial 3,226,530 3,179,930 6,764,030 6,322,385
Depreciation and
amortization 2,320,033 2,278,196 4,626,065 4,551,326
----------- ----------- ----------- -----------
Total expenses 11,470,526 10,706,672 23,262,040 21,593,266
----------- ----------- ----------- -----------
Loss before minority
interest (2,338,938) (1,709,873) (5,002,098) (3,868,024)
Minority interest
in loss of
subsidiaries 94,110 91,971 225,348 203,911
----------- ----------- ----------- -----------
Net loss $(2,244,828) $(1,617,902) $(4,776,750) $(3,664,113)
=========== =========== =========== ===========
Net loss-
limited partners $(2,222,380) $(1,601,723) $(4,728,983) $(3,627,472)
=========== =========== =========== ===========
Number of
BACs outstanding 15,987.5 15,987.5 15,987.5 15,987.5
=========== =========== =========== ===========
Net loss per BAC $ (139.00) $ (100.18) $ (295.79) $ (226.89)
=========== =========== =========== ===========
</TABLE>
*Reclassified for comparative purposes.
See Accompanying Notes to Consolidated Financial Statements.
-4-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Deficit
(Unaudited)
<TABLE>
<CAPTION>
============ ============ ============
Limited General
Total Partners Partners
------------ ------------ ------------
<S> <C> <C> <C>
Partners'
deficit -
March 16, 2000 $(13,075,599) $(12,214,998) $ (860,601)
Net loss (4,776,750) (4,728,983) (47,767)
------------ ------------ ------------
Partners'
deficit -
September 15, 2000 $(17,852,349) $(16,943,981) $ (908,368)
============ ============ ============
</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
(Unaudited)
<TABLE>
<CAPTION>
============================
Six Months Ended
September 15,
----------------------------
2000 1999
----------------------------
<S> <C> <C>
Cash flows from
operating activities:
Net loss $ (4,776,750) $ (3,664,113)
Adjustments to reconcile net loss
to net cash (used in) provided
by operating activities:
Depreciation and amortization 4,626,065 4,551,326
Minority interest in loss of
subsidiaries (225,348) (203,911)
Decrease in accounts
receivable-tenants 11,530 138,265
Increase in other assets (266,148) (59,324)
Increase in accounts payable and
other liabilities 1,298,525 1,074,190
Increase in due to general partners
and affiliates 274,677 573,142
Increase in cash held
in escrow (1,060,051) (748,512)
------------ ------------
Net cash (used in) provided by
operating activities (117,500) 1,661,063
------------ ------------
Cash flows from investing activities:
Increase in cash held in escrow (249,061) (140,213)
Improvements to property and
equipment (272,438) (483,107)
------------ ------------
Net cash used in investing activities (521,499) (623,320)
------------ ------------
</TABLE>
-6-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (decrease) in Cash and Cash Equivalents
(Unaudited)
(continued)
<TABLE>
<CAPTION>
============================
Six Months Ended
September 15,
----------------------------
2000 1999
----------------------------
<S> <C> <C>
Cash flows from financing activities:
Increase in deferred costs (480,435) 0
Decrease in due to selling partners 0 (27,865)
Proceeds from mortgage notes 13,000,000 0
Repayments of mortgage notes (13,672,719) (1,335,917)
Increase in due to local general
partners and affiliates 975,190 472,553
Decrease in due to local general
partners and affiliates (206,294) (182,798)
Decrease in capitalization of
consolidated subsidiaries
attributable to minority interest (32,649) (123,527)
------------ ------------
Net cash used in
financing activities (416,907) (1,197,554)
------------ ------------
Net decrease in cash and cash
equivalents (1,055,906) (159,811)
Cash and cash equivalents at
beginning of period 5,940,310 3,824,051
------------ ------------
Cash and cash equivalents at
end of period $ 4,884,404 $ 3,664,240
============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-7-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 15, 2000
(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 ("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
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
September 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, 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 September 15, 2000, the results of operations for the three
and six months ended September 15, 2000 and 1999 and cash flows for the six
months ended September 15, 2000 and 1999. However, the operating results for the
six months ended September 15, 2000 may not be indicative of the results for the
year.
Certain information and note disclosures normally included in financial
statements prepared in accordance with GAAP have been omitted or condensed.
These consolidated financial statements should be read in conjunction with the
financial state-
-8-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 15, 2000
(Unaudited)
ments 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, 2000.
Increases (decreases) in the capitalization of consolidated subsidiaries
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 $64,000 and $49,000 and $132,000 and
$113,000 for the three and six months ended September 15, 2000 and 1999,
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.
-9-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 15, 2000
(Unaudited)
The costs incurred to related parties for the three and six months ended
September 15, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
=========================== ===========================
Three Months Ended Six Months Ended
September 15, September 15,
--------------------------- ---------------------------
2000 1999 2000 1999
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Partnership
management
fees (a) $284,500 $284,500 $569,000 $569,000
Expense
reimbursement (b) 50,003 37,860 79,178 71,656
Property management
fees incurred to
affiliates of the
General Partners (c) 28,447 24,114 52,560 48,227
Local
administrative fee (d) 18,000 18,500 36,000 37,000
-------- -------- ---------- ---------
Total general and
administrative-
General Partners 380,950 364,974 736,738 725,883
-------- -------- ---------- ---------
Property management
fees incurred to
affiliates of the
subsidiary partnerships'
general partners (c) 288,954 310,881 600,043 618,515
-------- -------- ---------- ---------
Total general and
administrative-
related parties $669,904 $675,855 $1,336,781 $1,344,398
======== ======== ========== ==========
</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
-10-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 15, 2000
(Unaudited)
Partners amounting to approximately $4,821,000 and $4,502,000 were accrued and
unpaid as of September 15, 2000 and March 15, 2000, 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 $83,000 and
$105,000 were accrued and unpaid as of September 15, 2000 and March 15, 2000,
respectively.
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
$482,149 and $477,785 and $980,070 and $951,683 for the three and six months
ended September 15, 2000 and 1999, respectively. Of these fees $288,954 and
$310,881 and $600,043 and $618,515 were incurred to affiliates of the subsidiary
partnerships' general partners. In addition, $28,447 and $24,114 and $52,560 and
$48,227 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 administrative fee of up
to $2,500 per year from each subsidiary partnership.
NOTE 3 - MORTGAGE NOTES PAYABLE
2108 BOLTON DRIVE ASSOCIATES, L.P. ("BOLTON)
On February 1, 2000, Bolton refinanced its outstanding mortgage note payable.
The new mortgage in the amount of $7,500,000 is payable in monthly installments
of $58,094 including interest at the rate of 8.58% per annum through February
2007. At maturity,
-11-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 15, 2000
(Unaudited)
the remaining principal balance of approximately $7,080,000 will be due.
Proceeds from the new mortgage were used to pay the prior mortgage note payable,
repay the balance advanced from the Partnership, establish escrows, pay
refinancing costs and to return capital of approximately $1,600,000 to the
limited partners.
WALNUT PARK PLAZA ASSOCIATES ("WALNUT PARK")
At December 31, 1999, Walnut Park was in default under the terms of the Bond
Indenture. On April 11, 2000, the Redevelopment Authority of the City of
Philadelphia issued bonds (the "New Bonds"), most of the proceeds of which were
applied to purchase other bonds (the "Old Bonds") held by Municipal Capital
Appreciation Partners I, L.P. ("MCAP"). Both sets of bonds were secured by a
mortgage on the low-income apartment project (the "Project") owned by Walnut
Park. MCAP has retained ownership of approximately $3,000,000 of the Old Bonds,
which are now secured by a second mortgage on the Project, and which is
subordinate to the $5,500,000 mortgage on the Project which secures the New
Bonds. In connection with that transaction, the former general partner of Walnut
Park, which was Whitney-Pitts, LLC, withdrew from Walnut Park and was replaced
by Walnut Park Management, Inc., a Maryland corporation which is an affiliate of
the current management agent for the Project. In addition, Walnut Park granted
MCAP an option to acquire the Project at any time up to and including October 1,
2018. If that option is exercised prior to October 30, 2003, the option price is
set at the fair market value of the Project. For any exercise of that option
thereafter, the option price is set at $1.00.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The following disclosure includes 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, 2000.
ROBIN HOUSING ASSOCIATES
Robin Housing Associates ("Robin Housing") is a defendant in several personal
injury lawsuits. Robin Housing's insurance carrier intends to defend Robin
Housing vigorously. Management believes that the insurance coverage is adequate
to cover any li-
-12-
<PAGE>
LIBERTY TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 15, 2000
(Unaudited)
ability arising from this action. Since it is too premature to make an
evaluation of the amount or range of Robin Housing's potential loss, it is
management's opinion that no accrual for potential losses is currently warranted
in the financial statements.
-13-
<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 source of funds is cash distributions from operations
of the Local Partnerships in which the Partnership has invested. This source is
available to meet obligations of the Partnership. During the six months ended
September 15, 2000 and 1999 such distributions amounted to approximately $25,000
and $86,000, respectively. In addition, certain fees and expense reimbursements
owed to the General Partners amounting to approximately $4,904,000 and
$4,607,000 were accrued and unpaid as of September 15, 2000 and March 15, 2000,
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, 2000, cash and cash equivalents of the
Partnership and its 31 subsidiary partnerships decreased approximately
$1,056,000. This decrease is attributable to an increase in property and
equipment ($272,000), an increase in deferred costs ($480,000), a decrease in
capitalization of consolidated subsidiaries attributable to minority interest
($33,000), an increase in cash held in escrow relating to investing activities
($249,000), net proceeds and principal repayment of mortgage notes ($673,000)
and cash used in operating activities ($118,000) which exceeded a net increase
in due to local general partners and affiliates ($769,000). Included in
adjustments to reconcile the net loss to cash used in operating activities is
depreciation and amortization of approximately $4,626,000.
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
-14-
<PAGE>
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
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.
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 value to
the property on the market, which are not included in the financial statement
carrying amount. The Local Partnership's allocation of tax credits to the
Partnership will expire over the next year.
RESULTS OF OPERATIONS
Results of operations for the three and six months ended September 15, 2000 and
1999 consisted primarily of the results of the Partnership's investment in the
consolidated Local Partnerships.
Rental income increased approximately 2% and 3% for the three and six months
ended September 15, 2000 as compared to the corresponding periods in 1999
primarily due to rental rate increases.
Total expenses excluding general and administrative, repairs and maintenance and
operating and other remained fairly consistent with increases of approximately
2% and 4% for the three and six months ended September 15, 2000 as compared to
the corresponding periods in 1999.
General and administrative increased approximately $241,000 and $338,000 for
the three and six months ended September 15, 2000, as compared to the
corresponding periods in 1999 primarily due to an increase in management fees
at two Local Partnerships, an increase in bad debts at a third Local
Partnership, increases in
-15-
<PAGE>
office salaries and temporary help at a fourth and fifth Local Partnership
and an increase in legal fees at the Partnership level.
Repairs and maintenance increased approximately $273,000 and $538,000 for the
three and six months ended September 15, 2000 as compared to the corresponding
periods in 1999 primarily due to laundry room repairs at one Local Partnership,
painting of the building at a second Local Partnership, carpet replacement and
repaving of the parking lot at a third Local Partnership and the replacement of
carpets and cabinets due to a fire at a fourth Local Partnership.
Operating and other increased approximately $139,000 and $224,000 for the three
and six months ended September 15, 2000, as compared to the corresponding
periods in 1999 primarily due to an increase in utility expenses at four Local
Partnerships.
-16-
<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
-17-
<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 11, 2000
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
President and Chief Executive
Officer
(Principal Executive and Financial
Officer)
Date: October 11, 2000
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 11, 2000
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
President and Chief Executive
Officer
(Principal Executive and Financial
Officer)
Date: October 11, 2000
By: /s/ Glenn F. Hopps
------------------
Glenn F. Hopps,
Treasurer
(Principal Accounting Officer)
