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 December 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-24660
LIBERTY TAX CREDIT PLUS II L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3458180
(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 II L.P.
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<CAPTION>
December 31, March 31,
1999 1999
<S> <C> <C>
ASSETS
Property and equipment, net of
accumulated depreciation
of $77,960,082 and $72,210,811,
respectively $161,867,661 $167,205,538
Cash and cash equivalents 3,028,703 3,334,363
Cash held in escrow 8,080,535 6,902,143
Deferred costs, net of accumulated
amortization of $3,613,829
and $3,485,317, respectively 3,816,685 3,751,361
Other assets 4,081,051 4,333,107
Total assets $180,874,635 $185,526,512
LIABILITIES AND PARTNERS' CAPITAL
Mortgage notes payable $119,290,415 $116,033,679
Accounts payable and other
liabilities 8,299,950 9,521,924
Due to local general partners and
affiliates 9,769,248 10,045,549
Due to general partners and affiliates 8,890,928 7,383,024
Due to selling partners 2,135,076 3,579,455
Total liabilities 148,385,617 146,563,631
Minority interest 3,629,185 4,017,226
Commitments and contingencies (Note 5)
Partners' capital (deficit)
Limited partners (115,917.5 BACs
issued and outstanding) 29,601,918 35,626,882
General partners (742,085) (681,227)
Total partners' capital (deficit) 28,859,833 34,945,655
Total liabilities and partners'
capital (deficit) $180,874,635 $185,526,512
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1999* 1998* 1999 1998*
<S> <C> <C> <C> <C>
Revenues
Rentals, net $ 6,510,404 $ 6,347,337 $19,378,964 $19,215,481
Other 165,601 189,233 483,397 444,457
Total revenue 6,676,005 6,536,570 19,862,361 19,659,938
Expenses
General and
administrative 1,845,551 1,690,934 4,966,157 4,993,093
General and
administrative-
related parties
(Note 2) 688,078 630,615 1,980,489 1,940,484
Repairs and
maintenance 1,613,001 1,064,011 3,840,169 3,576,898
Operating 544,691 510,543 1,937,513 1,920,461
Taxes 268,119 269,320 809,127 819,353
Insurance 275,713 303,504 829,847 866,209
Interest 1,923,637 2,120,570 5,911,840 6,004,326
Depreciation and
amortization 1,910,253 1,921,489 5,877,783 5,908,041
Total expenses 9,069,043 8,510,986 26,152,925 26,028,865
Loss before
minority
interest (2,393,038) (1,974,416) (6,290,564) (6,368,927)
Minority interest
in loss of
subsidiaries 33,050 73,966 204,742 327,302
Net loss $(2,359,988) $(1,900,450) $(6,085,822) $(6,041,625)
Net loss-limited
partners $(2,336,388) $(1,881,446) $(6,024,964) $(5,981,209)
Number of BACs
outstanding 115,917.5 115,917.5 115,917.5 115,917.5
Net loss per BAC $ (20.16) $ (16.23) $ (51.98) $ (51.60)
*Reclassified for comparative purposes
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Capital
(Deficit)
(Unaudited)
<CAPTION>
Limited General
Total Partners Partners
<S> <C> <C> <C>
Partners' capital
(deficit) -
April 1, 1999 $34,945,655 $35,626,882 $(681,227)
Net loss (6,085,822) (6,024,964) (60,858)
Partners' capital
(deficit) -
December 31, 1999 $28,859,833 $29,601,918 $(742,085)
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<CAPTION>
Nine Months Ended
December 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $(6,085,822) $(6,041,625)
Adjustments to reconcile net loss
to net cash (used in) provided by
operating activities:
Depreciation and amortization 5,877,783 5,908,041
Minority interest in loss of
subsidiaries (204,742) (327,302)
Decrease (increase) in other assets 252,056 (179,665)
Increase in cash held
in escrow (838,356) (994,189)
Decrease in accounts payable and
other liabilities (1,221,974) (204,028)
Increase in due to general partners
and affiliates 1,507,904 1,579,634
Increase in due to local general
partners and affiliates 432,669 837,106
Decrease in due to local general
partners and affiliates (708,970) (236,191)
Total adjustments 5,096,370 6,383,406
Net cash (used in) provided by
operating activities (989,452) 341,781
Cash flows from investing activities:
Acquisitions of property and equipment (411,394) (333,147)
(Increase) decrease in cash held
in escrow (340,036) 178,977
Net cash used in investing activities (751,430) (154,170)
Cash flows from financing activities:
Increase in deferred costs (193,836) (1,642)
Repayments of mortgage notes (2,608,264) (1,101,424)
Proceeds of mortgage notes 5,865,000 0
(Decrease) increase in due to selling
partners (1,444,379) 21,958
Decrease in capitalization
of consolidated subsidiaries
attributable to minority
interest (183,299) (299,783)
Net cash provided by (used in)
financing activities 1,435,222 (1,380,891)
Net decrease in cash and
cash equivalents (305,660) (1,193,280)
Cash and cash equivalents at
beginning of period 3,334,363 4,177,583
Cash and cash equivalents at
end of period $ 3,028,703 $ 2,984,303
Supplemental disclosure of noncash
investing activities:
Property and equipment reclassified
from construction in progress $ 0 $ 604,411
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
(Unaudited)
Note 1 - General
The consolidated financial statements include the accounts of
Liberty Tax Credit Plus II L.P. (the "Partnership") and 27 subsidi-
ary partnerships ("subsidiaries", "subsidiary partnerships" or "Lo-
cal Partnerships") in which the Partnership is the limited partner.
Through the rights of the Partnership and/or Related Credit Prop-
erties II L.P., a Delaware limited partnership, Liberty Associates II
L.P., a Delaware limited partnership, or Liberty GP II Inc., a Dela-
ware corporation (each a "General Partner" and collectively, the
"General Partners"), which General Partners have a contractual
obligation to act on behalf of the Partnership, to remove the gen-
eral partner of the subsidiary partnerships (each, a "Local General
Partner), and to approve certain major operating and financial
decisions, the Partnership has a controlling financial interest in
each of the subsidiary partnerships.
For financial reporting purposes, the Partnership's fiscal quarter
ends December 31. The Partnership's fiscal quarter ends Decem-
ber 31 in order to allow adequate time for the subsidiaries' finan-
cial statements to be prepared and consolidated. All subsidiary
partnerships have fiscal quarters ending September 30. Accounts
of the subsidiary partnerships have been adjusted for intercom-
pany transactions from October 1 through December 31.
All intercompany accounts and transactions have been eliminated
in consolidation.
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.
Losses attributable to minority interests which exceed the minority
interests' investment in a subsidiary partnership have been
charged to the Partnership. Such losses aggregated $127,000 and
$52,000 and $401,000 and $311,000 for the three and nine months
ended December 31, 1999 and 1998, respectively. The Partner-
ship'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.
The books and records of the Partnership are maintained on the
accrual basis in accordance with generally accepted accounting
principles. In the opinion of each of the General Partners, the
accompanying unaudited financial statements contain all adjust-
ments (consisting only of normal recurring adjustments) necessary
to present fairly the financial position of the Partnership as of De-
cember 31, 1999, the results of operations for the three and nine
months ended December 31, 1999 and 1998 and cash flows for the
nine months ended December 31, 1999 and 1998. However, the
operating results for the nine months ended December 31, 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 principles 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 year ended
March 31, 1999.
Note 2 - Related Party Transactions
One 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.
<TABLE>
The costs incurred to related parties for the three and nine months
ended December 31, 1999 and 1998 were as follows:
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Partnership manage-
ment fees (a) $ 374,000 $ 374,000 $1,122,000 $1,122,000
Expense reimburse-
ment (b) 77,453 20,000 137,883 112,859
Property manage-
ment fees incurred
to affiliates of the
General Partners (c) 89,268 87,586 267,804 262,757
Local administrative
fee (d) 12,000 13,000 36,000 39,000
Total general and
administrative-
General Partners 552,721 494,586 1,563,687 1,536,616
Property manage-
ment fees incurred
to affiliates of the
subsidiary
partnerships'
general
partners (c) 135,357 136,029 416,802 403,868
Total general and
administrative-
related parties $ 688,078 $ 630,615 $1,980,489 $1,940,484
</TABLE>
(a) The General Partners are entitled to receive a partnership
management fee, after payment of all Partnership expenses, which
together with the annual local 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 $6,442,000 and $5,370,000
were accrued and unpaid as of December 31, 1999 and March 31,
1999, respectively. Without the General Partners' continued ac-
crual without payment, the Partnership will not be in a position to
meet its obligations. The General Partners have continued allow-
ing the accrual without payment of these amounts but are under
no obligation to do so.
(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.
(c) Property management fees incurred by subsidiary partnerships
amounted to $398,008 and $336,607 and $1,215,643 and $1,155,728
for the three and nine months ended December 31, 1999 and 1998,
respectively. Of these fees $224,625 and $223,615 and $684,606
and $666,625 were incurred to affiliates of the Local General Part-
ners. Included in amounts incurred to affiliates of the Local Gen-
eral Partners are $89,268 and $87,586 and $267,804 and $262,757
for the three and nine months ended December 31, 1999 and 1998,
respectively, which were also incurred to affiliates of the Partner-
ship.
(d) Liberty Associates II L.P., a special limited partner of the sub-
sidiary partnerships, is entitled to receive a local administrative fee
of up to $2,500 per year from each subsidiary partnership.
Note 3 - Mortgage Note Payable
Rolling Green L.P. ("Rolling Green")
On February 1, 1999, Rolling Green refinanced its existing indebt-
edness by borrowing $5,865,000 from the United States Depart-
ment of Housing and Urban Development ("HUD"). The loan
bears interest at the rate of 6.85% per annum, and matures on
March 1, 2034. Rolling Green's prior mortgage indebtedness in
the principal amount of approximately $1,671,000 and a purchase
money note of $1,450,000 along with $1,695,000 in accrued interest
were repaid. Additional funds in the amount of $1,049,000 were
added to the mortgage escrow.
Campeche Isle Apartments L.P. ("Campeche")
On October 6, 1999, Campeche refinanced its existing indebted-
ness by borrowing $4,125,000 from Lehman Brothers Bank, FSB.
The loan bears interest at the rate of 8.02% per annum, and ma-
tures on November 1, 2006. Campeche's prior mortgage indebt-
edness in the principal amount of approximately $4,000,000 to-
gether with $25,000 in accrued interest was repaid. Additional
funds in the amount of $100,000 were added to the mortgage es-
crow.
Note 4 - Commitments and Contingencies
There were no material 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 31, 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Con-
dition and Results of Operations
Liquidity and Capital Resources
The Partnership's primary sources of funds are rental revenues
which are fully utilized at the property level and cash distributions
from the operations of the Local Partnerships in which the Part-
nership has invested. These sources of funds are available to meet
obligations of the Partnership. During the nine months ended
December 31, 1999, distributions received from operations of the
Local Partnerships were approximately $6,300.
As of December 31, 1999 the Partnership has invested all of the net
proceeds in twenty-seven Local Partnerships. Approximately
$332,000 of the purchase price remains to be paid (none of which
is being held in escrow).
During the nine months ended December 31, 1999, cash and cash
equivalents decreased approximately $306,000. This decrease was
due to cash used in operating activities ($989,000), acquisitions of
property and equipment ($411,000), a decrease in capitalization of
consolidated subsidiaries attributable to minority interest
($183,000), a decrease in due to selling partners ($1,444,000), an
increase in cash held in escrow relating to investing activities
($340,000) and an increase in deferred costs ($194,000) which ex-
ceeded net proceeds of mortgage notes ($3,257,000). Included in
the adjustments to reconcile the net loss to cash used in operating
activities is depreciation and amortization ($5,878,000).
Partnership management fees owed to the General Partners
amounting to approximately $6,442,000 and $5,370,000 were ac-
crued and unpaid as of December 31, 1999 and March 31, 1999,
respectively. Without the General Partners continued accrual
without payment, 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 obli-
gation to continue to do so.
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 diversification of the portfolio may not pro-
tect against a general downturn in the national economy. The
Partnership has fully invested the proceeds of its offerings in 27
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 value to the property
on the market, which are not included in the financial statement
carrying amount.
Results of Operations
Results of operations for the three and nine months ended Decem-
ber 31, 1999 consisted primarily of the results of the Partnership's
investment in twenty-seven Local Partnerships.
Rental income increased approximately 3% and 1% for the three
and nine months ended December 31, 1999 as compared to the
corresponding periods in 1998 primarily due to rental rate in-
creases.
Other income decreased approximately $24,000 for the three
months ended December 31, 1999 as compared to the corre-
sponding period in 1998 primarily due to legal settlements re-
ceived by two Local Partnerships in the third quarter of 1998.
Total expenses, excluding repairs and maintenance remained
fairly consistent with an increase of less than 1% and a decrease of
approximately 1% for the three and nine months ended December
31, 1999 as compared to the corresponding periods in 1998.
Repairs and maintenance increased approximately $549,000 and
$263,000 for the three and nine months ended December 31, 1999
as compared to the corresponding periods in 1998 primarily due
to roof repairs at one Local Partnership as well as small increases
at two other Local Partnerships.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
None.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceeding - None
Item 2. Changes in Securities and Use of Proceeds - 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 - No reports on Form 8-K were
filed during the quarter.
<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 II L.P.
(Registrant)
By: RELATED CREDIT PROPERTIES II L.P.,
a General Partner
By: Related Credit Properties II Inc.,
its General Partner
Date: February 7, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: February 7, 2000
By: /s/ Glenn F. Hopps
Glenn F. Hopps,
Treasurer
(principal accounting officer)
and
By: LIBERTY GP II INC.,
a General Partner
Date: February 7, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: February 7, 2000
By: /s/ Glenn F. Hopps
Glenn F. Hopps,
Treasurer
(principal accounting officer)
and
BY: LIBERTY ASSOCIATES II, L.P.
a General Partner
BY: Related Credit Properties II, Inc.,
its General Partner
Date: February 7, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: February 7, 2000
By: /s/ Glenn F. Hopps
Glenn F. Hopps,
Treasurer
(principal accounting officer)
and
By: Liberty GP II Inc.,
its General Partner
Date: February 7, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: February 7, 2000
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 II L.P.
and is qualified in its entirety by reference to such financial state-
ments
</LEGEND>
<CIK> 0000832141
<NAME> Liberty Tax Credit Plus II L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 11,109,238
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,081,051
<PP&E> 239,827,743
<DEPRECIATION> 77,960,082
<TOTAL-ASSETS> 180,874,635
<CURRENT-LIABILITIES> 29,095,202
<BONDS> 119,290,415
0
0
<COMMON> 0
<OTHER-SE> 32,489,018
<TOTAL-LIABILITY-AND-EQUITY> 180,874,635
<SALES> 0
<TOTAL-REVENUES> 19,862,361
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,241,085
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,911,840
<INCOME-PRETAX> (6,290,564)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,085,822)
<EPS-BASIC> (51.98)
<EPS-DILUTED> 0
</TABLE>
