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 30, 1999
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-24652
FREEDOM TAX CREDIT PLUS L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3533987
(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
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
Consolidated Balance Sheets
(Unaudited)
<CAPTION>
September 30, March 31,
1999 1999
<S> <C> <C>
ASSETS
Property and equipment - (at cost,
net of accumulated depreciation
of $42,005,048 and $39,508,462,
respectively) $100,888,567 $103,215,088
Cash and cash equivalents 1,133,535 1,143,642
Investment in marketable securities 116,094 156,635
Cash held in escrow 4,423,939 4,282,886
Deferred costs (net of accumulated
amortization of $1,235,059
and $1,492,630, respectively) 1,703,809 1,915,961
Other assets 1,122,390 1,231,942
Total Assets $109,388,334 $111,946,154
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Mortgage notes payable $ 70,091,123 $ 70,447,844
Accounts payable and other
liabilities 2,611,739 2,517,628
Due to local general partners and
affiliates 3,018,120 3,333,005
Due to general partners and
affiliates (Note 2) 3,598,632 3,193,216
Total Liabilities 79,319,614 79,491,693
Minority interests 7,997,653 8,046,825
Partners' Capital (Deficit):
Limited partners (72,896 BACs
issued and outstanding) 22,519,880 24,832,512
General partners (460,047) (436,687)
Accumulated other comprehensive
income:
Unrealized gain on marketable
securities 11,234 11,811
Total Partners' Capital (Deficit) 22,071,067 24,407,636
Total Liabilities and Partners'
Capital (Deficit) $109,388,334 $111,946,154
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues
Rental income $ 3,224,470 $ 3,141,224 $ 6,422,128 $ 6,256,132
Other 379,969 360,135 677,671 685,112
Total revenues 3,604,439 3,501,359 7,099,799 6,941,244
Expenses
General and
administrative 524,935 549,814 1,171,663 1,138,024
General and
administrative-
related parties
Note 2) 366,030 423,665 739,242 791,532
Operating and
other 336,918 324,893 710,187 655,861
Repairs and
Maintenance 509,403 554,020 1,023,792 1,036,100
Real estate taxes 247,427 235,818 477,335 472,440
Insurance 115,711 117,435 216,770 222,519
Financial 1,200,765 1,223,008 2,413,543 2,440,910
Depreciation and
amortization 1,406,085 1,296,664 2,708,738 2,613,271
Total expenses 4,707,274 4,725,317 9,461,270 9,370,657
Loss before
minority interest (1,102,835) (1,223,958) (2,361,471) (2,429,413)
Minority interest
in loss of
subsidiary
partnerships 11,478 12,693 25,479 26,198
Net loss $(1,091,357) $(1,211,265) $(2,335,992) $(2,403,215)
Net loss - limited
partners $(1,080,443) $(1,199,152) $(2,312,632) $(2,379,183)
Number of BACs
outstanding 72,896 72,896 72,896 72,896
Basic net loss
per BAC $ (14.82) $ (16.45) $ (31.73) $ (32.64)
See Accompanying Notes to Consolidated Financial Statements.
</TABL
<PAGE>
</TABLE>
<TABLE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
Consolidated Statement of Changes in Partners' Capital (Deficit)
(Unaudited)
<CAPTION>
Accumulated
Other
Limited General Comprehensive Comprehensive
Total Partners Partners Income Loss
<S> <C> <C> <C> <C> <C>
Partners'
capital
(deficit)
April 1,
1999 $24,407,636 $24,832,512 $(436,687) $11,811
Comprehensive
Income
(Loss):
Net loss -
Six months
ended
September 30,
1999 (2,335,992) (2,312,632) (23,360) 0 $(2,335,992)
Other
Comprehensive
Income
(Loss):
Net unrealized
gain on
marketable
securities (577) (577) (577)
Total
Comprehensive
Income (Loss) $(2,336,569)
Partners'
capital
(deficit)
September 30,
1999 $22,071,067 $22,519,880 $(460,047) $11,234
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Six Months Ended
September 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,335,992) $(2,403,215)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 2,708,738 2,613,271
Minority interest in loss of
subsidiaries (25,479) (26,198)
Decrease (increase) in other assets 109,552 (301,567)
Increase in accounts payable
and other liabilities 94,111 444,392
Increase in cash held
in escrow (141,053) (587,582)
Increase in due to general partners
and affiliates 405,416 392,096
Increase in due to local general
partners and affiliates 622 5,987
Decrease in due to local general
partners and affiliates (315,507) (101,468)
Net cash provided by
operating activities 500,408 35,716
Cash flows from investing activities:
Acquisition of property and
equipment (170,065) (128,167)
Proceeds from sale of marketable
securities 39,964 0
Net cash used in investing
activities (130,101) (128,167)
Cash flows from financing activities:
Repayments of mortgage notes (356,721) (319,589)
Decrease in capitalization of
consolidated subsidiaries
attributable to minority interest (23,693) (26,650)
Net cash used in financing
activities (380,414) (346,239)
Net decrease in cash and cash
equivalents (10,107) (438,690)
Cash and cash equivalents at
beginning of period 1,143,642 1,656,414
Cash and cash equivalents at
end of period $1,133,535 $1,217,724
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
Notes to Consolidated Financial Statements
September 30, 1999
(Unaudited)
Note 1 - General
The consolidated financial statements include the accounts of
Freedom Tax Credit Plus L.P. ("the Partnership") and 42 subsidiary
partnerships ("subsidiaries", "subsidiary partnerships" or "Local
Partnerships") in which the Partnership is a limited partner.
Through the rights of the Partnership and/or an affiliate of a Gen-
eral Partner, which affiliate has a contractual obligation to act on
behalf of the Partnership, to remove the general partner of the
subsidiary local partnerships and to approve certain major oper-
ating and financial decisions, the Partnership has a controlling
financial interest in the subsidiary partnerships.
The Partnership's fiscal quarter ends September 30. All subsidiar-
ies have fiscal quarters ending June 30. Accounts of the subsidiar-
ies have been adjusted for intercompany transactions from July 1
through September 30. The Partnership's fiscal quarter ends Sep-
tember 30, in order to allow adequate time for the subsidiaries
financial statements to be prepared and consolidated.
All intercompany accounts and transactions have been eliminated
in consolidation.
Increases (decreases) in the capitalization of consolidated subsidi-
aries attributable to minority interest arise from cash contributions
from and cash distributions to the minority interest partners.
Losses attributable to minority interests aggregated approximately
$11,000 and $13,000 and $25,000 and $26,000 for the three and six
months ended September 30, 1999 and 1998, respectively. The
Partnership's investment in each subsidiary is generally equal to
the respective subsidiary's partners' equity less minority interest
capital, if any.
The books and records of the Partnership are maintained on the
accrual basis of accounting in accordance with generally accepted
accounting principles. In the opinion of the General Partners of
the Partnership, the accompanying unaudited financial statements
contain all adjustments (consisting only of normal recurring ad-
justments) necessary to present fairly the financial position of the
Partnership as of September 30, 1999, the results of operations for
the three and six months ended September 30, 1999 and 1998 and
cash flows for the six months ended September 30, 1999 and 1998.
However, the operating results for the six months ended Septem-
ber 30, 1999 may not be indicative of the results for the year.
In April of 1998, the Financial Accounting Standards Board issued
Statement of Position 98-5 ("SOP 98-5") "Reporting on the Costs of
Start-Up Activities". This statement provides guidance on the
financial reporting of start-up costs and organization costs. This
statement is effective for all fiscal quarters of fiscal years beginning
after December 15, 1998. Such change in accounting principle
amounted to approximately $139,000 for the quarter ended June
30, 1999.
Certain information and note disclosure normally included in
financial statements prepared in accordance with generally ac-
cepted accounting principles have been omitted or condensed.
These condensed 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 31, 1999.
Note 2 - Related Party Transactions
<TABLE>
The costs incurred to related parties for the three and six months
ended September 30, 1999 and 1998 were as follows:
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Partnership manage-
ment fees (a) $169,000 $169,000 $338,000 $338,000
Expense reimburse-
ment (b) 24,000 62,206 61,782 106,206
Local administra-
tive fee (c) 11,000 12,000 23,000 24,000
Total general and
administrative-
General Partners 204,000 243,206 422,782 468,206
Property manage-
ment fees
incurred to
affiliates of
the subsidiary
partnerships'
general
partners (d) 162,030 180,459 316,460 323,326
Total general and
administrative-
related parties $366,030 $423,665 $739,242 $791,532
</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. Subject to the foregoing limitation, the partnership
management fee will be determined by the General Partners in
their sole discretion based upon their review of the Partnership's
investment. Unpaid partnership management fees for any year
will be accrued without interest and will be payable from working
capital reserves or to the extent of available funds after the Part-
nership has made distributions to the Limited Partners and BACs
holders of sale or refinancing proceeds equal to their original capi-
tal contributions plus a 10% priority return thereon (to the extent
not theretofore paid out of Cash Flow). Partnership management
fees owed to the General Partners amounting to approximately
$3,166,000 and $2,828,000 were accrued and unpaid as of Septem-
ber 30, 1999 and March 31, 1999, respectively. Without the Gen-
eral Partners continued accrual without payment, the Partnership
will not be in a position to meet its obligations. The General Part-
ners have continued allowing the accrual without payment of
these amounts, but are under no obligation to continue 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) Freedom SLP L.P., a special limited partner of the subsidiary
partnerships is entitled to receive an annual local administrative
fee of up to $2,500 per year from each subsidiary partnership.
(d) Property management fees incurred by subsidiary partner-
ships amounted to $222,618 and $241,873 and $448,606 and
$458,306 for the three and six months ended September 30, 1999
and 1998, respectively. Of these fees $162,030 and $180,459 and
$316,460 and $323,326, respectively, were incurred to affiliates of
the subsidiary partnerships' general partners for the three and six
months ended September 30, 1999 and 1998, respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Con-
dition and Results of Operations
Liquidity and Capital Resources
The Partnership's sources of funds during the six months ended
September 30, 1999, include working capital reserves, interest
earned on working capital reserves and distributions received
from the Local Partnerships.
A working capital reserve of approximately $127,000 remains as of
September 30, 1999.
During the six months ended September 30, 1999 and 1998, the
distributions received from the Local Partnerships approximated
$16,000 and $14,000, respectively. Cash distributions from Local
Partnerships are not expected to reach a level sufficient to permit
cash distributions to BACs holders. These distributions as well as
the working capital reserves referred to in the preceding para-
graph and the continued deferral by the General Partners of fees
owed to them will be used to meet the operating expenses of the
Partnership. Partnership management fees owed to the General
Partners amounting to approximately $3,166,000 and $2,828,000
were accrued and unpaid as of September 30, 1999 and March 31,
1999, respectively. Without the General Partners continued ac-
crual without payments, the Partnership will not be in a position
to meet its obligations. The General Partners have continued al-
lowing the accrual without payment of these amounts, but are
under no obligation to continue to do so.
During the six months ended September 30, 1999, cash and cash
equivalents of the Partnership and its forty-two consolidated Local
Partnerships decreased approximately $10,000 due to acquisitions
of property and equipment ($170,000), a decrease in capitalization
of consolidated subsidiaries attributable to minority interest
($24,000) and repayments of mortgage notes ($357,000) which
exceeded cash provided by operating activities ($500,000) and a
decrease in marketable securities ($40,000). Included in the ad-
justments to reconcile the net loss to cash provided by operating
activities is depreciation and amortization ($2,709,000).
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. Manage-
ment 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 not be experiencing downswings.
However, the geographic diversification of the portfolio may not
protect against a general downturn in the national economy. The
Partnership has fully invested the proceeds of its offering in 42
local partnerships, all of which 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
property is warranted, the remaining tax credits would transfer to
the new owner, thereby adding value to the property on the mar-
ket. The financial statements do not include any adjustment to the
carrying value of the properties that might result from the market
value of the tax credits.
Results of Operations
The results of operations for the three and six months ended Sep-
tember 30, 1999 continues to be in the form of rental income with
corresponding expenses divided among operations, depreciation
and mortgage interest.
Rental income remained fairly consistent with an increase of ap-
proximately 3% for both the three and six months ended Septem-
ber 30, 1999 as compared to the corresponding periods in 1998,
primarily due to rental rate increases.
Total expenses excluding general and administrative-related re-
mained fairly consistent with an increase of approximately 1% and
2% for the three and six months ended September 30, 1999 as
compared to the corresponding periods in 1998.
General and administrative-related decreased approximately
$58,000 and $52,000 for the three and six months ended September
30, 1999 as compared to the corresponding periods in 1998 pri-
marily due to a decrease in expense reimbursements payable to
the General Partner.
Accounting Standards Issued but not yet Adopted
In June, 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133")
"Accounting for Derivative Instruments and Hedging Activities".
The Statement establishes accounting and reporting standards for
derivative instruments and hedging activities. This Statement is
effective for all fiscal quarters of fiscal years beginning after June
15, 2000. The adoption of SFAS 133 is not expected to have any
impact on the financial position or results of operations of the
Partnership.
Year 2000 Compliance
The Partnership utilizes the computer services of an affiliate of the
General Partners. The affiliate of the General Partners has up-
graded its computer information systems to be year 2000 compli-
ant. The most likely worst case scenario that the General Partners
face is that computer operations will be suspended for a few days
to a week commencing on January 1, 2000. The Partnership con-
tingency plan is to have (i) a complete backup done on December
31, 1999 and (ii) both electronic and printed reports generated 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.
Quantitative and Qualitative Disclosures about Market Risk.
The Partnership is not exposed to market risk since its mortgage
indebtedness bears fixed rates of interest.
<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
No reports on Form 8-K were filed during the quar-
ter.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securi-
ties Exchange Act of 1934, the registrant has duly caused this re-
port to be signed on its behalf by the undersigned, thereunto duly
authorized.
FREEDOM TAX CREDIT PLUS L.P.
(Registrant)
By: RELATED FREEDOM ASSOCIATES L.P.,
a General Partner
By: RELATED FREEDOM ASSOCIATES INC.,
General Partner
Date: November 2, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes, Vice President
(Principal Financial Officer)
Date: November 2, 1999
By: /s/ Glenn F. Hopps
Glenn F. Hopps, Treasurer
(Principal Accounting Officer)
and
By: FREEDOM GP INC.,
a General Partner
Date: November 2, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes, Vice President
(Principal Financial Officer)
Date: November 2, 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 Freedom Tax Credit Plus L.P.
and is qualified in its entirety by reference to such financial state-
ments
</LEGEND>
<CIK> 0000854926
<NAME> Freedom Tax Credit Plus L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 5,557,474
<SECURITIES> 116,094
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,122,390
<PP&E> 142,893,615
<DEPRECIATION> 42,005,048
<TOTAL-ASSETS> 109,388,334
<CURRENT-LIABILITIES> 79,319,614
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 30,068,720
<TOTAL-LIABILITY-AND-EQUITY> 109,388,334
<SALES> 0
<TOTAL-REVENUES> 7,099,799
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,047,727
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,413,543
<INCOME-PRETAX> (2,361,471)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,335,992)
<EPS-BASIC> (31.73)
<EPS-DILUTED> 0
</TABLE>
