<PAGE>
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, 2000
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 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
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
============= =========
September 30, March 31,
2000 2000
------------- ---------
<S> <C> <C>
ASSETS
Property and equipment - (at cost,
net of accumulated depreciation
of $46,883,538 and $44,409,197,
respectively) $ 96,539,932 $ 98,567,972
Cash and cash equivalents 1,350,335 1,483,417
Investment in marketable securities 111,413 113,553
Cash held in escrow 4,440,925 4,311,637
Deferred costs (net of accumulated
amortization of $1,399,051
and $1,316,082, respectively) 1,539,817 1,622,786
Other assets 1,116,712 1,081,697
------------ ------------
Total Assets $105,099,134 $107,181,062
------------ ------------
------------ ------------
</TABLE>
2
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(continued)
<TABLE>
<CAPTION>
============= =========
September 30, March 31,
2000 2000
------------- ---------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Mortgage notes payable $ 69,545,955 $ 69,914,088
Accounts payable and other
liabilities 2,385,264 2,109,616
Due to local general partners and
affiliates 3,163,867 3,392,393
Due to general partners and
affiliates (Note 2) 4,535,547 4,106,667
------------ ------------
Total Liabilities 79,630,633 79,522,764
------------ ------------
Minority interests 7,852,580 7,988,544
------------ ------------
Partners' Capital (Deficit):
Limited partners (72,896 BACs
issued and outstanding) 18,113,920 20,145,096
General partners (504,552) (484,035)
Accumulated other comprehensive
income:
Unrealized gain on marketable
securities 6,553 8,693
------------ ------------
Total Partners' Capital (Deficit) 17,615,921 19,669,754
------------ ------------
Total Liabilities and Partners'
Capital (Deficit) $105,099,134 $107,181,062
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
------------------------- --------------------------
------------------------- --------------------------
Three Months Ended Six Months Ended
September 30, September 30,
------------------------- --------------------------
2000 1999* 2000 1999*
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Rental income $3,294,114 $ 3,224,470 $ 6,622,323 $ 6,422,128
Other 377,618 379,969 697,720 677,671
---------- ----------- ----------- -----------
Total revenues 3,671,732 3,604,439 7,320,043 7,099,799
---------- ----------- ----------- -----------
Expenses
General and administrative 599,420 536,551 1,295,606 1,183,279
General and administrative-
related parties Note 2) 390,072 354,414 757,207 727,626
Operating and other 345,290 336,918 693,576 710,187
Repairs and Maintenance 507,278 509,403 1,043,850 1,023,792
Real estate taxes 233,029 247,427 467,839 477,335
Insurance 107,763 115,711 206,107 216,770
Financial 1,199,949 1,200,765 2,372,109 2,413,543
Depreciation and
amortization 1,287,215 1,406,085 2,557,310 2,708,738
---------- ----------- ----------- -----------
Total expenses 4,670,016 4,707,274 9,393,604 9,461,270
---------- ----------- ----------- -----------
Loss before
minority interest (998,284) (1,102,835) (2,073,561) (2,361,471)
Minority interest in loss
of subsidiary partnerships 9,639 11,478 21,868 25,479
---------- ----------- ----------- -----------
Net loss $ (988,645) $(1,091,357) $(2,051,693) $(2,335,992)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Net loss - limited partners $ (978,758) $(1,080,443) $(2,031,176) $(2,312,632)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Number of BACs outstanding 72,896 72,896 72,896 72,896
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Net loss per BAC $ (13.43) $ (14.82) $ (27.86) $ (31.73)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
</TABLE>
*Reclassified for comparative purposes.
See Accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Limited General Comprehensive Comprehensive
Total Partners Partners Income Loss
----------- ----------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Partners' capital (deficit) April 1, 2000 $19,669,754 $20,145,096 $(484,035) $ 8,693
Comprehensive Income (Loss):
Net loss - Six months ended
September 30, 2000 (2,051,693) (2,031,176) (20,517) $(2,051,693)
Other Comprehensive Income (Loss):
Net unrealized loss on marketable
securities (2,140) 0 0 (2,140) (2,140)
----------- ----------- --------- ------------- -------------
Total Comprehensive Income (Loss) $(2,053,833)
-------------
-------------
Partners' capital (deficit)
September 30, 2000 $17,615,921 $18,113,920 $(504,552) $ 6,553
----------- ----------- --------- -------------
----------- ----------- --------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
-------------------------
-------------------------
Six Months Ended
September 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,051,693) $(2,335,992)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 2,557,310 2,708,738
Minority interest in loss of
subsidiaries (21,868) (25,479)
(Increase) decrease in other assets (35,015) 109,552
Increase in accounts payable
and other liabilities 275,648 94,111
Increase in cash held
in escrow (129,288) (141,053)
Increase in due to general partners
and affiliates 428,880 405,416
Increase in due to local general
partners and affiliates 11,096 622
Decrease in due to local general
partners and affiliates (239,622) (315,507)
----------- -----------
Net cash provided by
operating activities 795,448 500,408
----------- -----------
Cash flows from investing activities:
Acquisition of property and
equipment (446,301) (170,065)
Proceeds from sale of marketable
securities 0 39,964
----------- -----------
Net cash used in investing
activities (446,301) (130,101)
----------- -----------
</TABLE>
6
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
<TABLE>
<CAPTION>
-------------------------
-------------------------
Six Months Ended
September 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from financing activities:
Repayments of mortgage notes (368,133) (356,721)
Decrease in capitalization of
consolidated subsidiaries
attributable to minority interest (114,096) (23,693)
----------- -----------
Net cash used in financing
activities (482,229) (380,414)
----------- -----------
Net decrease in cash and
cash equivalents (133,082) (10,107)
Cash and cash equivalents at
beginning of period 1,483,417 1,143,642
----------- -----------
Cash and cash equivalents at
end of period $1,350,335 $1,133,535
----------- -----------
----------- -----------
Supplemental disclosure of cash
flow information:
Cash paid during period for
interest $2,230,809 $2,210,841
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(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 General 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 operating
and financial decisions, the Partnership has a controlling financial interest
in the subsidiary partnerships.
The Partnership's fiscal quarter ends September 30. All subsidiaries have
fiscal quarters ending June 30. Accounts of the subsidiaries have been
adjusted for intercompany transactions from July 1 through September 30. The
Partnership's fiscal quarter ends September 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 subsidiaries
attributable to minority interest arise from cash contributions from and cash
distributions to the minority interest partners.
Losses attributable to minority interests aggregated approximately $10,000
and $11,000 and $22,000 and $25,000 for the three and six months ended
September 30, 2000 and 1999, 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 adjustments) necessary to present fairly the financial
position of the
8
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
Partnership as of September 30, 2000, the results of operations for the three
and six months ended September 30, 2000 and 1999 and cash flows for the six
months ended September 30, 2000 and 1999. However, the operating results and
cash flows for the six months ended September 30, 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 generally accepted accounting
principles have been omitted or condensed. These condensed financial
statements 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 31, 2000.
Note 2 - Related Party Transactions
The costs incurred to related parties for the three and six months ended
September 30, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------- --------------------
2000 1999* 2000 1999*
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Partnership manage-
ment fees (a) $169,000 $169,000 $338,000 $338,000
Expense reimburse-
ment (b) 61,771 24,000 91,845 61,782
Local administra-
tive fee (c) 13,000 11,000 26,000 23,000
-------- -------- -------- ---------
Total general and
administrative-
General Partners 243,771 204,000 455,845 422,782
-------- -------- -------- ---------
Property manage-
ment fees
incurred to
affiliates of
the subsidiary
partnerships'
general
partners (d) 146,301 150,414 301,362 304,844
-------- -------- -------- ---------
Total general and
administrative-
related parties $390,072 $354,414 $757,207 $727,626
-------- -------- -------- ---------
-------- -------- -------- ---------
</TABLE>
*Reclassified for comparative purposes.
9
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
(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 investments. 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 Partnership has made
distributions to the Limited Partners and BACs holders of sale or refinancing
proceeds equal to their original capital 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 $3,842,000 and $3,504,000 were accrued and unpaid as of
September 30, 2000 and March 31, 2000, 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
obligation to continue to do so. The Partnership is dependent upon the
support of the General Partners and certain of their affiliates in order to
meet its obligations at the Partnership level. The General Partners and these
affiliates have agreed to continue such support for the next year.
(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.
(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 partnerships amounted to
$232,450 and $222,618 and $475,866 and
10
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
$448,606 for the three and six months ended September 30, 2000 and 1999,
respectively. Of these fees $146,301 and $150,414 and $301,362 and $304,844,
respectively, were incurred to affiliates of the subsidiary partnerships'
general partners for the three and six months ended September 30, 2000 and
1999, respectively.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's sources of funds during the six months ended September 30,
2000, include working capital reserves, interest earned on working capital
reserves and distributions received from the Local Partnerships. None of
these sources generated substantial amounts of funds.
A working capital reserve of approximately $41,000 remains as of September
30, 2000.
During the six months ended September 30, 2000 and 1999, the distributions
received from the Local Partnerships approximated $9,000 and $16,000,
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 paragraph 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 $3,842,000 and $3,504,000 were accrued and unpaid as of
September 30, 2000 and March 31, 2000, respectively. Without the General
Partners continued accrual without payments, 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. The Partnership is dependent upon the
support of the General Partners and certain of its affiliates in order to
meet its obligations at the Partnership level. The General Partners and these
affiliates have agreed to continue such support for the next year.
During the six months ended September 30, 2000, cash and cash equivalents of
the Partnership and its forty-two consolidated Local Partnerships decreased
approximately $133,000 due to acquisitions of property and equipment
($446,000), a decrease in capitalization of consolidated subsidiaries
attributable to minority interest ($114,000) and repayments of mortgage notes
($368,000) which exceeded cash provided by operating activities ($795,000).
Included in the adjustments to reconcile the net loss to cash pro-
12
<PAGE>
vided by operating activities is depreciation and amortization ($2,557,000).
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. 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 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 market. 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 September 30,
2000 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 increases of approximately 2%
and 3% for the three and six months ended September 30, 2000 as compared to
the corresponding periods in 1999, primarily due to rental rate increases.
Total expenses excluding general and administrative and general and
administrative-related remained fairly consistent with decreases of
approximately 4% and 3% for the three and six months ended September 30, 2000
as compared to the corresponding periods in 1999.
General and administrative increased approximately $63,000 for the three
months ended September 30, 2000 as compared to the corresponding period in
1999 primarily due to a change of an affiliated management agent to an
unaffiliated management agent
13
<PAGE>
in 2000 at two Local Partnerships and an increase in office expenses at two
other Local Partnerships.
General and administrative-related parties increased approximately $36,000
for the three months ended September 30, 2000 as compared to the
corresponding period in 1999 primarily due to an increase in expense
reimbursements in 2000.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Partnership is not exposed to market risk since its mortgage indebtedness
bears fixed rates of interest.
14
<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 quarter.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FREEDOM TAX CREDIT PLUS L.P.
(Registrant)
By: RELATED FREEDOM ASSOCIATES L.P.,
a General Partner
By: RELATED FREEDOM ASSOCIATES INC.,
General Partner
Date: October 26, 2000
By: /s/ Alan P. Hirmes
-------------------------------------
Alan P. Hirmes, President
(Principal Executive and
Financial Officer)
Date: October 26, 2000
By: /s/ Glenn F. Hopps
-------------------------------------
Glenn F. Hopps, Treasurer
(Principal Accounting Officer)
and
By: FREEDOM GP INC.,
a General Partner
Date: October 26, 2000
By: /s/ Alan P. Hirmes
-------------------------------------
Alan P. Hirmes, President
(Principal Executive and
Financial Officer)
Date: October 26, 2000
By: /s/ Glenn F. Hopps
-------------------------------------
Glenn F. Hopps, Treasurer
(Principal Accounting Officer)
