<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 June 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
----- -----
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PART I - Financial Information
Item 1. Financial Statements
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
=========== ===========
June 30, March 31,
2000 2000
----------- -----------
<S> <C> <C>
ASSETS
Property and equipment - (at cost,
net of accumulated depreciation
of $45,637,807 and $44,409,197,
respectively) $ 97,560,026 $ 98,567,972
Cash and cash equivalents 1,357,921 1,483,417
Investment in marketable securities 112,483 113,553
Cash held in escrow 4,277,276 4,311,637
Deferred costs (net of accumulated
amortization of $1,357,567
and $1,316,082, respectively) 1,581,301 1,622,786
Other assets 1,115,668 1,081,697
----------- -----------
Total Assets $106,004,675 $107,181,062
=========== ===========
2
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FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(continued)
<CAPTION>
=========== ===========
June 30, March 31,
2000 2000
----------- -----------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Mortgage notes payable $ 69,731,708 $ 69,914,088
Accounts payable and other
liabilities 2,184,880 2,109,616
Due to local general partners and
affiliates 3,208,764 3,392,393
Due to general partners and
affiliates (Note 2) 4,304,131 4,106,667
----------- -----------
Total Liabilities 79,429,483 79,522,764
----------- -----------
Minority interests 7,969,556 7,988,544
----------- -----------
Partners' Capital (Deficit):
Limited partners (72,896 BACs
issued and outstanding) 19,092,678 20,145,096
General partners (494,665) (484,035)
Accumulated other comprehensive
income:
Unrealized gain on marketable
securities 7,623 8,693
----------- -----------
Total Partners' Capital (Deficit) 18,605,636 19,669,754
----------- -----------
Total Liabilities and Partners'
Capital (Deficit) $106,004,675 $107,181,062
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
============================
Three Months Ended
June 30,
----------------------------
2000 1999
----------------------------
<S> <C> <C>
Revenues
Rental income $ 3,328,209 $ 3,197,658
Other 320,102 297,702
---------- ----------
Total revenues 3,648,311 3,495,360
---------- ----------
Expenses
General and administrative 696,186 646,728
General and administrative-
related parties (Note 2) 367,135 373,212
Operating and other 348,286 373,269
Repairs and Maintenance 536,572 514,389
Real estate taxes 234,810 229,908
Insurance 98,344 101,059
Financial 1,172,160 1,212,778
Depreciation and amortization 1,270,095 1,302,653
---------- ----------
Total expenses 4,723,588 4,753,996
---------- ----------
Loss before minority interest (1,075,277) (1,258,636)
Minority interest in loss of subsidiaries 12,229 14,001
----------- ------------
Net loss $(1,063,048) $(1,244,635)
========== ==========
Net loss - limited partners $(1,052,418) $(1,232,189)
========== ==========
Number of BACs outstanding 72,896 72,896
========== ==========
Net loss per BAC $ (14.44) $ (16.90)
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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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 - Three months ended
June 30, 2000 (1,063,048) (1,052,418) (10,630) $(1,063,048)
Other Comprehensive Income (Loss):
Net unrealized loss on marketable
securities (1,070) 0 0 (1,070) (1,070)
-------------- -------------- ------------- -------------- --------------
Total Comprehensive Income (Loss) $(1,064,118)
==============
Partners' capital (deficit)
June 30, 2000 $18,605,636 $19,092,678 $(494,665) $ 7,623
============== ============== ============= ==============
</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>
============================
Three Months Ended
June 30,
----------------------------
2000 1999
----------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,063,048) $(1,244,635)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 1,270,095 1,302,653
Minority interest in loss of
subsidiaries (12,229) (14,001)
(Increase) decrease in other assets (33,971) 178,148
Increase (decrease) in accounts payable
and other liabilities 75,264 (279,559)
Decrease in cash held
in escrow 34,361 15,236
Increase in due to general partners
and affiliates 197,464 210,629
Increase in due to local general
partners and affiliates 6,332 47,759
Decrease in due to local general
partners and affiliates (189,961) (50,244)
--------- ---------
Net cash provided by
operating activities 284,307 165,986
--------- ---------
Cash flows from investing activities:
Acquisition of property and
equipment (220,664) (89,027)
Proceeds from sale of marketable
securities 0 39,964
--------- ---------
Net cash used in investing
activities (220,664) (49,063)
--------- ---------
6
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FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
<CAPTION>
============================
Three Months Ended
June 30,
----------------------------
2000 1999
----------------------------
<S> <C> <C>
Cash flows from financing activities:
Repayments of mortgage notes (182,380) (137,730)
Decrease in capitalization of
consolidated subsidiaries
attributable to minority interest (6,759) (10,803)
--------- ---------
Net cash used in financing
activities (189,139) (148,533)
--------- ---------
Net decrease in cash and
cash equivalents (125,496) (31,610)
Cash and cash equivalents at
beginning of period 1,483,417 1,143,642
--------- ---------
Cash and cash equivalents at
end of period $1,357,921 $1,112,032
========= =========
Supplemental disclosure of cash flow information:
Cash paid during period for interest $1,073,959 $1,043,410
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 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 June 30. All subsidiaries have fiscal
quarters ending March 31. Accounts of the subsidiaries have been adjusted for
intercompany transactions from April 1 through June 30. The Partnership's fiscal
quarter ends June 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 $12,000 and
$14,000 for the three months ended June 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
Partnership as of June 30, 2000 and the results of operations and cash flows for
the three months ended June 30, 2000 and 1999. However, the operating results
for the three
8
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FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
months ended June 30, 2000 may not be indicative of the results for the year.
Certain information and note disclosure 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 months ended June 30, 2000
and 1999 were as follows:
<TABLE>
<CAPTION>
============================
Three Months Ended
June 30,
----------------------------
2000 1999
----------------------------
<S> <C> <C>
Partnership management fees (a) $169,000 $169,000
Expense reimbursement (b) 30,074 37,782
Local administrative fee (c) 13,000 12,000
-------- --------
Total general and administrative-
General Partners 212,074 218,782
------- -------
Property management fees incurred
to affiliates of the subsidiary
partnerships' general partners (d) 155,061 154,430
------- -------
Total general and administrative-
related parties $367,135 $373,212
======= =======
</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 investments. Unpaid
partnership management fees for any year will be accrued without interest and
will be
9
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FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
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 $3,673,000 and $3,504,000 were accrued and unpaid as of June
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 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.
(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
$243,416 and $225,988 for the three months ended June 30, 2000 and 1999,
respectively. Of these fees $155,061 and $154,430, respectively, were incurred
to affiliates of the subsidiary partnerships' general partners for the three
months ended June 30, 2000 and 1999, respectively.
10
<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 three months ended June 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 $54,000 remains as of June 30, 2000.
During the three months ended June 30, 2000 and 1999, the distributions received
from the Local Partnerships approximated $8,000 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 $3,673,000 and
$3,504,000 were accrued and unpaid as of June 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 three months ended June 30, 2000, cash and cash equivalents of the
Partnership and its forty-two consolidated Local Partnerships decreased
approximately $125,000 due to acquisitions of property and equipment ($221,000),
a decrease in capitalization of consolidated subsidiaries attributable to
minority interest ($7,000) and repayments of mortgage notes ($182,000) which
exceeded cash provided by operating activities ($284,000). Included in the
adjustments to reconcile the net loss to cash provided by operating activities
is depreciation and amortization ($1,270,000).
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
11
<PAGE>
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 months ended June 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 an increase of approximately 4%
for the three months ended June 30, 2000 as compared to the corresponding period
in 1999, primarily due to rental rate increases.
Total expenses remained fairly consistent with a decrease of approximately 1%
for the three months ended June 30, 2000 as compared to the corresponding period
in 1999.
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.
12
<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.
13
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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: August 7, 2000
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes, President
(Principal Executive and
Financial Officer)
Date: August 7, 2000
By: /s/ Glenn F. Hopps
------------------
Glenn F. Hopps, Treasurer
(Principal Accounting Officer)
and
By: FREEDOM GP INC.,
a General Partner
Date: August 7, 2000
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes, President
(Principal Executive and
Financial Officer)
Date: August 7, 2000
By: /s/ Glenn F. Hopps
------------------
Glenn F. Hopps, Treasurer
(Principal Accounting Officer)
