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 0-24652
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>
December 31, March 31,
1999 1999
<S> <C> <C>
ASSETS
Property and equipment - (at cost,
net of accumulated depreciation
of $43,242,617 and $39,508,462,
respectively) $ 99,876,235 $103,215,088
Cash and cash equivalents 1,234,949 1,143,642
Investment in marketable securities 115,559 156,635
Cash held in escrow 4,629,648 4,282,886
Deferred costs (net of accumulated
amortization of $1,271,193
and $1,492,630, respectively) 1,667,675 1,915,961
Other assets 1,079,497 1,231,942
Total Assets $108,603,563 $111,946,154
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Mortgage notes payable $ 69,903,359 $ 70,447,844
Accounts payable and other
liabilities 2,875,977 2,517,628
Due to local general partners and
affiliates 2,992,690 3,333,005
Due to general partners and
affiliates (Note 2) 3,823,572 3,193,216
Total Liabilities 79,595,598 79,491,693
Minority interests 7,987,081 8,046,825
Partners' Capital (Deficit):
Limited partners (72,896 BACs
issued and outstanding) 21,480,728 24,832,512
General partners (470,543) (436,687)
Accumulated other comprehensive
income:
Unrealized gain on marketable
securities 10,699 11,811
Total Partners' Capital (Deficit) 21,020,884 24,407,636
Total Liabilities and Partners'
Capital (Deficit) $108,603,563 $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 Nine Months Ended
December 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues
Rental income $ 3,239,497 $ 3,079,076 $ 9,661,625 $ 9,335,208
Other 376,437 350,854 1,054,108 1,035,966
Total revenues 3,615,934 3,429,930 10,715,733 10,371,174
Expenses
General and
administrative 534,197 567,993 1,705,860 1,706,017
General and
administrative-
related parties
Note 2) 400,561 367,202 1,139,803 1,158,734
Operating and
other 308,947 318,197 1,019,134 974,058
Repairs and
Maintenance 641,492 668,863 1,665,284 1,704,963
Real estate taxes 229,867 228,033 707,202 700,473
Insurance 85,055 106,708 301,825 329,227
Financial 1,202,854 1,225,251 3,616,397 3,666,161
Depreciation and
amortization 1,273,703 1,298,519 3,982,441 3,911,790
Total expenses 4,676,676 4,780,766 14,137,946 14,151,423
Loss before
minority interest (1,060,742) (1,350,836) (3,422,213) (3,780,249)
Minority interest
in loss of
subsidiary
partnerships 11,094 14,363 36,573 40,561
Net loss $(1,049,648) $(1,336,473) $(3,385,640) $(3,739,688)
Net loss - limited
partners $(1,039,152) $(1,323,108) $(3,351,784) $(3,702,291)
Number of BACs
outstanding 72,896 72,896 72,896 72,896
Basic net loss
per BAC $ (14.25) $ (18.15) $ (45.98) $ (50.79)
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
Compre-
hensive
Income
(Loss):
Net loss -
Nine
months
ended
December
31, 1999 (3,385,640) (3,351,784) (33,856) $(3,385,640)
Other
Compre-
hensive
Income
(Loss):
Net
unrealized
gain on
marketable
securities (1,112) 0 0 (1,112) (1,112)
Total
Compre-
hensive
Income
(Loss) $(3,386,752)
Partners'
capital
(deficit)
December
31, 1999 $21,020,884 $21,480,728 $(470,543) $10,699
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>
Nine Months Ended
December 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,385,640) $(3,739,688)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 3,982,441 3,911,790
Minority interest in loss of
subsidiaries (36,573) (40,561)
Decrease (increase) in other assets 152,445 (430,278)
Increase in accounts payable
and other liabilities 358,349 901,051
Increase in cash held
in escrow (346,762) (707,609)
Increase in due to general partners
and affiliates 630,356 525,917
Increase in due to local general
partners and affiliates 36,045 8,489
Decrease in due to local general
partners and affiliates (376,360) (146,757)
Net cash provided by
operating activities 1,014,301 282,354
Cash flows from investing activities:
Acquisition of property and
equipment (395,302) (241,354)
Proceeds from sale of marketable
securities 39,964 0
Net cash used in investing
activities (355,338) (241,354)
Cash flows from financing activities:
Repayments of mortgage notes (544,485) (485,902)
Decrease in capitalization of
consolidated subsidiaries
attributable to minority interest (23,171) (19,909)
Net cash used in financing
activities (567,656) (505,811)
Net increase (decrease) in cash and
cash equivalents 91,307 (464,811)
Cash and cash equivalents at
beginning of period 1,143,642 1,656,414
Cash and cash equivalents at
end of period $1,234,949 $1,191,603
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
Notes to Consolidated Financial Statements
December 31, 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 December 31. All subsidiar-
ies have fiscal quarters ending September 30. Accounts of the sub-
sidiaries have been adjusted for intercompany transactions from
October 1 through December 31. The Partnership's fiscal quarter
ends December 31, in order to allow adequate time for the sub-
sidiaries 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 $14,000 and $37,000 and $41,000 for the three and
nine months ended December 31, 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 December 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.
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 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) $ 169,000 $ 169,000 $ 507,000 $ 507,000
Expense reimburse-
ment (b) 54,124 30,500 115,906 136,706
Local administra-
tive fee (c) 12,000 12,000 35,000 36,000
Total general and
administrative-
General Partners 235,124 211,500 657,906 679,706
Property manage-
ment fees
incurred to
affiliates of
the subsidiary
partnerships'
general
partners (d) 165,437 155,702 481,897 479,028
Total general and
administrative-
related parties $ 400,561 $ 367,202 $1,139,803 $1,158,734
</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 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
$3,335,000 and $2,828,000 were accrued and unpaid as of Decem-
ber 31, 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 $234,660 and $236,216 and $683,266 and
$694,522 for the three and nine months ended December 31, 1999
and 1998, respectively. Of these fees $165,437 and $155,702 and
$481,897 and $479,028, respectively, were incurred to affiliates of
the subsidiary partnerships' general partners for the three and nine
months ended December 31, 1999 and 1998, respectively.
Note 3 - Commitments and Contingencies
The following disclosure includes changes and/or additions to
disclosures regarding the subsidiary partnership which was in-
cluded in the Partnership's Annual report on Form 10-K for the
period ended March 31, 1999.
Eagle Ridge Limited Partnership
In fiscal 1998, Eagle Ridge entered into a Forbearance Agreement
with Wisconsin Housing and Economic Development Authority
("WHEDA") as a result of Eagle Ridge's failure to pay all the re-
quired installment payments under the mortgage note. Under the
terms of the agreement, WHEDA has agreed to temporarily forego
the enforcement of its rights and remedies against Eagle Ridge
through December 31, 1998 and to continue to extend Eagle Ridge
financing provided that Eagle Ridge complies with certain condi-
tions. The Forbearance Agreement was extended through Decem-
ber 31, 2000, and Eagle Ridge is currently negotiating with
WHEDA to permanently restructure the loan. The conditions of
the agreement consist of, but are not limited to: (1) monthly pay-
ments of escrow and reserve deposits, (2) monthly payments of
principal and interest limited to the lower of 100% of net operating
income ("NOI") or 5% of the regularly scheduled monthly note
payment (base payment), (3) 75% of the monthly NOI in excess of
the base payment for principal and interest and (4) the remaining
35% of NOI in excess of the base payment is to be paid as an in-
centive management fee to the management agent.
<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 nine months ended
December 31, 1999, include working capital reserves, interest
earned on working capital reserves and distributions received
from the Local Partnerships.
A working capital reserve of approximately $124,000 remains as of
December 31, 1999.
During the nine months ended December 31, 1999 and 1998, the
distributions received from the Local Partnerships approximated
$17,000 and $15,000, 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 $3,335,000 and $2,828,000
were accrued and unpaid as of December 31, 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 nine months ended December 31, 1999, cash and cash
equivalents of the Partnership and its forty-two consolidated Local
Partnerships increased approximately $91,000 due to cash pro-
vided by operating activities ($1,014,000) and proceeds from the
sale of marketable securities ($40,000) which exceeded acquisitions
of property and equipment ($396,000), a decrease in capitalization
of consolidated subsidiaries attributable to minority interest
($23,000) and repayments of mortgage notes ($544,000). Included
in the adjustments to reconcile the net loss to cash provided by
operating activities is depreciation and amortization ($3,982,000).
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 nine months ended
December 31, 1999 continues to be in the form of rental income
with corresponding expenses divided among operations, deprecia-
tion and mortgage interest.
Rental income remained fairly consistent with an increase of ap-
proximately 5% and 3% for the three and nine months ended De-
cember 31, 1999 as compared to the corresponding periods in
1998, primarily due to rental rate increases.
Total expenses, excluding insurance remained fairly consistent
with a decrease of approximately 2% and an increase of less than
1% for the three and nine months ended December 31, 1999 as
compared to the corresponding periods in 1998.
Insurance decreased approximately $22,000 and $27,000 for the
three and nine months ended December 31, 1999 as compared to
the corresponding periods in 1998 primarily due to an overaccrual
of insurance expense in the second quarter of 1999 at one Local
Partnership which was corrected in the third quarter of 1999 and a
decrease in insurance expense at a second Local Partnership.
Year 2000 Compliance
The Partnership has not experienced any Year 2000 problems to
date. However, there can be no assurance that no Y2K issues will
arise at a future date.
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 quarter.
<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: February 8, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes, Vice President
(Principal Financial Officer)
Date: February 8, 2000
By: /s/ Glenn F. Hopps
Glenn F. Hopps, Treasurer
(Principal Accounting Officer)
and
By: FREEDOM GP INC.,
a General Partner
Date: February 8, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes, Vice President
(Principal Financial Officer)
Date: February 8, 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 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> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 5,864,597
<SECURITIES> 115,559
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,079,497
<PP&E> 143,118,852
<DEPRECIATION> 43,242,617
<TOTAL-ASSETS> 108,603,653
<CURRENT-LIABILITIES> 79,595,598
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,007,965
<TOTAL-LIABILITY-AND-EQUITY> 108,603,653
<SALES> 0
<TOTAL-REVENUES> 10,715,733
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,521,549
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,616,397
<INCOME-PRETAX> (3,422,213)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,385,640)
<EPS-BASIC> (45.98)
<EPS-DILUTED> 0
</TABLE>
