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 June 30, 1997
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-20476
INDEPENDENCE TAX CREDIT PLUS L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3589920
(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
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
============= =============
June 30, March 31,
1997 1997
------------- -------------
Property and equipment at cost,
net of accumulated depreciation
of $22,729,266 and $21,272,068,
respectively $ 160,453,269 $ 161,897,905
Cash and cash equivalents 2,633,090 2,087,057
Cash held in escrow 8,659,474 8,777,109
Deferred costs, net of accumulated
amortization of $1,274,507 and
$1,189,037 respectively 2,858,457 2,943,927
Other assets 1,757,711 1,742,839
------------- -------------
Total assets $ 176,362,001 $ 177,448,837
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $ 98,599,127 $ 99,092,259
Construction note payable 6,740,018 6,740,018
Accounts payable and other
liabilities 7,566,157 6,814,714
Due to local general partners and
affiliates 5,979,050 6,341,448
Due to general partner and
affiliates 790,301 760,510
------------- -------------
Total liabilities 119,674,653 119,748,949
------------- -------------
Minority interest 6,678,124 6,695,280
------------- -------------
Partners' capital:
Limited partners (76,786 BACs
issued and outstanding) 50,192,006 51,177,436
General partner (182,782) (172,828)
------------- -------------
Total partners' capital 50,009,224 51,004,608
------------- -------------
Total liabilities and partners' capital $ 176,362,001 $ 177,448,837
============= =============
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
=============================
Three Months Ended
June 30,
-----------------------------
1997 1996*
-----------------------------
Revenues
Rental income $ 4,855,365 $ 4,833,372
Other income 122,842 124,736
----------- -----------
4,978,207 4,958,108
----------- -----------
Expenses
General and administrative 724,727 782,173
General and administrative-
related parties (Note 2) 291,620 276,374
Repairs and maintenance 662,313 631,375
Operating 689,668 646,721
Taxes 287,823 304,559
Insurance 206,309 188,101
Financial, principally interest 1,575,619 1,469,965
Depreciation and amortization 1,542,668 1,538,092
----------- -----------
Total expenses 5,980,747 5,837,360
----------- -----------
Loss before minority interest (1,002,540) (879,252)
Minority interest in loss
of subsidiary partnerships 7,156 7,046
----------- -----------
Net loss $ (995,384) $ (872,206)
=========== ===========
Net loss-limited partners $ (985,430) $ (863,484)
=========== ===========
Net loss per BAC (12.83) (11.25)
=========== ===========
* Reclassified for comparative purposes
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Capital
(Unaudited)
================================================
Limited General
Total Partners Partner
------------------------------------------------
Partners' capital-
April 1, 1997 $ 51,004,608 $ 51,177,436 $ (172,828)
Net loss (995,384) (985,430) (9,954)
------------ ------------ ------------
Partners' capital-
June 30, 1997 $ 50,009,224 $ 50,192,006 $ (182,782)
============ ============ ============
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (decrease) in Cash and Cash Equivalents
(Unaudited)
============================
Three Months Ended
June 30,
----------------------------
1997 1996
----------------------------
Cash flows from operating activities:
Net loss $ (995,384) $ (872,206)
----------- -----------
Adjustments to reconcile net loss to
net cash provided by
operating activities:
Depreciation and amortization 1,542,668 1,538,092
Minority interest in loss of
subsidiaries (7,156) (7,046)
Increase (decrease) in due to general
partner and affiliates 29,791 (95,956)
Increase (decrease) in accounts
payable and other liabilities 751,443 (110,101)
Increase in other assets (14,872) (6,661)
Increase in cash held in escrow (509,801) (263,348)
----------- -----------
Total adjustments 1,792,073 1,054,980
----------- -----------
Net cash provided by operating
activities 796,689 182,774
----------- -----------
Cash flows from investing activities:
Improvements to property and
equipment (12,562) (25,351)
Decrease in cash held in escrow 627,436 72,300
Increase in due to local general
partners and affiliates 1,125 833
Decrease in due to local general
partners and affiliates (363,523) (60,256)
----------- -----------
Net cash provided by (used in)
investing activities 252,476 (12,474)
----------- -----------
Cash flows from financing activities:
Repayment of mortgage notes (493,132) (442,759)
Decrease in capitalization of
consolidated subsidiaries
attributable to minority interest (10,000) (16,589)
----------- -----------
Net cash used in financing
activities (503,132) (459,348)
----------- -----------
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (decrease) in Cash and Cash Equivalents
(continued)
(Unaudited)
=============================
Three Months Ended
June 30,
-----------------------------
1997 1996
-----------------------------
Net increase (decrease) in cash
and cash equivalents 546,033 (289,048)
Cash and cash equivalents at
beginning of period 2,087,057 2,395,044
----------- -----------
Cash and cash equivalents at
end of period $ 2,633,090 $ 2,105,996
=========== ===========
See Accompanying Notes to Consolidated Financial Statements
6
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997
(Unaudited)
Note 1 - General
The consolidated financial statements include the accounts of Independence Tax
Credit Plus L.P. (the "Partnership") and 28 subsidiary partnerships ("subsidiary
partnerships", "subsidiaries" or "Local Partnerships") owning affordable
apartment complexes that are eligible for the low-income housing tax credit.
Some of such apartment complexes may also be eligible for the rehabilitation
investment credit for certified historic structures. The general partner of the
Partnership is Related Independence Associates L.P., a Delaware limited
partnership (the "General Partner"). Through the rights of the Partnership
and/or an affiliate of the 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.
All intercompany accounts and transactions with the subsidiary partnerships 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 which exceed the minority interests'
investment in a subsidiary have been charged to the Partnership. Such losses
aggregated approximately $6,000 and $11,000 for the three months ended June 30,
1997 and 1996, respectively. The Partnership's investment in each subsidiary is
equal to the respective subsidiary's partners' equity less minority interest
capital, if any. In consolidation, all subsidiary partner-
7
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997
(Unaudited)
Note 1 - General (continued)
ship losses are included in the Partnership's capital account except for losses
allocated to minority interest capital.
Certain information and note disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
has 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,
1997.
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 Partner, 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, 1997 and the results of operations and cash flows for the three months ended
June 30, 1997 and 1996. However, the operating results for the three months
ended June 30, 1997 may not be indicative of the results for the year.
Note 2 - Related Party Transactions
An affiliate of the General Partner, Independence SLP L.P., has a 1% interest as
a special limited partner in each of the Local Partnerships. An affiliate of the
General Partner also has a minority interest in certain local limited
partnerships.
The costs incurred to related parties for the three months ended June 30, 1997
and 1996 were as follows:
=========================
Three Months Ended
June 30,
-------------------------
1997 1996
-------------------------
Partnership management fees (a) $ 12,500 $ 25,000
Expense reimbursement (b) 41,986 21,154
Property management fees (c) 215,134 212,220
Local administrative fee (d) 22,000 18,000
-------- --------
$291,620 $276,374
======== ========
(a) The General Partner is entitled to receive a partnership management fee,
after payment of all Partnership expenses, which
8
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997
(Unaudited)
Note 2 - Related Party Transactions (continued)
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
Partner in its sole discretion based upon its review of the Partnership's
investments. Unpaid partnership management fees for any year will be accrued
without interest and will be payable only to the extent of available funds after
the Partnership has made distributions to the limited partners 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 Partner amounting to
approximately $502,000 and $489,000 were accrued and unpaid as of June 30, 1997
and March 31, 1997, respectively.
(b) The Partnership reimburses the General Partner and its affiliates for actual
Partnership operating expenses incurred by the General Partner and its
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 Partner performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships' performance.
(c) Property management fees incurred to affiliates of the subsidiary
partnerships amounted to $215,134 and $212,220 for the three months ended June
30, 1997 and 1996, respectively. Included in amounts incurred to affiliates of
the subsidiary partnerships were $12,184 and $18,244 for the three months ended
June 30, 1997 and 1996, respectively, which were also incurred to an affiliate
of the General Partner.
(d) Independence SLP L.P. is entitled to receive a local administrative fee of
up to $2,500 per year from each subsidiary partnership.
Pursuant to the Partnership Agreement and the Local Partnership Agreements, the
General Partner and Independence SLP L.P. received their pro-rata share of
profits, losses and tax credits.
Note 3 - Commitments and Contingencies
There were no changes and/or additions to the disclosure regarding the
subsidiary partnership which was included in the Partnership's Annual Report on
Form 10-K for the period ended March 31, 1997.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
The Partnership's primary source of funds include (i) working capital reserves
and interest earned thereon, and (ii) cash distributions from the operations of
the Local Partnerships. All these sources of funds are available to meet
obligations of the Partnership.
As of June 30, 1997, the Partnership has invested approximately $59,710,000 (not
including acquisition fees of approximately $4,500,000) of net proceeds in
twenty-eight Local Partnerships of which approximately $360,000 remains to be
paid to the Local Partnerships (which is being held in escrow) as certain
benchmarks, such as occupancy level, must be attained prior to the release of
the funds. During the three months ended June 30, 1997, approximately $627,000
was paid from escrow. The Partnership does not intend to acquire additional
properties, however, the Partnership may be required to fund potential purchase
price adjustments based on tax credit adjustor clauses.
Cash and cash equivalents of the Partnership and its twenty-eight consolidated
subsidiary partnerships increased approximately $546,000 during the three months
ended June 30, 1997 primarily due to cash provided by operating activities
($797,000) and a decrease in cash held in escrow for investing activities
($627,000) which exceeded repayments of mortgage notes ($493,000), improvements
to property and equipment ($13,000) and a net decrease in due to local general
partners and affiliates ($362,000). Included in the adjustments to reconcile the
net loss to cash provided by operations is depreciation and amortization of
approximately $1,543,000.
An original working capital reserve of approximately $1,536,000 (2% of Gross
Proceeds raised) was established from the Partnership's funds available for
investment. The working capital reserve at June 30, 1997 and March 31, 1997 was
approximately $129,000 and $181,000, respectively, which includes amounts which
may be required for the potential purchase price adjustments based on tax credit
adjustor clauses.
10
<PAGE>
Cash distributions received from the Local Partnerships remain relatively
immaterial. Distributions of approximately $10,000 and $40,000 were received
during the three months ended June 30, 1997 and 1996, respectively. However,
management expects that the distributions received from the Local Partnerships
will increase, although not to a level sufficient to permit providing cash
distributions to BACs holders. These distributions as well as the working
capital reserves referred to in the above paragraph will be used to meet the
operating expenses of the Partnership.
Partnership management fees owed to the General Partner amounting to
approximately $502,000 and $489,000 were accrued and unpaid as of June 30, 1997
and March 31, 1997, respectively.
For a discussion of a contingency affecting a certain Local Partnership, see
Note 3 to the financial statements. Since the maximum loss the Partnership would
be liable for is its net investment in the Local Partnership, the resolution of
the existing contingency is not anticipated to impact future results of
operations, liquidity or financial condition in a material way. However, the
Partnership's loss of its investment in a Local Partnership will eliminate the
ability to generate future tax credits from such Local Partnership and may also
result in recapture of tax credits if the investment is lost before the
expiration of the compliance period.
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 be experiencing upswings. 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 28 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 Partner 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.
11
<PAGE>
Results of Operations
The Partnership's results of operations for the three months ended June 30, 1997
and 1996 consisted primarily of the results of the Partnership's investment in
twenty-eight Local Partnerships. The majority of Local Partnership income
continues to be in the form of rental income with the corresponding expenses
being divided among operations, depreciation and mortgage interest.
Rental income remained fairly consistent with an increase of less than 1% for
the three months ending June 30, 1997 as compared to the same period in 1996
primarily due to rental rate increases.
Total expenses remained fairly consistent with an increase of approximately 2%
for the three months ended June 30, 1997 as compared to the same period in 1996.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The litigation described in Note 3 to the financial statements contained in
Part I, Item 1 is incorporated herein by reference.
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:
(3A) Form of Amended and Restated Agreement of Limited Partnership of
Independence Tax Credit Plus L.P., attached to the Prospectus as Exhibit A*
(3B) Amended and Restated Certificate of Limited Partnership of
Independence Tax Credit Plus L.P.*
(10A) Form of Subscription Agreement attached to the Prospectus as Exhibit
B*
(10B) Form of Purchase and Sales Agreement pertaining to the Partnership's
acquisition of Local Partnership Interests*
(10C) Form of Amended and Restated Agreement of Limited Partnership of
Local Partnerships*
(27) Financial Data Schedule (filed herewith).
*Incorporated herein as an exhibit by reference to exhibits filed with
Pre-Effective Amendment No. 1 to the Independence Tax Credit Plus L.P.
Registration Statement on Form S-11 (Registration No. 33-37704)
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter.
13
<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.
INDEPENDENCE TAX CREDIT PLUS L.P.
(Registrant)
By: RELATED INDEPENDENCE
--------------------------------
ASSOCIATES L.P., General Partner
By: RELATED INDEPENDENCE
--------------------------------
ASSOCIATES INC., General Partner
Date: August 13, 1997
By: /s/ Alan P. Hirmes
--------------------------------
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: August 13, 1997
By: /s/ Richard A. Palermo
--------------------------------
Richard A. Palermo,
Treasurer
(principal accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements for Independence Tax Credit Plus L.P. and is qualified in its
entirety by reference to such financial statements
</LEGEND>
<CIK> 0000869615
<NAME> Independence Tax Credit Plus L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 11,292,564
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,757,711
<PP&E> 183,182,535
<DEPRECIATION> 22,729,266
<TOTAL-ASSETS> 176,362,001
<CURRENT-LIABILITIES> 14,355,508
<BONDS> 105,339,145
0
0
<COMMON> 0
<OTHER-SE> 56,687,348
<TOTAL-LIABILITY-AND-EQUITY> 176,362,001
<SALES> 0
<TOTAL-REVENUES> 4,978,207
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,405,128
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,575,619
<INCOME-PRETAX> (1,002,540)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,002,540)
<EPS-PRIMARY> (12.83)
<EPS-DILUTED> 0
</TABLE>
