<PAGE>
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 September 30, 2000
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)
<TABLE>
<CAPTION>
============ ============
September 30, March 31,
2000 2000
------------ ------------
<S> <C> <C>
ASSETS
Property and equipment at cost,
net of accumulated depreciation
of $41,014,296 and $38,264,393,
respectively $141,652,511 $144,177,016
Cash and cash equivalents 1,638,982 2,256,497
Cash held in escrow 9,296,873 9,140,249
Deferred costs, net of accumulated
amortization of $1,120,464
and $956,312, respectively 1,903,919 2,025,646
Other assets 1,706,168 1,763,384
----------- -----------
Total assets $156,198,453 $159,362,792
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Mortgage notes payable $ 98,373,953 $ 92,458,812
Construction note payable 0 6,740,018
Accounts payable and other liabilities 8,956,939 9,058,332
Due to local general partners and
affiliates 5,559,193 5,821,007
Due to general partner and affiliates 4,133,297 3,542,200
----------- -----------
Total liabilities 117,023,382 117,620,369
----------- -----------
Minority interest 6,335,987 6,412,604
----------- -----------
Partners' capital (deficit):
Limited partners (76,786 BACs
issued and outstanding) 33,193,567 35,659,395
General partner (354,483) (329,576)
----------- -----------
Total partners' capital (deficit) 32,839,084 35,329,819
----------- -----------
Total liabilities and partners'
capital (deficit) $156,198,453 $159,362,792
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
2
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INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
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 $ 4,875,945 $ 4,978,699 $ 9,724,917 $ 9,797,623
Other income 172,875 153,745 287,101 287,001
----------- ----------- ----------- -----------
5,048,820 5,132,444 10,012,018 10,084,624
----------- ----------- ----------- -----------
Expenses
General and
administrative 943,821 1,074,345 1,850,384 1,916,784
General and
administrative-
related parties
(Note 2) 500,177 495,188 1,011,439 984,535
Repairs and
maintenance 1,079,397 891,831 1,901,920 1,608,713
Operating 651,857 643,371 1,324,085 1,320,726
Taxes 331,243 322,055 658,217 658,569
Insurance 181,924 191,752 393,653 401,127
Financial,
principally
interest 1,218,207 1,230,684 2,459,648 2,499,360
Depreciation and
amortization 1,488,536 1,489,113 2,914,055 2,960,262
----------- ----------- ----------- -----------
Total expenses 6,395,162 6,338,339 12,513,401 12,350,076
----------- ----------- ----------- -----------
Net loss before
minority interest (1,346,342) (1,205,895) (2,501,383) (2,265,452)
Minority interest
in loss of
subsidiaries 2,905 5,605 10,648 10,500
----------- ----------- ----------- -----------
Net loss $ (1,343,437) $ (1,200,290) $ (2,490,735) $ (2,254,952)
=========== =========== =========== ===========
Net loss - limited
partners $ (1,330,003) $ (1,188,287) $ (2,465,828) $ (2,232,402)
=========== =========== =========== ===========
Number of BACs
outstanding 76,786 76,786 76,786 76,786
=========== =========== =========== ===========
Net loss per BAC $ (17.32) $ (15.47) $ (32.11) $ (29.07)
=========== =========== =========== ===========
</TABLE>
*Reclassified for comparative purposes.
See Accompanying Notes to Consolidated Financial Statements.
3
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INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Capital
(Deficit)
(Unaudited)
<TABLE>
<CAPTION>
=================================================
Limited General
Total Partners Partner
-------------------------------------------------
<S> <C> <C> <C>
Partners' capital
(deficit)
April 1, 2000 $35,329,819 $35,659,395 $(329,576)
Net loss (2,490,735) (2,465,828) (24,907)
---------- ---------- --------
Partners' capital
(deficit)
September 30,
2000 $32,839,084 $33,193,567 $(354,483)
========== ========== ========
</TABLE>
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)
<TABLE>
<CAPTION>
==============================
Six Months Ended
September 30,
2000 1999
------------------------------
<S> <C> <C>
Cash flows from
operating activities:
Net loss $(2,490,735) $(2,254,952)
--------- ---------
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation and amortization 2,914,055 2,960,262
Minority interest in loss of
subsidiaries (10,648) (10,500)
Increase in due to general
partner and affiliates 591,097 601,307
(Decrease) increase in accounts
payable and other liabilities (101,393) 1,236,131
Decrease (increase) in other assets 57,216 (149,941)
Increase in cash held in escrow (224,324) (370,343)
--------- ---------
Total adjustments 3,226,003 4,266,916
--------- ---------
Net cash provided by
operating activities 735,268 2,011,964
--------- ---------
Cash flows from investing activities:
Increase in property and
equipment (225,398) (643,928)
Decrease in cash held in escrow 67,700 63,000
Decrease in due to local general
partners and affiliates (261,814) (240,492)
--------- ---------
Net cash used in
investing activities (419,512) (821,420)
--------- ---------
</TABLE>
5
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(continued)
<TABLE>
<CAPTION>
==============================
Six Months Ended
September 30,
2000 1999
------------------------------
<S> <C> <C>
Cash flows from financing activities:
Proceeds from mortgage notes payable 6,889,970 0
Repayment of mortgage notes (974,829) (973,327)
Repayment of construction loan
payable (6,740,018) 0
Decrease in capitalization of
consolidated subsidiaries
attributable to minority interest (65,969) (2,232)
Increase in deferred costs (42,425) 0
--------- ---------
Net cash used in financing activities (933,271) (975,559)
--------- ---------
Net (decrease) increase in cash
and cash equivalents (617,515) 214,985
Cash and cash equivalents at
beginning of period 2,256,497 1,781,472
--------- ---------
Cash and cash equivalents at
end of period $1,638,982 $1,966,457
========= =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
6
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000
(Unaudited)
Note 1 - General
The consolidated financial statements include the accounts of Independence Tax
Credit Plus L.P. (the "Partnership") and 28 other limited 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.
For financial reporting purposes, 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 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 and cash
distributions to the minority interest partners.
Losses attributable to minority interest which exceed the minority interests'
investment in a subsidiary have been charged to the Partnership. Such losses
aggregated approximately $8,000 and $7,000 and $14,000 and $12,000 for the three
and six months ended September 30, 2000 and 1999, respectively. The
Partnership's investment in each subsidiary is equal to the respective
subsidiary's
7
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000
(Unaudited)
partners' equity less minority interest capital, if any. In
consolidation, all subsidiary partnership 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,
2000.
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
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 for the six months ended
September 30, 2000 may not be indicative of the results for the year.
8
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INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000
(Unaudited)
Note 2 - Related Party Transactions
An affiliate of the General Partner, Independence SLP L.P., has either a 0.1% or
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
Partnerships.
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) $220,000 $220,000 $ 440,000 $440,000
Expense reimburse-
ment (b) 36,714 27,485 68,455 50,485
Local administra-
tive fee (c) 20,000 18,000 40,000 36,000
------- ------- --------- -------
Total general and
administrative-
General Partner 276,714 265,485 548,455 526,485
------- ------- --------- -------
Property manage-
ment fees incurred
to affiliates of
the subsidiary
partnerships'
general partners 223,463 229,703 462,984 458,050
------- ------- --------- -------
Total general and
administrative-
related parties $500,177 $495,188 $1,011,439 $984,535
======= ======= ========= =======
</TABLE>
(a) The General Partner is 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 Partner in its sole discretion
based upon its review of the Partnership's investments. Unpaid partnership
management fees for any year have been, and will continue to be, accrued without
interest and will be payable
9
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000
(Unaudited)
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 $2,739,000 and $2,299,000 were
accrued and unpaid as of September 30, 2000 and March 31, 2000. Without the
General Partner's advances and continued accrual without payment of certain fees
and expense reimbursements, the Partnership will not be in a position to meet
its obligations. The General Partner has continued to advance and allow the
accrual without payment of these amounts but is under no obligation to continue
to do so.
(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) 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 prorata share of
profits, losses and tax credits.
Note 3 - Mortgage Note Payable
P.S. 157 ASSOCIATES, L.P. ("P.S. 157")
On March 14, 2000, P.S. 157 refinanced its construction loans and converted them
into three permanent mortgage loans. The first loan, with a principal balance of
$1,834,000, bears interest at 7.97% and requires monthly payments of principal
and interest through maturity by March 1, 2015. The second loan, with a
principal balance of $2,838,070, bears interest at 1% and requires monthly
payments of principal and interest for the first 15 years; principal and
10
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000
(Unaudited)
interest at 6.875% payable monthly for 1 year and then, principal and
interest at .113% payable monthly through maturity on March 1, 2030. The
third loan, with a principal balance of $2,217,900, bears interest at 1% with
no payments due until April 1, 2016. The construction loan in the amount of
$6,740,018 was satisfied.
Note 4 - Commitments and Contingencies
There were no material changes and/or additions to disclosures regarding the
subsidiary partnerships which were included in the Partnership's Annual Report
on Form 10-K for the period ended March 31, 2000.
11
<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 is cash distributions from the
operations of the Local Partnerships. These funds, which remain immaterial, are
available to meet obligations of the Partnership.
As of September 30, 2000, the Partnership has invested all of its net proceeds
in twenty-eight Local Partnerships. Approximately $292,000 of the purchase price
remains to be paid to the Local Partnerships (all of which is held in escrow).
Cash and cash equivalents of the Partnership and its twenty-eight consolidated
subsidiary partnerships decreased approximately $618,000 during the six months
ended September 30, 2000 due to repayments of mortgage and construction loans
payable ($7,715,000), an increase in deferred costs ($42,000), acquisition of
property and equipment ($225,000), a decrease in capitalization of consolidated
subsidiaries attributable to minority interest ($66,000) and a decrease in due
to local general partners and affiliates ($262,000) which exceeded a decrease in
cash held in escrow relating to investing activities ($68,000), proceeds from
mortgage notes payable ($6,890,000) and cash provided by operating activities
($735,000). Included in the adjustments to reconcile the net loss to cash flow
provided by operating activities is depreciation and amortization ($2,914,000).
The working capital reserve at September 30, 2000 was approximately $2,000.
Cash distributions received from the Local Partnerships remain relatively,
immaterial. Distributions of approximately $46,000 and $14,000 were received
during the six months ended September 30, 2000 and 1999, 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 $2,739,000 and $2,299,000 were ac-
12
<PAGE>
crued and unpaid as of September 30, 2000 and March 31, 2000, respectively (see
Note 2). Without the General Partner's advances and continued accrual without
payment of certain fees and expense reimbursements, the Partnership will not be
in a position to meet its obligations. The General Partner has continued to
advance and allow the accrual without payment of these amounts but is under no
obligation to continue to do so.
For a discussion of mortgage notes payable, see Note 3 to the financial
statements.
For a discussion of contingencies affecting certain Local Partnerships, see Note
4 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 the ten year
period. If trends in the real estate market warranted the sale of a property,
the remaining tax credits would transfer to the new owner, thereby adding
significant value to the property on the market, which are not included in the
financial statement carrying amount.
RESULTS OF OPERATIONS
The Partnership's results of operations for the three and six months ended
September 30, 2000 and 1999 consisted primarily of the results of the
Partnership's investment in twenty-eight Local Part-
13
<PAGE>
nerships. 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 decreases of approximately 2% and
1% for the three and six months ended September 30, 2000 as compared to the
corresponding periods in 1999.
Other income increased approximately $19,000 for the three months ended
September 30, 2000 as compared to the corresponding period in 1999 primarily due
to the forfeiture of security deposits and an increase in laundry income
received in the second quarter of 2000 at one Local Partnership as well as small
increases at three other Local Partnerships.
Total expenses, excluding repairs and maintenance and general and administrative
remained fairly consistent with a decrease of less than 1% and approximately 1%
for the three and six months ended September 30, 2000 as compared to the
corresponding periods in 1999.
Repairs and maintenance increased approximately $188,000 and $293,000 for the
three and six months ended September 30, 2000 as compared to the corresponding
periods in 1999 primarily due to the replacement of doors and the purchase of
new appliances at one Local Partnership, roof repairs and replacement of water
heaters at a second Local Partnership and increased plumbing, electrical,
flooring and cleaning expenses due to hurricane damage at a third Local
Partnership.
General and administrative decreased approximately $131,000 for the three months
ended September 30, 2000 as compared to the corresponding period in 1999
primarily due to a decrease in legal fees at the Partnership level.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
None.
14
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - This information is incorporated by reference to
the discussion of Old Public in Commitments and Contingencies contained in
Item 1.
Item 2. Changes in Securities and Use of Proceeds - 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.
15
<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: October 25, 2000
By: /s/ Alan P. Hirmes
-------------------
Alan P. Hirmes,
Senior Vice President
(principal financial officer)
Date: October 25, 2000
By: /s/ Glenn F. Hopps
-------------------
Glenn F. Hopps,
Treasurer
(principal accounting officer)
