February 12, 1997
Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Boston Financial Tax Credit Fund VII, A Limited Partnership
Report on Form 10-Q Edgar for Quarter Ended December 31, 1996
File No. 0-24584
Dear Sir/Madam:
Pursuant to the requirements of Rule 901(d) of Regulation S-T, enclosed is one
copy of subject report.
Very truly yours,
/s/Veronica J. Curioso
Veronica J. Curioso
Assistant Controller
TC7-10Q3.DOC
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
(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, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended December 31, 1996 Commission file number 0-24584
----------------------------------
Boston Financial Tax Credit Fund VII, A Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-3166203
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 Arch Street, Boston, Massachusetts 02110-1106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617)439-3911
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>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
- - ------------------------------ --------
Item 1. Financial Statements
Balance Sheets - December 31, 1996 (Unaudited)
and March 31, 1996 1
Statements of Operations (Unaudited) - For the Three and
Nine Months Ended December 31, 1996 and 1995 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Nine Months Ended December 31, 1996 3
Statements of Cash Flows (Unaudited) - For the Nine
Months Ended December 31, 1996 and 1995 4
Notes to Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Items 1-6 10
SIGNATURE 11
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 359,948 $ 334,845
Other current assets 23,742 29,943
------------ ------------
Total current assets 383,690 364,788
Investments in Local Limited Partnerships (Note 2) 32,819,776 34,328,400
Restricted cash 235,491 227,320
Marketable securities, at fair value (Note 1) 3,187,839 3,855,342
Organization costs, net of accumulated
amortization of $38,333 and
$30,833, respectively 11,667 19,167
------------ ------------
Total Assets $ 36,638,463 $ 38,795,017
============ ============
Liabilities and Partners' Equity
Current liabilities:
Accounts payable to affiliates $ 272,642 $ 212,975
Accounts payable and accrued expenses 50,591 66,417
------------ ------------
Total current liabilities 323,233 279,392
------------ ------------
Commitments (Note 3)
General, Initial and Investor Limited Partners' Equity 36,337,624 38,536,506
Net unrealized losses on marketable securities (22,394) (20,881)
------------ ------------
Total Partners' Equity 36,315,230 38,515,625
------------ ------------
Total Liabilities and Partners' Equity $ 36,638,463 $ 38,795,017
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three and Nine Months Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Revenue:
Investment $ 43,057 $ 77,738 $ 146,175 $ 163,489
Other 4,856 1,110 71,689 45,099
-------------- ------------- ------------- --------------
Total Revenue 47,913 78,848 217,864 208,588
-------------- ------------- ------------- --------------
Expenses:
Asset management fee,
related party 68,826 67,146 206,478 201,438
General and administrative
(includes reimbursements to
an affiliate in the amounts of
$80,646 and $80,028
in 1996 and 1995, respectively) 41,132 56,081 160,991 176,182
Amortization 11,457 10,119 34,372 30,356
-------------- ------------- ------------- --------------
Total Expenses 121,415 133,346 401,841 407,976
-------------- ------------- ------------- --------------
Loss before equity in losses
of Local Limited Partnerships (73,502) (54,498) (183,977) (199,388)
Equity in losses of
Local Limited Partnerships (775,322) (637,626) (2,014,905) (1,895,061)
-------------- ------------- ------------- --------------
Net Loss $ (848,824) $ (692,124) $ (2,198,882) $ (2,094,449)
============== ============= ============= ==============
Net Loss allocated:
To General Partners $ (8,488) $ (6,921) $ (21,989) $ (20,945)
To Limited Partners (840,336) (685,203) (2,176,893) (2,073,504)
-------------- ------------- ------------- --------------
$ (848,824) $ (692,124) $ (2,198,882) $ (2,094,449)
============== ============= ============= ==============
Net Loss per Limited
Partnership Unit
(50,930 Units) $ (16.50) $ (13.45) $ (42.74) $ (40.71)
============= ============= ============ ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Nine Months Ended December 31, 1996
<TABLE>
<CAPTION>
Initial Investor Net
General Limited Limited Unrealized
Partners Partners Partners Losses Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1996 $ (58,956) $ 5,000 $ 38,590,462 $ (20,881) $ 38,515,625
Net change in net unrealized
losses on marketable securities
available for sale - - - (1,513) (1,513)
Net Loss (21,989) - (2,176,893) - (2,198,882)
---------- ------- ------------ ----------- ------------
Balance at December 31, 1996 $ (80,945) $ 5,000 $ 36,413,569 $ (22,394) $ 36,315,230
========== ======= ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------- ---------
<S> <C> <C>
Net cash used for operating activities $ (178,710) $ (390,839)
------------- ------------
Cash flows from investing activities:
Purchases of marketable securities (1,095,655) (9,964,932)
Proceeds from sales and maturities
of marketable securities 1,843,809 11,679,461
Investments in Local Limited Partnerships (663,227) (2,317,269)
Cash distributions received from
Local Limited Partnerships 127,057 73,148
Payment of acquisition fees and expenses - (104,056)
Restricted cash (8,171) -
------------ ------------
Net cash provided by (used for) investing activities 203,813 (633,648)
------------ ------------
Cash flows from financing activities:
Payment of issuance expenses - (4,364)
------------ ------------
Net cash used for financing activities - (4,364)
------------ ------------
Net increase (decrease) in cash and cash equivalents 25,103 (1,028,851)
Cash and cash equivalents, beginning of period 334,845 1,768,604
------------ ------------
Cash and cash equivalents, end of period $ 359,948 $ 739,753
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto included with the Fund's 10-K for the year ended
March 31, 1996. In the opinion of management, these financial statements include
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Fund's financial position and results of operations. The
results of operations for the periods may not be indicative of the results to be
expected for the year.
1. Marketable Securities
A summary of Marketable Securities is as follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
Debt securities issued by
the US Treasury and other
US Government corporations
and agencies $ 2,026,562 $ 867 $ (9,870) $ 2,017,559
Mortgage backed securities 1,183,671 - (13,391) 1,170,280
------------ -------- --------- -----------
Marketable securities at
December 31, 1996 $ 3,210,233 $ 867 $ (23,261) $ 3,187,839
============ ======== ========= ===========
Debt securities issued by
the US Treasury and other
US government corporations
and agencies $ 2,563,670 $ - $ (10,111) $ 2,553,559
Mortgage backed securities 1,312,553 - (10,770) 1,301,783
------------ -------- --------- -----------
Marketable securities at
March 31, 1996 $ 3,876,223 $ - $ (20,881) $ 3,855,342
============ ======== ========= ===========
</TABLE>
The contractual maturities at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Cost Fair Value
<S> <C> <C>
Due in one year or less $ 663,625 $ 661,050
Due in one to five years 1,362,937 1,356,509
Mortgage backed securities 1,183,671 1,170,280
------------ ------------
$ 3,210,233 $ 3,187,839
============ ============
</TABLE>
Actual maturities may differ from contractual maturities because some borrowers
have the right to call or prepay obligations. Proceeds from sales and maturities
were approximately $1,844,000 and $11,679,000 for the nine months ended December
31, 1996 and 1995, respectively. Included in investment income are gross gains
of $89,295 and $43,174 and gross losses of $7,131 and $93,863 which were
realized on these sales during the nine months ended December 31, 1996 and 1995,
respectively.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Investments in Local Limited Partnerships
The Fund has acquired interests in nineteen Local Limited Partnerships which own
and operate multi-family housing complexes. The Fund, as Investor Limited
Partner, pursuant to the various Local Limited Partnership Agreements, has
generally acquired a 99% interest in the profits, losses, tax credits and cash
flows from operations of each of the Local Limited Partnerships. In the case of
Springwood, the Fund owns a 19.80% interest and an affiliate of the General
Partner owns the remaining 79.2% Limited Partnership interest. Upon dissolution,
proceeds will be distributed according to each respective partnership agreement.
The following is a summary of Investments in Local Limited Partnerships at
December 31, 1996 (Unaudited):
<TABLE>
<CAPTION>
<S> <C>
Capital Contributions paid to Local Limited Partnerships
and purchase price paid to withdrawing partners of
Local Limited Partnerships $ 39,189,961
Cumulative equity in losses of Local Limited Partnerships (7,313,133)
Cash distributions received from Local Limited Partnerships (227,205)
-------------
Investments in Local Limited Partnerships before adjustments 31,649,623
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 1,252,338
Accumulated amortization of acquisition fees and expenses (82,185)
-------------
Investments in Local Limited Partnerships $ 32,819,776
=============
</TABLE>
Summarized financial information from the combined financial statements of the
nineteen Local Limited Partnerships in which the Fund has invested is as
follows:
Summarized Balance Sheets - as of September 30, 1996 (Unaudited):
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investment property, net $ 100,743,255
Current assets 5,011,711
Other assets 3,770,339
-------------
Total Assets $ 109,525,305
=============
Liabilities and Partners' Equity:
Long-term debt $ 59,843,725
Current liabilities (includes current portion of long term debt) 2,971,471
Other debt 4,513,399
-------------
Total Liabilities 67,328,595
Partners' Equity 42,196,710
-------------
Total Liabilities and Partners' Equity $ 109,525,305
=============
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Investments in Local Limited Partnership (continued)
Summarized Statements of Operations for the nine months ended September 30, 1996
(Unaudited):
<TABLE>
<CAPTION>
<S> <C>
Rental and other revenue $ 9,088,424
------------
Expenses:
Operating 4,363,408
Interest 3,795,786
Depreciation and amortization 3,051,195
------------
Total Expenses 11,210,389
Net Loss $ (2,121,965)
============
Fund's share of Net Loss $ (2,014,905)
============
Other Partners' share of Net Loss $ (107,060)
============
</TABLE>
3. Commitments
At December 31, 1996, the Fund has committed to make future capital
contributions and pay future purchase price installments on its investments in
Local Limited Partnerships. These future payments are contingent upon the
achievement of certain criteria as set forth in the Local Limited Partnership
Agreements and total approximately $752,000.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At December 31, 1996, the Fund had cash and cash equivalents of $359,948 as
compared with $334,845 at March 31, 1996. The increase is primarily attributable
to proceeds from sales and maturities of marketable securities in excess of
purchases of marketable securities and cash distributions received from Local
Limited Partnerships. These increases are partially offset by investments in
Local Limited Partnerships and cash used for operating activities.
As of December 31, 1996, approximately $2,483,000 of cash, cash equivalents and
marketable securities has been designated as Reserves by the Managing General
Partner. The Reserves were established to be used for working capital of the
Fund and contingencies related to the ownership of Local Limited Partnership
interests. Management believes that the interest income earned on reserves,
along with cash distributions received from Local Limited Partnerships, to the
extent available, will be sufficient to fund the Fund's ongoing operations.
Reserves may be used to fund operating deficits if the Managing General Partner
deems funding appropriate.
At December 31, 1996, the Fund has committed to make future capital
contributions and pay future purchase price installments on its investments in
Local Limited Partnerships. These future payments are contingent upon the
achievement of certain criteria as set forth in the Local Limited Partnership
Agreements and total approximately $752,000.
Since the Fund invests as a limited partner, the Fund has no contractual duty to
provide additional funds to Local Limited Partnerships beyond its specified
investment. Thus, as of December 31, 1996, the Fund had no contractual or other
obligation to any Local Limited Partnership, which had not been paid or provided
for, except as described above.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Fund might deem it in its best interest to
provide such funds, voluntarily, in order to protect its investment. No
such event has occurred to date.
Cash Distributions
No cash distributions were made during the nine months ended December 31, 1996.
Results of Operations
The Fund's results of operations for the three and nine months ended December
31, 1996 resulted in net losses of $848,824 and $2,198,882, respectively, as
compared to net losses of $692,124 and $2,094,449 for the same periods in 1995.
The increase in net loss for the three and nine months ended December 31, 1996
as compared to the same period in 1995 is primarily attributable to an increase
in equity in losses of Local Limited Partnerships and a decrease in investment
revenue.
The equity in losses of Local Limited Partnerships increased from the 1995
periods to the 1996 periods due to an increase in the number of properties which
have completed construction and are in full operation. This has resulted in
increased depreciation, interest and operating expenses over total income
earned. The income earned on investments has decreased as a result of lower
investment balance from 1995 to 1996. As capital contributions are paid to Local
Limited Partnerships, the Fund has less cash to invest in securities and
therefore earns less revenue.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Property Discussions
Los Claveles II, located in Trujillio Alto, Puerto Rico, continues to experience
operating difficulties due to ongoing capital repair needs and management
issues. As previously reported, most of these difficulties stem from widespread
water infiltration that caused subsidy payments to be suspended pending
completion of required property repairs. The suspension of Section 8 payments
caused large fluctuations in monthly revenue and a subsequent mortgage default.
The Partnership cured the default by advancing $208,000 from the developer's
escrow. Recently, an affiliate of the Managing General Partner successfully
negotiated with the Local General Partners, lender and local housing authority
to replace the management agent. The new managing agent assumed responsibility
for the property in December 1996. It appears likely that resolving the
property's long-term problems might require advances from property and
Partnership reserves. An affiliate of the Managing General Partner is continuing
to work closely with the management agent, Local General Partners and lender to
devise a plan which preserves the Partnership's long-term interest in the
property.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K
(a)Exhibits - None
(b)Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended December 31, 1996.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
SIGNATURE
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.
DATED: February 12, 1997 BOSTON FINANCIAL TAX CREDIT FUND VII,
A LIMITED PARTNERSHIP
By: Arch Street VII, Inc.,
its Managing General Partner
/s/Georgia Murray
Georgia Murray
A Managing Director, Treasurer and
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 359,948
<SECURITIES> 3,187,839
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 36,638,463<F1>
<CURRENT-LIABILITIES> 323,233<F2>
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 36,315,230
<TOTAL-LIABILITY-AND-EQUITY> 36,638,463
<SALES> 000
<TOTAL-REVENUES> 217,864<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 401,841<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (2,198,882)<F5>
<EPS-PRIMARY> (42.74)
<EPS-DILUTED> 000
<FN>
<F1>Included in total assets are Investments in Local Limited Partnerships of $32,819,776, Restricted cash of
$235,491, Organizational costs, net of $11,667 and Other current assets of $23,742.
<F2>Included in current liabilities are Accounts payable to affiliate of $272,642 and Accounts payable and
accrued expenses of $50,591.
<F3>Total revenue includes Investment of $146,175 and Other of $71,689.
<F4>Included in Other Expenses are Asset Management fees of $206,478, General and Administrative of $160,991, and
Amortization of $34,372.
<F5>Net loss reflects Equity in losses of Local Limited Partnerships of $2,014,905.
</FN>
</TABLE>
