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 December 31, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
Commission File Number 0-24660
LIBERTY TAX CREDIT PLUS II L.P.
-------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3458180
- ------------------------------- -----------------
(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
--- ---
PART I - Financial Information
Item 1. Financial Statements
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
============= =============
December 31, March 31,
2002 2002
------------- -------------
ASSETS
Property and equipment, net of
accumulated depreciation
of $97,332,394 and $91,748,867,
respectively $ 137,392,579 $ 142,589,875
Property and equipment - held
for sale, net of accumulated
depreciation of $0 and
$3,147,094, respectively 0 4,420,312
Cash and cash equivalents 1,469,792 1,253,722
Cash held in escrow 8,509,638 7,386,866
Deferred costs, net of accumulated
amortization of $4,165,167 and
$3,028,056, respectively 2,591,233 3,327,867
Other assets 4,492,855 4,772,891
------------- -------------
Total assets $ 154,456,097 $ 163,751,533
============= =============
2
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(continued)
============= =============
December 31, March 31,
2002 2002
------------- -------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Mortgage notes payable (Note 3) $ 105,077,283 $ 108,447,287
Accounts payable and other
liabilities 7,413,360 7,865,635
Due to local general partners and
affiliates 16,431,554 16,732,003
Due to general partners and affiliates 13,452,305 11,990,078
Due to selling partners 2,355,720 2,350,095
------------- -------------
Total liabilities 144,730,222 147,385,098
------------- -------------
Minority interest 2,192,931 2,516,272
------------- -------------
Commitments and contingencies (Note 5)
Partners' capital (deficit)
Limited partners (115,917.5 BACs
issued and outstanding) 8,488,298 14,742,345
General partners (955,354) (892,182)
------------- -------------
Total partners' capital (deficit) 7,532,944 13,850,163
------------- -------------
Total liabilities and partners'
capital (deficit) $ 154,456,097 $ 163,751,533
============= =============
See accompanying notes to consolidated financial statements.
3
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
============================ ============================
Three Months Ended Nine Months Ended
December 31, December 31,
---------------------------- ----------------------------
2002 2001 2002 2001
---------------------------- ----------------------------
Revenues
Rentals, net $ 6,663,988 $ 6,723,877 $ 19,976,203 $ 20,354,776
Other 166,463 254,364 448,961 593,634
Gain (loss) on sale
of property (Note 4) 14,583 0 (44,883) 0
------------ ------------ ------------ ------------
Total revenue 6,845,034 6,978,241 20,380,281 20,948,410
------------ ------------ ------------ ------------
Expenses
General and ad-
ministrative 1,815,659 1,838,302 5,364,406 5,224,075
General and admini-
strative - related
parties (Note 2) 660,116 684,272 1,972,114 1,981,531
Repairs and main-
tenance 1,194,607 1,500,055 3,510,397 4,336,797
Operating 603,689 782,076 2,112,145 2,279,676
Taxes 229,340 263,778 765,705 816,416
Insurance 275,719 252,692 964,524 854,212
Interest 1,763,608 1,767,142 5,262,508 5,561,821
Depreciation and
amortization 2,645,448 1,920,422 6,865,552 5,916,545
------------ ------------ ------------ ------------
Total expenses 9,188,186 9,008,739 26,817,351 26,971,073
------------ ------------ ------------ ------------
Loss before
minority interest
and extra-
ordinary item (2,343,152) (2,030,498) (6,437,070) (6,022,663)
Minority interest in
loss of subsidiaries 3,625 23,988 119,851 174,045
------------ ------------ ------------ ------------
Loss before extra-
ordinary item (2,339,527) (2,006,510) (6,317,219) (5,848,618)
Extraordinary item-
forgiveness of
indebtedness
income 0 0 0 1,802,622
------------ ------------ ------------ ------------
Net loss $ (2,339,527) $ (2,006,510) $ (6,317,219) $ (4,045,996)
============ ============ ============ ============
Limited Partners
Share:
Loss before extra-
ordinary item $ (2,316,132) $ 1,986,445) $ (6,254,047) $ (5,790,132)
Extraordinary item 0 0 0 1,784,596
------------ ------------ ------------ ------------
Net loss $ (2,316,132) $ (1,986,445) $ (6,254,047) $ (4,005,536)
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
4
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(continued)
========================== ==========================
Three Months Ended Nine Months Ended
December 31, December 31,
-------------------------- --------------------------
2002 2001 2002 2001
-------------------------- --------------------------
Number of units
outstanding 115,917.5 115,917.5 115,917.5 115,917.5
=========== =========== =========== ===========
Loss before
extraordinary
item per limited
partner unit $ (19.98) $ (17.14) $ (53.95) $ (49.95)
Extraordinary item
per limited
partner unit 0 0 0 15.40
----------- ----------- ----------- -----------
Net loss
per limited
partner unit $ (19.98) $ (17.14) $ (53.95) $ (34.55)
=========== =========== =========== ===========
See Accompanying Notes to Consolidated Financial Statements.
5
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Capital
(Deficit)
(Unaudited)
=================================================
Limited General
Total Partners Partners
-------------------------------------------------
Partners' capital
(deficit) -
April 1, 2002 $ 13,850,163 $ 14,742,345 $ (892,182)
Net loss (6,317,219) (6,254,047) (63,172)
------------ ------------ ------------
Partners' capital
(deficit) -
December 31, 2002 $ 7,532,944 $ 8,488,298 $ (955,354)
============ ============ ============
See accompanying notes to consolidated financial statements.
6
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
===============================
Nine Months Ended
December 31,
-------------------------------
2002 2001
-------------------------------
Cash flows from operating activities:
Net loss $ (6,317,219) $ (4,045,996)
------------ ------------
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Loss on sale of property (Note 4) 44,883 0
Extraordinary item - forgiveness
of indebtedness income 0 (1,802,622)
Depreciation and amortization 6,865,552 5,916,545
Minority interest in loss of
subsidiaries (119,851) (174,045)
Increase in cash held in escrow (441,578) (41,133)
Decrease (increase) in other assets 69,200 (69,947)
Increase (decrease) in accounts
payable and other liabilities 184,490 (824,231)
Increase in due to local general
partners and affiliates 277,320 953,116
Decrease in due to local general
partners and affiliates (577,769) (217,539)
Increase in due to general partners
and affiliates 1,461,226 1,325,936
------------ ------------
Total adjustments 7,763,473 5,066,080
------------ ------------
Net cash provided by operating
activities 1,446,254 1,020,084
------------ ------------
Cash flows from investing activities:
Acquisitions of property and
equipment (386,231) (416,236)
(Increase) decrease in cash held
in escrow (791,835) 200,972
------------ ------------
Net cash used in investing
activities (1,178,066) (215,264)
------------ ------------
7
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(continued)
===============================
Nine Months Ended
December 31,
-------------------------------
2002 2001
-------------------------------
Cash flows from financing activities:
Increase in deferred costs (545,391) (79,318)
Proceeds from mortgage notes 30,922,410 0
Repayments of mortgage notes (30,231,272) (1,367,969)
Increase in due to selling
partners 5,625 5,625
Decrease in capitalization
of consolidated subsidiaries
attributable to minority
interest (203,490) (582,258)
------------ ------------
Net cash used in financing activities (52,118) (2,023,920)
------------ ------------
Net increase (decrease) in cash and
cash equivalents 216,070 (1,219,100)
Cash and cash equivalents at
beginning of period 1,253,722 2,624,751
------------ ------------
Cash and cash equivalents at
end of period $ 1,469,792 $ 1,405,651
============ ============
Supplemental disclosure of noncash
operating and financing activities:
Increase in property and equipment -
held for sale reclassified from
property and equipment $ 0 $ 5,010,338
Advance from local general partner
and affiliates to repay mortgage
notes payable 0 5,100,000
Forgiveness of indebtedness income
(Note 3):
Decrease in mortgage notes payable 0 (1,802,622)
8
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(continued)
===============================
Nine Months Ended
December 31,
-------------------------------
2002 2001
-------------------------------
Summarized below are the
components of the loss on sale
of property (Note 4):
Decrease in property and
equipment - held for sale -
net of accumulated depreciation $ 4,420,312 $ 0
Decrease in rent receivable 20,423 0
Decrease in mortgage escrow
deposits 110,641 0
Decrease in prepaid expenses
and other assets 109,774 0
Decrease in mortgage notes payable (4,061,142) 0
Decrease in accounts payable,
accrued expenses and other
liabilities (556,126) 0
Increase in due to general partners
of subsidiaries and their affiliates 1,001 0
See accompanying notes to consolidated financial statements.
9
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2002
(Unaudited)
Note 1 - General
The consolidated financial statements for the nine months ended December 31,
2002 and 2001 include the accounts of Liberty Tax Credit Plus II L.P. (the
"Partnership") and 27 subsidiary partnerships ("subsidiaries", "subsidiary
partnerships" or "Local Partnerships") in which the Partnership is the limited
partner. Through the rights of the Partnership and/or Related Credit Properties
II L.P., a Delaware limited partnership, Liberty Associates II L.P., a Delaware
limited partnership, or Liberty GP II Inc., a Delaware corporation (each a
"General Partner" and collectively, the "General Partners"), which General
Partners have a contractual obligation to act on behalf of the Partnership, to
remove the general partner of the subsidiary partnerships (each, a "Local
General Partner"), and to approve certain major operating and financial
decisions, the Partnership has a controlling financial interest in each of the
subsidiary partnerships.
For financial reporting purposes, the Partnership's fiscal quarter ends December
31 in order to allow adequate time for the subsidiaries' financial statements to
be prepared and consolidated. All subsidiary partnerships have fiscal quarters
ending September 30. Accounts of the subsidiary partnerships have been adjusted
for intercompany transactions from October 1 through December 31.
All intercompany accounts and transactions have been eliminated in
consolidation.
Increase (decrease) in capitalization of consolidated subsidiary partnerships
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 partnership have been charged to the Partnership.
Such losses aggregated $210,000 and $142,000 and $529,000 and $504,000 for the
three and nine months ended December 31, 2002 and 2001, respectively. The
Partnership's investment in each subsidiary is equal to the respective
subsidiary partners' equity less minority interest capital, if any.
10
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2002
(Unaudited)
The books and records of the Partnership are maintained on the accrual basis in
accordance with generally accepted accounting principles ("GAAP"). In the
opinion of each of the General Partners, 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 December 31, 2002, the results of operations of the
Partnership for the three and nine months ended December 31, 2002 and 2001 and
the cash flows of the Partnership for the nine months ended December 31, 2002
and 2001, respectively. However, the operating results for the nine months ended
December 31, 2002 may not be indicative of the results for the year.
Certain information and note disclosures normally included in financial
statements prepared in accordance with GAAP have been omitted or condensed.
These consolidated 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 year ended March 31, 2002.
Note 2 - Related Party Transactions
One of the General Partners has a 1% interest as a special limited partner in
each of the subsidiary partnerships. An affiliate of the General Partners also
has a minority interest in certain subsidiary partnerships.
11
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2002
(Unaudited)
The costs incurred to related parties for the three and nine months ended
December 31, 2002 and 2001 were as follows:
Three Months Ended Nine Months Ended
December 31, December 31,
----------------------- -----------------------
2002 2001 2002 2001
----------------------- -----------------------
Partnership manage-
ment fees (a) $ 374,000 $ 374,000 $1,122,000 $1,122,000
Expense reimburse-
ment (b) 38,574 52,000 115,610 105,979
Property management
fees incurred to
affiliates of the
General Partners (c) 98,100 96,735 294,299 283,405
Local administrative
fee (d) 13,000 13,000 39,000 39,000
---------- ---------- ---------- ----------
Total general and ad-
ministrative-General
Partners 523,674 535,735 1,570,909 1,550,384
---------- ---------- ---------- ----------
Property management
fees incurred to affili-
ates of the subsidiary
partnerships' general
partners (c) 136,442 148,537 401,205 431,147
---------- ---------- ---------- ----------
Total general and admi-
nistrative-related parties $ 660,116 $ 684,272 $1,972,114 $1,981,531
========== ========== ========== ==========
(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. The partnership management fee, subject to the foregoing
limitation, will be determined by the General Partners in their sole discretion
based upon their review of the Partnership's investments. Partnership management
fees owed to the General Partners amounting to approximately $10,930,000 and
$9,808,000 were accrued and unpaid as of December 31, 2002 and March 31, 2002,
respectively. Without the General Partners' continued accrual without payment,
the Partnership will not be in a position to meet its obligations. The General
12
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2002
(Unaudited)
Partners have allowed for 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
Partnership. These services include site visits and evaluations of the
subsidiary partnerships' performance.
(c) Property management fees incurred by subsidiary partnerships amounted to
$420,240 and $425,353 and $1,228,209 and $1,259,083 for the three and nine
months ended December 31, 2002 and 2001, respectively. Of these fees, $234,542
and $245,272 and $695,504 and $714,552, respectively, were incurred to
affiliates of the Local General Partners. Included in amounts incurred to
affiliates of the Local General Partners are $98,100 and $96,735 and $294,299
and $283,405 for the three and nine months ended December 31, 2002 and 2001,
respectively, which were also incurred to affiliates of the Partnership.
(d) Liberty Associates II L.P., a General Partner and a special limited partner
of the subsidiary partnerships, is entitled to receive a local administrative
fee of up to $2,500 per year from each subsidiary partnership.
Note 3 - Mortgage Notes Payable
United-Glen Arden I
- -------------------
On September 3, 2002, United-Glen Arden I ("Glen Arden I ") refinanced its
existing mortgage indebtedness in the aggregate amount of $10,325,897 with two
new loans. The new mortgages in the amounts of $7,333,600 and $3,256,088 bear
interest at the rate of 7% and 5% per annum, respectively and mature on
September 1, 2032. Financing costs of approximately $91,000 were incurred.
13
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2002
(Unaudited)
United-Glen Arden II
- --------------------
On July 1, 2002, United-Glen Arden II ("Glen Arden II ") refinanced its existing
mortgage indebtedness in the aggregate amount of $8,043,951 with two new loans.
The new mortgages in the amounts of $6,960,400 and $1,470,842 bear interest at
the rate of 7% and 5% per annum and mature on August 1, 2022 and August 1, 2027,
respectively. Financing costs of approximately $85,000 were incurred.
Victory Apartments
- ------------------
On June 27, 2002, Victory Apartments ("Victory") refinanced its existing
mortgage indebtedness in the amount of $6,180,000. The new mortgage in the
amount of $6,491,500 bears interest at the rate of 6.61% per annum and matures
on July 1, 2042. Financing costs of approximately $170,000 were incurred, and a
replacement reserve of approximately $101,000 and mortgage insurance reserve of
approximately $32,000 were established.
Metropolitan Towers Associates L.P.
- -----------------------------------
On February 22, 2002, Metropolitan Towers Associates L.P. ("Metropolitan
Towers") refinanced its existing indebtedness by borrowing $5,364,000 from the
Puerto Rico Housing Finance Corporation ("PRHFC"). The loan bears interest at
the rate of 7% per annum and matures on February 1, 2032. Metropolitan Tower's
prior indebtedness of approximately $4,625,000 was repaid, and a Capital
Improvement Account of approximately $387,000 was established.
Note 4 - Sale of Property
On January 18, 2002, the property and the related assets and liabilities of
Campeche Isle Apartments, Limited Partnership ("Campeche") were sold to an
unaffiliated third party for $4,625,000, resulting in a loss of approximately
$45,000.
Note 5 - Commitments and Contingencies
Alexis Park Apartments
- ----------------------
A hazardous waste issue has affected Alexis Park Apartments ("Alexis") for
nearly 11 years. Although this environmental issue is in many respects beyond
its control, management believes that the selected remedy of the United States
14
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2002
(Unaudited)
Environmental Protection Agency is practical and is not likely to cause
significant disruption to the apartment project's operations beyond what it has
experienced over the last several years. The Local Partnership's congressman,
U.S. Senators and the Mayor of Bossier City have assisted Alexis in preventing
this issue from escalating unnecessarily and management believes that no
escalation will occur in the near term. Further, all indications are that an oil
company will bear all costs of remediation and that the Local Partnership will
not be called upon to share in those costs.
Gramco Development Limited Dividend Partnership, L.P.
- -----------------------------------------------------
Gramco Development Limited Dividend Partnership, L.P. ("Gramco") was granted net
funds of $4,867,000. In the event of a substantial violation of the provisions
of certain agreements between Gramco and the Municipality of Bayamon (the
"Municipality") and between the Municipality and HUD, the funds will become
immediately due and payable at the election of HUD and the Municipality.
Otherwise, the principal amount of the obligation together with any interest
will be forgiven. Proceeds from the loan have been deducted from fixed assets.
Williamsburg Residential, L.P.
- ------------------------------
In November 1996, the Local General Partner of Williamsburg Residential, L.P.
("Williamsburg") stopped making the mortgage note payments which constituted an
event of default. A Reinstatement and Modification Agreement was entered into
effective March 1, 1997. Since January 1997, the Partnership has advanced
Williamsburg the necessary funds to keep the mortgage and escrows current and it
is expected to continue to do so during 2003. As of December 31, 2002, the
Partnership has advanced approximately $970,000 to Williamsburg.
15
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
- -------------------------------
Through December 31, 2002, the Partnership has invested all of the net proceeds
of its original offering in twenty-seven Local Partnerships. Through December
31, 2002, the Partnership has sold the property and the related assets and
liabilities of Campeche.
The Partnership's primary sources of funds are (i) working capital reserves;
(ii) interest earned on working capital reserves; and (iii) cash distributions
from operations of the Local Partnerships. All of these sources of funds are
available to meet obligations of the Partnership. During the nine months ended
December 31, 2002, distributions received by the Partnership from operations of
the Local Partnerships were approximately $137,000.
During the nine months ended December 31, 2002, cash and cash equivalents of the
Partnership and its consolidated Local Partnerships increased approximately
$216,000. This increase was due to cash provided by operating activities
($1,446,000), net proceeds and repayments of mortgage notes ($691,000) and an
increase in due to selling partners ($6,000) which exceeded an increase in
deferred costs ($545,000), an increase in acquisitions of property and equipment
($386,000), an increase in cash held in escrow relating to investing activities
($792,000) and a decrease in capitalization of consolidated subsidiaries
attributable to minority interest ($203,000). In the adjustments to reconcile
the net loss to cash provided by operating are loss on sale of property
($45,000) and depreciation and amortization ($6,866,000).
Partnership management fees owed to the General Partners amounting to
approximately $10,930,000 and $9,808,000 were accrued and unpaid as of December
31, 2002 and March 31, 2002, 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 allowed for the accrual without
payment of these amounts but are under no obligation to continue to do so.
For a discussion of the sale of property, see Note 4 to the financial
statements.
Management is not aware of any trends, 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
16
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
offerings in 27 Local Partnerships, all of which fully have their tax credits in
place. The tax credits are attached to the property for a period of ten years
and are transferable with the property during the remainder of such 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 value
to the property on the market, which are not included in the financial statement
carrying amount.
Results of Operations
- ---------------------
During the fiscal year ended March 31, 2002, Campeche (the "Sold Asset") sold
its property and the related assets and liabilities. The results of operations
of the Partnership, as well as the Local Partnerships, remained fairly
consistent during the three and nine months ended December 31, 2002 and 2001,
excluding the Sold Asset, loss on sale of property, other income repairs and
maintenance, operating, taxes, insurance and depreciation and amortization. The
results of operations for the three and nine months ended December 31, 2002 and
2001 consisted primarily of the results of the Partnership's investment in the
Local Partnership.
Rental income decreased approximately 1% and 2% for the three and nine months
ended December 31, 2002 as compared to the corresponding periods in 2001.
Excluding the Sold Asset, rental income increased approximately 3% and 2% for
the three and nine months ended December 31, 2002 as compared to the
corresponding periods in 2001 primarily due to rental rate increases.
Other income decreased approximately $88,000 and $145,000 for the three and nine
months ended December 31, 2002 as compared to the corresponding periods in 2001.
Excluding the Sold Asset, other income decreased approximately $78,000 and
$130,000 for the three and nine months ended December 31, 2002 as compared to
the corresponding periods in 2001 primarily due to grant monies received at two
17
Local Partnerships in 2001, as well as lower interest rates earned on cash and
cash equivalent balances at the Local Partnerships in 2002.
Total expenses, excluding the Sold Asset, repairs and maintenance, operating,
insurance and depreciation and amortization remained fairly consistent with an
increase of approximately 3% for both the three and nine months ended December
31, 2002 as compared to the corresponding periods in 2001.
Repairs and maintenance decreased approximately $305,000 and $826,000 for the
three and nine months ended December 31, 2002 as compared to the corresponding
periods in 2001. Excluding the Sold Asset, repairs and maintenance decreased
approximately $278,000 and $718,000 primarily due to a repainting of units and
plumbing and security repairs at two Local Partnerships and building exterior
repairs at a third Local Partnership in 2001.
Operating expenses decreased approximately $178,000 for the three months ended
December 31, 2002 as compared to the corresponding period in 2001. Excluding the
Sold Asset, operating decreased approximately $155,000 primarily due to an
underaccrual of operating expenses during the second quarter of 2001 which was
corrected during the third quarter of 2001 at one Local Partnership.
Insurance increased approximately $23,000 and $110,000 for the three and nine
months ended December 31, 2002 as compared to the corresponding periods in 2001.
Excluding the Sold Asset, such expense increased approximately $38,000 and
$144,000 primarily due an increase in premiums at the Local Partnerships.
Depreciation and amortization increased approximately $725,000 and $949,000 for
the three and nine months ended December 31, 2002 as compared to the
corresponding periods in 2001. Excluding the Sold Asset, such expense increased
approximately $725,000 and $1,086,000 primarily due to the write-off of deferred
financing costs at three Local Partnerships in 2002.
Taxes decreased approximately $34,000 for the three months ended December 31,
2002 as compared to the corresponding period in 2001, primarily due to the Sold
Asset.
Item 3. Quantitative and Qualitative Disclosures about
Market Risk
None.
18
Item 4. Controls and Procedures
The Chief Executive Officer and Chief Financial Officer of Related Credit
Properties II Inc., the general partner of two of the General Partners of the
Partnership, has evaluated the Partnership's disclosure controls and procedures
relating to the Partnership's quarterly report on Form 10-Q for the period
ending December 31, 2002 as filed with the Securities and Exchange Commission
and has judged such controls and procedures to be effective as of December 31,
2002 (the "Evaluation Date").
There have been no significant changes in the internal controls or in other
factors that could significantly affect internal controls relating to the
Partnership since the Evaluation Date.
19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
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:
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter.
20
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.
LIBERTY TAX CREDIT PLUS II L.P.
-------------------------------
(Registrant)
By: RELATED CREDIT PROPERTIES II L.P.,
a General Partner
By: Related Credit Properties II Inc.,
its General Partner
Date: February 6, 2003
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
President and Principal Executive
Officer
(Principal Executive and Financial
Officer)
By: LIBERTY GP II INC.,
a General Partner
Date: February 6, 2003
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
President
and
By: LIBERTY ASSOCIATES II, L.P.
a General Partner
By: Related Credit Properties II Inc.,
its General Partner
Date: February 6, 2003
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
President
and
By: Liberty GP II Inc.,
its General Partner
Date: February 6, 2003
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
President
CERTIFICATION
I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of
Related Credit Properties II Inc. the general partner of Related Credit
Properties II L.P. and of Liberty GP II Inc., each of which is a General Partner
of Liberty Tax Credit Plus II L.P. (the "Partnership"), hereby certify that:
1. I have reviewed this quarterly report on Form 10-Q for the period
ending December 31, 2002 of the Partnership;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Partnership as of, and for, the periods presented in
this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15-d-14)
for the Partnership and I have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Partnership is made known to me,
particularly during the period in which this quarterly report was being
prepared;
b) evaluated the effectiveness of the Partnership's disclosure controls
and procedures as of December 31, 2002 (the "Evaluation Date"); and
c) presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
Partnership's auditors and to the boards of directors of the General
Partners:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Partnership's ability to
record, process, summarize and report financial data and have
identified for the Partnership's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Partnership's
internal controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Chief Executive Officer and
Chief Financial Officer
February 6, 2003
Exhibit 99.1
CERTIFICATION PURSUANT TO
18.U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Liberty Tax Credit Plus II L.P. (the
"Partnership") on Form 10-Q for the period ending December 31, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of
Related Credit Properties II Inc. the general partner of Related Credit
Properties II L.P. and Liberty GP II Inc. (each of which is a General Partner of
the Partnership), certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Principal Executive Officer and Principal Financial Officer
February 6, 2003