10QSB 1 tcpq302.txt TCP 12/31/2001 February 14, 2002 Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549 Re: Boston Financial Tax Credit Fund Plus, A Limited Partnership Report on Form 10-QSB for the Quarter Ended December 31, 2001 File Number 0-22104 Dear Sir/Madam: Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of 1934, filed herewith is one copy of subject report. Very truly yours, /s/Stephen Guilmette Stephen Guilmette Assistant Controller TCP-Q3.DOC UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (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, 2001 ------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------- ----------------------- Commission file number 0-22104 ----------- Boston Financial Tax Credit Fund Plus, A Limited Partnership ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 04-3105699 -------------------------------------------- ---------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 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 . BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No. ------------------------------ -------- Item 1. Financial Statements Balance Sheet (Unaudited) - December 31, 2001 1 Statements of Operations (Unaudited) - For the Three and Nine Months Ended December 31, 2001 and 2000 2 Statement of Changes in Partners' Equity (Deficiency) (Unaudited) - For the Nine Months Ended December 31, 2001 3 Statements of Cash Flows (Unaudited) - For the Nine Months Ended December 31, 2000 and 2001 4 Notes to the Financial Statements (Unaudited) 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION Items 1-6 10 SIGNATURE 11
BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) BALANCE SHEET December 31, 2001 (Unaudited)
Assets Cash and cash equivalents $ 27,005 Marketable securities, at fair value 637,632 Investments in Local Limited Partnerships, net (Note 1) 10,740,753 Other investments (Note 2) 1,915,607 Other assets 7,625 ------------- Total Assets $ 13,328,622 ============== Liabilities and Partners' Equity Accounts payable to affiliates $ 1,198,320 Accrued expenses 28,265 -------------- Total Liabilities 1,226,585 -------------- General, Initial and Investor Limited Partners' Equity 12,085,458 Net unrealized gains on marketable securities 16,579 -------------- Total Partners' Equity 12,102,037 -------------- Total Liabilities and Partners' Equity $ 13,328,622 =============
The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) STATEMENTS OF OPERATIONS For the Three and Nine Months Ended December 31, 2001 and 2000 (Unaudited)
Three Months Ended Nine Months Ended December 31, December 31, December 31, December 31, 2001 2000 2001 2000 ------------- ------------- ------------ -------------- Revenue: Investment $ 9,145 $ 19,571 $ 33,240 $ 57,583 Accretion of Original Issue Discount (Note 2) 37,008 34,249 108,511 100,423 Other 30,825 480 41,454 23,452 ------------- ------------- ------------ -------------- Total Revenue 76,978 54,300 183,205 181,458 ------------- ------------- ------------ -------------- Expenses: Asset management fees, affiliate 47,456 41,251 134,430 123,753 General and administrative (includes reimbursements to an affiliate in the amounts of $139,642 and $182,383 in 2001 and 2000, respectively) 59,911 144,430 209,222 258,652 Provision for valuation of investments in Local Limited Partnerships 15,001 202,648 21,949 212,424 Amortization 4,852 5,151 14,557 15,453 ------------- ------------- ------------ -------------- Total Expenses 127,220 393,480 380,158 610,282 ------------- ------------- ------------ -------------- Loss before equity in losses of Local Limited Partnerships (50,242) (339,180) (196,953) (428,824) Equity in losses of Local Limited Partnerships (146,657) (180,805) (493,237) (960,304) ------------- ------------- ------------ -------------- Net Loss $ (196,899) $ (519,985) $ (690,190) $ (1,389,128) ============= ============= ============ ============== Net Loss allocated: General Partner $ (2,339) $ (5,542) $ (7,987) $ (14,896) Class A Limited Partners (216,747) (513,575) (740,108) (1,380,278) Class B Limited Partners 22,187 (868) 57,905 6,046 ------------- ------------- ------------ -------------- $ (196,899) $ (519,985) $ (690,190) $ (1,389,128) ============= ============= ============ ============== Net Income (Loss) per Limited Partnership Unit: Class A Unit (34,643 Units) $ (6.25) $ (14.82) $ (21.36) $ (39.84) ============ ============= ============ ============== Class B Unit (3,290 Units) $ 6.74 $ (0.26) $ 17.60 $ 1.84 ============= ============= ============ ==============
The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY) For the Nine Months Ended December 31, 2001 (Unaudited)
Investor Investor Initial Limited Limited Net General Limited Partners, Partners, Unrealized Partners Partner Class A Class B Gains Totals ----------- ------- ------------- ------------ ----------- ------------- Balance at March 31, 2001 $ (207,210) $ 5,000 $ 10,456,872 $ 2,520,986 $ 12,724 $ 12,788,372 ------------ ------- ------------- ------------ ----------- ------------- Comprehensive Income (Loss): Change in net unrealized gains on marketable securities available for sale - - - - 3,855 3,855 Net Income (Loss) (7,987) - (740,108) 57,905 - (690,190) ----------- ------- ------------- ------------ ----------- ------------- Comprehensive Income (Loss) (7,987) - (740,108) 57,905 3,855 (686,335) ----------- ------- ------------- ------------ ----------- ------------- Balance at December 31, 2001 $ (215,197) $ 5,000 $ 9,716,764 $ 2,578,891 $ 16,579 $ 12,102,037 ============ ========= ============== ============= =========== =============
The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) STATEMENTS OF CASH FLOWS For the Nine Months Ended December 31, 2001 and 2000 (Unaudited)
2001 2000 ------------- ------------ Net cash used for operating activities $ (414,394) $ (501,724) Net cash provided by investing activities 185,698 352,319 ------------- ------------ Net decrease in cash and cash equivalents (228,696) (149,405) Cash and cash equivalents, beginning 255,701 216,088 ------------- ------------ Cash and cash equivalents, ending $ 27,005 $ 66,683 ============= ============
The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) Notes to the Financial Statements (Unaudited) The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the financial statements and notes thereto included with the Fund's Form 10-KSB for the year ended March 31, 2001. 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. The Managing General Partner of the Fund has elected to report results of the Local Limited Partnerships of which the Fund has a limited Partnership interest on a 90 day lag basis because the Local Limited Partnerships report their results on a calendar year basis. Accordingly, the financial information about the Local Limited Partnerships that is included in the accompanying financial statements is as of September 30, 2001 and 2000. 1. Investments in Local Limited Partnerships The Fund uses the equity method to account for its limited partnership interests in twenty-four Local Limited Partnerships which own and operate multi-family housing complexes, most of which are government assisted. Upon dissolution of the Local Limited Partnerships, proceeds will be distributed according to each respective partnership agreement. The following is a summary of investments in Local Limited Partnerships at December 31, 2001:
Capital contributions and advances paid to Local Limited Partnerships and purchase price paid to withdrawing partners of Local Limited Partnerships $ 26,365,355 Cumulative equity in losses of Local Limited Partnerships (excluding cumulative unrecognized losses of $1,169,175) (13,666,135) Cash distributions received from Local Limited Partnerships (1,101,302) ------------- Investments in Local Limited Partnerships before adjustments 11,597,918 Excess of investment cost over the underlying net assets acquired: Acquisition fees and expenses 1,097,216 Accumulated amortization of acquisition fees and expenses (243,973) ------------- Investments in Local Limited Partnerships prior to reserve for valuation 12,451,161 Reserve for valuation of investments in Local Limited Partnerships (1,710,408) ------------- Investments in Local Limited Partnerships $ 10,740,753 =============
The Fund has recorded a reserve for valuation for its investment in Local Limited Partnerships because there is evidence of non-temporary declines in the recoverable amount of these investments. For the nine months ended December 31, 2001, the Fund advanced $21,949 to certain Local Limited Partnerships to fund operating shortfalls, all of which was reserved. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) (Unaudited) 1. Investments in Local Limited Partnerships (continued) ---------------------------------------------------- The Fund's share of the net losses of the Local Limited Partnerships for the nine months ended December 31, 2001 is $670,474. For the nine months ended December 31, 2001, the Fund has not recognized $177,237 of equity in losses relating to certain Local Limited Partnerships in which cumulative equity in losses have exceeded its total investment. 2. Other Investments Other investments consists of the aggregate cost of the Treasury STRIPS purchased by the Fund for the benefit of the Class B Limited Partners. The amortized cost at December 31, 2001 is composed of the following: Aggregate cost of Treasury STRIPS $ 918,397 Accumulated accretion of Original Issue Discount 997,210 ------------ $ 1,915,607 The fair value of these securities at December 31, 2001 is $2,318,976. Maturity dates for the STRIPS range from February 15, 2007 to May 15, 2010 with a final maturity value of $3,290,000. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain matters discussed herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Fund intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements and is including this statement for purposes of complying with these safe harbor provisions. Although the Fund believes the forward-looking statements are based on reasonable assumptions, the Fund can give no assurance that its expectations will be attained. Actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, general economic and real estate conditions and interest rates. Liquidity and Capital Resources At December 31, 2001, the Fund had cash and cash equivalents of $27,005 as compared with $255,701 at March 31, 2001. The decrease is primarily attributable to cash used for operating activities. These decreases are partially offset by proceeds from cash distributions received from Local Limited Partnerships and sales and maturities of marketable securities. Under the terms of the Partnership Agreement, the Fund initially designated 4% of the Adjusted Gross Proceeds (which generally means Gross Proceeds minus the amounts committed to the acquisition of Treasury STRIPS) from the sale of Units as a reserve for working capital of the Fund and contingencies related to the ownership of Local Limited Partnership interests. The Managing General Partner may increase or decrease such Reserves from time to time, as it deems appropriate. Funds totaling approximately $412,000 have been withdrawn from Reserves to pay legal and other fees relating to various property issues. At December 31, 2001, approximately $503,000 of cash, cash equivalents and marketable securities have been designated as Reserves. The Managing General Partner believes that the investment income earned on the 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. If Reserves are not adequate to cover Fund operations, the Fund will seek other funding sources including, but not limited to, the deferral of Asset Management Fees to an affiliate of the Managing General Partner or working with Local Limited Partnerships to increase cash distributions. In the event a Local Limited Partnership encounters operating difficulties requiring additional funds, the Fund might deem it in its best interests to provide such funds, voluntarily, in order to protect its investment. The Fund has advanced approximately $245,000 to Local Limited Partnerships to fund operating deficits. 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, at December 31, 2001, the Fund had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for. Cash Distributions No cash distributions were made during the nine months ended December 31, 2001. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Results of Operations Three Month Period The Fund's results of operations for the three months ended December 31, 2001 resulted in net losses of $196,899, as compared to net loss of $519,985 for the same period in 2000. The decrease in net loss is primarily attributable to a decrease in general and administrative expenses and a decrease in provision for valuation of investments in Local Limited Partnerships. The decrease in general and administrative expense is primarily due to increased charges from an affiliate of the General Partner for operational and administrative expenses necessary for the operation of the Partnership which occurred in the period ended December 31, 2000. Nine Month Period The Fund's operations resulted in a net loss of $690,190 as compared to a net loss of $1,389,128 for the same period in 2000. The decrease in net loss is primarily attributable to a decrease in equity in losses of Local Limited Partnerships and decrease in provision for valuation of investments in Local Limited Partnerships. The decrease in equity in losses of Local Limited Partnerships is primarily due to the Fund not recognizing losses relating to Local Limited Partnership's where cumulative equity in losses and cumulative distributions have exceeded its total investment. Property Discussions The Fund's investment portfolio consists of limited partnership interests in twenty-four Local Limited Partnerships, each of which own and operate a multi-family apartment complex. A majority of the Properties have stabilized operations and operate above break-even. A few Properties generate cash flow deficits that the Local General Partners of those Properties fund through project expense loans, subordinated loans or operating escrows. However, some Properties have persistent operating difficulties that could either: i) have an adverse impact on the Partnership's liquidity; ii) result in their foreclosure; or iii) result in the Managing General Partner deeming it appropriate for the Partnership to dispose of its interest in the Local Limited Partnership. Also, the Managing General Partner may desire to dispose of interests in certain Local Limited Partnerships in the normal course of the Partnership's business. The following Property discussions focus only on such Properties. As previously reported, Bancroft Street Apartments, located in Toledo, Ohio, had significant operating deficits due to occupancy issues and deteriorating market conditions. The Managing General Partner and Local General Partner negotiated with the lender to restructure the mortgage loan. However, the lender ultimately determined to hold a foreclosure on the Property on October 10, 2000. The foreclosure resulted in recapture of tax credits for investors of approximately $18.70 per Unit. In addition, the foreclosure resulted in the allocation of taxable income to the Fund as well as loss of future benefits associated with this Property. Although the neighborhood in which 45th & Vincennes (Chicago, Illinois) is located has improved in the last few years, potential tenants are reluctant to occupy the Property due to its location. As a result, maintaining occupancy, and therefore revenues, continues to be an issue. A recent site visit by the Managing General Partner found the property in good condition. The Managing General Partner will continue to closely monitor the Property's operations. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Property Discussions (continued) ------------------------------- Occupancy at Metropolitan Apartments, located in Chicago, Illinois, has steadily improved during 2001. As a result, the property operated above break-even for the reporting period. Historically, occupancy and operations have suffered due to local market conditions and, in general, low quality tenants. The Property is also in need of certain maintenance and repair in order to sustain its recently improved occupancy level. The Managing General Partner continues to work with the Local General Partner to develop a plan that addresses the Property's issues. It is possible that Fund Reserves may be required to fund any future operating deficits. Due to concerns over the long-term financial health of Primrose, Phoenix Housing and Sycamore, located in Grand Forks, North Dakota, Moorhead, Minnesota and Sioux Falls, South Dakota, respectively, the Managing General Partner developed a plan that will ultimately result in the transfer of the Fund's interest in each Local Limited Partnership. All three Local Limited Partnerships have the same Local General Partner. In 1997, in an effort to reduce possible future risk, the Managing General Partner consummated the transfer of 50% of the Fund's interest in capital and profits in the three Local Limited Partnerships to an affiliate of the Local General Partner. Subsequently, effective June 17, 1999, the Local General Partner transferred both its general partner interest and 48.5% of its interest in capital and profits in the three Local Limited Partnerships to a non-affiliated, non-profit general partner. Effective August 31, 2000, the former Local General Partner withdrew its remaining interest in each of the Local Limited Partnerships. The Managing General Partner will have the right to transfer the Fund's remaining interests after September 1, 2001. With regard to Sycamore and Primrose, the Fund will retain its full share of tax credits until such time as the remaining interest is put to the Local General Partner. In addition, the Local General Partner has the right to call the remaining interest after the tax credit period has expired, which will be in 2003. With regard to Phoenix Housing, the Fund approved the admission of an additional limited partner to the Local Limited Partnership effective November 1, 2000. As a result, the Fund's interest in the Local Limited Partnership was diluted to an immaterial amount. The Fund received a pro-rata share of the Property's tax credits during 2000. The Fund will not receive a material amount of the Property's future tax credits. However, the Fund received cash from the Local Limited Partnership of approximately $16,000 in April 2001 and will receive approximately $94,000 in April 2002 and $47,000 in April 2003. These amounts represent the Fund's share of the Property's prospective tax credits that it will not receive because of its diluted interest in the Local Limited Partnership. Findley Place Apartments, located in Minneapolis, Minnesota, experienced operating deficits due to significant capital needs in recent years. As a result of concerns regarding the long-term viability of the Property, the Managing General Partner developed a plan that will ultimately result in the transfer of the Fund's interest in the Local Limited Partnership. On March 1, 2000, the Managing General Partner consummated the transfer of 1% of the Fund's interest in losses, 48.5% of its interest in profits and 30% of its capital account to the Local General Partner. The Managing General Partner has the right to put the Fund's remaining interests to the Local General Partner any time after one year from the March 1, 2000 effective date. In addition, the Local General Partner has the right to call the remaining interest after the tax credit period has expired, which will occur in 2004. Currently, the Property's operations are improving and it operates above break-even. The Fund has implemented policies and practices for assessing potential impairment of its investments in Local Limited Partnerships. Real estate experts analyze the investments to determine if impairment indicators exist. If so, the carrying value is compared to the undiscounted future cash flows expected to be derived from the asset. If a significant impairment in carrying value exists, a provision to write down the asset to fair value will be recorded in the Fund's financial statements. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (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, 2001. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (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 14, 2002 BOSTON FINANCIAL TAX CREDIT FUND PLUS, A LIMITED PARTNERSHIP By: Arch Street VI, Inc., its Managing General Partner /s/Jenny Netzer ----------------------------------------- Jenny Netzer Principal, Head of Housing and Community Investment