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 29, 1996
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: 0-18405
American Tax Credit Properties II L.P.
(Exact name of Registrant as specified in its charter)
Delaware 13-3495678
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Richman Tax Credit Properties II L.P.
599 West Putnam Avenue, 3rd Floor
Greenwich, Connecticut 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 869-0900
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 filing requirements
for the past 90 days. Yes X No .
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AMERICAN TAX CREDIT PROPERTIES II L.P.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Table of Contents Page
<S> <C>
Balance Sheets as of September 29, 1996 (Unaudited) and March 30, 1996 (Unaudited)
Statements of Operations for the three and six month periods ended September 29,
1996 (Unaudited) and September 29, 1995 (Unaudited)
Statements of Cash Flows for the six months ended September 29, 1996 (Unaudited)
and September 29, 1995 (Unaudited)
Notes to Financial Statements as of September 29, 1996 (Unaudited)
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
BALANCE SHEETS
SEPTEMBER 29, 1996 AND MARCH 30, 1996
(UNAUDITED)
September 29, March 30,
Notes 1996 1996
----- ------------------- ------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 678,855 $ 538,912
Investments in bonds available-for-sale 2 4,196,082 4,477,098
Investment in local partnerships 3 21,811,030 23,417,447
Interest receivable 78,572 76,148
---------------- ----------------
$ 26,764,539 $ 28,509,605
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 503,773 $ 480,944
Payable to general partner 471,336 426,440
Other 62,600 69,600
---------------- ----------------
1,037,709 976,984
-------------- ---------------
Partners' equity (deficit)
General partner (234,673) (217,372)
Limited partners, $1,000 stated value per unit (55,746 units of
limited partnership interest outstanding) 26,044,443 27,757,245
Unrealized loss on investments in bonds available-for-sale, net 2 (82,940) (7,252)
--------------- ----------------
25,726,830 27,532,621
------------- -------------
$ 26,764,539 $ 28,509,605
============= =============
See Notes to Financial Statements.
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF OPERATIONS
THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 29, 1996 AND 1995
(UNAUDITED)
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
September 29, September 29, September 29, September 29,
Notes 1996 1996 1995 1995
----- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUE
Interest $ 91,486 $ 184,989 $ 89,280 $ 179,391
---------------- --------------- ---------------- ---------------
TOTAL REVENUE 91,486 184,989 89,280 179,391
----------------- ---------------- ----------------- ----------------
EXPENSES
Administration fees 74,827 149,653 74,827 149,653
Management fees 74,827 149,653 74,827 149,653
Professional fees 8,489 24,325 11,686 24,868
Printing, postage and other 2,899 9,125 9,888 20,837
----------------- ----------------- ----------------- -----------------
TOTAL EXPENSES 161,042 332,756 171,228 345,011
--------------- --------------- --------------- ----------------
Loss from operations (69,556) (147,767) (81,948) (165,620)
Equity in loss of investment in local
partnerships 3 (737,316) (1,582,336) (749,147) (1,565,135)
--------------- -------------- --------------- --------------
NET LOSS $ (806,872) $ (1,730,103) $ (831,095) $ (1,730,755)
============== ============= ============== =============
NET LOSS ATTRIBUTABLE TO
General partner $ (8,069) $ (17,301) $ (8,311) $ (17,308)
Limited partners (798,803) (1,712,802) (822,784) (1,713,447)
--------------- ------------- --------------- -------------
$ (806,872) $ (1,730,103) $ (831,095) $ (1,730,755)
============== ============== ============== ==============
NET LOSS per unit of limited partnership
interest (55,746 units of limited
partnership interest) $ (14.33) $ (30.73) $ (14.76) $ (30.74)
================ ================ ================ ================
</TABLE>
See Notes to Financial Statements.
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 29, 1996 AND 1995
(UNAUDITED)
1996 1995
------------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Interest received $ 187,893 $ 205,767
Cash used from local partnerships for deferred expenses (7,000) (7,000)
Cash paid for
administration fees (104,757) (104,757)
management fees (104,757) (100,000)
professional fees (51,677) (51,118)
printing, postage and other expenses (3,840) (17,728)
--------------- --------------
Net cash used in operating activities (84,138) (74,836)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturity/redemption of bonds 200,000
Cash distributions from local partnerships 24,081 65,218
Transfer to restricted cash (12,804)
-------------------- --------------
Net cash provided by investing activities 224,081 52,414
-------------- --------------
Net increase (decrease) in cash and cash equivalents 139,943 (22,422)
Cash and cash equivalents at beginning of period 538,912 1,541,346
-------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 678,855 $ 1,518,924
============= ============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain (loss) on investments in bonds available-for-sale, net $ (75,688) $ 190,298
============== =============
See reconciliation of net loss to net cash used in operating activities on next
page.
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS - (Continued)
SIX MONTHS ENDED SEPTEMBER 29, 1996 AND 1995
(UNAUDITED)
1996 1995
-------------------- ------------
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (1,730,103) $ (1,730,755)
Adjustments to reconcile net loss to net cash used in operating
activities
Equity in loss of investment in local partnerships 1,582,336 1,565,135
Amortization of net premium on investments in bonds 24,875 33,077
Accretion of zero coupon bonds (19,547) (19,547)
Decrease (increase) in interest receivable (2,424) 42
Increase in accounts payable and accrued expenses 22,829 21,755
Increase in payable to general partner 44,896 49,653
Decrease in other liabilities (7,000) (7,000)
Increase in interest payable 12,804
---------------------- -----------------
NET CASH USED IN OPERATING ACTIVITIES $ (84,138) $ (74,836)
=============== ===============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 29, 1996
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. They do not include all information and footnotes
required by generally accepted accounting principles for complete
financial statements. The results of operations are impacted significantly
by the combined results of operations of the Local Partnerships, which are
provided by the Local Partnerships on an unaudited basis during interim
periods. Accordingly, the accompanying financial statements are dependent
on such unaudited information. In the opinion of the General Partner, the
financial statements include all adjustments necessary to present fairly
the financial position as of September 29, 1996 and the results of
operations and cash flows for the interim periods presented. All
adjustments are of a normal recurring nature. The results of operations
for the three and six month periods ended September 29, 1996 are not
necessarily indicative of the results that may be expected for the entire
year.
Certain reclassifications of amounts have been made to conform to the
current period presentation.
2. Investments in Bonds Available-For-Sale
As of September 29, 1996, certain information concerning investments in
bonds available-for-sale is as follows:
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
<S> <C> <C> <C> <C>
Description and maturity
Corporate debt securities
Within one year $ 131,893 $ 1,093 $ - $ 132,986
After one year through five years 555,202 20,545 (280) 575,467
After five years through ten years 2,275,595 14,182 (95,939) 2,193,838
After ten years 203,066 - (15,860) 187,206
----------- ---------------- ----------- -----------
3,165,756 35,820 (112,079) 3,089,497
----------- ----------- ----------- -----------
U.S. Treasury debt securities
After ten years 422,893 - (25,418) 397,475
------------ ---------------- ----------- -----------
U.S. government and agency securities
After five years through ten years 639,989 28,989 (3,223) 665,755
After ten years 50,384 - (7,029) 43,355
-------------- ----------------- ------------- -------------
690,373 28,989 (10,252) 709,110
------------- ------------ ------------ ------------
$ 4,279,022 $ 64,809 $ (147,749) $ 4,196,082
=========== =========== =========== ===========
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 29, 1996
(UNAUDITED)
3. Investment in Local Partnerships
The Partnership owns limited partnership interests in fifty Local
Partnerships representing capital contributions in the aggregate amount of
$45,692,662. As of June 30, 1996, the Local Partnerships have outstanding
mortgage loans payable totaling approximately $93,928,000 and accrued
interest payable on such loans totaling approximately $3,605,000, which
are secured by security interests and liens common to mortgage loans on
the Local Partnerships' real property and other assets.
For the six months ended September 29, 1996, the investment in Local
Partnerships activity consists of the following:
<S> <C> <C>
Investment in Local Partnerships as of March 30, 1996 $ 23,417,447
Equity in loss of investment in Local Partnerships for the
three months ended
March 31, 1996 $ (845,020)
June 30, 1996 (737,316) 1,582,336) (A)
--------------
Cash distributions received from Local Partnerships during the
three months ended June 29, 1996 (24,081)
----------------
Investment in Local Partnerships as of September 29, 1996 $ 21,811,030
=============
</TABLE>
(A) Equity in loss of investment in Local Partnerships is limited to
the Partnership's investment balance in each Local Partnership; any
excess is applied to other partners' capital in any such Local
Partnership. The amount of such excess losses applied to other
partners' capital for the three and six month periods ended June
30, 1996 was $66,841 and $194,267, respectively, as reflected in
the combined statements of operations of the Local Partnerships
reflected herein Note 3.
The combined unaudited balance sheets of the Local Partnerships as of June
30, 1996 and December 31, 1995 and the combined unaudited statements of
operations of the Local Partnerships for the three and six month periods
ended June 30, 1996 and 1995 are reflected on pages 9 and 10,
respectively.
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 29, 1996
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of June 30, 1996
and December 31, 1995 are as follows:
June 30, December 31,
1996 1995
-------------------- ------------
<S> <C> <C> <C>
ASSETS
Cash and other investments $ 3,724,847 $ 5,021,628
Rental receivable 165,599 239,874
Escrow deposits and reserves 5,340,216 5,169,090
Land 4,307,489 4,307,489
Buildings and improvements (net of accumulated
depreciation of $36,120,654 and $33,336,052) 112,251,966 114,580,652
Intangible assets (net of accumulated amortization of
$1,002,842 and $996,272) 1,892,170 1,942,783
Other 1,209,862 1,048,066
----------------- -----------------
$ 128,892,149 $ 132,309,582
============== ==============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 1,428,329 $ 1,373,237
Due to related parties 4,263,835 4,654,626
Mortgage loans 93,927,818 94,490,718
Notes payable 2,921,477 3,450,605
Accrued interest 3,605,283 3,330,072
Other 577,535 610,617
----------------- -----------------
106,724,277 107,909,875
-------------- --------------
Partners' equity
American Tax Credit Properties II L.P.
Capital contributions, net of distributions 45,117,843 45,256,337
Cumulative loss (23,306,813) (21,724,477)
--------------- ---------------
21,811,030 23,531,860
--------------- ---------------
General partners and other limited partners, including
ATCP & ATCP III
Capital contributions, net of distributions 3,535,682 3,639,386
Cumulative loss (3,178,840) (2,771,539)
---------------- ----------------
356,842 867,847
------------------ ------------------
22,167,872 24,399,707
---------------- ----------------
$ 128,892,149 $ 132,309,582
============== ==============
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 29, 1996
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
three and six month periods ended June 30, 1996 and 1995 are as follows:
Three Months Six Months Ended Three Months Six Months Ended
Ended June 30, June 30, Ended June 30, June 30,
1996 1996 1995 1995
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 4,905,129 $ 9,829,855 $ 4,838,001 $ 9,648,689
Interest and other 190,416 355,348 120,478 230,446
----------------- ----------------- ----------------- -----------------
Total Revenue 5,095,545 10,185,203 4,958,479 9,879,135
---------------- --------------- ---------------- ----------------
EXPENSES
Administrative 786,547 1,566,900 736,982 1,496,942
Utilities 601,754 1,387,773 548,984 1,295,852
Operating, maintenance and other 1,017,431 1,899,121 943,119 1,701,605
Taxes and insurance 562,651 1,160,423 533,000 1,081,820
Interest (including amortization of
$25,307, $50,614, $37,226 and $76,517)
1,677,714 3,373,071 1,740,761 3,451,222
Depreciation 1,369,938 2,787,552 1,400,156 2,796,540
-------------- ---------------- ---------------- ----------------
Total Expenses 6,016,035 12,174,840 5,903,002 11,823,981
---------------- --------------- ---------------- ----------------
NET LOSS $ (920,490) $ (1,989,637) $ (944,523) $ (1,944,846)
================ ============== =============== ===============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties II L.P. $ (737,316) $ (1,582,336) $ (749,147) $ (1,565,135)
General partners and other limited
partners, including ATCP & ATCP III,
which includes $66,841, $194,267,
$98,156 and $178,908 of American Tax
Credit Properties II L.P. loss in
excess of investment (183,174) (407,301) (195,376) (379,711)
---------------- ---------------- --------------- ----------------
$ (920,490) $ (1,989,637) $ (944,523) $ (1,944,846)
================ ============== ============== ==============
</TABLE>
The combined results of operations of the Local Partnerships for the three
and six month periods ended June 30, 1996 are not necessarily indicative of
the results that may be expected for an entire operating period.
4. Additional Information
Additional information, including the audited March 30, 1996 Financial
Statements and the Organization, Purpose and Summary of Significant
Accounting Policies, is included in the Partnership's Annual Report on Form
10-K for the fiscal year ended March 30, 1996 on file with the Securities
and Exchange Commission.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Material Changes in Financial Condition
As of September 29, 1996, Registrant has not experienced a significant change in
financial condition as compared to March 30, 1996. Principal changes in assets
are comprised of periodic transactions and adjustments and anticipated equity in
loss from operations of the Local Partnerships. During the six months ended
September 29, 1996, Registrant received cash from interest earnings and
distributions from Local Partnerships and utilized cash for normal operating
expenses. During the six months ended September 29, 1996, Registrant recorded a
net unrealized loss on bonds available-for-sale of approximately $76,000,
resulting in a net unrealized loss of approximately $83,000 reflected in
Registrant's partners' equity (deficit) as of September 29, 1996. In addition,
during the six months ended September 29, 1996, Registrant recorded amortization
of net premium on investments in bonds of approximately $25,000, which was
partially offset by accretion of zero coupon bonds of approximately $20,000.
In addition, during the six months ended September 29, 1996, Registrant received
$200,000 from the maturity of investments in bonds held for working capital
purposes. During the six months ended September 29, 1996, the investment
in Local Partnerships decreased as a result of Registrant's equity in
the Local Partnerships' net loss for the six months ended June 30, 1996 of
$1,582,336 and by cash distributions received from Local Partnerships of
$24,081.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico. The rents of the Properties, many of which receive rental subsidy
payments, including payments under Section 8 of Title II of the Housing and
Community Development Act of 1974 ("Section 8"), are subject to specific laws,
regulations and agreements with federal and state agencies. The subsidy
agreements expire at various times during and after the Compliance Periods of
the Local Partnerships. Registrant cannot reasonably predict legislative
initiatives and governmental budget negotiations, the outcome of which could
result in a reduction in funds available for the various federal and state
administered housing programs including the Section 8 program. Such changes
could adversely affect the future net operating income and debt structure of any
or all Local Partnerships currently receiving such subsidy or similar subsidies.
Three Local Partnerships' Section 8 contracts, which cover certain rental units,
are scheduled to expire in 1997 after being extended for one year. In addition,
the Local Partnerships have various financing structures which include (i)
required debt service payments ("Mandatory Debt Service") and (ii) debt service
payments which are payable only from available cash flow subject to the terms
and conditions of the notes, which may be subject to specific laws, regulations
and agreements with appropriate federal and state agencies ("Non-Mandatory Debt
Service or Interest"). During the six months ended June 30, 1996, revenue from
operations, Local General Partner advances and reserves of the Local
Partnerships have generally been sufficient to cover the operating expenses and
Mandatory Debt Service. The Local Partnerships are effectively operating at or
near break even levels, although certain Local Partnerships' accounting
information reflects operating deficits that do not represent cash deficits due
to their mortgage and financing structure and the required deferral of property
management fees. As discussed below, certain Local Partnerships' operating
information indicates below break even operations after taking into account
their mortgage and financing structure and the required deferral of property
management fees.
The terms of the partnership agreement of Christian Street Associates Limited
Partnership (the "Christian Street Local Partnership") require the Local General
Partner of the Christian Street Local Partnership to advance funds to cover
operating deficits up to $182,500 through March, 1996. As of June 30, 1996, the
Local General Partner of the Christian Street Local Partnership has advanced
approximately $293,000. In addition, the Local General Partner of the Christian
Street Local Partnership is required to cause the management agent to defer
property management fees in order to avoid a default under the mortgage. The
Christian Street Local Partnership incurred an operating deficit for the six
months ended June 30, 1996 of approximately $44,000 which includes property
management fees of approximately $12,000. Accordingly, the net operating deficit
was approximately $32,000. Of Registrant's total annual Low-income Tax Credits,
approximately 5.52% is allocated from the Christian Street Local Partnership.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
The terms of the partnership agreement of 2000-2100 Christian Street Associates
(the "2000 Christian Street Local Partnership") require the Local General
Partner of the 2000 Christian Street Local Partnership to advance funds to cover
operating deficits up to $130,000 through December, 1996. As of June 30, 1996,
the Local General Partner of the 2000 Christian Street Local Partnership has
advanced approximately $216,000. In addition, the Local General Partner of the
2000 Christian Street Local Partnership is required to cause the management
agent to defer property management fees in order to avoid a default under the
mortgage. The 2000 Christian Street Local Partnership incurred an operating
deficit for the six months ended June 30, 1996 of approximately $39,000 which
includes property management fees of approximately $9,000. Accordingly, the net
operating deficit was approximately $30,000. Of Registrant's total annual
Low-income Tax Credits, approximately 3.02% is allocated from the 2000 Christian
Street Local Partnership.
During the six months ended June 30, 1996, Forest Village Housing Partnership
(the "Forest Village Local Partnership") incurred an operating deficit of
approximately $5,000. There is no operating deficit guarantee in connection with
the Forest Village Local Partnership. All required payments on the mortgages and
real estate taxes are current. Of Registrant's total annual Low-income Tax
Credits, approximately 1.01% is allocated from the Forest Village Local
Partnership.
The terms of the partnership agreement of Patton Place Limited Partnership (the
"Patton Place Local Partnership") require the Local General Partner of the
Patton Place Local Partnership to fund any and all operating deficits through
February, 2005. As of June 30, 1996, the Local General Partner of the Patton
Place Local Partnership has advanced approximately $72,000. In addition, the
Local General Partner of the Patton Place Local Partnership is required to cause
the management agent to defer property management fees in order to avoid a
default under the mortgage. The Patton Place Local Partnership incurred an
operating deficit for the six months ended June 30, 1996 of approximately
$10,000 which includes property management fees of approximately $4,000.
Accordingly, the net operating deficit was approximately $6,000. Of Registrant's
total annual Low-income Tax Credits, approximately 1.66% is allocated from the
Patton Place Local Partnership.
The first mortgage of Ann Ell Apartments Associates, Ltd. (the "Ann Ell Local
Partnership") is in default due to insufficient deposits to the replacement
reserve. The lender has alleged certain other incidents of default including,
among other things, the inadequate funding of real estate tax and insurance
escrows and the failure to procure certain minimum insurance coverage. The Local
General Partner of the Ann Ell Local Partnership reports that the Ann Ell Local
Partnership incurred costs for capital improvements and unscheduled maintenance
through June, 1996 which were in excess of the replacement reserve funding
requirement and further reports that the other incidents have been wrongly
alleged and has requested a meeting with the lender to discuss the resolution of
this matter.
Littleton Avenue Community Village, L.P. (the "Littleton Local Partnership") is
a defendant in a lawsuit resulting from an accident in 1989 during the
construction of the complex owned by the Littleton Local Partnership. In
November, 1995 the Littleton Local Partnership and one co-defendant were found
liable in the lawsuit, of which the Littleton Local Partnership's potential
liability is approximately $300,000. The Littleton Local Partnership has filed a
lawsuit against the construction period insurance companies, which were not
co-defendants in the lawsuit, and has appealed the adverse result of the trial.
Although the incident is expected to be covered by insurance, the Local General
Partner of the Littleton Local Partnership has agreed to indemnify the Littleton
Local Partnership in the event of any adverse outcome and has established an
escrow of approximately $325,000 from development proceeds in the event the
Littleton Local Partnership is unsuccessful in its appeal.
Results of Operations
Registrant's operating results are dependent upon the operating results of the
Local Partnerships and are significantly impacted by the Local Partnerships'
policies. In addition, the operating results herein are not necessarily the same
for tax reporting. Registrant accounts for its investment in Local Partnerships
in accordance with the equity method of accounting and Emerging Issues Task
Force ("EITF") Issue No. 94-1, "Accounting for Tax Benefits Resulting from
Investments
in Affordable Housing Projects." Under the equity method of accounting and in
accordance with EITF Issue No. 94-1, the investment is carried at cost which
includes capital contributions payable, and is adjusted for Registrant's share
of the Local Partnership's results of operations and by any cash distributions
received. Equity in loss of each investment in Local Partnership allocated to
Registrant is recognized to the extent of Registrant's investment balance in
each Local Partnership. Any equity in loss in excess of Registrant's investment
balance in a Local Partnership is allocated to other partners' capital in each
such Local Partnership. As a result, the equity in loss of investment in Local
Partnerships is expected to decrease as Registrant's investment balances in the
respective Local Partnerships become zero.
Cumulative losses and cash distributions in excess of investment in Local
Partnerships may result from a variety of circumstances, including a Local
Partnership's accounting policies, subsidy structure, debt structure and
operating deficits, among other things. Accordingly, cumulative losses and cash
distributions in excess of the investment are not necessarily indicative of
adverse operating results of a Local Partnership. See discussion above under
Material Changes in Financial Condition regarding certain Local Partnerships
currently operating below economic break even levels.
Three Months Ended September 29, 1996
For the three months ended September 29, 1996, Registrant had a net loss of
approximately $807,000, which included an equity in loss of investment in Local
Partnerships of approximately $737,000 for the three months ended June 30, 1996.
Registrant's loss from operations for the three months ended September 29, 1996
of approximately $70,000 was attributable to interest revenue of approximately
$91,000, exceeded by operating expenses of approximately $161,000. Interest
income for future periods is expected to decline as investments in bonds mature
and are utilized for Registrant's operating expenses.
The Local Partnerships' net loss of approximately $920,000 for the three months
ended June 30, 1996 was attributable to rental and other revenue of
approximately $5,096,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $4,621,000 and approximately $1,395,000
of depreciation and amortization expenses.
Three Months Ended September 29, 1995
For the three months ended September 29, 1995, Registrant had a net loss of
approximately $831,000, which included an equity in loss of investment in Local
Partnerships of approximately $749,000 for the three months ended June 30, 1995.
Registrant's loss from operations for the three months ended September 29, 1995
of approximately $82,000 was attributable to interest revenue of approximately
$89,000, exceeded by operating expenses of approximately $171,000.
The Local Partnerships' net loss of approximately $945,000 for the three months
ended June 30, 1995 was attributable to rental and other revenue of
approximately $4,958,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $4,466,000 and approximately $1,437,000
of depreciation and amortization expenses.
Six Months Ended September 29, 1996
For the six months ended September 29, 1996, Registrant had a net loss of
approximately $1,730,000, which included an equity in loss of investment in
Local Partnerships of approximately $1,582,000 for the six months ended June 30,
1996. Registrant's loss from operations for the six months ended September 29,
1996 of approximately $148,000 was attributable to interest revenue of
approximately $185,000, exceeded by operating expenses of approximately
$333,000. Interest income for future periods is expected to decline as
investments in bonds mature and are utilized for Registrant's operating
expenses.
The Local Partnerships' net loss of approximately $1,990,000 for the six months
ended June 30, 1996 was attributable to rental and other revenue of
approximately $10,185,000, exceeded by operating and interest expenses
(including Non-Mandatory Interest) of approximately $9,337,000 and approximately
$2,838,000 of depreciation and amortization expenses.
Six Months Ended September 29, 1995
For the six months ended September 29, 1995, Registrant had a net loss of
approximately $1,731,000, which included an equity in loss of investment in
Local Partnerships of approximately $1,565,000 for the six months ended June 30,
1995. Registrant's loss from operations for the six months ended September 29,
1995 of approximately $166,000 was attributable to interest revenue of
approximately $179,000, exceeded by operating expenses of approximately
$345,000.
The Local Partnerships' net loss of approximately $1,945,000 for the six months
ended June 30, 1995 was attributable to rental and other revenue of
approximately $9,879,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $8,951,000 and approximately $2,873,000
of depreciation and amortization expenses.
Three and Six Month Periods Ended September 29, 1996 versus
Three and Six Month Periods Ended September 29, 1995
Registrant's operations for the three months ended September 29, 1996 resulted
in a net loss of approximately $807,000 as compared to a net loss of
approximately $831,000 for the same period in 1995. Although the net loss is
comparable, the nonrecognition of losses in excess of Registrant's investment in
certain Local Partnerships decreased by approximately $31,000.
Registrant's operations for the six months ended September 29, 1996 resulted in
a net loss of approximately $1,730,000 as compared to a net loss of
approximately $1,731,000 for the same period in 1995. Although the net loss is
comparable, the nonrecognition of losses in excess of Registrant's investment in
certain Local Partnerships increased by approximately $15,000.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Littleton Avenue Community Village, L.P. (the "Littleton Local
Partnership") is a defendant in a lawsuit resulting from an accident
in 1989 during the construction of the complex owned by the Littleton
Local Partnership. In November, 1995 the Littleton Local Partnership
and one co-defendant were found liable in the lawsuit, of which the
Littleton Local Partnership's potential liability is approximately
$300,000. The Littleton Local Partnership has filed a lawsuit against
the construction period insurance companies, which were not
co-defendants in the lawsuit, and has appealed the adverse result of
the trial. Although the incident is expected to be covered by
insurance, the Local General Partner of the Littleton Local
Partnership has agreed to indemnify the Littleton Local Partnership in
the event of any adverse outcome and has established an escrow of
approximately $325,000 from development proceeds in the event the
Littleton Local Partnership is unsuccessful in its appeal.
Registrant is not aware of any other material legal proceedings.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
As discussed in Part I, Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations, the first mortgage
of Ann Ell Apartments Associates, Ltd. (the "Ann Ell Local
Partnership") is in default due to insufficient deposits to the
replacement reserve. The lender has alleged certain other incidents of
default including, among other things, the inadequate funding of real
estate tax and insurance escrows and the failure to procure certain
minimum insurance coverage. The Local General Partner of the Ann Ell
Local Partnership has represented that these other incidents have been
wrongly alleged.
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
None
<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.
AMERICAN TAX CREDIT PROPERTIES II L.P.
a Delaware limited partnership)
By: Richman Tax Credit Properties II L.P.,
General Partner
by: Richman Tax Credits Inc.,
general partner
Date: November 13, 1996 /s/ Richard Paul Richman
----------------- ------------------------
Richard Paul Richman
President, Chief Executive Officer and
Director of the general partner of the
General Partner
Date: November 13, 1996 /s/ Neal Ludeke
----------------- ---------------
Neal Ludeke
Treasurer of the general partner
of the General Partner
(Principal Financial and Accounting
Officer of Registrant)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the quarter ended September 29, 1996 Form 10Q Balance Sheets and Statements of
Operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000842314
<NAME> AMERICAN TAX CREDIT PROPERTIES II L.P.
<MULTIPLIER> 1000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 9-MOS
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<PERIOD-END> SEP-29-1996
<CASH> 679
<SECURITIES> 2,196
<RECEIVABLES> 79
<ALLOWANCES> 0
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<TOTAL-ASSETS> 26,765
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0
0
<COMMON> 0
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<TOTAL-LIABILITY-AND-EQUITY> 26,765
<SALES> 0
<TOTAL-REVENUES> 185
<CGS> 0
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,730)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,730)
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<EPS-PRIMARY> (30.73)
<EPS-DILUTED> 0
</TABLE>
