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 June 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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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 .
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Table of Contents
Balance Sheets as of June 29, 1997 (Unaudited) and March 30, 1997 (Unaudited)
Statements of Operations for the three months ended June 29, 1997 (Unaudited)
and June 29, 1996 (Unaudited).............................................
Statements of Cash Flows for the three months ended June 29, 1997 (Unaudited)
and June 29, 1996 (Unaudited).............................................
Notes to Financial Statements as of June 29, 1997 (Unaudited)...............
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
BALANCE SHEETS
JUNE 29, 1997 AND MARCH 30, 1997
(UNAUDITED)
June 29, March 30,
Notes 1997 1997
----- ---------------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 882,895 $ 674,160
Investments in bonds available-for-sale 2 4,140,495 4,151,478
Investment in local partnerships 3 17,208,503 18,119,151
Interest receivable 67,545 77,340
--------------- ---------------
$ 22,299,438 $ 23,022,129
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 584,785 $ 561,847
Payable to general partner 508,671 486,224
Other 62,600 62,600
--------------- ---------------
1,156,056 1,110,671
------------- -------------
Commitments and contingencies 4
Partners' equity (deficit)
General partner (280,842) (272,442)
Limited partners (55,746 units of limited partnership
interest outstanding) 21,473,791 22,305,343
Unrealized loss on investments in bonds
available-for-sale, net 2 (49,567) (121,443)
-------------- -------------
21,143,382 21,911,458
------------ ------------
$ 22,299,438 $ 23,022,129
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 29, 1997 AND 1996
(UNAUDITED)
Notes 1997 1996
----- -------------- ---------
REVENUE
<S> <C> <C> <C>
Interest $ 89,990 $ 93,503
Other income from a local partnership 388
--------------- -------------
TOTAL REVENUE 90,378 93,503
------------- -------------
EXPENSES
Administration fees 74,826 74,826
Management fees 74,826 74,826
Professional fees 15,170 15,836
Printing, postage and other 8,628 6,226
--------------- ---------------
TOTAL EXPENSES 173,450 171,714
------------- -------------
Loss from operations (83,072) (78,211)
Equity in loss of investment in local partnerships 3 (756,880) (845,020)
------------ ------------
NET LOSS $ (839,952) $ (923,231)
============ ============
NET LOSS ATTRIBUTABLE TO
General partner $ (8,400) $ (9,232)
Limited partners (831,552) (913,999)
------------ ------------
$ (839,952) $ (923,231)
============ ============
NET LOSS per unit of limited partnership interest (55,746
units of limited partnership interest) $ (14.92) $ (16.40)
============== ==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 29, 1997 AND 1996
(UNAUDITED)
1997 1996
-------------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Interest received $ 104,233 $ 99,827
Other income from a local partnership 388
Cash used from local partnerships for deferred expenses (7,000)
Cash paid for
administration fees (52,379) (52,380)
management fees (52,379) (52,380)
professional fees (12,920) (23,689)
printing, postage and other expenses (10,387) (3,790)
-------------- --------------
Net cash used in operating activities (23,444) (39,412)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships 153,768 24,081
Maturity/redemption of bonds 130,000
Investments in bonds, includes $1,089 of accrued interest paid at purchase
of investment (51,589)
------------ ------------
Net cash provided by investing activities 232,179 24,081
------------ ------------
Net increase (decrease) in cash and cash equivalents 208,735 (15,331)
Cash and cash equivalents at beginning of period 674,160 538,912
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 882,895 $ 523,581
============ ============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain (loss) on investments in bonds available-for-sale, net $ 71,876 $ (75,606)
============= ============
- - ----------------------------------------------------------------------------------------------------------
See reconciliation of net loss to net cash used in operating activities
on page 6.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS - (Continued)
THREE MONTHS ENDED JUNE 29, 1997 AND 1996
(UNAUDITED)
1997 1996
-------------- ---------
RECONCILIATION OF NET LOSS TO NET CASH USED IN
OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (839,952) $ (923,231)
Adjustments to reconcile net loss to net cash used in operating activities
Equity in loss of investment in local partnerships 756,880 845,020
Amortization of net premium on investment in bonds 13,132 12,441
Accretion of zero coupon bonds (9,773) (9,773)
Decrease in interest receivable, includes $1,089 of accrued interest
paid at purchase of investment in bonds 10,884 3,656
Increase in payable to general partner 22,447 22,446
Increase in accounts payable and accrued expenses 22,938 17,029
Decrease in other liabilities (7,000)
------------------ --------------
NET CASH USED IN OPERATING ACTIVITIES $ (23,444) $ (39,412)
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 1997
(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 June 29, 1997 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 months
ended June 29, 1997 are not necessarily indicative of the results that may
be expected for the entire year.
2. Investments in Bonds Available-For-Sale
As of June 29, 1997, certain information concerning investments in bonds
available-for-sale is as follows:
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
<S> <C> <C> <C> <C>
Corporate debt securities
After one year through five years $ 747,707 $ 18,490 $ (2,327) $ 763,870
After five years through ten years 2,128,506 22,908 (63,574) 2,087,840
After ten years 202,866 -- (12,778) 190,088
----------- ---------------- ----------- ------------
3,079,079 41,398 (78,679) 3,041,798
----------- ------------ ----------- -----------
U.S. Treasury debt securities
After ten years 452,215 -- (24,670) 427,545
------------ ---------------- ----------- ------------
U.S. government and agency securities
After five years through ten years 608,409 18,027 -- 626,436
After ten years 50,359 -- (5,643) 44,716
------------- ---------------- ------------ -------------
658,768 18,027 (5,643) 671,152
------------ ------------ ------------ ------------
$ 4,190,062 $ 59,425 $ (108,992) $ 4,140,495
=========== =========== ========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1997
(UNAUDITED)
3. Investment in Local Partnerships
The Partnership owns a limited partnership interest in fifty Local
Partnerships representing capital contributions in the aggregate amount of
$45,692,662. As of March 31, 1997, the Local Partnerships have outstanding
mortgage loans payable totaling approximately $93,089,000 and accrued
interest payable on such loans totaling approximately $4,014,000, which are
secured by security interests and liens common to mortgage loans on the
Local Partnerships' real property and other assets.
For the three months ended June 29, 1997, the investment in Local
Partnerships activity consists of the following:
<S> <C>
Investment in Local Partnerships as of March 30, 1997 $ 18,119,151
Equity in loss of investment in Local Partnerships for
the three months ended March 31, 1997 (756,880) (A)
Cash distributions received from Local Partnerships
during the three months ended June 29, 1997 (153,768)
--------------
Investment in Local Partnerships as of June 29, 1997 $ 17,208,503
============
</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 was $139,147 and $127,426 for the three month
periods ended March 31, 1997 and 1996, 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 March
31, 1997 and December 31, 1996 and the combined unaudited statements of
operations of the Local Partnerships for the three months ended March 31,
1997 and 1996 are reflected on pages 9 and 10, respectively.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1997
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of March 31, 1997
and December 31, 1996 are as follows:
March 31, December 31,
1997 1996
------------------ -----------
<S> <C> <C>
ASSETS
Cash and other investments $ 3,728,348 $ 4,338,030
Rental receivable 327,362 331,265
Escrow deposits and reserves 5,210,890 5,141,484
Land 4,180,673 4,180,673
Buildings and improvements (net of accumulated depreciation of
$38,314,996 and $37,016,338) 100,978,417 102,236,052
Intangible assets (net of accumulated amortization of $957,737
and $992,006) 1,827,327 1,848,817
Other 1,080,282 993,891
--------------- ----------------
$ 117,333,299 $ 119,070,212
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 1,478,820 $ 1,520,643
Due to related parties 4,274,849 4,650,126
Mortgage loans 93,089,222 93,336,971
Notes payable 2,753,907 2,804,927
Accrued interest 4,014,239 3,948,452
Other 644,904 628,190
--------------- ---------------
106,255,941 106,889,309
------------- -------------
Partners' equity (deficit)
American Tax Credit Properties II L.P.
Capital contributions, net of distributions 45,023,925 45,115,322
Cumulative loss (27,661,654) (26,904,774)
-------------- --------------
17,362,271 18,210,548
--------------- ---------------
General partners and other limited partners, including ATCP
& ATCP III
Capital contributions, net of distributions 3,497,450 3,503,853
Cumulative loss (9,782,363) (9,533,498)
--------------- ---------------
(6,284,913) (6,029,645)
--------------- ---------------
11,077,358 12,180,903
--------------- ---------------
$ 117,333,299 $ 119,070,212
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1997
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
three months ended March 31, 1997 and 1996 are as follows:
1997 1996
--------------- ----------
<S> <C> <C>
REVENUE
Rental $ 5,001,136 $ 4,924,726
Interest and other 112,242 164,932
-------------- --------------
TOTAL REVENUE 5,113,378 5,089,658
------------- -------------
EXPENSES
Administrative 787,482 780,353
Utilities 836,795 786,019
Operating, maintenance and other 961,163 881,690
Taxes and insurance 596,568 597,772
Interest (including amortization of $21,490 and $25,307) 1,638,457 1,695,357
Depreciation 1,298,658 1,417,614
------------- -------------
TOTAL EXPENSES 6,119,123 6,158,805
------------- -------------
NET LOSS $ (1,005,745) $ (1,069,147)
============ ============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties II L.P. $ (756,880) $ (845,020)
General partners and other limited partners, including ATCP
& ATCP III, which includes $139,147 and $127,426 of
American Tax Credit Properties II L.P. loss in excess of
investment (248,865) (224,127)
------------- -------------
$ (1,005,745) $ (1,069,147)
============ ============
</TABLE>
The combined results of operations of the Local Partnerships for the three
months ended March 31, 1997 are not necessarily indicative of the results
that may be expected for an entire operating period.
4. Commitments and contingencies
On July 16, 1997, the Partnership received a demand for certain information
with respect to the holders of Units, the stated purpose which was to
assist such party in making an offer to Unit holders to purchase their
Units and otherwise to communicate with them concerning such an offer.
Subsequently, the Partnership requested certain information from such party
in order to assess the appropriateness of the demand. On July 28, 1997, a
complaint was filed against the Partnership, the General Partner and its
general partner seeking, among other things, an order directing the
defendants to immediately furnish the requested information and awarding
the plaintiff any resulting damages. As of August 13, 1997, such
information has not been provided.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1997
(UNAUDITED)
5. Additional Information
Additional information, including the audited March 30, 1997 Financial
Statements and the Organization, Purpose and Summary of Significant
Accounting Policies, is included in Registrant's Annual Report on Form 10-K
for the fiscal year ended March 30, 1997 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 June 29, 1997, Registrant has not experienced a significant change in
financial condition as compared to March 30, 1997. Principal changes in assets
are comprised of periodic transactions and adjustments and anticipated equity in
loss from operations of the Local Partnerships. During the three months ended
June 29, 1997, Registrant received cash from interest earnings and distributions
from the Local Partnerships and utilized cash for operating expenses. In
addition, Registrant received $130,000 from the maturity of investment in bonds,
and purchased bonds in an amount of $51,589, which includes accrued interest of
$1,089 paid at purchase. Cash and cash equivalents and investments in bonds
available-for-sale increased, in the aggregate, by approximately $198,000 during
the three months ended June 29, 1997, which increase includes a net unrealized
gain recorded on investments in bonds of approximately $72,000, the amortization
of net premium on investments in bonds of approximately $13,000 and the
accretion of zero coupon bonds of approximately $10,000. During three months
ended June 29, 1997, the investment in Local Partnerships decreased as a result
of Registrant's equity in the Local Partnerships' net loss for the three months
ended March 31, 1997 of $756,880 and cash distributions received from Local
Partnerships of $153,768. Accounts payable and accrued expenses and payable to
general partner are comprised primarily of accrued administration fees and
management fees, respectively.
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. The United States Department of Housing and Urban
Development ("HUD") has issued notices which implement provisions to renew
certain project based Section 8 contracts expiring during HUD's fiscal year
1997, where requested by an owner, for an additional one year term generally at
or below current rent levels, subject to certain guidelines. HUD has an
additional program which, in general, provides for restructuring rents and/or
mortgages where rents may be adjusted to market levels and mortgage terms may be
adjusted based on the reduction in rents, although there may be instances in
which only rents, but not mortgages, are restructured. 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. Six Local Partnerships' Section 8 contracts, which cover
certain rental units, are scheduled to expire in 1997, three of which expired
during 1996 and were 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 three months ended March 31, 1997, 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. Substantially all of 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. However, as discussed below, a
Local Partnership's operating information indicates below break even operations
after taking into account its mortgage and financing structure and the required
deferral of property management fees.
During the three months ended March 31, 1997, Forest Village Housing Partnership
(the "Forest Village Local Partnership") incurred an operating deficit of
approximately $9,000. Although the property experienced occupancy fluctuations
throughout the first quarter, occupancy has recently stabilized at approximately
94% and payments on the mortgages and real estate taxes are current. Of
Registrant's total annual Low-income Tax Credits, approximately 1% is allocated
from the Forest Village 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 Local General Partners have informed Registrant that the Christian Street
Associates Limited Partnership (the "Christian Street Local Partnership") and
2000-2100 Christian Street Associates (the "2000 Christian Street Local
Partnership") have not made the required principal and interest payments under
their first mortgage obligations since December 1996 and that the lender has
declared both mortgages in default. The Local General Partners have approached
the lender and are currently in the process of negotiating a workout, but the
lender has clearly indicated that in connection with any proposed workout, the
Local General Partners would be responsible for funding a portion of any
remaining deficit after taking into account the benefits of the workout.
However, the Local General Partners have informed Registrant that they do not
intend to continue to voluntarily fund the operating deficits of the properties.
Such amounts would likely be significant. There can be no assurance that any
such workout will be achieved. Of Registrant's total annual Low-income Tax
Credits, approximately 5% and 3% are allocated from the Christian Street Local
Partnership and the 2000 Christian Street Local Partnership, respectively.
The first mortgage of Ann Ell Apartments Associates, Ltd. (the "Ann Ell Local
Partnership") was in default due to insufficient deposits to the replacement
reserve and the lender has alleged certain other incidents of default including,
among other things, inadequate funding of real estate tax and insurance escrows
and failure to procure certain minimum insurance coverage, resulting in the
lender filing a foreclosure action and a motion for summary judgment. Registrant
has replaced the Local General Partner and the management agent of the Ann Ell
Local Partnership effective July 10, 1997 and advanced approximately $125,000 to
cure defaults and sufficiently fund the replacement reserve and escrows. The
foreclosure action has been voluntarily dismissed.
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
appealed the result of the trial and has filed a lawsuit against the
construction period insurance companies, which were not co-defendants in the
lawsuit. Although the Local General Partner of the Littleton Local Partnership
expects the incident to be covered by insurance, it has agreed to indemnify the
Littleton Local Partnership and has established an escrow of approximately
$325,000 from development proceeds in the event the Littleton Local Partnership
is unsuccessful in its appeal and its action against the construction period
insurance companies.
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, under which the investment
is carried at cost 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. The combined statements of operations of the
Local Partnerships reflected in Note 3 to Registrant's financial statements
include the operating results of all Local Partnerships, regardless of
Registrant's investment balances.
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 a Local Partnership currently
operating below economic break even level.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Three Months Ended June 29, 1997
For the three months ended June 29, 1997, Registrant had a net loss of
approximately $840,000, which included an equity in loss of investment in Local
Partnerships of approximately $757,000 for the three months ended March 31,
1997. Registrant's loss from operations for the three months ended June 29, 1997
of approximately $83,000 was attributable to interest revenue of approximately
$90,000, exceeded by operating expenses of approximately $173,000.
Nonrecognition of losses in excess of Registrant's investment in certain Local
Partnerships during the period was approximately $139,000.
The Local Partnerships' net loss of approximately $1,006,000 for the three
months ended March 31, 1997 was attributable to rental and other revenue of
approximately $5,113,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $4,799,000 and approximately $1,320,000
of depreciation and amortization expenses.
Three Months Ended June 29, 1996
For the three months ended June 29, 1996, Registrant had a net loss of
approximately $923,000, which included an equity in loss of investment in Local
Partnerships of approximately $845,000 for the three months ended March 31,
1996. Registrant's loss from operations for the three months ended June 29, 1997
of approximately $78,000 was attributable to interest revenue of approximately
$94,000, exceeded by operating expenses of approximately $172,000.
Nonrecognition of losses in excess of Registrant's investment in certain Local
Partnerships during the period was approximately $127,000.
The Local Partnerships' net loss of approximately $1,069,000 for the three
months ended March 31, 1996 was attributable to rental and other revenue of
approximately $5,090,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $4,716,000 and approximately $1,443,000
of depreciation and amortization expenses.
Three Months Ended June 29, 1997 v.
Three Months Ended June 29, 1996
Registrant's operations for the three months ended June 29, 1997 resulted in a
net loss of approximately $840,000, as compared to a net loss of approximately
$923,000 for the three months ended June 29, 1996. The decrease in net loss is
primarily attributed to a decrease in the equity in loss of investment in Local
Partnerships of approximately $88,000, which is primarily the result of the
increase in the nonrecognition of losses in excess of Registrant's investment in
Local Partnerships in accordance with the equity method of accounting.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As discussed in Part I, Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations, 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 appealed the result of the trial and
has filed a lawsuit against the construction period insurance
companies, which were not co-defendants in the lawsuit. Although the
Local General Partner of the Littleton Local Partnership expects the
incident to be covered by insurance, it has agreed to indemnify the
Littleton Local Partnership and has established an escrow of
approximately $325,000 from development proceeds in the event the
Littleton Local Partnership is unsuccessful in its appeal and its
action against the construction period insurance companies.
On July 16, 1997, Everest Properties, Inc. ("Everest") demanded
certain information with respect to the holders of Units. Everest
stated that the purpose of the demand was to assist Everest in making
an offer to Unit holders to purchase their Units and otherwise to
communicate with them concerning such an offer. On July 25, 1997,
Registrant requested certain information from Everest in order to
assess the appropriateness of the demand. To date, the information has
not been provided. On July 28, 1997, Everest filed a complaint against
Registrant, the General Partner and its general partner in the Court
of Chancery of the State of Delaware in and for New Castle County
seeking, among other things, an order directing the defendants to
immediately furnish the requested information and awarding the
plaintiff any resulting damages.
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") was in default due to insufficient deposits to the
replacement reserve and the lender has alleged certain other incidents
of default including, among other things, inadequate funding of real
estate tax and insurance escrows and failure to procure certain
minimum insurance coverage, resulting in the lender filing a
foreclosure action and a motion for summary judgment. Registrant has
replaced the Local General Partner and the management agent of the Ann
Ell Local Partnership effective July 10, 1997 and advanced
approximately $125,000 to cure defaults and sufficiently fund the
replacement reserve and escrows. The foreclosure action has been
voluntarily dismissed.
Registrant is not aware of any other material legal proceedings.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None; see Items 1 and 5 regarding mortgage defaults of certain Local
Partnerships.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
As discussed in Part I, Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations, both first mortgages
of the Christian Street Associates Limited Partnership and 2000-2100
Christian Street Associates are in default due to the non payment of
required principal and interest payments since December 1996. The
Local General Partners have approached the lender and are currently in
the process of negotiating a workout.
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
Dated: August 13, 1997 /s/ Richard Paul Richman
--------------- -------------------------
Richard Paul Richman
President, Chief Executive Officer and
Director of the general partner of the
General Partner
Dated: August 13, 1997 /s/ Neal Ludeke
--------------- ----------------
Neal Ludeke
Treasurer of the general partner
of the General Partner
(Principal Financial and Accounting
Officer of Registrant)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted
from the quarter ended June 29, 1997 Form 10-Q 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> 1.00
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-30-1998
<PERIOD-START> MAR-31-1997
<PERIOD-END> JUN-29-1997
<EXCHANGE-RATE> 1.00
<CASH> 883
<SECURITIES> 4,140
<RECEIVABLES> 68
<ALLOWANCES> 0
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<TOTAL-ASSETS> 22,299
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0
0
<COMMON> 0
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<TOTAL-LIABILITY-AND-EQUITY> 22,299
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<TOTAL-REVENUES> 90
<CGS> 0
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<OTHER-EXPENSES> (173)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (840)
<INCOME-TAX> 0
<INCOME-CONTINUING> (840)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (840)
<EPS-PRIMARY> (15.00)
<EPS-DILUTED> 0
</TABLE>
