UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
---
For the quarterly period ended December 30, 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 .
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Table of Contents
Balance Sheets as of December 30, 1996 (Unaudited) and March 30, 1996(Unaudited)
Statements of Operations for the three and nine month periods ended December 30,
1996 (Unaudited) and December 30, 1995 (Unaudited)
Statements of Cash Flows for the nine months ended December 30, 1996 (Unaudited)
and December 30, 1995 (Unaudited)
Notes to Financial Statements as of December 30, 1996 (Unaudited)
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
BALANCE SHEETS
DECEMBER 30, 1996 AND MARCH 30, 1996
(UNAUDITED)
December 30, March 30,
Notes 1996 1996
----- ------------------- ------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 609,161 $ 538,912
Investments in bonds available-for-sale 2 4,259,245 4,477,098
Investment in local partnerships 3 21,003,480 23,417,447
Interest receivable 67,297 76,148
----------------- ----------------
$ 25,939,183 $ 28,509,605
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 510,271 $ 480,944
Payable to general partner 463,781 426,440
Other 62,600 69,600
----------------- ----------------
1,036,652 976,984
--------------- ----------------
Partners' equity (deficit)
General partner (243,588) (217,372)
Limited partners (55,746 units of limited partnership interest
outstanding) 25,161,854 27,757,245
Unrealized loss on investments in bonds available-for-sale, net 2 (15,735) (7,252)
---------------- ----------------
24,902,531 27,532,621
-------------- --------------
$ 25,939,183 $ 28,509,605
============= =============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF OPERATIONS
THREE AND NINE MONTH PERIODS ENDED DECEMBER 30, 1996 AND 1995
(UNAUDITED)
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
December 30, December 30, December 30, December 30,
Notes 1996 1996 1995 1995
----- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUE
Interest $ 87,364 $ 272,353 $ 87,826 $ 267,217
----------------- --------------- ---------------- ---------------
TOTAL REVENUE 87,364 272,353 87,826 267,217
---------------------------------- ----------------- ----------------
EXPENSES
Administration fees 74,826 224,479 74,826 224,479
Management fees 74,826 224,479 74,826 224,479
Professional fees 16,815 41,140 18,203 43,071
Printing, postage and other 7,37 16,497 1,27 22,111
------------------------------------ ------------------------------------
TOTAL EXPENSES 173,839 506,595 169,129 514,140
----------------- ----------------- ----------------- -----------------
Loss from operations (86,475) (234,242) (81,303) (246,923)
Equity in loss of investment in local
partnerships 3 (805,029) (2,387,365) (823,772) (2,388,907)
----------------- ---------------- ----------------- ----------------
NET LOSS $ (891,504) $ (2,621,607) $ (905,075) $ (2,635,830)
================ =============== ================ ===============
NET LOSS ATTRIBUTABLE TO
General partner $ (8,915 $ (26,216) $ (9,050 $ (26,358)
Limited partners 882,589) (2,595,391) (896,025) (2,609,472)
----------------- ---------------- ----------------- --------------
$ (891,504) $ (2,621,607) $ (905,075) $ 2,635,830)
================ =============== ================ = ==============
NET LOSS per unit of limited partnership
interest (55,746 units of limited
partnership interest) $ 15.83 $ (46.56) $ (16.07 $ (46,81)
==================================== ====================================
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 30, 1996 AND 1995
(UNAUDITED)
1996 1995
------------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Interest received $ 290,574 $ 327,445
Cash used from local partnerships for deferred expenses (7,000) (7,000)
Cash paid for
administration fees (187,138) (187,136)
management fees (187,138) (189,513)
professional fees (51,890) (53,571)
printing, postage and other expenses (13,761) (19,574)
interest on an outstanding capital contribution (83,100)
--------------------- ----------------
Net cash used in operating activities (156,353) (212,449)
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturity/redemption of bonds 200,000
Cash distributions from local partnerships 26,602 72,420
Transfer from restricted cash 428,559
Investment in a local partnership (360,000)
---------------------- ---------------
Net cash provided by investing activities 226,602 140,979
---------------- ----------------
Net increase (decrease) in cash and cash equivalents 70,249 (71,470)
Cash and cash equivalents at beginning of period 538,912 1,541,346
---------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 609,161 $ 1,469,876
=============== =============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain (loss) on investments in bonds available-for-sale, net $ (8,483) $ 281,204
================ ==============
See reconciliation of net loss to net cash used in operating
activities on page 6.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS - (Continued)
NINE MONTHS ENDED DECEMBER 30, 1996 AND 1995
(UNAUDITED)
1996 1995
-------------------- ------------
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (2,621,607) $ (2,635,830)
Adjustments to reconcile net loss to net cash used in operating
activities
Equity in loss of investment in local partnerships 2,387,365 2,388,907
Amortization of net premium on investments in bonds 38,691 53,714
Accretion of zero coupon bonds (29,321) (29,321)
Decrease in interest receivable 8,851 21,294
Increase in accounts payable and accrued expenses 29,327 29,387
Increase in payable to general partner 37,341 34,959
Decrease in other liabilities (7,000) (7,000)
Decrease in interest payable (68,559)
---------------------- -----------------
NET CASH USED IN OPERATING ACTIVITIES $ (156,353) $ (212,449)
=============== ===============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 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 December 30, 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 nine month periods ended December 30, 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 December 30, 1996, certain information concerning investments in
bonds available-for-sale is as follows:
<S> <C> <C> <C> <C>
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
Corporate debt securities
Within one year $ 130,947 $ 1,115 $ -- $ 132,062
After one year through five years 555,064 24,141 -- 579,205
After five years through ten years 2,274,045 25,485 (61,628) 2,237,902
After ten years 202,999 -- (11,856) 191,143
------------- ------------------ ------------- -------------
3,163,055 50,741 (73,484) 3,140,312
------------ -------------- ------------- ------------
U.S. Treasury debt securities
After ten years 432,667 -- (14,580) 418,087
------------- ------------------ ------------- -------------
U.S. government and agency securities
After five years through ten years 628,882 29,134 (3,450) 654,566
After ten years 0,376 -- (4,096) 46,280
-------------- ------------------ -------------- --------------
679,258 29,134 (7,546) 700,846
------------- -------------- -------------- -------------
$ 4,274,980 $ 79,875 $ (95,610) $ 4,259,245
=========== ============= ============ ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
DECEMBER 30, 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 September 30, 1996, the Local Partnerships have
outstanding mortgage loans payable totaling approximately $93,633,000 and
accrued interest payable on such loans totaling approximately $3,809,000,
which are secured by security interests and liens common to mortgage loans
on the Local Partnerships' real property and other assets.
For the nine months ended December 30, 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)
September 30, 1996 (805,029) (2,387,365) (A)
--------------
Cash distributions received from Local Partnerships
during the nine months ended December 30, 1996 (26,602)
---------------
Investment in Local Partnerships as of December 30, 1996 $ 21,003,480
============
</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 nine month periods ended
September 30, 1996 was $82,487 and $276,754, 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
September 30, 1996 and December 31, 1995 and the combined unaudited
statements of operations of the Local Partnerships for the three and nine
month periods ended September 30, 1996 and 1995 are reflected on pages 9
and 10, respectively.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
DECEMBER 30, 1996
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of September 30,
1996 and December 31, 1995 are as follows:
September 30, December 31,
1996 1995
-------------------- ------------
<S> <C> <C> <C>
ASSETS
Cash and other investments $ 3,962,869 $ 5,021,628
Rental receivable 372,626 239,874
Escrow deposits and reserves 5,522,846 5,169,090
Land 4,307,489 4,307,489
Buildings and improvements (net of accumulated
depreciation of $37,503,697 and $33,336,052) 111,012,572 114,580,652
Intangible assets (net of accumulated amortization of
$1,025,363 and $996,272) 1,869,649 1,942,783
Other 898,036 1,048,066
----------------- -----------------
$ 127,946,087 $ 132,309,582
============== ==============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 1,617,195 $ 1,373,237
Due to related parties 4,229,191 4,654,626
Mortgage loans 93,633,351 94,490,718
Notes payable 2,874,877 3,450,605
Accrued interest 3,809,216 3,330,072
Other 608,835 610,617
-------------- --------------
106,772,665 107,909,875
-------------- --------------
Partners' equity
American Tax Credit Properties II L.P.
Capital contributions, net of distributions 45,117,843 45,256,337
Cumulative loss (24,111,842) (21,724,477)
-------------- ---------------
21,006,001 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 (3,368,261) (2,771,539)
-------------- --------------
167,421 867,847
-------------- -------------
21,173,422 24,399,707
---------------- -------------
$ 127,946,087 $ 132,309,582
============== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
DECEMBER 30, 1996
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
three and nine month periods ended September 30, 1996 and 1995 are as
follows:
Three Months Nine Months Three Months Nine Months Ended
Ended September Ended September Ended September September
30, 30, 30, 30,
996 1996 1995 1995
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 4,945,521 $ 14,775,376 $ 4,898,467 $ 14,547,157
Interest and other 159,783 515,131 101,186 331,632
---------------- ----------------- ---------------- -----------------
TOTAL REVENUE 5,105,304 15,290,507 4,999,653 14,878,789
--------------- --------------- --------------- ---------------
EXPENSES
Administrative 732,855 2,299,755 743,531 2,240,473
Utilities 516,557 1,904,330 484,976 1,780,828
Operating, maintenance and other 1,217,644 3,116,765 1,072,489 2,774,094
Taxes and insurance 568,235 1,728,658 553,693 1,635,513
Interest (including amortization of
$22,520, $73,134, $71,630 and $148,147
1,684,370 5,057,441 1,771,461 5,222,684
Depreciation 1,380,093 4,167,645 1,397,732 4,194,272
--------------- ---------------- --------------- ----------------
TOTAL EXPENSES 6,099,754 18,274,594 6,023,882 17,847,864
--------------- --------------- --------------- ---------------
NET LOSS $ (994,450) $ (2,984,087) $ (1,024,229) $ (2,969,075)
=============== ============= ============== ==============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties II L.P. $ (805,029) $ (2,387,365) $ (823,772) $ (2,388,907)
General partners and other limited
partners, including ATCP & ATCP III,
which includes $82,487, $276,754,
$93,366 and $272,274 of American Tax
Credit Properties II L.P. loss in
excess of investment (189,421) (596,722) (200,457) (580,168)
---------------- --------------- ---------------- ----------------
$ (994,450) $ (2,984,087) $ (1,024,229) $ (2,969,075)
=============== ============= ============== ==============
</TABLE>
The combined results of operations of the Local Partnerships for the three
and nine month periods ended September 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 December 30, 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 nine months ended
December 30, 1996, Registrant received cash from interest earnings and
distributions from Local Partnerships and utilized cash for operating expenses.
During the nine months ended December 30, 1996, Registrant recorded a net
unrealized loss on bonds available-for-sale of approximately $8,000, resulting
in a net unrealized loss of approximately $16,000 reflected in Registrant's
partners' equity (deficit) as of December 30, 1996. In addition, during the nine
months ended December 30, 1996, Registrant recorded amortization of net premium
on investments in bonds of approximately $39,000, which was partially offset by
accretion of zero coupon bonds of approximately $29,000. In addition, during the
nine months ended December 30, 1996, Registrant received $200,000 from the
maturity of investments in bonds held for working capital purposes. During the
nine months ended December 30, 1996, the investment in Local Partnerships
decreased as a result of Registrant's equity in the Local Partnerships' net loss
for the nine months ended September 30, 1996 of $2,387,365 and cash
distributions received from Local Partnerships of $26,602.
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 nine months ended September 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. 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,
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 agreements of Christian Street Associates Limited
Partnership (the "Christian Street Local Partnership") and 2000-2100 Christian
Street Associates (the "2000 Christian Street Local Partnership"), which Local
Partnerships have certain common general partner interests and a common first
mortgage lender, require the Local General Partners to advance funds to cover
operating deficits up to $182,500 (through March, 1996) and $130,000 (through
December, 1996), respectively, and to cause the management agent to defer
property management fees in order to avoid a default under the respective
mortgages. The properties have experienced ongoing operating deficits and as of
September 30, 1996, the Local General Partners have advanced approximately
$305,000 to the Christian Street Local Partnership and approximately $232,000 to
the 2000 Christian Street Local Partnership. Pending an attempt to address a
potential loan restructuring of the respective mortgages with the lender, the
Local General Partners have informed Registrant that they do not intend to
continue to voluntarily fund the operating deficits of the properties. As of
February 12, 1997, the Christian Street Local Partnership and the 2000 Christian
Street Local Partnership are two months in arrears under
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
their first mortgage obligations and although the lender has not declared a
default of either mortgage, it is expected that a default would be declared if
the Local General Partners are not successful in addressing a new financing
structure with the lender. The Christian Street Local Partnership and the 2000
Christian Street Local Partnership incurred operating deficits for the nine
months ended September 30, 1996 of approximately $33,000 and $35,000,
respectively (exclusive of property management fees of approximately $18,000 and
$14,000, respectively). Of Registrant's total annual Low-income Tax Credits,
approximately 5.52% and 3.02% 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") 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
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.
<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 December 30, 1996
For the three months ended December 30, 1996, Registrant had a net loss of
approximately $892,000, which included an equity in loss of investment in Local
Partnerships of approximately $805,000 for the three months ended September 30,
1996. Nonrecognition of losses in excess of Registrant's investment in certain
Local Partnerships during the period was approximately $82,000. Registrant's
loss from operations for the three months ended December 30, 1996 of
approximately $87,000 was attributable to interest revenue of approximately
$87,000, exceeded by operating expenses of approximately $174,000. Interest
revenue 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 $994,000 for the three months
ended September 30, 1996 was attributable to rental and other revenue of
approximately $5,105,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $4,696,000 and approximately $1,403,000
of depreciation and amortization expenses.
Three Months Ended December 30, 1995
For the three months ended December 30, 1995, Registrant had a net loss of
approximately $905,000, which included an equity in loss of investment in Local
Partnerships of approximately $824,000 for the three months ended September 30,
1995. Nonrecognition of losses in excess of Registrant's investment in certain
Local Partnerships during the period was approximately $93,000. Registrant's
loss from operations for the three months ended December 30, 1995 of
approximately $81,000 was attributable to interest revenue of approximately
$88,000, exceeded by operating expenses of approximately $169,000.
The Local Partnerships' net loss of approximately $1,024,000 for the three
months ended September 30, 1995 was attributable to rental and other revenue of
approximately $5,000,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $4,555,000 and approximately $1,469,000
of depreciation and amortization expenses.
Nine Months Ended December 30, 1996
For the nine months ended December 30, 1996, Registrant had a net loss of
approximately $2,622,000, which included an equity in loss of investment in
Local Partnerships of approximately $2,387,000 for the nine months ended
September 30, 1996. Nonrecognition of losses in excess of Registrant's
investment in certain Local Partnerships during the period was approximately
$277,000. Registrant's loss from operations for the nine months ended December
30, 1996 of approximately $234,000 was attributable to interest revenue of
approximately $272,000, exceeded by operating expenses of approximately
$507,000. Interest revenue 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 $2,984,000 for the nine months
ended September 30, 1996 was attributable to rental and other revenue of
approximately $15,291,000, exceeded by operating and interest expenses
(including Non-Mandatory Interest) of approximately $14,034,000 and
approximately $4,241,000 of depreciation and amortization expenses.
Nine Months Ended December 30, 1995
For the nine months ended December 30, 1995, Registrant had a net loss of
approximately $2,636,000, which included an equity in loss of investment in
Local Partnerships of approximately $2,389,000 for the nine months ended
September 30, 1995. Nonrecognition of losses in excess of Registrant's
investment in certain Local Partnerships during the period was
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
approximately $272,000. Registrant's loss from operations for the nine months
ended December 30, 1995 of approximately $247,000 was attributable to interest
revenue of approximately $267,000, exceeded by operating expenses of
approximately $514,000.
The Local Partnerships' net loss of approximately $2,969,000 for the nine months
ended September 30, 1995 was attributable to rental and other revenue of
approximately $14,879,000, exceeded by operating and interest expenses
(including Non-Mandatory Interest) of approximately $13,506,000 and
approximately $4,342,000 of depreciation and amortization expenses.
Three and Nine Month Periods Ended December 30, 1996 v.
Three and Nine Month Periods Ended December 30, 1995
Registrant's operations for the three and nine month periods ended December 30,
1996 resulted in net losses of approximately $892,000 and $2,622,000,
respectively, which are comparable to net losses of approximately $905,000 and
$2,636,000 for the same periods in 1995. The nonrecognition of losses in excess
of Registrant's investment in certain Local Partnerships for the periods ended
December 30, 1996 was comparable to the same periods in 1995.
<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 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
None; see Item 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, 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. It is the position of the Local General
Partner of the Ann Ell Local Partnership that such claims have been
wrongly alleged.
As discussed in Part I, Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations, as of February 12,
1997, Christian Street Associates Limited Partnership and 2000-2100
Christian Street Associates are two months in arrears under their
first mortgage obligations though the lender has not declared a
default of either mortgage.
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: February 13, 1997 /s/ Richard Paul Richman
----------------- ------------------------
Richard Paul Richman
President, Chief Executive Officer and
Director of the general partner of the
General Partner
Date: February 13, 1997 /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 December 30, 1996 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
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-30-1997
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0
0
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<EPS-PRIMARY> 46.56
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