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, 1998
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>
Table of Contents Page
<S> <C>
Balance Sheets as of June 29, 1998 (Unaudited) and March 30, 1998 (Unaudited)................................3
Statements of Operations for the three months ended June 29, 1998 (Unaudited)
and June 29, 1997 (Unaudited).............................................................................4
Statements of Cash Flows for the three months ended June 29, 1998 (Unaudited)
and June 29, 1997 (Unaudited).............................................................................5
Notes to Financial Statements as of June 29, 1998 (Unaudited)................................................7
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 29, March 30,
Notes 1998 1998
----- -------------- --------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 676,508 $ 513,536
Investments in bonds available-for-sale 3 4,257,446 4,270,266
Investment in local partnerships 4 14,560,656 15,304,416
Interest receivable 65,774 74,378
------------ ------------
$ 19,560,384 $ 20,162,596
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 667,000 $ 639,905
Payable to general partner 620,841 546,015
Other 55,600 55,600
------------- -------------
1,343,441 1,241,520
------------- -------------
Partners' equity (deficit)
General partner (311,564) (304,342)
Limited partners (55,746 units of limited partnership
interest outstanding) 18,432,286 19,147,253
Accumulated other comprehensive income 2,3 96,221 78,165
-------------- -------------
18,216,943 18,921,076
-------------- -------------
$ 19,560,384 $ 20,162,596
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 29, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Notes 1998 1997
----- -------------- ------------
<S> <C> <C> <C>
REVENUE
Interest $ 83,384 $ 89,990
Other income from local partnerships 388 388
------------- --------------
TOTAL REVENUE 83,772 90,378
------------- --------------
EXPENSES
Administration fees 74,826 74,826
Management fees 74,826 74,826
Professional fees 24,598 15,170
Printing, postage and other 12,478 8,628
------------- --------------
TOTAL EXPENSES 186,728 173,450
------------- -------------
Loss from operations (102,956) (83,072)
Equity in loss of investment in local partnerships 4 (619,233) (756,880)
------------- -------------
NET LOSS (722,189) (839,952)
Other comprehensive income 2,3 18,056 71,876
-------------- --------------
COMPREHENSIVE LOSS $ (704,133) $ (768,076)
============== ==============
NET LOSS ATTRIBUTABLE TO
General partner $ (7,222) $ (8,400)
Limited partners (714,967) (831,552)
-------------- --------------
$ (722,189) $ (839,952)
============ ==============
NET LOSS per unit of limited partnership interest (55,746
units of limited partnership interest) $ (12.83) $ (14.92)
============== ==============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 29, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
-------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 89,864 $ 104,233
Cash paid for
administration fees (52,379) (52,379)
management fees (52,379)
professional fees (12,347) (12,920)
printing, postage and other expenses (20,081) (10,387)
-------------- --------------
Net cash provided by (used in) operating activities 5,057 (23,832)
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions and other income from local partnerships 124,915 154,156
Maturity/redemption of bonds 33,000 130,000
Investments in bonds (includes $1,089 of accrued interest) (51,589)
-------------- -------------
Net cash provided by investing activities 157,915 232,567
------------ ------------
Net increase in cash and cash equivalents 162,972 208,735
Cash and cash equivalents at beginning of period 513,536 674,160
------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 676,508 $ 882,895
============ ============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain on investments in bonds available-for-sale, net $ 18,056 $ 71,876
============= =============
- ---------------------------------------------------------------------------------------------------------------------
See reconciliation of net loss to net cash provided by (used in) operating activities on page 6.
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS - (Continued)
THREE MONTHS ENDED JUNE 29, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
-------------- ---------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
Net loss $ (722,189) $ (839,952)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities
Equity in loss of investment in local partnerships 619,233 756,880
Distributions from local partnerships classified as other income (388) (388)
Amortization of net premium on investments in bonds 7,619 13,132
Accretion of zero coupon bonds (9,743) (9,773)
Decrease in interest receivable 8,604 10,884
Increase in payable to general partner 74,826 22,447
Increase in accounts payable and accrued expenses 27,095 22,938
------------ --------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 5,057 $ (23,832)
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 1998
(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, 1998 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, 1998 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. Comprehensive Income
On March 31, 1998, the Partnership adopted Statement of Financial
Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income." As
a result, the statements of operations includes an amount for other
comprehensive income, as well as comprehensive loss. Other comprehensive
income consists of revenues, expenses, gains and losses that have affected
partners' equity (deficit) but which are excluded from net loss. Other
comprehensive income in the accompanying statement of operations for the
three months ended June 29, 1998 resulted from a net unrealized gain on
investments in bonds available-for-sale of $18,056. Accumulated other
comprehensive income in the accompanying balance sheet as of June 29, 1998
reflects the cumulative net unrealized gain on investments in bonds
available-for-sale. The balance sheet as of March 30, 1998 and the
statement of operations for the three months ended June 29, 1997 include
certain reclassifications to reflect the adoption of SFAS No. 130.
3. Investments in Bonds Available-For-Sale
As of June 29, 1998, certain information concerning investments in bonds
available-for-sale is as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
<S> <C> <C> <C> <C>
Corporate debt securities
Within one year $ 202,150 $ 3,146 $ -- $ 205,296
After one year through five years 1,016,154 31,649 (2,212) 1,045,591
After five years through ten years 1,668,400 50,098 (3,504) 1,714,994
After ten years 202,600 -- (3,562) 199,038
----------- ----------- ------------- ------------
3,089,304 84,893 (9,278) 3,164,919
----------- ------------- ------------- -----------
U.S. Treasury debt securities
After five years through ten years 492,779 14,087 -- 506,866
------------ ------------- ------------- ------------
U.S. government and agency securities
After five years through ten years 579,142 6,519 -- 585,661
------------ ------------- ------------- -------------
$ 4,161,225 $ 105,499 $ (9,278) $ 4,257,446
=========== ============ ============= ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1998
(UNAUDITED)
4. Investment in Local Partnerships
The Partnership owns limited partnership interests in fifty Local
Partnerships representing capital contributions in the aggregate amount of
$45,877,165. As of March 31, 1998, the Local Partnerships have outstanding
mortgage loans payable totaling approximately $91,933,000 and accrued
interest payable on such loans totaling approximately $4,593,000, 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, 1998, the investment in Local
Partnerships activity consists of the following:
<TABLE>
<CAPTION>
<S> <C>
Investment in Local Partnerships as of March 30, 1998 $ 15,304,416
Equity in loss of investment in Local Partnerships (619,233) *
Cash distributions received from Local Partnerships (124,915)
Cash distributions classified as other income 388
------------
Investment in Local Partnerships as of June 29, 1998 $ 14,560,656
============
</TABLE>
* 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 $204,845 for the three months ended March 31,
1998 as reflected in the combined statement of operations of the
Local Partnerships reflected herein Note 4.
The combined unaudited balance sheets of the Local Partnerships as of March
31, 1998 and December 31, 1997 and the combined unaudited statements of
operations of the Local Partnerships for the three months ended March 31,
1998 and 1997 are reflected on pages 9 and 10, respectively.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1998
(UNAUDITED)
4. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of March 31, 1998
and December 31, 1997 are as follows:
<TABLE>
March 31, December 31,
1998 1997
------------------ -----------
<S> <C> <C>
ASSETS
Cash and other investments $ 3,764,309 $ 4,208,629
Rents receivable 446,623 334,976
Escrow deposits and reserves 5,376,673 5,438,953
Land 4,180,673 4,180,673
Buildings and improvements (net of accumulated depreciation of
$43,453,264 and $42,156,402) 96,522,326 97,712,120
Intangible assets (net of accumulated amortization of $983,187
and $962,322) 1,697,504 1,718,369
Other 1,202,851 1,082,118
--------------- ----------------
$ 113,190,959 $ 114,675,838
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 1,402,511 $ 1,386,630
Due to related parties 4,609,586 4,763,846
Mortgage loans 91,932,603 92,291,126
Notes payable 2,545,634 2,599,572
Accrued interest 4,593,476 4,603,549
Other 649,623 630,192
--------------- ---------------
105,733,433 106,274,915
------------- -------------
Partners' equity (deficit)
American Tax Credit Properties II L.P.
Capital contributions, net of distributions 45,015,442 45,045,349
Cumulative loss (30,330,306) (29,711,073)
-------------- --------------
14,685,136 15,334,276
--------------- ---------------
General partners and other limited partners, including ATCP
& ATCP III
Capital contributions, net of distributions 3,344,347 3,363,369
Cumulative loss (10,571,957) (10,296,722)
-------------- --------------
(7,227,610) (6,933,353)
--------------- ----------------
7,457,526 8,400,923
--------------- ----------------
$ 113,190,959 $ 114,675,838
============= =============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1998
(UNAUDITED)
4. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
three months ended March 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
--------------- ----------
<S> <C> <C>
REVENUE
Rental $ 5,089,713 $ 5,001,136
Interest and other 127,000 112,242
-------------- --------------
TOTAL REVENUE 5,216,713 5,113,378
------------- -------------
EXPENSES
Administrative 865,536 787,482
Utilities 794,989 836,795
Operating, maintenance and other 923,294 961,163
Taxes and insurance 595,745 596,568
Financial (including amortization of $20,865 and $21,490) 1,634,755 1,638,457
Depreciation 1,296,862 1,298,658
------------- -------------
TOTAL EXPENSES 6,111,181 6,119,123
------------- -------------
NET LOSS $ (894,468) $ (1,005,745)
============ ============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties II L.P. $ (619,233) $ (756,880)
General partners and other limited partners, including ATCP &
ATCP III, which includes $204,845 and $139,147 of American
Tax Credit Properties II L.P. loss in excess of investment
(275,235) (248,865)
------------- -------------
$ (894,468) $ (1,005,745)
============= ============
</TABLE>
The combined results of operations of the Local Partnerships for the three
months ended March 31, 1998 are not necessarily indicative of the results
that may be expected for an entire operating period.
5. Additional Information
Additional information, including the audited March 30, 1998 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, 1998 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, 1998, American Tax Credit Properties II L.P. (the "Registrant")
has not experienced a significant change in financial condition as compared to
March 30, 1998. Principal changes in assets are comprised of periodic
transactions and adjustments and anticipated equity in loss from operations of
the local partnerships (the "Local Partnerships") which own low-income
multifamily residential complexes (the "Properties") which qualify for the
low-income tax credit under Section 42 of the Internal Revenue Code (the
"Low-income Tax Credit"). During the three months ended June 29, 1998,
Registrant received cash from interest revenue, maturity/redemption of bonds and
distributions from Local Partnerships and utilized cash for operating expenses.
Cash and cash equivalents and investments in bonds available-for-sale increased,
in the aggregate, by approximately $150,000 during the three months ended June
29, 1998 (which included a net unrealized gain on investments in bonds of
approximately $18,000, the amortization of net premium on investments in bonds
of approximately $8,000 and the accretion of zero coupon bonds of approximately
$10,000). Notwithstanding circumstances that may arise in connection with the
Properties, Registrant does not expect to realize significant gains or losses on
its investments in bonds, if any. During the three months ended June 29, 1998,
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,
1998 of $619,233 and cash distributions received from Local Partnerships of
$124,527 (exclusive of distributions from Local Partnerships of $388 classified
as other income). Accounts payable and accrued expenses and payable to general
partner in the accompanying balance sheet as of June 29, 1998 represents
deferred administration fees and management fees, respectively.
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 each Local
Partnership's results of operations and by 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. Equity in loss in excess of Registrant's investment balance in a
Local Partnership is allocated to other partners' capital in any such Local
Partnership. As a result, the reported 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 4 to Registrant's financial
statements include the operating results of all Local Partnerships, irrespective
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 below under
Local Partnership Matters regarding certain Local Partnerships currently
operating below economic break even levels.
Registrant's operations for the three months ended June 29, 1998 and 1997
resulted in net losses of $722,189 and $839,952, respectively. The decrease in
net loss from 1997 to 1998 is primarily attributable to a decrease in equity in
loss of investment in Local Partnerships of approximately $138,000, which is
primarily the result of a decrease in the net operating losses of those Local
Partnerships that continue to have an investment balance as of June 29, 1998.
Other comprehensive income for the three months ended June 29, 1998 and 1997
resulted from a net unrealized gain on investments in bonds available-for-sale
of $18,056 and $71,876, respectively.
The Local Partnerships' net loss of approximately $894,000 for the three months
ended March 31, 1998 was attributable to rental and other revenue of
approximately $5,217,000, exceeded by operating and interest expenses (including
interest on non-mandatory debt) of approximately $4,793,000 and approximately
$1,318,000 of depreciation and amortization
<PAGE>
AMERICAN TAX CREDIT PROPERTIES II L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
expense. The Local Partnerships' net loss of approximately $1,006,000 for the
three months ended March 30, 1997 was attributable to rental and other revenue
of approximately $5,113,000, exceeded by operating and interest expenses
(including interest on non-mandatory debt) of approximately $4,799,000 and
approximately $1,320,000 of depreciation and amortization expense. The results
of operations of the Local Partnerships for the three months ended March 31,
1998 are not necessarily indicative of the results that may be expected in
future periods.
Local Partnership Matters
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 pursuant to subsidy agreements ("HAP Contracts") are subject to
specific laws, regulations and agreements with federal and state agencies. Six
Local Partnerships have one or more HAP Contracts, certain of which cover only
certain rental units, which are scheduled to expire in 1998. 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, 1998, 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' operating information reflects operating deficits that do not
represent cash deficits due to their mortgage and financing structure and any
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
any 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") (collectively,
the "Christian Street Local Partnerships"), 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 March 31, 1998, the Local
General Partners have advanced approximately $573,000 to the Christian Street
Local Partnership and approximately $445,000 to the 2000 Christian Street Local
Partnership. However, the Local General Partners, which have fulfilled their
respective deficit guarantees, have informed Registrant that they do not intend
to continue to voluntarily fund the operating deficits of the properties. The
Local General Partners have also informed Registrant that the Christian Street
Local Partnerships are current under their respective first mortgage obligations
as a result of the Local General Partners' funding of operating deficits. The
Local General Partners have approached the lender and are attempting to
restructure the loans; however the lender has indicated that in connection with
any such restructuring, the respective Local Partnerships would be responsible
for certain costs, which may be significant. There can be no assurance that any
such restructuring will be achieved. The Christian Street Local Partnership and
the 2000 Christian Street Local Partnership have continued to incur significant
operating deficits for the three months ended March 31, 1998. The Christian
Street Local Partnerships have allocated approximately 7.5 years of Low-income
Tax Credits to Registrant through December 31, 1997. Accordingly, if the Local
General Partners cease to fund the operating deficits, Registrant may incur
substantial recapture of Low-income Tax Credits. Of Registrant's total annual
Low-income Tax Credits, approximately 6% and 3% are allocated from the Christian
Street Local Partnership and the 2000 Christian Street Local Partnership,
respectively, and are scheduled to expire in 2000.
During the three months ended March 31, 1998, Forest Village Housing Partnership
(the "Forest Village Local Partnership") incurred an operating deficit of
approximately $14,000, resulting primarily from costs associated with tenant
turnover and maintenance costs. 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)
During the three months ended March 31, 1998, Ann Ell Apartments Associates,
Ltd. (the "Ann Ell Local Partnership") incurred an operating deficit of
approximately $27,000. Payments on mortgage and real estate taxes are current.
Of Registrant's total annual Low-income Tax Credits, approximately .7% is
allocated from the Ann Ell Local Partnership.
The terms of the partnership agreement of Batesville Family, L.P. (the
"Batesville Local Partnership") require the management agent to defer property
management fees in order to avoid a default under the mortgage. The Batesville
Local Partnership incurred an operating deficit of approximately $7,000 for the
three months ended March 31, 1998, which includes property management fees of
approximately $500. Of Registrant's total annual income Low-income Tax Credits,
approximately .3% is allocated from the Batesville Local Partnership.
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 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.
Adoption of Accounting Standard
On March 31, 1998, Registrant adopted Statement of Financial Accounting Standard
("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of general-purpose
financial statements. The adoption of SFAS No. 130 has not materially impacted
Registrant's financial position and results of operations.
<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.
Registrant is not aware of any other material legal proceedings.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
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, 1998 /s/ Richard Paul Richman
--------------- -------------------------
Richard Paul Richman
President, Chief Executive Officer and
Director of the general partner of the
General Partner
Dated: August 13, 1998 /s/ Neal Ludeke
--------------- ----------------
Neal Ludeke
Vice President and 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, 1998 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-30-1999
<PERIOD-START> MAR-31-1998
<PERIOD-END> JUN-29-1998
<EXCHANGE-RATE> 1.00
<CASH> 677
<SECURITIES> 4,257
<RECEIVABLES> 66
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,560
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 19,560
<SALES> 0
<TOTAL-REVENUES> 84
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (187)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (722)
<INCOME-TAX> 0
<INCOME-CONTINUING> (722)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (722)
<EPS-PRIMARY> (13.00)
<EPS-DILUTED> 0
</TABLE>
