UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 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: 0-19217
American Tax Credit Properties III L.P.
--------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware
13-3545006
- -------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Richman Tax Credit Properties III 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 III L.P.
PART I - FINANCIAL INFORMATION
<TABLE>
Item 1. Financial Statements
<S> <C>
Table of Contents Page
Balance Sheets as of September 29, 1998 (Unaudited) and March 30, 1998 (Unaudited)...........................
Statements of Operations for the three and six month periods ended September 29, 1998 (Unaudited)
and September 29, 1997 (Unaudited)......................................................................
Statements of Cash Flows for the six months ended September 29, 1998 (Unaudited)
and September 29, 1997 (Unaudited)......................................................................
Notes to Financial Statements as of September 29, 1998 (Unaudited)...........................................
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<S> <C> <C> <C>
September 29, March 30,
Notes 1998 1998
----- --------------- --------------
ASSETS
Cash and cash equivalents $ 494,976 $ 419,372
Restricted cash 4 84,433 84,433
Investments in bonds available-for-sale 3 3,128,592 3,065,441
Investment in local partnerships 4 7,608,502 8,515,114
Interest receivable 21,136 21,909
--------------- --------------
$ 11,337,639 $ 12,106,269
============== ==============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 1,042,979 $ 997,634
Payable to general partner 995,899 930,614
Capital contributions payable 4 84,433 84,433
Other 11,700 16,450
--------------- --------------
2,135,011 2,029,131
--------------- --------------
Commitments and contingencies 4
Partners' equity (deficit)
General partner (225,124) (214,858)
Limited partners (35,883 units of limited partnership interest
outstanding) 9,242,377 10,258,714
Accumulated other comprehensive income, net 2,3 185,375 33,282
---------------- --------------
9,202,628 10,077,138
--------------- --------------
$ 11,337,639 $ 12,106,269
=============== ==============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C> <C>
Three Months Six Months Ended Three Months Six Months Ended
Ended September September 29, Ended September September 29,
29, 29,
Notes 1998 1998 1997 1997
----- --------------- ------------------- ----------------- -----------
REVENUE
Interest $ 61,673 $ 123,532 $ 85,664 $ 151,393
Other income from local partnerships 1,580 5,752 4,172
------------ -------------- -------------- --------------
TOTAL REVENUE 63,253 129,284 85,664 155,565
------------ -------------- --------------- --------------
EXPENSES
Administration fees 57,642 115,285 57,642 115,285
Management fees 57,642 115,285 57,642 115,285
Professional fees 8,937 21,349 7,349 18,099
Printing, postage and other 4,042 13,897 4,336 10,236
------------ -------------- -------------- --------------
TOTAL EXPENSES 128,263 265,816 126,969 258,905
------------ -------------- -------------- --------------
Loss from operations (65,010) (136,532) (41,305) (103,340)
Equity in loss of investment in local
partnerships 4 (434,420) (890,071) (552,778) (1,068,467)
------------ -------------- -------------- --------------
NET LOSS (499,430) (1,026,603) (594,083) (1,171,807)
Other comprehensive income 2,3 125,219 152,093 65,174 130,989
------------ -------------- -------------- --------------
COMPREHENSIVE LOSS $ (374,211) $ (874,510) $ (528,909) $ (1,040,818)
============ ============== ============== ==============
NET LOSS ATTRIBUTABLE TO
General partner $ (4,994) $ (10,266) $ (5,941) $ (11,718)
Limited partners (494,436) (1,016,337) (588,142) (1,160,089)
------------ -------------- -------------- --------------
$ (499,430) $ (1,026,603) $ (594,083) $ (1,171,807)
============ ============== ============== ===============
NET LOSS per unit of limited partnership
interest (35,883 units of limited
partnership interest) $ (13.78) $ (28.32) $ (16.39) $ (32.33)
============ ============== ============== ==============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 29, 1998 AND 1997
(UNAUDITED)
<TABLE>
<S> <C> <C>
1998 1997
------------ --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 88,247 $ 96,375
Cash used for local partnerships for deferred expenses (4,750) (4,750)
Cash paid for
administration fees (50,000) (50,000)
management fees (50,000) (50,000)
professional fees (42,099) (39,599)
printing, postage and other expenses (13,087) (15,110)
----------- --------------
Net cash used in operating activities (71,689) (63,084)
----------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions and other income from local partnerships 22,293 18,559
Maturity/redemption of bonds 125,000 75,000
Transfer from restricted cash 1,224,775
Investment in local partnerships (1,224,775)
----------- --------------
Net cash provided by investing activities 147,293 93,559
----------- --------------
Net increase in cash and cash equivalents 75,604 30,475
Cash and cash equivalents at beginning of period 419,372 409,413
----------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 494,976 $ 439,888
=========== ==============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain on investments in bonds available-for-sale, net $ 152,093 $ 130,989
============ ==============
</TABLE>
- ------------------------------------------------------------------------------
See reconciliation of net loss to net cash used in operating activities on page
6.
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF CASH FLOWS - (Continued)
SIX MONTHS ENDED SEPTEMBER 29, 1998 AND 1997
(UNAUDITED)
<TABLE>
<S> <C> <C>
1998 1997
-------------- --------------
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES
Net loss $(1,026,603) $ (1,171,807)
Adjustments to reconcile net loss to net cash used in operating activities
Equity in loss of investment in local partnerships 890,071 1,068,467
Distributions from local partnerships classified as other income (5,752) (4,172)
Loss on maturity/redemption of investments in bonds 677
Amortization of net premium on investments in bonds 6,629 7,453
Accretion of zero coupon bonds (43,364) (66,157)
Decrease in interest receivable 773 3,686
Increase in payable to general partner 65,285 65,285
Increase in accounts payable and accrued expenses 45,345 38,911
Decrease in other liabilities (4,750) (4,750)
----------- ------------
NET CASH USED IN OPERATING ACTIVITIES $ (71,689) $ (63,084)
=========== ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 September 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 and six month periods ended September 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 include an amount" for other
comprehensive income, as well as comprehensive loss. Other comprehensive
income (loss) 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 statements of operations for
the three and six month periods ended September 29, 1998 resulted from a
net unrealized gain on investments in bonds available-for-sale of $125,219
and $152,093, respectively. Accumulated other comprehensive income in the
accompanying balance sheet as of September 29, 1998 reflects the net
unrealized gain on investments in bonds available-for-sale of $185,375. The
balance sheet as of March 30, 1998 and the statements of operations for the
three and six month periods ended September 29, 1997 include certain
reclassifications to reflect the adoption of SFAS No. 130.
3. Investments in Bonds Available-For-Sale
As of September 29, 1998, certain information concerning investments in
bonds available-for-sale is as follows:
<TABLE>
<S> <C> <C> <C> <C>
Gross unrealized Gross
Amortized gains unrealized Estimated
Description and maturity cost losses fair value
------------------------ ---------- ---------------- ----------- ----------
Corporate debt securities
Within one year $ 138,904 $ -- $ (174) $ 138,730
After one year through five years 537,855 22,015 -- 559,870
After five years through ten years 703,538 40,184 -- 743,722
After ten years 505,419 706 -- 506,125
---------- ---------------- ---------------- ---------
1,885,716 62,905 (174) 1,948,447
U.S. Treasury debt securities
After ten years 1,057,501 122,644 -- 1,180,145
------------ ------------- -------------------------------
$ 2,943,217 $ 185,549 $ (174) $ 3,128,592
============ ============ ============= ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS-(Continued)
SEPTEMBER 29, 1998
(UNAUDITED)
4. Investment in Local Partnerships
The Partnership owns limited partnership interests in forty-three Local
Partnerships representing capital contributions in the aggregate amount of
$29,264,476, of which the Partnership has paid $29,180,043 and $84,433 are
outstanding as of September 29, 1998. Restricted cash in the accompanying
balance sheet as of September 29, 1998 represents such outstanding capital
contribution, which is payable upon one Local Partnership's satisfaction of
specified conditions related to operations. As of June 30, 1998, the Local
Partnerships have outstanding mortgage loans payable totaling approximately
$86,649,000 and accrued interest payable on such loans totaling
approximately $2,283,000, which are secured by security interests and liens
common to mortgage loans on the Local Partnerships' real property and other
assets.
For the six months ended September 29, 1998, the investment in Local
Partnerships activity consists of the following:
<TABLE>
<S> <C> <C>
Investment in Local Partnerships as of March 30, 1998 $ 8,515,114
Equity in loss of investment in Local Partnerships (890,071)*
Cash distributions received from Local Partnerships (22,293)
Cash distributions classified as other income
5,752
Investment in Local Partnerships as of September 29, 1998 $ 7,608,502
============
</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
$592,085 for the six months ended June 30, 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 June
30, 1998 and December 31, 1997 and the combined unaudited statements of
operations of the Local Partnerships for the three and six month periods
ended June 30, 1998 and 1997 are reflected on pages 9 and 10, respectively.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 29, 1998
(UNAUDITED)
4. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of June 30, 1998
and December 31, 1997 are as follows:
<TABLE>
<S> <C> <C>
June 30, December 31,
1998 1997
----------------- ------------------
ASSETS
Cash and cash equivalents $ 1,391,111 $ 863,259
Rents receivable 391,363 456,077
Capital contributions receivable 84,433 84,433
Escrow deposits and reserves 4,626,886 4,403,622
Land 3,910,215 3,910,215
Buildings and improvements (net of accumulated depreciation of
$29,053,096 and $27,045,787) 85,606,836 87,586,072
Intangible assets (net of accumulated amortization of $604,831 and
$584,504) 738,172 762,749
Other 888,907 1,401,766
----------------- ---------------
$ 97,637,923 $ 99,468,193
============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 491,205 $ 442,564
Due to related parties 5,124,036 5,247,688
Mortgage loans 86,649,493 86,919,773
Notes payable 31,753 62,111
Accrued interest 2,282,510 2,109,721
Other 603,468 580,863
---------------- ----------------
95,182,465 95,362,720
--------------- --------------
Partners' equity (deficit)
American Tax Credit Properties III L.P.
Capital contributions, net of distributions (includes
receivable of $84,433) 29,020,603 29,048,449
Cumulative loss (21,412,947) (20,522,876)
-------------- --------------
7,607,656 8,525,573
--------------- ---------------
General partners and other limited partners, including ATCP II
Capital contributions, net of distributions (154,835) (123,346)
Cumulative loss (4,997,363) (4,296,754)
--------------- --------------
(5,152,198) (4,420,100)
2,455,458 4,105,473
---------------- ---------------
$ 97,637,923 $ 99,468,193
=============== =============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 29, 1998
(UNAUDITED)
4. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
three and six month periods ended June 30, 1998 and 1997 are as follows:
<TABLE>
<S> <C> <C> <C> <C>
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1998 1998 1997 1997
--------------- --------------- --------------- ---------
REVENUE
Rental $ 2,650,051 $ 5,265,766 $ 2,584,104 $ 5,205,060
Interest and other 84,687 163,966 87,181 168,790
-------------- -------------- -------------- --------------
TOTAL REVENUE 2,734,738 5,429,732 2,671,285 5,373,850
------------ ------------- ------------ -------------
EXPENSES
Administrative 498,220 993,705 526,913 1,036,508
Utilities 233,713 513,644 241,748 530,441
Operating, maintenance and other 556,042 1,143,828 562,896 1,038,125
Taxes and insurance 318,121 647,946 326,146 652,464
Financial (including amortization of
$12,285, $24,577, $14,284 and $25,938) 855,385 1,713,980 850,088 1,734,006
Depreciation 1,003,726 2,007,309 1,038,254 2,055,186
------------ ------------- ------------ -------------
TOTAL EXPENSES 3,465,207 7,020,412 3,546,045 7,046,730
------------ ------------- ------------ -------------
NET LOSS $ (730,469) $ (1,590,680) $ (874,760) $ (1,672,880)
============ ============ ============ ============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties III L.P. $ (434,420) $ (890,071) $ (552,778) $ (1,068,467)
General partners and other limited
partners, including ATCP II, which
includes $236,063, $592,085, $250,285
and $464,675 of American Tax Credit
Properties III L.P. loss in excess of
investment (296,049) (700,609) (321,982) (604,413)
------------ -------------- ------------- -------------
$ (730,469) $ (1,590,680) $ (874,760) $ (1,672,880)
============ ============ ============ ============
</TABLE>
The combined results of operations of the Local Partnerships for the three
and six month periods ended June 30, 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 III L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Material Changes in Financial Condition
As of September 29, 1998, American Tax Credit Properties III 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 in accordance with Section 42 of the Internal
Revenue Code (the "Low-income Tax Credit"). During the six months ended
September 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
$139,000 during the six months ended September 29, 1998 (which included a net
unrealized gain on investments in bonds of approximately $152,000, amortization
of net premium on investments in bonds of approximately $7,000 and accretion of
zero coupon bonds of approximately $43,000). 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 six months ended September 29, 1998, the investment in Local Partnerships
decreased as a result of Registrant's equity in the Local Partnerships' net loss
for the six months ended June 30, 1998 of $890,071 and cash distributions
received from Local Partnerships of $22,293 (exclusive of distributions from
Local Partnerships of $5,752 classified as other income). Accounts payable and
accrued expenses and payable to general partner in the accompanying balance
sheet as of September 29, 1998 include 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. Accordingly, the investment
is carried at cost, which includes capital contributions payable, 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 September 29, 1998 and 1997
resulted in net losses of $499,430 and $594,083, respectively. The decrease in
net loss is primarily attributable to a decrease in equity in loss of investment
in Local Partnerships of approximately $118,000, partially offset by a decrease
in interest revenue of approximately $24,000. Other comprehensive income for the
three months ended September 29, 1998 and 1997 resulted from a net unrealized
gain on investments in bonds available for-sale of $125,219 and $65,174,
respectively.
The Local Partnerships' net loss of approximately $730,000 for the three months
ended June 30, 1998 was attributable to rental and other revenue of
approximately $2,735,000, exceeded by operating and interest expenses (including
interest on non-mandatory debt) of approximately $2,449,000 and approximately
$1,016,000 of depreciation and amortization expenses. The Local Partnerships'
net loss of approximately $875,000 for the three months ended June 30, 1997 was
attributable to rental and other revenue of approximately $2,671,000, exceeded
by operating and interest expenses (including interest on non-mandatory debt) of
approximately $2,494,000 and approximately $1,052,000 of depreciation and
amortization expenses. The results of operations of the Local Partnerships for
the three months ended June 30, 1998 are not necessarily indicative of the
results that may be expected in future periods.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Registrant's operations for the six months ended September 29, 1998 and 1997
resulted in net losses of $1,026,603 and $1,171,807, respectively. The
difference in net loss is primarily attributable to a decrease in equity in loss
of investment in Local Partnerships of approximately $178,000 which includes an
increase in the nonrecognition of losses in excess of Registrant's investment in
Local Partnerships of approximately $127,000 in accordance with the equity
method of accounting, partially offset by a decrease in interest revenue of
approximately $28,000. Other comprehensive income for the six months ended
September 29, 1998 and 1997 resulted from a net unrealized gain on investments
in bonds available-for-sale of $152,093 and $130,989, respectively.
The Local Partnerships' net loss of approximately $1,591,000 for the six months
ended June 30, 1998 was attributable to rental and other revenue of
approximately $5,430,000, exceeded by operating and interest expenses (including
interest on non-mandatory debt) of approximately $4,989,000 and approximately
$2,032,000 of depreciation and amortization expenses. The Local Partnerships'
net loss of approximately $1,673,000 for the six months ended June 30, 1997 was
attributable to rental and other revenue of approximately $5,374,000, exceeded
by operating and interest expenses (including interest on non-mandatory debt) of
approximately $4,966,000 and approximately $2,081,000 of depreciation and
amortization expenses. The results of operations of the Local Partnerships for
the six months ended June 30, 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. One
Local Partnership's HAP Contracts are scheduled to expire in 1999 after being
extended during 1998 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"). In the
event rents are not sufficient to cover operating expenses, Mandatory Debt
Service requirements and other charges, certain general partners of the Local
Partnerships (the "Local General Partners") are obligated to provide advances to
cover deficits for a certain period of time up to certain amounts (the "Deficit
Guarantee"). A Local General Partner's funding of such Deficit Guarantee is
dependent on its liquidity or ability to borrow the required funds. During the
six months ended June 30, 1998, revenue from operations of the Local
Partnerships, 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 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
any required deferral of property management fees.
The terms of the partnership agreement of Christian Street Commons Associates
(the "Christian Street Local Partnership") require the Local General Partners to
advance funds to cover operating deficits up to $150,000 through 2008 and to
cause the management agent to defer property management fees in order to avoid a
default under the mortgage. The Christian Street Local Partnership incurred an
operating deficit of approximately $7,000 for the six months ended June 30,
1998, which includes property management fees of approximately $2,000. As of
June 30, 1998, the Local General Partners have advanced approximately $84,000
under their Deficit Guarantee obligation and payments on the mortgage and real
estate taxes are current. Registrant's investment balance in the Christian
Street Local Partnership, after cumulative equity losses, became zero during the
year ended March 30, 1998. Of Registrant's total annual Low-income Tax Credits,
approximately 2% is allocated from the Christian Street Local Partnership.
Fulton Street Houses Limited Partnership (the "Fulton Street Local Partnership")
has an escrow of approximately $285,000 as of June 30, 1998 to cover operating
deficits and there are no Mandatory Debt Service payments or real estate taxes
during the Compliance Period. The Fulton Street Local Partnership incurred an
operating deficit of approximately $15,000 for the six months June 30, 1998. Of
Registrant's total annual Low-income Tax Credits, approximately 8% is allocated
from the Fulton Street Local Partnership.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
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 $16,000 for the
six months ended June 30, 1998, which includes property management fees of
approximately $1,000. Payments on the mortgage and real estate taxes are
current. Registrant's investment balance in the Batesville Local Partnership,
after cumulative equity losses, became zero during the year ended March 30,
1997. Of Registrant's total annual Low-income Tax Credits, approximately 1% is
allocated from the Batesville Local Partnership.
The terms of the partnership agreement of Westminster Apartments Limited
Partnership (the "Westminster Local Partnership") require the Local General
Partner to advance funds to cover operating deficits through 2009 and to cause
the management agent to defer property management fees in order to avoid a
default under the mortgage. The Westminster Local Partnership incurred an
operating deficit of approximately $12,000 for the six months ended June 30,
1998, which includes property management fees of approximately $7,000. Payments
on the mortgage and real estate taxes are current. Of Registrant's total annual
Low-income Tax Credits, approximately 4% is allocated from the Westminster Local
Partnership.
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 III L.P.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
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 duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
<TABLE>
<S> <C> <C>
AMERICAN TAX CREDIT PROPERTIES III L.P.
(a Delaware limited partnership)
By: Richman Tax Credit Properties III L.P.,
General Partner
by: Richman Housing Credits Inc.,
general partner
Dated: November 5, 1998 /s/ Richard Paul Richman
---------------- -------------------------
Richard Paul Richman
President, Chief Executive
Officer and Director of the
general partner of the
General Partner
Dated: November 5, 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>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the quarter ended September 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> 0000856135
<NAME> American Tax Credit Properties, III L.P.
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-30-1999
<PERIOD-START> MAR-31-1998
<PERIOD-END> SEP-29-1998
<EXCHANGE-RATE> 1
<CASH> 579
<SECURITIES> 3,129
<RECEIVABLES> 21
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,338
<CURRENT-LIABILITIES> 2,135
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,338
<SALES> 0
<TOTAL-REVENUES> 129
<CGS> 0
<TOTAL-COSTS> (266)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,027)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,027)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,027)
<EPS-PRIMARY> (28.32)
<EPS-DILUTED> 0
</TABLE>
