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, 1997
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 ___.
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AMERICAN TAX CREDIT PROPERTIES III L.P.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Table of Contents Page
<S> <C>
Balance Sheets as of December 30, 1997 (Unaudited) and March 30, 1997
(Unaudited) 3
Statements of Operations for the three and nine month periods ended
December 30, 1997 (Unaudited)
and December 30, 1996 (Unaudited) 4
Statements of Cash Flows for the nine months ended December 30, 1997
(Unaudited) 5
and December 30, 1996 (Unaudited)
Notes to Financial Statements as of December 30, 1997 (Unaudited) 7
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<TABLE>
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AMERICAN TAX CREDIT PROPERTIES III L.P.
BALANCE SHEETS
(UNAUDITED)
December 30, March 30,
Notes 1997 1997
----- --------------------------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 398,753 $ 409,413
Restricted cash 3 84,433 1,309,208
Investments in bonds available-for-sale 2 3,040,162 2,854,771
Investment in local partnerships 3 9,388,862 10,905,064
Interest receivable 31,630 25,173
---------------- ----------------
$ 12,943,840 $ 15,503,629
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 942,734 $ 862,114
Payable to general partner 897,974 800,043
Capital contributions payable 3 84,433 1,309,208
Other 16,450 21,200
---------------- ----------------
1,941,591 2,992,565
-------------- --------------
Commitments and contingencies 4
Partners' equity (deficit)
General partner (205,507) (188,365)
Limited partners (35,883 units of limited partnership interest
outstanding) 11,184,491 12,881,544
Unrealized gain (loss) on investments in bonds available-for-sale, net 2 23,265 (182,115)
---------------- --------------
11,002,249 12,511,064
------------- -------------
$ 12,943,840 $ 15,503,629
============ ============
</TABLE>
See Notes to Financial Statements.
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Nine Months Three Months Nine Months
Ended December Ended December Ended December 30, Ended December
30, 30, 30,
Notes 1997 1997 1996 1996
----- --------------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C>
REVENUE
Interest $ 41,007 $ 192,400 $ 79,701 $ 237,123
Other income from local partnerships 4,172
------------------------------------- -------- -----------------
TOTAL REVENUE 41,007 196,572 79,701 237,123
---------------- ---------------- ---------------- ----------------
EXPENSES
Administration fees 57,646 172,931 57,646 172,931
Management fees 57,646 172,931 57,646 172,931
Professional fees 26,526 44,625 13,911 27,760
Printing, postage and other 10,729 20,965 2,975 14,141
----------------- ---------------- ------------------ -----------------
TOTAL EXPENSES 152,547 411,452 132,178 387,763
---------------- --------------- --------------- ----------------
Loss from operations (111,540) (214,880) (52,477) (150,640)
Equity in loss of investment in local
partnerships 3 (430,848) (1,499,315) (601,022) (2,010,258)
--------------- --------------- --------------- ---------------
NET LOSS $ (542,388) $ (1,714,195) $ (653,499) $ (2,160,898)
============== ============== ============== ==============
NET LOSS ATTRIBUTABLE TO
General partner $ (5,424) $ (17,142) $ (6,535) $ (21,609)
Limited partners (536,964) (1,697,053) (646,964) (2,139,289)
-------------- --------------- --------------- ---------------
$ (542,388) $ (1,714,195) $ (653,499) $ (2,160,898)
============== ============== ============== ==============
NET LOSS per unit of limited partnership
interest (35,883 units of limited
partnership interest) $ (14.96) $ (47.29) $ (18.03) $ (59.62)
================ ================= ================ =================
</TABLE>
See Notes to Financial Statements.
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
------------------ -----------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 130,932 $ 177,063
Other income from local partnerships 4,172
Cash used for local partnerships for deferred expenses (4,750) (4,750)
Cash paid for
administration fees (75,000) (75,000)
management fees (75,000) (75,000)
professional fees (55,375) (40,999)
printing, postage and other expenses (27,526) (10,393)
------------- -------------
Net cash used in operating activities (102,547) (29,079)
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships 16,887 23,509
Maturity/redemption of bonds 75,000 200,000
Transfer from (to) restricted cash 1,224,775 (198,900)
Investment in a local partnership (1,224,775)
-----------
Net cash provided by investing activities 91,887 24,609
-------------- --------------
Net decrease in cash and cash equivalents (10,660) (4,470)
Cash and cash equivalents at beginning of period 409,413 389,931
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 398,753 $ 385,461
============ ============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain on investments in bonds available-for-sale, net $ 205,380 $ 8,871
============ ===============
Increase in capital contributions payable $ 198,900
=============
- ------------------------------------------------------------------------------------------------------------------------------------
See reconciliation of net loss to net cash used in operating activities on page
6.
</TABLE>
See Notes to Financial Statements.
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF CASH FLOWS - (Continued)
NINE MONTHS ENDED DECEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
--------------------------------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES
Net loss $ (1,714,195) $ (2,160,898)
Adjustments to reconcile net loss to net cash used in operating activities
Equity in loss of investment in local partnerships 1,499,315 2,010,258
Amortization of net premium on investments in bonds 11,180 12,639
Accretion of zero coupon bonds (66,191) (66,191)
Increase in interest receivable (6,457) (6,508)
Increase in payable to general partner 97,931 97,931
Increase in accounts payable and accrued expenses 80,620 88,440
Decrease in other liabilities (4,750) (4,750)
---------------- ----------------
NET CASH USED IN OPERATING ACTIVITIES $ (102,547) $ (29,079)
============= ==============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1997
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. They do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. The results of operations are impacted significantly by the
combined results of operations of the Local Partnerships, which are
provided by the Local Partnerships on an unaudited basis during interim
periods. Accordingly, the accompanying financial statements are dependent
on such unaudited information. In the opinion of the General Partner, the
financial statements include all adjustments necessary to present fairly
the financial position as of December 30, 1997 and the results of
operations and cash flows for the interim periods presented. All
adjustments are of a normal recurring nature. The results of operations for
the three and nine month periods ended December 30, 1997 are not
necessarily indicative of the results that may be expected for the entire
year.
2. Investments in Bonds Available-For-Sale
As of December 30, 1997, certain information concerning investments in
bonds available-for-sale is as follows:
Gross unrealized Gross
Amortized gains unrealized Estimated
Description and maturity cost losses fair value
<S> <C> <C> <C> <C>
Corporate debt securities
After one year through five years $ 481,068 $ 5,335 $ (469) $ 485,934
After five years through ten years 455,406 7,127 (3,637) 458,896
After ten years 955,943 22,878 (13,293) 965,528
------------- ------------ ------------ -------------
1,892,417 35,340 (17,399) 1,910,358
------------ ------------ ------------ ------------
U.S. Treasury debt securities
After five years through ten years 89,631 -- (1,361) 88,270
After ten years 909,093 10,886 -- 919,979
------------- ------------ ----------------- -------------
998,724 10,886 (1,361) 1,008,249
------------- ------------ ------------- ------------
U.S. government and agency securities
After ten years 125,756 -- (4,201) 121,555
------------- ---------------- ------------- -------------
$ 3,016,897 $ 46,226 $ (22,961) $ 3,040,162
=========== =========== =========== ===========
</TABLE>
3. Investment in Local Partnerships
The Partnership owns a limited partnership interest 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 is
outstanding as of December 30, 1997. Restricted cash in the accompanying
balance sheet as of December 30, 1997 represents such outstanding capital
contribution, which is payable upon one Local Partnership providing
information that it has satisfied specific conditions related to
operations. As of September 30, 1997, the Local Partnerships have
outstanding mortgage loans payable totaling approximately $87,056,000 and
accrued interest payable on such loans totaling approximately $2,000,000,
which are secured by security interests and liens common to mortgage loans
on the Local Partnerships' real property and other assets.
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AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
DECEMBER 30, 1997
(UNAUDITED)
3. Investment in Local Partnerships (continued)
For the nine months ended December 30, 1997, the investment in Local
Partnerships activity consists of the following:
<S> <C>
Investment in Local Partnerships as of March 30, 1997 $ 10,905,064
Equity in loss of investment in Local Partnerships (1,499,315) (A)
Cash distributions received from Local Partnerships (16,887)
--------------
Investment in Local Partnerships as of December 30, 1997 $ 9,388,862
============
</TABLE>
(A) Equity in loss of investment in Local Partnerships is limited to the
Partnership's investment balance in each Local Partnership; any excess
is applied to other partners' capital in any such Local Partnership.
The amount of such excess losses applied to other partners' capital
was $661,055 for the nine months ended September 30, 1997 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, 1997 and December 31, 1996 and the combined unaudited
statements of operations of the Local Partnerships for the three and nine
month periods ended September 30, 1997 and 1996 are reflected on pages 9
and 10, respectively.
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<CAPTION>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
DECEMBER 30, 1997
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of September 30, 1997 and December 31, 1996 are as
follows:
September 30, December 31,
1997 1996
--------------------------------
ASSETS
<S> <C> <C>
Cash and other investments $ 1,446,550 $ 1,340,942
Rental receivable 378,060 354,108
Capital contributions receivable 84,433 1,309,208
Escrow deposits and reserves 4,637,282 3,763,306
Land 3,964,692 3,964,692
Buildings and improvements (net of accumulated depreciation of
$26,294,423 and $23,212,364) 89,416,763 92,443,378
Intangible assets (net of accumulated amortization of $649,850 and
$1,039,889) 772,792 748,879
Other 772,465
---------- -----------------
752,304
$ 101,452,876 $ 104,696,978
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 638,322 $ 512,801
Due to related parties 5,025,701 5,127,931
Mortgage and construction loans 87,055,836 87,351,443
Notes payable 61,002 70,804
Accrued interest 2,000,246 1,782,695
Other 581,193 557,856
----------------- -----------------
95,362,300 95,403,530
--------------- ---------------
Partners' equity (deficit)
American Tax Credit Properties III L.P.
Capital contributions, net of distributions (includes receivable of
$84,433 and $1,309,208) 29,055,122 29,079,605
Cumulative loss (19,663,760) (18,164,445)
-------------- --------------
9,391,362 10,915,160
General partners and other limited partners, including ATCP II
Capital contributions, net of distributions (64,402) 764,757
Cumulative loss (3,236,384) (2,386,469)
--------------- ---------------
(3,300,786) (1,621,712)
6,090,576 9,293,448
--------------- ---------------
$ 101,452,876 $ 104,696,978
============= =============
</TABLE>
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<TABLE>
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<CAPTION>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
DECEMBER 30, 1997
(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, 1997 and 1996 are as
follows:
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1997 1997 1996 1996
------------------ ----------------------------------- ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 2,657,724 $ 7,862,784 $ 2,579,221 $ 7,709,936
Interest and other 107,208 275,998 55,980 235,821
-------------- -------------- ------------- --------------
TOTAL REVENUE 2,764,932 8,138,782 2,635,201 7,945,757
------------- ------------- ------------ -------------
EXPENSES
Administrative 479,734 1,516,242 491,257 1,520,155
Utilities 194,336 724,777 176,214 762,780
Operating, maintenance and other 571,374 1,609,499 473,663 1,489,338
Taxes and insurance 322,825 975,289 337,661 967,868
Interest (including amortization of
$12,001, $37,939, $18,936 and $89,229)
846,140 2,580,146 871,083 2,660,463
Depreciation 1,026,873 3,082,059 1,041,892 3,105,829
------------ -------------- ------------ --------------
TOTAL EXPENSES 3,441,282 10,488,012 3,391,770 10,506,433
------------ ------------- ------------ -------------
NET LOSS $ (676,350) $ (2,349,230) $ (756,569) $ (2,560,676)
============ ============ ============ ============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties III L.P. $ (430,848) $ (1,499,315) $ (601,022) $ (2,010,258)
General partners and other limited
partners, including ATCP II, which
includes $196,380, $661,055, $91,556 and
$350,502 of American Tax Credit Properties
III L.P. loss in excess of (245,502) (849,915) (155,547) (550,418)
------------ -------------- ------------ --------------
investment
$ (676,350) $ (2,349,230) $ (756,569) $ (2,560,676)
=========== ============ =========== ============
</TABLE>
The combined results of operations of the Local Partnerships for the three
and nine month periods ended September 30, 1997 are not necessarily
indicative of the results that may be expected for an entire operating
period.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
DECEMBER 30, 1997
(UNAUDITED)
4. Commitments and Contingencies
On July 16, 1997, the Partnership received a demand for certain information
with respect to the holders of Units, the stated purpose of which was to
assist such party in making an offer to Unit holders to purchase their
Units and otherwise to communicate with them concerning such an offer.
Subsequently, the Partnership requested certain information from such party
in order to assess the appropriateness of the demand. To date, the
information has not been provided. On July 28, 1997, a complaint was filed
in the Court of Chancery of the State of Delaware in and for New Castle
County against the Partnership, the General Partner and its general partner
seeking, among other things, an order directing the defendants to
immediately furnish the requested information and awarding the plaintiff
any resulting damages. A one day trial was held on September 29, 1997. On
December 5, 1997, the Court of Chancery issued a memorandum opinion and
order, holding that plaintiff is entitled to the requested information
regarding Unit holders. On December 15, 1997, defendants filed a Notice of
Appeal to the Supreme Court of Delaware, and briefing on that appeal is
currently in progress. The Court of Chancery has stayed enforcement of its
December 5, 1997 memorandum opinion and order pending resolution of
defendants' appeal.
5. Additional Information
Additional information, including the audited March 30, 1997 Financial
Statements and the Organization, Purpose and Summary of Significant
Accounting Policies, is included in the Partnership's Annual Report on Form
10-K for the fiscal year ended March 30, 1997 on file with the Securities
and Exchange Commission.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III 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, 1997, Registrant has not experienced a significant change in
financial condition as compared to March 30, 1997. Principal changes in assets
are comprised of periodic transactions and adjustments and anticipated equity in
loss from operations of the Local Partnerships and payment of a capital
contribution to a Local Partnership. During the nine months ended December 30,
1997, Registrant received cash from interest earnings, maturity of a bond and
distributions from Local Partnerships and utilized cash for operating expenses
and for a capital contribution to a Local Partnership. Cash and cash equivalents
and investments in bonds available-for-sale increased, in the aggregate, by
approximately $175,000 during the nine months ended December 30, 1997, which
increase includes a net unrealized gain recorded on investments in bonds of
approximately $205,000, the amortization of net premium on investments in bonds
of approximately $11,000 and the accretion of zero coupon bonds of approximately
$66,000. During the nine months ended December 30, 1997, 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, 1997 of
$1,499,315 and cash distributions received from Local Partnerships of $16,887.
Accounts payable and accrued expenses and payable to general partner are
comprised primarily of accrued administration fees and management fees,
respectively.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico. The rents of the Properties, many of which receive rental subsidy
payments pursuant to subsidy agreements ("HAP Contracts") are subject to
specific laws, regulations and agreements with federal and state agencies. One
Local Partnership's HAP Contract, which covers certain rental units, is
scheduled to expire in 1998 after being renewed in 1997 for a one year period.
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 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 nine months ended September 30, 1997, revenue from operations, Local
General Partner advances and reserves of the Local Partnerships have generally
been sufficient to cover the operating expenses and Mandatory Debt Service.
Substantially all of the Local Partnerships are effectively operating at or near
break even levels, although certain Local Partnerships' 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 of
the Christian Street Local Partnership 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 $19,000 for the nine months ended September 30, 1997, which
includes property management fees of approximately $3,000. Accordingly, the net
operating deficit was approximately $16,000. Required payments on the mortgage
and real estate taxes are current. As of September 30, 1997, the Local General
Partners of the Christian Street Local Partnership have advanced approximately
$65,000 under their Deficit Guarantee obligation. Of Registrant's total annual
Low-income Tax Credits, approximately 2% is allocated from the Christian Street
Local Partnership.
Although Westminster Apartments Limited Partnership (the "Westminster Local
Partnership") reported only a minor operating deficit for the nine months ended
September 30, 1997, the Westminster Local Partnership subsequently incurred
higher operating deficits and, as a result, fell three months in arrears on its
mortgage. As of February 11, 1998, the Local General Partners report that
required mortgage payments are current as a result of the lender drawing on
available collateral provided by the Local General Partners. No default has been
declared by the lender as a result of the arrearage
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
or the drawdown on the collateral. The Westminster Local Partnership was
entitled to a real estate tax abatement which expired in 1996, resulting in an
increase of approximately $17,000 per annum in real estate tax expense. Although
the Local General Partners have appealed the real estate tax assessment, there
is no assurance that the Local General Partners will be successful in their
appeal to reduce the taxes. Of Registrant's total annual Low-income Tax Credits,
approximately 4% is allocated from the Westminster Local Partnership.
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 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 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 3 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 above under
Material Changes in Financial Condition regarding certain Local Partnerships
currently operating below economic break even levels.
Three Months Ended December 30, 1997
For the three months ended December 30, 1997, Registrant had a net loss of
approximately $542,000, which included an equity in loss of investment in Local
Partnerships of approximately $431,000 for the three months ended September 30,
1997. Registrant's loss from operations for the three months ended December 30,
1997 of approximately $112,000 was attributable to interest revenue of
approximately $41,000, exceeded by operating expenses of approximately $153,000.
Nonrecognition of losses in excess of Registrant's investment in certain Local
Partnerships during the period was approximately $196,000.
The Local Partnerships' net loss of approximately $676,000 for the three months
ended September 30, 1997 was attributable to rental and other revenue of
approximately $2,765,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $2,402,000 and approximately $1,039,000
of depreciation and amortization expenses.
Three Months Ended December 30, 1996
For the three months ended December 30, 1996, Registrant had a net loss of
approximately $653,000, which included an equity in loss of investment in Local
Partnerships of approximately $601,000 for the three months ended September 30,
1996. Registrant's loss from operations for the three months ended December 30,
1996 of approximately $52,000 was attributable to interest revenue of
approximately $80,000, exceeded by operating expenses of approximately $132,000.
Nonrecognition of losses in excess of Registrant's investment in certain Local
Partnerships during the period was approximately $92,000.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
The Local Partnerships' net loss of approximately $757,000 for the three months
ended September 30, 1996 was attributable to rental and other revenue of
approximately $2,635,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $2,331,000 and approximately $1,061,000
of depreciation and amortization expenses.
Nine Months Ended December 30, 1997
For the nine months ended December 30, 1997, Registrant had a net loss of
approximately $1,714,000, which included an equity in loss of investment in
Local Partnerships of approximately $1,499,000 for the nine months ended
September 30, 1997. Registrant's loss from operations for the nine months ended
December 30, 1997 of approximately $215,000 was attributable to interest revenue
of approximately $192,000 and other income from Local Partnerships of
approximately $4,000, exceeded by operating expenses of approximately $411,000.
Nonrecognition of losses in excess of Registrant's investment in certain Local
Partnerships during the period was approximately $661,000.
The Local Partnerships' net loss of approximately $2,349,000 for the nine months
ended September 30, 1997 was attributable to rental and other revenue of
approximately $8,139,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $7,368,000 and approximately $3,120,000
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 $2,161,000, which included an equity in loss of investment in
Local Partnerships of approximately $2,010,000 for the nine months ended
September 30, 1996. Registrant's loss from operations for the nine months ended
December 30, 1996 of approximately $151,000 was attributable to interest revenue
of approximately $237,000, exceeded by operating expenses of approximately
$388,000. Nonrecognition of losses in excess of Registrant's investment in
certain Local Partnerships during the period was approximately $350,000.
The Local Partnerships' net loss of approximately $2,561,000 for the nine months
ended September 30, 1996 was attributable to rental and other revenue of
approximately 7,946,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $7,312,000 and approximately $3,195,000
of depreciation and amortization expenses.
Three and Nine Month Periods Ended December 30, 1997 v.
Three and Nine Month Periods Ended December 30, 1996
Registrant's operations for the three months ended December 30, 1997 resulted in
a net loss of approximately $542,000 as compared to a net loss of approximately
$653,000 for the three months ended December 30, 1996. The decrease in net loss
is primarily attributed to a decrease in the equity in loss of investment in
Local Partnerships of approximately $170,000, which includes an increase in the
nonrecognition of losses in excess of Registrant's investment in Local
Partnerships of approximately $105,000 in accordance with the equity method of
accounting, partially offset by (i) a reduction of interest revenue of
approximately $39,000 as a result of Registrant's utilization of investments to
pay capital contributions to a Local Partnership and (ii) an increase in
Registrant's professional fees of approximately $13,000. Professional fees
increased as a result of legal expenses incurred in connection with the matter
described in Note 4 to the financial statements.
Registrant's operations for the nine months ended December 30, 1997 resulted in
a net loss of approximately $1,714,000 as compared to a net loss of
approximately $2,161,000 for the nine months ended December 30, 1996. The
decrease in net loss is primarily attributed to a decrease in the equity in loss
of investment in Local Partnerships of approximately $511,000, which includes an
increase in the nonrecognition of losses in excess of Registrant's investment in
Local Partnerships of approximately $311,000 in accordance with the equity
method of accounting, partially offset by (i) a reduction of interest revenue of
approximately $45,000 as a result of Registrant's utilization of investments to
pay capital contributions to a Local Partnership and (ii) an increase in
Registrant's professional fees of approximately $17,000. Professional fees
increased as a result of legal expenses incurred in connection with the matter
described in Note 4 to the financial statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
On July 16, 1997, Everest Properties, Inc. ("Everest") demanded
certain information with respect to the holders of Units. Everest
stated that the purpose of the demand was to assist Everest in making
an offer to Unit holders to purchase their Units and otherwise to
communicate with them concerning such an offer. On July 25, 1997,
Registrant requested certain information from Everest in order to
assess the appropriateness of the demand. To date, the information has
not been provided. On July 28, 1997, Everest filed a complaint in the
Court of Chancery of the State of Delaware in and for New Castle
County against Registrant, the General Partner and its general partner
seeking, among other things, an order directing the defendants to
immediately furnish the requested information and awarding the
plaintiff any resulting damages. A one day trial was held on September
29, 1997. On December 5, 1997, the Court of Chancery issued a
memorandum opinion and order, holding that plaintiff is entitled to
the requested information regarding Unit holders. On December 15,
1997, defendants filed a Notice of Appeal to the Supreme Court of
Delaware, and briefing on that appeal is currently in progress. The
Court of Chancery has stayed enforcement of its December 5, 1997
memorandum opinion and order pending resolution of defendants' appeal.
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 duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
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: February 13, 1998 /s/ Richard Paul Richman
----------------- -------------------------
Richard Paul Richman
President, Chief Executive
Officer and Director of the
general partner of the
General Partner
Dated: February 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 December
30, 1997 Form 10Q 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.
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