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, 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
Item 1. Financial Statements
Table of Contents
Page
Balance Sheets as of December 30, 1998 (Unaudited)
and March 30, 1998 (Unaudited).................................................3
Statements of Operations for the three and nine month
periods ended December 30, 1998 (Unaudited)and
December 30, 1997 (Unaudited)..................................................4
Statements of Cash Flows for the nine months ended
December 30, 1998 (Unaudited)and December 30, 1997 (Unaudited).................5
Notes to Financial Statements as of December 30, 1998 (Unaudited)..............7
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
December 30, March 30,
Notes 1998 1998
----- ------------ ------------
ASSETS
Cash and cash equivalents $ 487,221 $ 419,372
Restricted cash 4 84,433 84,433
Investments in bonds available-for-sale 3 3,078,764 3,065,441
Investment in local partnerships 4 7,172,364 8,515,114
Interest receivable 31,347 21,909
------------ ------------
$ 10,854,129 $ 12,106,269
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 1,084,936 $ 997,634
Payable to general partner 1,028,545 930,614
Capital contributions payable 4 84,433 84,433
Other 11,700 16,450
------------ ------------
2,209,614 2,029,131
------------ ------------
Commitments and contingencies 4
Partners' equity (deficit)
General partner (230,201) (214,858)
Limited partners (35,883 units of limited partnership interest
outstanding) 8,739,762 10,258,714
Accumulated other comprehensive income, net 2,3 134,954 33,282
------------ ------------
8,644,515 10,077,138
------------ ------------
$ 10,854,129 $ 12,106,269
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
December 30, December 30, December 30, December 30,
Notes 1998 1998 1997 1997
----- ----------- ------------ ----------- -----------
REVENUE
Interest $ 61,700 $ 185,232 $ 41,007 $ 192,400
Other income from local partnerships 4 5,752 4,172
---------- ------------ ----------- -----------
TOTAL REVENUE 61,700 190,984 41,007 196,572
---------- ------------ ----------- -----------
EXPENSES
Administration fees 57,646 172,931 57,646 172,931
Management fees 57,646 172,931 57,646 172,931
Professional fees 13,251 34,600 26,526 44,625
Printing, postage and other 8,807 22,704 10,729 20,965
---------- ------------ ----------- -----------
TOTAL EXPENSES 137,350 403,166 152,547 411,452
---------- ------------ ----------- -----------
Loss from operations (75,650) (212,182) (111,540) (214,880)
Equity in loss of investment in local
partnerships 4 (432,042) (1,322,113) (430,848) (1,499,315)
---------- ------------ ----------- -----------
NET LOSS (507,692) (1,534,295) (542,388) (1,714,195)
Other comprehensive income (loss) 2,3 (50,421) 101,672 74,391 205,380
---------- ------------ ----------- -----------
COMPRENHENSIVE LOSS $ (558,113) $ (1,432,623) $ (467,997) $(1,508,815)
========== ============ =========== ===========
NET LOSS ATTRIBUTABLE TO
General partner $ (5,077) $ (15,343) $ (5,424) $ (17,142)
Limited partners (502,615) (1,518,952) (536,964) (1,697,053)
---------- ------------ ----------- -----------
$ (507,692) $ (1,534,295) $ (542,388) $(1,714,195)
========== ============ =========== ===========
NET LOSS per unit of limited partnership
interest (35,883 units of limited
partnership interest) $ (14.01) $ (42.33) $ (14.96) $ (47.29)
========== ============ =========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
--------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 121,225 $ 130,932
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 (44,225) (55,375)
printing, postage and other expenses (23,708) (27,526)
--------- -----------
Net cash used in operating activities (101,458) (106,719)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions and other income from local partnerships 26,389 21,059
Maturity/redemption of bonds 142,918 75,000
Transfer from restricted cash 1,224,775
Investment in local partnerships (1,224,775)
--------- -----------
Net cash provided by investing activities 169,307 96,059
--------- -----------
Net increase (decrease) in cash and cash equivalents 67,849 (10,660)
Cash and cash equivalents at beginning of period 419,372 409,413
--------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 487,221 $ 398,753
========= ===========
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain on investments in bonds available-for-sale, net $ 101,672 $ 205,380
========= ===========
See reconciliation of net loss to net cash used in operating activities on page 6.
See Notes to Financial Statements.
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF CASH FLOWS - (Continued)
NINE MONTHS ENDED DECEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
----------- -----------
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES
Net loss $ (1,534,295) $ (1,714,195)
Adjustments to reconcile net loss to net cash used in operating activities
Equity in loss of investment in local partnerships 1,322,113 1,499,315
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 9,919 11,180
Accretion of zero coupon bonds (65,165) (66,191)
Increase in interest receivable (9,438) (6,457)
Increase in payable to general partner 97,931 97,931
Increase in accounts payable and accrued expenses 87,302 80,620
Decrease in other liabilities (4,750) (4,750)
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES $ (101,458) $ (106,719)
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 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 December
30, 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 nine month periods ended December 30, 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 (loss), 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 (loss) in the accompanying statements of operations for the three and
nine month periods ended December 30, 1998 resulted from a net unrealized gain
(loss) on investments in bonds available-for-sale. Accumulated other
comprehensive income in the accompanying balance sheet as of December 30, 1998
reflects the net unrealized gain on investments in bonds available-for-sale. The
balance sheet as of March 30, 1998 and the statements of operations for the
three and nine month periods ended December 30, 1997 include certain
reclassifications to reflect the adoption of SFAS No. 130.
3. Investments in Bonds Available-For-Sale
As of December 30, 1998, certain information concerning investments in
bonds available-for-sale is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
------------------------ ----------- ---------- ---------- -----------
Corporate debt securities
Within one year $ 138,253 $ - $ (1,457) $ 136,796
After one year through five years 536,566 13,409 - 549,975
After five years through ten years 703,602 44,076 - 747,678
After ten years 487,291 - (8,426) 478,865
----------- ---------- ---------- -----------
1,865,712 57,485 (9,883) 1,913,314
U.S. Treasury debt securities
After ten years 1,078,098 87,352 - 1,165,450
----------- ---------- ---------- -----------
$ 2,943,810 $ 144,837 $ (9,883) $ 3,078,764
=========== ========== ========== ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
DECEMBER 30, 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 is
outstanding as of December 30, 1998. Restricted cash in the accompanying balance
sheet as of December 30, 1998 represents such outstanding capital contribution,
which is payable upon one Local Partnership's satisfaction of specified
conditions related to operations. As of September 30, 1998, the Local
Partnerships have outstanding mortgage loans payable totaling approximately
$86,514,000 and accrued interest payable on such loans totaling approximately
$2,359,000, which are secured by security interests and liens common to mortgage
loans on the Local Partnerships' real property and other assets.
For the nine months ended December 30, 1998, the investment in Local
Partnerships activity consists of the following:
<TABLE>
<CAPTION>
<S> <C>
Investment in Local Partnerships as of March 30, 1998 $ 8,515,114
Equity in loss of investment in Local Partnerships (1,322,113) *
Cash distributions received from Local Partnerships (26,389)
Cash distributions classified as other income 5,752
------------
Investment in Local Partnerships as of December 30, 1998 $ 7,172,364
============
</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 $972,612 for the nine
months ended September 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
September 30, 1998 and December 31, 1997 and the combined unaudited statements
of operations of the Local Partnerships for the three and nine month periods
ended September 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)
DECEMBER 30, 1998
(UNAUDITED)
4. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of September 30,
1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, December 31,
1998 1997
------------ ------------
ASSETS
Cash and cash equivalents $ 1,378,752 $ 863,259
Rents receivable 435,709 456,077
Capital contributions receivable 84,433 84,433
Escrow deposits and reserves 4,806,329 4,403,622
Land 3,910,215 3,910,215
Buildings and improvements (net of accumulated depreciation of
$30,058,773 and $27,045,787) 84,637,784
87,586,072
Intangible assets (net of accumulated amortization of $616,699 and
$584,504) 726,304 762,749
Other 849,147 1,401,766
------------ ------------
$ 96,828,673 $ 99,468,193
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 645,177 $ 442,564
Due to related parties 5,095,122 5,247,688
Mortgage loans 86,514,119 86,919,773
Notes payable 29,736 62,111
Accrued interest 2,358,935 2,109,721
Other 629,874 580,863
------------ ------------
95,272,963 95,362,720
============ ============
Partners' equity (deficit)
American Tax Credit Properties III L.P.
Capital contributions, net of distributions (includes
receivable of $84,433) 29,006,523 29,048,449
Cumulative loss (21,844,989) (20,522,876)
------------ ------------
7,161,534 8,525,573
------------ ------------
General partners and other limited partners, including ATCP II
Capital contributions, net of distributions (154,835) (123,346)
Cumulative loss (5,450,989) (4,296,754)
------------ ------------
(5,605,824) (4,420,100)
------------ ------------
1,555,710 4,105,473
------------ ------------
$ 96,828,673 $ 99,468,193
============ ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
DECEMBER 30, 1998
(UNAUDITED)
4. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the three
and nine month periods ended September 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1998 1998 1997 1997
------------ ------------ ------------ ------------
REVENUE
Rental $ 2,667,212 $ 7,932,978 $ 2,657,724 $ 7,862,784
Interest and other 89,304 253,270 107,208 275,998
----------- ------------ ------------ ------------
TOTAL REVENUE 2,756,516 8,186,248 2,764,932 8,138,782
----------- ------------ ------------ ------------
EXPENSES
Administrative 534,207 1,527,912 479,734 1,516,242
Utilities 172,918 686,562 194,336 724,777
Operating, maintenance and other 770,033 1,913,861 571,374 1,609,499
Taxes and insurance 317,192 965,138 322,825 975,289
Financial (including amortization of $11,868,
$36,445, $12,001 and $37,939) 842,157 2,556,137 846,140 2,580,146
Depreciation 1,005,677 3,012,986 1,026,873 3,082,059
----------- ------------ ------------ ------------
TOTAL EXPENSES 3,642,184 10,662,596 3,441,282 10,488,012
----------- ------------ ------------ ------------
NET LOSS $ (885,668) $ (2,476,348) $ (676,350) $ (2,349,230)
=========== ============ ============ ============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties III L.P. $ (432,042) $ (1,322,113) $ (430,848) $ (1,499,315)
General partners and other limited partners,
including ATCP II, which includes
$380,527, $972,612, $196,380 and $661,055
of Partnership loss in excess of investment (453,626) (1,154,235) (245,502) (849,915)
----------- ------------ ------------ ------------
$ (885,668) $ (2,476,348) $ (676,350) $ (2,349,230)
=========== ============ ============ ============
</TABLE>
The combined results of operations of the Local Partnerships for the three
and nine month periods ended September 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 December 30, 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 nine months ended
December 30, 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
$81,000 during the nine months ended December 30, 1998 (which included a net
unrealized gain on investments in bonds of approximately $102,000, amortization
of net premium on investments in bonds of approximately $10,000 and accretion of
zero coupon bonds of approximately $65,000). 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 nine months ended December 30, 1998, 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, 1998 of $1,322,113 and cash
distributions received from Local Partnerships of $20,637 (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 December 30, 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 December 30, 1998 and
1997 resulted in net losses of $507,692 and $542,388, respectively. The decrease
in net loss is primarily attributable to an increase in interest revenue of
approximately $21,000 and a decrease in professional fees of approximately
$13,000. Other comprehensive income (loss) for the three months ended December
30, 1998 and 1997 resulted from a net unrealized gain (loss) on investments in
bonds available for-sale of $(50,421) and $74,391, respectively.
The Local Partnerships' net loss of approximately $886,000 for the three
months ended September 30, 1998 was attributable to rental and other revenue of
approximately $2,757,000, exceeded by operating and interest expenses (including
interest on non-mandatory debt) of approximately $2,625,000 and approximately
$1,018,000 of depreciation and amortization expenses. 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 interest on non-mandatory
debt) of approximately $2,402,000 and approximately $1,039,000 of depreciation
and amortization expenses. The increase in net loss from 1997 to 1998 is
primarily attributable to an increase in the operating and maintenance expenses
of certain Local Partnerships. The results of operations of the Local
Partnerships for the three months ended September 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 nine months ended December 30, 1998 and
1997 resulted in net losses of $1,534,295 and $1,714,195, respectively. The
difference in net loss is primarily attributable to a decrease in equity in loss
of investment in Local Partnerships of approximately $177,000, which includes an
increase in the nonrecognition of losses in excess of Registrant's investment in
Local Partnerships of approximately $312,000 in accordance with the equity
method of accounting. Other comprehensive income for the nine months ended
December 30, 1998 and 1997 resulted from a net unrealized gain on investments in
bonds available-for-sale of $101,672 and $205,380, respectively.
The Local Partnerships' net loss of approximately $2,476,000 for the nine
months ended September 30, 1998 was attributable to rental and other revenue of
approximately $8,186,000, exceeded by operating and interest expenses (including
interest on non-mandatory debt) of approximately $7,613,000 and approximately
$3,049,000 of depreciation and amortization expenses. 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 interest on non-mandatory
debt) of approximately $7,368,000 and approximately $3,120,000 of depreciation
and amortization expenses. The results of operations of the Local Partnerships
for the nine months ended September 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. 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
nine months ended September 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 $11,000 for the nine
months ended September 30, 1998, which includes property management fees of
approximately $3,000. As of September 30, 1998, the Local General Partners have
advanced approximately $85,000 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 $286,000 as of September 30, 1998
to cover operating deficits and there are no Mandatory Debt Service payments or
real estate taxes required during the Compliance Period. The Fulton Street Local
Partnership incurred an operating deficit of approximately $23,000 for the nine
months September 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 $21,000 for the
nine months ended September 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.
While the operations of Westminster Apartments Limited Partnership (the
"Westminster Local Partnership") reflect near break even operations for the nine
months ended September 30, 1998, the Local General Partner reports that the
Westminster Local Partnership is currently one month in arrears on its first
mortgage obligation. No default has been declared and the Local General Partner
is working with the lender to resolve the arrearage via the application of
excess escrow funds held by the lender.
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.
Year 2000 Compliance
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a two
digit year is commonly referred to as the year 2000 compliance ("Y2K") issue. As
the year 2000 approaches, such systems may be unable to accurately process
certain data-based information. Many businesses may need to upgrade existing
systems or purchase new ones to correct the Y2K issue. The total cost associated
with Y2K implementation is not expected to materially impact Registrant's
financial position or results of operations in any given year. However, there
can be no assurance that the systems of other entities on which Registrant
relies, including the Local Partnerships which report to Registrant on a
periodic basis for the purpose of Registrant's reporting to its investors, will
be timely converted. There can be no assurance that a failure to convert by
another entity would not have a material adverse impact on Registrant.
<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
As discussed in Part I, Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations, the local general
partner of Westminster Apartments Limited Partnership (the
"Westminster Local Partnership") reports that the Westminster Local
Partnership is currently one month in arrears on its first mortgage
obligation. No default has been declared and the local general partner
is working with the lender to resolve the arrearage via the
application of excess escrow funds held by the lender.
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 11, 1999 /s/ Richard Paul Richman
----------------------------------------
Richard Paul Richman
President, Chief Executive
Officer and Director of the
general partner of the
General Partner
Dated: February 11, 1999 /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, 1998 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.
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-30-1999
<PERIOD-START> MAR-30-1998
<PERIOD-END> DEC-30-1998
<EXCHANGE-RATE> 1.00
<CASH> 572
<SECURITIES> 3,079
<RECEIVABLES> 0
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0
0
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<CGS> 0
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<INCOME-PRETAX> (1,534)
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<EPS-PRIMARY> (42.33)
<EPS-DILUTED> 0
</TABLE>
