UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1999
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..........................................................3
Statements of Operations................................................4
Statements of Cash Flows................................................5
Notes to Financial Statements...........................................7
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
June 29, March 30,
Notes 1999 1999
------- ----------- ------------
ASSETS
Cash and cash equivalents $ 759,779 $ 567,613
Investments in bonds available-for-sale 2 2,631,034 2,890,010
Investment in local partnerships 3 5,613,098 6,032,392
Interest receivable 29,776 21,531
----------- ------------
$ 9,033,687 $ 9,511,546
=========== ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 1,150,403 $ 1,105,703
Payable to general partner 1,093,828 1,061,185
Other 11,700 11,700
----------- ------------
2,255,931 2,178,588
----------- ------------
Commitment and contingencies 3
Partners' equity (deficit)
General partner (247,158) (242,419)
Limited partners (35,883 units of limited partnership interest
outstanding) 7,061,027 7,530,193
Accumulated other comprehensive income (loss), net 2 (36,113) 45,184
----------- ------------
6,777,756 7,332,958
----------- ------------
$ 9,033,687 $ 9,511,546
=========== ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 29, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Notes 1999 1998
------- ---------- ----------
REVENUE
Interest $ 56,766 $ 61,859
Other income from local partnerships 4,172 4,172
---------- ----------
TOTAL REVENUE 60,938 66,031
---------- ----------
EXPENSES
Administration fees 57,643 57,643
Management fees 57,643 57,643
Professional fees 6,355 12,412
Printing, postage and other 5,908 9,855
---------- -----------
TOTAL EXPENSES 127,549 137,553
---------- -----------
Loss from operations (66,611) (71,522)
Equity in loss of investment in local partnerships 3 (407,294) (455,651)
---------- -----------
NET LOSS (473,905) (527,173)
Other comprehensive income (loss) 2 (81,297) 26,874
---------- -----------
COMPREHENSIVE LOSS $ (555,202) $ (500,299)
========== ==========
NET LOSS ATTRIBUTABLE TO
General partner $ (4,739) $ (5,272)
Limited partners (469,166) (521,901)
---------- ----------
$ (473,905) $ (527,173)
========== ==========
NET LOSS per unit of limited partnership interest (35,883 units of
limited partnership interest) $ (13.07) $ (14.54)
========== =========
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 29, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 30,299 $ 34,551
Cash paid for
administration fees (25,000) (25,000)
management fees (25,000) (25,000)
professional fees (1,287)
printing, postage and other expenses (206) (9,855)
---------- ----------
Net cash used in operating activities (19,907) (26,591)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions and other income from local partnerships 16,172 10,713
Maturity/redemption of bonds 195,901 85,000
---------- ----------
Net cash provided by investing activities 212,073 95,713
---------- ----------
Net increase in cash and cash equivalents 192,166 69,122
Cash and cash equivalents at beginning of period 567,613 419,372
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 759,779 $ 488,494
========== ==========
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain (loss) on investments in bonds available-for-sale, net $ (81,297) $ 26,874
========== ==========
</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)
THREE MONTHS ENDED JUNE 29, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
----------- -----------
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES
Net loss $ (473,905) $ (527,173)
Adjustments to reconcile net loss to net cash used in operating activities
Equity in loss of investment in local partnerships 407,294 455,651
Distributions from local partnerships classified as other income (4,172) (4,172)
Amortization of net premium on investments in bonds 3,342 3,314
Accretion of zero coupon bonds (21,564) (21,564)
Increase in interest receivable (8,245) (9,058)
Increase in payable to general partner 32,643 32,643
Increase in accounts payable and accrued expenses 44,700 43,768
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES $ (19,907) $ (26,591)
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 1999
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. They do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. The results of operations are impacted significantly by the
combined results of operations of the Local Partnerships, which are
provided by the Local Partnerships on an unaudited basis during interim
periods. Accordingly, the accompanying financial statements are dependent
on such unaudited information. In the opinion of the General Partner, the
financial statements include all adjustments necessary to present fairly
the financial position as of June 29, 1999 and the results of operations
and cash flows for the interim periods presented. All adjustments are of a
normal recurring nature. The results of operations for the three months
ended June 29, 1999 are not necessarily indicative of the results that may
be expected for the entire year.
2. Investments in Bonds Available-For-Sale
As of June 29, 1999, certain information concerning investments in bonds
available-for-sale is as follows:
<TABLE>
<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 $ 76,249 $ 293 $ -- $ 76,542
After one year through five years 459,640 4,665 (2,101) 462,204
After five years through ten years 703,691 13,112 (14,683) 702,120
After ten years 308,951 1,466 -- 310,417
----------- ----------- ----------- -----------
1,548,531 19,536 (16,784) 1,551,283
----------- ----------- ----------- -----------
U.S. Treasury debt securities
After five years through ten years 1,118,616 -- (38,865) 1,079,751
----------- ----------- ----------- -----------
$ 2,667,147 $ 19,536 $ (55,649) $ 2,631,034
=========== =========== =========== ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1999
(UNAUDITED)
3. 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, all of which have been paid. As of March 31, 1999, the Local
Partnerships have outstanding mortgage loans payable totaling approximately
$86,221,000 and accrued interest payable on such loans totaling
approximately $2,527,000, which are secured by security interests and liens
common to mortgage loans on the Local Partnerships' real property and other
assets.
For the three months ended June 29, 1999, the investment in Local
Partnerships activity consists of the following:
<TABLE>
<S> <C>
Investment in Local Partnerships as of March 30, 1999 $ 6,032,392
Equity in loss of investment in local partnerships (407,294)*
Cash distributions received from Local Partnerships (16,172)
Cash distributions classified as other income 4,172
--------------
Investment in Local Partnerships as of June 29, 1999 $ 5,613,098
==============
</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
$326,238 for the three months ended March 31, 1999 as reflected in the
combined statement of operations of the Local Partnerships reflected
herein Note 3.
The combined unaudited balance sheets of the Local Partnerships as of March
31, 1999 and December 31, 1998 and the combined unaudited statements of
operations of the Local Partnerships for the three months ended March 31,
1999 and 1998 are reflected on pages 9 and 10, respectively.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1999
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of March 31, 1999
and December 31, 1998 are as follows:
<TABLE>
<S> <C> <C>
March 31, December 31,
1999 1998
------------- -------------
ASSETS
Cash and cash equivalents $ 1,359,855 $ 1,396,493
Rents receivable 340,185 429,688
Capital contributions receivable 84,433
Escrow deposits and reserves 4,809,898 4,657,419
Land 3,910,215 3,910,215
Buildings and improvements (net of accumulated depreciation of
$32,057,999 and $31,057,575) 81,044,355 82,003,262
Intangible assets (net of accumulated amortization of $630,338 and
$618,890) 705,276 716,724
Other 838,759 804,785
------------- -------------
$ 93,008,543 $ 94,003,019
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 630,584 $ 619,342
Due to related parties 4,962,056 5,154,179
Mortgage loans 86,221,053 86,358,980
Notes payable 24,887 26,990
Accrued interest 2,526,561 2,420,323
Other 642,869 613,520
------------- -------------
95,008,010 95,193,334
------------- -------------
Partners' equity (deficit)
American Tax Credit Properties III L.P.
Capital contributions, net of distributions (includes
receivable of $84,433 as of December 31, 1998) 28,996,587 29,004,177
Cumulative loss (23,383,760) (22,976,466)
------------- -------------
5,612,827 6,027,711
------------- -------------
General partners and other limited partners, including ATCP II
Capital contributions, net of distributions (196,921) (177,871)
Cumulative loss (7,415,373) (7,040,155)
------------- -------------
(7,612,294) (7,218,026)
------------- -------------
(1,999,467) (1,190,315)
------------- -------------
$ 93,008,543 $ 94,003,019
============= =============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1999
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
three months ended March 31, 1999 and 1998 are as follows:
<TABLE>
<S> <C> <C>
1999 1998
------------ ------------
REVENUE
Rental $ 2,694,711 $ 2,615,715
Interest and other 77,144 79,279
------------ ------------
TOTAL REVENUE 2,771,855 2,694,994
------------ ------------
EXPENSES
Administrative 497,760 495,485
Utilities 305,931 279,931
Operating, maintenance and other 589,608 587,786
Taxes and insurance 320,778 329,825
Financial (including amortization of $11,448 and $12,292) 839,866 858,595
Depreciation 1,000,424 1,003,583
------------ ------------
TOTAL EXPENSES 3,554,367 3,555,205
------------ ------------
NET LOSS $ (782,512) $ (860,211)
============ ============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties III L.P. $ (407,294) $ (455,651)
General partners and other limited partners, including ATCP II,
which includes $326,238 and $356,022 of Partnership
loss in excess of investment (375,218) (404,560)
------------ ------------
$ (782,512) $ (860,211)
============ ============
</TABLE>
The combined results of operations of the Local Partnerships for the three
months ended March 31, 1999 are not necessarily indicative of the results
that may be expected for an entire operating period.
4. Additional Information
Additional information, including the audited March 30, 1999 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, 1999 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 June 29, 1999, American Tax Credit Properties III L.P. (the "Registrant")
has not experienced a significant change in financial condition as compared to
March 30, 1999. 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 three months ended June 29, 1999,
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 decreased,
in the aggregate, by approximately $67,000 during the three months ended June
29, 1999 (which includes a net unrealized loss on investments in bonds of
approximately $81,000, the amortization of net premium on investments in bonds
of approximately $3,000 and the accretion of zero coupon bonds of approximately
$22,000). Notwithstanding circumstances that may arise in connection with the
Properties, Registrant does not expect to realize significant gains or losses on
its investments in bonds, if any. During the three months ended June 29, 1999,
the investment in Local Partnerships decreased as a result of Registrant's
equity in the Local Partnerships' net loss for the three months ended March 30,
1999 of $407,294 and cash distributions received from Local Partnerships of
$12,000 (exclusive of distributions from Local Partnerships of $4,172 classified
as other income from local partnerships). Accounts payable and accrued expenses
includes deferred administration fees of $1,093,828 and payable to general
partner represents deferred management fees in the accompanying balance sheet as
of June 29, 1999.
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 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 below under
Local Partnership Matters regarding certain Local Partnerships currently
operating below economic break even levels.
Registrant's operations for the three months ended June 29, 1999 and 1998
resulted in net losses of $473,905 and $527,173, respectively. The decrease in
net loss is primarily attributable to a decrease in equity in loss of investment
in local partnerships of approximately $48,000. Other comprehensive income
(loss) for the three months ended June 29, 1999 and 1998 resulted from a net
unrealized gain (loss) on investments in bonds available-for-sale of ($81,297)
and $26,874, respectively.
<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 $783,000 for the three months
ended March 31, 1999 was attributable to rental and other revenue of
approximately $2,772,000, exceeded by operating and interest expenses (including
interest on non-mandatory debt) of approximately $2,543,000 and approximately
$1,012,000 of depreciation and amortization expenses. The Local Partnerships'
net loss of approximately $860,000 for the three months ended March 31, 1998 was
attributable to rental and other revenue of approximately $2,695,000, exceeded
by operating and interest expenses (including interest on non-mandatory debt) of
approximately $2,539,000 and approximately $1,016,000 of depreciation and
amortization expenses. The results of operations of the Local Partnerships for
the three months ended March 31, 1999 are not necessarily indicative of the
results that may be expected in future periods.
Local Partnership Matters
Registrant's primary objective is to provide Low-income Tax Credits to limited
partners generally over a ten year period. The required holding period of each
Property, in order to avoid Low-income Tax Credit recapture, is fifteen years
from the year in which the Low-income Tax Credits commence on the last building
of the Property (the "Compliance Period"). In addition, certain of the Local
Partnerships have entered into agreements with the relevant state tax credit
agencies whereby the Local Partnerships must maintain the low-income nature of
the Properties for a period which exceeds the Compliance Period, regardless of
any sale of the Properties by the Local Partnerships after the Compliance
Period. The Properties must satisfy various requirements including rent
restrictions and tenant income limitations (the "Low-income Tax Credit
Requirements") in order to maintain eligibility for the recognition of the
Low-income Tax Credit at all times during the Compliance Period. Once a Local
Partnership has become eligible for the Low-income Tax Credit, it may lose such
eligibility and suffer an event of recapture if its Property fails to remain in
compliance with the Low-income Tax Credit Requirements. Through December 31,
1998, none of the Local Partnerships have suffered an event of recapture of
Low-income Tax Credits.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico. Many of the Local Partnerships receive rental subsidy payments,
including payments under Section 8 of Title II of the Housing and Community
Development Act of 1974 ("Section 8"). The subsidy agreements expire at various
times during and after the Compliance Periods of the Local Partnerships. In
October 1997, Congress passed the Multifamily Assisted Housing and Reform and
Affordability Act, whereby the United States Department of Housing and Urban
Development ("HUD") was given the authority to renew certain project based
Section 8 contracts expiring during HUD's fiscal year 1998, where requested by
an owner, for an additional one year term generally at or below current rent
levels, subject to certain guidelines. In October 1998, HUD issued a directive
related to project based Section 8 contracts expiring during HUD's fiscal year
1999 which defines owners' notification responsibilities, advises owners of
project based Section 8 properties of what their options are regarding the
renewal of Section 8 contracts, provides guidance and procedures to owners,
management agents, contract administrators and HUD staff on renewing Section 8
contracts, provides guidance on setting renewal rents and handling renewal rent
increases and provides the requirements and procedures for opting-out of a
Section 8 project based contract. Registrant cannot reasonably predict
legislative initiatives and governmental budget negotiations, the outcome of
which could result in a reduction in funds available for the various federal and
state administered housing programs including the Section 8 program. Such
changes could adversely affect the future net operating income and debt
structure of any or all Local Partnerships currently receiving such subsidy or
similar subsidies. One Local Partnership's Section 8 contract is currently
subject to annual year-to-year renewals.
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 three months ended March 31, 1999, revenue from
operations of the Local Partnerships have generally been sufficient to cover
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
<PAGE>
AMERICAN TAX CREDIT PROPERTIES III L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
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 Westminster Apartments Limited
Partnership ("Westminster") 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.
Westminster reported an operating deficit of approximately $15,000 for the three
months ended March 31, 1999, which includes property management fees of
approximately $4,000. In addition, as of March 31, 1999, Westminster is four
months in arrears on its mortgage, and eight to ten months in arrears on its
replacement reserve and escrow requirements. The Local General Partner is
conducting discussions with the lender, which has not declared a default.
Registrant's investment balance in Westminster, after the cumulative equity
losses, became zero during the year ended March 30, 1999. Of Registrant's total
annual Low-income Tax Credits, approximately 4% is allocated from Westminster.
Fulton Street Houses Limited Partnership ("Fulton Street") has an escrow of
approximately $290,000 as of March 31, 1999 to cover operating deficits, and
there are no Mandatory Debt Service payments or real estate taxes required
during the Compliance Period. Fulton Street reported an operating deficit of
approximately $22,000 for the three months March 31, 1999. Of Registrant's total
annual Low-income Tax Credits, approximately 8% is allocated from Fulton Street.
The terms of the partnership agreement of Batesville Family, L.P. ("Batesville")
require the management agent to defer property management fees in order to avoid
a default under the mortgage. Batesville reported an operating deficit of
approximately $6,000 for the three months ended March 31, 1999, which includes
property management fees of approximately $1,000. Payments on the mortgage and
real estate taxes are current. Registrant's investment balance in Batesville,
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 Batesville.
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. Registrant has performed
an assessment of its computer software and hardware and believes it has made the
necessary upgrades in an effort to ensure compliance. 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. Registrant has corresponded with the Local Partnerships to ensure
their awareness of the Y2K issue and has requested details regarding their
efforts to ensure compliance. 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 a
failure to convert by Registrant or another entity would not have a material
adverse impact on Registrant.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
The market value of Registrant's investments in bonds is subject to fluctuation
based upon changes in interest rates relative to each investment's maturity
date. Since Registrant's investments in bonds have various maturity dates
through 2023, the value of such investments may be adversely impacted in an
environment of rising interest rates in the event Registrant decides to
liquidate any such investment prior to its maturity. Because Registrant
presently intends to hold such investments to their respective maturities,
Registrant does not anticipate any material adverse impact in connection with
such investments.
The Properties are generally located where there is a demand for low-income
housing. Accordingly, there is a significant likelihood that new properties
could be built in the general vicinity of the respective Properties. As a
result, the respective Properties' ability to operate at high occupancy levels
is subject to competition from newly built low-income housing.
<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 ("Westminster")
reports that Westminster is four months in arrears on its first
mortgage obligation as of March 31, 1999. The local general partner is
conducting discussions with the lender, which has not declared a
default.
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: August 12, 1999 /s/ Richard Paul Richman
------------------------------------------
by: Richard Paul Richman
President, Chief Executive
Officer and Director of the
general partner of the
General Partner
Dated: August 12, 1999 /s/ Neal Ludeke
------------------------------------------
by: Neal Ludeke
Vice President and
Treasurer of the general partner
of the General Partner
(Principal Financial and Accounting
Officer of Registrant)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the quarter ended June 29, 1999 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> 3-MOS
<FISCAL-YEAR-END> MAR-30-2000
<PERIOD-START> MAR-30-1999
<PERIOD-END> JUN-29-1999
<EXCHANGE-RATE> 1.00
<CASH> 760
<SECURITIES> 2,631
<RECEIVABLES> 30
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,034
<CURRENT-LIABILITIES> 2,256
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 9,034
<SALES> 0
<TOTAL-REVENUES> 61
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 128
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (474)
<INCOME-TAX> 0
<INCOME-CONTINUING> (474)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (474)
<EPS-BASIC> (13.07)
<EPS-DILUTED> 0
</TABLE>
