<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended MARCH 31, 2000
Commission File Number 0-20610
NATIONAL TAX CREDIT INVESTORS II
(A California Limited Partnership)
I.R.S. Employer Identification No. 93-1017959
9090 WILSHIRE BLVD., SUITE 201
BEVERLY HILLS, CALIF. 90211
Registrant's Telephone Number,
Including Area Code (310) 278-2191
Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
<PAGE> 2
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2000
<TABLE>
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Balance Sheets, March 31, 2000 and December 31, 1999.........................................1
Statements of Operations
Three Months Ended March 31, 2000 and 1999..........................................2
Statement of Partners' Equity (Deficiency),
Three Months Ended March 31, 2000....................................................3
Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999...........................................4
Notes to Financial Statements ...............................................................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................................10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..........................................................................13
Item 6. Exhibits and Reports on Form 8-K ..........................................................13
Signatures . . . . . . . . . . . . . ...............................................................14
</TABLE>
<PAGE> 3
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
ASSETS
<TABLE>
<CAPTION>
2000 1999
(Unaudited) (Audited)
------------ ----------
<S> <C> <C>
INVESTMENTS IN LIMITED PARTNERSHIPS
(Notes 1 and 2) $15,533,936 $16,153,744
CASH AND CASH EQUIVALENTS (Note 1) 1,666,597 1,296,513
OTHER ASSETS 130,397 120,479
RESTRICTED CASH (Note 3) 244,498 241,636
----------- -----------
TOTAL ASSETS $17,575,428 $17,812,372
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Accrued fees due to partners (Notes 5 and 7) $ 3,481,325 $ 3,296,209
Capital contributions payable (Note 4) 1,076 1,076
Accounts payable and accrued expenses 80,994 113,878
----------- -----------
3,563,395 3,411,163
----------- -----------
CONTINGENCIES (Note 6)
PARTNERS' EQUITY 14,012,033 14,401,209
----------- -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $17,575,428 $17,812,372
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
--------- ----------
<S> <C> <C>
INTEREST INCOME $ 17,985 $ 6,801
--------- ---------
OPERATING EXPENSES:
Management fees - partners (Note 5) 185,116 191,153
General and administrative (Note 5) 18,539 24,224
Legal and accounting 56,849 28,983
--------- ---------
Total operating expenses 260,504 244,360
--------- ---------
LOSS FROM PARTNERSHIP OPERATIONS (242,519) (237,559)
DISTRIBUTIONS FROM LIMITED PARTNERSHIPS
RECOGNIZED AS INCOME 455,843 --
EQUITY IN LOSS OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS (Note 2) (602,500) (644,000)
--------- ---------
NET LOSS $(389,176) $(881,559)
========= =========
NET LOSS PER LIMITED
PARTNERSHIP INTEREST (Note 1) $ (5) $ (12)
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------- ------------- ------------
<S> <C> <C> <C>
PARTNERSHIP INTERESTS 72,404
============
PARTNERS' EQUITY (DEFICIENCY),
January 1, 2000 $ (484,912) $ 14,886,121 $ 14,401,209
Net loss for the three months
ended March 31, 2000 (3,892) (385,284) (389,176)
------------ ------------ ------------
PARTNERS' EQUITY (DEFICIENCY),
March 31, 2000 $ (488,804) $ 14,500,837 $ 14,012,033
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (389,176) $ (881,559)
Adjustments to reconcile net loss to net cash
used in operating activities:
Equity in loss of limited partnerships
and amortization of acquisition costs 602,500 644,000
Increase (decrease) in other assets (9,918) --
Increase (decrease) in:
Accounts payable and accrued expenses (32,885) (20,004)
Accrued fees due to partners 185,116 191,153
----------- -----------
Net cash provided by (used in) operating activities 355,637 (66,410)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from limited partnerships recognized as a 35,331 76,854
return of capital
Capital contributions (18,023) (17,646)
Increase (decrease) in restricted cash (2,861) (1,143)
----------- -----------
Net cash provided by investing activities 14,447 58,065
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 370,084 (8,345)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,296,513 515,522
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,666,597 $ 507,177
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 7
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The information contained in the following notes to the financial
statements is condensed from that which would appear in the annual audited
financial statements; accordingly, the financial statements included herein
should be reviewed in conjunction with the financial statements and related
notes thereto contained in the annual report for the year ended December
31, 1999 prepared by National Tax Credit Investors II (the "Partnership").
Accounting measurements at interim dates inherently involve greater
reliance on estimates than at year end. The results of operations for the
interim periods presented are not necessarily indicative of the results for
the entire year.
In the opinion of the Partnership, the accompanying unaudited financial
statements contain all adjustments (consisting primarily of normal
recurring accruals) necessary to present fairly the financial position as
of March 31, 2000 and the results of operations and changes in cash flows
for the three months then ended.
ORGANIZATION
The Partnership was formed under the California Revised Limited Partnership
Act on January 12, 1990. The Partnership was formed to invest primarily in
other limited partnerships ("Local Partnerships") which own and operate
multifamily housing complexes that are eligible for low income housing tax
credits. ("Tax Credits"). The general partner of the Partnership (the
"General Partner") is National Partnership Investments Corp. ("NAPICO"), a
California corporation. The special limited partner of the Partnership (the
"Special Limited Partner") is PaineWebber TC Partners, L.P., a Virginia
limited partnership.
The Partnership offered up to 100,000 units of limited partnership
interests ("Units") at $1,000 per Unit. The offering terminated on April
22, 1992, at which date a total of 72,404 Units had been sold amounting to
$72,404,000 in capital contributions. Offering expenses of $9,412,521 were
incurred in connection with the sale of such limited partner interests.
The General Partner has a one percent interest in operating profits and
losses of the Partnership. The limited partners will be allocated the
remaining 99 percent interest in proportion to their respective
investments.
The Partnership shall continue in full force and in effect until December
31, 2030 unless terminated earlier pursuant to the terms of its Amended and
Restated Agreement of Limited Partnership (a "Partnership Agreement") or
operation of law.
5
<PAGE> 8
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
METHOD OF ACCOUNTING FOR INVESTMENT IN LIMITED PARTNERSHIPS
The Partnership's investment in Local Partnerships are accounted for on the
equity method. Acquisition, selection and other costs related to the
Partnership's investments are capitalized and are being amortized on a
straight line basis over the estimated lives of the underlying assets,
which is generally 30 years.
NET LOSS PER LIMITED PARTNERSHIP INTEREST
Net loss per limited partnership interest was computed by dividing the
limited partners' share of net loss by the weighted average number of
limited partnership interests outstanding during the year. The weighted
average number of limited partner interests was 72,404 for the periods
presented.
CASH AND CASH EQUIVALENTS
The Partnership considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents.
INCOME TAXES
No provision has been made for income taxes in the accompanying financial
statements since such taxes, if any, are the responsibility of the
individual partners.
IMPAIRMENT OF LONG-LIVED ASSETS
The Partnership reviews long-lived assets to determine if there has been
any permanent impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable. If
the sum of the expected future cash flows is less than the carrying amount
of the assets, the Partnership recognizes an impairment loss.
6
<PAGE> 9
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in 37 local
partnerships (the "Local Partnerships"). As a limited partner of the Local
Partnerships, the Partnership does not have authority over day-to-day
management of the Local Partnerships or their properties (the "Apartment
Complexes"). The general partners responsible for management of the Local
Partnerships (the "Local Operating General Partners") are not affiliated
with the General Partner of the Partnership, except as discussed below.
At March 31, 2000, the Local Partnerships own residential projects
consisting of 3,716 apartment units.
The Partnership, as a limited partner, is generally entitled to 99 percent
of the operating profits and losses of the Local Partnerships. National Tax
Credit, Inc. II ("NTC-II") an affiliate of the General Partner, serves
either as a special limited partner or non-managing administrative general
partner in which case it receives .01 percent of operating profits and
losses of the Local Partnership, or as the Local Operating General Partner
of the Local Partnership in which case it is entitled to .09 percent of the
operating profits and losses of the Local Partnership.
The Partnership is generally entitled to receive 50 percent of the net cash
flow generated by the Apartment Complexes, subject to repayment of any
loans made to the Local Partnerships (including loans made by NTC-II or an
affiliate), repayment for funding of development deficit and operating
deficit guarantees by the Local Operating General Partners or their
affiliates (excluding NTC-II and its affiliates), and certain priority
payments to the Local Operating General Partners other than NTC-II or its
affiliates.
The Partnership's allocable share of losses from Local Partnerships are
recognized in the financial statements until the related investment account
is reduced to a zero balance. Losses incurred after the investment account
is reduced to zero will not be recognized.
Distributions received by the Partnership from the Local Partnerships are
accounted for as a return of capital until the investment balance is
reduced to zero or to a negative amount equal to further capital
contributions required. Subsequent distributions received will be
recognized as income.
The following is a summary of the investments in Local Partnerships for the
three months ended March 31, 2000:
Balance, beginning of period $16,153,744
Capital contributions 18,023
Equity in losses of limited partnerships (564,000)
Distributions recognized as a return of capital (35,331)
Amortization of capitalized acquisition costs and fees (38,500)
-----------
Balance, end of period $15,533,936
===========
NOTE 3 - RESTRICTED CASH
Restricted cash represents funds in escrow to be used, to fund operating
deficits, if any, of one of the Local Partnership, as defined in the Local
Partnership Agreement.
7
<PAGE> 10
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE 4 - CAPITAL CONTRIBUTIONS PAYABLE
Capital contributions payable represent amounts which are due at various
times based on conditions specified in the respective Local Partnership
agreements. The capital contributions payable unsecured and non-interest
bearing. These amounts are generally due upon the Local Partnership
achieving certain operating or financing benchmarks.
NOTE 5 - RELATED-PARTY TRANSACTIONS
Under the terms of its Partnership Agreement, the Partnership is obligated
to the General Partner and the Special Limited Partner for the following
fees:
(a) An annual Partnership management fee in an amount equal to 0.5 percent
of invested assets (as defined in the Partnership Agreement) is
payable to the General Partner and Special Limited Partner. For the
three months ended March 31, 2000 and 1999, approximately $185,000 and
$191,000, respectively, has been expensed. The unpaid balance at March
31, 2000 is approximately $3,481,325.
(b) A property disposition fee is payable to the General Partner in an
amount equal to the lesser of (i) one-half of the competitive real
estate commission that would have been charged by unaffiliated third
parties providing comparable services in the area where the apartment
complex is located, or (ii) 3 percent of the sale price received in
connection with the sale or disposition of the apartment complex or
local partnership interest, but in no event will the property
disposition fee and all amounts payable to affiliated real estate
brokers in connection with any such sale exceed in the aggregate, the
lesser of the competitive rate (as described above) or 6 percent of
such sale price. Receipt of the property disposition fee will be
subordinated to the distribution of sale or refinancing proceeds by
the Partnership until the limited partners have proceeds in an
aggregate amount equal to (i) their 6 percent priority return for any
year not theretofore satisfied (as defined in the Partnership
Agreement) and (ii) an amount equal to the aggregate adjusted
investment (as defined in the Partnership Agreement) of the limited
partners. No disposition fees have been paid.
(c) The Partnership reimburses NAPICO for certain expenses. For the three
months ended March 31, 2000 and 1999 there were no reimbursements to
NAPICO.
NTC II is the Local Operating General Partner in four of the Partnership's
37 Local Partnerships. In addition, NTC II is either a special limited
partner or an administrative general partner in each Local Partnership.
An affiliate of the General Partner is currently managing seven properties
owned by Local Partnerships. The Local Partnerships pay the affiliate
property management fees in the amount of 5 percent of their gross rental
revenues and data processing fees. The amounts paid were approximately
$45,000 and $36,000 for the three months ended March 31, 2000 and 1999,
respectively.
8
<PAGE> 11
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE 6 - CONTINGENCIES
The General Partner of the Partnership is involved in various lawsuits
arising from transactions in the ordinary course of business. In addition,
the Partnership was involved in the following lawsuit. In the opinion of
management and the General Partner, the claims will not result in any
material liability to the Partnership.
NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about Fair
Value of Financial Instruments," requires disclosure of fair value
information about financial instruments. The carrying amount of other
assets and liabilities reported on the balance sheets that require such
disclosure approximates fair value due to their short-term maturity.
9
<PAGE> 12
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
The Partnership raised $72,404,000 from investors by a public offering. The
Partnership's public offering ended April 22, 1992. The proceeds have been
used to invest in Local Partnerships which own and operate Apartment
Complexes that are eligible for Tax Credits.
It is not expected that any of the Local Partnerships in which the
Partnership invests will generate cash from operations sufficient to
provide distributions to the Limited Partners in any material amount. Such
cash from operations, if any, would first be used to meet operating
expenses of the Partnership. The Partnership's investments will not be
readily marketable and may be affected by adverse general economic
conditions which, in turn, could substantially increase the risk of
operating losses for the Apartment Complexes, the Local Partnerships and
the Partnership. These problems may result from a number of factors, many
of which cannot be controlled by the General Partner.
The Partnership does not have the ability to assess Limited Partners for
additional capital contributions to provide capital if needed by the
Partnership or Local Partnerships. Accordingly, if circumstances arise that
cause the Local Partnerships to require capital in addition to that
contributed by the Partnership and any equity of the local general
partners, the only sources from which such capital needs will be able to be
satisfied (other than the limited reserves available at the Partnership
level) will be (i) third-party debt financing (which may not be available
if, as expected, the Apartment Complexes owned by the Local Partnerships
are already substantially leveraged), (ii) other equity sources (which
could reduce the amount of Tax Credits being allocated to the Partnership,
adversely affect the Partnership's interest in operating cash flow and/or
proceeds of sale or refinancing of the Apartment Complexes and possibly
even result in adverse tax consequences to the Limited Partners), or (iii)
the sale or disposition of Apartment Complexes. There can be no assurance
that any of such sources would be readily available in sufficient
proportions to fund the capital requirements of the Local Partnerships. If
such sources are not available, the Local Partnerships would risk
foreclosure on their Apartment Complexes if they were unable to renegotiate
the terms of their first mortgages and any other debt secured by the
Apartment Complexes, which would have significant adverse tax consequences
to the Limited Partners.
Reserves of the Partnership and reserves of the Local Partnerships may be
increased or decreased from time to time by the General Partner or the
local general partner, as the case may be, in order to meet anticipated
costs and expenses. The amount of cash flow available for distributions
and/or sale as refinancing proceeds, if any, which is available for
distribution to the Limited Partners may be affected accordingly.
RESULTS OF OPERATIONS
The Partnership was formed to provide various benefits to its Limited
Partners. It is not expected that any of the Local Partnerships in which
the Partnership has invested will generate cash flow sufficient to provide
for distributions to Limited Partners in any material amount. The
Partnership accounts for its investments in the Local Partnerships on the
equity method, thereby adjusting its investment balance by its
proportionate share of the income or loss of the Local Partnerships.
10
<PAGE> 13
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
In general, in order to avoid recapture of Housing Tax Credits, the
Partnership does not expect that it will dispose of its Local Partnership
Interests or approve the sale by a Local Partnership of any Apartment
Complex prior to the end of the applicable 15-year Compliance Period.
Because of (i) the nature of the Apartment Complexes, (ii) the difficulty
of predicting the resale market for low-income housing 15 or more years in
the future, and (iii) the inability of the Partnership to directly cause
the sale of Apartment Complexes by local general partners, but generally
only to require such local general partners to use their respective best
efforts to find a purchaser for the Apartment Complexes, it is not possible
at this time to predict whether the liquidation of substantially all of the
Partnership's assets and the disposition of the proceeds, if any, in
accordance with the partnership agreement will be able to be accomplished
promptly at the end of the 15-year period. If a Local Partnership is unable
to sell an Apartment Complex, it is anticipated that the local general
partner will either continue to operate such Apartment Complex or take such
other actions as the local general partner believes to be in the best
interest of the Local Partnership. In addition, circumstances beyond the
control of the General Partner may occur during the Compliance Period which
would require the Partnership to approve the disposition of an Apartment
Complex prior to the end of the Compliance Period.
Except for interim investments in highly liquid debt investments, the
Partnership's investments are entirely interests in other Local
Partnerships owning Apartment Complexes. Funds temporarily not required for
such investments in projects are invested in these highly liquid debt
investments earning interest income as reflected in the statements of
operations. These interim investments can be easily converted to cash to
meet obligations as they arise.
The Partnership, as a Limited Partner in the Local Partnerships in which it
has invested, is subject to the risks incident to the construction,
management, and ownership of improved real estate. The Partnership
investments are also subject to adverse general economic conditions, and
accordingly, the status of the national economy, including substantial
unemployment and concurrent inflation, could increase vacancy levels,
rental payment defaults, and operating expenses, which in turn, could
substantially increase the risk of operating losses for the Apartment
Complexes.
The Partnership accounts for its investments in the local limited
partnerships on the equity method, thereby adjusting its investment balance
by its proportionate share of the income or loss of the Local Partnerships.
Distributions received from limited partnerships are recognized as return
of capital until the investment balance has been reduced to zero or to a
negative amount equal to future capital contributions required. Subsequent
distributions received are recognized as income.
11
<PAGE> 14
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
Operating expenses consist primarily of recurring general and
administrative expenses and professional fees for services rendered to the
Partnership. In addition, an annual partnership management fee in an amount
equal to 0.5 percent of invested assets is payable to the General Partner
and Special Limited Partner. The management fee represents the annual
recurring fee which will be paid to the General Partner for its continuing
management of Partnership affairs.
The Michigan Beach property, a 240-unit apartment complex located in
Chicago, Illinois, has been operating at a substantial deficit since 1996.
The deficit has been attributable to a soft local rental market, high
leverage and deferred maintenance. In November 1996, the local partnership
ceased making payments on its first mortgage, and has commenced
negotiations with the lender and the U.S. Department of Housing and Urban
Development, who insures the loan, in order to cure the default. During
1998, the loan was restructured through a Partial Payment of Claim ("PPC")
with HUD. As a result, the first mortgage balance was reduced from
approximately $5.25 million to $2.84 million. The interest rate was reduced
from 10.125% to 7.625%. The PPC also resulted in a new second mortgage of
approximately $3.56 million payable only from "surplus cash" or proceeds
from sale of the property. The PPC cured the aforementioned default.
However, as a result of the default and the legal proceedings discussed in
Item 3, the carrying value of the investment of $1,117,893 was written off
in 1996.
Foreclosure proceedings were commenced against the Paramount local
partnership in November 1998 and a receiver was appointed in May 1999. A
decree of foreclosure was entered in January 2000, although no foreclosure
sale has been set. The local partnership is exploring various alternatives
to satisfy its indebtedness. The Partnership has no investment balance
related to this local partnership.
Due to operating deficits, the Wade Walton local partnership which owns a
property in Clarksdale, Mississippi commenced a bankruptcy case in order to
reorganize under Chapter 11 of the United States Bankruptcy Code. The local
partnership has filed a reorganization plan which proposes to pay all
creditors in full. The Partnership has no investment balance related to
this local partnership.
The Partnership has received notification form the Internal Revenue Service
("IRS") in April, 1998, that the low income housing tax credits generated
during 1992 and 1993 by the Wedgewood Commons local partnership were
subject to recapture due to the local partnership's alleged failure to
properly comply with federal tax credit guidelines. The Partnership has
filed an administrative appeal of the IRS notification. As of the closed of
the reporting period, however, the IRS has indicated that it has closed the
audit and will not pursue adjustments to the low income housing tax credits
taken for the 1993 tax year.
12
<PAGE> 15
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 2000
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NTCI-II's General Partner is involved in various lawsuits. In addition, the
Partnership is involved in the following lawsuits arising from transactions in
the ordinary course of business. In the opinion of management and the General
Partner, these claims will not result in any material liability to the
Partnership.
Foreclosure proceedings were commenced against the Paramount local partnership
in November 1998 and a receiver was appointed in May 1999. The local partnership
is exploring various alternatives to satisfy its indebtedness.
The Wade Walton local partnership commenced proceedings under Chapter 11 of the
United States Bankruptcy Code on July 20, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are required per the provision of Item 6 of regulation S-K
and no reports on Form 8-K were filed during the quarter ended March 31,
2000.
13
<PAGE> 16
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
By: National Partnership Investments Corp.
General Partner
/s/ BRUCE NELSON
---------------------------------------
Bruce Nelson
President
Date: May 22, 2000
----------------------------------------
/s/ PAUL PATIERNO
---------------------------------------
Paul Patierno
Chief Financial Officer
Date: May 22, 2000
----------------------------------------
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,911,095
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,911,095
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,575,428
<CURRENT-LIABILITIES> 80,994
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,012,033
<TOTAL-LIABILITY-AND-EQUITY> 17,575,428
<SALES> 0
<TOTAL-REVENUES> 473,828
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 863,004
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (389,176)
<INCOME-TAX> 0
<INCOME-CONTINUING> (389,176)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (389,176)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
