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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF ---
1934
For the transition period from to ____________
-----------------
Commission file number: 0-24600
American Tax Credit Trust, a Delaware statutory business trust
Series I
(Exact name of Registrant as specified in its charter)
Delaware
06-6385350
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Richman American Credit Corp.
599 West Putnam Avenue, 3rd Floor
Greenwich, Connecticut 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 869-0900
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days. Yes X No .
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AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Table of Contents
Balance Sheets as of June 29, 1997 (Unaudited) and March 30, 1997 (Unaudited)...
Statements of Operations for the three months ended June 29, 1997 (Unaudited)
and June 29, 1996 (Unaudited).................................................
Statements of Cash Flows for the three months ended June 29, 1997 (Unaudited)
and June 29, 1996 (Unaudited).................................................
Notes to Financial Statements as of June 29, 1997 (Unaudited)...................
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
BALANCE SHEETS
JUNE 29, 1997 AND MARCH 30, 1997
(UNAUDITED)
June 29, March 30,
Notes 1997 1997
----- ------------ ------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 819,205 $ 830,290
Restricted cash 3 706,966 705,938
Investments in bonds available-for-sale 2 956,519 834,697
Investment in local partnerships 3 12,293,600 12,662,815
Interest receivable 14,958 12,611
Organization costs (less accumulated amortization
of $53,750 and $50,000) 21,250 25,000
------------ ------------
$ 14,812,498 $ 15,071,351
============ ============
LIABILITIES AND OWNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 27,900 $ 29,961
Payable to manager 311,449 312,863
Capital contributions payable 3 673,050 673,050
Interest payable 33,916 32,888
------------ ------------
1,046,315 1,048,762
Owners' equity (deficit)
Manager (25,812) (23,004)
Beneficial owners(18,654 units of beneficial ownership
interest outstanding) 13,832,815 14,110,830
Unrealized loss on investments in bonds 2 (40,820) (65,237)
available-for-sale, net ------------- ------------
13,766,183 14,022,589
$ 14,812,498 $ 15,071,351
============ ============
See Notes to Financial Statements.
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 29, 1997 AND 1996
(UNAUDITED)
Notes 1997 1996
----- -------------- ---------
<S> <C> <C> <C>
REVENUE
Interest $ 34,654 $ 42,055
----------- -----------
TOTAL REVENUE 34,654 42,055
------------ ------------
EXPENSES
Management fee 48,133 48,588
Professional fees 5,500 10,244
Printing, postage and other 8,717 3,758
Amortization 3,750 3,750
------------- -------------
TOTAL EXPENSES 66,100 66,340
------------ -------------
Loss from operations (31,446) (24,285)
Equity in loss of investment in local partnerships 3 (249,377) (157,726)
----------- -----------
NET LOSS $ (280,823) $ (182,011)
========== ==========
NET LOSS ATTRIBUTABLE TO
Manager $ (2,808) $ (1,820)
Beneficial owners (278,015) (180,191)
----------- -----------
$ (280,823) $ (182,011)
========== ==========
NET LOSS per unit of beneficial ownership interest
(18,654 units of beneficial ownership interest) $ (14.90) $ (9.66)
============ =============
See Notes to Financial Statements.
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 29, 1997 AND 1996
(UNAUDITED)
1997 1996
------------ --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 34,420 $ 43,308
Cash paid for
management fee (50,000) (25,000)
professional fees (10,000) (19,845)
printing, postage and other expenses (5,825) (4,868)
------------ -----------
Net cash used in operating activities (31,405) (6,405)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships 119,838
Investment in bonds, includes $282 of accrued interest paid
at purchase of investment (98,490)
Investment in a local partnership (454,650)
Transfer from (to) restricted cash (1,028) 453,313
---------- -----------
Net cash provided by (used in) investing activities 20,320 (1,337)
---------- -----------
Net decrease in cash and cash and cash equivalents (11,085) (7,742)
Cash and cash equivalents at beginning of period 830,290 569,008
---------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 819,205 $ 561,266
========= =========
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain (loss) on investments in bonds
available-for-sale, net $ 24,417 $ (25,128)
========== =========
- - --------------------------------------------------------------------------------------------
See reconciliation of net loss to net cash used in operating activities on page
6.
See Notes to Financial Statements.
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS - (Continued)
THREE MONTHS ENDED JUNE 29, 1997 AND 1996
(UNAUDITED)
1997 1996
-------------- ---------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING
ACTIVITIES
Net loss $ (280,823) $ (182,011)
Adjustments to reconcile net loss to net cash used in
operating activities
Equity in loss of investment in local partnerships 249,377 157,726
Amortization of organization costs 3,750 3,750
Amortization of net premium on investments in bonds 803 878
Decrease in accounts payable and accrued expenses (2,061) (10,711)
Increase in interest receivable, net of $282 of accrued
interest paid at purchase of investment in bonds (2,065) (962)
Increase (decrease) in payable to manager (1,414) 23,588
Increase in interest payable 1,028 1,337
------------- -------------
NET CASH USED IN OPERATING ACTIVITIES $ (31,405) $ (6,405)
=========== ============
See Notes to Financial Statements.
</TABLE>
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<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 1997
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. They do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. The results of operations are impacted significantly by the
combined results of operations of the Local Partnerships, which are provided
by the Local Partnerships on an unaudited basis during interim periods.
Accordingly, the accompanying financial statements are dependent on such
unaudited information. In the opinion of the Manager, the financial
statements include all adjustments necessary to present fairly the financial
position as of June 29, 1997 and the results of operations and cash flows
for the interim periods presented. All adjustments are of a normal recurring
nature. The results of operations for the three months ended June 29, 1997
are not necessarily indicative of the results that may be expected for the
entire year.
2. Investments in Bonds Available-For-Sale
As of June 29, 1997, certain information concerning investments in bonds
available-for-sale is as follows:
<S> <C> <C> <C> <C>
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair
value
Corporate debt securities
After five years through ten $ 463,435 $ 675 $ (14,484) $ 449,626
years
After ten years 533,904 -- (27,011) 506,893
------------- ----------------------------- ------------
$ 997,339 $ 675 $ (41,495) $ 956,519
============= ============ ============= ============
</TABLE>
3. Investment in Local Partnerships
The Trust owns a 98.9%-99% limited partnership interest in ten Local
Partnerships representing capital contributions in the aggregate amount of
$14,761,041, of which the Trust has paid $14,087,991 and $673,050 are
outstanding as of June 29, 1997. Restricted cash in the accompanying balance
sheet as of June 29, 1997 represents such outstanding capital contributions
along with accrued interest of $33,916 on an outstanding capital
contribution. The outstanding capital contributions are payable in
installments upon each Local Partnership's satisfaction of specified
conditions related to construction and/or operations. As of March 31, 1997,
the Local Partnerships have outstanding mortgage and construction loans
payable totaling approximately $23,369,000 and accrued interest payable on
such loans totaling approximately $628,000, which are secured by security
interests and liens common to mortgage and construction loans on the Local
Partnerships' real property and other assets.
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<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1997
(UNAUDITED)
3. Investment in Local Partnerships (continued)
For the three months ended June 29, 1997, the investment in Local
Partnerships activity consists of the following:
<S> <C>
Investment in Local Partnerships as of March $ 12,662,815
30, 1997
Equity in loss of investment in Local
Partnerships for the three months ended (249,377)
March 31, 1997
Cash distributions received from Local
Partnerships during the three months ended (119,838)
June 29, 1997
Investment in Local Partnerships as of June $ 12,293,600
============
29, 1997
</TABLE>
The combined unaudited balance sheets of the Local Partnerships as of March
31, 1997 and December 31, 1996 and the combined unaudited statements of
operations of the Local Partnerships for the three months ended March 31,
1997 and 1996 are reflected on pages 9 and 10, respectively.
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<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1997
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of March 31, 1997
and December 31, 1996 are as follows:
March 31, December 31,
1997 1996
---------------------------
<S> <C> <C>
ASSETS
Cash and other investments $ 875,841 $ 515,352
Rental receivable 42,704 47,816
Capital contributions receivable 673,050 1,073,050
Escrow deposits and reserves 1,226,407 1,151,896
Land 1,267,153 1,267,153
Buildings and improvements (net of accumulated depreciation
of $3,089,094 and $2,760,074) 33,786,049 34,109,040
Intangible assets (net of accumulated amortization of $80,684 402,707 412,240
and $71,151)
Other 252,599 243,968
-------------- --------------
$38,526,510 $ 38,820,515
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 419,472 $ 372,568
Due to related parties 1,234,807 1,343,366
Mortgage and construction loans 23,369,396 23,410,498
Note payable 100,000 100,000
Accrued interest 628,445 556,684
Other 328,653 338,544
------------- -------------
26,080,773 26,121,660
Partners' equity
American Tax Credit Trust, Series I
Capital contributions, net of distributions (includes
receivable of $673,050 and $1,073,050) 14,758,041 14,758,041
Cumulative loss (2,344,603) (2,095,226)
------------ ------------
12,413,438 12,662,815
General partners and other limited partners
Capital contributions, net of distributions 283,505 284,686
Cumulative loss (251,206) (248,646)
------------- -------------
32,299 36,040
--------------- ---------------
12,445,737 12,698,855
$ 38,526,510 $ 38,820,515
============ ============
</TABLE>
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<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1997
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
three months ended March 31, 1997 and 1996 are as follows:
1997 1996
--------------------------
<S> <C> <C>
REVENUE
Rental $ 921,802 $ 813,246
Interest and other 35,808 21,612
-------------- --------------
TOTAL REVENUE 957,610 834,858
------------- -------------
EXPENSES
Administrative 167,090 140,354
Utilities 148,914 104,325
Operating, maintenance and other 178,126 144,469
Taxes and insurance 128,539 96,073
Interest (including amortization of $9,533 and $7,033) 257,858 233,909
Depreciation 329,020 275,087
------------- -------------
TOTAL EXPENSES 1,209,547 994,217
------------ -------------
NET LOSS $ (251,937) $ (159,359)
============ ============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Trust, Series I $ (249,377) $ (157,726)
General partners and other limited partners (2,560) (1,633)
-------------- --------------
$ (251,937) $ (159,359)
============ ============
</TABLE>
The combined results of operations of the Local Partnerships for the three
months ended March 31, 1997 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, 1997 Financial
Statements and the Organization, Purpose and Summary of Significant
Accounting Policies, is included in the Trust's Annual Report on Form 10-K
for the fiscal year ended March 30, 1997 on file with the Securities and
Exchange Commission.
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AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Material Changes in Financial Condition
As of June 29, 1997, Registrant has not experienced a significant change in
financial condition as compared to March 30, 1997. Principal changes in assets
are comprised of periodic transactions and adjustments and anticipated equity in
loss from operations of the Local Partnerships. During the three months ended
June 29, 1997, Registrant received cash from interest earnings 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 $111,000 during the three months ended June 29,
1997, which increase includes a net unrealized gain recorded on investments in
bonds of approximately $24,000 and the amortization of net premium on
investments in bonds of approximately $1,000. During the three months ended June
29, 1997, 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 31, 1997 of $249,377 and cash distributions received from Local
Partnerships of $119,838. Payable to manager represents deferred management
fees.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States. The
rents of the Properties, certain of which receive rental subsidy payments,
including payments under Section 8 of Title II of the Housing and Community
Development Act of 1974 ("Section 8"), are subject to specific laws, regulations
and agreements with federal and state agencies. The subsidy agreements expire at
various times during and after the Compliance Periods of the Local Partnerships.
United States Department of Housing and Urban Development ("HUD") has issued
notices which implement provisions to renew certain project based Section 8
contracts expiring during HUD's fiscal year 1997, where requested by an owner,
for an additional one year term generally at or below current rent levels,
subject to certain guidelines. HUD has an additional program which, in general,
provides for restructuring rents and/or mortgages where rents may be adjusted to
market levels and mortgage terms may be adjusted based on the reduction in
rents, although there may be instances in which only rents, but not mortgages,
are restructured. 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. Two Local
Partnerships' Section 8 contracts, which cover certain rental units, are
scheduled to expire in 1997, one of which expired during 1996 and was extended
for one year. In addition, the Local Partnerships have various financing
structures which include (i) required debt service payments ("Mandatory Debt
Service") and (ii) debt service payments which are payable only from available
cash flow subject to the terms and conditions of the notes, which may be subject
to specific laws, regulations and agreements with appropriate federal and state
agencies ("Non-Mandatory Debt Service or Interest"). In the event rents are not
sufficient to cover operating expenses and Mandatory Debt Service requirements
and other charges, 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, 1997, revenue from operations, Local
General Partner advances and reserves of the Local Partnerships have generally
been sufficient to cover the operating expenses and Mandatory Debt Service. All
of the Local Partnerships have achieved full operational status and
substantially all of the Local Partnerships are effectively operating at or near
breakeven levels, although certain Local Partnerships' accounting 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.
Results of Operations
Registrant's operating results are dependent upon the operating results of the
Local Partnerships and are significantly impacted by the Local Partnerships'
policies. In addition, the operating results herein are not necessarily the same
for tax reporting. Registrant accounts for its investment in Local Partnerships
in accordance with the equity method of accounting, under which the investment
is carried at cost which includes capital contributions payable, and is adjusted
for Registrant's share of the Local
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AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Partnership's results of operations and by any cash distributions received.
Equity in loss of each investment in Local Partnership allocated to Registrant
is recognized to the extent of Registrant's investment balance in each Local
Partnership. Any equity in loss in excess of Registrant's investment balance in
a Local Partnership is allocated to other partners' capital in each such Local
Partnership. As a result, the 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, regardless of
Registrant's investment balances.
Three Months Ended June 29, 1997
For the three months ended June 29, 1997, Registrant had a net loss of
approximately $281,000, which included an equity in loss of investment in Local
Partnerships of approximately $249,000 for the three months ended March 31,
1997. Registrant's loss from operations for the three months ended June 29, 1997
of approximately $31,000 was attributable to interest revenue of approximately
$35,000, exceeded by operating expenses of approximately $62,000 and
amortization of organization costs of approximately $4,000.
The Local Partnerships' net loss of approximately $252,000 for the three months
ended March 31, 1997 was attributable to rental and other revenue of
approximately $958,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $871,000 and approximately $339,000 of
depreciation and amortization expenses.
Three Months Ended June 29, 1996
For the three months ended June 29, 1996, Registrant had a net loss of
approximately $182,000, which included an equity in loss of investment in Local
Partnerships of approximately $158,000 for the three months ended March 31,
1996. Registrant's loss from operations for the three months ended June 29, 1996
of approximately $24,000 was attributable to interest revenue of approximately
$42,000, exceeded by operating expenses of approximately $62,000 and
amortization of organization costs of approximately $4,000.
The Local Partnerships' net loss of approximately $159,000 for the three months
ended March 31, 1996 was attributable to rental and other revenue of
approximately $835,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $712,000 and approximately $282,000 of
depreciation and amortization expenses. As a result of ongoing development and
construction, as of March 31, 1996, one Local Partnership had not commenced
rental operations.
Three Months Ended June 29, 1997 v.
Three Months Ended June 29, 1996
Registrant's operations for the three months ended June 29, 1997 resulted in a
net loss of approximately $281,000 as compared to a net loss of approximately
$182,000 for the three months ended June 29, 1996. The increase in net loss is
primarily attributable to an increase in equity in loss of investment in Local
Partnerships of approximately $92,000. The increase in equity in loss of
investment in Local Partnerships is primarily a result of more Local
Partnerships experiencing full operations.
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AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
<PAGE>
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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.
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust,
Series I
By: Richman American Credit Corp.,
The Manager
Dated: August 13, 1997 /s/ Richard Paul Richman
--------------- ------------------------
Richard Paul Richman
President, Chief Executive
Officer and Director of the Manager
Dated: August 13, 1997 /s/ Neal Ludeke
--------------- ---------------
Neal Ludeke
Vice President and
Treasurer of the Manager
(Principal Financial and Accounting
Officer of The Trust)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the quarter ended June 29, 1997 Form 10Q Balance Sheets and
Statements of Operations and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000897315
<NAME> American Tax Credit Trust
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-30-1998
<PERIOD-START> MAR-31-1997
<PERIOD-END> JUN-29-1997
<EXCHANGE-RATE> 1.00
<CASH> 819
<SECURITIES> 957
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,812
<CURRENT-LIABILITIES> 1,046
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,812
<SALES> 0
<TOTAL-REVENUES> 35
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (66)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (280)
<INCOME-TAX> 0
<INCOME-CONTINUING> (280)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (280)
<EPS-PRIMARY> (15.00)
<EPS-DILUTED> 0
</TABLE>
