UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the fiscal year
ended March 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 ____________
0-24600
(Commission File Number)
American Tax Credit Trust, a Delaware statutory business trust
Series I
(Exact name of registrant as specified in its governing instruments)
Delaware 06-6385350
(State or other jurisdiction of organization)(I.R.S.Employer 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
--------------
Securities registered pursuant to Section 12(b) of the Act:
None None
(Title of each Class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
Units of Beneficial Ownership Interest
- --------------------------------------------------------------------------------
(Title of Class)
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 such filing
requirement for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in a definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
Registrant has no voting stock.
Documents incorporated by reference:
Part I - pages 11 through 21 and 30 through 48 of the prospectus dated
September 7, 1993, as supplemented by Supplement No. 1, Supplement No. 2,
Supplement No. 3 and Supplement No. 4 dated September 7, 1993,
November 16, 1993, November 23, 1994 and December 28, 1994, respectively,
filed pursuant to Rule 424(b)(3) under the Securities Act of 1933.
<PAGE>
PART I
Item 1. Business
Formation
American Tax Credit Trust, a Delaware statutory business trust (the "Trust"),
was formed on February 4, 1993 to invest primarily in leveraged low-income
multifamily residential complexes (the "Property" or "Properties") which qualify
for the low-income tax credit established by Section 42 of the Internal Revenue
Code (the "Low-income Tax Credit"), through the acquisition of limited
partnership equity interests in partnerships (the "Local Partnership" or "Local
Partnerships") that are the owners of the Properties. The Trust considers its
activity to constitute a single industry segment.
Richman American Credit Corp. (the "Manager"), a Delaware corporation, was
formed on April 5, 1993, under Chapter 1, Title 8 of the Delaware Code, to act
as the manager of the Trust. The Manager is wholly-owned by Richard Paul Richman
and is an affiliate of The Richman Group, Inc. ("Richman Group"), a Delaware
corporation founded by Richard Paul Richman in 1988.
The Amendment No. 4 to the Registration Statement on Form S-11 was filed with
the Securities and Exchange Commission (the "Commission") on August 25, 1993
pursuant to the Securities Act of 1933 under Registration Statement No. 33-58032
and was declared effective on August 26, 1993. Reference is made to the
prospectus dated September 7, 1993, as supplemented by Supplement No. 1,
Supplement No. 2, Supplement No. 3 and Supplement No. 4 dated September 7, 1993,
November 16, 1993, November 23, 1994 and December 28, 1994, respectively, filed
with the Commission pursuant to Rule 424(b)(3) under the Securities Act of 1933
(the "Prospectus"). Pursuant to Rule 12b-23 of the Commission's General Rules
and Regulations promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the description of Registrant's business set forth
under the heading "Investment Objectives and Policies" at pages 30 through 48 of
the Prospectus is incorporated herein by reference.
On September 13, 1993, the Trust commenced, through Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") and PaineWebber Incorporated
("PaineWebber"), the offering of up to 150,000 units of beneficial ownership
interest ("Unit") at $1,000 per Unit to beneficial owners ("Beneficial Owners")
in from one to twenty series (each a "Series"). This filing is presented for
Series I only and as used herein, the term Registrant refers to Series I of the
Trust. On November 29, 1993, January 28, 1994 and May 25, 1994 the closings for
8,460, 4,909 and 5,285 Units, respectively, took place, amounting to aggregate
Beneficial Owners' capital contributions of $18,654,000.
Competition
Pursuant to Rule 12b-23 of the Commission's General Rules and Regulations
promulgated under the Exchange Act, the description of Registrant's competition,
general risks, tax risks and partnership risks set forth under the heading "Risk
Factors" at pages 11 through 21 of the Prospectus is incorporated herein by
reference.
Employees
Registrant employs no personnel and incurs no payroll costs. All management
activities of Registrant are conducted by the Manager. An affiliate of the
Manager employs individuals who perform the management activities of Registrant.
This entity also performs similar services for other affiliates of the Manager.
<PAGE>
Item 1. Business (continued)
Tax Reform Act of 1986, Revenue Act of 1987, Technical and Miscellaneous Revenue
Act of 1988, Omnibus Budget Reconciliation Act of 1989, Omnibus Budget
Reconciliation Act of 1990, Tax Extension Act of 1991, Omnibus Budget
Reconciliation Act of 1993, Uruguay Round Agreements Act and Taxpayer Relief Act
of 1997 (collectively the "Tax Acts")
Registrant is organized as a limited partnership and is a "pass through" tax
entity which does not, itself, pay Federal income tax. However, the owners of
Registrant who are subject to Federal income tax may be affected by the Tax
Acts. Registrant will consider the effect of certain aspects of the Tax Acts on
the owners when making decisions regarding its investments. Registrant does not
anticipate that the Tax Acts will currently have a material adverse impact on
Registrant's business operations, capital resources and plans or liquidity.
Item 2. Properties
The executive offices of Registrant and the Manager are located at 599 West
Putnam Avenue, 3rd floor, Greenwich, Connecticut 06830. Registrant does not own
or lease any properties. Registrant pays no rent; all charges for leased space
are borne by an affiliate of the Manager.
Registrant's primary objective is to provide Low-income Tax Credits to
Beneficial Owners generally over a ten year period. The relevant state tax
credit agency has allocated each of Registrant's Local Partnerships an amount of
Low-income Tax Credits, which are generally available for a ten year period
from the year the Property is placed in service. 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,
1997, none of the Local Partnerships have suffered an event of recapture of
Low-income Tax Credits.
Certain 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") (see descriptions of subsidies on page 4). 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") has been given 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. HUD
has additional programs which, in general, provide 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. One Local Partnership's Section 8 contract, which covers
certain rental units, is scheduled to expire in September 1998.
Registrant owns a 98.9%-99% limited partnership interest ("Local Partnership
Interest") in ten Local Partnerships reflected on the following page.
<PAGE>
<TABLE>
<CAPTION>
Item 2. Properties (continued)
Capital contribution
obligation
------------------------------ Mortgage
Name of Local Partnership Number Total as of Paid through loans payable as of Subsidy
Name of apartment complex of rental March 30, March 30, December 31, (see
Apartment complex location units 1998 1998 1997 footnotes)
----------------------------- ----------- ------------- -------------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
ACP Housing Associates, L.P.
ACP Housing Apartments
New York, New York 28 $ 737,222 $ 737,222 $ 1,507,629 (1b)
Creative Choice Homes VII, Ltd.
Coral Gardens Apartments
Homestead, Florida 91 2,382,812 2,382,812 2,155,841 (1a)
Edgewood Manor Associates, L.P.
Edgewood Manor Apartments
Philadelphia, Pennsylvania 49 1,963,799 1,963,799 1,858,934 (1b)
Ledge / McLaren Limited Partnership
Ledge / McLaren Apartments
Nashua, New Hampshire 8 343,079 343,079 460,811 (1b)
Penn Apartment Associates
Penn Apartments
Chester, Pennsylvania 15 852,180 852,180 963,000 (1b)
SB-92 Limited Partnership
Shaker Boulevard Apartments
Cleveland, Ohio 73 795,255 795,255 2,102,720 (1b)
St. Christopher's Associates, L.P. V
Lehigh Park Apartments
Philadelphia, Pennsylvania 29 2,075,785 1,998,985 2,180,000 (1b)
St. John Housing Associates, L.P.
St. John Homes
Gary, Indiana 144 3,546,861 3,546,861 4,564,538 (1a & c)
Starved Rock - LaSalle Manor
Limited Partnership
LaSalle Manor
LaSalle, Illinois 48 634,327 327,894 2,098,314 (1a)
Vision Limited Dividend Housing
Association Limited Partnership
Helen Odean Butler Apartments
Detroit, Michigan 97 1,429,721 1,139,904 5,464,930 (1b)
----------- ----------- -----------
$14,761,041 $14,087,991 $23,356,717
=========== =========== ===========
</TABLE>
(1) Description of Subsidies:
(a) Section 8 of Title II of the Housing and Community Development
Act of 1974 allows qualified low-income tenants to pay thirty
percent of their monthly income as rent with the balance paid by
the federal government.
(b) The Local Partnership's debt structure includes a principal
or interest payment subsidy.
(c) One of the Local Partnership's Section 8 contracts, which covers
certain rental units, is scheduled to expire in September 1998.
<PAGE>
Item 3. Legal Proceedings
Registrant is not aware of any material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of the Beneficial Owners of Registrant
during the fourth quarter of the fiscal year covered by this report.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity
and Related Security Holder Matters
Market Information and Holders
There is no established public trading market for Registrant's Units.
Accordingly, accurate information as to the market value of a Unit at any given
date is not available. The number of Beneficial Owners of Units as of May 21,
1998 was 979, holding 18,654 Units.
Merrill Lynch and PaineWebber follow internal guidelines for providing estimated
values of limited partnerships and other direct investments reported on client
account statements. Pursuant to such guidelines, estimated values reported on
Merrill Lynch and PaineWebber client account statements (such as Registrant's
Units) are separately provided to Merrill Lynch and PaineWebber by independent
valuation services. These estimated values are based on financial and other
information available to the independent services (1) on the prior August 15th
for reporting on December year-end and subsequent client account statements
through the following May month-end client account statements and (2) on the
prior March 31st for reporting on June through November month-end client account
statements of the same year. Merrill Lynch and PaineWebber clients may contact
their respective financial consultants or telephone the number provided to them
on their account statements to obtain a general description of the methodology
used by the independent valuation services to determine their estimates of
value. In addition, Registrant may provide an estimate of value to Unit holders
from time to time in Registrant's reports to Beneficial Owners. The estimated
values provided by the independent services and Registrant, which may differ,
are not market values and Unit holders may not be able to sell their Units or
realize either amount upon a sale of their Units. In addition, Unit holders may
not realize such estimated values upon the liquidation of Registrant's assets
over its remaining life.
Distributions
Registrant owns a limited partnership interest in Local Partnerships that are
the owners of Properties which are leveraged and receive government assistance
in various forms of rental and debt service subsidies. The distribution of cash
flow generated by the Local Partnerships may be restricted, as determined by
each Local Partnership's financing and subsidy agreements. Accordingly,
Registrant does not anticipate that it will provide significant annual cash
distributions to its owners. There were no cash distributions to the owners
during the years ended March 30, 1998 and 1997.
Low-income Tax Credits, which are subject to various limitations, may be used by
Beneficial Owners to offset Federal income tax liabilities. The Low-income Tax
Credits per Unit for each of the three closings, generated by Registrant and
allocated to the Beneficial Owners for the tax years ended December 31, 1997 and
1996 and the cumulative Low-income Tax Credits allocated from inception through
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
First closing Second closing Third closing
November 29, 1993 January 28, 1994 May 25, 1994
----------------- ---------------- -------------
<S> <C> <C> <C>
Low-income Tax Credits:
- ----------------------
Tax year ended December 31, 1997 $ 138.81 $ 138.81 $ 138.81
Tax year ended December 31, 1996 134.10 134.10 134.10
Cumulative totals $ 421.14 $ 418.96 $ 406.44
</TABLE>
Notwithstanding future circumstances which may give rise to recapture or loss of
future benefits (see Part I, Item 2 - Properties, herein), Registrant expects to
generate total Low-income Tax Credits from investments in Local Partnerships of
approximately $1,410 per Unit through December 31, 2006.
<PAGE>
Item 6. Selected Financial Data
The information set forth below presents selected financial data of Registrant.
Additional detailed financial information is set forth in the audited financial
statements included under Part II, Item 8 herein.
<TABLE>
<CAPTION>
November 29, 1993
Years Ended March 30, (Commencement of
------------------------------------------------------------------ Operations) to
1998 1997 1996 1995 March 30, 1994
------------- ------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Interest revenue $ 141,902 $ 156,201 $ 268,044 $ 250,570 $ 5,148
============= ============= ============= ============= ===========
Equity in loss of
investment in local
partnerships $ (1,023,224) $ (1,070,651) $ (590,457) $ (391,691) $ (42,427)
============= ============= ============= ============= ===========
Net loss $ (1,119,287) $ (1,170,580) $ (590,132) $ (387,896) $ (161,847)
============= ============= ============= ============= ===========
Net loss per unit of
beneficial ownership
interest * $ (59.40) $ (62.12) $ (31.32) $ (21.52) $ (14.66)
============= ============= ============= ============= ===========
* Net loss per unit of beneficial ownership interest was based upon 18,654 Units
for the years ended March 30, 1998, 1997 and 1996 and upon a weighted average
number of Units of 17,843 and 10,935 for the year ended March 30, 1995 and for
the period ended March 30, 1994, respectively.
As of March 30,
------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- ------------- ------------- ------------- -------------
Total assets $ 14,089,314 $ 15,071,351 $ 17,438,812 $ 19,721,810 $ 5,427,860
============= ============= ============= ============= =============
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
As used herein, the term Registrant refers to Series I of American Tax Credit
Trust, a Delaware statutory business trust, (the "Trust"). References to any
right, obligation, action, asset or liability of Series I means such right,
obligation, action, asset or liability of the Trust in respect or on behalf of
Series I.
Capital Resources and Liquidity
Registrant admitted beneficial owners (the "Beneficial Owners") in three
closings with aggregate Beneficial Owners' capital contributions of $18,654,000.
In connection with the offering of the sale of units of beneficial ownership,
Registrant incurred organization and offering costs of approximately $2,331,000
and established a working capital reserve of approximately $1,287,000. The
remaining net proceeds of approximately $15,036,000 (the "Net Proceeds") were
available to be applied to the acquisition of limited partnership interests in
local partnerships (the "Local Partnerships") which own low-income multifamily
residential complexes (the "Property" or "Properties") which qualify for the
low-income tax credit under Section 42 of the Internal Revenue Code (the
"Low-income Tax Credit"). Any adjustments to the capital contributions made by
Registrant to the Local Partnerships under the terms of the Local Partnerships'
partnership agreements have resulted in an adjustment to Registrant's working
capital reserve. Registrant has utilized the Net Proceeds, after making any
necessary adjustments, in acquiring an interest in ten Local Partnerships.
Restricted cash in the balance sheet as of March 30, 1998 represents outstanding
capital contributions payable to Local Partnerships and accrued interest on an
outstanding capital contribution. The outstanding capital contributions are
payable in installments upon each Local Partnership's satisfaction of specified
conditions related to operations.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
As of March 30, 1998, Registrant has unrestricted cash and cash equivalents and
investments in bonds totaling $1,836,830, which is available for operating
expenses of Registrant and circumstances which may arise in connection with the
Local Partnerships. As of March 30, 1998, Registrant's investments in bonds
represent corporate bonds of $999,656 with various maturity dates ranging from
2003 to 2016. Registrant acquired such investments in bonds with the intention
of utilizing proceeds generated by such investments to meet its annual
obligations. Future sources of Registrant funds are expected primarily from
interest earned on working capital and limited cash distributions from Local
Partnerships.
During the year ended March 30, 1998, Registrant received cash from interest
revenue and distributions from Local Partnerships and utilized cash for
operating expenses and investments in bonds. Cash and cash equivalents and
investments in bonds available-for-sale increased, in the aggregate, by
approximately $172,000 during the year ended March 30, 1998 (which included a
net unrealized gain on investments in bonds of approximately $70,000).
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 year ended March 30, 1998, the investment in Local Partnerships
decreased as a result of Registrant's equity in the Local Partnerships' net loss
for the year ended December 31, 1997 of $1,023,224 and cash distributions
received from Local Partnerships of $124,338. Payable to manager in the
accompanying balance sheet as of March 30, 1998 represents accrued 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 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. As of March 30, 1998, no investment in any Local Partnership has reached a
zero balance.
Registrant's operations for the years ended March 30, 1998, 1997 and 1996
resulted in net losses of $1,119,287, $1,170,580 and $590,132, respectively. The
operations of Registrant and the Local Partnerships were consistent between 1997
and 1998. The increase in net loss from 1996 to 1997 is primarily attributable
to an increase in equity in loss of investment in Local Partnerships of
approximately $480,000 as a result of certain Local Partnerships, which were
previously in rent-up, having achieved full operations and a decrease in
interest revenue of Registrant of approximately $112,000 as a result of
Registrant's utilization of Net Proceeds for making capital contributions to
Local Partnerships in 1996.
The Local Partnerships' net loss of approximately $1,032,000 for the year ended
December 31, 1997 includes depreciation and amortization expense of
approximately $1,439,000 and interest on non-mandatory debt of approximately
$309,000, and does not include principal payments on permanent mortgages and
construction loans of approximately $330,000. The Local Partnerships' net loss
of approximately $1,082,000 for the year ended December 31, 1996 includes
depreciation and amortization expense of approximately $1,337,000 and interest
on non-mandatory debt of approximately $266,000, and does not include principal
payments on permanent mortgages and construction loans of approximately
$786,000. The Local Partnerships' net loss of approximately $657,000 for the
year ended December 31, 1995 includes depreciation and amortization expense of
approximately $910,000 and interest on non-mandatory debt of approximately
$105,000, and does not include principal payments on permanent mortgages and
construction loans of approximately $90,000. The results of operations of the
Local Partnerships for the year ended December 31, 1997 are not necessarily
indicative of the results that may be expected in future periods.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Local Partnership Matters
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
pursuant to subsidy agreements ("HAP Contracts"), are subject to specific laws,
regulations and agreements with federal and state agencies. One Local
Partnership's HAP Contract, which covers certain rental units, is scheduled to
expire in September 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 a local
partnership (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
year ended December 31, 1997, revenue from operations 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 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 any required deferral of property management fees.
Inflation
Inflation is not expected to have a material adverse impact on Registrant's
operations during its period of ownership of the Local Partnership Interests.
Adoption of Accounting Standard
Registrant has adopted Statement of Financial Accounting Standard ("SFAS")
No. 128, "Earnings Per Share" and SFAS No. 129, "Disclosure of Information about
Capital Structure." SFAS No. 128 establishes standards for computing and
presenting earnings per share. SFAS No. 129 requires the disclosure in summary
form within the financial statements of the pertinent rights and privileges of
the various securities outstanding. The adoption of SFAS Nos. 128 and 129 has
not materially impacted Registrant's reported earnings, financial condition,
cash flows or presentation of the financial statements.
Accounting Standard not yet Adopted
On March 31, 1998, Registrant adopted 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 is not expected to have a material impact on Registrant's financial position
and results of operations.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Item 8. Financial Statements and Supplementary Data
Table of Contents
Independent Auditors' Report
Balance Sheets as of March 30, 1998 and 1997
Statements of Operations for the years ended March 30, 1998, 1997 and 1996
Statements of Changes in Owners' Equity (Deficit) for the years ended March 30,
1998, 1997 and 1996
Statements of Cash Flows for the years ended March 30, 1998, 1997 and 1996
Notes to Financial Statements as of March 30, 1998, 1997 and 1996
No financial statement schedules are included because of the absence of the
conditions under which they are required or because the information is included
in the financial statements or the notes thereto.
<PAGE>
Independent Auditors' Report
To the Manager and Beneficial Owners
American Tax Credit Trust,
a Delaware statutory business trust Series I
We have audited the accompanying balance sheets of American Tax Credit
Trust, a Delaware statutory business trust Series I as of March 30, 1998 and
1997, and the related statements of operations, changes in owners' equity
(deficit) and cash flows for each of the three years in the period ended March
30, 1998. These financial statements are the responsibility of the trust's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of American Tax Credit
Trust, a Delaware statutory business trust Series I as of March 30, 1998 and
1997, and the results of its operations and its cash flows for each of the three
years in the period ended March 30, 1998, in conformity with generally accepted
accounting principles.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
May 11, 1998
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
BALANCE SHEETS
MARCH 30, 1998 AND 1997
Notes 1998 1997
----- ------------- ------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents 3,9 $ 837,174 $ 830,290
Restricted cash 3,5,9 711,505 705,938
Investments in bonds available-for-sale 4,9 999,656 834,697
Investment in local partnerships 5,8 11,515,253 12,662,815
Interest receivable 9 15,726 12,611
Organization costs (less accumulated amortization of
$65,000 and $50,000) 2 10,000 25,000
------------ ------------
$ 14,089,314 $ 15,071,351
============ ============
LIABILITIES AND OWNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 22,500 $ 29,961
Payable to manager 6,8 381,682 312,863
Capital contributions payable 5,9 673,050 673,050
Interest payable 5,9
38,455 32,888
------------ ------------
1,115,687 1,048,762
------------ ------------
Commitments and contingencies 5,8
Owners' equity (deficit) 2,4
Manager (34,197) (23,004)
Beneficial owners (18,654 units of beneficial ownership interest
outstanding) 13,002,736 14,110,830
Unrealized gain (loss) on investments in bonds available-for-sale, net 5,088 (65,237)
------------ ------------
12,973,627 14,022,589
------------ ------------
$ 14,089,314 $ 15,071,351
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 30, 1998, 1997 AND 1996
Notes 1998 1997 1996
----- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Interest $ 141,902 $ 156,201 $ 268,044
----------- ----------- ------------
TOTAL REVENUE 141,902 156,201 268,044
----------- ----------- ------------
EXPENSES
Management fee 6,8 193,819 194,348 195,490
Professional fees 16,477 30,566 30,907
Printing, postage and other 12,669 16,216 26,322
Amortization 15,000 15,000 15,000
----------- ----------- ------------
TOTAL EXPENSES 237,965 256,130 267,719
----------- ----------- ------------
Income (loss) from operations (96,063) (99,929) 325
Equity in loss of investment in local
partnerships 5 (1,023,224) (1,070,651) (590,457)
----------- ----------- ------------
NET LOSS $(1,119,287) $(1,170,580) $ (590,132)
=========== =========== ============
NET LOSS ATTRIBUTABLE TO 2
Manager $ (11,193) $ (11,706) $ (5,901)
Beneficial owners (1,108,094) (1,158,874) (584,231)
----------- ----------- ------------
$(1,119,287) $(1,170,580) $ (590,132)
=========== =========== ============
NET LOSS per unit of beneficial ownership
interest (18,654 units of beneficial
ownership interest) $ (59.40) $ (62.12) $ (31.32)
============ ============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CHANGES IN OWNERS' EQUITY (DEFICIT)
YEARS ENDED MARCH 30, 1998, 1997 AND 1996
Unrealized Gain
(Loss) on
Investments in
Bonds
Beneficial Available-For-Sale,
Manager Owners Net Total
------------ --------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Owners' equity (deficit), March 30, 1995 $ (5,397) $ 15,853,935 $ 403 $ 15,848,941
Net loss (5,901) (584,231) (590,132)
Unrealized loss on investments in bonds
available-for-sale, net (44,816) (44,816)
------------ ------------ --------------- ------------
Owners' equity (deficit), March 30, 1996 (11,298) 15,269,704 (44,413) 15,213,993
Net loss (11,706) (1,158,874) (1,170,580)
Unrealized loss on investments in bonds
available-for-sale, net (20,824) (20,824)
------------ ------------ --------------- ------------
Owners' equity (deficit), March 30, 1997 (23,004) 14,110,830 (65,237) 14,022,589
Net loss (11,193) (1,108,094) (1,119,287)
Unrealized gain on investments in bonds
available-for-sale, net 70,325 70,325
------------ ------------ --------------- ------------
Owners' equity (deficit), March 30, 1998 $ (34,197) $ 13,002,736 $ 5,088 $ 12,973,627
=========== ============ =============== ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 30, 1998, 1997 AND 1996
1998 1997 1996
------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 148,210 $ 165,368 $ 270,380
Cash paid for
management fee (125,000) (75,000) (100,000)
professional fees (23,777) (30,016) (22,158)
printing, postage and other expenses (12,830) (17,853) (24,023)
------------- ------------- --------------
Net cash provided by (used in) operating activities (13,397) 42,499 124,199
------------- ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships 124,338 3,000
Investments in bonds (includes $282 of accrued interest
in 1998) (98,490) (903,445)
Transfer from (to) restricted cash (5,567) 1,294,318 3,188,564
Investments in and acquisition of local partnership interests (1,075,535) (3,165,219)
Maturity/redemption of bonds 1,131,000
------------- ------------- --------------
Net cash provided by investing activities 20,281 218,783 253,900
------------- ------------- --------------
Net increase in cash and cash equivalents 6,884 261,282 378,099
Cash and cash equivalents at beginning of year 830,290 569,008 190,909
------------- ------------- --------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 837,174 $ 830,290 $ 569,008
============= ============= ==============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain (loss) on investments in bonds
available-for-sale, net $ 70,325 $ (20,824) $ (44,816)
============= ============= ==============
Increase (decrease) in capital contributions payable, net $ (224,298) $ 539,027
============= ==============
- ------------------------------------------------------------------------------------------------------------------------------------
See reconciliation of net loss to net cash provided by (used in) operating activities on page 16.
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS - (Continued)
YEARS ENDED MARCH 30, 1998, 1997 AND 1996
1998 1997 1996
-------------- ------------- -------------
<S> <C> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net loss $ (1,119,287) $ (1,170,580) $ (590,132)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities
Equity in loss of investment in local partnerships 1,023,224 1,070,651 590,457
Amortization of organization costs 15,000 15,000 15,000
Amortization of net premium on investments in bonds 3,574 3,511
Accretion of zero coupon bonds (12,285)
Decrease (increase) in interest receivable (2,833) 141 (12,752)
Increase (decrease) in accounts payable and accrued
expenses (7,461) (1,087) 11,048
Increase in payable to manager 68,819 119,348 95,490
Increase in interest payable 5,567 5,515 27,373
------------- ------------- ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
$ (13,397) $ 42,499 $ 124,199
============= ============= ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS
MARCH 30, 1998, 1997 AND 1996
1. Organization, Purpose and Summary of Significant Accounting Policies
American Tax Credit Trust, a Delaware statutory business trust (the
"Trust") was formed on February 4, 1993 under Chapter 38 of Title 12 of the
Delaware Code. There was no operating activity until admission of the
beneficial owners on November 29, 1993. The Trust was formed to invest
primarily in leveraged low-income multifamily residential complexes (the
"Property" or "Properties") which qualify for the low-income tax credit
established by Section 42 of the Internal Revenue Code (the "Low-income Tax
Credit"), through the acquisition of limited partnership equity interests
(the "Local Partnership Interests") in partnerships (the "Local
Partnership" or "Local Partnerships") that are the owners of the
Properties. Richman American Credit Corp. (the "Manager") was formed on
April 5, 1993 to act as the manager of the Trust.
On September 13, 1993, the Trust commenced the offering for sale of units
of beneficial ownership ("Units") to investors ("Beneficial Owners") in one
to twenty series ("Series I through Series XX"; each a "Series"). These
notes and the accompanying financial statements are presented for Series I
only.
Basis of Accounting and Fiscal Year
The Trust's records are maintained on the accrual basis of accounting for
both financial reporting and tax purposes. For financial reporting
purposes, the Trust's fiscal year ends March 30 and its quarterly periods
end June 29, September 29 and December 30. The Local Partnerships have a
calendar year for financial reporting purposes. The Trust and the Local
Partnerships each have a calendar year for income tax purposes.
The Trust 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
the Trust'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 the Trust is recognized to the extent of the
Trust's investment balance in each Local Partnership. Equity in loss in
excess of the Trust's investment balance in a Local Partnership is
allocated to other partners' capital in any such Local Partnership.
Previously unrecognized equity in loss of any Local Partnership is
recognized in the fiscal year in which equity in income is earned by such
Local Partnership. Distributions received subsequent to the elimination of
an investment balance for any such investment in a Local Partnership are
recorded as other income from Local Partnerships.
The Partnership regularly assesses its investments in Local Partnerships
for the existence of impairment. If an investment in a Local Partnership is
considered to be permanently impaired, the Partnership reduces its
investment in any such Local Partnership and includes such reduction in
equity in loss of investments in Local Partnerships.
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 the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
Adoption of Accounting Standard
The Trust has adopted Statement of Financial Accounting Standard ("SFAS")
No. 128, "Earnings Per Share" and SFAS No. 129, "Disclosure of Information
about Capital Structure." SFAS No. 128 establishes standards for computing
and presenting earnings per share. SFAS No. 129 requires the disclosure in
summary form within the financial statements of the pertinent rights and
privileges of the various securities outstanding. The adoption of SFAS Nos.
128 and 129 has not materially impacted the Trust's reported earnings,
financial condition, cash flows or presentation of the financial
statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
1. Organization, Purpose and Summary of Significant Accounting
Policies (continued)
Accounting Standard not yet Adopted
On March 31, 1998, the Trust adopted 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 is not expected to have a material impact on the Trust's
financial position and results of operations.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Trust considers all
highly liquid investments purchased with an original maturity of three
months or less at the date of acquisition to be cash equivalents. Cash and
cash equivalents are stated at cost which approximates market value.
Restricted Cash
Restricted cash is set aside to make the Trust's required capital
contributions to Local Partnerships (see Notes 3 and 5).
Investments in Bonds Available-For-Sale
Investments in bonds classified as available-for-sale represent investments
that the Trust intends to hold for an indefinite period of time but not
necessarily to maturity. Any decision to sell an investment classified as
available-for-sale would be based on various factors, including significant
movements in interest rates and liquidity needs. Investments in bonds
available-for-sale are carried at estimated fair value and unrealized gains
or losses are reported as a separate component of owners' equity (deficit).
Premiums and discounts on investments in bonds available-for-sale are
amortized (accreted) using the straight-line method over the life of the
investment. Amortized premiums offset interest revenue, while the accretion
of discounts and zero coupon bonds are included in interest revenue.
Realized gain (loss) on redemption or sale of investments in bonds
available-for-sale are included in, or offset against, interest revenue on
the basis of the adjusted cost of each specific investment redeemed or
sold.
Interest on Capital Contributions Payable to Local Partnerships
Pursuant to agreements with certain Local Partnerships, interest is accrued
on certain installments of capital contributions. Such amounts are recorded
as a liability and an offset to interest revenue.
Organization Costs
Organization costs are amortized on a straight-line basis over five (5)
years.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
1. Organization, Purpose and Summary of Significant Accounting
Policies (continued)
Income Taxes
No provision for income taxes has been made because all income, losses and
tax credits are allocated to the owners for inclusion in their respective
tax returns. In accordance with SFAS No. 109, "Accounting for Income
Taxes," the Trust has included in Note 7 certain disclosures related to
differences in the book and tax bases of accounting.
Acquisition Fees
Acquisition fees are recorded as investments in Local Partnerships and
capital contributions payable when incurred.
2. Capital Contributions
On September 13, 1993, the Trust commenced the offering of Units through
Merrill Lynch, Pierce, Fenner & Smith Incorporated and PaineWebber
Incorporated (the "Selling Agents"). On November 29, 1983, January 28, 1994
and May 25, 1994, under the terms of the Fourth Amended and Restated
Agreement of Trust of the Trust (the "Trust Agreement"), the Manager
admitted Beneficial Owners to the Trust in three closings. At these
closings, subscriptions for a total of 18,654 Units representing
$18,654,000 in Beneficial Owners' capital contributions were accepted. In
connection with the offering of Units, the Trust incurred organization and
offering costs of $2,330,819, of which $75,000 was capitalized as
organization costs and $2,255,819 was charged to the Beneficial Owners'
equity as syndication costs. The Trust received a capital contribution of
$100 from the Manager.
Net loss is allocated 99% to the Beneficial Owners and 1% to the Manager in
accordance with the Trust Agreement.
3. Cash and Cash Equivalents and Restricted Cash
As of March 30, 1998, the Trust has cash and cash equivalents and
restricted cash in the aggregate of $1,548,679 which are deposited in
interest-bearing accounts with an institution which is not insured by the
Federal Deposit Insurance Corporation.
4. Investments in Bonds Available-For-Sale
The Trust carries its investments in bonds as available-for-sale because
such investments are used to facilitate and provide flexibility for the
Trust's obligations, including resolving circumstances which may arise in
connection with the Local Partnerships. Investments in bonds
available-for-sale are reflected in the accompanying balance sheets at
estimated fair value.
As of March 30, 1998, certain information concerning investments in bonds
available-for-sale is as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
------------------------ ----------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Corporate debt securities
After five years through ten years $ 619,702 $ 6,564 $ (1,639) $ 624,627
After ten years 374,866 1,446 (1,283) 375,029
---------- ------------ ----------- ----------
$ 994,568 $ 8,010 $ (2,922) $ 999,656
========== ============ =========== ==========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
4. Investments in Bonds Available-For-Sale (continued)
As of March 30, 1997, certain information concerning investments in bonds
available-for-sale is as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
------------------------ ------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Corporate debt securities
After five years through ten years $ 357,402 $ -- $ (23,507) $ 333,895
After ten years 542,532 -- (41,730) 500,802
---------- -------------- ------------ ----------
$ 899,934 $ -- $ (65,237) $ 834,697
========== ============== ============= ==========
</TABLE>
5. Investment in Local Partnerships
As of March 30, 1998, the Trust owns a 98.9%-99% limited partnership
interest in the following Local Partnerships:
1. ACP Housing Associates, L.P.;
2. Creative Choice Homes VII, Ltd.;
3. Edgewood Manor Associates, L.P.;
4. Ledge / McLaren Limited Partnership;
5. Penn Apartment Associates;
6. SB-92 Limited Partnership;
7. St. Christopher's Associates, L.P. V *;
8. St. John Housing Associates, L.P.;
9. Starved Rock - LaSalle Manor Limited Partnership; and
10. Vision Limited Dividend Housing Association Limited Partnership.
* An affiliate of the Manager provides property management services
to the Local Partnership.
The Properties are principally comprised of subsidized and leveraged
low-income multifamily residential complexes located throughout the United
States. 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"). The rents of the Properties are controlled by
federal and state agencies pursuant to applicable laws and regulations.
Under the terms of each of the Local Partnership's partnership agreements,
the Trust has committed to make capital contribution payments in the
aggregate amount of $14,761,041, of which the Trust has paid $14,087,991
and $673,050 are outstanding. Restricted cash in the accompanying balance
sheet as of March 30, 1998 represents such outstanding capital
contributions along with accrued interest of $38,455 on an outstanding
capital contribution. The outstanding capital contributions are payable in
installments upon each Local Partnership's satisfaction of specified
conditions related to operations. As of December 31, 1997, the Local
Partnerships have outstanding mortgage loans payable totaling approximately
$23,357,000 and accrued interest payable on such loans totaling
approximately $762,000, which are secured by security interests and liens
common to mortgage loans on the Local Partnerships' real property and other
assets.
The combined balance sheets of the Local Partnerships as of December 31,
1997 and 1996 and the combined statements of operations of the Local
Partnerships for the years ended December 31, 1997, 1996 and 1995 are
reflected on pages 21 and 22, respectively.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
5. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of December 31,
1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
------------- --------------
<S> <C> <C>
ASSETS
Cash and other investments $ 431,906 $ 515,352
Rents receivable 58,175 47,816
Capital contributions receivable 673,050 1,073,050
Escrow deposits and reserves 1,527,756 1,151,896
Land 1,267,153 1,267,153
Buildings and improvements (net of accumulated depreciation of $4,163,615
and $2,760,074) 32,771,397 34,109,040
Intangible assets (net of accumulated amortization of $106,629 and $71,151) 388,011 412,240
Other 232,920 243,968
------------ ------------
$ 37,350,368 $ 38,820,515
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 377,440 $ 372,568
Due to related parties 1,135,319 1,343,366
Mortgage and construction loans 23,356,717 23,410,498
Notes payable 100,000 100,000
Accrued interest 761,838 556,684
Other 138,975 338,544
------------ ------------
25,870,289 26,121,660
------------ ------------
Partners' equity (deficit)
American Tax Credit Trust, Series I
Capital contributions, net of distributions (includes receivable of
$673,050 and $1,073,050) 14,638,203 14,758,041
Cumulative loss (3,118,450) (2,095,226)
------------ ------------
11,519,753 12,662,815
------------ ------------
General partners and other limited partners
Capital contributions, net of distributions 217,360 284,686
Cumulative loss (257,034) (248,646)
------------ ------------
(39,674) 36,040
------------ ------------
11,480,079 12,698,855
------------ ------------
$ 37,350,368 $ 38,820,515
============ ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
5. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
years ended December 31, 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
REVENUE
Rental $ 3,730,675 $ 3,500,347 $ 2,442,752
Interest and other 142,800 104,402 142,948
----------- ----------- -----------
TOTAL REVENUE 3,873,475 3,604,749 2,585,700
----------- ----------- -----------
EXPENSES
Administrative 695,834 677,879 473,763
Utilities 477,870 427,767 286,883
Operating, maintenance and other 814,082 800,537 449,429
Taxes and insurance 472,030 499,944 364,767
Interest (including amortization of $35,478, $38,194
and $20,194) 1,041,730 981,169 777,920
Depreciation 1,403,541 1,299,076 889,849
----------- ----------- -----------
TOTAL EXPENSES 4,905,087 4,686,372 3,242,611
----------- ----------- -----------
NET LOSS $(1,031,612) $(1,081,623) $ (656,911)
=========== =========== ===========
NET LOSS ATTRIBUTABLE TO
American Tax Credit Trust, Series I $ (1,023,224) $ (1,070,651) $ (590,457)
General partners and other limited partners, which
includes specially allocated items of revenue
(expense) to certain general partners of $2,094
and ($60,294) in 1997 and 1995, respectively (8,388) (10,972) (66,454)
------------ ------------ -----------
$ (1,031,612) $ (1,081,623) $ (656,911)
============ ============ ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
5. Investment in Local Partnerships (continued)
Investment and capital contribution activity with respect to each Local
Partnership for the year ended March 30, 1998 is as follows:
<TABLE>
<CAPTION>
Cash
Investment Trust's distributions Investment
in Local equity in loss received in Local Capital
Partnership for the year during the Partnership contributions
balance as ended year ended balance as payable as
of March 30, December 31, March 30, of March 30, of March 30,
Name of Local Partnership 1997 1997 1998 1998 1998
------------------------- ------------- -------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
ACP Housing Associates, L.P. $ 630,080 $ (77,863) $ -- $ 552,217 $ --
Creative Choice Homes VII, Ltd. 2,184,706 (130,905) -- 2,053,801 --
Edgewood Manor Associates, L.P. 1,496,535 (142,807) -- 1,353,728 --
Ledge / McLaren Limited
Partnership 308,966 (3,414) (1,500) 304,052 --
Penn Apartment Associates 548,314 (98,822) -- 449,492 --
SB-92 Limited Partnership 618,735 (39,203) (6,000) 573,532 --
St. Christopher's Associates,
L.P. V 1,682,225 (130,168) -- 1,552,057 76,800
St. John Housing Associates, L.P. 3,361,953 (167,276) (116,838) 3,077,839 --
Starved Rock - LaSalle Manor
Limited Partnership 548,805 (50,772) -- 498,033 306,433
Vision Limited Dividend Housing
Association Limited Partnership 1,282,496 (181,994) -- 1,100,502 289,817
------------ ------------ ------------ ------------ ------------
$ 12,662,815 $ (1,023,224) $ (124,338) $ 11,515,253 $ 673,050
============ ============ ============ ============ ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
5. Investment in Local Partnerships (continued)
Investment and capital contribution activity with respect to each Local
Partnership for the year ended March 30, 1997 is as follows:
<TABLE>
<CAPTION>
Investment Trust's Investment in
in Local Adjustments equity in loss Local Capital
Partnership during the for the year Partnership contributions
balance as year ended ended balance as payable as
of March 30, March 30, December 31, of March 30, of March 30,
Name of Local Partnership 1996 1997 1996 1997 1997
------------------------- ------------ --------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
ACP Housing Associates, L.P. $ 729,176 $ (14,115) $ (84,981) $ 630,080 $ --
Creative Choice Homes VII, Ltd. 2,321,934 -- (137,228) 2,184,706 --
Edgewood Manor Associates, L.P. 1,650,217 -- (153,682) 1,496,535 --
Ledge / McLaren Limited
Partnership 328,304 -- (19,338) 308,966 --
Penn Apartment Associates 642,439 -- (94,125) 548,314 --
SB-92 Limited Partnership 692,527 -- (73,792) 618,735 --
St. Christopher's Associates,
L.P. V 1,821,364 -- (139,139) 1,682,225 76,800
St. John Housing Associates, L.P. 3,525,033 -- (163,080) 3,361,953 --
Starved Rock - LaSalle Manor
Limited Partnership 604,901 -- (56,096) 548,805 306,433
Vision Limited Dividend Housing
Association Limited Partnership 1,641,869 (210,183) (149,190) 1,282,496 289,817
-------------- ----------- ------------ ------------ ------------
$ 13,957,764 $ (224,298) $ (1,070,651) $ 12,662,815 $ 673,050
============ =========== ============ ============ ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
5. Investment in Local Partnerships (continued)
Property information for each Local Partnership as of December 31, 1997 is
as follows:
<TABLE>
<CAPTION>
Mortgage Buildings and Accumulated
Name of Local Partnership loans payable Land improvements depreciation
------------------------- ------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
ACP Housing Associates, L.P. $ 1,507,629 $ 14,000 $ 2,505,364 $ (168,739)
Creative Choice Homes VII, Ltd. 2,155,841 500,000 4,091,851 (298,999)
Edgewood Manor Associates, L.P. 1,858,934 53,850 3,625,205 (563,695)
Ledge / McLaren Limited
Partnership 460,811 123,673 677,680 (52,379)
Penn Apartment Associates 963,000 13,357 1,783,668 (196,290)
SB-92 Limited Partnership 2,102,720 73,000 2,983,158 (446,908)
St. Christopher's
Associates, L.P. V 2,180,000 31,829 3,783,012 (498,638)
St. John Housing
Associates, L.P. 4,564,538 74,800 8,271,928 (1,095,083)
Starved Rock - LaSalle Manor
Limited Partnership 2,098,314 202,845 2,447,194 (260,078)
Vision Limited Dividend Housing
Association Limited Partnership 5,464,930 179,799 6,765,952 (582,806)
-------------- ------------ -------------- -------------
$ 23,356,717 $ 1,267,153 $ 36,935,012 $ (4,163,615)
============ =========== ============ ============
</TABLE>
Property information for each Local Partnership as of December 31, 1996 is
as follows:
<TABLE>
<CAPTION>
Mortgage and
construction Buildings and Accumulated
Name of Local Partnership loans payable Land improvements depreciation
------------------------- ------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
ACP Housing Associates, L.P. $ 1,511,174 $ 14,000 $ 2,505,364 $ (98,403)
Creative Choice Homes VII, Ltd. 2,186,893 500,000 4,091,851 (173,917)
Edgewood Manor Associates, L.P. 1,861,013 53,850 3,614,581 (431,502)
Ledge / McLaren Limited
Partnership 462,678 123,673 677,680 (30,705)
Penn Apartment Associates 963,000 13,357 1,783,188 (148,623)
SB-92 Limited Partnership 2,129,343 73,000 2,968,572 (333,519)
St. Christopher's
Associates, L.P. V 2,180,000 31,829 3,783,012 (361,088)
St. John Housing
Associates, L.P. 4,646,393 74,800 8,271,928 (758,539)
Starved Rock - LaSalle Manor
Limited Partnership 2,120,089 202,845 2,406,986 (196,586)
Vision Limited Dividend Housing
Association Limited Partnership 5,349,915 179,799 6,765,952 (227,192)
------------ ----------- ------------ ------------
$ 23,410,498 $ 1,267,153 $ 36,869,114 $ (2,760,074)
============ =========== ============ ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
5. Investment in Local Partnerships (continued)
The summary of property activity during the year ended December 31, 1997 is
as follows:
<TABLE>
<CAPTION>
Net change during the
Balance as of year ended Balance as of
December 31, December 31, December 31,
1996 1997 1997
------------------ ------------------- ---------------
<S> <C> <C> <C>
Land $ 1,267,153 $ -- $ 1,267,153
Buildings and improvements 36,869,114 65,898 36,935,012
------------ ------------ ------------
38,136,267 65,898 38,202,165
Accumulated depreciation (2,760,074) (1,403,541) (4,163,615)
------------ ------------ ------------
$ 35,376,193 $ (1,337,643) $ 34,038,550
============ ============ ============
</TABLE>
6. Transactions with Manager and Affiliates
For the years ended March 30, 1998, 1997 and 1996, the Trust paid and/or
incurred the following amounts to the Manager and/or affiliates in
connection with services provided to the Trust:
<TABLE>
<CAPTION>
1998 1997 1996
--------------------- --------------------- ---------------------
Paid Incurred Paid Incurred Paid Incurred
-------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fee (see Note 8) $125,000 $193,819 $ 75,000 $194,348 $100,000 $195,490
Acquisition fees (see Note 1) -- -- -- -- 63,236 63,236
</TABLE>
For the years ended December 31, 1997, 1996 and 1995, the Local
Partnerships paid and/or incurred the following amounts to the Manager
and/or affiliates in connection with services provided to the Local
Partnerships:
<TABLE>
<CAPTION>
1997 1996 1995
---------------------- ---------------------- ----------------------
Paid Incurred Paid Incurred Paid Incurred
-------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Property management fees $ 12,180 $ 12,180 $ 13,920 $ 13,920 $ 13,920 $ 13,920
Insurance 4,213 13,855 9,234 29,065 51,856 36,505
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
7. Taxable Loss
A reconciliation of the financial statement net loss of the Trust for the
years ended March 30, 1998, 1997 and 1996 to the tax return net loss for
the years ended December 31, 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------------- --------------- ---------------
<S> <C> <C> <C>
Financial statement net loss for the years ended March 30,
1998, 1997 and 1996 $ (1,119,287) $ (1,170,580) $ (590,132)
Add (less) net transactions occurring between
January 1, 1995 and March 30, 1995 -- -- (13,144)
January 1, 1996 and March 30, 1996 -- (16,987) 16,987
January 1, 1997 and March 30, 1997 (35,681) 35,681 --
January 1, 1998 and March 30, 1998 15,851 -- --
------------ ------------ -----------
Adjusted financial statement net loss for the years ended
December 31, 1997, 1996 and 1995 (1,139,117) (1,151,886) (586,289)
Adjustment to management fee pursuant to Internal Revenue
Code Section 267 94,348 94,348 131,367
Differences arising from equity in loss of investment in
Local Partnerships (159,124) (204,896) (61,564)
Other differences (15) (1,212) (168)
------------ ------------ -----------
Tax return net loss for the years ended December 31, 1997,
1996 and 1995 $ (1,203,908) $ (1,263,646) $ (516,654)
============ ============ ===========
</TABLE>
The differences between the equity in the investment in Local Partnerships
for tax return and financial reporting purposes as of December 31, 1997 and
1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
<S> <C> <C>
Investment in Local Partnerships - financial reporting $11,519,753 $12,662,815
Investment in Local Partnerships - tax * 10,399,413 11,301,599
------------ ------------
$ 1,120,340 $ 1,361,216
============ ============
* Capital contributions payable to Local Partnerships are not included
in the investment balance for tax purposes.
</TABLE>
Payable to manager in the accompanying balance sheets represents accrued
management fees not deductible for tax purposes pursuant to Internal
Revenue Code Section 267.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1998, 1997 AND 1996
8. Commitments and Contingencies
Pursuant to the Trust Agreement, the Trust is required to pay to the
Manager an annual management fee ("Management Fee") for its services in
connection with the management of the affairs of the Trust, subject to
certain provisions of the Trust Agreement. The annual Management Fee is
equal to 0.5% of all proceeds as of December 31 of any year, invested or
committed for investment in Local Partnerships plus all debts of the Local
Partnerships related to the Properties. The Trust incurred a Management Fee
of $193,819, $194,348 and $195,490 for the years ended March 30, 1998, 1997
and 1996, respectively. Unpaid Management Fees in the amount of $381,682
and $312,863 are recorded as payable to manager in the accompanying balance
sheets as of March 30, 1998 and 1997, respectively.
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. 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") has been
given 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. HUD has additional programs which, in general,
provide 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. The Trust 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, which covers certain rental units, is scheduled to
expire in September 1998.
9. Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." The estimated fair
value amounts have been determined using available market information,
assumptions, estimates and valuation methodologies.
Cash and Cash Equivalents and Restricted Cash
The carrying amounts approximate fair value.
Investments in Bonds Available-For-Sale
Fair value is estimated based on market quotes provided by an independent
service as of the balance sheet dates.
Interest Receivable
The carrying amount approximates fair value due to the terms of the
underlying investments.
Capital Contributions Payable and Interest Payable
The carrying amounts approximate fair value in accordance with the Local
Partnerships' partnership agreements.
The estimated fair value of the Trust's financial instruments as of
March 30, 1998 and 1997 are disclosed elsewhere in the financial
statements.
<PAGE>
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Registrant has no officers or directors. The Manager manages Registrant's
affairs and has general responsibility and authority in all matters affecting
its business. The executive officers and directors of the Manager are:
<TABLE>
<CAPTION>
Served in present
Name capacity since 1 Position held
- ---- -------------- -------------
<S> <C> <C>
Richard Paul Richman May 10, 1993 President and Director
Stephen B. Smith May 10, 1993 Executive Vice President
David A. Salzman May 10, 1993 Vice President and Secretary
Eric P. Richelson May 10, 1993 Vice President
Neal Ludeke May 10, 1993 Vice President and Treasurer
</TABLE>
- --------------------------------------------------------------------------------
1 Director holds office until his successor is elected and qualified. All
officers serve at the pleasure of the Director.
Richard Paul Richman, age 50, is the sole Director and President of the Manager.
Mr. Richman is the President and sole stockholder of Richman Group. Mr. Richman
is involved in the syndication and management of residential property. Mr.
Richman is also a director of Wilder Richman Resources Corp., an affiliate of
the Manager and the general partner of Secured Income L.P., a director of Wilder
Richman Historic Corporation, an affiliate of the Manager and the general
partner of Wilder Richman Historic Properties II, L.P., a director of Richman
Tax Credit Properties Inc., an affiliate of the Manager and the general partner
of the general partner of American Tax Credit Properties L.P., a director of
Richman Tax Credits Inc., an affiliate of the Manager and the general partner of
the general partner of American Tax Credit Properties II L.P. and a director of
Richman Housing Credits Inc., an affiliate of the Manager and the general
partner of the general partner of American Tax Credit Properties III L.P.
Stephen B. Smith, age 54, is the Executive Vice President of the Manager. Mr.
Smith is responsible for marketing and investment program development for
Richman Group. From 1989 until joining Richman Group in 1993, Mr. Smith was an
independent advisor to developers, lenders and institutional investors on
matters related to real estate investments.
David A. Salzman, age 37, is a Vice President and the Secretary of the Manager.
Mr. Salzman is responsible for the acquisition and development of residential
real estate for syndication as a Vice President of acquisitions of Richman
Group.
Eric P. Richelson, age 46, is a Vice President of the Manager. Mr. Richelson is
President of Wilder Richman Management Corporation, a property management
company affiliated with the Manager. In addition, Mr. Richelson is a Vice
President of Richman Asset Management, LLC ("RAM"), an affiliate of the Manager.
Mr. Richelson's responsibilities in connection with RAM include advisory
services provided to a small business investment company.
Neal Ludeke, age 40, is a Vice President and the Treasurer of the Manager. Mr.
Ludeke, a Vice President and the Treasurer of Richman Group, is engaged
primarily in the syndication, asset management and finance operations of Richman
Group. In addition, Mr. Ludeke is a Vice President and the Treasurer of RAM. Mr.
Ludeke's responsibilities in connection with RAM include advisory services
provided to a small business investment company and various partnership
management functions.
<PAGE>
Item 11. Executive Compensation
Registrant has no officers or directors. Registrant does not pay the officers or
director of the Manager any remuneration. During the year ended March 30, 1998,
the Manager did not pay any remuneration to any of its officers or its director.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of May 21, 1998, no person or entity was known by Registrant to be the
Beneficial Owner of more than five percent of the Units. The Manager is
wholly-owned by Richard Paul Richman.
Item 13. Certain Relationships and Related Transactions
The Manager and certain of its affiliates are entitled to receive certain
compensation, fees, and reimbursement of expenses and have received/earned fees
for services provided to Registrant as described in Notes 6 and 8 to the audited
financial statements included in Item 8 - "Financial Statements and
Supplementary Data" herein.
Transactions with Manager and Affiliates
The tax losses and Low-income Tax Credits generated by Registrant during the
year ended December 31, 1997 allocated to the Manager were $12,039 and $26,155,
respectively.
Indebtedness of Management
No officer or director of the Manager or any affiliate of the foregoing was
indebted to Registrant at any time during the year ended March 30, 1998.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Financial Statements, Financial Statement Schedules and Exhibits
(1) Financial Statements
See Item 8 - "Financial Statements and Supplementary Data."
(2) Financial Statement Schedules
No financial statement schedules are included because of the absence
of the conditions under which they are required or because the
information is included in the financial statements or notes
thereto.
(3) Exhibits
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to
<S> <C> <C>
10.1 Credit Agreement dated as of December 27, 1993 Exhibit 10.1 to Form 10-Q Report
between Trust and Citibank N.A. dated December 30, 1993
(File No. 33-58032)
10.2 Security and Pledge Agreement dated as of Exhibit 10.2 to Form 10-Q Report
December 27, 1993 between Trust and Citibank N.A. dated December 30, 1993
(File No. 33-58032)
10.3 Cash Collateral Agreement dated as of December Exhibit 10.3 to Form 10-Q Report
27, 1993 between Trust and Citibank N.A. dated December 30, 1993
(File No. 33-58032)
10.4 Promissory Note dated December 27, 1993 from Exhibit 10.4 to Form 10-Q Report
Trust to Citibank N.A. dated December 30, 1993
(File No. 33-58032)
10.5 Tri-Party Agreement dated as of December 27, Exhibit 10.5 to Form 10-Q Report
1993 between Trust, Citibank N.A. and United dated December 30, 1993
States Trust Company of New York (File No. 33-58032)
10.6 ACP Housing Associates, L.P. Amended and Exhibit 10.1 to Form 10-Q Report
Restated Agreement of Limited Partnership dated September 29, 1995
(File No. 0-24600)
10.7 Creative Choice Homes VII, Ltd. Amended and Exhibit 10.1 to Form 10-Q Report
Restated Agreement of Limited Partnership dated December 30, 1994
(File No. 0-24600)
10.8 Edgewood Manor Associates, L.P. Amended and Exhibit 10.6 to Form 10-K Report
Restated Agreement of Limited Partnership dated March 30, 1994
(File No. 33-58032)
10.9 Ledge / McLaren Limited Partnership Amended and Exhibit 10.2 to Form 10-Q Report
Restated Agreement of Limited Partnership dated December 30, 1994
(File No. 0-24600)
10.10 Penn Apartment Associates Amended and Restated Exhibit 10.7 to Form 10-K Report
Agreement of Limited Partnership dated March 30, 1994
(File No. 33-58032)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to
<S> <C> <C>
10.11 First Amendment to Penn Apartment Associates Exhibit 10.8 to Form 10-K Report
Amended and Restated Agreement of Limited dated March 30, 1994
Partnership (File No. 33-58032)
10.12 Second Amendment to Penn Apartment Associates Exhibit 10.9 to Form 10-K Report
Amended and Restated Agreement of Limited dated March 30, 1994
Partnership (File No. 33-58032)
10.13 SB-92 Limited Partnership Amended and Restated Exhibit 10.6 to Form 10-Q Report
Agreement of Limited Partnership dated December 30, 1993
(File No. 33-58032)
10.14 St. Christopher's Associates, L.P. V Amended and Exhibit 10.1 to Form 10-Q Report
Restated Agreement of Limited Partnership dated June 29, 1994
(File No. 33-58032)
10.15 St. John Housing Associates, L.P. Amended and Exhibit 10.7 to Form 10-Q Report
Restated Agreement of Limited Partnership dated December 30, 1993
(File No. 33-58032)
10.16 Starved Rock - LaSalle Manor Limited Partnership Exhibit 10.2 to Form 10-Q Report
Amended and Restated Agreement of Limited dated September 29, 1995
Partnership (File No. 0-24600)
10.17 Vision Limited Dividend Housing Association Exhibit 10.3 to Form 10-Q Report
Limited Partnership Amended and Restated dated December 30, 1994
Agreement of Limited Partnership (File No. 0-24600)
27 Financial Data Schedule
99.1 Pages 11 through 21, 26 through 48 and 63 Exhibit 99.1 to Form 10-K Report
through 65 of Prospectus of Registrant dated March 30, 1994
dated September 7, 1993 filed pursuant to (File No. 33-58032)
Rule 424(b)(3) under the Securities Act of 1933
99.2 Supplement No. 2 dated November 16, 1993 to Exhibit 28.1 to Form 10-Q Report
Prospectus dated December 30, 1993
(File No. 33-58032)
99.3 Supplement No. 3 dated November 23, 1994 to Exhibit 99.3 to Form 10-K Report
Prospectus dated March 30, 1995
(File No. 0-24600)
99.4 Supplement No. 4 dated December 28, 1994 to Exhibit 99.4 to Form 10-K Report
Prospectus dated March 30, 1995
(File No. 0-24600)
99.5 December 31, 1995 financial statements of Exhibit 99.5 to Form 10-K Report
St. John Housing Associates, L.P. pursuant to dated March 30, 1996
Title 17, Code of Federal Regulations, (File No. 0-24600)
Section 210.3-9
99.6 December 31, 1996 financial statements of Exhibit 99.6 to Form 10-K Report
St. John Housing Associates, L.P. pursuant to dated March 30, 1997
Title 17, Code of Federal Regulations (File No. 0-24600)
99.7 December 31, 1997 financial statements of
St. John Housing Associates, L.P. pursuant to
Title 17, Code of Federal Regulations
</TABLE>
<PAGE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Registrant during the last quarter of
the period covered by this report.
(c) Exhibits
See (a)(3) above.
(d) Financial Statement Schedules
See (a)(2) above.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: June 29, 1998 /s/ Richard Paul Richman
------------- ------------------------
by: Richard Paul Richman
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Richard Paul Richman President, Chief Executive Officer June 29, 1998
------------------------ and Director of the Manager -------------
/s/ Neal Ludeke Vice President and Treasurer of
------------------------ the Manager (Principal Financial June 29, 1998
and Accounting Officer of the Trust) -------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the year ended March 30, 1998 Form 10K 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> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-30-1998
<PERIOD-START> APR-1-1997
<PERIOD-END> MAR-30-1998
<EXCHANGE-RATE> 1.00
<CASH> 837
<SECURITIES> 1,000
<RECEIVABLES> 16
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,089
<CURRENT-LIABILITIES> 1,116
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,089
<SALES> 0
<TOTAL-REVENUES> 142
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 238
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,119)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,119)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,119)
<EPS-PRIMARY> (59.40)
<EPS-DILUTED> 0
</TABLE>
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
ST. JOHN HOUSING ASSOCIATES
LIMITED PARTNERSHIP
DECEMBER 31, 1997, 1996 AND 1995
<PAGE>
St. John Housing Associates Limited Partnership
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS
BALANCE SHEETS
STATEMENTS OF PROFIT AND LOSS
STATEMENTS OF PARTNERS' EQUITY
STATEMENTS OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
St. John Housing Associates Limited Partnership
We have audited the accompanying balance sheets of St. John Housing
Associates Limited Partnership as of December 31, 1997 and 1996, and the related
statements of profit and loss, partners' equity and cash flows for the years
ended December 31, 1997, 1996 and 1995. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of St. John Housing
Associates Limited Partnership as of December 31, 1997 and 1996, and the results
of its operations, changes in partners' equity and cash flows for the years
ended December 31, 1997, 1996 and 1995, in conformity with generally accepted
accounting principles.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 4, 1998
<PAGE>
<TABLE>
<CAPTION>
St. John Housing Associates Limited Partnership
BALANCE SHEETS
December 31,
ASSETS
1997 1996
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Petty cash $ 100 $ 100
Cash in bank 13,099 6,315
U.S. Treasury Bills 227,032 242,677
Partnership cash 5,697 24,412
Tenant accounts receivable 1,280 1,202
Accounts receivable - other project - 9,246
Prepaid insurance 3,442 3,127
Prepaid mortgage insurance 13,666 13,972
Account receivable - interest subsidy 9,122 -
------------ ------------
Total current assets 273,438 301,051
------------ ------------
DEPOSITS HELD IN TRUST - FUNDED
Tenant security deposits 15,246 14,407
------------ ------------
RESTRICTED DEPOSITS AND FUNDED RESERVES
Mortgage escrow deposits 39,627 81,467
Reserve for replacements 217,769 185,671
------------ ------------
257,396 267,138
------------ ------------
RENTAL PROPERTY
Land 59,800 59,800
Land improvements 15,000 15,000
Buildings and improvements 8,018,620 8,018,620
Furniture and equipment 243,279 243,279
Automobile 10,029 10,029
------------ ------------
8,346,728 8,346,728
Less accumulated depreciation 1,095,083 758,539
------------ ------------
7,251,645 7,588,189
------------ ------------
OTHER ASSETS
Mortgage costs, net of accumulated amortization of $13,327
and $9,934, respectively 88,464 91,857
Organization costs, net of accumulated amortization of $8,054
and $6,036, respectively 2,036 4,054
------------ ------------
$ 7,888,225 $ 8,266,696
============ ============
</TABLE>
(continued)
<PAGE>
<TABLE>
<CAPTION>
St. John Housing Associates Limited Partnership
BALANCE SHEETS
December 31,
LIABILITIES AND PARTNERS' EQUITY
1997 1996
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 18,805 $ 17,172
Prepaid rents 375 121
Accrued interest payable 18,702 19,152
Accrued real estate taxes 98,000 95,000
Due to management company 4,791 4,880
Accrued partnership administrative fee 94,002 108,517
Mortgages payable - current maturities 87,673 81,612
------------- ------------
Total current liabilities 322,348 326,454
------------ ------------
DEPOSITS LIABILITY
Tenant security deposits (contra) 14,922 14,385
------------ ------------
LONG-TERM LIABILITIES
Mortgages payable 4,564,538 4,646,393
Less current maturities 87,673 81,612
------------ ------------
4,476,865 4,564,781
------------ ------------
CONTINGENCY - -
PARTNERS' EQUITY 3,074,090 3,361,076
------------ ------------
$ 7,888,225 $ 8,266,696
============ ============
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
St. John Housing Associates Limited Partnership
STATEMENTS OF PROFIT AND LOSS
Year ended December 31,
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Revenue
Rental $ 1,016,548 $ 1,016,001 $ 962,765
Interest and other 17,645 23,638 37,720
------------ ------------ ------------
1,034,193 1,039,639 1,000,485
------------ ------------ ------------
Expenses
Administrative 123,961 118,157 121,444
Utilities 61,802 54,676 67,571
Operating and maintenance 196,929 171,031 125,714
Taxes and insurance 148,556 157,793 98,369
Interest 226,741 232,146 227,226
Depreciation and amortization 341,955 359,716 322,365
------------ ------------ ------------
1,099,944 1,093,519 962,689
------------ ------------ ------------
Other entity expenses (income) 103,217 110,847 (255)
------------ ------------ ------------
NET PROFIT (LOSS) $ (168,968) $ (164,727) $ 38,051
============ ============ ============
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
St. John Housing Associates Limited Partnership
STATEMENTS OF PARTNERS' EQUITY
Years ended December 31, 1997, 1996 and 1995
General Limited
Total partners partners
-------------- ------------ --------------
<S> <C> <C> <C>
Partners' equity, December 31, 1994 $ 2,352,002 $ 389 $ 2,351,613
Partners' contributions 1,135,750 - 1,135,750
Net profit - 1995 38,051 381 37,670
------------- ----------- -------------
Partners' equity, December 31, 1995 3,525,803 770 3,525,033
Net loss - 1996 (164,727) (1,647) (163,080)
------------- ----------- -------------
Partners' equity, December 31, 1996 3,361,076 (877) 3,361,953
Partners' distributions (118,018) (1,180) (116,838)
Net loss - 1997 (168,968) (1,690) (167,278)
------------- ------------ -------------
Partners' equity (deficit), December 31, 1997 $ 3,074,090 $ (3,747) $ 3,077,837
============= ============ =============
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
St. John Housing Associates Limited Partnership
STATEMENTS OF CASH FLOWS
Year ended December 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net profit (loss) $ (168,968) $ (164,727) $ 38,051
Adjustments to reconcile net profit (loss) to net cash
provided by operating activities
Depreciation 336,544 354,305 316,954
Amortization 5,411 5,411 5,411
Interest income on U.S. Treasury Bills (7,323) - -
Increase (decrease) in tenant accounts receivable (78) (1,098) 1,164
Increase in accounts receivable - interest subsidy (9,122) - -
(Increase) decrease in prepaid expenses (9) (5,858) 26,345
Decrease in escrow deposits 41,840 5,107 23,737
Increase (decrease) in accounts payable 1,633 1,740 (27,962)
Increase (decrease) in accrued interest payable (450) (434) 17,839
Increase (decrease) in accrued real estate tax 3,000 30,000 (35,000)
Increase in tenant security deposits - net (302) (677) (426)
Increase in prepaid rents 254 32 59
Increase (decrease) in due to management company (89) 131 (2,443)
Increase (decrease) in accrued partnership
administrative fee (14,515) 108,517 -
Due from other project - deposit 9,246 (9,246) -
---------- --------- ----------
Net cash provided by operating activities 197,072 323,203 363,729
---------- --------- ----------
Cash flows from investing activities
Deposits in reserve for replacement (41,191) (46,987) (32,895)
Investment in rental property - (120,414) (1,048,229)
Proceeds from redemption of U.S. Treasury Bills 250,000 - -
Withdrawals from replacement reserve 9,093 15,694 -
Decrease in accounts payable - development - (9,462) (682,390)
Purchase of U.S. Treasury Bills (227,032) (242,677) -
--------- --------- ----------
Net cash used in investing activities (9,130) (403,846) (1,763,514)
--------- --------- ----------
Cash flows from financing activities
Mortgage principal payments (81,855) (76,197) (60,339)
Mortgage loan proceeds - - 964,896
Loans from general partner - - 8,000
Repayment to general partner - - (356,959)
Decrease in due to general partner and affiliates - (137,980) -
Capital contributions received - - 1,135,750
Distributions (118,018) - -
--------- --------- ----------
Net cash provided by (used in) financing
activities (199,873) (214,177) 1,691,348
--------- --------- ----------
NET INCREASE (DECREASE) IN CASH (11,931) (294,820) 291,563
Cash, beginning 30,827 325,647 34,084
--------- --------- ----------
Cash, end $ 18,896 $ 30,827 $ 325,647
========= ========= ==========
Supplemental disclosure of cash flow information
Cash paid for interest during the year $ 227,191 $ 250,860 $ 209,387
========== ========= ==========
</TABLE>
See notes to financial statements
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996 and 1995
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The partnership was formed as a limited partnership under the laws of the
State of Illinois on June 1, 1992, for the purpose of acquiring,
rehabilitating and operating a rental housing project under Sections 236 and
241 of the National Housing Act. The project which was acquired December 29,
1993 consists of 144 units located in Gary, Indiana and is currently
operating under the name of St. John Homes. The project is managed by an
affiliate of one of the stockholders of the general partner under an
agreement approved by HUD which provides for a management fee of 5.14% of
monthly rental collections.
Cash distributions are limited by agreements between the partnership and HUD
to $121,682 per year to the extent of surplus cash as defined by HUD.
Undistributed amounts are cumulative and may be distributed in subsequent
years if future operations provide surplus cash in excess of current
requirements.
Each building of the project has qualified and been allocated low-income
housing credits pursuant to Internal Revenue Code Section 42 ("Section 42")
which regulates the use of the project as to occupant eligibility and unit
gross rent, among other requirements. Each building of the project must meet
the provisions of these regulations during each of 15 consecutive years, the
compliance period, in order to remain qualified to receive the credits. In
addition, on March 14, 1996, St. John Housing Associates Limited Partnership
executed a Declaration of Extended Low-Income Housing Commitment which will
require the utilization of the project pursuant to Section 42 for a minimum
of 30 years, even if disposition of the project by the partnership occurs.
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 the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Rental Property
Rental property is carried at cost. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives by use of the straight-line method for financial
reporting purposes. For income tax purposes, accelerated lives and methods
are used.
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997, 1996 and 1995
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Amortization
Mortgage costs are amortized over the term of the mortgage loan using the
straight-line method.
Organization costs are amortized over 60 months using the straight-line
method.
Income Taxes
No provision or benefit for income taxes has been included in these
financial statements since taxable income or loss passes through to, and is
reportable by, the partners individually.
Rental Income
Rental income is recognized as rentals become due. Rental payments received
in advance are deferred until earned. All leases between the partnership and
the tenants of the property are operating leases.
U.S. Treasury Bills
The U.S. Treasury Bills are carried at amortized cost, which approximates
fair value, and are classified as held-to-maturity. These Bills bear
interest ranging from 5.082% to 5.592% and mature through March 5, 1998.
NOTE B - MORTGAGES PAYABLE
The mortgage note is insured by the Federal Housing Administration (FHA) and
is collateralized by a deed of trust on the rental property. The note is
payable in monthly principal and interest installments of $5,394, net of an
interest reduction subsidy through maturity on November 1, 2014. The note
bears interest at the rate of 7% per annum; however, HUD, through the
interest reduction subsidy, reduces the interest rate to an effective annual
rate of approximately 1% over the term of the mortgage. The annual interest
subsidy of $109,721 for 1997, $109,989 for 1996, and $110,240 for 1995, is
reflected as a reduction of interest expense. As of December 31, 1997 and
1996, principal balances of $1,729,819 and $1,781,493 were outstanding and
accrued interest was $969 and $1,247, respectively.
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997, 1996 and 1995
NOTE B - MORTGAGES PAYABLE (Continued)
The second mortgage in the original amount of $2,908,300 is insured by the
Federal Housing Administration (FHA) and collateralized by a second deed of
trust on the rental property. The note bears interest at the rate of 7.5%
per annum. Principal and interest are payable by the partnership in monthly
installments of $20,335 through maturity on May 1, 2025. As of December 31,
1997 and 1996, principal balances of $2,834,721 and $2,864,900 were
outstanding and accrued interest was $17,733 and $17,905, respectively.
Under agreements with the mortgage lenders and FHA, the partnership is
required to make monthly escrow deposits for taxes, insurance and
replacement of project assets, and is subject to restrictions as to
operating policies, rental charges, operating expenditures and distributions
to partners.
The liability of the partnership under the mortgage notes is limited to the
underlying value of the real estate collateral plus other amounts deposited
with the lenders.
Aggregate maturities of the mortgages payable over each of the next five
years are as follows:
<TABLE>
<CAPTION>
First Second
Mortgage Mortgage Total
---------- ---------- ---------
<S> <C> <C> <C>
December 31, 1998 55,151 32,522 87,673
1999 59,138 35,047 94,185
2000 63,413 37,767 101,180
2001 67,997 40,699 108,696
2002 72,913 43,859 116,772
</TABLE>
NOTE C - HOUSING ASSISTANCE PAYMENT CONTRACT AGREEMENTS
The Federal Housing Administration (FHA) has contracted with the partnership
effective December 1989 under Section 8 of The National Housing Act of 1937,
to make housing assistance payments to the partnership on behalf of
qualified tenants. The terms of the agreements are:
Number of units covered Expiration date
----------------------- ------------------
110 September 30, 1997
34 June 30, 1999
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997, 1996 and 1995
NOTE C - HOUSING ASSISTANCE PAYMENT CONTRACT AGREEMENTS (Continued)
One agreement, covering 110 units, expired on September 30, 1997 and was
renewed through September 30, 1998. With Congressional passage in October
1997 of the Multifamily Assisted Housing and Reform and Affordability Act
(the Act), HUD has been giving budgetary authority to approve requests for
one-year renewals on all Section 8 contracts expiring through September 30,
1998. Thus, this partnership HAP agreement will be eligible for a one-year
renewal through September 30, 1999.
NOTE D - RELATED PARTY TRANSACTIONS
Management Fee
The property is managed by L-B Residential Management Company, an affiliate
of one of the stockholders of the general partner, pursuant to a management
agreement approved by HUD that expires February 28, 1997. The management
agreement provided for a management fee of 5.14% of monthly rental
collections. Additionally, the partnership pays L-B Residential Management
Company a monthly computer accounting/bookkeeping fee of $3.50 per unit.
During the years ended December 31, 1997, 1996 and 1995, management fees of
$52,724, $52,453, and $52,103, and computer and accounting fees of $6,048,
$6,048, and $11,592 were charged to operations, respectively. At December
31, 1997 and 1996, the partnership owed the management agent $4,791 and
$4,880, respectively, which consisted of unpaid management fees of $4,287
and $4,376 and computer accounting/bookkeeping fees of $504 and $504,
respectively.
Maintenance Services
An affiliate of one of the stockholders of the general partner provides
certain maintenance and repair services. During the years ended December 31,
1997, 1996 and 1995, $1,080, $1,560, and $6,180 were charged to operations,
respectively.
Repurchase Guaranty
Under the terms of the partnership agreement, the general partner is
obligated to purchase the partnership interest of the investor limited
partner upon the occurrence of a repurchase event as described in the
partnership agreement.
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997, 1996 and 1995
NOTE D - RELATED PARTY TRANSACTIONS (Continued)
Partnership Administration Fee
The partnership has entered into a partnership administration services
agreement with the general partner for its services in managing the
partnership throughout the term of the partnership. Under the terms of this
agreement, commencing January 1, 1996, the partnership is obligated to pay
to the general partner an annual fee in the amount of the lesser of 50% of
the project's net cash flow as defined in the partnership agreement or 3% of
the replacement cost of the rental property as of the date of substantial
completion. In the event that in any year 50% of net cash flow exceeds 3% of
the replacement cost of the rental property as of the date of substantial
completion, such excess amount shall be paid to the general partner to the
extent that the partnership administration fee paid in any prior years was
less than 3% of the replacement cost. For the years ended December 31, 1997
and 1996, a partnership administrative fee of $103,502 and $108,517,
respectively was incurred, of which $94,002 and $108,517, respectively, was
payable as of December 31, 1997 and 1996.
Fees Payable
The partnership has entered into agreements which provide for the payment of
various fees to the general partner and its affiliates in consideration for
various guarantees. Fees are payable to the general partner and affiliates
from capital contributions or available surplus cash. As of December 31,
1996 all fees have been paid.
In addition, during the year ended December 31, 1996, the general partner
was paid $120,414 for fees, which have been capitalized in the cost of
rental property.
Consulting Fees
The general partner received compensation from L-B Residential Management
Company, the management agent, for consulting services rendered in 1997 and
1996.
NOTE E - CONTINGENCY
The project's low-income housing credits are contingent on its ability to
maintain compliance with applicable sections of Section 42. Failure to
maintain compliance with occupant eligibility, and/or unit gross rent, or to
correct compliance within a specified time period could result in recapture
of previously taken tax credits plus interest. In addition, such potential
noncompliance may require an adjustment to the contributed capital by the
limited partner.
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997, 1996 and 1995
NOTE F - MORTGAGOR ENTITY EXPENSES (INCOME)
Mortgagor entity expenses (income) consists of the following:
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Interest income $ (300) $ (857) $ (814)
Miscellaneous administrative 15 1,444 559
Interest expense - 1,743 -
Partnership administrative fee 103,502 108,517
----------- ------------- ------------
$ 103,217 $ 110,847 $ (255)
=========== ============ ============
</TABLE>
