UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------- ----------------
Commission file number: 0-24600
American Tax Credit Trust, a Delaware statutory business trust
Series I
(Exact name of Registrant as specified in its charter)
Delaware 06-6385350
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Richman American Credit Corp.
599 West Putnam Avenue, 3rd Floor
Greenwich, Connecticut 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 869-0900
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days. Yes X No__.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Table of Contents Page
Balance Sheets as of June 29, 1998 (Unaudited) and March 30, 1998
(Unaudited)...................................................................3
Statements of Operations for the three months ended June 29, 1998 (Unaudited)
and June 29, 1997 (Unaudited)................................................4
Statements of Cash Flows for the three months ended June 29, 1998 (Unaudited)
and June 29, 1997 (Unaudited)................................................5
Notes to Financial Statements as of June 29, 1998 (Unaudited)..................7
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 29, March 30,
Notes 1998 1998
----- ------------- -------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 942,126 $ 837,174
Restricted cash 4 560,379 711,505
Investments in bonds available-for-sale 3 1,005,688 999,656
Investment in local partnerships 4 11,159,181 11,515,253
Interest receivable 14,959 15,726
Organization costs (less accumulated amortization
of $68,750 and $65,000) 6,250 10,000
------------ ------------
$ 13,688,583 $ 14,089,314
============ ============
LIABILITIES AND OWNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 28,220 $ 22,500
Payable to manager 404,742 381,682
Capital contributions payable 4 519,834 673,050
Interest payable 4 40,545 38,455
----------- ------------
993,341 1,115,687
----------- ------------
Commitments and contingencies 4
Owners' equity (deficit)
Manager (37,050) (34,197)
Beneficial owners (18,654 units of beneficial
ownership interest outstanding) 12,720,278 13,002,736
Accumulated other comprehensive income 2,3 12,014 5,088
------------ -------------
12,695,242 12,973,627
------------ ------------
$ 13,688,583 $ 14,089,314
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 29, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Notes 1998 1997
----- ----------- ------------
<S> <C> <C>
REVENUE
Interest $ 35,242 $ 34,654
----------- -----------
TOTAL REVENUE 35,242 34,654
----------- ------------
EXPENSES
Management fee 48,060 48,133
Professional fees 6,522 5,500
Printing, postage and other 5,646 8,717
Amortization 3,750 3,750
----------- ------------
TOTAL EXPENSES 63,978 66,100
----------- ------------
Loss from operations (28,736) (31,446)
Equity in loss of investment in local partnerships 4 (256,575) (249,377)
----------- -----------
NET LOSS (285,311) (280,823)
Other comprehensive income 2,3 6,926 24,417
----------- -----------
COMPREHENSIVE LOSS $ (278,385) $ (256,406)
========== ==========
NET LOSS ATTRIBUTABLE TO
Manager $ (2,853) $ (2,808)
Beneficial owners (282,458) (278,015)
----------- -----------
$ (285,311) $ (280,823)
========== ==========
NET LOSS per unit of beneficial ownership interest
(18,654 units of beneficial ownership interest) $ (15.14) $ (14.90)
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 29, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
------------ --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 38,993 $ 34,420
Cash paid for
management fee (25,000) (50,000)
professional fees (802) (10,000)
printing, postage and other expenses (5,646) (5,825)
------------ ------------
Net cash provided by (used in) operating activities 7,545 (31,405)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships 99,497 119,838
Investment in bonds (includes $282 of accrued interest) (98,490)
Transfer from (to) restricted cash 151,126 (1,028)
Investments in local partnerships (153,216)
----------- -----------
Net cash provided by investing activities 97,407 20,320
----------- -----------
Net increase (decrease) in cash and cash equivalents 104,952 (11,085)
Cash and cash equivalents at beginning of period 837,174 830,290
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 942,126 $ 819,205
============ ===========
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain on investments in bonds available-for-sale, net $ 6,926 $ 24,417
============ ===========
- ------------------------------------------------------------------------------------------------
See reconciliation of net loss to net cash provided by (used in) operating activities on page 6.
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS - (Continued)
THREE MONTHS ENDED JUNE 29, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net loss $ (285,311) $ (280,823)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities
Equity in loss of investment in local partnerships 256,575 249,377
Amortization of organization costs 3,750 3,750
Amortization of net premium on investments in bonds 894 803
Decrease (increase) in interest receivable 767 (2,065)
Increase (decrease) in accounts payable and accrued
expenses 5,720 (2,061)
Increase (decrease) in payable to manager 23,060 (1,414)
Increase in interest payable 2,090 1,028
----------- ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 7,545 $ (31,405)
=========== ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 1998
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. They do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. The results of operations are impacted significantly by the
combined results of operations of the Local Partnerships, which are provided
by the Local Partnerships on an unaudited basis during interim periods.
Accordingly, the accompanying financial statements are dependent on such
unaudited information. In the opinion of the Manager, the financial
statements include all adjustments necessary to present fairly the financial
position as of June 29, 1998 and the results of operations and cash flows
for the interim periods presented. All adjustments are of a normal recurring
nature. The results of operations for the three months ended June 29, 1998
are not necessarily indicative of the results that may be expected for the
entire year.
2. Comprehensive Income
On March 31, 1998, the Trust adopted Statement of Financial Accounting
Standard ("SFAS") No. 130, "Reporting Comprehensive Income." As a result,
the statements of operations include an amount for other comprehensive
income, as well as comprehensive loss. Other comprehensive income consists
of revenues, expenses, gains and losses that have affected owners' equity
(deficit) but which are excluded from net loss. Other comprehensive income
in the accompanying statement of operations for the three months ended June
29, 1998 resulted from a net unrealized gain on investments in bonds
available-for-sale of $6,926. Accumulated other comprehensive income in the
accompanying balance sheet as of June 29, 1998 reflects the cumulative net
unrealized gain on investments in bonds available-for-sale. The balance
sheet as of March 30, 1998 and the statement of operations for the three
months ended June 29, 1997 include certain reclassifications to reflect the
adoption of SFAS No. 130.
3. Investments in Bonds Available-For-Sale
As of June 29, 1998, certain information concerning investments in bonds
available-for-sale is as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
Description and maturity cost gains losses value
------------------------- ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Corporate debt securities
Within one year $ 98,582 $ 3,609 $ -- $ 102,191
After five years through ten 693,019 9,738 (1,332) 701,425
years
After ten years 202,073 168 (169) 202,072
------------ ------------ ----------- ----------
$993,674 $13,515 $(1,501) $1,005,688
============ =========== =========== ============
</TABLE>
4. Investment in Local Partnerships
The Trust owns a 98.9%-99% limited partnership interest in ten Local
Partnerships representing capital contributions in the aggregate amount of
$14,761,041, of which the Trust has paid $14,241,207 and $519,834 are
outstanding as of June 29, 1998. Restricted cash in the accompanying balance
sheet as of June 29, 1998 represents such outstanding capital contributions
along with accrued interest of $40,545 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 March 31, 1998, the Local
Partnerships have outstanding mortgage loans payable totaling approximately
$23,271,000 and accrued interest payable on such loans totaling
approximately $827,000, which are secured by security interests and liens
common to mortgage loans on the Local Partnerships' real property and other
assets.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1998
(UNAUDITED)
4. Investment in Local Partnerships (continued)
For the three months ended June 29, 1998, the investment in Local
Partnerships activity consists of the following:
<TABLE>
<S> <C>
Investment in Local Partnerships as of March 30, 1998 $ 11,515,253
Equity in loss of investment in Local Partnerships (256,575)
Cash distributions received from Local Partnerships (99,497)
-----------
Investment in Local Partnerships as of June 29, 1998 $ 11,159,181
============
</TABLE>
The combined unaudited balance sheets of the Local Partnerships as of March
31, 1998 and December 31, 1997 and the combined unaudited statements of
operations of the Local Partnerships for the three months ended March 31,
1998 and 1997 are reflected on pages 9 and 10, respectively.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1998
(UNAUDITED)
4. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of March 31, 1998
and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- ------------
<S> <C> <C>
ASSETS
Cash and other investments $ 452,275 $ 431,906
Rents receivable 62,466 58,175
Capital contributions receivable 673,050 673,050
Escrow deposits and reserves 1,595,003 1,527,756
Land 1,267,153 1,267,153
Buildings and improvements (net of accumulated depreciation
of $4,511,587 and $4,163,615) 32,434,238 32,771,397
Intangible assets (net of accumulated amortization of
$115,469 and $106,629) 379,171 388,011
Other 234,159 232,920
---------- ------------
$ 37,097,515 $ 37,350,368
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 401,309 $ 377,440
Due to related parties 1,141,903 1,135,319
Mortgage loans 23,271,015 23,356,717
Notes payable 100,000 100,000
Accrued interest 826,593 761,838
Other 140,337 138,975
---------- ------------
25,881,157 25,870,289
---------- ------------
Partners' equity (deficit)
American Tax Credit Trust, Series I
Capital contributions, net of distributions (includes
receivable of $673,050) 14,633,703 14,638,203
Cumulative loss (3,375,025) (3,118,450)
---------- ----------
11,258,678 11,519,753
---------- ----------
General partners and other limited partners
Capital contributions, net of distributions 217,360 217,360
Cumulative loss (259,680) (257,034)
---------- ----------
(42,320) (39,674)
---------- ----------
11,216,358 11,480,079
---------- -----------
$ 37,097,515 $ 37,350,368
============ ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 1998
(UNAUDITED)
4. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
three months ended March 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
------------ -------------
<S> <C> <C>
REVENUE
Rental $ 936,836 $ 921,802
Interest and other 38,803 35,808
-------------- -------------
TOTAL REVENUE 975,639 957,610
------------- -------------
EXPENSES
Administrative 165,572 167,090
Utilities 113,354 148,914
Operating, maintenance and other 188,129 178,126
Taxes and insurance 133,774 128,539
Financial (including amortization of $8,840 and $9,533) 286,059 257,858
Depreciation 347,972 329,020
------------ ------------
TOTAL EXPENSES 1,234,860 1,209,547
------------ ------------
NET LOSS $ (259,221) $ (251,937)
============ =============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Trust, Series I $ (256,575) $ (249,377)
General partners and other limited partners (2,646) (2,560)
-------------- -------------
$ (259,221) $ (251,937)
============ =============
</TABLE>
The combined results of operations of the Local Partnerships for the three
months ended March 31, 1998 are not necessarily indicative of the results
that may be expected for an entire operating period.
5. Additional Information
Additional information, including the audited March 30, 1998 Financial
Statements and the Organization, Purpose and Summary of Significant
Accounting Policies, is included in the Trust's Annual Report on Form 10-K
for the fiscal year ended March 30, 1998 on file with the Securities and
Exchange Commission.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Material Changes in Financial Condition
As of June 29, 1998, American Tax Credit Trust (the "Registrant") has not
experienced a significant change in financial condition as compared to March 30,
1998. Principal changes in assets are comprised of periodic transactions and
adjustments and anticipated equity in loss from operations of the local
partnerships (the "Local Partnerships") which own low-income multifamily
residential complexes (the "Properties") which qualify for the low-income tax
credit under Section 42 of the Internal Revenue Code. During the three months
ended June 29, 1998, Registrant received cash from interest revenue and
distributions from Local Partnerships and utilized cash for operating expenses
and making capital contributions to Local Partnerships. Cash and cash
equivalents and investments in bonds available-for-sale increased, in the
aggregate, by approximately $111,000 during the three months ended June 29, 1998
(which included a net unrealized gain on investments in bonds of approximately
$7,000 and the amortization of net premium on investments in bonds of
approximately $1,000), and restricted cash decreased by approximately $151,000
as a result of a capital contribution payment made to a Local Partnership.
Notwithstanding circumstances that may arise in connection with the Properties,
Registrant does not expect to realize significant gains or losses on its
investments in bonds, if any. During the three months ended June 29, 1998, the
investment in Local Partnerships decreased as a result of Registrant's equity in
the Local Partnerships' net loss for the three months ended March 31, 1998 of
$256,575 and cash distributions received from Local Partnerships of $99,497.
Payable to manager in the accompanying balance sheet as of June 29, 1998
represents deferred 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 June 29, 1998, no investment in any Local Partnership has reached a
zero balance.
Registrant's operations for the three months ended June 29, 1998 and 1997
resulted in net losses of $285,311 and $280,823, respectively. The operations of
Registrant and the Local Partnerships were consistent between 1997 and 1998.
Other comprehensive income for the three months ended June 29, 1998 and 1997
resulted from a net unrealized gain on investments in bonds available-for-sale
of $6,926 and $24,417, respectively.
The Local Partnerships' net loss of approximately $259,000 for the three months
ended March 31, 1998 was attributable to rental and other revenue of
approximately $976,000, exceeded by operating and interest expenses (including
interest on non-mandatory debt) of approximately $878,000 and approximately
$357,000 of depreciation and amortization expenses. The Local Partnerships' net
loss of approximately $252,000 for the three months ended March 31, 1997 was
attributable to rental and other revenue of approximately $958,000, exceeded by
operating and interest expenses (including interest on non-mandatory debt) of
approximately $871,000 and approximately $339,000 of depreciation and
amortization expenses. The results of operations of the Local Partnerships for
the three months ended March 31, 1998 are not necessarily indicative of the
results that may be expected in future periods.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
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
three months ended March 31, 1998, 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 substantially all 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.
Adoption of Accounting Standard
On March 31, 1998, Registrant adopted Statement of Financial Accounting Standard
("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of general-purpose
financial statements. The adoption of SFAS No. 130 has not materially impacted
Registrant's financial position and results of operations.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
By: Richman American Credit Corp.,
The Manager
Dated: August 13, 1998 /s/ Richard Paul Richman
--------------- ------------------------
Richard Paul Richman
President, Chief Executive
Officer and Director of the Manager
Dated: August 13, 1998 /s/ Neal Ludeke
--------------- ---------------
Neal Ludeke
Vice President and
Treasurer of the Manager
(Principal Financial and Accounting
Officer of The Trust)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from the
quarter ended June 29, 1998 Form 10Q Balance Sheets and Statements of Operations
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000897315
<NAME> American Tax Credit Trust
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-30-1998
<PERIOD-START> Mar-30-1998
<PERIOD-END> JUN-29-1998
<EXCHANGE-RATE> 1.00
<CASH> 942
<SECURITIES> 1,006
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,689
<CURRENT-LIABILITIES> 993
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,689
<SALES> 0
<TOTAL-REVENUES> 35
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 64
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (285)
<INCOME-TAX> 0
<INCOME-CONTINUING> (285)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (285)
<EPS-PRIMARY> (15.14)
<EPS-DILUTED> 0
</TABLE>
