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, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 0-24600
American Tax Credit Trust, a Delaware statutory business trust
Series I
(Exact name of Registrant as specified in its charter)
Delaware 06-6385350
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Richman American Credit Corp.
599 West Putnam Avenue, 3rd Floor
Greenwich, Connecticut 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 869-0900
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes [X] No__
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AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Table of Contents Page
Balance Sheets.............................................................3
Statements of Operations...................................................4
Statements of Cash Flows...................................................5
Notes to Financial Statements..............................................7
2
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
BALANCE SHEETS
(UNAUDITED)
June 29, March 30,
Notes 2000 2000
----- ---- ----
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,109,524 $ 1,003,497
Restricted cash 3 129,736 127,932
Investments in bonds 2 924,586 936,079
Investment in local partnerships 3 8,980,988 9,235,937
Interest receivable 14,959 15,726
------------ ------------
$ 11,159,793 $ 11,319,171
------------ ------------
LIABILITIES AND OWNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 32,007 $ 25,200
Payable to manager 589,073 566,037
Capital contributions payable 3 76,800 76,800
Interest payable 3 52,936 51,132
------------ ------------
750,816 719,169
------------ ------------
Commitments and contingencies 3
Owners' equity (deficit)
Manager (59,173) (57,369)
Beneficial owners (18,654 units of beneficial
ownership interest outstanding) 10,530,089 10,708,711
Accumulated other comprehensive loss 2 (61,939) (51,340)
------------ ------------
10,408,977 10,600,002
$ 11,159,793 $ 11,319,171
============ ============
See Notes to Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 29, 2000 AND 1999
(UNAUDITED)
Notes 2000 1999
----- ---- ----
<S> <C> <C> <C>
REVENUE
$32,383 $28,085
Interest ----------- ------------
TOTAL REVENUE 32,383 28,085
----------- ------------
EXPENSES
Management fee 48,036 48,011
Professional fees 5,800 5,420
Printing, postage and other 6,335 3,515
----------- ------------
TOTAL EXPENSES 60,171 56,946
----------- ------------
Loss from operations (27,788) (28,861)
Equity in loss of investment in local partnerships 3 (152,638) (197,564)
----------- ------------
NET LOSS (180,426) (226,425)
Other comprehensive loss 2 (10,599) (17,076)
----------- ------------
COMPREHENSIVE LOSS $ (191,025) $ (243,501)
=========== ============
NET LOSS ATTRIBUTABLE TO
Manager $ (1,804) $ (2,264)
Beneficial owners (178,622) (224,161)
----------- ------------
$ (180,426) $ (226,425)
=========== ============
NET LOSS per unit of beneficial ownership interest
(18,654 units of beneficial ownership interest) $ (9.58) $ (12.02)
=========== ============
See Notes to Financial Statements.
</TABLE>
4
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 29, 2000 AND 1999
(UNAUDITED)
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 35,848 $ 31,683
Cash paid for management fee (25,000) (25,000)
printing, postage and other expenses (5,328) (5,515)
----------- ----------
Net cash provided by operating activities 5,520 1,168
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships 102,311 750
Transfer from (to) restricted cash (1,804) 287,881
Investment in local partnerships (270,640)
----------- ----------
Net cash provided by investing activities 100,507 17,991
----------- ----------
Net increase in cash and cash equivalents 106,027 19,159
Cash and cash equivalents at beginning of period 1,003,497 937,143
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,109,524 $ 956,302
========== ==========
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized loss on investments in bonds, net $ (10,599) $ (17,076)
========== ==========
Reduction in capital contributions payable $ (19,177)
==========
--------------------------------------------------------------------------------
See reconciliation of net loss to net cash provided by operating activities on
page 6.
See Notes to Financial Statements.
5
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS - (Continued)
THREE MONTHS ENDED JUNE 29, 2000 AND 1999
(UNAUDITED)
2000 1999
---- ----
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net loss $(180,426) $(226,425)
Adjustments to reconcile net loss to net cash
provided by operating activities
Equity in loss of investment in local partnerships 152,638 197,564
Amortization of net premium on investments in bonds 894 894
Decrease in interest receivable 767 768
Increase in accounts payable and accrued expenses 6,807 3,420
Increase in payable to manager 23,036 23,011
Increase in interest payable 1,804 1,936
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 5,520 $ 1,168
========= =========
See Notes to Financial Statements.
6
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 2000
(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, 2000 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, 2000 are not necessarily indicative of the results that may
be expected for the entire year.
2. Investments in Bonds
As of June 29, 2000, certain information concerning investments in bonds is
as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
------------------------ ---- ----- ------ ----------
Corporate debt securities
<S> <C> <C> <C> <C>
After one year through five years $ 99,179 $ -- $ (1,817) $ 97,362
After five years through ten years 685,181 -- (39,999) 645,182
After ten years 202,165 -- (20,123) 182,042
--------- -------- --------- ---------
$ 986,525 $ -- $ (61,939) $ 924,586
========= ======== ========= =========
</TABLE>
7
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 2000
(UNAUDITED)
3. Investment in Local Partnerships
The Trust owns a 98.9%-99% limited partnership interest in ten Local
Partnerships and has committed to make capital contribution payments in the
aggregate amount of $14,741,864, of which the Trust has paid $14,665,064
and $76,800 is outstanding as of June 29, 2000. Restricted cash in the
accompanying balance sheet as of June 29, 2000 represents such outstanding
capital contribution along with accrued interest of $52,936 on an
outstanding capital contribution. The outstanding capital contribution is
payable upon a certain Local Partnership's satisfaction of specified
conditions. As of March 31, 2000, the Local Partnerships have outstanding
mortgage loans payable totaling approximately $22,262,000 and accrued
interest payable on such loans totaling approximately $1,283,000, which are
secured by security interests and liens common to mortgage loans on the
Local Partnerships' real property and other assets.
For the three months ended June 29, 2000, the investment in local
partnerships activity consists of the following:
Investment in local partnerships as of March 30, 2000 $ 9,235,937
Equity in loss of investment in local partnerships (152,638)
Cash distributions received from Local Partnerships (102,311)
------------
Investment in local partnerships as of June 29, 2000 $ 8,980,988
============
The combined unaudited balance sheets of the Local Partnerships as of March
31, 2000 and December 31, 1999 and the combined unaudited statements of
operations of the Local Partnerships for the three months ended March 31,
2000 and 1999 are reflected on pages 9 and 10, respectively.
8
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 2000
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of March 31, 2000
and December 31, 1999 are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---- ----
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 488,705 $ 515,116
Rents receivable 99,779 117,466
Capital contributions receivable 76,800 76,800
Escrow deposits and reserves 1,714,714 1,647,606
Land 1,267,153 1,267,153
Buildings and improvements (net of accumulated depreciation of
$7,072,079 and $6,762,545) 30,025,709 30,321,993
Intangible assets (net of accumulated amortization of $119,519
and $176,272) 300,033 302,368
Other 272,727 250,222
------------- ----------------
$ 35,245,620 $ 34,498,724
============ ================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 465,301 $ 465,926
Due to related parties 829,725 896,462
Mortgage loans 22,261,884 22,355,808
Notes payable 100,000 100,000
Accrued interest 1,282,754 1,221,503
Other 159,547 158,432
------------- ----------------
25,099,211 25,198,131
------------- ----------------
Partners' equity (deficit)
American Tax Credit Trust, Series I
Capital contributions, net of distributions (includes
receivable of $76,800) 14,449,644 14,449,644
Cumulative loss (5,366,345) (5,213,707)
------------- ----------------
9,083,299 9,235,937
------------- ----------------
General partners and other limited partners
Capital contributions, net of distributions 341,103 341,103
Cumulative loss (277,993) (276,447)
------------- ----------------
63,110 64,656
------------- ----------------
9,146,409 9,300,593
------------- ----------------
$ 34,245,620 $ 34,498,724
============= ================
</TABLE>
9
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
JUNE 29, 2000
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
three months ended March 31, 2000 and 1999 are as follows:
2000 1999
---- ----
REVENUE
Rental $ 957,051 $ 958,968
Interest and other 28,339 34,532
TOTAL REVENUE 985,390 993,500
EXPENSES
Administrative 163,673 158,220
Utilities 115,341 125,108
Operating, maintenance and other 204,952 201,322
Taxes and insurance 119,392 122,619
Financial (including amortization of $2,335
and $7,923) 224,347 243,436
Depreciation 311,869 342,410
TOTAL EXPENSES 1,139,574 1,193,115
NET LOSS $ (154,184) $ (199,615)
NET LOSS ATTRIBUTABLE TO
American Tax Credit Trust, Series I $ (152,638) $ (197,564)
General partners and other limited partners (1,546) (2,051)
$ (154,184) $ (199,615)
The combined results of operations of the Local Partnerships for the three
months ended March 31, 2000 are not necessarily indicative of the results
that may be expected for an entire operating period.
4. Additional Information
Additional information, including the audited March 30, 2000 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, 2000 on file with the Securities and
Exchange Commission.
10
<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, 2000, American Tax Credit Trust (the "Registrant") has not
experienced a significant change in financial condition as compared to March 30,
2000. Principal changes in assets are comprised of periodic transactions and
adjustments and anticipated equity in loss from operations of the local
partnerships (the "Local Partnerships") which own low-income multifamily
residential complexes (the "Properties") which qualify for the low-income tax
credit in accordance with Section 42 of the Internal Revenue Code (the
"Low-income Tax Credit"). During the three months ended June 29, 2000,
Registrant received cash from interest revenue and distributions from Local
Partnerships and utilized cash for operating expenses. Cash and cash equivalents
and investments in bonds increased, in the aggregate, by approximately $95,000
during the three months ended June 29, 2000 (which is net of a net unrealized
loss on investments in bonds of approximately $11,000 and the amortization of
net premium on investments in bonds of approximately $1,000). Notwithstanding
circumstances that may arise in connection with the Properties, Registrant does
not expect to realize significant gains or losses on its investments in bonds,
if any. During the three months ended June 29, 2000, 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, 2000 of $152,638 and
cash distributions received from Local Partnerships of $102,311. Payable to
manager in the accompanying balance sheet as of June 29, 2000 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. Accordingly, the investment
is carried at cost, which includes capital contributions payable, and is
adjusted for Registrant's share of each Local Partnership's results of
operations and by cash distributions received. Equity in loss of each investment
in Local Partnership allocated to Registrant is recognized to the extent of
Registrant's investment balance in each Local Partnership. Equity in loss in
excess of Registrant's investment balance in a Local Partnership is allocated to
other partners' capital in any such Local Partnership. As a result, the reported
equity in loss of investment in local partnerships is expected to decrease as
Registrant's investment balances in the respective Local Partnerships become
zero. As of June 29, 2000, no investment in any Local Partnership has reached a
zero balance.
Registrant's operations for the three months ended June 29, 2000 and 1999
resulted in net losses of $180,426 and $226,425, respectively. The decrease in
net loss is primarily attributable to a decrease in equity in loss of investment
in local partnerships of approximately $45,000. Other comprehensive loss for the
three months ended June 29, 2000 and 1999 resulted from a net unrealized loss on
investments in bonds of $10,599 and $17,076, respectively.
The Local Partnerships' net loss of approximately $154,000 for the three months
ended March 31, 2000 was attributable to rental and other revenue of
approximately $985,000, exceeded by operating and interest expenses (including
interest on non-mandatory debt) of approximately $825,000 and approximately
$314,000 of depreciation and amortization expense. The Local Partnerships' net
loss of approximately $200,000 for the three months ended March 31, 1999 was
attributable to rental and other revenue of approximately $993,000, exceeded by
operating and interest expenses (including interest on non-mandatory debt) of
approximately $843,000 and approximately $350,000 of depreciation and
amortization expense. The results of operations of the Local Partnerships for
the three months ended March 31, 2000 are not necessarily indicative of the
results that may be expected in future periods.
11
<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
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,
1999, none of the Local Partnerships have suffered an event of recapture of
Low-income Tax Credits.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States. 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"). The subsidy agreements expire at various times during and after
the Compliance Periods of the Local Partnerships. Since October 1997, the United
States Department of Housing and Urban Development ("HUD") has issued a series
of directives related to project based Section 8 contracts that define owners'
notification responsibilities, advise owners of project based Section 8
properties of what their options are regarding the renewal of Section 8
contracts, provide guidance and procedures to owners, management agents,
contract administrators and HUD staff concerning renewal of Section 8 contracts,
provide policies and procedures on setting renewal rents and handling renewal
rent adjustments and provide the requirements and procedures for opting-out of a
Section 8 project based contract. Registrant cannot reasonably predict
legislative initiatives and governmental budget negotiations, the outcome of
which could result in a reduction in funds available for the various federal and
state administered housing programs including the Section 8 program. Such
changes could adversely affect the future net operating income and debt
structure of any or all Local Partnerships currently receiving such subsidy or
similar subsidies. Three Local Partnerships' Section 8 contracts are currently
subject to renewal under applicable HUD guidelines.
The Local Partnerships have various financing structures which include (i)
required debt service payments ("Mandatory Debt Service") and (ii) debt service
payments which are payable only from available cash flow subject to the terms
and conditions of the notes, which may be subject to specific laws, regulations
and agreements with appropriate federal and state agencies ("Non-Mandatory Debt
Service or Interest"). In the event rents are not sufficient to cover operating
expenses, Mandatory Debt Service requirements and other charges, certain general
partners of the Local Partnerships (the "Local General Partners") are obligated
to provide advances to cover deficits for a certain period of time up to certain
amounts (the "Deficit Guarantee"). A Local General Partner's funding of such
Deficit Guarantee is dependent on its liquidity or ability to borrow the
required funds. During the three months ended March 31, 2000, revenue from
operations of the Local Partnerships has generally been sufficient to cover
operating expenses and Mandatory Debt Service. All of the Local Partnerships are
effectively operating at or above 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 the
required deferral of property management fees.
Year 2000 Compliance
Registrant successfully completed a program to ensure Year 2000 readiness. As a
result, Registrant had no Year 2000 problems that affected its business, results
of operations or financial condition.
12
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Registrant has invested a significant portion of its working capital reserves in
corporate bonds. The market value of such investments is subject to fluctuation
based upon changes in interest rates relative to each investment's maturity
date. Since Registrant's investments in bonds have various maturity dates
through 2016, the value of such investments may be adversely impacted in an
environment of rising interest rates in the event Registrant decides to
liquidate any such investment prior to its maturity. Although Registrant may
utilize reserves to assist an under performing Property, it otherwise intends to
hold such investments to their respective maturities. Therefore, Registrant does
not anticipate any material adverse impact in connection with such investments.
13
<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
14
<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 11, 2000 /s/ Richard Paul Richman
---------------------------------------
by: Richard Paul Richman
President, Chief Executive
Officer and Director of the Manager
Dated: August 11, 2000 /s/ Neal Ludeke
---------------------------------------
by: Neal Ludeke
Vice President and
Treasurer of the Manager
(Principal Financial and Accounting
Officer of The Trust)
15
