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EX-32.2 - AMERICAN TAX CREDIT PROPERTIES II L P | v173750_ex32-2.htm |
EX-32.1 - AMERICAN TAX CREDIT PROPERTIES II L P | v173750_ex32-1.htm |
EX-31.2 - AMERICAN TAX CREDIT PROPERTIES II L P | v173750_ex31-2.htm |
EX-31.1 - AMERICAN TAX CREDIT PROPERTIES II L P | v173750_ex31-1.htm |
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 December
30, 2009
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: 0-18405
American Tax Credit
Properties II L.P.
(Exact
Name of Registrant as Specified in its Charter)
Delaware
|
13-3495678
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
No.
|
|
Richman
Tax Credit Properties II L.P.
340
Pemberwick Road
Greenwich,
Connecticut
|
06831
|
|
(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 ¨
Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
Registrant was required to submit and post such files).
Yes ¨ No
¨
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated
Filer ¨ Smaller
Reporting Company x
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes ¨ No
x
As of
February 10, 2010, there are 55,746 units of limited partnership interest
outstanding.
AMERICAN
TAX CREDIT PROPERTIES II L.P.
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
AMERICAN
TAX CREDIT PROPERTIES II L.P.
BALANCE
SHEETS
(UNAUDITED)
December
30,
|
March
30,
|
|||||||
2009
|
2009
|
|||||||
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 3,227,557 | $ | 1,008,523 | ||||
Due
from local partnership
|
46,450 | |||||||
Investment
in local partnerships
|
1,157,597 | 1,081,160 | ||||||
$ | 4,431,604 | $ | 2,089,683 | |||||
LIABILITIES
AND PARTNERS' EQUITY (DEFICIT)
|
||||||||
Liabilities
|
||||||||
Accounts
payable and accrued expenses
|
$ | 75,063 | $ | 431,687 | ||||
Payable
to general partner and affiliates
|
836,118 | 963,456 | ||||||
911,181 | 1,395,143 | |||||||
Commitments
and contingencies
|
||||||||
Partners'
equity (deficit)
|
||||||||
General
partner
|
(457,567 | ) | (485,826 | ) | ||||
Limited
partners (55,746 units of limited partnership interest
outstanding)
|
3,977,990 | 1,180,366 | ||||||
3,520,423 | 694,540 | |||||||
$ | 4,431,604 | $ | 2,089,683 |
See Notes
to Financial Statements.
3
AMERICAN
TAX CREDIT PROPERTIES II L.P.
STATEMENTS
OF OPERATIONS
THREE
AND NINE MONTH PERIODS ENDED DECEMBER 30, 2009 AND 2008
(UNAUDITED)
Three
Months
|
Nine
Months
|
Three
Months
|
Nine
Months
|
|||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
December
30,
2009
|
December
30,
2009
|
December
30,
2008
|
December
30,
2008
|
|||||||||||||
REVENUE
|
||||||||||||||||
Interest
|
$ | 915 | $ | 1,868 | $ | 2,207 | $ | 16,479 | ||||||||
Other
income from local partnerships
|
9,600 | 29,714 | 112,721 | |||||||||||||
TOTAL
REVENUE
|
10,515 | 31,582 | 2,207 | 129,200 | ||||||||||||
EXPENSES
|
||||||||||||||||
Administration
fees
|
38,849 | 147,331 | 55,196 | 163,068 | ||||||||||||
Management
fees
|
38,849 | 147,331 | 55,196 | 163,068 | ||||||||||||
Professional
fees
|
29,928 | 75,072 | 25,754 | 66,174 | ||||||||||||
State
of New Jersey filing fee
|
17,549 | 52,648 | 15,258 | 22,996 | ||||||||||||
Printing,
postage and other
|
7,306 | 15,603 | (890 | ) | 8,978 | |||||||||||
TOTAL
EXPENSES
|
132,481 | 437,985 | 150,514 | 424,284 | ||||||||||||
(121,966 | ) | (406,403 | ) | (148,307 | ) | (295,084 | ) | |||||||||
Equity
in income (loss) of investment in local partnerships
|
120,940 | (30,063 | ) | (113,590 | ) | (129,651 | ) | |||||||||
Loss
prior to gain on sale of limited partner interests/local
partnership properties
|
(1,026 | ) | (436,466 | ) | (261,897 | ) | (424,735 | ) | ||||||||
Gain
on sale of limited partner interests/local partnership
properties
|
3,252,349 | 3,262,349 | 8,000 | |||||||||||||
NET
INCOME (LOSS)
|
3,251,323 | 2,825,883 | (261,897 | ) | (416,735 | ) | ||||||||||
Other
comprehensive loss, net
|
(3,268 | ) | ||||||||||||||
COMPREHENSIVE
INCOME (LOSS)
|
$ | 3,251,323 | $ | 2,825,883 | $ | (261,897 | ) | $ | (420,003 | ) | ||||||
NET
INCOME (LOSS) ATTRIBUTABLE TO
|
||||||||||||||||
General
partner
|
$ | 32,513 | $ | 28,259 | $ | (2,619 | ) | $ | (4,167 | ) | ||||||
Limited
partners
|
3,218,810 | 2,797,624 | (259,278 | ) | (412,568 | ) | ||||||||||
$ | 3,251,323 | $ | 2,825,883 | $ | (261,897 | ) | $ | (416,735 | ) | |||||||
NET INCOME (LOSS) per
unit of limited partnership interest (55,746 units of limited partnership
interest)
|
$ | 57.75 | $ | 50.19 | $ | (4.65 | ) | $ | (7.40 | ) |
See Notes
to Financial Statements.
4
AMERICAN
TAX CREDIT PROPERTIES II L.P.
STATEMENTS
OF CASH FLOWS
NINE
MONTHS ENDED DECEMBER 30, 2009 AND 2008
(UNAUDITED)
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Interest
received
|
$ | 1,868 | $ | 11,852 | ||||
Cash
paid for
|
||||||||
administration
fees
|
(372,000 | ) | (22,365 | ) | ||||
management
fees
|
(394,665 | ) | ||||||
professional
fees
|
(94,893 | ) | (104,234 | ) | ||||
State
of New Jersey filing fee
|
(40,616 | ) | (84,697 | ) | ||||
printing,
postage and other expenses
|
(19,773 | ) | (39,207 | ) | ||||
Net
cash used in operating activities
|
(920,079 | ) | (238,651 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Distributions
received from local partnerships
|
20,114 | 112,721 | ||||||
Voluntary
advances to local partnerships
|
(106,500 | ) | ||||||
Proceeds
from maturities/redemptions and sales of investments in
bonds
|
844,000 | |||||||
Proceeds
in connection with sale of limited partner interests/local partnership
properties
|
3,225,499 | 8,000 | ||||||
Net
cash provided by investing activities
|
3,139,113 | 964,721 | ||||||
Net
increase in cash and cash equivalents
|
2,219,034 | 726,070 | ||||||
Cash
and cash equivalents at beginning of period
|
1,008,523 | 706,974 | ||||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 3,227,557 | $ | 1,433,044 | ||||
SIGNIFICANT
NON-CASH INVESTING ACTIVITIES
|
||||||||
Increase
in due from local partnership classified as gain on sale of limited
partner interests/local partnership properties
|
$ | 36,850 | ||||||
Increase
in due from local partnership classified as other income from local
partnerships
|
$ | 9,600 | ||||||
Unrealized
loss on investments in bonds, net
|
$ | (3,268 | ) |
See
reconciliation of net income (loss) to net cash used in operating activities on
page 6.
See Notes
to Financial Statements.
5
AMERICAN
TAX CREDIT PROPERTIES II L.P.
STATEMENTS
OF CASH FLOWS - (Continued)
NINE
MONTHS ENDED DECEMBER 30, 2009 AND 2008
(UNAUDITED)
2009
|
2008
|
|||||||
RECONCILIATION
OF NET INCOME (LOSS) TO NET CASH USED IN OPERATING
ACTIVITIES
|
||||||||
Net
income (loss)
|
$ | 2,825,883 | $ | (416,735 | ) | |||
Adjustments
to reconcile net income (loss) to net cash used in operating
activities
|
||||||||
Equity
in loss of investment in local partnerships
|
30,063 | 129,651 | ||||||
Distributions
from local partnerships classified as other income
|
(29,714 | ) | (112,721 | ) | ||||
Gain
on sale of limited partner interests/local partnership
properties
|
(3,262,349 | ) | (8,000 | ) | ||||
Accretion
of zero coupon bonds
|
(4,627 | ) | ||||||
Increase
in prepaid expenses
|
(18,907 | ) | ||||||
Increase
(decrease) in payable to general partner and affiliates
|
(127,338 | ) | 303,771 | |||||
Decrease
in accounts payable and accrued expenses
|
(356,624 | ) | (111,083 | ) | ||||
NET
CASH USED IN OPERATING ACTIVITIES
|
$ | (920,079 | ) | $ | (238,651 | ) |
See Notes
to Financial Statements.
6
AMERICAN
TAX CREDIT PROPERTIES II L.P.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
30, 2009
(UNAUDITED)
1.
|
Basis
of Presentation
|
The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
(“GAAP”) for interim financial information. They do not include all
information and footnotes required by GAAP for complete financial
statements. The results of operations are impacted 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
General Partner, the financial statements include all adjustments necessary to
present fairly the financial position as of December 30, 2009 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 nine months ended December 30, 2009 are not necessarily
indicative of the results that may be expected for the entire year.
Recent Accounting
Pronouncements
The
Financial Accounting Standards Board (“FASB”) issued Interpretation (“FIN”) No.
48, “Accounting for Uncertainty in Income Taxes,” as codified by FASB Accounting
Standards Codification (“ASC”) Topic 740; Subtopic 10, which interprets
Statement of Financial Accounting Standard (“SFAS”) No. 109, “Accounting for
Income Taxes,” as codified by ASC Topic 740; Subtopic 10. ASC Topic
740; Subtopic 10 requires all taxpayers to analyze all material positions they
have taken or plan to take in all tax returns that have been filed or should
have been filed with all taxing authorities for all years still subject to
challenge by those taxing authorities. If the position taken is
“more-likely-than-not” to be sustained by the taxing authority on its technical
merits and if there is more than a 50% likelihood that the position would be
sustained if challenged and considered by the highest court in the relevant
jurisdiction, the tax consequences of that position should be reflected in the
taxpayer’s GAAP financial statements. Because the Partnership is a
pass-through entity and is not required to pay income taxes, ASC Topic 740;
Subtopic 10 does not currently have any impact on its financial
statements.
FASB
issued SFAS No. 157, “Fair Value Measurements,” as codified by ASC Topic 820,
which defines fair value, establishes a framework for measuring fair value in
accordance with GAAP and expands disclosures about fair value
measurements. ASC Topic 820 applies to other accounting
pronouncements that require or permit fair value
measurements. Accordingly, ASC Topic 820 does not require any new
fair value measurements. ASC Topic 820 is effective for fiscal years
beginning after November 15, 2007. The Partnership adopted ASC
Topic 820 effective March 31, 2008. On February 6, 2008 FASB approved
the Financial Staff Position (“FSP”) that deferred the effective date of ASC
Topic 820 by one year for nonfinancial assets and liabilities that are
recognized or disclosed at fair value in the financial statements on a
nonrecurring basis. The partial adoption of ASC Topic 820 for
financial assets and liabilities did not have a material impact on the
Partnership’s financial position, results of operations or cash
flows.
The
Partnership adopted ASC Topic 820 as of March 31, 2008, with the exception of
the application of the statement to nonrecurring nonfinancial assets and
nonfinancial liabilities. Nonrecurring nonfinancial assets and
liabilities for which the Partnership has not applied the provisions of ASC
Topic 820 include investment in local partnerships, which is accounted for under
the equity method of accounting.
ASC Topic
820 establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. These tiers include: Level 1, defined
as observable inputs such as quoted prices in active markets for identical
assets or liabilities; Level 2, defined as inputs other than quoted prices for
similar assets or liabilities in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which
little or no market data exists, therefore requiring an entity to develop its
own assumptions.
Financial
assets accounted for at historical cost which approximates fair value on a
recurring basis as of December 30, 2009 are cash and cash equivalents of
$3,227,557 as reflected in the accompanying unaudited balance
sheet. Cash and cash equivalents are carried at historical cost which
approximates fair value based on quoted market prices for identical securities
(Level 1 inputs).
7
AMERICAN
TAX CREDIT PROPERTIES II L.P.
NOTES
TO FINANCIAL STATEMENTS - (Continued)
DECEMBER
30, 2009
(UNAUDITED)
1.
|
Basis
of Presentation (continued)
|
FASB
issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities - including an amendment of FASB Statement No. 115,” as codified by
ASC Topic 825; Subtopic 10, which permits entities to choose to measure many
financial instruments and certain other items at fair value. The fair
value election is designed to improve financial reporting by providing entities
with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. ASC Topic 825; Subtopic 10 is
effective for fiscal years beginning after November 15, 2007. On
March 31, 2008, the Partnership adopted ASC Topic 825; Subtopic 10 and elected
not to apply the provisions to its eligible financial assets and financial
liabilities on the date of adoption. Accordingly, the initial
application of ASC Topic 825; Subtopic 10 had no effect on the Partnership’s
financial statements.
FASB
issued SFAS No. 141R, “Business Combinations,” as codified by ASC Topic 805,
which changes the accounting for acquisitions specifically eliminating the step
acquisition model, changing the recognition of contingent consideration from
being recognized when it is probable to being recognized at the time of
acquisition, and disallowing the capitalization of transaction costs and delays
when restructurings related to acquisitions can be recognized. ASC
Topic 805 is effective for fiscal years ending after December 15, 2008 and its
adoption has not had an impact on the Partnership’s financial position or
results of operations.
FASB
issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51,” as codified by ASC Topic 810, which
replaces the concept of minority interest with noncontrolling interests in
subsidiaries. Noncontrolling interests will now be reported as a
component of equity in the consolidated statement of financial
position. Earnings attributable to noncontrolling interests will
continue to be reported as a part of consolidated earnings; however, ASC Topic
810 requires that income attributable to both controlling and noncontrolling
interests be presented separately on the face of the consolidated income
statement. In addition, ASC Topic 810 provides that when losses
attributable to noncontrolling interests exceed the noncontrolling interest’s
basis, losses continue to be attributed to the noncontrolling interest as
opposed to being absorbed by the consolidating entity. ASC Topic 810
requires retroactive adoption of the presentation and disclosure requirements
for existing minority interests. All other requirements of ASC Topic
810 shall be applied prospectively. ASC Topic 810 is effective for
the first annual reporting period beginning on or after December 15, 2008 and
its adoption has not had an impact on the Partnership’s financial position or
results of operations.
The
Emerging Issues Task Force (“EITF”) issued EITF No. 08-6, “Equity Method
Investment Accounting Considerations,” as codified by ASC Topic 323; Subtopic
10, which addresses how the initial carrying value of an equity method
investment should be determined, how an impairment assessment of an underlying
indefinite-lived intangible asset of an equity method investment should be
performed, how an equity method investee’s issuance of shares should be
accounted for, and how to account for a change in an investment from the equity
method to the cost method. ASC Topic 323; Subtopic 10 shall be
effective in fiscal years beginning on or after December 15, 2008, and
interim periods within those fiscal years. ASC Topic 323; Subtopic 10
shall be applied prospectively with early application prohibited and its
adoption has not had an impact on the Partnership’s financial position or
results of operations.
In April
2009, FASB issued FSP 107-1 and APB 28-1, “Interim Disclosures about Fair Value
of Financial Instruments,” as codified by ASC Topic 825; Subtopic 10, which
requires disclosure about the method and significant assumptions used to
establish the fair value of financial instruments for interim reporting periods
as well as annual statements. ASC Topic 825; Subtopic 10 is effective
for the Partnership as of June 30, 2009 and its adoption did not impact the
Partnership’s financial condition or results of operations. The
Partnership has no financial instruments as of December 30, 2009.
In May
2009, FASB issued SFAS No. 165, “Subsequent Events,” as codified by ASC Topic
855, which establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. ASC Topic 855 is effective
for the Partnership as of June 30, 2009 and its adoption did not have an impact
on the Partnership’s financial condition or results of
operations.
8
AMERICAN
TAX CREDIT PROPERTIES II L.P.
NOTES
TO FINANCIAL STATEMENTS - (Continued)
DECEMBER
30, 2009
(UNAUDITED)
1.
|
Basis
of Presentation (continued)
|
In June
2009, FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),”
as codified by ASC Topic 810; Subtopic 10. ASC Topic 810; Subtopic 10
amends existing consolidation guidance for variable interest entities, requires
ongoing reassessment to determine whether a variable interest entity must be
consolidated, and requires additional disclosures regarding involvement with
variable interest entities and any significant changes in risk exposure due to
that involvement. ASC Topic 810; Subtopic 10 will be effective for
the Partnership’s fiscal year beginning March 31, 2010. The
Partnership is currently evaluating the effects of ASC Topic 810; Subtopic 10 on
its financial statements.
2.
|
Investment
in Local Partnerships
|
The
Partnership originally acquired limited partner interests (the “Local
Partnership Interests”) in fifty Local Partnerships representing capital
contributions in the aggregate amount of $48,366,168, which amount includes
voluntary advances made to certain Local Partnerships and all of which has been
paid. As of December 30, 2009, the Partnership holds a Local
Partnership Interest in thirty-seven Local Partnerships. The
Partnership has no legal obligation to fund any operating deficits of the Local
Partnerships.
For the
nine months ended December 30, 2009, the investment in local partnerships
activity consists of the following:
Investment
in local partnerships as of March 30, 2009
|
$ | 1,081,160 | ||
Voluntary
advances made to Local Partnerships
|
106,500 | |||
Equity
in loss of investment in local partnerships
|
(30,063 | )* | ||
Distributions
received from local partnerships
|
(20,114 | ) | ||
Distributions
receivable from local partnerships
|
(9,600 | ) | ||
Distributions
classified as other income
|
29,714 | |||
Investment
in local partnerships as of December 30, 2009
|
$ | 1,157,597 |
*
|
In
the event the operations of a Local Partnership result in a loss, equity
in loss of each investment in Local Partnership allocated to the
Partnership is recognized to the extent of the Partnership’s investment
balance in each Local Partnership. Equity
in loss in excess of the Partnership’s investment balance in a Local
Partnership is allocated to other partners’ capital in any such Local
Partnership.
|
The
Partnership’s investment balance in North Hills Farms Limited Partnership
(“North Hills Farms”) represents more than 20% of the Partnership’s total assets
as of December 30, 2009 and the equity in loss of investment in local
partnerships reflected above includes $76,437 of income attributable to North
Hills Farms. The following financial information represents certain
unaudited operating statement data of North Hills Farms for the nine months
ended September 30, 2009:
Revenue
|
$ | 2,051,185 | ||
Net
income
|
$ | 77,209 |
In
September 2009, the Partnership sold its Local Partnership Interest in Nixa
Heights Apartments, L.P. (“Nixa Heights”) to an affiliate of the Local General
Partner of Nixa Heights for $10,000. Such amount is included in gain
on sale of limited partner interests/local partnership properties in the
accompanying unaudited statement of operations for the nine months ended
December 30, 2009. The Partnership’s investment balance in Nixa
Heights, after cumulative equity losses, became zero during the year ended March
30, 2001.
9
AMERICAN
TAX CREDIT PROPERTIES II L.P.
NOTES
TO FINANCIAL STATEMENTS - (Continued)
DECEMBER
30, 2009
(UNAUDITED)
2.
|
Investment in Local
Partnerships (continued)
|
In
November 2009, Harborside Housing Limited Partnership (“Harborside”) sold its
underlying Property, in connection with which the Partnership received
$3,215,499. Such amount is included in gain on sale of limited
partner interests/local partnership properties in the accompanying unaudited
statement of operations for the nine months ended December 30,
2009. There may be additional proceeds after a reconciliation of
Harborside’s outstanding receivables and payables and the release of any escrows
by Harborside’s mortgagee. In addition, the Local General Partner of
Harborside established a $300,000 escrow pursuant to the Purchase and Sale
Contract (the “Harborside Contract”) to protect against potential obligations of
Harborside to the buyer. In accordance with the Harborside Contract,
any remaining balance in such escrow will be distributed to the Partnership
after one year. Any additional proceeds received by the Partnership
will be recognized as income when received. The Partnership’s
investment balance in Harborside, after cumulative equity losses, became zero
during the year ended March 30, 2004.
In
December 2009, Hughes Manor Limited Partnership (“Hughes Manor”) sold its
underlying Property, in connection with which the Partnership will receive
$46,450. Such amount is reflected as due from local partnership in
the accompanying unaudited balance sheet as of December 30, 2009, while $36,850
is included in gain on sale of limited partner interests/local partnership
properties and $9,600 is included in other income from local partnerships in the
accompanying unaudited statement of operations for the nine months then
ended. The Partnership’s investment balance in Hughes Manor, after
cumulative equity losses, became zero during the year ended March 30,
2002.
The first
mortgage of Ann Ell Apartments Associates, Ltd. (“Ann Ell”) matured in January
2009 but has not been repaid or formally extended; unpaid principal and accrued
interest total approximately $3,172,000 as of December 2009. In
addition, Ann Ell’s non-mandatory second mortgage matured in February 2006 but
has not been repaid or formally extended. Unpaid principal and
accrued interest on the second mortgage total approximately $827,000 as of
December 2009. Ann Ell has entered into a Commercial Contract for
Purchase and Sale (the “Ann Ell Contract”) to sell the Property for $3,450,000,
whereby the first mortgage holder would be paid in full and the remaining
proceeds would be paid to the second mortgage holder. The Ann Ell
Contract is currently being reviewed by the second mortgage
holder. There can be no assurance that the Property will be sold
under the terms of the Ann Ell Contract. The Partnership has made
cumulative voluntary advances of $712,366 to Ann Ell as of December 30, 2009 to
fund operating deficits, of which $106,500 was advanced during the nine months
then ended. The Partnership’s investment balance in Ann Ell, after
cumulative equity losses, became zero during the year ended March 30, 1994 and
voluntary advances made by the Partnership have been recorded as investment in
local partnerships and offset by additional equity in loss of investment in
local partnerships.
The Local
General Partner of Queen Lane Investors (“Queen Lane”) represents that, as a
result of a dispute between the local housing agency (the “Agency”) and the
Local General Partner of Queen Lane regarding the adequacy of certain unit
repairs mandated by the Agency, the Local General Partner of Queen Lane
requested that the Agency cancel the Section 8 voucher contract in connection
with the Property. As a result, the Property has been vacant since
October 2007. Two of Queen Lane’s mortgages matured in 2007 but have
not been repaid or formally extended, representing principal and accrued
interest of approximately $1,932,000 as of December 2009. The Local
General Partner of Queen Lane further represents that the lender has not issued
a notice of default and that real estate taxes are in arrears approximately
$37,000 as of December 2009. The Local General Partner of Queen Lane
is examining the potential to sell the Property. The Partnership’s
investment balance in Queen Lane, after cumulative equity losses, became zero
during the year ended March 30, 2001.
The
non-mandatory mortgages of Littleton Avenue Community Village, L.P.
(“Littleton”) matured in October 2006 but have not been repaid or formally
extended. Unpaid principal and accrued interest as of December 2009
total approximately $8,253,000. The Local General Partner of
Littleton represents that neither lender has declared a default and that
negotiations are ongoing in an effort to refinance the mortgages. The
real estate tax abatement on the Property expired in June 2007; the City of
Newark (the “City”) has assessed the Property and has charged Littleton for real
estate taxes. The Local General Partner of Littleton reports that
real estate taxes are in arrears approximately $103,000 as of December 2009 and
that the City has sold approximately $72,000 in tax liens to a third
party. The Partnership’s investment balance in Littleton, after
cumulative equity losses, became zero during the year ended March 30,
1999.
10
AMERICAN
TAX CREDIT PROPERTIES II L.P.
NOTES
TO FINANCIAL STATEMENTS - (Continued)
DECEMBER
30, 2009
(UNAUDITED)
3.
|
Additional
Information
|
Additional
information, including the audited March 30, 2009 Financial Statements and the
Organization, Purpose and Summary of Significant Accounting Policies, is
included in the Partnership's Annual Report on Form 10-K for the fiscal year
ended March 30, 2009 on file with the Securities and Exchange
Commission.
4.
|
Subsequent
Events
|
Management
has evaluated all activity of the Partnership through
February 10, 2010 and concluded that no subsequent events have occurred that
would require recognition in the accompanying financial statements or disclosure
in the notes thereto.
11
AMERICAN
TAX CREDIT PROPERTIES II L.P.
Item
2. Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Material Changes in
Financial Condition
As of
December 30, 2009, resulting primarily from proceeds received in connection with
the sale of the property owned by Harborside Housing Limited Partnership
(“Harborside”) (see discussion below under Local Partnership
Matters), American Tax Credit Properties II L.P. (the “Registrant”) has
experienced a significant change in financial condition as compared to March 30,
2009. Principal changes in assets are comprised of periodic
transactions and adjustments and equity in income (loss) from operations of the
local partnerships (the “Local Partnerships”), which own low-income multifamily
residential complexes (the “Properties”) that qualified for the low-income tax
credit in accordance with Section 42 of the Internal Revenue Code (the
“Low-income Tax Credit”). During the nine months ended December 30,
2009, Registrant received cash from interest revenue, distributions from Local
Partnerships and proceeds in connection with the sale of its limited partner
interest (the “Local Partnership Interest”) in Nixa Heights Apartments, L.P.
(“Nixa Heights”) and the sale of the Harborside Property (see discussion below
under Local
Partnership Matters) and utilized cash for operating expenses and making
voluntary advances to a Local Partnership (see discussion below under Local Partnership
Matters). Cash and cash equivalents increased by approximately
$2,219,000 during the nine months ended December 30, 2009. During the
nine months ended December 30, 2009, the investment in local partnerships
increased as a result of voluntary advances of $106,500 made to a Local
Partnership (see discussion below under Local Partnership
Matters), partially offset by Registrant’s equity in the Local
Partnerships’ net loss for the nine months ended September 30, 2009 of
$30,063. During the nine months ended December 30, 2009, accounts
payable and accrued expenses decreased primarily as a result of the payment of
deferred administration fees of $344,665. Payable to general partner
and affiliates represents deferred administration and management fees in the
accompanying unaudited balance sheet as of December 30, 2009.
Results of
Operations
Registrant’s
operating results are dependent upon the operating results of the Local
Partnerships and are 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 and is
adjusted for Registrant's share of each Local Partnership's results of
operations and by cash distributions received. In the event the
operations of a Local Partnership result in a loss, 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.
Cumulative
losses and cash distributions in excess of investment in local partnerships may
result from a variety of circumstances, including a Local Partnership's
accounting policies, subsidy structure, debt structure and operating deficits,
among other things. In addition, the book value of Registrant’s
investment in each Local Partnership (the “Local Partnership Carrying Value”)
may be reduced if the Local Partnership Carrying Value is considered to exceed
the estimated value derived by management. Accordingly, cumulative
losses and cash distributions in excess of the investment or an adjustment to a
Local Partnership’s Carrying Value are not necessarily indicative of adverse
operating results of a Local Partnership.
Registrant’s
operations for the three months ended December 30, 2009 and 2008 resulted in net
income (loss) of $3,251,323 and $(261,897), respectively. The
increase in net income from fiscal 2008 to fiscal 2009 is primarily attributable
to (i) a gain on sale of limited partner interests/local partnership properties
of approximately $3,252,000 in connection with the sales of the Property owned
by Hughes Manor Limited Partnership (“Hughes Manor”) and the Harborside Property
(see discussion below under Local Partnership
Matters) and (ii) an increase in equity in income of investment in local
partnerships of approximately $235,000, which increase is attributable to an
increase in the net operating income of the Local Partnership in which
Registrant continues to have an investment balance, partially offset by
voluntary advances made to a Local Partnership that were written off as equity
in loss of investment in local partnerships (see discussion below under Local Partnership
Matters). In addition, administration and management fees
decreased in the cumulative amount of approximately $33,000 as a result of
Registrant’s sale of its Local Partnership Interests in Nixa Heights, Harborside
and Hughes Manor.
12
AMERICAN
TAX CREDIT PROPERTIES II L.P.
Item
2. Management's Discussion and
Analysis of Financial Condition and Results of Operations
(continued).
Registrant’s
operations for the nine months ended December 30, 2009 and 2008 resulted in net
income (loss) of $2,825,883 and $(416,735), respectively. The
increase in net income from fiscal 2008 to fiscal 2009 is primarily attributable
to (i) an increase in gain on sale of limited partner interests/local
partnership properties of approximately $3,254,000 and (ii) a decrease in equity
in loss of investment in local partnerships of approximately $100,000, which
decrease is attributable to an increase in the net operating income of the Local
Partnership in which Registrant continues to have an investment balance,
partially offset by voluntary advances made to a Local Partnership that were
written off as additional equity in loss of investment in local partnerships
(see discussion below under Local Partnership
Matters), all partially offset by a decrease in interest revenue and
other income from local partnerships of approximately $98,000. In
addition, administration and management fees decreased in the cumulative amount
of approximately $31,000 as a result of Registrant’s sale of its Local
Partnership Interests in Nixa Heights, Harborside and Hughes
Manor. Other comprehensive loss for the nine months ended December
30, 2008 resulted from a net unrealized loss on investments in bonds of
$3,268. Registrant’s investments in bonds as reflected in
Registrant’s balance sheet as of March 30, 2008 matured during the nine months
ended December 30, 2008.
Local Partnership
Matters
Registrant's
primary objective, to provide Low-income Tax Credits to its limited partners
(the “Limited Partners”), has been completed. The relevant state tax
credit agency allocated each of the 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 “Ten Year Credit Period”). The
Ten Year Credit Period was fully exhausted with respect to all of the Properties
as of December 31, 2005. 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 Compliance Period of
all of the Local Partnerships had expired as of December 31, 2006. In
addition, certain of the Local Partnerships 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 (in certain circumstances, up to 50 years from when the
Property is placed in service, but commonly 30 years from the date any such
Property is placed in service), regardless of a sale of the Properties by the
Local Partnerships after the Compliance Period (the “Extended Use
Provisions”). Although the Extended Use Provisions do not extend the
Compliance Period of the respective Local Partnerships, such provisions limit
the number and availability of potential purchasers of the
Properties. Accordingly, a sale of a Property may happen well after
the expiration of the Compliance Period and/or may be significantly
discounted. Registrant is in the process of disposing of its Local
Partnership Interests. As of December 30, 2009, Registrant owns
thirty-seven of the fifty Local Partnership Interests originally
acquired. Registrant has served a demand on the local general
partners (the “Local General Partners”) of all remaining Local Partnerships to
commence a sale process to dispose of the Properties. In the event a
sale cannot be consummated, it is the General Partner’s intention to sell or
assign Registrant’s Local Partnership Interests. Following the final
disposition of its Local Partnership Interests, Registrant intends to dissolve
and does not intend to conduct any business. It is uncertain as to
the amount, if any, that Registrant will receive with respect to each specific
Property from such sales or assignments. There can be no assurance as
to when Registrant will dispose of its remaining Local Partnership
Interests.
The
Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico. Many 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. 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 before debt service (“NOI”) and debt structure of any or all Local
Partnerships currently receiving such subsidy or similar
subsidies. Nine Local Partnerships’ Section 8 contracts, certain of
which cover only certain rental units, are currently subject to renewal under
applicable HUD guidelines. Of the nine Local Partnerships noted
above, three have entered into restructuring agreements, resulting in changes to
both rent subsidy and mandatory debt service.
13
AMERICAN
TAX CREDIT PROPERTIES II L.P.
Item
2. Management's Discussion and
Analysis of Financial Condition and Results of Operations
(continued).
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"). Registrant has no legal obligation to fund any operating
deficits of the Local Partnerships.
In
September 2009, Registrant sold its Local Partnership Interest in Nixa Heights
to an affiliate of the Local General Partner of Nixa Heights for
$10,000. Such amount is included in gain on sale of limited partner
interests/local partnership properties in the accompanying unaudited statement
of operations for the nine months ended December 30,
2009. Registrant’s investment balance in Nixa Heights, after
cumulative equity losses, became zero during the year ended March 30,
2001.
In
November 2009, Harborside sold its underlying Property, in connection with which
Registrant received $3,215,499. Such amount is included in gain on
sale of limited partner interests/local partnership properties in the
accompanying unaudited statement of operations for the nine months ended
December 30, 2009. There may be additional proceeds after a
reconciliation of Harborside’s outstanding receivables and payables and the
release of any escrows by Harborside’s mortgagee. In addition, the
Local General Partner of Harborside established a $300,000 escrow pursuant to
the Purchase and Sale Contract (the “Harborside Contract”) to protect against
potential obligations of Harborside to the buyer. In accordance with
the Harborside Contract, any remaining balance in such escrow will be
distributed to Registrant after one year. Any additional proceeds
received by Registrant will be recognized as income when
received. Registrant’s investment balance in Harborside, after
cumulative equity losses, became zero during the year ended March 30,
2004.
In
December 2009, Hughes Manor sold its underlying Property, in connection with
which Registrant will receive $46,450. Such amount is reflected as
due from local partnership in the accompanying unaudited balance sheet as of
December 30, 2009, while $36,850 is included in gain on sale of limited partner
interests/local partnership properties and $9,600 is included in other income
from local partnerships in the accompanying unaudited statement of operations
for the nine months then ended. Registrant’s investment balance in
Hughes Manor, after cumulative equity losses, became zero during the year ended
March 30, 2002.
The first
mortgage of Ann Ell Apartments Associates, Ltd. (“Ann Ell”) matured in January
2009 but has not been repaid or formally extended; unpaid principal and accrued
interest total approximately $3,172,000 as of December 2009. In
addition, Ann Ell’s non-mandatory second mortgage matured in February 2006 but
has not been repaid or formally extended. Unpaid principal and
accrued interest on the second mortgage total approximately $827,000 as of
December 2009. Ann Ell has entered into a Commercial Contract for
Purchase and Sale (the “Ann Ell Contract”) to sell the Property for $3,450,000,
whereby the first mortgage holder would be paid in full and the remaining
proceeds would be paid to the second mortgage holder. The Ann Ell
Contract is currently being reviewed by the second mortgage
holder. There can be no assurance that the Property will be sold
under the terms of the Ann Ell Contract. Registrant has made
cumulative voluntary advances of $712,366 to Ann Ell as of December 30, 2009 to
fund operating deficits, of which $106,500 was advanced during the nine months
then ended. Registrant does not anticipate the receipt of any
proceeds from the proposed sale of the Property. Registrant’s
investment balance in Ann Ell, after cumulative equity losses, became zero
during the year ended March 30, 1994 and voluntary advances made by Registrant
have been recorded as investment in local partnerships and offset by additional
equity in loss of investment in local partnerships.
The Local
General Partner of Queen Lane Investors (“Queen Lane”) represents that, as a
result of a dispute between the local housing agency (the “Agency”) and the
Local General Partner of Queen Lane regarding the adequacy of certain unit
repairs mandated by the Agency, the Local General Partner of Queen Lane
requested that the Agency cancel the Section 8 voucher contract in connection
with the Property. As a result, the Property has been vacant since
October 2007. Two of Queen Lane’s mortgages matured in 2007 but have
not been repaid or formally extended, representing principal and accrued
interest of approximately $1,932,000 as of December 2009. The Local
General Partner of Queen Lane further represents that the lender has not issued
a notice of default and that real estate taxes are in arrears approximately
$37,000 as of December 2009. The Local General Partner of Queen Lane
is examining the potential to sell the Property. Registrant’s
investment balance in Queen Lane, after cumulative equity losses, became zero
during the year ended March 30, 2001.
14
AMERICAN
TAX CREDIT PROPERTIES II L.P.
Item
2. Management's Discussion and
Analysis of Financial Condition and Results of Operations
(continued).
The
non-mandatory mortgages of Littleton Avenue Community Village, L.P.
(“Littleton”) matured in October 2006 but have not been repaid or formally
extended. Unpaid principal and accrued interest as of December 2009
total approximately $8,253,000. The Local General Partner of
Littleton represents that neither lender has declared a default and that
negotiations are ongoing in an effort to refinance the mortgages. The
real estate tax abatement on the Property expired in June 2007; the City of
Newark (the “City”) has assessed the Property and has charged Littleton for real
estate taxes. The Local General Partner of Littleton reports that
real estate taxes are in arrears approximately $103,000 as of December 2009 and
that the City has sold approximately $72,000 in tax liens to a third
party. Registrant’s investment balance in Littleton, after cumulative
equity losses, became zero during the year ended March 30, 1999.
Critical Accounting Policies
and Estimates
The
accompanying unaudited financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America
(“GAAP”), which requires Registrant to make certain estimates and
assumptions. The following section is a summary of certain aspects of
those accounting policies that may require subjective or complex judgments and
are most important to the portrayal of Registrant’s financial condition and
results of operations. Registrant believes that there is a low
probability that the use of different estimates or assumptions in making these
judgments would result in materially different amounts being reported in the
accompanying financial statements.
|
·
|
Registrant
accounts for its investment in local partnerships in accordance with the
equity method of accounting.
|
|
·
|
If
the book value of Registrant’s investment in a Local Partnership exceeds
the estimated value derived by management, Registrant reduces its
investment in any such Local Partnership and includes such reduction in
equity in income (loss) of investment in local
partnerships. Registrant makes such assessment at least
annually in the fourth quarter of its fiscal year or whenever there are
indications that a permanent impairment may have occurred. A
loss in value of an investment in a Local Partnership other than a
temporary decline would be recorded as an impairment
loss. Impairment is measured by comparing the investment
carrying amount to the estimated residual value of the
investment.
|
|
·
|
Registrant
does not consolidate the accounts and activities of the Local
Partnerships, which are considered Variable Interest Entities under
Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No.
46 - Revised, “Consolidation of Variable Interest Entities,” as codified
by FASB Accounting Standards Codification (“ASC”) Topic 810; Subtopic 10,
because Registrant is not considered the primary
beneficiary. Registrant’s balance in investment in local
partnerships represents the maximum exposure to loss in connection with
such investments. Registrant’s exposure to loss on the Local
Partnerships is mitigated by the condition and financial performance of
the underlying Properties as well as the strength of the Local General
Partners.
|
Recent Accounting
Pronouncements
FASB
issued FIN No. 48, “Accounting for Uncertainty in Income Taxes,” as codified by
ASC Topic 740; Subtopic 10, which interprets Statement of Financial Accounting
Standard (“SFAS”) No. 109, “Accounting for Income Taxes,” as codified by ASC
Topic 740; Subtopic 10. ASC Topic 740; Subtopic 10 requires all
taxpayers to analyze all material positions they have taken or plan to take in
all tax returns that have been filed or should have been filed with all taxing
authorities for all years still subject to challenge by those taxing
authorities. If the position taken is “more-likely-than-not” to be
sustained by the taxing authority on its technical merits and if there is more
than a 50% likelihood that the position would be sustained if challenged and
considered by the highest court in the relevant jurisdiction, the tax
consequences of that position should be reflected in the taxpayer’s GAAP
financial statements. Because Registrant is a pass-through entity and
is not required to pay income taxes, ASC Topic 740; Subtopic 10 does not
currently have any impact on its financial statements.
FASB
issued SFAS No. 157, “Fair Value Measurements,” as codified by ASC Topic 820,
which defines fair value, establishes a framework for measuring fair value in
accordance with GAAP and expands disclosures about fair value
measurements. ASC Topic 820 applies to other accounting
pronouncements that require or permit fair value
measurements. Accordingly, ASC Topic 820 does not require any new
fair value measurements. ASC Topic 820 is effective for fiscal years
beginning after November 15, 2007. Registrant adopted ASC Topic
820 effective March 31, 2008. On February 6, 2008 FASB approved the
Financial Staff Position (“FSP”) that deferred the effective date of ASC Topic
820 by one year for nonfinancial assets and liabilities that are recognized or
disclosed at fair value in the financial statements on a nonrecurring
basis. The partial adoption of ASC Topic 820 for financial assets and
liabilities did not have a material impact on Registrant’s financial position,
results of operations or cash flows.
15
AMERICAN
TAX CREDIT PROPERTIES II L.P.
Item
2. Management's Discussion and
Analysis of Financial Condition and Results of Operations
(continued).
Registrant
adopted ASC Topic 820 as of March 31, 2008, with the exception of the
application of the statement to nonrecurring nonfinancial assets and
nonfinancial liabilities. Nonrecurring nonfinancial assets and
liabilities for which Registrant has not applied the provisions of ASC Topic 820
include investment in local partnerships, which is accounted for under the
equity method of accounting.
ASC Topic
820 establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. These tiers include: Level 1, defined
as observable inputs such as quoted prices in active markets for identical
assets or liabilities; Level 2, defined as inputs other than quoted prices for
similar assets or liabilities in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which
little or no market data exists, therefore requiring an entity to develop its
own assumptions.
Financial
assets accounted for at historical cost which estimates fair value on a
recurring basis as of December 30, 2009 are cash and cash equivalents of
$3,227,557 as reflected in the accompanying unaudited balance
sheet. Cash and cash equivalents are carried at historical cost which
approximates fair value based on quoted market prices for identical securities
(Level 1 inputs).
FASB
issued SFAS No. 141R, “Business Combinations,” as codified by ASC Topic 805,
which changes the accounting for acquisitions specifically eliminating the step
acquisition model, changing the recognition of contingent consideration from
being recognized when it is probable to being recognized at the time of
acquisition, and disallowing the capitalization of transaction costs and delays
when restructurings related to acquisitions can be recognized. ASC
Topic 805 is effective for fiscal years ending after December 15, 2008 and its
adoption has not had an impact on Registrant’s financial position or results of
operations.
FASB
issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51,” as codified by ASC Topic 810, which
replaces the concept of minority interest with noncontrolling interests in
subsidiaries. Noncontrolling interests will now be reported as a
component of equity in the consolidated statement of financial
position. Earnings attributable to noncontrolling interests will
continue to be reported as a part of consolidated earnings; however, ASC Topic
810 requires that income attributable to both controlling and noncontrolling
interests be presented separately on the face of the consolidated income
statement. In addition, ASC Topic 810 provides that when losses
attributable to noncontrolling interests exceed the noncontrolling interest’s
basis, losses continue to be attributed to the noncontrolling interest as
opposed to being absorbed by the consolidating entity. ASC Topic 810
requires retroactive adoption of the presentation and disclosure requirements
for existing minority interests. All other requirements of ASC Topic
810 shall be applied prospectively. ASC Topic 810 is effective for
the first annual reporting period beginning on or after December 15, 2008 and
its adoption has not had an impact on Registrant’s financial position or results
of operations.
The
Emerging Issues Task Force (“EITF”) issued EITF No. 08-6, “Equity Method
Investment Accounting Considerations,” as codified by ASC Topic 323; Subtopic
10, which addresses how the initial carrying value of an equity method
investment should be determined, how an impairment assessment of an underlying
indefinite-lived intangible asset of an equity method investment should be
performed, how an equity method investee’s issuance of shares should be
accounted for, and how to account for a change in an investment from the equity
method to the cost method. ASC Topic 323; Subtopic 10 shall be
effective in fiscal years beginning on or after December 15, 2008, and
interim periods within those fiscal years. ASC Topic 323; Subtopic 10
shall be applied prospectively with early application prohibited and its
adoption has not had an impact on Registrant’s financial position or results of
operations.
In April
2009, FASB issued FSP 107-1 and APB 28-1, “Interim Disclosures about Fair Value
of Financial Instruments,” as codified by ASC Topic 825; Subtopic 10, which
requires disclosure about the method and significant assumptions used to
establish the fair value of financial instruments for interim reporting periods
as well as annual statements. ASC Topic 825; Subtopic 10 is effective
for Registrant as of June 30, 2009 and its adoption did not impact Registrant’s
financial condition or results of operations. Registrant has no
financial instruments as of December 30, 2009.
In May
2009, FASB issued SFAS No. 165, “Subsequent Events,” as codified by ASC Topic
855, which establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. ASC Topic 855 is effective
for Registrant as of June 30, 2009 and its adoption did not impact Registrant’s
financial condition or results of operations.
16
AMERICAN
TAX CREDIT PROPERTIES II L.P.
Item
2. Management's Discussion and
Analysis of Financial Condition and Results of Operations
(continued).
In June
2009, FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),”
as codified by ASC Topic 810; Subtopic 10. ASC Topic 810; Subtopic 10
amends existing consolidation guidance for variable interest entities, requires
ongoing reassessment to determine whether a variable interest entity must be
consolidated, and requires additional disclosures regarding involvement with
variable interest entities and any significant changes in risk exposure due to
that involvement. ASC Topic 810; Subtopic 10 will be effective for
Registrant’s fiscal year beginning March 31, 2010. Registrant is
currently evaluating the effects of ASC Topic 810; Subtopic 10 on its financial
statements.
Forward-Looking
Information
As a
cautionary note, with the exception of historical facts, the matters discussed
in this quarterly report on Form 10-Q are “forward-looking” statements within
the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform
Act”). Forward-looking statements may relate to, among other things,
current expectations, forecasts of future events, future actions, future
performance generally, business development activities, capital expenditures,
strategies, the outcome of contingencies, future financial results, financing
sources and availability and the effects of regulation and
competition. Words such as “anticipate,” “expect,” “intend,” “plan,”
“seek,” “estimate” and other words and terms of similar meaning in connection
with discussions of future operating or financial performance signify
forward-looking statements. Registrant may also provide written
forward-looking statements in other materials released to the
public. Such statements are made in good faith by Registrant pursuant
to the “Safe Harbor” provisions of the Reform Act. Registrant
undertakes no obligation to update publicly or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise. Such forward-looking statements involve known risks,
uncertainties and other factors that may cause Registrant’s actual results of
operations or actions to be materially different from future results of
operations or actions expressed or implied by the forward-looking
statements.
Item
3. Quantitative and Qualitative
Disclosure About Market Risk.
None.
Item
4. Controls and
Procedures.
Disclosure
controls and procedures are controls and procedures that are designed to ensure
that information required to be disclosed by Registrant in reports that
Registrant files or submits under the Exchange Act is recorded, processed,
summarized and timely reported as provided in SEC rules and
forms. Registrant periodically reviews the design and effectiveness
of its disclosure controls and procedures, including compliance with various
laws and regulations that apply to its operations. Registrant makes
modifications to improve the design and effectiveness of its disclosure controls
and procedures, and may take other corrective action, if its reviews identify a
need for such modifications or actions. In designing and evaluating
the disclosure controls and procedures, Registrant recognizes that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives.
Registrant
has carried out an evaluation, under the supervision and the participation of
its management, including the Chief Executive Officer and Chief Financial
Officer of the general partner of the General Partner, of the effectiveness of
the design and operation of its disclosure controls and procedures (as defined
in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of
the three months ended December 30, 2009. Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer of the general partner
of the General Partner concluded that Registrant’s disclosure controls and
procedures were effective as of December 30, 2009.
Item
4T. Internal Control Over
Financial Reporting.
There
were no changes in Registrant’s internal control over financial reporting during
the three months ended December 30, 2009 that have materially affected, or
are reasonably likely to materially affect, Registrant’s internal control over
financial reporting.
17
PART
II - OTHER
INFORMATION
Item
1.
|
Legal
Proceedings.
|
None.
Item
1A.
|
Risk
Factors.
|
There
have been no material changes from the risk factors previously disclosed in Item
1A of Registrant’s Annual Report on Form 10-K for the year ended March 30,
2009.
Item
2.
|
Unregistered Sales of
Equity Securities and Use of
Proceeds.
|
None.
Item
3.
|
Defaults Upon Senior
Securities.
|
None; see
Item 2 of Part I regarding the mortgage defaults of certain Local
Partnerships.
Item
4.
|
Submission of Matters
to a Vote of Security
Holders.
|
None.
Item
5.
|
Other
Information.
|
None.
Item
6.
|
Exhibits.
|
Exhibit
31.1 - Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
Officer.
Exhibit
31.2 - Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
Officer.
Exhibit
32.1 - Section 1350 Certification of Chief Executive Officer.
Exhibit
32.2 - Section 1350 Certification of Chief Financial Officer.
18
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 PROPERTIES II L.P.
|
||
(a
Delaware limited partnership)
|
||
By:
Richman Tax Credit Properties II L.P.,
|
||
General Partner
|
||
by:
Richman Tax Credits Inc.,
|
||
general partner
|
||
Dated:
February 10, 2010
|
/s/David
Salzman
|
|
by: David
Salzman
|
||
Chief
Executive Officer
|
||
Dated:
February 10, 2010
|
/s/James
Hussey
|
|
by: James
Hussey
|
||
Chief
Financial Officer
|
||
Dated:
February 10, 2010
|
/s/Richard
Paul Richman
|
|
by: Richard
Paul Richman
|
||
Director
|
19