FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
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: 0-20057
WNC HOUSING TAX CREDIT FUND V, L.P., Series 4
California 33-0707612
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
--------- -----------
Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act).
Yes No X
--------- ----------
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
INDEX TO FORM 10-Q
For the Quarter Ended September 30, 2002
2
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
INDEX TO FORM 10-Q
For the Quarter Ended September 30, 2002
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
September 30, 2002 and March 31, 2002......................3
Statements of Operations For the
Three and Six Months Ended September 30, 2002 and 2001......4
Statement of Partners' Equity (Deficit)
For the Six Months Ended September 30, 2002................5
Statements of Cash Flows
For the Six Months Ended September 30, 2002 and 2001.......6
Notes to Financial Statements ...............................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................13
Item 3. Quantitative and Qualitative Disclosures about Market Risk..15
Item 4. Procedures and Controls.....................................15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................15
Item 5. Other Information............................................15
Item 6. Exhibits and Reports on Form 8-K.............................15
Signatures ..........................................................16
Certifications ...................................................17
2
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
BALANCE SHEETS
September 30, 2002 March 31, 2002
---------------------- ---------------------
(unaudited)
ASSETS
Cash and cash equivalents $ 1,173,185 $ 1,221,951
Due from affiliates (Note 3) 22,089 9,732
Investments in limited partnerships net (Note 2) 12,805,379 13,261,486
Other assets 574 574
---------------------- ---------------------
$ 14,001,227 $ 14,493,743
====================== =====================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to limited partnerships (Note 4) $ 154,741 $ 164,475
Accrued fees and expenses due to
General Partner and affiliates (Note 3) 12,192 18,143
---------------------- ---------------------
166,933 182,618
---------------------- ---------------------
Commitments and contingencies
Partners' equity (deficit):
General partner (80,717) (75,949)
Limited partners (22,000 units issued and outstanding) 13,915,011 14,387,074
---------------------- ---------------------
Total Partners' equity 13,834,294 14,311,125
---------------------- ---------------------
$ 14,001,227 $ 14,493,743
====================== =====================
See accompanying notes to financial statements
3
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended September 30, 2002 and 2001
(unaudited)
2002 2001
------------------------------------------ ---------------------------------------
Three Months Six Months Three Months Six Months
------------------- ----------------- ---------------- ----------------
Interest income $ 5,444 $ 11,458 $ 18,328 $ 32,466
------------------- ----------------- ---------------- ----------------
Operating expenses:
Amortization (Note 2) 14,891 29,782 14,891 29,782
Asset management fees (Note 3) 15,125 30,250 15,125 30,250
Legal and accounting 9,726 13,551 9,213 11,103
Other 1,062 5,630 3,629 7,112
------------------- ----------------- ---------------- ----------------
Total operating expenses 40,804 79,213 42,858 78,247
------------------- ----------------- ---------------- ----------------
Loss from operations (35,360) (67,755) (24,530) (45,781)
Equity in losses of
limited partnerships (204,538) (409,076) (277,549) (555,098)
------------------- ----------------- ---------------- ----------------
Net loss $ (239,898) $ (476,831) $ (302,079) $ (600,879)
=================== ================= ================ ================
Net loss allocated to:
General partner $ (2,399) $ (4,768) $ (3,021) $ (6,009)
=================== ================= ================ ================
Limited partners $ (237,499) $ (472,063) $ (299,058) $ (594,870)
=================== ================= ================ ================
Net loss per weighted limited
partner units $ (11) $ (21) $ (14) $ (27)
=================== ================= ================ ================
Outstanding weighted limited
partner units 22,000 22,000 22,000 22,000
=================== ================= ================ ================
See accompanying notes to financial statements
4
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
For the Six Months Ended September 30, 2002
(unaudited)
General Limited
Partner Partners Total
------------------- ----------------- ---------------
Partners' equity (deficit) at March 31, 2002 $ (75,949) $ 14,387,074 $ 14,311,125
Net loss (4,768) (472,063) (476,831)
------------------- ----------------- ---------------
Partners' equity (deficit) at September 30, 2002 $ (80,717) $ 13,915,011 $ 13,834,294
=================== ================= ===============
See accompanying notes to financial statements
5
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Six Months Ended September 30, 2002 and 2001
(unaudited)
2002 2001
-------------------- ----------------------
Cash flows from operating activities:
Net loss $ (476,831) $ (600,879)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization 29,782 29,782
Equity in losses of limited partnerships 409,076 555,098
Accrued fees and expenses due to
General Partner and affiliates (5,951) 16,671
-------------------- ----------------------
Net cash provided by (used in) operating activities (43,924) 672
-------------------- ----------------------
Cash flows from investing activities:
Investment in limited partnerships - (93,414)
Payable to limited partnerships (9,733) -
Loans receivable (12,357) -
Distributions from limited partnerships 17,248 15,177
-------------------- ----------------------
Net cash (used in)investing activities (4,842) (78,237)
-------------------- ----------------------
Net decrease in cash and cash equivalents (48,766) (77,565)
-------------------- ----------------------
Cash and cash equivalents, beginning of period 1,221,951 1,316,217
-------------------- ----------------------
Cash and cash equivalents, end of period $ 1,173,185 $ 1,238,652
==================== ======================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes Paid $ 800 $ 800
==================== ======================
See accompanying notes to financial statements
6
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2002
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
General
- -------
The accompanying condensed unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act
of 1934. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and six
months ended September 30, 2002 are not necessarily indicative of the results
that may be expected for the fiscal year ending March 31, 2003. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-K for the fiscal year ended March 31,
2002.
Organization
- ------------
WNC Housing Tax Credit Fund V, L.P., Series 4, a California Limited Partnership
(the "Partnership"), was formed on July 26, 1995 under the laws of the state of
California, and commenced operations on July 1, 1996. The Partnership was formed
to invest primarily in other limited partnerships and limited liability
companies (the "Local Limited Partnerships") which own and operate multi-family
housing complexes (the "Housing Complex") that are eligible for low-income
housing credits. The local general partners (the "Local General Partners") of
each Local Limited Partnership retain responsibility for maintaining, operating
and managing the Housing Complex.
The Partnership shall continue in full force and effect until December 31, 2050
unless terminated prior to that date, pursuant to the partnership agreement or
law.
WNC & Associates, Inc. ("Associates") is the general partner of the Partnership
(the "General Partners"). The chairman and president own substantially all of
the outstanding stock of Associates. The business of the Partnership is
conducted primarily through Associates as the Partnership has no employees of
its own.
The financial statements include only activity relating to the business of the
Partnership, and do not give effect to the assets that the partners may have
outside of their interest in the Partnership, or to any obligations, including
income taxes, of the partner.
The partnership agreement authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). The offering of Units concluded on July 11, 1997 at which
time 22,000 Units representing subscriptions in the amount of $21,914,830, net
of discount of $79,550 for volume purchases and $5,620 for dealer discounts, had
been accepted. The General Partner has a 1% interest in operating profits and
losses, taxable income and losses and in cash available for distribution from
the Partnership and tax credits. The limited partners will be allocated the
remaining 99% of these items in proportion to their respective investments.
After the limited partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investment (as defined
in the Partnership Agreement) and the General Partner has received proceeds
equal to its capital contribution and a subordinated disposition fee (as
described in Note 3) from the remainder, any additional sale or refinancing
proceeds will be distributed 90% to the limited partners (in proportion to their
respective investments) and 10% to the General Partner.
7
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarter Ended September 30, 2002
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Risks and Uncertainties
- -----------------------
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the low-income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
to mortgage indebtedness. If a Local Limited Partnership does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex and low-income housing credits. As a limited partner of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local Limited Partnerships, and will rely totally on the
Local General Partners of the Local Limited Partnerships for management of the
Local Limited Partnerships. The value of the Partnership's investments will be
subject to changes in national and local economic conditions, including
unemployment conditions, which could adversely impact vacancy levels, rental
payment defaults and operating expenses. This, in turn, could substantially
increase the risk of operating losses for the Housing Complexes and the
Partnership. In addition, each Local Limited Partnership is subject to risks
relating to environmental hazards and natural disasters, which might be
uninsurable. Because the Partnership's operations will depend on these and other
factors beyond the control of the General Partner and the Local General
Partners, there can be no assurance that the anticipated low-income housing
credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the low-income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the
low-income housing credits. There are limits on the transferability of Units,
and it is unlikely that a market for Units will develop. All of management
decisions will be made by the General Partner.
Method of Accounting For Investments in Limited Partnerships
- ------------------------------------------------------------
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnerships are consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of the
investment account and are being amortized over 30 years (see Note 2).
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling limited
partnership interests in the Partnership. The General Partner is obligated to
pay all offering and organization costs in excess of 14.5% (including sales
commissions) of the total offering proceeds. Offering expenses are reflected as
a reduction of limited partners' capital and amounted to $2,960,328 at the end
of all periods presented.
8
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2002
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could materially differ from those
estimates.
Cash and Cash Equivalents
- -------------------------
The Partnership considers all highly liquid investments with remaining maturity
of three months or less when purchased to be cash equivalents. As of September
30 and March 31, 2002, the Partnership had no cash equivalents.
Concentration of Credit Risk
- ----------------------------
At September 30, 2002 and March 31, 2002, the Partnership maintained cash
balances at a certain financial institution in excess of the federally insured
maximum.
Net Loss Per Limited Partner Unit
- ---------------------------------
Net loss per limited partner unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit
includes no dilution and is computed by dividing loss available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net income per unit is not required.
Reporting Comprehensive Income
- ------------------------------
The Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income established standards for the reporting and display of
comprehensive income (loss) and its components in a full set of general-purpose
financial statements. The Partnership had no items of other comprehensive income
for all periods presented, as defined by SFAS No. 130.
New Accounting Pronouncement
- ----------------------------
In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
144"), which addresses accounting and financial reporting for the impairment or
disposal of long-lived assets. SFAS 144 is effective for fiscal years beginning
after December 15, 2001, and generally, is to be applied prospectively. SFAS 144
is not expected to have a material impact on the Partnership's financial
position or results of operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 addresses accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (Including
Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
and measured initially at fair value when the liability is incurred. SFAS No.
146 is effective for exit or disposal activities that are initiated after
December 31, 2002, with early application encouraged. The Company does not
expect the adoption of this statement to have a material effect on the Company's
financial statements
9
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2002
(unaudited)
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of September 30 and March 31, 2002, the Partnership has acquired limited
partnership interests in 14 Local Limited Partnerships, each of which owns one
Housing Complex consisting of an aggregate of 785 apartment units. As of
September 30 and March 31, 2002, all construction or rehabilitation of the
Housing Complexes was completed. The respective Local General Partners of the
Local Limited Partnerships manages the day-to-day operations of the entities.
Significant Local-Limited Partnership business decisions require approval from
the Partnership. The Partnership, as a limited partner, is generally entitled to
99%, as specified in the Local Limited Partnership agreements, of the operating
profits and losses, taxable income and losses and tax credits of the Local
Limited Partnerships, except for one of the investments in which it is entitled
to 49.5% of such amounts.
Equity in losses of the Local Limited Partnerships is recognized in the
financial statements until the related investment account is reduced to a zero
balance. Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.
Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income. As of September 30 and March 31, 2002, no
investment recorded in Local Limited Partnerships reached zero balance.
The following is a summary of the equity method activity of the investment in
Local Limited Partnerships for the periods presented below:
For the Six Months For the Year
Ended Ended
September 30, 2002 March 31, 2002
------------------------------ ------------------------
Investment per balance sheet, beginning of period $ 13,261,486 $ 14,075,565
Equity in losses of limited partnerships (409,076) (745,147)
Distributions received from limited partnerships (17,248) (9,368)
Amortization of capitalized acquisition fees and costs (29,782) (59,564)
------------------------------ ------------------------
Investment per balance sheet, end of period $ 12,805,380 $ 13,261,486
============================== ========================
10
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2002
(unaudited)
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- --------------------------------------------------------
Selected financial information for the six months ended September 30, 2002 and
2001 from the combined condensed financial statements of the limited
partnerships in which the partnership has invested is as follows:
2002 2001
------------------- ------------------
Revenues $ 1,723,000 $ 1,569,000
------------------- ------------------
Expenses:
Interest expense 471,000 476,000
Depreciation and amortization 626,000 632,000
Operating expenses 1,064,000 1,060,000
------------------- ------------------
Total Expenses 2,161,000 2,168,000
------------------- ------------------
Net loss $ (438,000) $ (599,000)
=================== ==================
Net loss allocable to the Partnership $ (409,000) $ (555,000)
=================== ==================
Net loss recognized by the Partnership $ (409,000) $ (555,000)
=================== ==================
Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partner may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired and the loss and recapture of the related tax credits could occur.
NOTE 3- RELATED PARTY TRANSACTIONS
- ----------------------------------
As of September 30 and March 31, 2002, $22,089 and $9,732 due from affiliates
consists of certain advances to certain Local Limited Partnership for
operations. Under the terms of the Partnership Agreement, the Partnership has
paid or is obligated to the General Partner or their affiliates for the
following items:
(a) Annual Asset Management fee. An annual asset management fee of the greater
of (i) $2,000 per multi-family housing complex or (ii) 0.275% of Gross
Proceeds. The base fee amount will be adjusted annually based on changes in
the Consumer Price Index. However, in no event will the annual asset
management fee exceed 0.2% of Invested Assets. "Invested Assets" means the
sum of the Partnership's Investment in Local Limited Partnerships and the
Partnership's allocable share of the amount of indebtedness related to the
Housing complexes. Asset management fees of $30,250 were incurred for each
of the six months ended September 30, 2002 and 2001. The Partnership paid
the General Partner or its affiliates $45,375 and $25,208 of these fees
during the six months ended September 30, 2002 and 2001, respectively.
11
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2002
(unaudited)
NOTE 3- RELATED PARTY TRANSACTIONS, continued
- ---------------------------------------------
(b) A subordinated disposition fee in an amount equal to 1% of the sales price
of real estate sold. Payment of this fee is subordinated to the limited
partners receiving a preferred return of 14% through December 31, 2006 and
6% thereafter (as defined in the Partnership Agreement) and is payable only
if the General partner or its affiliates render services in the sales
effort.
Accrued fees and advances due to affiliates of the General Partner included in
the balance sheet consist of the following at:
September 30, 2002 March 31, 2002
---------------------- -------------------------
Asset management fees payable $ 1,436 $ 16,561
Advances by the General Partner or affiliates 10,756 1,582
---------------------- -------------------------
Total $ 12,192 $ 18,143
====================== =========================
NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payables to limited partnerships represent amounts, which are due at various
times based on conditions specified in the Local Limited Partnership agreements.
These contributions are payable in installments and are generally due upon the
limited partnerships achieving certain development and operating benchmarks
(generally within two years of the Partnership's initial investment).
NOTE 5 - INCOME TAXES
No provision for income taxes has been made as the liability for income taxes is
an obligation of the partners of the Partnership.
NOTE 6 - OTHER ITEMS
The former Local General Partner of Ashford Place, one of the Local Limited
Partnerships, has withdrawn from Ashford Place and has been replaced by WNC
Oklahoma LLC, an affiliate of the General Partner. The withdrawn Local General
Partner was a local general partner in other Oklahoma limited partnerships in
which other WNC investment partnership have invested. With respect to those
other Oklahoma limited partnerships, the withdrawn Local General Partner failed
to satisfy its operating deficit guarantees. A settlement agreement was entered
into, a condition of which was that the Local General Partner withdraw from
Ashford Place and the other WNC investment partnerships and be replaced with WNC
Oklahoma LLC.
12
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
With the exception of the discussion regarding historical information,
"Management's Discussion and Analysis of Financial Condition and Results of
operations" and other discussions elsewhere in this Form 10-Q contain
forward-looking statements. Such statements are based on current expectations
subject to uncertainties and other factors, which may involve known and unknown
risks that could cause actual results of operations to differ materially from
those projected or implied. Further, certain forward-looking statements are
based upon assumptions about future events, which may not prove to be accurate.
Risks and uncertainties inherent in forward-looking statements include, but are
not limited to our future cash flows and ability to obtain sufficient financing,
level of operating expenses, conditions in the low-income housing tax credit
property market and the economy in general, as well as legal proceedings.
Historical results are not necessarily indicative of the operating results for
any future period.
Subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by
cautionary statements in this Form 10-Q and in other reports we filed with the
Securities and Exchange Commission. The following discussion should be read in
conjunction with the Financial Statements and the Notes thereto included
elsewhere in this filing.
The following discussion and analysis compares the results of operations for the
six months ended September 30, 2002 and 2001, and should be read in conjunction
with the condensed financial statements and accompanying notes included within
this report.
Financial Condition
The Partnership's assets at September 30, 2002 consisted primarily of $1,173,000
in cash and aggregate investments in the fourteen Local Limited Partnerships of
$12,805,000. Liabilities at September 30, 2002 consisted primarily of $155,000
of note payables to limited partnerships and $12,000 of accrued asset management
fees and reimbursements due to the General Partner and affiliates at September
30, 2002.
Results of Operations
Three Months Ended September 30, 2002 Compared to Three Months Ended September
30, 2001. The Partnership's net loss for the three months ended September 30,
2002 was $(240,000), reflecting a decrease of $62,000 from the $(302,000) of net
loss for the three months ended September 30, 2001. The decrease in net loss is
primarily due to a decrease of equity in losses from limited partnerships, which
decreased by approximately $73,000 to approximately $(205,000) for the three
months ended September 30, 2002 from $(278,000) for the three months ended
September 30, 2001. The decrease in equity in losses from limited partnerships
was offset by an increase in loss from operations of $11,000 to $(35,000), for
the three months ended September 30, 2002 from $(24,000) for the three months
ended September 30, 2001. The increase in loss from operations was primarily due
to a decrease in interest income of $13,000 and an increase in legal and
accounting fees of $1,000, which were offset by a decrease in other operating
expenses of $(3,000) for the three months ended September 30, 2002.
Six Months Ended September 30, 2002 Compared to Six Months Ended September 30,
2001. The Partnership's net loss for the six months ended September 30, 2002 was
$(477,000), reflecting a decrease of $124,000 from the $(601,000) of net loss
for the six months ended September 30, 2001. The decrease in net loss is
primarily due to a decrease of equity in losses from limited partnerships, which
decreased by approximately $146,000 to approximately $(409,000) for the six
months ended September 30, 2002 from $(555,000) for the six months ended
September 30, 2001. The decrease in equity in losses from limited partnerships
was offset by an increase in loss from operations of $22,000 to $(68,000), for
the six months ended September 30, 2002 from $(46,000) for the six months ended
September 30, 2001. The increase in loss from operations was primarily due to a
decrease in interest income of $21,000 and an increase in legal and accounting
fees of $2,000, which was offset by a decrease in other operating expenses of
$(1,000) for the six months ended September 30, 2002.
13
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Cash Flows
Six Months Ended September 30, 2002 Compared to Six Months Ended September 30,
2001. The net cash decrease during the six months ended September 30, 2002 was
$(49,000) compared to a cash decrease for the six months ended September 30,
2001 of $(78,000). The change of $29,000 was due primarily to a decrease in
capital contributions paid to Local Limited Partnerships of $93,000, to $0 for
the six months ended September 30, 2002 from $(93,000) for the six months ended
September 30, 2001. Along with the decrease in capital contributions,
distributions from Limited Partnership increased by $2,000, to $17,000 for the
six months ended September 30, 2002 from $15,000 for the six months ended
September 30, 2001. Offsetting those increases are a decrease in payables to
limited partnerships of $(10,000) and an increase in loans receivable of
$(12,000). The increase in cash provided by investing activities was offset by
the increase of cash used in operating activities by $(45,000) from $1,000
provided in the six months ended September 30, 2001 compared to $(44,000) used
in the six months ended September 30, 2002.
The Partnership expects its future cash flows, together with its net available
assets at September 30, 2002, to be sufficient to meet all currently foreseeable
future cash requirements.
14
Item 3. Quantitative and Qualitative Disclosures About Market Risks
NOT APPLICABLE
Item 4. Procedures and Controls
Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures
pursuant to Exchange Act Rule 13a- 14. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective. There were
no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the
date of their evaluation.
Part II.Other Information
Item 1. Legal Proceedings
NONE
Item 5. Other Information
Wilfred N. Cooper, Jr. has assumed the role of Chief Executive Officer
of WNC & Associates. Wilfred N. Cooper, Sr. who previously held the role
of Chief Executive Officer remains the Chairman of The Board.
Item 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K.
--------------------
1. NONE
(b) Exhibits.
---------
99.1 Certification pursuant to 18 U.S.C. Section 1350 as adapted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
15
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.
WNC HOUSING TAX CREDIT FUND V, L.P. Series 4
By: WNC & Associates, Inc. General Partner of the Registrant
By: /s/Wilfred N. Cooper, Jr.
- -----------------------------
Wilfred N. Cooper, Jr.
President and Chief Operating Officer of WNC & Associates, Inc.
Date: November 14, 2002
By: /s/ Thomas J. Riha
- -----------------------
Thomas J. Riha
Vice President and Chief Financial Officer of WNC & Associates, Inc.
Date: November 14, 2002
16
CERTIFICATIONS
I, Wilfred N. Cooper, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of WNC Housing Tax
Credit Fund V, L.P. Series 4;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 14, 2002
/s/Wilfred N. Cooper, Jr.
- -------------------------
[Signature]
President and Chief Executive Officer of WNC & Associates, Inc.
17
CERTIFICATIONS
I, Thomas J. Riha, certify that:
1. I have reviewed this quarterly report on Form 10-Q of WNC Housing Tax
Credit Fund V, L.P. Series 4;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
(d) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(e) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(f) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
(c) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(d) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 14, 2002
/s/ Thomas J. Riha
- -------------------
[Signature]
Vice-President and Chief Financial Officer of WNC & Associates, Inc.
18