FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
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: 0-26869
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 6
California 33-0761578
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3158 Redhill Avenue, Suite 120
Costa Mesa, CA 92626
(Address of principal executive offices)
(714) 662-5565
(Telephone number)
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 VI, L.P., SERIES 6
(A California Limited Partnership)
INDEX TO FORM 10-Q
For The Quarter Ended September 30, 2002
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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.........................14
Item 3. Quantitative and Qualitative Disclosures about Market Risk..16
Item 4. Procedures and Controls.....................................16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................16
Item 5. Other Information............................................16
Item 6. Exhibits and Reports on Form 8-K.............................16
Signatures ..........................................................17
Certifications ......................................................18
2
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
BALANCE SHEETS
September 30, 2002 March 31, 2002
-------------------------- --------------------
(unaudited)
ASSETS
Cash and cash equivalents $ 768,428 $ 751,327
Investments in limited partnerships, net (Note 3) 14,018,576 14,585,268
Loan receivable (Note 2) - 50,000
Other assets 2,049 2,059
-------------------------- --------------------
$ 14,789,053 $ 15,388,654
========================== ====================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to limited partnerships (Note 5) $ 246,175 $ 246,185
Accrued fees and expenses due to
General Partner and affiliates (Note 4) 41,887 43,577
-------------------------- --------------------
Total liabilities 288,062 289,762
-------------------------- --------------------
Commitment and contingencies
Partners' equity (deficit):
General partner (59,468) (53,489)
Limited partners (25,000 units authorized,
20,500 units issued and outstanding) 14,560,459 15,152,381
-------------------------- --------------------
Total partners' equity 14,500,991 15,098,892
-------------------------- --------------------
$ 14,789,053 $ 15,388,654
========================== ====================
See accompanying notes to financial statements
3
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended September 30, 2002 and 2001
(unaudited)
2002 2001
------------------------------------------ ---------------------------------------
Three Six Three Six
Months Months Months Months
----------------- ------------------ ---------------- ----------------
Interest income $ 3,378 $ 7,057 $ 5,396 $ 20,289
----------------- ------------------ ---------------- ----------------
Operating expenses:
Amortization (Note 3) 12,887 25,774 12,887 25,774
Asset management fees (Note 4) 16,994 31,946 14,952 29,904
Legal and accounting fees 7,521 11,196 13,118 15,822
Other 692 5,582 580 20,995
----------------- ------------------ ---------------- ----------------
Total operating expenses 38,094 74,498 41,537 92,495
----------------- ------------------ ---------------- ----------------
Loss from operations (34,716) (67,441) (36,141) (72,206)
Equity in losses of
limited partnerships (Note 3) (265,230) (530,460) (189,376) (379,266)
----------------- ------------------ ---------------- ----------------
Net loss $ (299,946) $ (597,901) $ (225,517) $ (451,472)
================= ================== ================ ================
Net loss allocated to:
General Partner $ (2,999) $ (5,979) $ (2,255) $ (4,515)
================= ================== ================ ================
Limited Partners $ (296,947) $ (591,922) $ (223,262) $ (446,957)
================= ================== ================ ================
Net loss per weighted limited
partner unit $ (14) $ (29) $ (11) $ (22)
================= ================== ================ ================
Outstanding weighted limited
partner units 20,500 20,500 20,500 20,500
================= ================== ================ ================
See accompanying notes to financial statements
4
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(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 $ (53,489) $ 15,152,381 $ 15,098,892
Net loss (5,979) (591,922) (597,901)
------------ --------------- ----------------
Partners' equity (deficit) at September 30, 2002 $ (59,468) $ 14,560,459 $ 14,500,991
============ =============== ================
See accompanying notes to financial statements
5
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(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 $ (597,901) $ (451,472)
Adjustments to reconcile net loss to
cash used in operating activities:
Amortization 25,774 25,774
Equity in losses of limited partnerships 530,460 379,266
Accrued fees and expenses due to
General Partner and affiliates (1,680) 10,237
-------------------
--------------------
Net cash used in operating activities (43,347) (36,195)
-------------------- -------------------
Cash flows from investing activities:
Investments in limited partnerships, net (10) -
Loans receivable 50,000 -
Distributions received 10,458 9,216
-------------------- -------------------
Net cash provided by investing activities 60,448 9,216
-------------------- -------------------
Net increase (decrease) in cash and cash equivalents 17,101 (26,979)
Cash and cash equivalents, beginning of period 751,327 1,152,887
-------------------- -------------------
Cash and cash equivalent, end of period $ 768,428 $ 1,125,908
==================== ===================
Supplemental Disclosure of
Cash Flow Information
Taxes Paid $ 800 $ 800
==================== ===================
See accompanying notes to financial statements
6
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(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 VI, L.P., Series 6 (the "Partnership") was formed on
March 3, 1997 under the laws of the State of California, and commenced
operations on August 20, 1998. Prior to August 20, 1998, the Partnership was
considered a development-stage enterprise. The Partnership was formed to invest
primarily in other limited partnerships ("the Local Limited Partnerships") which
own and operate multi-family housing complexes (the "Housing Complexes") that
are eligible for low-income housing tax credits. The local general partners (the
"Local General Partners") of each Local Limited Partnership retain
responsibility for developing, constructing, maintaining, operating and managing
the Housing Complex.
The general partner is WNC & Associates, Inc. ("WNC" or the "General Partner").
The chairman and president own substantially all the outstanding stock of WNC.
The business of the Partnership is conducted primarily through WNC, as the
Partnership has no employees of its own.
The Partnership shall continue in full force and effect until December 31, 2052
unless terminated prior to that date, pursuant to the partnership agreement or
law.
The financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.
The Partnership agreement authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). As of September 30, 2002 and March 31, 2002, 20,500 units,
representing subscriptions in the amount of $20,456,595, net of discounts of
$27,305 for volume purchases and dealer discounts of $16,100 had been accepted.
The General Partner has 1% interest in operating profits and losses, taxable
income and losses, cash available for distribution from the Partnership and tax
credits of the Partnership. 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 4) 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 VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINIUED
For the Quarter Ended September 30, 2002
(unaudited)
19
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 management
decisions will be made by the General Partner.
Method of Accounting For Investments in Local 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 the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of the
investment and amortized over 30 years (see Note 3).
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with the selling of
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
$2,817,761 as of September 30, 2002 and March 31, 2002.
8
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINIUED
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, 2002 and March 31, 2002 the Partnership had no cash equivalents.
Net Income Per Limited Partner Unit
- -----------------------------------
Net income per limited partner unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net income per unit
includes no dilution and is computed by dividing income 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.
Concentration of Credit Risk
- ----------------------------
At September 30, 2002 and March 31, 2002, the Partnership maintained cash
balances at certain financial institutions in excess of the federally insured
maximum.
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 Pronouncements
- -----------------------------
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. The
Partnership does not expect SFAS 144 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 Partnership does not
expect SFAS 146 to have a material impact on the Partnership's financial
position or results of operations.
Reclassification
- ----------------
Certain prior period balances have been reclassified to conform to the
presentation for the six months ended September 30, 2002.
9
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINIUED
For the Quarter Ended September 30, 2002
(unaudited)
NOTE 2 - LOAN RECEIVABLE
- ------------------------
Loans receivable represent amounts loaned by the Partnership to certain Local
Limited Partnerships in which the Partnership may invest. These loans are
generally applied against the first capital contribution due if the Partnership
ultimately invests in such entities. In the event that the Partnership does not
invest in such entities, the loans are to be repaid with interest at a rate
which is equal to the rate charged to the holder (11.5% and 11.5% at March 31,
2002 and 2001, respectively). A loan receivable with a balance of $50,000 at
March 31, 2002 and 2001 was due from one Local Limited Partnership, in which an
interest was not acquired. On April 11, 2002, the loan was repaid.
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of September 30, 2002 and March 31, 2002, the Partnership had acquired
Limited Partnership interests in fifteen Local Limited Partnerships each of
which owns one Housing Complex, except for one Local Limited Partnership which
owns six Housing Complexes, consisting of an aggregate of 608 apartment units.
As of September 30, 2002, construction or rehabilitation of one of the Housing
Complexes was still in process. The respective general partners of the Local
Limited Partnerships manage 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
99.9%, 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.
As of November 20, 2002, the Partnership had not obtained audited financial
statements for one of its investments, Cotton Mill Elderly Living Center, L.P.
("Cotton Mill"), as of and for the year ended December 31, 2001. As a result,
the Partnership has not included the financial information of Cotton Mill in the
combined condensed statement of operations presented herein. The Partnership's
investment in Cotton Mill totaled $670,000 (unaudited) at September 30, 2002.
The Partnership's estimate of its interest in the results of operations of
Cotton Mill totaled $(100,000) (unaudited) for the period ended September 30,
2002. The combined condensed statement of operations presented herein for
September 30, 2001 previously included a net loss of $(12,000) for Cotton Mill.
The combined condensed financial information presented in this footnote for 2001
has been restated to exclude the accounts of Cotton Mill.
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.
10
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINIUED
For the Quarter Ended September 30, 2002
(unaudited)
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
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, 2002, no investment accounts
in Local Limited Partnerships had reached a zero balance.
Following is a summary of the equity method activity of the investments in
limited partnerships as of:
For the Six Months
Ended For the Year Ended
September 30, 2002 March 31, 2002
----------------------- ---------------------
Investments per balance sheet, beginning of period $ 14,585,268 $ 15,439,696
Capital contributions paid, net - 298,125
Capital contributions to be paid - 52,605
Equity in losses of limited partnerships (530,460) (1,136,238)
Tax credit adjustments - (7,537)
Amortization of capitalized acquisition fees and costs (25,774) (51,548)
Distributions received from limited partnerships (10,458) (9,835)
----------------------- ---------------------
Investments in limited partnerships, end of period $ 14,018,576 $ 14,585,268
======================= =====================
11
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINIUED
For the Quarter Ended September 30, 2002
(unaudited)
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
Selected financial information for the six months ended September 30, 2002 and
2001 from the unaudited combined condensed financial statements of the limited
partnerships in which the Partnership has invested as follows:
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2002 2001
----------------------- ---------------------
(Restated)
Revenues $ 1,193,000 $ 1,065,000
----------------------- ---------------------
Expenses:
Interest expense 304,000 301,000
Depreciation and amortization 543,000 490,000
Operating expenses 786,000 650,000
----------------------- ---------------------
Total expenses 1,633,000 1,441,000
----------------------- ---------------------
Net loss $ (440,000) $ (376,000)
======================= =====================
Net loss allocable to the Partnership, $ (440,000) $ (376,000)
before equity in losses of Cotton Mill
======================= =====================
Net loss recorded by the Partnership, (430,000) (367,000)
before equity in losses of Cotton Mill
Net loss of Cotton Mill recorded
by the Partnership (unaudited) (100,000) (12,000)
----------------------- ---------------------
Net loss recorded by the Partnership $ (530,000) $ (379,000)
======================= =====================
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.
12
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINIUED
For the Quarter Ended September 30, 2002
(unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Under the terms of the Partnership Agreement, the Partnership has paid or is
obligated to the General Partner or its affiliates for the following items:
(a) An annual asset management fee not to exceed 0.2% of the Invested
Assets (defined as the Partnership's capital contributions plus
reserves of the Partnership of up to 5% of gross proceeds plus its
allocable percentage of the mortgage debt encumbering the Housing
Complexes) of the Local Limited Partnerships. Management fees of
$31,946 and $29,904 were incurred during the six months ended
September 30, 2002 and 2001, respectively, of which $40,468 and
$29,527 were paid during the six months ended September 30, 2002 and
2001, respectively.
(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 12% through December
31, 2008 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. No disposition fees have been paid.
Accrued fees and expenses due to the General Partner and affiliates consisted of
the following:
September 30, 2002 March 31, 2002
--------------------- ---------------------
Asset management fees payable $ 25,690 $ 34,212
Reimbursement for expenses paid by the General Partner
or an affiliate 16,197 9,365
--------------------- ---------------------
Total $ 41,887 $ 43,577
===================== =====================
NOTE 5 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payables to limited partnerships represent amounts, which are due at various
times based on conditions specified in the limited partnership agreements. These
contributions are payable in installments and are due upon the Local Limited
Partnerships achieving certain operating and development benchmarks (generally
within two years of the Partnership's initial investment).
NOTE 6 - INCOME TAXES
- ---------------------
No provision for income taxes has been recorded in the accompanying financial
statement, as any liability for income taxes is the obligation of the partners
of the Partnership.
13
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 $768,000
in cash, net investments in fifteen Local Limited Partnerships of $14,019,000
and $2,000 in other assets. Liabilities at September 30, 2002 primarily
consisted of $246,000 of capital contributions due to Local Limited Partnerships
and $42,000 of accrued fees and advances due to the General Partner and
affiliates.
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 $(300,000), reflecting an increase of approximately $(75,000) from the
net loss of $(225,000) for the three months ended September 30, 2001. The
increase in net loss was primarily due to equity in losses of limited
partnerships which increased by $(76,000) to $(265,000) for the three months
ended September 30, 2002 from $(189,000) for the three months ended September
30, 2001. The increase in equity in losses of limited partnerships was offset by
loss from operations, which decreased by $(1,000) to $(35,000) for the three
months ended September 30, 2002 from $(36,000) for the three months ended
September 30, 2001.
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
$(598,000), reflecting an increase of approximately $(146,000) from the net loss
of $(452,000) for the six months ended September 30, 2001. The increase in net
loss was primarily due to equity in losses of limited partnerships which
increased by $(151,000) to $(530,000) for the six months ended September 30,
2002 from $(379,000) for the six months ended September 30, 2001. The increase
in equity in losses of limited partnerships was offset by loss from operations,
which decreased by $(5,000) to $(67,000) for the six months ended September 30,
2002 from $(72,000) for the six months ended September 30, 2001. The decrease in
loss from operations was due a decrease in interest income of $13,000, which was
offset by a decrease in operating expenses of $18,000 to $75,000 for the six
months ended September 30, 2002 from approximately $93,000 for the six months
ended September 30, 2001. The decrease in operating expenses was substantially
due to a decrease in legal and accounting fees and other operating expenses of
$(20,000) for the six months ended September 30, 2002.
14
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. Net increase in cash during the six months ended September 30, 2002 was
$17,000 compared to net cash decrease for the six months ended September 30,
2001 of $(27,000), reflecting an increase of $44,000. The increase is primarily
due to an increase in cash provided by net investing activities of approximately
$51,000 from $9,000 for the six months ended September 30, 2001 to $60,000 for
the six months ended September 30, 2002 due to the receipt of proceeds on a note
receivable. This was offset by an increase of approximately $7,000 in net cash
used in operating activities from $(36,000) for the six months ended September
30, 2001, to $(43,000) for 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 future cash
requirements.
Impact of New Accounting Pronouncements
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. The
Partnership does not expect SFAS 144 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 Partnership does not
expect SFAS 146 to have a material impact on the Partnership's financial
position or results of operations.
15
Item 3: Quantitative and Qualitative Disclosures Above 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. Three 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.
16
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 VI, L.P., Series 6
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: December 4, 2002
By: /s/ Thomas J. Riha
- -----------------------
Thomas J. Riha
Vice President and Chief Financial Officer of WNC & Associates, Inc.
Date: December 4, 2002
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 VI, L.P. Series 6;
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: December 4, 2002
/s/ Wilfred N. Cooper, Jr.
- --------------------------
[Signature]
President and Chief Executive Officer of WNC & Associates, Inc.
18
CERTIFICATIONS
I, Thomas J. Riha, certify that:
1. I have reviewed this quarterly report on Form 10-Q of WNC Housing Tax
Credit Fund VI, L.P. Series 6;
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: December 4, 2002
/s/ Thomas J. Riha
- -------------------
[Signature]
Vice-President and Chief Financial Officer of WNC & Associates, Inc.
19