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 December 31, 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: 0-20058
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
California 33-0316953
(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 CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
INDEX TO FORM 10 - Q
For the Quarterly Period Ended December 31, 2002
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
December 31, 2002 and March 31, 2002.............................. 2
Statements of Operations
For the three and nine months ended December 31, 2002 and 2001.... 3
Statement of Partners' Deficit
For the nine months ended December 31, 2002 ......................4
Statements of Cash Flows
For the nine months ended December 31, 2002 and 2001...............5
Notes to Financial Statements...........................................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.....................................11
Item 3. Quantitative and Qualitative Disclosures About Market Risks....12
Item 4. Controls and Procedures........................................12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..............................................13
Item 4. Submission of Matters to a Vote of Security Holders............13
Item 5. Other Information..............................................13
Item 6. Exhibits and Reports on Form 8-K...............................13
Signatures.............................................................14
Certifications.........................................................15
1
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 2002 March 31, 2002
----------------------- -------------------
(unaudited)
ASSETS
Cash and cash equivalents $ 5,647 $ 12,170
Investments in limited partnerships, net (Note 2) 503,004 600,843
----------------------- -------------------
$ 508,651 $ 613,013
======================= ===================
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Accrued fees and expenses due to
General Partner and affiliates $ 1,273,276 $ 1,180,524
----------------------- -------------------
Commitments and contingencies
Partners' deficit:
General partner (72,487) (70,516)
Limited partners (10,000 units authorized,
7,450 units issued and outstanding) (692,138) (496,995)
----------------------- -------------------
Total partners' deficit: (764,625) (567,511)
----------------------- -------------------
$ 508,651 $ 613,013
======================= ===================
See accompanying notes to financial statement
2
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Nine Months ended December 31, 2002 and 2001
(unaudited)
2002 2002 2001 2001
Three Months Nine Months Three Months Nine Months
------------------- -------------------- ------------------ --------------------
Interest income $ 7 $ 43 $ 85 $ 696
Distribution income - 1,584 - -
------------------- -------------------- ------------------ --------------------
7 1,627 85 696
------------------- -------------------- ------------------ --------------------
Operating expenses:
Amortization (Note 2) 1,356 4,068 1,176 3,888
Asset management fees 27,964 83,892 27,963 83,890
Legal and accounting 2,320 16,695 2,063 15,207
Other 589 3,481 1,636 4,717
------------------- -------------------- ------------------ --------------------
Total operating expenses 32,229 108,136 32,838 107,702
------------------- -------------------- ------------------ --------------------
Loss from operations (32,222) (106,509) (32,753) (107,006)
Equity in losses of
limited partnerships (Note 2) (25,738) (90,605) (48,103) (161,803)
------------------- -------------------- ------------------ --------------------
Net loss $ (57,960) $ (197,114) $ (80,856) $ (268,809)
=================== ==================== ================== ====================
Net loss allocated to:
General partner $ (579) $ (1,971) $ (808) $ (2,688)
=================== ==================== ================== ====================
Limited partners $ (57,381) $ (195,143) $ (80,048) $ (266,121)
=================== ==================== ================== ====================
Net loss per limited partnership unit $ (8) $ (26) $ (11) $ (36)
=================== ==================== ================== ===================
Outstanding weighted limited
partner units 7,450 7,450 7,450 7,450
=================== ==================== ================== ===================
See accompanying notes to financial statement
3
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
STATEMENT OF PARTNERS' DEFICIT
For the Nine Months Ended December 31, 2002
(unaudited)
General Limited
Partner Partners Total
----------------- ---------------- ------------------
Partners' deficit at March 31, 2002 $ (70,516) $ (496,995) $ (567,511)
Net loss (1,971) (195,143) (197,114)
----------------- ---------------- ------------------
Partners' deficit at December 31, 2002 $ (72,487) (692,138) $ (764,625)
================= ================ ==================
See accompanying notes to financial statement
4
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 2002 and 2001
(unaudited)
2002 2001
--------------------- -----------------
Cash flows from operating activities:
Net loss $ (197,114) $ (268,809)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 4,068 3,888
Equity in losses of limited partnerships 90,605 161,803
Change in accrued fees and expense due to
General Partner and affiliates 92,752 70,189
--------------------- -----------------
Net cash used in operating activities (9,689) (32,929)
--------------------- -----------------
Cash flows from investing activities:
Distributions from limited partnerships 3,166 2,979
--------------------- -----------------
Net cash provided by investing activities 3,166 2,979
--------------------- -----------------
Net decrease in cash and cash equivalents (6,523) (29,950)
Cash and cash equivalents, beginning of period 12,170 44,172
--------------------- -----------------
Cash and cash equivalents, end of period $ 5,647 $ 14,222
===================== =================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes paid $ 800 $ 800
===================== =================
See accompanying notes to financial statement
5
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Quarterly Period Ended December 31, 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 nine
months ended December 31, 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 California Housing Tax Credits, L.P., a California Limited Partnership (the
"Partnership"), was formed on September 15, 1988 under the laws of the State of
California. 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 Complex") 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
maintaining, operating and managing the Housing Complex.
WNC & Associates, Inc. ("Associates") and Wilfred N. Cooper, Sr. are the general
partners 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 the General Partners as the
Partnership has no employees of its own.
The Partnership shall continue to be in full force and effect until December 31,
2037 unless terminated prior to that date pursuant to the partnership agreement
or law.
The Partnership Agreement authorized the sale of up to 10,000 units at $1,000
per Unit ("Units"). The offering of Units concluded in October 1990 at which
time 7,450 Units representing subscriptions in the amount of $7,450,000, had
been accepted. The General Partners have a 1% interest in operating profits and
losses, taxable income and losses, in 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 investments (as defined
in the Partnership Agreement) and the General Partners have received proceeds
equal to their capital contributions from the remainder, any additional sale or
refinancing proceeds will be distributed 99% to the limited partners (in
proportion to their respective investments) and 1% to the General Partners.
6
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period Ended December 31, 2002
(unaudited)
NOTE 1 - ORGANIZATION AND 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 the investments 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 Partners.
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 investments
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
investments and are being amortized over 30 years.
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. WNC is obligated to pay all offering
and organization costs in excess of 15% (including sales commissions) of the
total offering proceeds. Offering expenses are reflected as a reduction of
limited partners' capital and amounted to $946,704 at the end of all periods
presented.
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.
7
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period Ended December 31, 2002
(unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------
Cash and Cash Equivalents
- -------------------------
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents. As of
December 31 and March 31, 2002, the Partnership had no cash equivalents.
Net Loss Per Limited Partner Unit
- ---------------------------------
Net loss per limited partnership 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 loss 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 years 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. 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. Adoption of this statement
is not expected to have a material effect on the Partnership's financial
statements
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of the periods presented, the Partnership has acquired limited partnership
interests in eleven Local Limited Partnerships each of which owns one Housing
Complex consisting of an aggregate of 433 apartment units. 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%, 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.
Equity in losses of the local limited partnerships is recognized in the
financial statements until the related investments account is reduced to a zero
balance. Losses incurred after the investments 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.
8
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period Ended December 31, 2002
(unaudited)
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for the periods presented:
For the Nine Months For the Year Ended
Ended
December 31, 2002 March 31, 2002
-------------------------- ---------------------
Investments per balance sheet,
beginning of period $ 600,843 $ 809,249
Equity in losses of limited
partnerships (90,605) (201,095)
Distributions received (3,166) (2,749)
Amortization of paid
acquisition fees and costs (4,068) (4,562)
-------------------------- ---------------------
Investments per balance sheet,
end of period $ 503,004 $ 600,843
========================== =====================
Selected financial information for the nine months ended December 31, 2002 and
2001 from the unaudited combined condensed financial statements of the limited
partnerships in which the partnership has invested is as follows:
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2002 2001
--------------------- --------------------
Revenues $ 1,452,000 $ 1,418,000
--------------------- --------------------
Expenses
Interest expense 289,000 297,000
Depreciation & amortization 477,000 468,000
Operating expenses 1,045,000 1,002,000
--------------------- --------------------
Total expenses 1,811,000 1,767,000
--------------------- --------------------
Net loss $ (359,000) $ (349,000)
===================== ====================
Net loss allocable to the Partnership $ (356,000) $ (345,000)
===================== ====================
Net loss recorded by the Partnership $ (91,000) $ (162,000)
===================== ====================
9
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period Ended December 31, 2002
(unaudited)
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
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 Partners may be
required to sustain operations of such Local Limited Partnerships. If additional
capital contributions are not made when they are required, the Partnership's
investments 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
- -----------------------------------
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or its affiliates during the current or future years for the following
fees:
(a) Annual Asset Management Fee. An annual asset management fee in an amount
equal to 0.5% of the Invested Assets of the Partnership, as defined.
"Invested Assets" means the sum of the Partnership's investments in Local
Limited Partnerships and the Partnership's allocable share of the amount of
the mortgage loans on and other debts related to the Housing Complexes
owned by such Local Limited Partnerships. Fees of $83,892 and $83,890 were
incurred in the nine months ended December 31, 2002 and 2001, respectively.
The Partnership paid the General Partners and or their affiliates $0 and
$2,430 of those fees during the nine months ended December 31, 2002 and
2001, respectively.
The accrued fees and expenses due to the General Partners and affiliates consist
of the following as of the dates indicated.
December 31, 2002 March 31, 2002
---------------------- -----------------
Reimbursement for expenses paid by the General
Partners and affiliates $ 10,710 $ 1,850
Asset management fee payable 1,262,566 1,178,674
---------------------- -----------------
$ 1,273,276 $ 1,180,524
====================== =================
The General Partners do not anticipate that the accrued fees will be paid until
such time as capital reserves are in excess of future foreseeable working
capital requirements.
The Partnership currently has insufficient working capital to fund its
operations. WNC has agreed to continue providing advances sufficient enough to
fund the operations and working capital requirements of the Partnership through
at least January 1, 2004
NOTE 4 - 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.
10
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 Consolidated Financial Statements and the Notes thereto
included elsewhere in this filing.
The following discussion and analysis compares the results of operations for the
three and nine months ended December 31, 2002 and 2001, and should be read in
conjunction with the condensed consolidated financial statements and
accompanying notes included within this report.
Financial Condition
The Partnership's assets at December 31, 2002 consisted primarily of $6,000 in
cash and aggregate investments in the eleven Local Limited Partnerships of
$503,000. Liabilities at December 31, 2002 primarily consisted of $1,273,000 of
accrued asset management fees and expenses due to the General Partner and
affiliates.
Results of Operations
Three Months Ended December 31, 2002 Compared to the Three Months Ended December
31, 2001. The Partnership's net loss for the three months ended December 31,
2002 was $(58,000), reflecting a decrease of $23,000 from the $(81,000) net loss
experienced for the three months ended December 31, 2001. The decline in net
loss is primarily due to equity in losses from limited partnerships which
declined by $22,000 to $(26,000) for the three months ended December 31, 2002
from $(48,000) for the three months ended December 31, 2001. This decrease was a
result of the Partnership not recognizing certain losses of the Local Limited
Partnerships. The investments in such Local Limited Partnerships had reached $0
at December 31, 2002. Since the Partnership's liability with respect to its
investments is limited, losses in excess of investments are not recognized.
Along with the decrease in equity in losses of limited partnerships, loss from
operations decreased by $1,000 for the three months ended December 31, 2002 to
$(32,000), from $(33,000) for the three months ended December 31, 2001, due to a
decrease in other expenses.
Nine Months Ended December 31, 2002 Compared to the Nine Months Ended December
31, 2001. The Partnership's net loss for the nine months ended December 31, 2002
was $(197,000), reflecting a decrease of $72,000 from the $(269,000) net loss
experienced for the nine months ended December 31, 2001. The decline in net loss
is primarily due to equity in losses from limited partnerships which declined by
$71,000 to $(91,000) for the nine months ended December 31, 2002 from $(162,000)
for the nine months ended December 31, 2001. This decrease was a result of the
Partnership not recognizing certain losses of the Local Limited Partnerships.
The investments in such Local Limited Partnerships had reached $0 at December
31, 2002. Since the Partnership's liability with respect to its investments is
limited, losses in excess of investments are not recognized. Along with the
decrease in equity in losses of limited partnerships, loss from operations
decreased by $1,000 for the three months ended December 31, 2002 to $(106,000),
from $(107,000) for the three months ended December 31, 2001, due to an increase
in distribution income of approximately $1,000.
11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Cash Flows
Nine months Ended December 31, 2002 Compared to Nine months Ended December 31,
2001. Net decrease in cash during the nine months ended December 31, 2002 was
$(7,000) compared to a net decrease in cash for the nine months ended December
31, 2001 of $(30,000). The change was due primarily to a decrease in cash used
by operating activities of $(23,000).
During the nine months ended December 31, 2002, accrued payables, which consist
primarily of related party management fees and advances due to the General
Partner, increased by $93,000. The General Partner does not anticipate that
these accrued fees and advances will be paid until such time as capital reserves
are in excess of foreseeable working capital requirements of the partnership.
The Partnership currently has insufficient working capital to fund its
operations. WNC has agreed to continue providing advances sufficient enough to
fund the operations and working capital requirements of the Partnership through
at least April 1, 2003.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
NOT APPLICABLE
Item 4. Controls and Procedures.
Within the 90 days prior to the date of this report, the General Partners of the
Partnership carried out an evaluation, under the supervision and with the
participation of Associates' management, including Associates' Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Partnership'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 Partnership's disclosure
controls and procedures are effective. There were no significant changes in the
Partnership's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.
12
Part II. Other Information
Item 1. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
The Consent Solicitation Statement dated June 1, 2002 was first sent
to the Limited Partners on or about June 1, 2002.
The General Partner has proposed that the Partnership cease
reproduction and mailing of quarterly and annual financial statements
to the Limited Partners, to reduce the expenses incurred by the
Partnership. The Partnership will continue to prepare quarterly and
annual financial statements so long as it is required to do so under
the Securities and Exchange Commission Act of 1934 and submit them to
the Securities and Exchange Commission. All votes were to be returned
to the General Partner by August 1, 2002 to be counted. The proposal
was approved by the Limited Partners and the results of the vote were
4,438 for the proposal, 640 against the proposal, and 165 abstentions.
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.
13
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 CALIFORNIA HOUSING TAX CREDITS, L.P.
By: WNC & Associates, Inc. General Partner
By: /s/ Wilfred N. Cooper, Jr.
---------------------------
Wilfred N. Cooper, Jr.
President and Chief Executive Officer of WNC & Associates, Inc.
Date: February 11, 2003
By: /s/ Thomas J. Riha
-------------------
Thomas J. Riha
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: February 11, 2003
14
CERTIFICATIONS
I, Wilfred N. Cooper, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of WNC CALIFORNIA
HOUSING TAX CREDITS, L.P.;
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 officer 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 officer 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 officer 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: February 11, 2003
By: /s/ Wilfred N. Cooper, Jr.
--------------------------
President and Chief Executive Officer of WNC & Associates, Inc.
15
CERTIFICATIONS
I, Thomas J. Riha, certify that:
1. I have reviewed this quarterly report on Form 10-Q of WNC CALIFORNIA
HOUSING TAX CREDITS, L.P.;
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 officer 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 officer 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 officer 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: February 11, 2003
By: /s/ Thomas J. Riha
-------------------
Vice-President - Chief Financial Officer of WNC & Associates, Inc.