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 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: 0-26048
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1
California 33-0563307
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 IV, L.P. SERIES 1
(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.......................3
Statements of Operations
For the Three and Nine Months Ended
December 31, 2002 and 2001...............................4
Statement of Partners' Equity (Deficit)
For the Nine Months Ended December 31, 2002................5
Statements of Cash Flows
For the Nine Months Ended December 31, 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. Controls and Procedures......................................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 IV, L.P. SERIES 1
(A California Limited Partnership)
BALANCE SHEETS
December 31, 2002 March 31, 2002
---------------------- -------------------
(unaudited)
ASSETS
Cash and cash equivalents $ 237,038 $ 277,292
Investments in limited partnerships, net (Note 2) 1,998,200 2,234,002
---------------------- -------------------
Total assets $ 2,235,238 $ 2,511,294
====================== ===================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payable to limited partnership $ 2,303 $ 2,303
Accrued fees and expenses due to
General Partner and affiliates (Note 3) 136,105 134,569
---------------------- -------------------
Total liabilities 138,408 136,872
---------------------- -------------------
Commitments and contingencies
Partners' equity (deficit):
General Partner (78,933) (76,157)
Limited Partners (10,000 units authorized,
10,000 units issued and outstanding) 2,175,763 2,450,579
---------------------- -------------------
Total partners' equity 2,096,830 2,374,422
---------------------- -------------------
$ 2,235,238 $ 2,511,294
====================== ===================
See accompanying notes to financial statements
3
WNC HOUSING TAX CREDIT FUND IV, L.P. SERIES 1
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 2002 and 2001
(unaudited)
2002 2001
----------------------------------------- ------------------------------------------
Three Months Nine Months Three Months Nine Months
------------------- ---------------- ----------------- -----------------
Interest income $ 915 $ 3,039 $ 1,337 $ 6,645
Distribution income - 6,475 - -
------------------- ---------------- ----------------- -----------------
915 9,514 1,337 6,645
------------------- ---------------- ----------------- -----------------
Operating expenses:
Amortization (Note 2) 5,953 17,859 5,953 17,995
Asset management fees (Note 3) 10,500 31,500 10,500 31,500
Legal & accounting 2,320 17,819 2,075 16,970
Other 769 4,119 3,249 6,647
------------------- ---------------- ----------------- -----------------
Total operating expenses 19,542 71,297 21,777 73,112
------------------- ---------------- ----------------- -----------------
Loss from operations (18,627) (61,783) (20,440) (66,467)
Equity in losses of limited
partnerships (Note 2) (71,819) (215,809) (87,257) (382,877)
------------------- ---------------- ----------------- -----------------
Net loss $ (90,446) $ (277,592) $ (107,697) $ (449,344)
=================== ================ ================= =================
Net loss allocated to:
General partner $ (905) $ (2,776) $ (1,077) $ (4,493)
=================== ================ ================= =================
Limited partners $ (89,541) $ (274,816) $ (106,620) $ (444,851)
=================== ================ ================= =================
Net loss per limited partner unit $ (9) $ (28) $ (11) $ (44)
=================== ================ ================= =================
Outstanding weighted
limited partner units 10,000 10,000 10,000 10,000
=================== ================ ================= =================
See accompanying notes to financial statements
4
WNC HOUSING TAX CREDIT FUND IV, L.P. SERIES 1
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
For the Nine Months Ended December 31, 2002
(unaudited)
General Limited
Partner Partners Total
--------------- ------------------- ---------------
Partners' equity (deficit) at March 31, 2002 $ (76,157) $ 2,450,579 $ 2,374,422
Net loss (2,776) (274,816) (277,592)
--------------- ------------------- ---------------
Partners' equity (deficit) at December 31, 2002 $ (78,933) $ 2,175,763 $ 2,096,830
=============== =================== ===============
See accompanying notes to financial statements
5
WNC HOUSING TAX CREDIT FUND IV, L.P. SERIES 1
(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 $ (277,592) $ (449,344)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 17,859 17,995
Equity in losses of limited partnerships 215,809 382,877
Change in accrued fees and expense due to
General Partner and affiliates 1,536 7,065
------------------ -----------------
Net cash used in operating activities (42,388) (41,407)
------------------ -----------------
Cash flows from investing activities:
Investments in limited partnerships - (16,028)
Distributions from limited partnerships 2,134 15,681
------------------ -----------------
Net cash provided (used in) by investing activities 2,134 (347)
------------------ -----------------
Net decrease in cash and cash equivalents (40,254) (41,754)
Cash and cash equivalents, beginning of period 277,292 312,214
------------------ -----------------
Cash and cash equivalents, end of period $ 237,038 $ 270,460
================== =================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes paid $ 800 $ 800
================== =================
See accompanying notes to financial statements
6
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(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 Housing Tax Credit Fund IV, L.P., Series 1, a California Limited Partnership
(the "Partnership"), was formed on May 4, 1993 under the laws of the state of
California, and commenced operations on October 20, 1993. 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 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 Agreement authorized the sale of up to 10,000 units at $1,000
per Unit ("Units"). The offering of Units concluded in July 1994 at which time
10,000 Units in the amount of $10,000,000 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. 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 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 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 IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period Ended December 31, 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 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 15% (including sales
commissions) of the total offering proceeds. Offering expenses are reflected as
a reduction of limited partners' capital and amounted to $1,356,705 at the end
of all periods presented.
8
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period Ended December 31, 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
maturities of three months or less when purchased to be cash equivalents. The
Partnership had no cash equivalents as of December 31, 2002 and March 31, 2002.
Concentration of Credit Risk
- ----------------------------
At December 31, 2002, the Partnership maintained a cash balance at a certain
financial institution in excess of the maximum federally insured amounts.
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 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. SFAS 146 is not expected
to have a material impact on the Partnership's financial position or results of
operations.
9
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period Ended December 31, 2002
(unaudited)
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
--------------------------------------------
As of the periods presented, the Partnership had acquired limited partnership
interests in twenty-one Local Limited Partnerships, each of which owns one
housing complex, consisting of an aggregate of 812 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 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 would be recognized as income.
Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for the periods presented below:
For the Nine Months For the Year Ended
Ended
December 31, 2002 March 31, 2002
------------------------ -------------------
Investments per balance sheet,
beginning of period $ 2,234,002 $ 2,823,846
Capital contributions paid, net - 16,028
Distributions received from limited partnerships (2,134) (16,953)
Equity in losses of limited partnerships (215,809) (564,968)
Amortization of capitalized acquisition fees and costs (17,859) (23,951)
------------------------ -------------------
Investments per balance sheet,
end of period $ 1,998,200 $ 2,234,002
======================== ===================
10
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(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
- -------------------------------------------------------
Selected financial information for the nine months ended December 31, 2002 and
2001 from the unaudited combined condensed financial statements of the limited
partnership in which the Partnership has invested is as follows:
2002 2001
------------------- -------------------
Revenues $ 2,550,000 $ 2,548,000
------------------- -------------------
Expenses:
Interest expense 617,000 631,000
Depreciation and amortization 824,000 856,000
Operating expenses 1,701,000 1,649,000
------------------- -------------------
Total expenses 3,142,000 3,136,000
------------------- -------------------
Net loss $ (592,000) $ (588,000)
=================== ===================
Net loss allocable to the Partnership $ (583,000) $ (579,000)
=================== ===================
Net loss recorded by the Partnership $ (216,000) $ (383,000)
=================== ===================
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 Partners 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
- -----------------------------------
Under the terms of the Partnership Agreement the Partnership is obligated to the
General Partner or its affiliates for the following items:
(a) Annual Asset Management Fee. An annual asset management fee equal to the
greater amount of (i) $2,000 for each apartment complex, or (ii) 0.275% of
gross proceeds. The base fee amount will be adjusted annually based on
changes to the Consumer Price Index. However, in no event will the annual
asset management fee exceed 0.2% of the invested assets of the Local
Limited Partnerships, including the Partnership's allocable share of the
mortgages. Asset management fees of $31,500 were incurred for each of the
nine months ended December 31, 2002 and 2001. The Partnership paid $30,000
and $24,500 of those asset management fees during the nine months ended
December 31, 2002 and 2001, respectively.
(b) Subordinated Disposition Fee. 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 16%
through December 31, 2003 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.
11
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period Ended December 31, 2002
(unaudited)
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
The accrued fees and advances due to General Partner and affiliates consisted of
the following:
December 31, 2002 March 31, 2002
---------------------- --------------------
Reimbursement for expenses paid by the General
Partner or an affiliate $ 1,438 $ 1,402
Asset management fee payable 134,667 133,167
---------------------- --------------------
$ 136,105 $ 134,569
====================== ====================
NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payables to limited partnerships represent amounts, which are due at various
times based on conditions specified in the limited partnership agreement. These
contributions are payable in installments and are due upon the limited
partnership achieving certain operating and development benchmarks (generally
within two years of the Partnership's initial investment).
NOTE 5 - INCOME TAXES
- ---------------------
The Partnership will not make a provision for income taxes since all items of
taxable income and loss will be allocated to the partners for inclusion in their
respective income tax returns.
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 condensed unaudited Financial Statements and the Notes
thereto included elsewhere in this filing.
The following discussion and analysis compares the results of operations for the
nine months ended December 31, 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 December 31, 2002 consisted primarily of $237,000 in
cash and aggregate investments in the twenty-one Local Limited Partnerships of
$1,998,000. Liabilities at December 31, 2002 consisted primarily of $136,000 in
accrued asset management fees and expenses payable to the General Partner.
Results of Operations
Three Months Ended December 31, 2002 Compared to Three Months Ended December 31,
2001. The Partnership's net loss for the three months ended December 31, 2002
was $(90,000), reflecting a decrease of $18,000 from the net loss experienced
for the three months ended December 31, 2001 of $(108,000). The decrease in net
loss is primarily due to equity in losses of Local Limited Partnerships which
decreased by $15,000 to $(72,000) for the three months ended December 31, 2002
from $(87,000) for the three months ended December 31, 2001. The decrease in
equity in losses of Local Limited Partnerships is due to 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 investment are not recognized. Along with the decrease in equity in
losses of Local Limited Partnerships, loss from operations decreased
approximately by $1,000 to (19,000) for the three months ended December 31, 2002
from $(20,000) for the three months ended December 31, 2001, which was
substantially caused by a decrease in other operating expenses of $2,000 for the
three months ended December 31, 2002.
Nine Months Ended December 31, 2002 Compared to Nine Months Ended December 31,
2001. The Partnership's net loss for the nine months ended December 31, 2002 was
$(277,000), reflecting a decrease of $172,000 from the net loss experienced for
the nine months ended December 31, 2001 of $(449,000). The decrease in net loss
is primarily due to equity in losses of Local Limited Partnerships which
decreased by $167,000 to $(216,000) for the nine months ended December 31, 2002
from $(383,000) for the nine months ended December 31, 2001. The decrease in
equity in losses of Local Limited Partnerships is due to 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 investment are not recognized. Along with the decrease in equity in
losses of Local Limited Partnerships, loss from operations decreased by
approximately $4,000 to (62,000) for the nine months ended December 31, 2002
from $(66,000) for the nine months ended December 31, 2001, which was caused by
an increase in interest income of approximately $3,000 and a decrease in other
operating expenses of approximately $2,000 for the nine months ended December
31, 2002.
13
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 cash used during the nine months ended December 31, 2002 was ($40,000)
compared to net cash used for the nine months ended December 31, 2001 of
($42,000). The $2,000 decrease in cash used was due to an increase in cash
provided by investing activities of approximately $3,000, and an increase in
cash used by operating activities of $(1,000) in the nine months ended December
31, 2002.
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 approximately $2,000. The General Partner does not
anticipate that these accrual 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 expects its future cash flows, together with its net available
assets at December 31, 2002, to be sufficient to meet all currently foreseeable
future cash requirements.
14
Item 3. Quantitative and Qualitative Disclosures about Market Risk
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.
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 IV, L.P., Series 1
By: WNC Tax Credit Partners IV, L.P. General Partner of the Registrant
By: WNC & ASSOCIATES, INC.General Partner of WNC Tax Credit Partners IV, L.P.
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
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 IV, L.P., Series 1;
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
/s/ Wilfred N. Cooper Jr.
--------------------------
President and Chief Executive Officer of WNC & Associates, Inc.
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CERTIFICATIONS
I, Thomas J. Riha, certify that:
1. I have reviewed this quarterly report on Form 10-Q of WNC HOUSING TAX
CREDIT FUND IV, L.P., Series 1;
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
/s/ Thomas J. Riha
-------------------
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
18