Back to GetFilings.com
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 2003
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: 333-67682
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 10
California 33-0974362
(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
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to section12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
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 X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. <060>o<048><057><057><062>
1
Indicate by check mark whether the registrant is an accelerated filer.
Yes No X
- ------- -----------
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter.
INAPPLICABLE
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
2
PART 1.
Item 1. Business
Organization
WNC Housing Tax Credit Fund, VI, L.P., Series 10 (the "Partnership") was formed
under the California Revised Limited Partnership Act on July 17, 2001, and
commenced operations on February 28, 2003. The Partnership was formed to invest
primarily in other limited partnerships or limited liability companies (the
"Local Limited Partnerships") which will own and operate multifamily housing
complexes that are eligible for low-income housing federal and, in certain
cases, California income tax credits ("Low-Income Housing Credit").
The general partner of the Partnership is WNC & Associates, Inc. ("Associates"
or the "General Partner".) The chairman and the president own substantially all
of the outstanding stock of Associates. The business of the Partnership is
conducted primarily through Associates, as the Partnership has no employees of
its own.
Pursuant to a supplement dated February 28, 2003 to the prospectus of the
Partnership dated November 14, 2001, on March 6, 2003, the Partnership commenced
a public offering of 25,000 units of Limited Partnership Interest ("Units"), at
a price of $1,000 per Unit. As of March 31, 2003, the Partnership had accepted
no subscriptions for Units. Holders of Units are referred to herein as "Limited
Partners." Effective May 15, 2003, the Partnership had received the minimum
subscriptions for units required to break escrow. Accordingly, from May 15, 2003
and through May 20, 2003, the Partnership has accepted subscriptions for 1,810
units, for which it has received $1,635,360 in cash, net of a $140 volume/
dealer discount, $72,000 in promissory notes and $102,500 in subscriptions
receivable.
Description of Business
The Partnership's principal business objective is to provide its Limited
Partners with Low-Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner or non-managing member in
Local Limited Partnerships each of which will own and operate a multi-family
housing complex (the "Housing Complexes") which will qualify for the Low-Income
Housing Credit. In general, under Section 42 of the Internal Revenue Code, an
owner of low-income housing can receive the Low-Income Housing Credit to be used
to reduce Federal taxes otherwise due in each year of a ten-year period. In
general, under Section 17058 of the California Revenue and Taxation Code, an
owner of low-income housing can receive the Low-Income Housing Credit to be used
against California taxes otherwise due in each year of a four-year period. Each
Housing Complex is subject to a fifteen-year compliance period (the "Compliance
Period"), and under state law may have to be maintained as low-income housing
for 30 or more years.
In general, in order to avoid recapture of Low-Income Housing Credits, the
Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited Partnership of its Housing Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Housing
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the ability of government
lenders to disapprove of transfer, it is not possible at this time to predict
whether the liquidation of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership's Agreement of Limited
Partnership, as amended "by Supplements thereto" (the "Partnership Agreement"),
will be able to be accomplished promptly at the end of the 15-year period. If a
Local Limited Partnership is unable to sell its Housing Complex, it is
anticipated that the local general partner ("Local General Partner") will either
continue to operate such Housing Complex or take such other actions as the Local
General Partner believes to be in the best interest of the Local Limited
Partnership. Notwithstanding the preceding, circumstances beyond the control of
the General Partner or the Local General Partners may occur during the
Compliance Period, which would require the Partnership to approve the
disposition of a Housing Complex prior to the end thereof, possibly resulting in
recapture of Low-Income Housing Credits.
3
Certain Risks and Uncertainties
An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:
The Low-Income Housing Credit rules are extremely complicated. Noncompliance
with these rules results in the loss of future Low-Income Housing Credits and
the fractional recapture of Low-Income Housing Credits already taken. In most
cases the annual amount of Low-Income Housing Credits that an individual can use
is limited to the tax liability due on the person's last $25,000 of taxable
income. The Local Limited Partnerships may be unable to sell the Housing
Complexes at a profit. Accordingly, the Partnership may be unable to distribute
any cash to its investors. Low-Income Housing Credits may be the only benefit
from an investment in the Partnership.
The Partnership expects to invest in a limited number of Local Limited
Partnerships. Such limited diversity means that the results of operation of each
single Housing Complex will have a greater impact on the Partnership. With
limited diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
will be subject to mortgage indebtedness. If a Local Limited Partnership failed
to pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
future Low-Income Housing Credits, a fractional recapture of prior Low-Income
Housing Credits, and a loss of the Partnership's investment in the Housing
Complex would occur. The Partnership will be a limited partner or non-managing
member of each Local Limited Partnership. Accordingly, the Partnership will have
very limited rights with respect to management of the Local Limited
Partnerships. The Partnership will rely totally on the Local General Partners.
Neither the Partnership's investments in Local Limited Partnerships, nor the
Local Limited Partnerships' investments in Housing Complexes, 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 interests
in Local Limited Partnerships; limitations on removal of Local General Partners;
limitations on subsidy programs; and possible changes in applicable regulations.
Uninsured casualties could result in loss of property and Low-Income Housing
Credits and recapture of Low-Income Housing Credits previously taken. The value
of real estate is subject to risks from fluctuating economic conditions,
including employment rates, inflation, tax, environmental, land use and zoning
policies, supply and demand of similar properties, and neighborhood conditions,
among others.
The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low-Income Housing
Credits and tax losses allocable to the investors could be reduced if the IRS
were successful in such a challenge. The alternative minimum tax could reduce
tax benefits from an investment in the Partnership. Changes in tax laws could
also impact the tax benefits from an investment in the Partnership and/or the
value of the Housing Complexes.
No trading market for the Units exists or is expected to develop. Investors may
be unable to sell their Units except at a discount and should consider their
Units to be a long-term investment. Individual investors will have no recourse
if they disagree with actions authorized by a vote of the majority of Limited
Partners.
Item 2. Properties
None
4
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Item 5a.
(a) The Units are not traded on a public exchange but are being sold through a
public offering. It is not anticipated that any public market will develop
for the purchase and sale of any Unit. Units can be assigned only if
certain requirements in the Partnership Agreement are satisfied.
(b) At March 31, 2003, the Partnership had one Limited Partner, which was in
affiliate of WNC and Associates, Inc.
(c) The Partnership is not designed to provide cash distributions to Limited
Partners in circumstances other than refinancing or disposition of its
investments in Local Limited Partnerships.
(d) No unregistered securities were sold by the Partnership during the year
ended March 31, 2003.
Item 5b.
The Partnership is currently conducting an offering pursuant to a registration
statement (Commission File No. 333-67670), which was declared effective on
November 14, 2001 and was recently supplemented on February 28, 2003. As of
March 31, 2003, the Partnership had not accepted any subscriptions for Units.
5
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
March 31
----------------
2003
----------------
ASSETS
Cash and cash equivalents $ 1,100
----------------
$ 1,100
================
LIABILITIES AND PARTNERS' EQUITY
Commitments and Contingencies
Partners' equity:
General Partner 100
Initial limited partner 1,000
----------------
$ 1,100
================
Selected results of operations, cash flows, and other information for the Partnership for the following period:
For the period
from
February 28,
2003 (date
operations
commenced)to
March 31, 2003
-----------------
Net loss $ -
=================
Net loss allocated to:
General partner $ -
=================
Limited partners $ -
=================
Net loss per limited partner
unit $ -
=================
Outstanding weighted limited
partner units -
=================
6
For the period
from February 28,
2003(date
operation
commenced)to
March 31, 2003
---------------------
Net cash provided by (used in):
Operating activities $ -
Investing activities -
Financing activities -
----------------
Net change in cash and cash
equivalents -
Cash and cash equivalents,
beginning of period 1,100
----------------
Cash and cash equivalents, end
of period $ 1,100
================
Item 7. 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-K 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-K 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.
Critical Accounting Policies and Certain Risks and Uncertainties
The Partnership believes that the following discussion addresses its most
significant accounting policies, which are the most critical to aid in fully
understanding and evaluating the Partnership's reported financial results, and
certain of the Partnership's risks and uncertainties.
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
Method of Accounting For Investments in Limited Partnerships
The Partnership will account 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 Partnerships' results of operations
and for any contributions made or distributions received. The Partnership will
review the carrying amount of an individual investment in a Local Limited
Partnership for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by a comparison of the carrying
amount to future undiscounted net cash flows expected to be generated. If an
investment is considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the investment exceeds
fair value. The accounting policies of the Local Limited Partnerships are
expected to be generally consistent with those of the Partnership. Costs
incurred by the Partnership in acquiring the investments will be capitalized as
part of the investment account and are being amortized over 30 years.
Equity in losses of the Local Limited Partnerships for each year ended March 31
will be recorded by the Partnership based on nine months of reported results
provided by the Local Limited Partnerships for each year ended December 31 and
on three months of results estimated by management of the Partnership for each
three-month period ended March 31. Management's estimate for the three-month
period will be based on either actual unaudited results reported by the Local
Limited Partnerships or historical trends in the operations of the Local Limited
Partnrships. Equity in losses of the Local Limited Partnerships will be
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 will not be 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 from the Local Limited Partnerships will be accounted for
as a reduction of the investment balance. Distributions received after the
investment has reached zero will be recognized as income.
Income Taxes
No provision for income taxes will be recorded in the financial statements as
any liability for income taxes will be the obligation of the partners of the
Partnership.
Certain Risks and Uncertainties
An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:
The Low-Income Housing Credit rules are extremely complicated. Noncompliance
with these rules results in the loss of future Low-Income Housing Credits and
the fractional recapture of Low-Income Housing Credits already taken. In most
cases the annual amount of Low-Income Housing Credits that an individual can use
is limited to the tax liability due on the person's last $25,000 of taxable
income. The Local Limited Partnerships may be unable to sell the Housing
Complexes at a profit. Accordingly, the Partnership may be unable to distribute
any cash to its investors. Low-Income Housing Credits may be the only benefit
from an investment in the Partnership.
The Partnership expects to invest in a limited number of Local Limited
Partnerships. Such limited diversity means that the results of operation of each
single Housing Complex will have a greater impact on the Partnership. With
limited diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
will be subject to mortgage indebtedness. If a Local Limited Partnership failed
to pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
future Low-Income Housing Credits, a fractional recapture of prior Low-Income
Housing Credits, and a loss of the Partnership's investment in the Housing
Complex would occur. The Partnership will be a limited partner or non-managing
member of each Local Limited Partnership. Accordingly, the Partnership will have
very limited rights with respect to management of the Local Limited
Partnerships. The Partnership will rely totally on the Local General Partners.
Neither the Partnership's investments
8
in Local Limited Partnerships, nor the Local Limited Partnerships' investments
in Housing Complexes, 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 interests in Local Limited Partnerships; limitations
on removal of Local General Partners; limitations on subsidy programs; and
possible changes in applicable regulations. Uninsured casualties could result in
loss of property and Low-Income Housing Credits and recapture of Low-Income
Housing Credits previously taken. The value of real estate is subject to risks
from fluctuating economic conditions, including employment rates, inflation,
tax, environmental, land use and zoning policies, supply and demand of similar
properties, and neighborhood conditions, among others.
The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low-Income Housing
Credits and tax losses allocable to the investors could be reduced if the IRS
were successful in such a challenge. The alternative minimum tax could reduce
tax benefits from an investment in the Partnership. Changes in tax laws could
also impact the tax benefits from an investment in the Partnership and/or the
value of the Housing Complexes.
No trading market for the Units exists or is expected to develop. Investors may
be unable to sell their Units except at a discount and should consider their
Units to be a long-term investment. Individual investors will have no recourse
if they disagree with actions authorized by a vote of the majority of Limited
Partners.
Financial Condition
The Partnership's assets at March 31, 2003 consisted of $1,100 in cash.
Pursuant to a supplement dated February 28, 2003 to the prospectus of the
Partnership dated November 14, 2001, on March 6, 2003, the Partnership commenced
a public offering of 25,000 units of Limited Partnership Interest ("Units"), at
a price of $1,000 per Unit. As of March 31, 2003, the Partnership had accepted
no subscriptions for Units. Holders of Units are referred to herein as "Limited
Partners." Effective May 15, 2003, the Partnership had received the minimum
subscriptions for units required to break escrow. Accordingly, from May 15, 2003
and through May 20, 2003, the Partnership has accepted subscriptions for 1,810
units, for which it has received $1,635,360 in cash, net of a $140 volume/
dealer discount, $72,000 in promissory notes and $102,500 in subscriptions
receivable.
Results of Operations
The Partnership commenced operations on February 28, 2003. As of March 31, 2003,
the Partnership has not accepted subscriptions for any Units nor made any
investments in Local Limited Partnerships. As a result there were no operations
for the period ended March 31, 2003. Furthermore, there are no comparative
results of operations or financial condition from prior periods to report. In
addition, there were no Low-Income Housing Credits available for allocation to
the partners.
Liquidity and Capital Resources
The Partnership had no cash flows from operating or investing activities for the
period ended March 31, 2003.
Since March 31, 2003, the Partnership has raised $1,635,360 of equity capital
sufficient to satisfy all of its identified obligations. In this regard, the
Partnership expects its future cash flows, together with its net available
assets at March 31, 2003, to be sufficient to meet all currently foreseeable
future cash requirements.
9
Future Contractual Cash Obligations
The following table summarizes our future contractual cash obligations as of March 31, 2003:
2004 2005 2006 2007 2008 Thereafter Total
--------- --------- --------- --------- --------- ----------- ---------
Asset Management Fees $ - $ - $ - $ - $ - $ - $ -
Capital Contributions Payable
to Lower Tier Partnerships - - - - - - -
--------- --------- --------- --------- --------- ----------- ---------
Total contractual cash
obligations $ - $ - $ - $ - $ - $ - $ -
========= ========= ========= ========= ========= =========== =========
As of March 31, 2003 there are no Asset Management Fees or Capital Contributions
Payable to Lower Tier Partnerships due to the fact that the Partnership had not
acquired any investments in Local Limited Partnerships as of March 31, 2003.
Impact of New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations", which requires that the fair value of a liability for
an asset retirement obligation be recognized in the period in which it is
incurred with the associated asset retirement costs being capitalized as a part
of the carrying amount of the long-lived asset. SFAS No. 143 also includes
disclosure requirements that provide a description of asset retirement
obligations and reconciliation of changes in the components of those
obligations. The statement is effective for fiscal years beginning after June
15, 2002. The Partnership does not expect the adoption of SFAS No. 143 to have a
material effect on the Partnership's financial position or results of
operations.
In August 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of
Long-Lived Assets," which addresses accounting and financial reporting for the
impairment or disposal of long-lived assets. This standard was effective for the
Partnership's financial statements at the date operations commenced, February
28, 2003. The implementation of SFAS No. 144 did not have a material impact on
the Partnership's financial position or results of operations.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS No. 145 rescinded three previously issued statements and amended SFAS No.
13, "Accounting for Leases." The statement provides reporting standards for debt
extinguishments and provides accounting standards for certain lease
modifications that have economic effects similar to sale-leaseback transactions.
The statement is effective for certain lease transactions occurring after May
15, 2002 and all other provisions of the statement shall be effective for
financial statements issued on or after May 15, 2002. The implementation of SFAS
No. 145 did not 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," which updates accounting and reporting
standards for personnel and operational restructurings. The Partnership adopted
SFAS No. 146 for exit, disposal or other restructuring activities initiated
after December 31, 2002. The adoption of SFAS No. 146 did not have a material
effect on the Partnership's financial position or results of operations.
In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." The adoption of FIN 45 did not have a
material impact on the Partnership's financial position or results of
operations.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment to SFAS No. 123." SFAS
No. 148 provides alternative methods of transition for a voluntary change to the
fair value based method on accounting for stock-based employee compensation. The
10
implementation of SFAS No. 148 is not expected to have a material effect on the
Partnership's financial position or results of operations.
In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." The adoption of FIN 46 did not
have a material impact on the Partnership's financial position or results of
operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
NONE.
Item 8. Financial Statements and Supplementary Data
11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 10
We have audited the accompanying balance sheet of WNC Housing Tax Credit Fund
VI, L.P., Series 10 (a California Limited Partnership) (the "Partnership") as of
March 31, 2003, and the related statements of operations, partners' equity and
cash flows for the period February 28, 2003 (date operations commenced) through
March 31, 2003. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of WNC Housing Tax Credit Fund VI,
L.P., Series 10 (a California Limited Partnership) as of March 31, 2003, and the
results of its operations and its cash flows for the period February 28, 2003
(date operations commenced) through March 31, 2003 in conformity with accounting
principles generally accepted in the United States of America.
/s/ BDO SEIDMAN, LLP
Costa Mesa, California
May 20, 2003
12
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)
BALANCE SHEET
March 31,
2003
-------------
ASSETS
Cash and cash equivalents $ 1,100
-------------
$ 1,100
=============
LIABILITIES AND PARTNERS' EQUITY
Commitments and contingencies (Note 2)
Partners' equity (Note 4)
General partner 100
Initial limited partner 1,000
-------------
Total partners' equity $ 1,100
=============
See accompanying notes to financial statements
13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)
STATEMENT OF OPERATIONS
For The Period
February 28,
2003 (Date
Operations
Commenced)
through
March 31, 2003
------------------
Interest income $ -
------------------
Operating expenses:
Total operating expenses -
------------------
Loss from operations -
------------------
Net income (loss) $ -
==================
Net income (loss) allocated to:
General partner $ -
==================
Limited partners $ -
==================
Net income (loss) per limited partner unit $ -
==================
Outstanding weighted limited partner units 0
==================
See accompanying notes to financial statements
14
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
For The Period February 28, 2003 (Date Operations Commenced)
through March 31, 2003
General Limited Total
Partner Partner
--------------- --------------- ---------------
Contribution from General Partner and initial
limited partner $ 100 $ 1,000 $ 1,100
--------------- --------------- ---------------
Partners' equity at March 31, 2003 $ 100 $ 1,000 $ 1,100
=============== =============== ===============
See accompanying notes to financial statements
15
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
For The Period
February 28,
2003 (Date
Operations
Commenced)
through
March 31, 2003
------------------
Cash flows from operating activities:
Net income (loss) $ -
Adjustments to reconcile net income to
net cash provided by operating activities:
Net cash provided by (used in) operating
activities -
------------------
Cash flows from investing activities:
Capitalized acquisition costs and fees -
------------------
Net cash provided by (used in) investing activities -
------------------
Cash flows from financing activities:
Capital contributions -
Offering expenses -
------------------
Net cash provided by (used in) financing activities -
------------------
Net increase in cash and cash
equivalents -
Cash and cash equivalents, beginning of period 1,100
------------------
Cash and cash equivalents, end of period $ 1,100
==================
See accompanying notes to financial statements
16
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Period February 28, 2003 (Date Operations Commenced)
through March 31, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
- ------------
WNC Housing Tax Credit Fund VI, L.P., Series 10, a California Limited
Partnership (the "Partnership"), was formed on July 17, 2001 under the laws of
the state of California, and commenced operations on February 28, 2003. The
Partnership was formed to invest primarily in other limited partnerships and
limited liability companies (the "Local Limited Partnerships") which own and
operate multi-family housing complexes (the "Housing Complex") that are eligible
for low-income housing 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.
The general partner of the Partnership is WNC & Associates, Inc. ("Associates"
or the "General Partner".) The chairman and the president own substantially all
of the outstanding stock of Associates. The initial limited partner is an
affiliate of Associates. The business of the Partnership is conducted primarily
through Associates, as the Partnership has no employees of its own.
The Partnership shall continue in full force and effect until December 31, 2062,
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 authorizes the sale of up to 25,000 units at $1,000
per Unit ("Units"). As of March 31, 2003, no subscriptions for Units had been
accepted by the Partnership as the required minimum offering amount of
$1,400,000 had not been achieved. Such minimum was achieved subsequent to March
31, 2003 (see Note 4). Holders of Units are referred to herein as "Limited
Partners." The General Partner has a 0.1% interest in operating profits and
losses, taxable income and losses, in cash available for distribution from the
Partnership and tax credits. The Limited Partners will be allocated the
remaining 99.9% interest in proportion to their respective investments.
After the Limited Partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investment (as defined
in the Partnership Agreement) and the General Partner has received proceeds
equal to its capital contribution and a subordinated disposition fee (as
described in Note 3) from the remainder, any additional sale or refinancing
proceeds will be distributed 90% to the Limited Partners (in proportion to their
respective investments) and 10% to the General Partner.
17
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period February 28, 2003 (Date Operations Commenced)
through March 31, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Risks and Uncertainties
- -----------------------
The Partnership's future investments in Local Limited Partnerships will be
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 tax credits could be
recaptured and that neither the Partnership's future 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 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 tax
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 fair
values 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 will be 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 will be subject to risks in that the rules
governing the low-income housing tax credits 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 intends to account 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 Partnerships' results of
operations and for any contributions made and distributions received. The
Partnership will review the carrying amount of an individual investment in a
Local Limited Partnership for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of such investment may not be
recoverable. Recoverability of such investment is measured by a comparison of
the carrying amount to future undiscounted net cash flows expected to be
generated. If an investment is considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the
investment exceeds fair value. The accounting policies of the Local Limited
Partnership's are expected to be generally consistent with those of the
Partnership. Costs incurred by the Partnership in acquiring the investments will
be capitalized as part of the investment account and are being amortized over 30
years.
Equity in losses of the Local Limited Partnerships for each year ended March 31
will be recorded by the Partnership based on nine months of reported results
provided by the Local Limited Partnerships for each year ended December 31 and
on three months of results estimated by management of the Partnership for each
three-month period ended March 31. Management's estimate for the three-month
period will be based on either actual unaudited results reported by the Local
Limited Partnerships or historical trends in the operations of the Local Limited
Partnerships. Equity in losses of the Local Limited Partnerships will be
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 will not be 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.
18
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period February 28, 2003 (Date Operations Commenced)
through March 31, 2003
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------
Distributions received from the Local Limited Partnerships will be accounted for
as a reduction of the investment balance. Distributions received after the
investment has reached zero will be recognized as income.
Offering Expenses
- -----------------
Offering expenses will consist of underwriting commissions, legal fees,
printing, filing and recordation fees, and other costs incurred in connection
with selling limited partnership interests in the Partnership. The General
Partner is obligated to pay all offering and organization costs in excess of 13%
(excluding sales commissions and the dealer manager fee) of the total offering
proceeds. Offering expenses will be reflected as a reduction of partners'
capital and amounted to $0 as of March 31, 2003.
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. As of
March 31, 2003, 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.
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
during the period ended March 31, 2003, as defined by SFAS No. 130.
New Accounting Pronouncements
- -----------------------------
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations", which requires that the fair value of a liability for
an asset retirement obligation be recognized in the period in which it is
incurred with the associated asset retirement costs being capitalized as a part
of the carrying amount of the long-lived asset. SFAS No. 143 also includes
disclosure requirements that provide a description of asset retirement
obligations and reconciliation of changes in the components of those
obligations. The statement is effective for fiscal years beginning after June
15, 2002. The Partnership does not expect the adoption of SFAS No. 143 to have a
material effect on the Partnership's financial position or results of
operations.
19
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period February 28, 2003 (Date Operations Commenced)
through March 31, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
In August 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of
Long-Lived Assets," which addresses accounting and financial reporting for the
impairment or disposal of long-lived assets. This standard was effective for the
Partnership's financial statements at the date operations commenced, February
28, 2003. The implementation of SFAS No. 144 did not have a material impact on
the Partnership's financial position or results of operations.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS No. 145 rescinded three previously issued statements and amended SFAS No.
13, "Accounting for Leases." The statement provides reporting standards for debt
extinguishments and provides accounting standards for certain lease
modifications that have economic effects similar to sale-leaseback transactions.
The statement is effective for certain lease transactions occurring after May
15, 2002 and all other provisions of the statement shall be effective for
financial statements issued on or after May 15, 2002. The implementation of SFAS
No. 145 did not 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," which updates accounting and reporting
standards for personnel and operational restructurings. The Partnership adopted
SFAS No. 146 for exit, disposal or other restructuring activities initiated
after December 31, 2002. The adoption of SFAS No. 146 did not have a material
effect on the Partnership's financial position or results of operations.
In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." The adoption of FIN 45 did not have a
material impact on the Partnership's financial position or results of
operations.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment to SFAS No. 123." SFAS
No. 148 provides alternative methods of transition for a voluntary change to the
fair value based method on accounting for stock-based employee compensation. The
implementation of SFAS No. 148 is not expected to have a material effect on the
Partnership's financial position or results of operations.
In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." The adoption of FIN 46 did not
have a material impact on the Partnership's financial position or results of
operations.
NOTE 2 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Under the terms of the Partnership Agreement, the Partnership or is obligated to
the General Partner or its affiliates for the following items:
Acquisition fees of 7% of the gross proceeds from the sale of Units as
compensation for services rendered in connection with the acquisition of
Local Limited Partnerships. As of March 31, 2003, the Partnership has
incurred no acquisition fees.
A non-accountable acquisition expense reimbursement equal to 2% of the
gross proceeds from the sale of the Units.
20
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period February 28, 2003 (Date Operations Commenced)
through March 31, 2003
NOTE 2 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
A non-accountable organization and offering expense reimbursement equal to
4% of the gross proceeds from the sale of the Units, a dealer manager fee
equal to 2% of the gross proceeds from the sale of the Units, and
reimbursement for retail selling commissions advanced by the General
Partner or affiliates on behalf of the Partnership. This reimbursement plus
all other organizational and offering expenses, inclusive of the
non-accountable organization and offering expense reimbursement, and the
dealer manager fees, are not to exceed 13% of the gross proceeds from the
sale of the Units.
An annual asset management fee not to exceed 0.5% of the invested assets
(defined as the sum of the Partnership's investment in Local Limited
Partnerships, plus the revenues of the Partnership of up to 5% of gross
Unit sales proceeds, and the Partnership's allocable share of the amount of
the mortgage loans on, and other debts related to, the Housing Complexes)
of the Local Limited Partnerships. There were no management fees incurred
during the period ended March 31, 2003.
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 return on investment (as defined in the Partnership
Agreement) and is payable only if the General Partner or its affiliates
render services in the sales effort.
No accrued fees and expenses were due to General Partner and affiliates at March
31, 2003.
NOTE 3 - INCOME TAXES
- ---------------------
No provision for income taxes has been recorded in the accompanying financial
statements, as any liability for income taxes is the obligation of the partners
of the Partnership.
NOTE 4 - SUBSEQUENT EVENT
- -------------------------
Effective May 15, 2003, the Partnership had received the minimum subscriptions
for Units required to break escrow. Accordingly, from May 15, 2003 and through
May 20, 2003, the Partnership has accepted subscriptions for 1,810 Units, for
which it has received $1,635,360, in cash, which is net of a $140 volume/dealer
discount, $72,000 in promissory notes and $102,500 in subscriptions receivable.
The fees and expenses earned by and paid to the General Partner and affiliates
subsequent to March 31, 2003 through May 20, 2003 consist of the following:
Acquisition fees $ 126,700
Acquisition expenses 36,200
Organizational, offering and selling costs 108,600
Commissions 126,560
---------------
Total amount earned 398,060
Less amounts paid (300,200)
---------------
Amount owing as of May 20, 2003 $ 97,860
===============
21
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NOT APPLICABLE
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors, (b) Identification of Executive Officers, (c)
--------------------------------------------------------------------------
Identification of Certain Significant Employees, (d) Family Relationships,
--------------------------------------------------------------------------
and (e) Business Experience
---------------------------
The Partnership has no directors, executive officers or employees of its own.
The following biographical information is presented for the directors, executive
officers and significant employees of Associates, which has principal
responsibility for the Partnership's affairs.
Associates is a California corporation which was organized in 1971. Its officers
and significant employees are:
Wilfred N. Cooper, Sr. Chairman of the Board
Wilfred N. Cooper, Jr. President and Chief Executive Officer
David N. Shafer, Esq. Executive Vice President and Director of Asset Management
Sylvester P. Garban Senior Vice President - Institutional Investments
David C. Turek Senior Vice President - Originations
Thomas J. Riha, CPA Vice President - Chief Financial Officer
Michael J. Gaber Vice President - Acquisitions
Diemmy T. Tran Vice President - Portfolio Management
J. Brad Hurlbut Director of Syndications
In addition to Wilfred N. Cooper, Sr., the directors of Associates are Wilfred
N. Cooper, Jr., David N. Shafer, and Kay L. Cooper. The principal shareholder of
Associates is a trust established by Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., age 72, is the founder and Chairman of the Board of
Directors of Associates, a Director of WNC Capital Corporation, and a general
partner in some of the partnerships previously sponsored by Associates Mr.
Cooper has been actively involved in the affordable housing industry since 1968.
Previously, during 1970 and 1971, he was founder and a principal of Creative
Equity Development Corporation, a predecessor of Associates, and of Creative
Equity Corporation, a real estate investment firm. For 12 years before that, Mr.
Cooper was employed by Rockwell International Corporation, last serving as its
manager of housing and urban developments where he had responsibility for
factory-built housing evaluation and project management in urban planning and
development. He has testified before committees of the U.S. Senate and the U.S.
House of Representatives. Mr. Cooper is a Life Director of the National
Association of Home Builders and a National Trustee for NAHB's Political Action
Committee, and the Chairman of NAHB's Multifamily Council. He is a Director of
the National Housing Conference and a member of NHC's Executive Committee, and a
founder and Director of the California Housing Consortium. He is the husband of
Kay Cooper and the father of Wilfred N. Cooper, Jr. Mr. Cooper graduated from
Pomona College in 1956 with a Bachelor of Arts degree.
Wilfred N. Cooper, Jr., age 40, is President, Chief Executive Officer, Secretary
and a Director and a member of the Acquisition Committee of Associates He is
President of, and a registered principal with, WNC Capital Corporation, and is a
Director of WNC Management, Inc. He has been involved in real estate investment
and acquisition activities since 1988 when he joined Associates Previously, he
served as a Government Affairs Assistant with Honda North America in Washington,
D.C. Mr. Cooper is a member of the Editorial Advisory Boards of Affordable
----------
Housing Finance and LIHC Monthly Report, a Steering Member of the Housing Credit
- --------------- -------------------
Group of the National Association of Home Builders, an Alternate Director of
NAHB, a member of the Advisory Board of the New York State Association for
Affordable Housing and a member of the Urban Land Institute. He is the son of
Wilfred Cooper, Sr. and Kay Cooper. Mr. Cooper graduated from The American
University in 1985 with a Bachelor of Arts degree.
22
David N. Shafer, age 50, is Executive Vice President, a Director, Director of
Asset Management and a member of the Acquisition Committee of Associates, and a
Director and Secretary of WNC Management, Inc. Mr. Shafer has been active in the
real estate industry since 1984. Before joining Associates in 1990, he was
engaged as an attorney in the private practice of law with a specialty in real
estate and taxation. Mr. Shafer is a Director and President of the California
Council of Affordable Housing, and a member of the State Bar of California. Mr.
Shafer graduated from the University of California at Santa Barbara in 1978 with
a Bachelor of Arts degree, from the New England School of Law in 1983 with a
Juris Doctor degree cum laude and from the University of San Diego in 1986 with
a Master of Law degree in Taxation.
Sylvester P. Garban, age 57, is Senior Vice President - Institutional
Investments of Associates Mr. Garban has been involved in real estate investment
activities since 1978. Before joining Associates in 1989, he served as Executive
Vice President with MRW, Inc., a real estate development and management firm.
Mr. Garban is a member of the National Association of Affordable Housing Lenders
and the Financial Planning Association. He graduated from Michigan State
University in 1967 with a Bachelor of Science degree in Business Administration.
David C. Turek, age 48, is Senior Vice President - Originations of Associates
His experience with real estate investments and finance has continued since
1976, and he has been employed by Associates since 1996. Previously, from 1995
to 1996, Mr. Turek served as a consultant for a national tax credit sponsor
where he was responsible for on-site feasibility studies and due diligence
analyses of tax credit properties. From 1992 to 1995 he served as Executive Vice
President for Levcor, Inc., a multi-family development company, and from 1990 to
1992 he served as Vice President for the Paragon Group where he was responsible
for tax credit development activities. He is a Director of the National Housing
and Rehabilitation Association, the Rural Rental Housing Association of Texas,
and the Alabama Council of Affordable Rental Housing. Mr. Turek graduated from
Southern Methodist University in 1976 with a Bachelor of Business Administration
degree.
Thomas J. Riha, age 47, is Vice President - Chief Financial Officer and a member
of the Acquisition Committee of Associates and President, Treasurer and a
Director of WNC Management, Inc. He has been involved in real estate acquisition
and investment activities since 1979. Before joining Associates in 1994, Mr.
Riha was employed by Trust Realty Advisor, a real estate acquisition and
management company, last serving as Vice President - Operations. He is a
Director of the Task Force on Housing Credit Certification of the National
Association of Home Builders. Mr. Riha graduated from the California State
University, Fullerton in 1977 with a Bachelor of Arts degree cum laude in
Business Administration with a concentration in Accounting and is a Certified
Public Accountant and a member of the American Institute of Certified Public
Accountants.
Michael J. Gaber, age 37, is Vice President - Acquisitions and a member of the
Acquisition Committee of Associates Mr. Gaber has been involved in real estate
acquisition, valuation and investment activities since 1989 and has been
associated with Associates since 1997. Prior to joining Associates, he was
involved in the valuation and classification of major assets, restructuring of
debt and analysis of real estate taxes with H.F. Ahmanson & Company, parent of
Home Savings of America. Mr. Gaber graduated from the California State
University, Fullerton in 1991 with a Bachelor of Science degree in Business
Administration - Finance.
Diemmy T. Tran, age 37, is Vice President - Portfolio Management of Associates
She is responsible for overseeing portfolio management and investor reporting
for all WNC funds, and for monitoring investment returns for all WNC
institutional funds. Ms. Tran has been involved in real estate asset management
and finance activities for 12 years. Prior to joining Associates in 1998, Ms.
Tran served as senior asset manager for a national Tax Credit sponsor and as an
asset specialist for the Resolution Trust Corporation where she was responsible
for the disposition and management of commercial loan and REO portfolios. Ms.
Tran is licensed as a California real estate broker. She graduated from
California State University, Northridge in 1989 with a Bachelor of Science
degree in finance and a minor in real estate.
J. Brad Hurlbut, age 43, is Director of Syndications of Associates He is
responsible for the financial structuring of WNC's institutional funds. Mr.
Hurlbut has 20 years of experience in real estate investment and development.
Prior to joining WNC in 2000, he served as corporate controller for Great
Western Hotels Corporation. Mr. Hurlbut has been an enrolled agent licensed to
practice before the IRS since 1984. He graduated from the University of Redlands
in 1981 with a Bachelor of Science degree in business management and from
California State University, Fullerton in 1985 with a Master of Science degree
in taxation.
23
Kay L. Cooper, age 66, is a Director of Associates Mrs. Cooper was the sole
proprietor of Agate 108, a manufacturer and retailer of home accessory products,
from 1975 until its sale in 1998. She is the wife of Wilfred Cooper, Sr. and the
mother of Wilfred Cooper, Jr. Ms. Cooper graduated from the University of
Southern California in 1958 with a Bachelor of Science degree.
(f) Involvement in Certain Legal Proceedings
----------------------------------------
Inapplicable.
(g) Promoters and Control Persons
-----------------------------
Inapplicable.
(h) Audit Committee Financial Expert
--------------------------------
Neither the Partnership nor Associates has an audit committee.
Item 11. Executive Compensation
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 for the following fees:
(a) Organization and Offering Expenses. A non-accountable organization and
offering expense reimbursement equal to 4% of the gross proceeds from
the sale of the Units, a dealer manager fee equal to 2% of the gross
proceeds from the sale of the Units, and reimbursement for retail
selling commissions advanced by the General Partner or affiliates on
behalf of the Partnership. This reimbursement plus all other
organizational and offering expenses, inclusive of the non-accountable
organization and offering expense reimbursement, and the dealer
manager fees, are not to exceed 13% of the gross proceeds from the
sale of the Units. As of March 31, 2003, no expenses were incurred.
(b) Acquisition Fees. Acquisition fees in an amount equal to 7.0% of the
gross proceeds of the Partnership's Offering ("Gross Proceeds"). As of
March 31, 2003, no fees were incurred.
(c) Acquisition Expense. The Partnership is to reimburse the General
Partner for acquisition expenses, on a non-accountable basis, in an
amount equal to 2% of the Gross Proceeds, pursuant to the terms of the
partnership agreement. There were no amounts owed for the period
February 28, 2003 (date operations commenced) through March 31, 2003.
(d) Annual Asset Management Fee. An annual asset management fee in an
amount equal to 0.5% of the Invested Assets of the Partnership.
"Invested Assets" is defined as the sum of the Partnership's
Investment in Local Limited Partnerships, plus the reserves of the
Partnership of up to 5% of gross Unit sales proceeds, and the
Partnership's allocable share of the amount of the mortgage loans and
other debts related to the Housing Complexes owned by such Local
Limited Partnerships. There were no fees incurred for the period
February 28, 2003 (date operations commenced) through March 31, 2003.
(e) Operating Expenses. The Partnership incurred no operating expenses for
the period February 28, 2003 (date operations commenced) through March
31, 2003.
(f) Subordinated Disposition Fee. A subordinated disposition fee in an
amount equal to 1% of the sale price received in connection with the
sale or disposition of an Apartment Complex or Local Limited
Partnership Interest. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital
contributions and payment of the Return on Investment to the Limited
Partners. "Return on Investment" means an annual, cumulative but not
compounded, "return" to the Limited Partners (including Low-Income
Housing Credits) as a class on their adjusted capital contributions
commencing for each Limited Partner on the last day of the calendar
quarter during which the Limited Partner's capital contribution is
received by the Partnership, calculated at the following rates: (i)
11% through December 31, 2010, and (ii) 6% for the balance of the
Partnerships term. No disposition fees have been incurred.
24
(g) Interest in Partnership. The General Partner will receive 0.1% of the
Low-Income Housing Credits. No Low-Income Housing Credits were
allocated for the period ended December 31, 2002. The General Partners
are also entitled to receive 0.1% of cash distributions. There were no
distributions of cash owed to the General Partner during the period
February 28, 2003 (date operations commenced) through March 31, 2003.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
(a) Securities Authorized for Issuance Under Equity Compensation Plans
------------------------------------------------------------------
Inapplicable
(b) Security Ownership of Certain Beneficial Owners
-----------------------------------------------
No person is known to own beneficially in excess of 5% of
theoutstanding Units.
(c) Security Ownership of Management
--------------------------------
Neither the General Partner, its affiliates, nor any of the officers
or directors of the General Partner or its affiliates own directly or
beneficially any Units in the Partnership.
(d) Changes in Control
------------------
The management and control of the General Partner and of Associates
may be changed at any time in accordance with their respective
organizational documents, without the consent or approval of the
Limited Partners. In addition, the Partnership Agreement provides for
the admission of one or more additional and successor General Partners
in certain circumstances.
First, with the consent of any other General Partners and a
majority-in-interest of the Limited Partners, any General Partner may
designate one or more persons to be successor or additional General
Partners. In addition, any General Partner may, without the consent of
any other General Partner or the Limited Partners, (i) substitute in
its stead as General Partner any entity which has, by merger,
consolidation or otherwise, acquired substantially all of its assets,
stock or other evidence of equity interest and continued its business,
or (ii) cause to be admitted to the Partnership an additional General
Partner or Partners if it deems such admission to be necessary or
desirable so that the Partnership will be classified a partnership for
Federal income tax purposes. Finally, a majority-in-interest of the
Limited Partners may at any time remove the General Partner of the
Partnership and elect a successor General Partner.
Item 13. Certain Relationships and Related Transactions
The General Partner manages all of the Partnership's affairs. The transactions
with the General Partner are primarily in the form of fees paid by the
Partnership for services rendered to the Partnership, reimbursement of expenses,
and the General Partner's interest in the Partnership, as discussed in Item 11
and in the notes to the Partnership's financial statements.
Item 14. Controls and Procedures
Associates, on behalf of the Partnership, maintains disclosure controls and
procedures that are designed to ensure that information required to be disclosed
in our periodic reports filed with the Securities and Exchange Commission
("SEC") is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC and that such information is
accumulated and communicated to our management as appropriate to allow timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, our management recognized that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
25
Based on their most recent evaluation, which was completed within 90 days of the
filing of this Annual Report on Form 10-K, our Principal Executive Officer and
Principal Financial Officer believe that our disclosure controls and procedures
(as defined in Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934,
as amended) are effective. There were no significant changes in internal
controls or in other factors that could significantly affect these internal
controls subsequent to the date of their most recent evaluation.
PART IV.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial statements included in Part II hereof:
Report of Independent Certified Public Accountants
Independent Auditors' Report
Balance Sheet, March 31, 2003
Statement of Operations for the period February 28, 2003 (Date Operations Commenced)
through March 31, 2003
Statement of Partners' Equity for the period February 28, 2003 (Date Operations Commenced)
through March 31, 2003
Statement of Cash Flows for the period February 28, 2003 (Date Operations Commenced)
through March 31, 2003
Notes to Financial Statements
(a)(2) Financial statement schedules:
None.
(b) Reports on Form 8-K.
None.
(c) Exhibits.
99.1 Certification of the Principal Executive Officer pursuant to 18
U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002. (filed herewith)
99.2 Certification of the Principal Financial Officer pursuant to 18
U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002. (filed herewith)
26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
By: WNC & Associates, Inc.,
General Partner
By: /s/ Wilfred N. Cooper, Jr.
--------------------------
Wilfred N. Cooper, Jr.,
President of WNC & Associates, Inc.
Date: June 5, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By: /s/ Wilfred N. Cooper, Jr.
--------------------------
Wilfred N. Cooper, Jr.,
Chief Executive Officer, President and Director of WNC & Associates,
Inc. (principal executive officer)
Date: June 5, 2003
By: /s/ Thomas J. Riha
------------------
Thomas J. Riha,
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
(principal financial officer and principal accounting officer)
Date: June 4, 2003
By: /s/ Wilfred N. Cooper, Sr.
--------------------------
Wilfred N. Cooper, Sr.,
Chairman of the Board of WNC & Associates, Inc.
Date: June 5, 2003
By: /s/ David N. Shafer
-------------------
David N Shafer,
Director of WNC & Associates, Inc.
Date: June 5, 2003
27
CERTIFICATIONS
I, Wilfred N. Cooper, Jr., certify that:
1. I have reviewed this annual report on Form 10-K of WNC HOUSING TAX CREDIT
FUND VI, L.P., SERIES 10;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the period presented in this annual 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 annual 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
annual report (the "Evaluation Date"); and
(c) presented in this annual 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
annual 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: June 9, 2003
/s/ Wilfred N. Cooper, Jr.
__________________________
President and Chief Executive Officer of WNC & Associates, Inc.
28
CERTIFICATIONS
I, Thomas J. Riha, certify that:
1. I have reviewed this annual report on Form 10-Q of WNC HOUSING TAX CREDIT
FUND VI, L.P., SERIES 10;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the period presented in this annual 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 annual 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
annual report (the "Evaluation Date"); and
(c) presented in this annual 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
annual 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: June 9, 2003
/s/Thomas J. Riha
_________________
Vice-President - Chief Financial Officer and Chief Accounting Officer of
WNC & Associates, Inc.
29