FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2004
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: 333-76435-01
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 9
California 33-0761517
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17782 Sky Park Circle
Irvine, CA 92614
(Address of principal executive offices)
(714) 662-5565
(Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
--------- ----------
Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act).
Yes No X
--------- ----------
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
INDEX TO FORM 10-Q
For the Quarter Ended September 30, 2004
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
September 30, 2004 and March 31, 2004.................................3
Statements of Operations
For the Six Months Ended September 30, 2004 and 2003..................4
Statement of Partners' Equity (Deficit)
For the Six Months Ended September 30, 2004...........................5
Statements of Cash Flows
For the Six Months Ended September 30, 2004 and 2003..................6
Notes to Financial Statements.............................................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................14
Item 3. Quantitative and Qualitative Disclosures about Market Risk......15
Item 4. Controls and Procedures.........................................15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................15
Item 2. Changes in Securities and Use of Proceed........................15
Item 3. Defaults Upon Senior Securities.................................15
Item 4. Submission of Matters to a Vote of Security Holders.............15
Item 5. Other Information...............................................15
Item 6. Exhibits........................................................16
Signatures...............................................................17
2
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
BALANCE SHEETS
September 30, 2004 March 31, 2004
------------------ --------------
ASSETS (unaudited)
Cash and cash equivalents $ 857,766 $ 1,709,308
Interest and notes receivables 146 146
Investments in limited partnerships (Notes 2
and 3) 11,418,415 11,827,145
------------------- ---------------------
$ 12,276,327 $ 13,536,599
=================== =====================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to limited partnerships (Note 4) $ 639,573 $ 1,484,983
Accrued fees and expenses due to
General Partner and affiliates (Note 3) 239,786 183,229
------------------- ---------------------
879,359 1,668,212
------------------- ---------------------
Commitments and contingencies
Partners' Equity (Deficit)
General partner (2,641) (2,170)
Limited partners (25,000 units authorized;
15,325 units issued and outstanding ) 11,399,609 11,870,557
------------------- ---------------------
Total Partners' Equity 11,396,968 11,868,387
------------------- ---------------------
$ 12,276,327 $ 13,536,599
=================== =====================
See accompanying notes to financial statements
3
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Six Months Ended September 30, 2004 and 2003
(unaudited)
2004 2003
------------------------------- --------------------------------
Three Six Three Six
Months Months Months Months
------------- ------------- -------------- --------------
Interest Income $ 1,337 $ 3,617 $ 1,463 $ 3,480
------------- ------------- -------------- --------------
Operating expenses:
Amortization (Note 3) 12,556 25,112 12,504 24,141
Asset management fees (Note 3) 36,277 72,554 35,823 61,506
Legal and accounting 4,200 5,725 8,915 12,485
Other 348 1,839 5,054 7,537
------------- ------------- -------------- --------------
Total operating expenses 53,381 105,230 62,296 105,669
------------- ------------- -------------- --------------
Loss from operations (52,044) (101,613) (60,833) (102,189)
Equity in losses of limited
Partnerships (Note 2) (184,904) (369,806) (334,692) (422,200)
------------- ------------- -------------- --------------
Net loss $ (236,948) $ (471,419) $ (395,525) $ (524,389)
============= ============= ============== ==============
Net loss allocated to :
General Partner $ (237) $ (471) $ (395) $ (524)
============= ============= ============== ==============
Limited Partners $ (236,711) $ (470,948) $ (395,130) $ (523,865)
============= ============= ============== ==============
Net loss per weighted limited
partner unit $ (15) $ (31) $ (26) $ (34)
============= ============= ============== ==============
Outstanding weighted
limited partner units 15,325 15,325 15,325 15,325
============= ============= ============== ==============
See accompanying notes to financial statements
4
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
For the Six Months Ended September 30, 2004
(unaudited)
General Partner Limited Partners Total
--------------- ---------------- -----
Partners' equity (deficit), March 31, 2004 $ (2,170 ) $ 11,870,557 $ 11,868,387
Net loss (471 ) (470,948 ) (471,419)
------------------ -------------------- -----------------
Partners' equity (deficit), September 30, 2004 $ (2,641 ) $ 11,399,609 $ 11,396,968
================== ==================== =================
See accompanying notes to financial statements
5
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Six Months Ended September 30, 2004 and 2003
(unaudited)
2004 2003
---- ----
Cash flows from operating activities:
Net loss $ (471,419) $ (524,389)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Equity in losses of limited partnerships 369,806 422,200
Interest receivable - (1,426)
Amortization 25,112 24,141
Accrued fees and expenses due to
General Partner and affiliates 56,557 50,332
------------------ ------------------
Net cash used in operating activities (19,944) (29,142)
------------------ ------------------
Cash flows from investing activities:
Investments in limited partnerships, net (834,113) (3,037,996)
Distribution received from limited partnerships 2,515 -
------------------ ------------------
Net cash used in investing activities (831,598) (3,037,996)
------------------ ------------------
Cash flows from financing activities:
Capital contributions receivable - 345,500
Subscriptions receivable - 3,226
Offering expenses payable - (29,670)
------------------ ------------------
Net cash provided by financing activities - 319,056
------------------ ------------------
Net change in cash and cash equivalents (851,542) (2,748,082)
Cash and cash equivalents, beginning of period 1,709,308 4,521,172
------------------ ------------------
Cash and cash equivalents, end of period $ 857,766 $ 1,773,090
================== ==================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes paid $ - $ -
================== ==================
See accompanying notes to financial statements
6
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Quarter Ended September 30, 2004
(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 six months ended
September 30, 2004 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 31, 2005. 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,
2004.
Organization
- ------------
WNC Housing Tax Credit Fund VI, L.P., Series 9, a California Limited Partnership
(the "Partnership"), was formed on July 17, 2001 under the laws of the state of
California, and commenced operations on August 3, 2001, the effective date of
its public offering pursuant to the Securities and Exchange Commission's
approval of the Partnership's Pre-Effective Amendment No. 1 to Form S-11
initially filed on August 16, 2001. Prior to August 3, 2001, the Partnership was
considered a development-stage enterprise. 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 is WNC & Associates, Inc. ("WNC") (the "General Partner"), a
California limited partnership. The chairman and president own substantially all
of the outstanding stock of WNC. The business of the Partnership is conducted
primarily through WNC, as the Partnership has no employees of its own.
The Partnership shall continue in full force and effect until December 31, 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 authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). As of March 31, 2004, 15,323 Units, representing
subscriptions in the amount of $15,316,125, net of dealer discounts of $7,350
and volume discounts of $1,525, had been accepted. 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 4) from the remainder, any additional sale or refinancing
proceeds will be distributed 90% to the limited partners (in proportion to their
respective investments) and 10% to the General Partner.
7
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS, continued
For the Quarter Ended September 30, 2004
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
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 Credit s 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 price which would result in the Partnership realizing cash
distributions or proceeds from the transaction. Accordingly, the Partnership may
be unable to distribute any cash to its limited partners. Low-Income Housing
Credits may be the only benefit from an investment in the Partnership.
The Partnership has invested 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
is 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 is 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, are 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 limited partners 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. Limited
partners may be unable to sell their Units except at a discount and should
consider their Units to be a long-term investment. Individual limited partners
will have no recourse if they disagree with actions authorized by a vote of the
majority of Limited Partners.
8
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS, continued
For the Quarter Ended September 30, 2004
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
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 Partnerships' results of operations
and for any contributions made and distributions received. The Partnership
reviews 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 the estimated value derived by
management, generally consisting of the sum of the remaining future Low-Income
Housing Credits estimated to be allocable to the Partnership and the estimated
residual value to the Partnership. 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 generally 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).
Equity in losses of limited partnerships for the periods ended September 30,
2004 and 2003 have been recorded by the Partnership based on three months of
reported results estimated by management of the Partnership. Management's
estimate for the three-month period is 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 from the Limited
Partnerships allocated to the Partnership are not recognized to the extent that
the investment balance would be adjusted below zero. As soon as the investment
balance reaches zero, amortization of the related costs of acquiring the
investment are accelerated to the extent of losses available (see Note 2). 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.
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling limited
partnership interests in the Partnership. WNC is obligated to pay all offering
and organization costs in excess of 15% (including sales commissions) of the
total offering proceeds. Offering expenses are reflected as a reduction of
limited partners' capital and amounted to $1,983,375 at the end of all periods
presented.
Exit Strategy
- -------------
The IRS compliance period for low-income housing tax credit properties is
generally 15 years from occupancy following construction or rehabilitation
completion. WNC was one of the first in the industry to offer investments using
the tax credit. Now these very first programs are completing their compliance
period.
With that in mind, we are continuing our review of the Partnership's holdings,
with special emphasis on the more mature properties including those that have
satisfied the IRS compliance requirements. Our review will consider many factors
including extended use requirements on the property (such as those due to
mortgage restrictions or state compliance agreements), the condition of the
property, and the tax consequences to the limited partners from the sale of the
property.
Upon identifying those properties with the highest potential for a successful
sale, refinancing or syndication, we expect to proceed with efforts to liquidate
those properties. Our objective is to maximize the limited partners' return
wherever possible and, ultimately, to wind down those funds that no longer
provide tax benefits to limited partners. To date no properties in the
Partnership have been selected.
9
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS, continued
For the Quarter Ended September 30, 2004
(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 original maturities
of three months or less when purchased to be cash equivalents. As of September
30 and March 31, 2004, the Partnership had no cash equivalents.
Net Loss Per Limited Partner Unit
- ---------------------------------
Net loss per limited partnership unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit
includes no dilution and is computed by dividing loss available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net loss per unit is not required.
Income Taxes
- ------------
No provision for income taxes has been recorded in the accompanying financial
statements as any liability and/or benefits for income taxes as income taxes
flows to the partners of the Partnership and is their obligation and/or benefit.
For income tax purposes the Partnership reports on a calendar year basis.
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 January 2003, the FASB issued Interpretation No. 46 ("FIN46"), "Consolidation
of Variable Interest Entities." FIN 46 provides guidance on when a company
should include the assets, liabilities, and activities of a variable interest
entity ("VIE") in its financial statements and when it should disclose
information about its relationship with a VIE. A VIE is a legal structure used
to conduct activities or hold assets, which must be consolidated by a company if
it is the primary beneficiary because it absorbs the majority of the entity's
expected losses, the majority of the expected returns, or both.
In December 2003, the FASB issued a revision of FIN 46 ("FIN 46R") to clarify
some of its provisions. The revision results in multiple effective dates based
on the nature as well as the creation date of the VIE. VIEs created after
January 31, 2003, but prior to January 1, 2004, may be accounted for either
based on the original interpretations or the revised interpretations. However,
all VIEs must be accounted for under the revised interpretations as of March 31,
2004, when FIN 46R is effective for the Partnership.
10
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS, continued
For the Quarter Ended September 30, 2004
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
This Interpretation would require consolidation by the Partnership of certain
Local Limited Partnerships' assets and liabilities and results of operations if
the Partnership determined that the Local Limited Partnership was a VIE and that
the Partnership was the "Primary Beneficiary." Minority interests may be
recorded for the Local Limited Partnerships' ownership share attributable to
other Limited Partners. Where consolidation of Local Limited Partnerships is not
required, additional financial information disclosures of Local Limited
Partnerships may be required. The Partnership has assessed the potential
consolidation effects of the Interpretation and concluded that the adoption of
the Interpretation does not have a material impact on the financial statements
of the Partnerships.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of the periods presented, the Partnership has acquired limited partnership
interests in thirteen Local Limited Partnerships each of which owns one Housing
Complex except for one that owns three Housing Complexes. Collectively, the
Housing Complexes consist of an aggregate of 506 apartment units. The respective
Local General Partners of the Local Limited Partnerships manage the day to day
operations of the entities. Significant Local Limited Partnership business
decisions require approval from the Partnership. The Partnership, as a limited
partner, is generally entitled to 99%, as specified in the Local Limited
Partnership agreements, of the operating profits and losses, taxable income and
losses, and tax credits of the Local Limited Partnerships.
Equity in losses of the local limited partnerships is recognized in the
financial statements until the related investments account is reduced to a zero
balance. Losses incurred after the investments account is reduced to zero are
not recognized. If the Local Limited Partnerships report net income in future
years, the Partnership will resume applying the equity method only after its
share of such net income equals the share of net losses not recognized during
the period(s) the equity method was suspended.
Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income.
The following is a summary of the equity method activity of the investments in
Local Limited Partnerships for the periods presented:
For the Six Months For the Year
Ended September 30, Ended March 31,
2004 2004
-------------------- -------------------
Investments in limited partnerships, beginning
of period $ 11,827,145 $ 8,870,849
Capital contributions paid, net - 3,099,814
Capital contributions payable - 635,663
Equity in losses of limited partnership (369,806) (839,570)
Capitalized acquisition fees and costs - 110,186
Tax credit adjustment (11,297) -
Distributions received from limited partnerships (2,515) (580)
Amortization of warehouse interest and fees (2,123) (3,241)
Amortization of capitalized acquisition fees and costs (22,989) (45,976)
-------------------- -------------------
Investments in limited partnerships, end of period $ 11,418,415 $ 11,827,145
==================== ===================
11
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS, continued
For the Quarter Ended September 30, 2004
(unaudited)
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
Selected financial information for the six months ended September 30, 2004 and
2003 from the unaudited combined condensed financial statements of the limited
partnerships in which the Partnership has invested are as follows:
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2004 2003
-------------------- ------------------
Revenues $ 1,156,000 $ 1,047,000
-------------------- ------------------
Expenses:
Interest expense 312,000 295,000
Depreciation & amortization 455,000 455,000
Operating expenses 777,000 719,000
-------------------- ------------------
Total expenses 1,544,000 1,469,000
-------------------- ------------------
Net loss $ (388,000) $ (422,000)
==================== ==================
Net loss allocable to the Partnership $ (370,000) $ (422,000)
==================== ==================
Net loss recorded by the Partnership $ (370,000) $ (422,000)
==================== ==================
NOTE 3 - RELATED PARTY TRANSACTIONS
- -----------------------------------
The Partnership has no officer, 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) 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. For all periods presented, the Partnership
incurred acquisition fees of $1,072,750. Accumulated amortization of these
capitalized costs was $72,651 and $54,770 as of September 30 and March 31,
2004, respectively.
(b) Acquisition costs of 2% of the gross proceeds from the sale of Units as
full reimbursement of costs incurred by the General Partner in connection
with the acquisition of Local Limited Partnerships. For all periods
presented, the Partnership incurred acquisition costs of $306,500.
Accumulated amortization of these capitalized costs was $20,315 and $15,207
as of September 30, 2004 and March 31, 2004, respectively.
(c) An annual asset management fee not to exceed 0.5% of the invested assets
(defined as the Partnership's capital contributions plus reserves of the
Partnership of up to 5% of gross proceeds plus its allocable percentage of
the mortgage debt encumbering the housing complexes) of the Local Limited
Partnerships. Management fees of $72,554 and $61,506 were incurred for the
six months ended September 30, 2004 and 2003, respectively. The Partnership
paid the General Partner or its affiliates $18,750 and $10,000 of these
fees during the six months ended September 30, 2004 and 2003, respectively.
(d) 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.
12
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS, continued
For the Quarter Ended September 30, 2004
(unaudited)
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
(e) The Partnership reimburses the General Partner or its affiliates for
operating expenses incurred in behalf of the Partnership. Operating expense
reimbursements ere approximately $4,812 and $21,197 during the six months
ended September 30, 2004 and 2003, respectively.
Accrued fees and expenses due to the General Partner and affiliates consisted of
the following as of:
September 30, 2004 March 31, 2004
---------------------- ---------------------
Asset management fees payable $ 235,586 $ 181,782
Reimbursements for expenses paid by the
General Partner or an affiliate 4,200 1,447
---------------------- ---------------------
Total $ 239,786 $ 183,229
====================== =====================
The General Partners do not anticipate that these accrued fees will be paid in
full until such timas as capital reserves are in excess of the future forseeable
working capital requirements of the Partnerships.
NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payables to limited partnerships amounting to $639,573 and $1,484,983 at
September 30 and March 31, 2004, respectively represent amounts, which are due
at various times based on conditions specified in the respective limited
partnership agreements. These contributions are payable in installments and are
generally due upon the limited partnerships achieving certain development and
operating benchmarks (generally within two years of the Partnership's initial
investment).
13
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
With the exception of the discussion regarding historical information,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other discussions elsewhere in this Form 10-Q contain
forward-looking statements. Such statements are based on current expectations
subject to uncertainties and other factors, which may involve known and unknown
risks that could cause actual results of operations to differ materially from
those projected or implied. Further, certain forward-looking statements are
based upon assumptions about future events, which may not prove to be accurate.
Risks and uncertainties inherent in forward-looking statements include, but are
not limited to, our future cash flows and ability to obtain sufficient
financing, level of operating expenses, conditions in the low-income housing tax
credit property market and the economy in general, as well as legal proceedings.
Historical results are not necessarily indicative of the operating results for
any future period.
Subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by
cautionary statements in this Form 10-Q and in other reports we filed with the
Securities and Exchange Commission. The following discussion should be read in
conjunction with the condensed Financial Statements and the Notes thereto
included elsewhere in this filing.
The following discussion and analysis discusses the results of operations for
the three and six months ended September 30, 2004 and 2003, and should be read
in conjunction with the condensed financial statements and accompanying notes
included within this report.
Financial Condition
The Partnership's assets at September 30, 2004 consisted primarily of $858,000
in cash and aggregate investments in the thirteen Local Limited Partnerships of
$11,418,000. Liabilities at September 30, 2004 consisted primarily of $640,000
of notes payable to local limited partnerships and $240,000 in accrued expenses
and management fees due to the General Partner or affiliates.
Results of Operations
Three Months Ended September 30, 2004 Compared to the Three Months Ended
September 30, 2003. The Partnership's net loss for the three months ended
September 30, 2004 was $(237,000), reflecting a decrease of approximately
$159,000 from the net loss of $(396,000) experienced for the three months ended
September 30, 2003. The decrease in net loss is primarily due to a decrease of
equity in losses from limited partnerships of $150,000 due to losses of
$(335,000) for the three months ended September 30, 2003 compared to losses of
$(185,000) for the three months ended September 30, 2004. During 2004,
properties were stabilizing as such losses were less than in 2003. Along with
the decrease of equity in losses from limited partnerships, the loss from
operations decreased by $9,000 due to a decrease in operating expenses of
approximately $9,000 for the three months ended September 30, 2004 as compared
to the three months ended September 30, 2003. The decrease in expenses is due to
a decrease of $5,000 for legal and accounting and a $5,000 decrease for other
operating expenses offset by a $(1,000) increase in asset management fees.
Six Months Ended September 30, 2004 Compared to Six Months Ended September 30,
2003. The Partnership's net loss for the six months ended September 30, 2004 was
$(471,000), reflecting a decrease of $53,000 from the net loss of $(524,000)
experienced for the six months ended September 30, 2003. The decrease in net
loss is primarily due to a decrease of equity in losses from limited
partnerships of $52,000 due to losses of $(422,000) for the six months ended
September 30, 2003 compared to losses of $(370,000) for the six months ended
September 30, 2004. Along with the decrease of equity in losses from limited
partnerships, the loss from operations decreased by $1,000 for the six months
ended September 30, 2004 compared to the six months ended September 30, 2003.
The decrease in expenses is primarily due to a $7,000 decrease in legal and
accounting, a $6,000 decrease in other operating expenses offset by an increase
of $(11,000) for asset management fees and $(1,000) increase in amortization.
14
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Cash Flows
Six Months Ended September 30, 2004 Compared to Six Months Ended September 30,
2003. Net decrease in cash during the six months ended September 30, 2004 was
$(852,000), compared to a net decrease in cash for the six months ended
September 30, 2003 of $(2,748,000) reflect a net change of $1,896,000. The
change in net cash is due to a decrease of cash used in investing activities of
$2,206,000 primarily due to a decrease of payments on notes payable to limited
partnerships of $2,204,000 and a $2,000 increase of distributions from Limited
Partnerships. Along with a decrease in cash provided by financing activities of
$(320,000) largely due to the completion of the syndication process. There was
also a decrease of $10,000 in cash used in operating activities.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
NOT APPLICABLE
Item 4. Controls and Procedures
As of the end of the period covered by this report, the Partnership's General
Partner, under the supervision and with the participation of the Chief Executive
Officer and Chief Financial Officer of Associates carried out an evaluation of
the effectiveness of the Fund's "disclosure controls and procedures" as defined
in Securities Exchange Act of 1934 Rule 13a-15 and 15d-15. Based on that
evaluation, the Chief Executive Officer and Principal Financial Officer have
concluded that as of the end of the period covered by this report, the
Partnership's disclosure controls and procedures were adequate and effective in
timely alerting them to material information relating to the Partnership
required to be included in the Partnership's periodic SEC filings.
Changes in internal controls. There were no changes in the Partnership's
internal control over financial reporting that occurred during the quarter ended
September 30, 2004 that materially affected, or are reasonably likely to
materially affect, the Partnership's internal control over financial reporting.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities and Use of Proceeds
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
15
Item 6. Exhibits
31.1 Certification of the Principal Executive Officer pursuant to Rule
13a-15(e) and 15d-15(e), as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002. (filed herewith)
31.2 Certification of the Principal Financial Officer pursuant to Rule
13a-15(e) and 15d-15(e), as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002. (filed herewith)
32.1 Section 1350 Certification of the Chief Executive Officer. (filed
herewith)
32.2 Section 1350 Certification of the Chief Financial Officer. (filed
herewith)
16
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 9
- ----------------------------------------------
(Registrant)
By: WNC & Associates, Inc., General Partner
By: /s/ Wilfred N. Cooper, Jr.
-------------------------
Wilfred N. Cooper, Jr.
President and Chief Operating Officer of WNC & Associates, Inc.
Date: February 23, 2005
By: /s/ Thomas J. Riha
------------------
Thomas J. Riha
Senior Vice-President and Chief Financial Officer of WNC & Associates, Inc.
Date: February 23, 2005
17