Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 2009
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: 333-124115
333-124116
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 14
20-2355224
California 20-2355303
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17782 Sky Park Circle
Irvine, CA 92614-6404
Address of principal executive offices) (Zip Code)
(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 has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes No X
----------- ------------------
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [X] Smaller reporting company [_]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes[_] No [X]
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
INDEX TO FORM 10 - Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
WNC Housing Tax Credit Fund VI, L.P., Series 14 ("Series 14") currently has no
assets or liabilities and has had no operations. Accordingly, no financial
information is included herein for Series 14.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
As of September 30, 2009 and March 31, 2009 3
Statements of Operations
For the Three and Six Months Ended September 30, 2009 and 2008 4
Statement of Partners' Equity (Deficit)
For the Six Months Ended September 30, 2009 5
Statements of Cash Flows
For the Six Months Ended September 30, 2009 and 2008 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures about Market Risks 19
Item 4T. Controls and Procedures 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 1A. Risk Factors 20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits 21
Signatures 22
2
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
BALANCE SHEETS
(UNAUDITED)
SEPTEMBER 30, 2009 MARCH 31, 2009
------------------ --------------
ASSETS
Cash and cash equivalents $ 624,586 $ 1,522,248
Investments in Local Limited Partnerships, net (Notes 2 and 3) 11,683,923 13,242,305
------------ ------------
Total Assets $ 12,308,509 $ 14,764,553
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to Local Limited Partnerships (Note 5) $ 722,779 $ 1,110,039
Accrued fees and expenses due to
General Partner and affiliates (Note 3) 434,387 291,539
------------ ------------
Total Liabilities 1,157,166 1,401,578
------------ ------------
Partners' Equity (Deficit):
General Partner (7,008) (4,796)
Limited Partners (25,000 Partnership Units authorized;
20,981 Partnership Units issued and outstanding) 11,158,351 13,367,771
------------ ------------
Total Partners' Equity (Deficit) 11,151,343 13,362,975
------------ ------------
Total Liabilities and Partners' Equity (Deficit) . $ 12,308,509 $ 14,764,553
============ ============
See accompanying notes to financial statements
3
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
2009 2008
-------------------------------------------- --------------------------------------------
Three Months Six Months Three Months Six Months
-------------------- -------------------- -------------------- --------------------
Reporting fees $ -- $ -- $ 5,833 $ 7,333
-------------------- -------------------- -------------------- --------------------
Operating expenses:
Amortization (Note 2) 17,175 34,350 17,750 34,350
Asset management fees (Note 3) 44,614 89,227 44,681 89,443
Legal and accounting fees 31,451 42,960 8,882 9,172
Impairment loss (Note 2) -- 288,607 -- 80,344
Asset management expenses 4,748 7,292 3,384 7,545
Write off of advances to Local
Limited Partnerships (Note 4) 375,000 525,000 -- --
Other 1,277 3,370 5 1,403
-------------------- -------------------- -------------------- --------------------
Total operating expenses 474,265 990,806 74,127 222,257
-------------------- -------------------- -------------------- --------------------
Loss from operations (474,265) (990,806) (68,294) (214,924)
Equity in losses of Local
Limited Partnerships (Note 2) (610,750) (1,221,500) (610,750) (1,221,500)
Interest income 252 674 7,808 10,798
-------------------- -------------------- -------------------- --------------------
Net loss $ (1,084,763) $ (2,211,632) $ (671,236) $ (1,425,626)
==================== ==================== ==================== ====================
Net loss allocated to:
General Partner $ (1,085) $ (2,212) $ (672) $ (1,426)
==================== ==================== ==================== ====================
Limited Partners $ (1,083,678) $ (2,209,420) $ (670,564) $ (1,424,200)
==================== ==================== ==================== ====================
Net loss per Partnership Unit $ (51.65) $ (105.31) $ (31.96) $ (67.88)
==================== ==================== ==================== ====================
Outstanding weighted
Partnership Units 20,981 20,981 20,981 20,981
==================== ==================== ==================== ====================
See accompanying notes to financial statements
4
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009
(UNAUDITED)
GENERAL LIMITED
PARTNER PARTNERS TOTAL
----------------- ---------------- ------------------
Partners' equity (deficit) at March 31, 2009 $ (4,796) $ 13,367,771 $ 13,362,975
Net loss (2,212) (2,209,420) (2,211,632)
----------------- ---------------- ------------------
Partners' equity (deficit) at September 30, 2009 $ (7,008) $ 11,158,351 $ 11,151,343
================= ================ ==================
See accompanying notes to financial statements
5
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
2009 2008
----------- ----------
Cash flows from operating activities:
Net loss $(2,211,632) $(1,425,626)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 34,350 34,350
Impairment loss 288,607 80,344
Equity in losses of Local Limited Partnerships 1,221,500 1,221,500
Change in accrued expenses -- (17,765)
Change in accrued fees and expenses due to
General Partner and affiliates 142,848 72,677
----------- ----------
Net cash used in operating activities (524,327) (34,520)
----------- ----------
Cash used in investing activities:
Investments in Local Limited Partnerships, net (376,893) (1,757,311)
Distributions received from Local Limited Partnerships 3,558 1,000
Advances to Local Limited Partnerships (525,000) --
Write off of advances to Local Limited Partnerships 525,000 --
----------- ----------
Net cash used in investing activities (373,335) (1,756,311)
Net decrease in cash (897,662) (1,790,831)
Cash, beginning of period 1,522,248 3,715,123
----------- ----------
Cash, end of period $ 624,586 $ 1,924,292
=========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes paid $ -- $ --
=========== ===========
SIGNIFICANT NONCASH INVESTING ACTIVITIES
The Partnership decreased its investment in Local Limited
Partnerships and decreased its payables to Local Limited
Partnerships for tax credits not generated $ 10,366 $ 65,903
=========== ===========
See accompanying notes to financial statements
6
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(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, 2009 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 31, 2010. 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,
2009.
Organization
------------
WNC Housing Tax Credit Fund VI, L.P., Series 13, a California Limited
Partnership (the "Partnership") (a Development Stage Enterprise), was formed on
February 7, 2005 under the laws of the State of California, and commenced
operations on December 14, 2005. 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. Each Local Limited Partnership is governed by its agreement of
limited partnership (the "Local Limited Partnership Agreement").
WNC Housing Tax Credit Fund VI, L.P., Series 14 ("Series 14") currently has no
assets or liabilities and has had no operations. Accordingly, no financial
information is included herein for Series 14.
The general partner of the Partnership is WNC National Partners, LLC (the
"General Partner".) The general partner of the General Partner is WNC &
Associates, Inc. ("Associates"). The chairman and the president of Associates
owns all of the outstanding stock of Associates. The business of the Partnership
is conducted primarily through Associates, as the Partnership and General
Partner have no employees of their own.
The Partnership shall continue in full force and effect until December 31, 2070,
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 partnership Unit ("Partnership Units"). As of March 31, 2006, subscriptions
for 7,691 Units had been accepted by the Partnership. The required minimum
offering amount of $1,400,000 was achieved by December 14, 2005. As of March 31,
2007 total subscriptions for 20,981 Partnership Units had been accepted,
representing $20,965,400 which is net of volume discounts of $4,540 and dealer
discounts of $11,060. 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 Low Income Housing Tax Credits. The
investors (the "Limited Partners") in the Partnership will be allocated the
remaining 99.9% of these items in proportion to their respective investments.
This offering was closed on September 21, 2006.
The proceeds from the disposition of any of the Housing Complexes will be used
first to pay debts and other obligations per the respective Local Limited
Partnership Agreement. Any remaining proceeds will then be paid to the partners
of the Local Limited Partnership, including the Partnership, in accordance with
the terms of the particular Local Limited
7
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS -CONTINIUED
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------
Partnership Agreement. The sale of a Housing Complex may be subject to other
restrictions and obligations. Accordingly, there can be no assurance that a
Local Limited Partnership will be able to sell its Housing Complex. Even if it
does so, there can be no assurance that any significant amounts of cash will be
distributed to the Partnership. Should such distributions occur, the Limited
Partners will be entitled to receive distributions from the proceeds remaining
after payment of Partnership obligations and funding reserves, equal to their
capital contributions and their return on investment (as defined in the
Partnership Agreement). The General Partners would then be entitled to receive
proceeds equal to their capital contributions 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.
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 Tax Credits rules are extremely complicated.
Noncompliance with these rules results in the loss of future Low Income Housing
Tax Credits and the fractional recapture of Low Income Housing Tax Credits
already taken. In most cases the annual amount of Low Income Housing Tax 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 Tax 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 Tax Credits, a fractional recapture of prior Low
Income Housing Tax Credits, and a loss of the Partnership's investment in the
Housing Complex would occur. The Partnership is a limited partner or a
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 Tax Credits and recapture of Low Income
Housing Tax 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 Housing Complexes, and neighborhood conditions, among others.
8
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS -CONTINIUED
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------
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 Tax
Credits and tax losses allocable to 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 Partnership Units exists or is expected to develop.
Limited Partners may be unable to sell their Partnership Units except at a
discount and should consider their Partnership 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.
The Partnership currently has insufficient working capital to fund its
operations. Associates has agreed to continue providing advances sufficient
enough to fund the operations and working capital requirements of the
Partnership through March 31, 2011.
Anticipated future and existing cash resources of the Partnership are not
sufficient to pay existing liabilities of the Partnership. However,
substantially all of the existing liabilities of the Partnership are payable to
the General Partner and/or its affiliates. Though the amounts payable to the
General Partner and/or its affiliates are contractually currently payable, the
Partnership anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual obligations until capital reserves are
in excess of the aggregate of then existing contractual obligations and then
anticipated future foreseeable obligations of the Partnership. The Partnership
would be adversely affected should the General Partner and/or its affiliates
demand current payment of the existing contractual obligations and or suspend
services for this or any other reason.
Exit Strategy
-------------
The Compliance Period for a Housing Complex is generally 15 years following
construction or rehabilitation completion. Associates was one of the first in
the industry to offer syndicated investments in Low Income Housing Tax Credits.
The initial programs are completing their Compliance Periods.
With that in mind, as of September 30, 2009 the General Partner of the
Partnership has not begun reviewing the Housing Complexes, since none of the
Housing Complexes have satisfied the IRS compliance requirements. Once the
Housing Complexes have satisfied the IRS compliance requirements the review will
take into many consideration many factors, including extended use requirements
(such as those due to mortgage restrictions or state compliance agreements), the
condition of the Housing Complexes, and the tax consequences to the Limited
Partners from the sale of the Housing Complexes.
Upon identifying those Housing Complexes with the highest potential for a
successful sale, refinancing or syndication, the Partnership will expect to
proceed with efforts to liquidate them. The objective is to maximize the Limited
Partners' return wherever possible and, ultimately, to wind down the
Partnership. Local Limited Partnership interests may be disposed of any time by
the General Partner in its discretion. No Local Limited Partnerships have been
identified for disposition as of September 30, 2009.
Subsequent to September 30, 2009, on December 24, 2009 the Partnership
identified two Local Limited Partnerships, Fernwood Meadows Limited Partnership
("Fernwood") and Sierra's Run Limited Partnership ("Sierra's Run") for
disposition in order to generate sufficient equity to complete the purchase of
Davenport Housing VII, L.P. (See Troubled Housing Complexes in footnote 2.) On
February 12, 2010, Fernwood and Sierra's Run were sold, subject to a condition
subsequent that the Limited Partners approve the sales by a majority in interest
of the Limited Partners. The approval of the Limited Partners will be sought as
the transfers were to a limited partnership that is affiliated with the
Partnership.
9
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS -CONTINIUED
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------
Fernwood and Sierra's Run were sold for an aggregate purchase price of
$2,829,427. The Partnership's net investment balances in Fernwood and Sierra's
Run were $1,904,702 and $1,805,558, respectively, at the time of the sale.
Accordingly, the Partnership would recognize a loss on the sale of Local Limited
Partnerships in the amount of approximately $881,000 if the sales are approved
by the Limited Partners.
Fernwood and Sierra's Run will complete their 15-year compliance periods in
2022; therefore there is a risk of tax credit recapture. The maximum exposure of
recapture (excluding the interest and penalties related to the recapture) is
$177,508 and $170,246, respectively, for Fernwood and Sierra's Run, which
equates to $16.57 per Partnership Unit in the aggregate. Under the
circumstances, the General Partner believes there is a reasonable expectation
that each Local Limited Partnership will continue to be operated as qualified
low income housing for the balance of its compliance period, and, accordingly,
does not anticipate that there will be any recapture.
Method of Accounting for Investments in Local Limited Partnerships
------------------------------------------------------------------
The Partnership accounts for its investments in Local 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 Tax 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 Partnership reduces the carrying value of its investment in any
such Local Limited Partnership. The accounting policies of the Local Limited
Partnerships, generally, are expected to be 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 Local Limited Partnerships" for the periods ended September
30, 2009 and 2008 have been recorded by the Partnership. Management's estimate
for the six-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. In subsequent annual financial statements, upon
receiving the actual annual results reported by the Local Limited Partnerships,
management reverses its prior estimate and records the actual results reported
by the Local Limited Partnerships. Equity in losses of Local Limited
Partnerships allocated to the Partnership are not recognized to the extent that
the investment balance would be adjusted below zero. If the Local Limited
Partnerships reported 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 (see Note 2).
In accordance with the accounting guidance for the consolidation of variable
interest entities, the Partnership determines when it 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, and
a VIE must be consolidated by a company if it is the primary beneficiary because
a primary beneficiary absorbs the majority of the entity's expected losses, the
majority of the expected residual returns, or both. The Local Limited
Partnerships in which the Partnership invests are VIEs. However, management does
not consolidate the Partnership's interests in these VIE's as the Partnership is
not considered the primary beneficiary. The Partnership's balance in its
investment in Local Limited Partnerships, plus the risk of recapture of tax
credits previously recognized on these investments, represents its maximum
exposure to loss. The Partnership may be subject to additional losses to the
extent of any financial support that the Partnership voluntarily provides to the
Local Limited Partnerships in the future.
Distributions received by the Partnership are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income. As of September 30, 2009 and March 31, 2009, none
of the investment balances had reached zero.
10
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS -CONTINIUED
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(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, 2009 and March 31, 2009, the Partnership had cash equivalents of
approximately $544,000 and $1,485,000, respectively.
Concentration of Credit Risk
----------------------------
For all periods presented, the Partnership maintained cash balances at certain
financial institutions in excess of the federally insured maximum. The
Partnership believes it is not exposed to any significant financial risk on
cash.
Reporting Comprehensive Income
------------------------------
The Partnership had no items of other comprehensive income for all periods
presented.
Income Taxes
------------
The Partnership has elected to be treated as a pass-through entity for income
tax purposes and, as such, is not subject to income taxes. Rather, all items of
taxable income, deductions and tax credits are passed through to and are
reported by its owners on their respective income tax returns. The Partnership's
federal tax status as a pass-through entity is based on its legal status as a
partnership. Accordingly, the Partnership is not required to take any tax
positions in order to qualify as a pass-through entity. The Partnership is
required to file and does file tax returns with the Internal Revenue Service and
other taxing authorities. Accordingly, these financial statements do not reflect
a provision for income taxes and the Partnership has no other tax positions
which must be considered for disclosure.
Net Loss Per Partnership Unit
-----------------------------
Net loss per Partnership Unit includes no dilution and is computed by dividing
loss allocated to Limited Partners by the weighted average number of Partnership
Units outstanding during the period. Calculation of diluted net loss per
Partnership Unit is not required.
Revenue Recognition
-------------------
The Partnership is entitled to receive reporting fees from the Local Limited
Partnerships. The intent of the reporting fees is to offset (in part)
administrative costs incurred by the Partnership in corresponding with the Local
Limited Partnerships. Due to the uncertainty of the collection of these fees,
the Partnership recognizes reporting fees as collections are made.
11
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS -CONTINIUED
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------
Amortization
------------
Acquisition fees and costs were being amortized over 30 years using the
straight-line method. Amortization expense for each of the six months ended
September 30, 2009 and 2008 was $34,350. During each of the six months ended
September 30, 2009 and 2008, there was no impairment loss recorded against these
fees and costs.
Impairment
----------
A loss in value from a Local Limited Partnership other than a temporary decline
is recorded as an impairment loss. Impairment is measured by comparing the
investment carrying amount to the sum of the total of the remaining Low Income
Housing Tax Credits allocated to the Partnership and the estimated residual
value to the Partnership. For the six months ended September 30, 2009 and 2008,
impairment loss related to investment in Local Limited Partnerships was $288,607
and $80,344, respectively. The Partnership also evaluates its intangibles for
impairment in connection with its investments in Local Limited Partnerships.
Impairment on the intangibles is measured by comparing the investment's carrying
amount after impairment and the related intangible assets to the sum of the
total of the remaining Low Income Housing Tax Credits allocated to the
Partnership and the estimated residual value of the investment. During each of
the six months ended September 30, 2009 and 2008, there was no impairment loss
recorded on the related intangibles.
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
--------------------------------------------------
As of the periods presented, the Partnership owns Local Limited Partnership
interests in ten Local Limited Partnerships consisting of an aggregate of 647
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 99.98%, as
specified in the Local Limited Partnership agreements, of the operating profits
and losses, taxable income and losses, and Low Income Housing Tax Credits of the
Local Limited Partnerships.
A loss in value from a Local Limited Partnership other than a temporary decline
would be recorded as an impairment loss. Impairment is measured by comparing the
investment carrying amount to the sum of the total amount of the remaining Low
Income Housing Tax Credits allocated to the Partnership and the estimated
residual value to the Partnership. Due to current economic conditions all Local
Limited Partnerships were not considered to have any residual value.
Accordingly, the Partnership recorded an impairment loss of $288,607 and $80,344
during the six months ended September 30, 2009 and 2008, respectively. The
Partnership also evaluates its intangibles for impairment in connection with its
investment in Local Limited Partnerships. During each of the six months ended
September 30, 2009 and 2008, there was no impairment loss was recorded on the
related intangibles.
12
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS -CONTINIUED
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED
-------------------------------------------------------------
The following is a summary of the equity method activity of the investments in
Local Limited Partnerships for the periods presented below:
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2009 MARCH 31, 2009
------------------ ---------------
Investments per balance sheet, beginning of period $ 13,242,305 $ 15,943,480
Equity in losses of Local Limited Partnerships (1,221,500) (2,443,000)
Tax credit adjustments (10,366) (108,131)
Impairment loss (288,607) (80,344)
Distribution received from Local Limited Partnerships (3,559) (1,000)
Amortization of capitalized acquisition fees and costs (34,332) (68,664)
Amortization of warehouse costs and interest (18) (36)
------------ ------------
Investments per balance sheet, end of period $ 11,683,923 $ 13,242,305
============ ============
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2009 MARCH 31, 2009
------------------ ---------------
Investments in Local Limited Partnerships, net $ 9,976,879 $11,500,911
Acquisition fees and costs, net of accumulated amortization of
$182,163 and $147,831 1,706,127 1,740,459
Capitalized warehouse costs and interest accumulated
amortization of $122 and $104 917 935
----------- -----------
Investments per balance sheet, end of period $11,683,923 $13,242,305
=========== ===========
13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS -CONTINIUED
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED
-------------------------------------------------------------
Selected financial information for the six months ended September 30, 2009 and
2008 from the unaudited combined condensed financial statements of the Local
Limited Partnerships in which the Partnership has invested is as follows:
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2009 2008
----------- -----------
Revenues $ 2,258,000 $ 2,258,000
----------- -----------
Expenses:
Interest expense 610,000 610,000
Depreciation and amortization 947,000 947,000
Operating expenses 1,923,000 1,923,000
----------- -----------
Total expenses 3,480,000 3,480,000
----------- -----------
Net loss $(1,222,000) $(1,222,000)
=========== ===========
Net loss allocable to the Partnership $(1,222,000) $(1,222,000)
=========== ===========
Net loss recorded by the Partnership $(1,222,000) $(1,222,000)
=========== ===========
Certain Local Limited Partnerships have incurred significant operating losses
and/or have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership may be required to sustain operations of such
Local Limited Partnerships. If additional capital contributions are not made
when they are required, the Partnership's investments in certain of such Local
Limited Partnerships could be impaired, and the loss and recapture of the
related Low Income Housing Tax Credits could occur.
Troubled Housing Complexes
--------------------------
One Local Limited Partnership, Davenport Housing VII, L.P., ("Davenport")
started construction in October 2006 and was scheduled to be completed in June
2008. Construction was delayed due to the original Local General Partner
defaulting on his construction guarantee and resulting disputed mechanic liens
on the property. In November 2008, the original Local General Partner was
replaced with a new Local General Partner, Shelter Resource Corporation due to
restrictions implemented by the Iowa Finance Authority ("IFA"). Subsequently,
with IFA's approval, the defaulting original Local General Partner was removed
from the Partnership leaving Shelter Resource Corporation as the sole Local
General Partner.
As of March 31, 2009 construction of the property was 75% complete and a
certificate of occupancy was granted for both buildings in December 2009. The
Partnership engaged all sub-contractors to sign new construction contracts,
along with lien releases for any and all work done after their engagement. As of
September 30, 2009 the Partnership voluntarily advanced $547,311 and
subsequently advanced $321,175 to Davenport for construction related costs.
It is anticipated that Davenport will be fully completed by March 31, 2010 and
achieve stabilized operations by May 31, 2010. Davenport has been awarded state
historical tax credits from the State of Iowa, federal historical credits and
14
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS -CONTINIUED
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED
-------------------------------------------------------------
federal Low Income Housing Tax Credits. The State historical credits are given
in the form of a refund check from the State in conjunction with the State tax
return filing. The net amount of the check after applicable federal taxes will
be contributed back to the property to help fund construction shortfalls.
Davenport was also allocated additional federal Low Income Housing Tax Credits
as well as federal historical tax credits. Upon the Limited Partners' approval
of the disposition of Sierra's Run and Fernwood, the Partnership will purchase
the additional credits. See the exit strategy in footnote 1 regarding the
disposition of Sierra's Run and Fernwood.
NOTE 3 - RELATED PARTY TRANSACTIONS
-----------------------------------
Under the terms of the Partnership Agreement, the Partnership has paid or is
obligated to the General Partner or its affiliates the following fees:
(a) Acquisition fees of up to 7% of the gross proceeds from the sale of
Partnership Units as compensation for services rendered in connection with
the acquisition of Local Limited Partnerships. At the end of all periods
presented, the Partnership had incurred cumulative acquisition fees of
$1,468,670. Accumulated amortization of these capitalized costs was
$141,689 and $114,985 as of September 30, 2009 and March 31, 2009,
respectively.
(b) Reimbursement of costs incurred by the General Partner or an affiliate in
connection with the acquisition of Local Limited Partnerships. These
reimbursements have not exceeded 2% of the gross proceeds. As of the end of
all periods presented, the Partnership had incurred cumulative acquisition
costs of $419,620, which have been included in investments in Local Limited
Partnerships. Accumulated amortization of these capitalized costs was
$40,474 and $32,846 as of September 30, 2009 and March 31, 2009,
respectively.
(c) Annual Asset Management Fee. An annual asset management fee accrues 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 partnership 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. Asset
management fees of $89,227 and $89,443 were incurred during the six months
ended September 30, 2009 and 2008, respectively. The Partnership paid the
General Partner and or its affiliates $0 and $15,000 of those fees during
the six months ended September 30, 2009 and 2008, respectively.
(d) The Partnership reimburses the General Partner or its affiliates for
operating expenses incurred by the Partnership and paid for by the General
Partner or its affiliates on behalf of the Partnership. Operating expense
reimbursements were $0 and $19,886 during the six months ended September
30, 2009 and 2008, respectively.
(e) 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 and is payable only if the
General Partner or its affiliates render services in the sales effort. No
such fees were incurred for all periods presented.
15
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS -CONTINIUED
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
NOTE 3 - RELATED PARTY TRANSACTIONS, CONTINUED
----------------------------------------------
The accrued fees and expenses due to the General Partner and affiliates consist
of the following at:
SEPTEMBER 30, 2009 MARCH 31, 2009
------------------- -----------------
Reimbursement for expenses paid by the General
Partner or affiliates on behalf of the Partnership $ 86,608 $ 32,987
Asset management fee payable 347,779 258,552
------------------- -----------------
Total $ 434,387 $ 291,539
=================== =================
The General Partner and/or its affiliates do not anticipate that these accrued
fees will be paid until such time as capital reserves are in excess of future
foreseeable working capital requirements of the Partnership.
NOTE 4 -ADVANCES TO LOCAL LIMITED PARTNERSHIPS
----------------------------------------------
During the six months ended September 30, 2009, the Partnership voluntarily
advanced $525,000 to one Local Limited Partnership in which the Partnership is a
Limited Partner. The Local Limited Partnerships has been experiencing issues
related to the construction. As of September 30, 2009 total advances made to
Local Limited Partnerships were $547,311, of which $547,311 was reserved. The
Partnership determined the recoverability of these advances to be improbable
and, accordingly, a reserve had been recorded.
NOTE 5- PAYABLES TO LOCAL LIMITED PARTNERSHIPS
----------------------------------------------
Payables to Local Limited Partnerships represent amounts which are due at
various times based on conditions specified in the Local Limited Partnership
agreements. These contributions are payable in installments and are generally
due upon the Local Limited Partnerships achieving certain operating and
development benchmarks (generally within two years of the Partnership's initial
investment). The payables to Local Limited Partnerships are subject to
adjustment in certain circumstances. Payables to Local Limited Partnerships were
decreased for tax credit adjusters during the six months ended September 30,
2009 and 2008 in the amounts of $10,366 and $65,903, respectively.
NOTE 6- SUBSEQUENT EVENTS
-------------------------
Subsequent to September 30, 2009, the Partnership advanced $321,175 to one Local
Limited Partnership, Davenport. Davenport has been experiencing construction
issues. All advances were reserved in full in the period they were advanced. See
Troubled Housing Complexes in footnote 2 for further details regarding the
construction related issues.
Subsequent to September 30, 2009, on December 24, 2009 the Partnership
identified two Local Limited Partnerships, Fernwood and Sierra's Run, for
disposition in order to generate sufficient equity to complete the purchase of
Davenport (See troubled Housing Complexes in footnote 2). On February 12, 2010,
Fernwood and Sierra's Run were sold, subject to a condition subsequent that the
Limited Partners approve the sales by a majority in interest of the Limited
Partners. See the exit strategy in footnote 1 for additional information
regarding the disposition of these two Local Limited Partnerships.
16
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, this
"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, the Partnership 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 the
Partnership or persons acting on its behalf are expressly qualified in their
entirety by cautionary statements in this Form 10-Q and in other reports filed
with the Securities and Exchange Commission. The following discussion should be
read in conjunction with the condensed unaudited financial statements and the
notes thereto included elsewhere in this filing.
The following discussion and analysis compares the results of operations for the
three and six months ended September 30, 2009 and 2008, and should be read in
conjunction with the condensed unaudited financial statements and accompanying
notes included within this report.
FINANCIAL CONDITION
The Partnership's assets at September 30, 2009 consisted of $625,000 in cash and
cash equivalents and aggregate investments in ten Local Limited Partnerships of
$11,684,000. Liabilities at September 30, 2009 consisted of $434,000 of accrued
fees and payables due to the General Partner and/or its affiliates for
reimbursement of expenses paid and $723,000 of capital contributions due to
Local Limited Partnerships.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2008. The Partnership's net loss for the three months ended
September 30, 2009 was $(1,085,000), reflecting an increase of approximately
$(414,000) from the $(671,000) net loss experienced for the three months ended
September 30, 2008. The increase in net loss is largely due to the $(375,000),
increase in write off of advances to Local Limited Partnerships. During the
three months ended September 30, 2009 there were advances of $(375,000) made to
one Local Limited Partnership which were reserved for in full as of September
30, 2009 compared to no advances made and reserved for during the three months
ended September 30, 2008. The advances made to the troubled Local Limited
Partnerships can vary each year depending on the operations of the individual
Local Limited Partnerships. Additionally there was an increase of $(23,000) in
legal and accounting fees due to the timing of legal work being performed. The
other operating expenses increased by $(1,000) as well as a $(1,000) increase in
asset management expenses. The reporting fees decreased by approximately
$(6,000) for the three months ended September 30, 2009. Reporting fees can
fluctuate from year to year due to the fact that Local Limited Partnerships pay
those fees to the Partnership when the Local Limited Partnership's cash flow
will allow for the payment. Interest income decreased by $(7,000) due to the
cash balances being maintained by the Partnership decreasing as well as the
interest rates in the time period September 30, 2008 to September 30, 2009.
SIX MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE SIX MONTHS ENDED SEPTEMBER
30, 2008. The Partnership's net loss for the six months ended September 30, 2009
was $(2,212,000), reflecting an increase of approximately $(786,000) from the
$(1,426,000) net loss experienced for the six months ended September 30, 2008.
The increase in net loss is largely due to the $(525,000), increase in write off
of advances to Local Limited Partnerships. During the six months ended September
30, 2009 there were advances of $(525,000) made to one Local Limited Partnership
which were reserved for in full as of September 30, 2009 compared to no advances
made and reserved for during the six months ended September 30, 2008. The
17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
advances made to the troubled Local Limited Partnerships can vary each year
depending on the operations of the individual Local Limited Partnerships. The
increase was also due to an increase of $(208,000) in impairment loss. The
impairment loss can vary from year to year depending on the operations of the
Local Limited Partnerships and the amount of the Low Income Housing Tax Credits
that are allocated each year. Additionally there was an increase of $(34,000) in
legal and accounting fees due to the timing of legal work being performed. The
other operating expenses increased by $(2,000). The reporting fees decreased by
approximately $(7,000) for the three months ended September 30, 2009. Reporting
fees can fluctuate from year to year due to the fact that Local Limited
Partnerships pay those fees to the Partnership when the Local Limited
Partnership's cash flow will allow for the payment. Interest income decreased by
$(10,000) due to the cash balances being maintained by the Partnership
decreasing as well as the interest rates in the time period September 30, 2008
to September 30, 2009.
LIQUIDITY AND CAPITAL RESOURCES
SIX MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30,
2008. The net decrease in cash during the six months ended September 30, 2009
was $(898,000) compared to a net decrease in cash for the six months ended
September 30, 2008 of $(1,791,000). The decrease in the net cash used is largely
due to the $(1,757,000) in capital contributions made to Local Limited
Partnerships during the six months ended September 30, 2008 compared to
$(377,000) paid to Local Limited Partnerships during the six months ended
September 30, 2009, a net difference of $1,380,000. Capital contributions to
Local Limited Partnerships are usually made during the first two years of
acquiring the Local Limited Partnerships so a decrease is expected as the
Partnership is a year further in operations. During the six months ended
September 30, 2009 the Partnership advanced one Local Limited Partnership
$(525,000) compared to no advances made to Local Limited Partnerships for the
six months ended September 30, 2008 as described above. During the six months
ended September 30, 2008 the Partnership paid the General Partner or an
affiliate $15,000 and $20,000 in asset management fees and reimbursement of
operating expenses, respectively, compared to neither one being paid during the
six months ended September 30, 2009. During 2009 the cash balances had decreased
significantly largely due to the advances that were made to a Local Limited
Partnership, so asset management fees and operating expense reimbursements
payments could not be made.
During the six months ended September 30, 2009, accrued payables, which consist
primarily of related party management fees and advances due to the General
Partner, increased by $143,000. The General Partner does not anticipate that the
balance of the accrued fees and advances will be paid until such time as capital
reserves are in excess of foreseeable working capital requirements of the
Partnership.
The Partnership expects its future cash flows, together with its net available
assets as of September 30, 2009, to be insufficient to meet all currently
foreseeable future cash requirements. Associates has agreed to continue
providing advances sufficient enough to fund the operations and working capital
requirements of the Partnership through March 31, 2011.
RECENT ACCOUNTING CHANGES
The Partnership has elected to be treated as a pass-through entity for income
tax purposes and, as such, is not subject to income taxes. Rather, all items of
taxable income, deductions and tax credits are passed through to and are
reported by its owners on their respective income tax returns. The Partnership's
federal tax status as a pass-through entity is based on its legal status as a
partnership. Accordingly, the Partnership is not required to take any tax
positions in order to qualify as a pass-through entity. The Partnership is
required to file and does file tax returns with the Internal Revenue Service and
other taxing authorities. Accordingly, these financial statements do not reflect
a provision for income taxes and the Partnership has no other tax positions
which must be considered for disclosure.
In September 2006, the Financial Accounting Standards Board ("FASB") issued GAAP
for Fair Value Measurements, which defines fair value, establishes a framework
for measuring fair value and expands disclosure about fair value measurements.
This guidance is effective for financial statements issued for fiscal years
18
beginning after November 15, 2007 and shall be applied prospectively except for
very limited transactions. In February 2008, the FASB delayed for one year
implementation of the guidance as it pertains to certain non-financial assets
and liabilities The Partnership does not anticipate this guidance to have a
material impact on the Partnership's financial statements.
In November 2008, the FASB issued GAAP on Equity Method Investment Accounting
Considerations, which clarifies the accounting for how to account for certain
transactions and impairment considerations involving equity method investments.
This guidance is effective in fiscal years beginning on or after December 15,
2008, and interim periods within those fiscal years. The Partnership adopted the
guidance for the interim quarterly period beginning April 1, 2009. The impact of
adopting it does not have a material impact on the Partnership's financial
condition or results of operations.
In April 2009, the FASB issued GAAP for Interim Disclosures about Fair Value of
Financial Instruments. This requires disclosure about the method and significant
assumptions used to establish the fair value of financial instruments for
interim reporting periods as well as annual statements. It was effective for the
Partnership as of June 30, 2009 and has no impact on the Partnership's financial
condition or results of operations.
In May 2009, the FASB issued guidance regarding subsequent events, which was
subsequently updated in February 2010. This guidance established general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. In particular, this guidance sets forth the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements, and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. This guidance
is effective for financial statements issued for fiscal years and interim
periods ending after June 15, 2009, and therefore has been adopted by the
Partnership for this quarterly report. The adoption did not have a significant
impact on the subsequent events that the Partnership reports, either through
recognition or disclosure, in the financial statements. In February 2010, the
FASB amended its guidance on subsequent events to remove the requirement to
disclose the date through which an entity has evaluated subsequent events,
alleviating conflicts with current SEC guidance. This amendment was effective
immediately and therefore the Partnership did not include the disclosure in this
Form 10-Q.
In June 2009, the FASB issued the Accounting Standards Codification
(Codification). Effective July 1, 2009, the Codification is the single source of
authoritative accounting principles recognized by the FASB to be applied by
non-governmental entities in the preparation of financial statements in
conformity with U.S. generally accepted accounting principles (GAAP). The
Codification is intended to reorganize, rather than change, existing GAAP.
Accordingly, all references to currently existing GAAP have been removed and
have been replaced with plain English explanations of the Partnership's
accounting policies. The adoption of the Codification did not have a material
impact on the Partnership's financial position or results of operations.
In June 2009, the FASB issued an amendment to the accounting and disclosure
requirements for the consolidation of VIEs. The amended guidance modifies the
consolidation model to one based on control and economics, and replaces the
current quantitative primary beneficiary analysis with a qualitative analysis.
The primary beneficiary of a VIE will be the entity that has (1) the power to
direct the activities of the VIE that most significantly impact the VIE's
economic performance and (2) the obligation to absorb losses or receive benefits
that could potentially be significant to the VIE. If multiple unrelated parties
share such power, as defined, no party will be required to consolidate the VIE.
Further, the amended guidance requires continual reconsideration of the primary
beneficiary of a VIE and adds an additional reconsideration event for
determination of whether an entity is a VIE. Additionally, the amendment
requires enhanced and expanded disclosures around VIEs. This amendment is
effective for fiscal years beginning after November 15,2009. The adoption of
this guidance on April 1, 2010 is not expected to have a material effect on the
Partnership's financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
NOT APPLICABLE
ITEM 4T. CONTROLS AND PROCEDURES
19
(a) Disclosure 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 Partnership'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 Chief Financial Officer have concluded
that, as of the end of the period covered by this report, the
Partnership's disclosure controls and procedures were not effective to
ensure that material information required to be disclosed in the
Partnership's periodic report filings with SEC is recorded, processed,
summarized and reported within the time period specified by the SEC's
rules and forms, consistent with the definition of "disclosure
controls and procedures" under the Securities Exchange Act of 1934.
The Partnership must rely on the Local Limited Partnerships to provide
the Partnership with certain information necessary to the timely
filing of the Partnership's periodic reports. Factors in the
accounting at the Local Limited Partnerships have caused delays in the
provision of such information during past reporting periods, and
resulted in the Partnership's inability to file its periodic reports
in a timely manner.
Once the Partnership has received the necessary information from the
Local Limited Partnerships, the Chief Executive Officer and the Chief
Financial Officer of Associates believe that the material information
required to be disclosed in the Partnership's periodic report filings
with SEC is effectively recorded, processed, summarized and reported,
albeit not in a timely manner. Going forward, the Partnership will use
the means reasonably within its power to impose procedures designed to
obtain from the Local Limited Partnerships the information necessary
to the timely filing of the Partnership's periodic reports.
(b) 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, 2009 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 1A. RISK FACTORS
No material changes in risk factors as previously disclosed in the
Partnership's Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY 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
20
ITEM 6. EXHIBITS
31.1 Certification of the Principal Executive Officer pursuant to Rule
13a-14 and 15d-14, 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-14 and 15d-14, 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)
21
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 13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 14
By: WNC National Partners, L.L.C. General Partner
By: WNC & ASSOCIATES, INC. General Partner
By: /s/ Wilfred N. Cooper, Jr.
---------------------------
Wilfred N. Cooper, Jr.
President and Chief Executive Officer of WNC & Associates, Inc.
Date: April 1, 2010
By: /s/ Melanie R. Wenk
-------------------
Melanie R. Wenk
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: April 1, 2010
22
