-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SlfD7b5NCn1MNnAqhzVQBkdj7JHOLNE11ZtKhSCe20XBhWHejHb2TUvc6LI4QVjo dYLFXSGIGuA90+Y5u6/l1g== 0001084067-08-000083.txt : 20080519 0001084067-08-000083.hdr.sgml : 20080519 20080516173753 ACCESSION NUMBER: 0001084067-08-000083 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20071231 FILED AS OF DATE: 20080519 DATE AS OF CHANGE: 20080516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WNC HOUSING TAX CREDIT FUND VI LP SERIES 5 CENTRAL INDEX KEY: 0001036500 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 330745418 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24855 FILM NUMBER: 08843437 BUSINESS ADDRESS: STREET 1: 3158 REDHILL AVE STREET 2: STE 120 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7146625565 MAIL ADDRESS: STREET 1: 3158 REDHILL AVE STREET 2: STE 120 CITY: COSTA MESA STATE: CA ZIP: 92626 10-Q 1 q106507d.txt DECEMBER 31, 2007 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2007 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: 000-24855 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 California 33-0745418 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 17782 Sky Park Circle, Irvine, CA 92614 ( Address of principle executive offices ) (714) 622-5565 ( 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 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 5 (A California Limited Partnership) INDEX TO FORM 10-Q For the Quarterly period Ended December 31, 2007 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets As of December 31, 2007 and March 31, 2007...........................3 Statements of Operations For the Three and Nine Months Ended December 31, 2007 and 2006.......4 Statement of Partners' Equity (Deficit) For the Nine Months Ended December 31, 2007 .........................5 Statements of Cash Flows For the Nine Months Ended December 31, 2007 and 2006.................6 Notes to Financial Statements................................................7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................15 Item 3. Quantitative and Qualitative Disclosures About Market Risk..........16 Item 4. Controls and Procedures ...........................................16 Item 4T.Controls and Procedures ...........................................16 PART II. OTHER INFORMATION Item 1. Legal Proceedings...................................................16 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.........16 Item 3. Defaults Upon Senior Securities.....................................17 Item 4. Submission of Matters to a Vote of Security Holders.................17 Item 5. Other Information...................................................17 Item 6. Exhibits............................................................17 Signatures..................................................................18 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) BALANCE SHEETS (unaudited)
December 31, 2007 March 31, 2007 ------------------ ------------------ ASSETS Cash $ 137,412 $ 143,541 Investments in Local Limited Partnerships, net (Note 2) 6,743,433 8,470,127 ------------------ ------------------ Total Assets $ 6,880,845 $ 8,613,668 ================== ================== Liabilities: Accrued fees and expenses due to General Partner and affiliates (Note 3) $ 898,409 $ 866,873 ------------------ ------------------ Partners' equity (deficit): General Partner (189,269) (171,625) Limited Partners (25,000 Partnership Units authorized; 25,000 Partnership Units issued and outstanding) 6,171,705 7,918,420 ------------------ ------------------ Total Partners' Equity 5,982,436 7,746,795 ------------------ ------------------ Total Liabilities and Partners' $ 6,880,845 $ 8,613,668 ================== ==================
See accompanying notes to financial statements 3 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) STATEMENTS OF OPERATIONS For the Three Months and Nine Months Ended December 31, 2007 and 2006 (unaudited)
2007 2006 ----------------------------------- ---------------------------------------- Three Nine Three Nine Months Months Months Months -------------- ------------- --------------- -------------- Reporting fees $ 7,000 $ 26,000 $ - $ 53,685 -------------- ------------- --------------- -------------- Operating expenses: Amortization (Note 2) 15,481 46,443 15,855 47,565 Asset management fees (Note 3) 17,517 52,551 17,517 52,551 Impairment loss (Note 2) - 999,047 - 559,870 Write off of advances from Local Limited Partnerships (Note 4) 4,500 4,500 - - Legal and accounting fees - 2,755 407 3,266 Other 1,100 4,065 1,079 4,468 -------------- ------------- --------------- -------------- Total operating expenses 38,598 1,109,361 34,858 667,720 -------------- ------------- --------------- -------------- Loss from operations (31,598) (1,083,361) (34,858) (614,035) Equity in losses of Local Limited Partnerships (Note 2) (227,068) (681,204) (229,369) (688,107) Interest income 3 206 199 517 -------------- ------------- --------------- -------------- Net loss $ (258,663) $ (1,764,359) (264,028) $ (1,301,625) ============== ============= =============== ============== Net loss allocated to: General Partner $ (2,587) $ (17,644) $ (2,640) $ (13,016) ============== ============== =============== ============== Limited Partners $ (256,076) $ (1,746,715) $ (261,388) $ (1,288,609) ============== ============== =============== ============== Net loss per Partnerships Units $ (10) $ (70) $ (10) $ (52) ============== ============== =============== ============== Outstanding weighted Partnership Units 25,000 25,000 25,000 25,000 ============== ============== =============== ==============
See accompanying notes to financial statements 4 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) STATEMENT OF PARTNERS' EQUITY (DEFICIT) For the Nine Months Ended December 31, 2007 (unaudited)
General Limited Partner Partners Total --------------- ---------------- ------------------ Partners' equity (deficit) at March 31, 2007 $ (171,625) $ 7,918,420 $ 7,746,795 Net loss (17,644) (1,746,715) (1,764,359) --------------- ---------------- ------------------ Partners' equity (deficit) at December 31, 2007 $ (189,269) $ 6,171,705 $ 5,982,436 =============== ================ ==================
See accompanying notes to financial statements 5 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) STATEMENTS OF CASH FLOWS For the Nine Months Ended December 31, 2007 and 2006 (unaudited)
2007 2006 -------------- --------------- Cash flows from operating activities: Net loss $ (1,764,359) $ (1,301,625) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Amortization 46,443 47,565 Equity in losses of Local Limited Partnerships 681,204 668,107 Impairment loss 999,047 559,870 Advances to Local Limited Partnerships (4,500) - Write off of advances to Local Limited Partnerships 4,500 - Change in accrued fees and expenses due to General Partner and affiliates 31,536 42,583 -------------- --------------- Net cash provided by (used in) operating activities (6,129) 36,500 -------------- --------------- Net increase (decrease) in cash (6,129) 36,500 Cash, beginning of period 143,541 125,887 -------------- --------------- Cash, end of period $ 137,412 $ 162,387 ============== =============== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Taxes paid $ - $ - ============== ===============
See accompanying notes to financial statements 6 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarterly period ended December 31, 2007 (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 nine months ended December 31, 2007 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2008. 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, 2007. Organization - ------------ WNC Housing Tax Credit Fund VI, L.P., Series 5 is a California Limited Partnership (the "Partnership") was formed under the laws of the State of California on March 3, 1997 and commenced operations on August 29, 1997. The Partnership was formed to invest primarily in other limited partnerships or limited liability companies ("Local Limited Partnerships") which own and operate multi-family housing complexes ("Housing Complexes") that are eligible for Federal low-income housing tax credits ("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 Complexes. Each Local Limited Partnership is governed by its agreement of limited partnership (the "Local Limited Partnership Agreement"). The general partner of the Partnership is WNC & Associates, Inc. ("Associates" the "General Partner"). The chairman and president of Associates own substantially all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through the General Partner, as the Partnership has no employees of its own. The Partnership shall continue in full force and effect until December 31, 2052, 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 of limited partnership interest ("Partnership Units) at $1,000 per Partnership Unit. The offering of Partnership Units has concluded and 25,000 Partnership Units, representing subscriptions in the amount of $24,918,175, net of dealer and volume discounts of $81,825 had been accepted. The General Partner has a 1% interest in operating profits and losses, taxable income and losses, cash available for distribution from the Partnership and Low Income Housing Tax Credits of the Partnership. The investors (the "Limited Partners") in the Partnership will be allocated the remaining 99% of these items in proportion to their respective investments. 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 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 7 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarterly period ended December 31, 2007 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- return on investment (as defined in the Partnership Agreement). The General Partner 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 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 Tax 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 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 8 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarterly period ended December 31, 2007 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- 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 April 30, 2009. 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 IRS compliance period for Low-Income Housing Tax Credit properties is generally 15 years from occupancy following construction or rehabilitation completion. Associates was one of the first in the industry to offer syndicated investments using the Low Income Housing Tax Credits. The initial programs are completing their compliance periods. As of December 31, 2007, none of the Local Limited Partnerships had completed the 15 year compliance period. With that in mind, the Partnership is continuing to review the Housing Complexes, with special emphasis on the more mature Housing Complexes such as any that have satisfied the IRS compliance requirements. The review considers 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 expects 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. While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of December 31, 2007. As of December 31, 2007, no Housing Complexes had been sold or selected for disposition. 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 allocated 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 and are being amortized over 30 years (see Note 2). 9 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarterly period ended December 31, 2007 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- "Equity in losses of Local Limited Partnerships" for the periods ended December 31, 2007 and 2006 have been recorded by 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. 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. As soon as the investment balance reaches zero, the related costs of acquiring the investment are impaired. 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). The Partnership does not consolidate the accounts and activities of the Local Limited Partnerships, which are considered Variable Interest Entities under Financial Accounting Standards Board Interpretation No. 46-Revised, "Consolidation of Variable Interest Entities", because the Partnership is not considered the primary beneficiary. The Partnership's balance in investments in Local Limited Partnerships, plus the risk of recapture of tax credits previously recognized on such investments, represents the maximum exposure to loss in connection with such investments. The Partnership's exposure to loss on the Local Limited Partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local General Partners and their guarantees against Low Income Housing Tax Credit recapture. Distributions received from the Local Limited Partnerships are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as distribution income. As of December 31, 2007 three investment accounts in Local Limited Partnerships had reached a zero balance. Use of Estimates - ---------------- The preparation of financial statements in conformity with accounting principles generally accepted in the country-regionplaceUnited 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 an original maturity of three months or less when purchased to be cash equivalents. For all periods presented, the Partnership had no cash equivalents. 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. Income Taxes - ------------ No provision for income taxes has been recorded in the financial statements as any liability and or benefits for 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. 10 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarterly period ended December 31, 2007 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- Net Loss Per Partnership Unit - ----------------------------- Net loss per Partnership Unit is calculated pursuant to Statement of Financial Accounting Standards No. 128, Earnings Per Share. 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. Amortization - ------------ Acquisition fees and costs are being amortized over 30 years using the straight-line method. Amortization expense for the for the nine months ended December 31, 2007 and 2006 was $46,443 and $47,565, respectively. Impairment - --------- A loss in value of 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 allocate to the Partnership and the estimated residual value to the Partnership. NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS - -------------------------------------------------- As of December 31, 2007, the Partnership has acquired limited partnership interests in fifteen Local Limited Partnerships, each of which owns one Housing Complex consisting of an aggregate of 624 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, as defined, require approval from the Partnership. The Partnership, as a Limited Partner, is generally entitled to 99.9%, 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 is 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 Tax Credits allocated to the Partnership and the estimated residual value to the Partnership. Accordingly, the Partnership recorded an impairment loss of $999,047 and $559,870, during the nine months ended December 31, 2007 and 2006, respectively. 11 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarterly period ended December 31, 2007 (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 Nine For the Year Months Ended Ended December 31, 2007 March 31, 2007 ---------------------- ------------------ Investments per balance sheet, beginning of period $ 8,470,127 $ 10,041,847 Impairment loss (999,047) (559,870) Equity in losses of Local Limited Partnerships (681,204) (948,430) Amortization of capitalized acquisition fees and costs (46,443) (63,420) ---------------------- ------------------ Investments per balance sheet, end of period $ 6,743,433 $ 8,470,127 ====================== ==================
For the Nine Months For the Year Ended Ended December 31, 2007 March 31, 2007 ----------------------- -------------------- Investments in Local Limited Partnerships, net $ 5,489,426 $ 7,169,677 Acquisition fees and costs, net of accumulated amortization of $681,727 and $635,284 1,254,007 1,300,450 ----------------------- -------------------- Investments per balance sheet, end of period $ 6,743,433 $ 8,470,127 ======================= ====================
Selected financial information for the nine months ended December 31, 2007 and 2006 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
2007 2006 ---------------------- ------------------ Revenues $ 2,508,000 $ 2,508,000 ---------------------- ------------------ Expenses: Interest expense 646,000 646,000 Depreciation and amortization 927,000 927,000 Operating expenses 1,667,000 1,667,000 ---------------------- ------------------ Total expenses 3,240,000 3,240,000 ---------------------- ------------------ Net loss $ (732,000) (732,000) ====================== ================== Net loss allocable to the Partnership$ (727,000) $ (727,000) ====================== ================== Net loss recorded by the Partnership $ (681,000) $ (688,000) ====================== ==================
12 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarterly period ended December 31, 2007 (unaudited) NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued - ------------------------------------------------------------- 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 and/or the Local General Partners may be required to sustain the operations of such Local Limited Partnerships. If additional capital contributions are not made when they are required, the Partnership's investment in certain of such Local Limited Partnerships could be impaired, and the loss and recapture of the related Low Income Housing Tax Credits could occur. 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 incurred acquisition fees of $1,750,000. Accumulated amortization of these capitalized costs was $570,289 and $526,534 as of December 31, 2007 and March 31, 2007, respectively. (b) Reimbursement of costs incurred by the General Partner or an affiliate of Associates in connection with the acquisition of Local Limited Partnerships. These reimbursements have not exceeded 1.5% of the gross proceeds. As of the end of all periods presented, the Partnership incurred acquisition costs of $185,734, which have been included in investments in Local Limited Partnerships. Accumulated amortization was $111,438 and $108,750 as of December 31, 2007 and March 31, 2007, respectively. (c) An annual asset management fee in an amount not to exceed 0.2% of the Invested Assets of the Partnership, as defined. "Invested Assets" means the sum of the Partnership's investment in Local Limited Partnerships and the Partnership's allocable share of mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Asset management fees of $52,551 were incurred during each of the nine months ended December 31, 2007 and 2006. Of those fees, the Partnership paid the General Partner or its affiliates $12,500 and $6,250 during the nine months ended December 31, 2007 and 2006. (d) A subordinated disposition fee is an amount equal to 1% of the sales price of real estate sold. Payment of this fee is subordinated to the Limited Partners receiving a preferred return of 12% through December 31, 2008 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort. No such fees were incurred for the quarter ended December 31, 2007. (e) The Partnership reimburses the General Partner or its affiliates for operating expenses incurred on behalf of the Partnership. Operating expense reimbursements were $15,335 and $11,453 during each of the nine months ended December 31, 2007 and 2006, respectively. 13 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarterly period ended December 31, 2007 (unaudited) NOTE 3 - RELATED PARTY TRANSACTIONS, continued - ---------------------------------------------- The accrued fees and expenses due to General Partner and affiliates consisted of the following at:
December 31, March 31, 2007 2007 -------------- ----------------- Accrued asset management fees $ 451,578 $ 411,527 Expenses paid by the General Partners or affiliates on behalf of the Partnership 446,831 455,346 -------------- ----------------- Total $ 898,409 $ 866,873 ============== =================
The General Partner and/or its affiliates do not anticipate that these accrued fees will be paid in full 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 nine months ended December 31, 2007, the Partnership advanced approximately $4,500 to one of the Local Limited Partnerships, in which the Partnership is a limited partner. The Partnership had made advances which were used to facilitate timely escrow payments. As of December 31, 2007, total advances made to Local Limited Partnerships were $905,416, all of which have been reserved. The Partnership determined the recoverability of these advances to be improbable and, accordingly, a reserve had been recorded. 14 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's 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 Financial Statements and the Notes thereto included elsewhere in this filing. The following discussion and analysis compares the results of operations for the three and nine months ended December 31, 2007 and 2006 and should be read in conjunction with the combined condensed financial statements and accompanying notes included within this report. Financial Condition The Partnership's assets at December 31, 2007 consisted of $137,000 in cash and aggregate investments in the fifteen Local Limited Partnerships of $6,743,000. Liabilities at December 31, 2007 consisted of $898,000 of accrued fees and expenses due to the General Partner and affiliates. Results of Operations Three Months Ended December 31, 2007 Compared to the Three Months Ended December 31, 2006 The Partnership's net loss for the three months ended December 31, 2007 was $(259,000), reflecting a decrease of approximately $5,000 from the net loss of $(264,000) for the three months ended December 31, 2006. The primary factor for the decrease was in increase in reporting fees of $7,000 for the three months ended December 31, 2007 compared to the three months ended December 31, 2006 due to the fact that Local Limited Partnerships pay reporting fees to the Partnership when the Local Limited Partnership's cash flow will allow for the payment. There was also a $2,000 decrease in equity in losses of Local Limited Partnerships for the three months ended December 31, 2007 compared to the three months ended December 31, 2006. The equity in losses can vary each year depending on the operations of each of the Local Limited Partnerships and the Partnership not recognizing losses for which the Partnership's investment balances had reached zero. Since the Partnership's liability with respect to its investments is limited, losses in excess of investment are not recognized. Additionally, there was a $(5,000) increase in bad debt expense. Nine Months Ended December 31, 2007 Compared to Nine Months Ended December 31, 2006 The Partnership's net loss for the nine months ended December 31, 2007 was $(1,764,000), reflecting an increase of approximately $(462,000) from the net loss of $(1,302,000) for the nine months ended December 31, 2006. The increase in net loss was primarily due to the $(469,000) increase in loss from operations. That increase was mainly the result of an increase in impairment loss of $(439,000). The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the Partnership and the current estimated residual value to the Partnership compared to the current carrying value to the Partnership. Reporting fees decreased by $(28,000) for the nine months ended December 31, 2007 compared to the nine months ended December 31, 2006 due to the fact that Local Limited Partnerships pay reporting fees to the Partnership when the Local Limited Partnership's cash flow will allow for the payment. Additionally, bad debt expense increased by $(5,000). 15 Offsetting the increase in the loss from operations was a decrease of equity in losses of Local Limited Partnerships of $7,000 to $(681,000) for the nine months ended December 31, 2007 from $(688,000) for the nine months ended December 31, 2006. The equity in losses can vary each year depending on the operations of each of the Local Limited Partnerships and the Partnership not recognizing losses for which the Partnership's investment balances had reached zero. Since the Partnership's liability with respect to its investments is limited, losses in excess of investment are not recognized. Capital Resources and Liquidity Nine Months Ended December 31, 2007 Compared to Nine Months Ended December 31, 2006 Net cash used during the nine months ended December 31, 2007 was $(6,000), compared to net cash provided during the nine months ended December 31, 2006 of $37,000, reflecting a change of $(43,000). The change was mainly due to the fact that the Partnership collected $28,000 more in reporting fees for the nine months ended December 31, 2006 compared to the nine months ended December 31, 2007. Additionally, during the nine months ended December 31, 2007 the Partnership paid its General Partner or an affiliate $28,000 for accrued asset management fees and reimbursement for expenses paid on its behalf compared to $18,000 paid during the nine months ended December 31, 2006. The Partnership currently has insufficient working capital to fund its operations. Associates has agreed to provide advances sufficient enough to fund the operations and working capital requirements of the Partnership through April 30, 2009. 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 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 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 December 31, 2007 that materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. Item 4T. Controls and Procedures This annual report does not include an attestation report of the Partnership's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Partnership's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Partnership to provide only management's report in this annual report. Part II. Other Information Item 1. Legal Proceedings NONE Item 2. Unregistered Sales of Equity Securities and Use of Proceeds NONE 16 Item 3. Defaults Upon Senior Securities NONE Item 4. Submission of Matters to a Vote of Security Holders NONE Item 5. Other Information NONE 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) 17 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 5 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: May 16, 2008 By: /s/ Thomas J. Riha ------------------ Thomas J. Riha Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc. Date: May 16, 2008 18 EX-31 2 ex311.txt EX 31-1 Exhibit 31-1 CERTIFICATIONS I, Wilfred N. Cooper, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of WNC HOUSING TAX CREDIT FUND VI, SERIES 5 L.P.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant/s internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's independent registered accounting firm and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect in the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 16, 2008 /s/ Wilfred N. Cooper Jr. - ------------------------- President and Chief Executive Officer of WNC & Associates, Inc. EX-31 3 ex312.txt EX 31-2 Exhibit 31-2 CERTIFICATIONS I, Thomas J. Riha, certify that: 1. I have reviewed this quarterly report on Form 10-Q of WNC HOUSING TAX CREDIT FUND VI, SERIES 5, L.P. ; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's independent registered accounting firm and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect in the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 16, 2008 /s/ Thomas J. Riha - ------------------ Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc. EX-32 4 ex321.txt EX 32-1 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of WNC Housing Tax Credit Fund VI, L.P., Series 5 (the "Partnership") for the quarter ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), and pursuant to 18 U.S.C., section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, I, Wilfred N. Cooper, Jr., President and Chief Executive Officer of WNC & Associates, Inc., general partner of the Partnership, hereby certify that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, except to the extent that such provisions require the audit report of Local Limited Partnership financial statements to refer to the auditing standards of the Public Company Accounting Oversight Board for the Partnership's annual financial statements and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership. /s/Wilfred N. Cooper, Jr. - ------------------------- Wilfred N. Cooper, Jr President and Chief Executive Officer of WNC & Associates, Inc. May 16, 2008 EX-32 5 ex322.txt EX 32-2 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of WNC Housing Tax Credit Fund VI, L.P., Series 5 (the "Partnership") for the quarter ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), and pursuant to 18 U.S.C., section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, I, Wilfred N. Cooper, Jr., President and Chief Executive Officer of WNC & Associates, Inc., general partner of the Partnership, hereby certify that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, except to the extent that such provisions require the audit report of Local Limited Partnership financial statements to refer to the auditing standards of the Public Company Accounting Oversight Board for the Partnership's annual financial statements and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership. /s/Thomas J. Riha - ----------------- Thomas J. Riha Senior Vice-President and Chief Financial Officer of WNC & Associates, Inc. May 16, 2008 -----END PRIVACY-ENHANCED MESSAGE-----