-----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, NtRG4/nESH5Ni0s/M+QnfmMDI8Y4eKTe70iHoTinF/LWLFCNjbRRkDZYonhTU9Zh +opQU8Pnhyh/dA3i2UHZkw== 0000943906-99-000078.txt : 19990826 0000943906-99-000078.hdr.sgml : 19990826 ACCESSION NUMBER: 0000943906-99-000078 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990825 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WNC HOUSING TAX CREDIT FUND VI LP SERIES 6 CENTRAL INDEX KEY: 0001037156 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 330761578 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-26869 FILM NUMBER: 99698785 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: SUITE 120 CITY: COSTA MESA STATE: CA ZIP: 92626 10-K 1 ANNUAL REPORT FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) O ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended OR X TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from January 1, 1999 to March 31, 1999 Commission file number: 333-24111 WNC HOUSING TAX CREDIT FUND VI, L.P., Series 6 California 33-0745418 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626 (714) 662-5565 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to section 12(g) of the Act: NONE 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x 1 State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant. INAPPLICABLE DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). NONE PART I. Item 1. Business Organization WNC Housing Tax Credit Fund VI, L.P., Series 6 (the "Partnership") is a California Limited Partnership formed under the laws of the State of California on March 3, 1997 and commenced operations on August 20, 1998. The Partnership was formed to acquire limited partnership interests in other limited partnerships or limited liability companies ("Local Limited Partnerships") which own multi-family housing complexes that are eligible for Federal low income housing tax credits (the "Low Income Housing Credit"). The general partner of the Partnership is WNC & Associates, Inc. ("Associates" or the "General Partner"). Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns 66.8% of the outstanding stock of Associates. John B. Lester, Jr. was the original limited partner of the Partnership and owns, through the Lester Family Trust, 28.6% 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. Pursuant to a registration statement which was declared effective on June 23, 1997, a Prospectus dated June 23, 1997 and Supplements thereto, the Partnership commenced a public offering of 25,000 units of limited partnership interest ("Units"), at a price of $1,000 per Unit. As of March 31, 1999, the Partnership had received and accepted subscriptions for 11,776 Units in the amount of $11,738,335, net of dealer discounts of $10,360 and volume discounts of $27,305, of which $494,000 was represented by promissory notes of the subscribers ($185,000 of which had been collected by August 10, 1999) and $703,375 was represented by subscriptions collected subsequent to March 31, 1999. Holders of Units are referred to herein as "Limited Partners." Description of Business The Partnership's principal business objective is to provide its Limited Partners with Low Income Housing Credits. The Partnership's principal business therefore consists of investing as a limited partner or non-managing member in Local Limited Partnerships each of which will own and operate a multi-family housing complex (the "Housing Complex") which will qualify for the Low Income Housing Credit. In general, under Section 42 of the Internal Revenue Code, an owner of low-income housing can receive the Low Income Housing Credit to be used to reduce Federal taxes otherwise due in each year of a ten-year period. In general, under Section 17058 of the California Revenue and Taxation Code, an owner of low-income housing can receive the Low Income Housing Credit to be used against California taxes otherwise due in each year of a four-year period. The Housing Complex is subject to a fifteen year compliance period (the "Compliance Period"), and under state law may have to be maintained as low income housing for 30 or more years. In general, in order to avoid recapture of Low Income Housing Credits, the Partnership does not expect that it will dispose of its interests in Local Limited Partnerships ("Local Limited Partnership Interests") or approve the sale by any Local Limited Partnership of its Housing Complex prior to the end of the applicable Compliance Period. Because of (i) the nature of the Housing Complexes, (ii) the difficulty of predicting the resale market for low-income housing 15 or more years in the future, and (iii) the ability of government lenders to disapprove of transfer, it is not possible at this time to predict whether the liquidation of the Partnership's assets and the disposition of the proceeds, if any, in accordance with the Partnership's Agreement of Limited Partnership, as amended by the First Amendment thereto ("Partnership Agreement"), will be able to be accomplished promptly at the end of the 15-year period. If a Local Limited Partnership is unable to sell its Housing Complex, it is anticipated that the local general partner ("Local General Partner") will either continue to operate such Housing Complex or take such other actions as the Local General Partner believes to be in the best interest of the Local Limited Partnership. Notwithstanding the preceding, circumstances beyond the control of the General Partner may occur during the Compliance Period, which would require the Partnership to approve the disposition of a Housing Complex prior to the end thereof, possibly resulting in recapture of Low Income Housing Credits. 3 As of March 31, 1999, the Partnership had invested in six Local Limited Partnerships. Each of these Local Limited Partnerships owns an Housing Complex that is or is expected to be eligible for the Federal Low Income Housing Credit, except for one Local Limited Partnership which owns three Housing Complexes. Certain Local Limited Partnerships may also benefit from government programs promoting low- or moderate-income housing. The Partnership's investments in Local Limited Partnerships are subject to the risks incident to the management and ownership of low-income housing and to the management and ownership of multi-unit residential real estate. Some of these risks are that the Low Income Housing Credit could be recaptured and that neither the Partnership's investments nor the Housing Complexes owned by the Local Limited Partnerships will be readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes: difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of Local Limited Partnership Interests: limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. The Housing Complexes are or will be subject to mortgage indebtedness. If a Local Limited Partnership does not makes its mortgage payments, the lender could foreclose resulting in a loss of the Housing Complex and Low Income Housing Credits. As a limited partner or non-managing member of the Local Limited Partnerships, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships, and will rely totally on the general partners or managing members of the Local Limited Partnerships for management of the Local Limited Partnerships. The value of the Partnership's investments will be subject to changes in national and local economic conditions, including unemployment conditions, which could adversely impact vacancy levels, rental payment defaults and operating expenses. This, in turn, could substantially increase the risk of operating losses for the Housing Complexes and the Partnership. In addition, each Local Limited Partnership is subject to risks relating to environmental hazards and natural disasters which might be uninsurable. Because the Partnership's operations will depend on these and other factors beyond the control of the General Partner and the Local General Partners, there can be no assurance that the anticipated Low Income Housing Credits will be available to Limited Partners. In addition, Limited Partners are subject to risks in that the rules governing the Low Income Housing Credit are complicated, and the use of credits can be limited. The only material benefit from an investment in Units may be the Low Income Housing Credits. There are limits in the transferability of Units, and it is unlikely that a market for Units will develop. All management decisions will be made by the General Partner. As of March 31, 1999, three of the Housing Complexes were still under construction and one was partially under construction. The Housing Complexes were being developed by the respective Local General Partners who acquired the sites and applied for applicable mortgages and subsidies. The four Housing Complexes acquired in two Local Limited Partnerships during the three months ended March 31, 1999 were acquired for rehabilitation and were already operating at the respective dates of acquisition. The rehabilitations were not complete at March 31, 1999. The Partnership became the principal limited partner or non-managing member in these Local Limited Partnerships pursuant to arm's-length negotiations with the respective Local General Partners. As a limited partner or non-managing member, the Partnership's liability for obligations of each Local Limited Partnership is limited to its investment. The Local General Partners of each Local Limited Partnership retain responsibility for developing, constructing, maintaining, operating and managing the Housing Complex. Item 2. Properties Through its investments in Local Limited Partnerships, the Partnership holds limited partnership interests in the Housing Complexes. The following table reflects the status of the eight Housing Complexes in six Local Limited Partnerships as of the dates and for the periods indicated: 4
---------------------------- ---------------------------------------- As of March 31, 1999 As of December 31, 1998 ---------------------------- ---------------------------------------- Partnership's Amount of Estimated Encumbrances Total Investment Investment Number Low Income of Local in Local Limited Paid to of Occu- Housing Limited Partnership Name Location General Partner Name Partnerships Date Units pancy Credits (1) Partnerships - --------------------------------------------------------------------------------------------- -------------------------------------- Brighton Ridge Edgefield, The Piedmont Foundation Apartments, L.P. South Carolina of South Carolina, Inc. $ 989,000 $ 396,000 44 73% $ - $ 607,000 Desloge Associates Desloge, East Missouri Action I, L.P. Missouri Agency, Inc. 1,063,000 872,000 32 0% - 634,000 Ottawa I, L.P. Oglesby, Michael K. Moore 403,000 282,000 - - - - Illinois Preservation Pontiac and Michael K. Moore and Partners I, L.P. Taylorville, Affordable Housing Illinois Development Fund, Inc. 514,000 232,000 - - - - Trenton Village Trenton, MBL Development, Co. 1,025,000 769,000 32 0% - - Apartments, L.P. Missouri United Development Memphis, Harold E. Buehler, Sr. Co., L.P. - 97.0. Tennessee and Jo Ellen Buehler 2,813,000 2,119,000 60 0% - 539,000 ---------- ---------- ---- --- -------- ---------- $ 6,807,000 $ 4,670,000 168 19% $ - $ 1,780,000 ========== ========== ==== === ======== ==========
(1) The apartment complexes are under construction and cost certification has yet to be completed. 5
---------------------------------------- ---------------------------------------------- For the period August 20, 1998 through December 31, 1998 Low Income Housing Credits ---------------------------------------- ---------------------------------------------- Credits Allocated Year to be First Partnership Name Rental Income Net Income to Partnership Available - -------------------------------------------------------------------- ---------------------------------------------- Brighton Ridge Apartments L.P. $ 194,000 $ 28,000 98.989% 1999 Desloge Associates I, L.P. - - 99.890% 1999 Ottawa I, L.P. - - 99.980% 1999 Preservation Partners I, L.P. - - 99.980% 1999 Trenton Village Apartments, L.P. - 8,000 99.980% 1999 United Development Co. L.P.-97.0. - 25,000 99.980% 1999 -------- ------ $ 194,000 $ 61,000 ======== ======
6 Item 3. Legal Proceedings NONE Item 4. Submission of Matters to a Vote of Security Holders NONE PART II. Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Item 5a. (a) The Units are not traded on a public exchange but are being sold through a public offering. It is not anticipated that any public market will develop for the purchase and sale of any Unit and none exists. Units can be assigned only if certain requirements in the Partnership Agreement are satisfied. (b) At March 31, 1999, there were 613 Limited Partners. (c) The Partnership was not designed to provide cash distributions to Limited Partners in circumstances other than refinancing or disposition of its investments in Local Limited Partnerships. The Limited Partners received no Low Income Housing Credits in 1998. Item 5b. The Partnership is conducting an offering pursuant to a registration statement (Commission File No. 333-24111) declared effective on June 23, 1997 and a Prospectus dated June 23, 1997, and Supplements thereto. As of March 31, 1999 the Partnership had received subscriptions for 11,776 Units, for an aggregate amount of capital contributions of $11,738,335, net of dealer discounts of $10,360 and volume discounts of $27,305, in an offering which commenced on July 9, 1998. At March 31, 1999, the above capital contributions consisted of cash of $10,540,960, subscriptions receivable of $703,375 and notes receivable of $494,000. At March 31, 1999, approximately $1,478,935 was paid or due to Associates or WNC Capital Corporation, the dealer-manager for the offering, for selling commissions, wholesaling activities and in reimbursement of other organization and offering expenses. Included therein are selling commissions of approximately $713,669 and wholesaling and other organization and offering expenses of approximately $765,266, which were paid, or will be paid, to non-affiliates. The Partnership has committed funds for the purchase of real estate in excess of amounts raised. At March 31, 1999, approximately $10,259,400 is or will be invested in Local Limited Partnership Interests or Reserves as follows:
Paid or to be Paid to General Partner or Paid or to be Affiliate Paid to Others Total ---------------- ---------------- ----------------- Acquisition fees as of March 31, 1999 $ 789,740 - $ 789,740 Acquisition costs as of March 31, 1999 - 51,848 51,848 Local Limited Partnerships - 6,807,425 6,807,425 Deposits paid to Local Limited Partnerships which were subsequently acquired - 1,043,530 1,043,530 Investments in reserves or available to be invested - 1,566,857 1,566,857 ---------------- ---------------- ----------------- Total $ 789,740 $ 9,469,660 $ 10,259,400 ================ ================ =================
7 Item 6. Selected Financial Data Selected Balance Sheet information for the Partnership is as follows: March 31, December 31, 1999 1998 --------- ------------ ASSETS Cash and cash equivalents $ 2,690,665 $ 372,505 Subscriptions receivable 893,370 1,030,915 Investments in limited partnerships, net 7,748,624 6,440,762 Other assets 1,043,530 50,000 -------------- ------------- $ 12,376,189 $ 7,894,182 ============== ============= LIABILITIES Payables to limited partnerships $ 2,137,275 $ 1,734,427 Loan payable - 113,269 Accrued fees and expenses due to general partner and affiliates 184,291 173,323 PARTNERS' EQUITY 10,054,623 5,873,163 -------------- ------------- $ 12,376,189 $ 7,894,182 ============== ============= Selected results of operations, cash flows and other information for the Partnership is as follows for the three months ended March 31, 1999 and the period from August 20, 1998 (Date Operations Commenced) to December 31, 1998: March 31, December 31, 1999 1998 --------- ------------ Loss from operations $ (3,249) $ (1,501) Equity in income of limited partnerships 47,263 60,610 -------------- ------------- Net income $ 44,014 $ 59,109 ============== ============= Net income allocated to: General partner $ 440 $ 591 ============== ============= Limited partners $ 43,574 $ 58,518 ============== ============= Net income per limited partner unit $ 4.26 $ 16.38 ============== ============= Outstanding weighted limited partner units 10,218 3,573 ============== ============= 8 March 31, December 31, 1999 1998 ---------- ------------ Net cash provided by (used in): Operating activities $ 34,356 $ 1,554 Investing activities (1,914,981) (4,525,457) Financing activities 4,198,785 4,896,408 ------------ ------------ Net change in cash and cash equivalents 2,318,160 372,505 Cash and cash equivalents, beginning of period 372,505 - ------------ ------------ Cash and cash equivalents, end of period $ 2,690,665 $ 372,505 ============ ============ Low Income Housing Credit per Unit was as follows for the period ended December 31, 1998: Federal $ - State - ------------ Total $ - ============ Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition The Partnership's assets at March 31, 1999 consisted primarily of $2,690,655 in cash, subscriptions receivable from the sale of Units totaling $893,370, aggregate investments in six Local Limited Partnerships of $7,748,624 and deposits on two prospective acquisitions of $1,043,530. Liabilities at March 31, 1999 primarily consisted of $2,137,275 of estimated future capital contributions to the Local Limited Partnerships and $184,291 of accrued fees and advances due to the General Partner and affiliates. The Partnership offered Units for sale to the public until June 23, 1999, at which time total limited partner capital raised was $20,500,000 ($11,776,000 raised at March 31, 1999). Results of Operations The Partnership commenced operations on August 20, 1998. As a result, there are no comparative results of operations or financial condition from prior periods to report. Net income for the three months ended March 31, 1999 was principally composed of equity in income from the Local Limited Partnerships, consisting of both operations and interest income. Net income for the period ended December 31, 1998 was principally composed of equity in income from the Local Limited Partnerships, consisting primarily of interest income. As of March 31, 1999, three of the Local Limited Partnerships were under construction. During the three months ended March 31, 1999, four additional Housing Complexes, owned by two Local Limited Partnerships, were acquired, all of which were operating at the time of acquisition. All of the Housing Complexes acquired during the three months ended March 31, 1999 were undergoing rehabilitation as of March 31, 1999. All such Housing Complexes have continued operations during the rehabilitation. As of December 31, 1998, three of the four Local Limited Partnerships acquired by December 31, 1998 were under construction at December 31, 1998 and the fourth Local Limited Partnership commenced operations just prior to December 31, 1998. Accordingly, there were no Low Income Housing Credits available for allocation to the partners. 9 Cash Flows Cash flows provided by operating activities for the periods ended March 31, 1999 and December 31, 1998 included interest income from cash investments less miscellaneous costs of operations. Cash flows provided by financing activities for the period ended March 31, 1999, primarily consisted of net proceeds from the sale of Units of $3,861,000 and the collection of $1,031,000 of subscriptions receivable, offset by $575,000 in offering costs and principal loan repayments in the amount of $113,000. Cash flows provided by financing activities for the period ended December 31, 1998, primarily consisted of proceeds from the sale of Units of $5,648,000 and loan proceeds of $113,000, offset by $867,000 in offering costs. Cash flows used in investing activities substantially consisted of capital contributions paid to Local Limited Partnerships of $4,155,000 and capitalized acquisition fees and costs totaling $493,000. Since March 31, 1999, the Partnership has raised equity capital sufficient to satisfy all of its identified obligations. In this regard, the Partnership expects its future cash flows, together with its net available assets at March 31, 1999, to be sufficient to meet all future cash requirements. Impact of Year 2000 WNC & Associates, Inc. Status of Readiness Information Technology (IT) Systems. The Partnership relies on the IT systems of WNC, its general partner. IT systems include computer hardware and software used to produce financial reports and tax return information. This information is then used to generate reports to investors and regulatory agencies, including the Internal Revenue Service and the Securities and Exchange Commission. The IT systems of WNC are year 2000 compliant. Non-IT Systems. The Partnership also relies on the non-IT systems of WNC. Non-IT systems include machinery and equipment such as telephones, voice mail and electronic postage equipment. Except for one telephone system, the non-IT systems of WNC are year 2000 compliant. The one telephone system will require the replacement of one computer and one software application, both of which will be completed on or before October 1, 1999. Service Providers. WNC also relies on the IT and non-IT systems of service providers. Service providers include utility companies, financial institutions, telecommunications carriers, municipalities, and other outside vendors. WNC has obtained verbal assurances from its material service providers (electrical power provider, financial institutions and telecommunications carriers) that their IT and non-IT systems are year 2000 compliant. There can be no assurance that this compliance information is correct. There also can be no assurance that the systems of other, less-important service providers and outside vendors will be year 2000 compliant. Costs to Address Year 2000 Issues The cost to address year 2000 issues for WNC has been less than $20,000. The cost to replace the telephone system noted above will be less than $5,000. The cost to deal with potential year 2000 issues of other outside vendors cannot be estimated at this time. Risk of Year 2000 Issues The most reasonable and likely result from non-year 2000 compliance of systems of the service providers noted above will be the disruption of normal business operations for WNC. This disruption would, in turn, lead to delays in performing reporting and fiduciary responsibilities on behalf of the Partnership. The worst case scenario would be the replacement of a service provider. These delays would likely be temporary and would likely not have a material effect on the Partnership or WNC. 10 Local Limited Partnerships Status of Readiness WNC is in the process of obtaining year 2000 certifications from each Local General Partner of each Local Limited Partnership. Those certifications will represent to the Partnership that the IT and non-IT systems critical to the operation of the Housing Complexes and investor reporting to the Partnership are year 2000 compliant. These certifications will also represent to the Partnership that the IT and non-IT systems of property management companies, independent accountants, electrical power providers, financial institutions and telecommunications carriers used by the Local Limited Partnership are year 2000 compliant. There can be no assurance that the representations in the certifications will be correct. There also can be no assurance that the systems of other, less-important service providers and outside vendors, upon which the Local Limited Partnerships rely, will be year 2000 compliant. Costs to Address Year 2000 Issues There will be no cost to the Partnership as a result of assessing year 2000 issues for the Local Limited Partnerships. The cost to deal with potential year 2000 issues of the Local Limited Partnerships cannot be estimated at this time. Risk of Year 2000 Issues There may be Local General Partners who indicate that they or their property management company are not year 2000 compliant and do not have plans to become year 2000 compliant before the end of 1999. There may be other Local General Partners who are unwilling to respond to the certification request. The most likely result of either non-compliance or failure to respond will be the removal and replacement of the property management company and/or the Local General Partner with year 2000 compliant operators. Item 7A. Quantitative and Qualitative Disclosures About Market Risk NOT APPLICABLE Item 8. Financial Statements and Supplementary Data 11 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Partners WNC Housing Tax Credit Fund VI, L.P., Series 6 We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund VI, L.P., Series 6 (a California Limited Partnership) (the "Partnership") as of March 31, 1999 and December 31, 1998, and the related statements of operations, partners' equity (deficit) and cash flows for the three months ended March 31, 1999 and the period August 20, 1998 (date operations commenced) through December 31, 1998. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. A significant portion of the financial statements of the limited partnerships in which the Partnership is a limited partner were audited by other auditors whose reports have been furnished to us. As discussed in Note 3 to the financial statements, the Partnership accounts for its investments in limited partnerships using the equity method. The portion of the Partnership's investment in limited partnerships audited by other auditors represented 27% and 42% of the total assets of the Partnership at March 31, 1999 and December 31, 1998, respectively. Our opinion, insofar as it relates to the amounts included in the financial statements for the limited partnerships which were audited by others, is based solely on the reports of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of WNC Housing Tax Credit Fund VI, L.P., Series 6 (a California Limited Partnership) as of March 31, 1999 and December 31, 1998, and the results of its operations and its cash flows for the three months ended March 31, 1999 and the period August 20, 1998 (date operations commenced) through December 31, 1998, in conformity with generally accepted accounting principles. /s/ BDO SEIDMAN, LLP BDO SEIDMAN, LLP Orange County, California August 10, 1999 12 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) BALANCE SHEETS
March 31, December 31, 1999 1998 --------- ------------ ASSETS Cash and cash equivalents $ 2,690,665 $ 372,505 Subscriptions receivable (Note 8) 893,370 1,030,915 Investments in limited partnerships, net (Note 3) 7,748,624 6,440,762 Loans receivable (Notes 2 and 9) 1,043,530 50,000 ------------- ------------- $ 12,376,189 $ 7,894,182 ============= ============= LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Liabilities: Payables to limited partnerships (Note 5) $ 2,137,275 $ 1,734,427 Loan payable (Note 6) - 113,269 Accrued fees and advances due to General Partner and affiliate (Note 4) 184,291 173,323 ------------- ------------- Total liabilities 2,321,566 2,021,019 ------------- ------------- Commitments and contingencies (Note 9) Partners' equity (deficit) General partner (13,659) (7,977) Limited partners (25,000 units authorized; 11,776 and 6,944 units outstanding at March 31, 1999 and December 31, 1998, respectively) (Note 10) 10,068,282 5,881,140 ------------- ------------- Total partners' equity 10,054,623 5,873,163 ------------- ------------- $ 12,376,189 $ 7,894,182 ============= =============
See accompanying notes to financial statements 13 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) STATEMENTS OF OPERATIONS For the Period August 20, 1998 For the Three (Date Operations Months Ended Commenced) Through March 31, 1999 December 31, 1998 ------------------ ------------------ Interest income $ 15,869 $ 6,003 ------------- ------------- Operating expenses: Amortization (Note 3) 5,207 3,055 Management fees (Note 4) 8,096 - Other 5,815 4,449 ------------- ------------- Total operating expenses 19,118 7,504 ------------- ------------- Loss from operations (3,249) (1,501) Equity in income of limited partnerships (Note 3) 47,263 60,610 ------------- ------------- Net income $ 44,014 $ 59,109 ============= ============= Net income allocated to: General partner $ 440 $ 591 ============= ============= Limited partners $ 43,574 $ 58,518 ============= ============= Net income per limited partner unit $ 4.26 $ 16.38 ============= ============= Outstanding weighted limited partner units 10,218 3,573 ============= ============= See accompanying notes to financial statements 14 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) STATEMENTS OF PARTNERS' EQUITY (DEFICIT) For The Three Months Ended March 31, 1999 and For The Period August 20, 1998 (Date Operations Commenced) Through December 31, 1998
General Limited Partner Partners Total ------- -------- ----- Contribution from general partner on August 20, 1998 $ 100 $ 1,000 $ 1,100 Sale of limited partnership units, net of discounts of $1,750 - 6,942,250 6,942,250 Sale of limited partnership units issued for promissory notes receivable (Note 8) - (262,500) (262,500) Offering expenses (8,668) (858,128) (866,796) Net income 591 58,518 59,109 ----------- ----------- ----------- Partners' equity (deficit) at December 31, 1998 (7,977) 5,881,140 5,873,163 Sale of limited partnership units, net of discounts - 4,796,085 4,796,085 Sale of limited partnership units issued for promissory notes receivable (Note 8) - (231,500) (231,500) Collection of notes receivable (Note 8) - 185,000 185,000 Offering expenses (6,122) (606,017) (612,139) Net income 440 43,574 44,014 ----------- ----------- ----------- Partners' equity (deficit) at March 31, 1999 $ (13,659) $ 10,068,282 $ 10,054,623 =========== =========== ===========
See accompanying notes to financial statements 15 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) STATEMENTS OF CASH FLOWS
For The Period August 20, 1998 For The Three (Date Operations Months Ended March Commenced) Through 31, 1999 December 31, 1998 ------------------ ------------------ Cash flows from operating activities: Net income $ 44,014 $ 59,109 Adjustments to reconcile net income to net cash provided by operating activities: Amortization 5,207 3,055 Equity in income of limited partnerships (47,263) (60,610) Change in accrued fees and expenses due to general partner and affiliates 32,398 - ------------- ------------- Net cash provided by operating activities 34,356 1,554 ------------- ------------- Cash flows from investing activities: Investments in limited partnership, net (514,697) (4,155,453) Loan receivable (993,530) (50,000) Capitalized acquisition costs and fees (348,261) (493,327) Accrued and unpaid acquisition fees and advances (58,493) 173,323 due to affiliate of general partner ------------- ------------- Net cash used in investing activities (1,914,981) (4,525,457) ------------- ------------- Cash flows from financing activities: Initial partner contributions - 1,100 Sale of limited partner units 4,749,585 6,679,750 Subscriptions receivable 137,545 (1,030,915) Offering expenses (575,076) (866,796) Increase (decrease) in loan payable (113,269) 113,269 ------------- ------------- Net cash provided by financing activities 4,198,785 4,896,408 ------------- ------------- Net change in cash and cash equivalents 2,318,160 372,505 Cash and cash equivalents, beginning of period 372,505 - ------------- ------------- Cash and cash equivalents, end of period $ 2,690,665 $ 372,505 ============= ============= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Interest paid $ 1,262 $ - ============= ============= Taxes paid $ - $ 800 ============= =============
See accompanying notes to financial statements 16 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For The Three Months Ended March 31, 1999 and For The Period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization WNC Housing Tax Credit Fund VI, L.P., Series 6 (the "Partnership") was formed on March 3, 1997 under the laws of the State of California, and commenced operations on August 20, 1998. Prior to August 20, 1998, the Partnership was considered a development-stage enterprise. The Partnership was formed to invest primarily in other limited partnerships ("the Local Limited Partnerships") which own and operate multi-family housing complexes (the "Housing Complexes") 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 developing, constructing, maintaining, operating and managing the Housing Complex. The general partner is WNC & Associates, Inc. ("WNC" or the "General Partner"). Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns 66.8% of the outstanding stock of WNC. John B. Lester, Jr. is the original limited partner of the Partnership and owns, through the Lester Family Trust, 28.6% of the outstanding stock of WNC. 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 at $1,000 per Unit ("Units"). As of March 31, 1999, 11,776 Units, representing subscriptions in the amount of $11,738,335, net of discounts of $27,305 for volume purchases and dealer discounts of $10,360, had been accepted (see Note 10). As of December 31, 1998, 6,944 Units representing subscriptions in the amount of $6,942,250, net of discounts of $1,750 for volume purchases, 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 tax credits of the Partnership. The limited partners will be allocated the remaining 99% of these items in proportion to their respective investments. After the limited partners have received proceeds from a sale or refinancing equal to their capital contributions and their return on investment (as defined in the Partnership Agreement) and the General Partner has received proceeds equal to its capital contribution and a subordinated disposition fee (as described in Note 4) from the remainder, any additional sale or refinancing proceeds will be distributed 90% to the limited partners (in proportion to their respective investments) and 10% to the General Partner. Changes in Reporting Year End The Partnership has elected to change it's year end for financial reporting purposes from December 31 to March 31. All financial information reflected in the financial statements and related footnotes has been adjusted for this change in year end except for the combined condensed financial information relating to the Local Limited Partnerships included in Note 3. 17 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Three Months Ended March 31, 1999 and For The Period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Risks and Uncertainties The Partnership's investments in Local Limited Partnerships are subject to the risks incident to the management and ownership of low-income housing and to the management and ownership of multi-unit residential real estate. Some of these risks are that the low income housing credit could be recaptured and that neither the Partnership's investments nor the Housing Complexes owned by the Local Limited Partnerships will be readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of Local Limited Partnership Interests; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. The Housing Complexes are or will be subject to mortgage indebtedness. If a Local Limited Partnership does not make its mortgage payments, the lender could foreclose resulting in a loss of the Housing Complex and low income housing credits. As a limited partner of the Local Limited Partnerships, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships, and will rely totally on the Local General Partners of the Local Limited Partnerships for management of the Local Limited Partnerships. The value of the Partnership's investments will be subject to changes in national and local economic conditions, including unemployment conditions, which could adversely impact vacancy levels, rental payment defaults and operating expenses. This, in turn, could substantially increase the risk of operating losses for the Housing Complexes and the Partnership. In addition, each Local Limited Partnership is subject to risks relating to environmental hazards and natural disasters which might be uninsurable. Because the Partnership's operations will depend on these and other factors beyond the control of the General Partner and the Local General Partners, there can be no assurance that the anticipated low income housing credits will be available to Limited Partners. In addition, Limited Partners are subject to risks in that the rules governing the low income housing credit are complicated, and the use of credits can be limited. The only material benefit from an investment in Units may be the low income housing credits. There are limits on the transferability of Units, and it is unlikely that a market for Units will develop. All management decisions will be made by the General Partner. Method of Accounting For Investments in Local Limited Partnerships The Partnership accounts for its investments in Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnership's results of operations and for any distributions received. The accounting policies of the Local Limited Partnerships are consistent with the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment and amortized over 15 years (see Note 3). Income from limited partnerships for the period August 20, 1998 (Date Operations Commenced) through December 31, 1998 has been recorded by the Partnership based on reported results provided by this Local Limited Partnerships. Income from limited partnerships for the three months ended March 31, 1999 has been estimated by management of the Partnership. Losses from Local Limited Partnerships allocated to the Partnership will not be recognized to the extent that the investment balance would be adjusted below zero. 18 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Three Months Ended March 31, 1999 and For The Period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Offering Expenses Offering expenses consist of underwriting commissions, legal fees, printing, filing and recordation fees, and other costs incurred with the selling of limited partnership interests in the Partnership. The General Partner is obligated to pay all offering and organization costs in excess of 14.5% (including sales commissions) of the total offering proceeds. Offering expenses are reflected as a reduction of limited partners' capital and amounted to $1,478,935 and $866,796 as of March 31, 1999 and December 31, 1998, respectively. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Cash and Cash Equivalents The Partnership considers all highly liquid investments with remaining maturities of three months or less when purchased to be cash equivalents. As of March 31, 1999 and December 31, 1998 the Partnership had cash equivalents of $52,271 and $6,087, respectively. Concentration of Credit Risk As of March 31, 1999, the Partnership maintained cash balances at a certain financial institution in excess of the federally insured maximum. Net Income Per Limited Partner Unit Net income per limited partnership unit is calculated pursuant to Statement of Financial Accounting Standards No. 128, Earnings Per Share. Net income per unit includes no dilution and is computed by dividing income available to limited partners by the weighted average number of units outstanding during the period. Calculation of diluted net income per unit is not required. Reporting Comprehensive Income In June 1997, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income. This statement establishes standards for reporting the components of comprehensive income and requires that all items that are required to be recognized under accounting standards as components of comprehensive income be included in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income includes net income as well as certain items that are reported directly within a separate component of Partners' equity and bypass net income. The Partnership adopted the provisions of this statement in 1998. For the periods presented, the Partnership has no elements of other comprehensive income, as defined by SFAS No. 130. 19 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Three Months Ended March 31, 1999 and For The Period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 NOTE 2 - LOANS RECEIVABLE Loans receivable represent amounts loaned by the Partnership to certain Local Limited Partnerships in which the Partnership may invest. These loans will be applied against the first capital contribution due if the Partnership ultimately invests in such entities. In the event that the Partnership does not invest in such entities, the loans are to be repaid with interest at a rate which is equal to the rate charged to the holder (8.00% and 8.25% at March 31, 1999 and December 31, 1998, respectively). Loans receivable with balances of $643,530 and $400,000 at March 31, 1999 were collectible from two Local Limited Partnerships in which interests were acquired subsequent to March 31, 1999 (see Note 9). A loan receivable with a balance of $50,000 at December 31, 1998 was collectible from one Local Limited Partnership, in which an interest was acquired on January 14, 1999. NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS As of March 31, 1999 and December 31, 1998, the Partnership had acquired Limited Partnership interests in six and four Local Limited Partnerships, respectively, each of which owns one Housing Complex, except for one Local Limited Partnership acquired during the three months ended March 31, 1999 which owns three Housing Complexes, consisting of an aggregate of 260 and 168 apartment units, respectively. As of March 31, 1999, construction or rehabilitation of all but one of the Housing Complexes was still in process. As of December 31, 1998, construction or rehabilitation of all of the Housing Complexes was still in process. The respective general partners of the Local Limited Partnerships manage the day to day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership. The Partnership, as a limited partner, is generally entitled to 99.9%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses and tax credits of the Local Limited Partnerships. The Partnership's investment in Local Limited Partnerships as shown in the balance sheet as of December 31, 1998 is approximately $2,043,000 greater than the Partnership's equity as shown in the Local Limited Partnerships' financial statements. This difference is primarily due to acquisition, selection, and other costs related to the acquisition of the investments which have been capitalized in the Partnership's investment account and capital contributions payable to the Limited Partnerships which were netted against partner capital inn the Local Limited Partnership's financial statements (see Note 5). Equity in losses of the Local Limited Partnerships is recognized in the financial statements until the related investment account is reduced to a zero balance. Losses incurred after the investment account is reduced to zero are not recognized. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended. Distributions received by limited partners are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as income. During the periods presented, no investment accounts in Local Limited Partnerships reached a zero balance. 20 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Three Months Ended March 31, 1999 and For The Period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued Following is a summary of the equity method activity of the investment in the Local Limited Partnerships for the periods presented:
For The Period August 20, 1998 For The Three (Date Operations Months Ended March Commenced) Through 31, 1999 December 31, 1998 ------------------ ------------------ Investment per balance sheet, beginning of period $ 6,440,762 $ - Capital contributions paid, net 514,697 4,155,453 Capital contributions to be paid 402,848 1,734,427 Equity in income of limited partnerships 47,263 60,610 Distributions received - - Capitalized acquisition fees and costs 348,261 493,327 Amortization of paid acquisition fees and costs (5,207) (3,055) ----------------- ----------------- Investment per balance sheet, end of period $ 7,748,624 $ 6,440,762 ================= =================
The financial information from the individual financial statements of the Limited Partnerships includes rental and interest subsidies. Rental subsidies are included in total revenues and interest subsidies are generally netted against interest expense. Approximate combined condensed financial information from the individual financial statements of the Local Limited Partnerships at December 31, 1998 and for the period then ended is as follows: COMBINED CONDENSED BALANCE SHEET 1998 ---- ASSETS Buildings and improvements (net of $ 901,000 accumulated depreciation of $25,000) Land 433,000 Construction in progress 1,748,000 Other assets (including due from affiliates of $265,000) 4,114,000 ----------- $ 7,196,000 =========== 21 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Three Months Ended March 31, 1999 and For The Period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued COMBINED CONDENSED BALANCE SHEET, Continued 1998 ---- LIABILITIES AND PARTNERS' EQUITY Mortgage and construction loans payable $ 1,780,000 Other liabilities (including payables to 137,000 affiliates of $80,000) ------------- 1,917,000 ------------- PARTNERS' CAPITAL WNC Housing Tax Credit Fund VI, L.P., Series 6 4,398,000 Other partners 881,000 ------------- 5,279,000 ------------- $ 7,196,000 ============= COMBINED CONDENSED STATEMENT OF OPERATIONS 1998 ---- Revenues $ 236,000 Expenses 175,000 ------------- Net income $ 61,000 ============= Net income allocable to the Partnership $ 61,000 ============= NOTE 4 - RELATED PARTY TRANSACTIONS Under the terms of the Partnership Agreement, the Partnership is obligated to the General Partner or its affiliates for the following items: Acquisition fees of up to 7% of the gross proceeds from the sale of Units as compensation for services rendered in connection with the acquisition of Local Limited Partnerships. As of March 31, 1999 and December 31, 1998, the Partnership incurred acquisition fees of $789,740 and $464,555, respectively. Accumulated amortization of these capitalized costs was $7,619 and $2,760 at March 31, 1999 and December 31, 1998, respectively. 22 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Three Months Ended March 31, 1999 and For The Period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 NOTE 4 - RELATED PARTY TRANSACTIONS, continued Reimbursement of costs incurred by an affiliate of the General Partner in connection with the acquisition of Local Limited Partnerships. These reimbursements will not exceed 1.5% of the gross proceeds. As of March 31, 1999 and December 31, 1998, the Partnership incurred acquisition costs of $51,848 and $28,772, respectively, which have been included in investments in limited partnerships. Accumulated amortization was $643 and $295 at March 31, 1999 and December 31, 1998, respectively. An annual asset management fee not to exceed 0.2% of the Invested Assets (defined as the Partnership's capital contributions plus reserves of the Partnership of up to 5% of gross proceeds plus its allocable percentage of the mortgage debt encumbering the Housing Complexes) of the Local Limited Partnerships. Management fees of $8,096 and $0 were incurred during the three months ended March 31, 1999 and the year ended December 31, 1998, respectively. As of March 31, 1999 and December 31, 1998, no management fees have been paid. A subordinated disposition fee in an amount equal to 1% of the sales price of real estate sold. Payment of this fee is subordinated to the limited partners receiving a preferred return of 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. The accrued fees and expenses due to the General Partner and affiliates consist of the following: March 31, December 31, 1999 1998 --------- ------------ Acquisition fees $ 68,330 $ 135,103 Asset management fee payable 8,096 - Commissions payable to affiliate 29,129 38,220 Reimbursement for expenses paid by the General partner or an affiliate 78,736 - -------------- ------------- $ 184,291 $ 173,323 ============== ============= NOTE 5 - PAYABLES TO LIMITED PARTNERSHIPS Payables to limited partnerships represent amounts which are due at various times based on conditions specified in the limited partnership agreements. These contributions are payable in installments and are due upon the Local Limited Partnerships achieving certain operating and development benchmarks (generally within two years of the Partnership's initial investment). NOTE 6 - LOAN PAYABLE The Partnership has a $1,000,000 line-of-credit with a bank which expired June 1, 1999. The line bore interest at the prime rate plus 0.50% (8.25% at December 31, 1998) and was secured by subscriptions receivable and guaranteed by WNC. The loan was paid off in January 1999. 23 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Three Months Ended March 31, 1999 and For The Period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 NOTE 7 - INCOME TAXES No provision for income taxes has been recorded in the accompanying financial statements as any liability for income taxes is the obligation of the partners of the Partnership. NOTE 8 - SUBSCRIPTIONS AND NOTES RECEIVABLE During the three month period ending March 31, 1999, the Partnership received subscriptions for 4,832 Units which included subscriptions receivable of $703,375, net of dealer discounts, and promissory notes receivable of $231,500, of which $0 was collected after March 31, 1999 and prior to the issuance of these financial statements, leaving an unpaid balance of $231,500. In 1998, the Partnership had received promissory notes of $262,500 related to the sale of Units, of which $185,000 was collected in 1999. Promissory notes collected subsequent to year end and prior to the issuance of the financial statements are recorded as a capital contribution and an asset in the financial statements. Any unpaid balance as of the issuance of the financial statements is reflected as a reduction of partners' equity in the financial statements. During 1998, the Partnership had received subscriptions for 6,944 Units which included subscriptions receivable of $1,030,915, net of dealer discounts, and promissory notes receivable of $262,500. Limited partners who subscribed for ten or more units of Local Limited Partnerships interest ($10,000) could elect to pay 50% of the purchase price in cash upon subscription and the remaining 50% by the delivery of a promissory note payable, together with interest at the rate of 5.5% per annum, due no later than 13 months after the subscription date. Subscriptions and notes receivable collected subsequent to year-end are recorded as a capital contribution and an asset in the accompanying financial statements. Any unpaid balance is reflected as a reduction of partners' equity in the accompanying financial statements. NOTE 9 - COMMITMENTS AND CONTINGENCIES Subsequent to March 31, 1999, the Partnership acquired three limited partnership interests which required capital contributions totaling approximately $4,158,418, of which $1,043,530 has been advanced as of March 31, 1999 and has been reflected in loans receivable in the balance sheet (see Note 2) and $1,440,425 had been contributed subsequent to March 31, 1999. NOTE 10 - SUBSEQUENT EVENT From April 1, 1999 through June 23, 1999, the Partnership received subscriptions for an additional 8,724 Units, for which it has received cash totaling $8,036,660 and notes receivable totaling $693,000. 24 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure NOT APPLICABLE PART III. Item 10. Directors and Executive Officers of the Registrant The Partnership has no directors or executive officers of its own. The following biographical information is presented for the directors and executive officers of Associates which has principal responsibility for the Partnership's affairs. Directors and Executive Officers of WNC & Associates, Inc. The directors of WNC & Associates, Inc. are Wilfred N. Cooper, Sr., who serves as Chairman of the Board, John B. Lester, Jr., David N. Shafer, Wilfred N. Cooper, Jr. and Kay L. Cooper. The principal shareholders of WNC & Associates, Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr. Wilfred N. Cooper, Sr., age 68, is the founder, Chief Executive Officer and a Director of WNC & Associates, Inc., a Director of WNC Capital Corporation, and a general partner in some of the programs previously sponsored by the Sponsor. Mr. Cooper has been involved in real estate investment and acquisition activities since 1968. Previously, during 1970 and 1971, he was founder and principal of Creative Equity Development Corporation, a predecessor of WNC & Associates, Inc., and of Creative Equity Corporation, a real estate investment firm. For 12 years prior to that, Mr. Cooper was employed by Rockwell International Corporation, last serving as its manager of housing and urban developments where he had responsibility for factory-built housing evaluation and project management in urban planning and development. Mr. Cooper is a Director of the National Association of Home Builders (NAHB) and a National Trustee for NAHB's Political Action Committee, a Director of the National Housing Conference (NHC) and a member of NHC's Executive Committee and a Director of the National Multi-Housing Council (NMHC). Mr. Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree. John B. Lester, Jr., age 65, is President, a Director, Secretary and a member of the Acquisition Committee of WNC & Associates, Inc., and a Director of WNC Capital Corporation. Mr. Lester has 27 years of experience in engineering and construction and has been involved in real estate investment and acquisition activities since 1986 when he joined the Sponsor. Previously, he was Chairman of the Board and Vice President or President of E & L Associates, Inc., a provider of engineering and construction services to the oil refinery and petrochemical industries which he co-founded in 1973. Mr. Lester graduated from the University of Southern California in 1956 with a Bachelor of Science degree in Mechanical Engineering. Wilfred N. Cooper, Jr., age 36, is Executive Vice President, a Director and a member of the Acquisition Committee of WNC & Associates, Inc. He is President of, and a registered principal with, WNC Capital Corporation, a member firm of the NASD, and is a Director of WNC Management, Inc. He has been involved in investment and acquisition activities with respect to real estate since he joined the Sponsor in 1988. Prior to this, he served as Government Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of the Advisory Board for LIHC Monthly Report, a Director of NMHC and an Alternate Director of NAHB. He graduated from The American University in 1985 with a Bachelor of Arts degree. David N. Shafer, age 47, is Senior Vice President, a Director, General Counsel, and a member of the Acquisition Committee of WNC & Associates, Inc., and a Director and Secretary of WNC Management, Inc. Mr. Shafer has been involved in real estate investment and acquisition activities since 1984. Prior to joining the Sponsor in 1990, he was practicing law with a specialty in real estate and taxation. Mr. Shafer is a Director and President of the California Council of Affordable Housing and a member of the State Bar of California. Mr. Shafer graduated from the University of California at Santa Barbara in 1978 with a Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris Doctor degree (cum laude) and from the University of San Diego in 1986 with a Master of Law degree in Taxation. 25 Michael L. Dickenson, age 42, is Vice President and Chief Financial Officer, and a member of the Acquisition Committee of WNC & Associates, Inc., and Chief Financial Officer of WNC Management, Inc. He has been involved with acquisition and investment activities with respect to real estate since 1985. Prior to joining the Sponsor in March 1999, he was the Director of Financial Services at TrizecHahn Centers Inc., a developer and operator of commercial real estate, from 1995 to 1999, a Senior Manager with E&Y Kenneth Leventhal Real Estate Group, Ernst & Young, LLP, from 1988 to 1995, and Vice President of Finance with Great Southwest Companies, a commercial and residential real estate developer, from 1985 to 1988. Mr. Dickenson is a member of the Financial Accounting Standards Committee for the National Association of Real Estate Companies and the American Institute of Certified Public Accountants, and a Director of HomeAid Southern California, a charitable organization affiliated with the building industry. He graduated from Texas Tech University in 1978 with a Bachelor of Business Administration - Accounting degree, and is a Certified Public Accountant in California and Texas. Thomas J. Riha, age 44, is Vice President - Asset Management and a member of the Acquisition Committee of WNC & Associates, Inc. and a Director and Chief Executive Officer of WNC Management, Inc. Mr. Riha has been involved in acquisition and investment activities with respect to real estate since 1979. Prior to joining the Sponsor in 1994, Mr. Riha was employed by Trust Realty Advisor, a real estate acquisition and management company, last serving as Vice President - Operations. Mr. Riha graduated from the California State University, Fullerton in 1977 with a Bachelor of Arts degree (cum laude) in Business Administration with a concentration in Accounting and is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants. Sy P. Garban, age 53, is Vice President - National Sales of WNC & Associates, Inc. and has been employed by the Sponsor since 1989. Mr. Garban has been involved in real estate investment activities since 1978. Prior to joining the Sponsor he served as Executive Vice President of MRW, Inc., a real estate development and management firm. Mr. Garban is a member of the International Association of Financial Planners. He graduated from Michigan State University in 1967 with a Bachelor of Science degree in Business Administration. N. Paul Buckland, age 36, is Vice President - Acquisitions of WNC & Associates, Inc. He has been involved in real estate acquisitions and investments since 1986 and has been employed with WNC & Associates, Inc. since 1994. Prior to that, he served on the development team of the Bixby Ranch which constructed apartment units and Class A office space in California and neighboring states, and as a land acquisition coordinator with Lincoln Property Company where he identified and analyzed multi-family developments. Mr. Buckland graduated from California State University, Fullerton in 1992 with a Bachelor of Science degree in Business Finance. David Turek, age 44, is Vice President - Originations of WNC & Associates, Inc. He has been involved with real estate investment and finance activities since 1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to 1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where he was responsible for on-site feasibility studies and due diligence analyses of Tax Credit properties. From 1990 to 1995, he was involved in the development of conventional and tax credit multi-family housing. He is a Director with the Texas Council for Affordable Rural Housing and graduated from Southern Methodist University in 1976 with a Bachelor of Business Administration degree. Kay L. Cooper, age 62, is a Director of WNC & Associates, Inc. Mrs. Cooper was the founder and sole proprietor of Agate 108, a manufacturer and retailer of home accessory products, from 1975 until 1998. She is the wife of Wilfred N. Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B. Lester, Jr. Ms. Cooper graduated from the University of Southern California in 1958 with a Bachelor of Science degree. 26 Item 11. Executive Compensation The Partnership has no officers, employees, or directors. However, under the terms of the Partnership Agreement the Partnership is obligated to the General Partner or its affiliates for the following fees: (a) Organization and Offering Expenses. The Partnership accrued or paid to the General Partner or its affiliates as of March 31, 1999 and December 31, 1998 approximately $1,478,935 and $866,800, respectively, for selling commissions and other fees and expenses of the Partnership's offering of Units. Of the total accrued or paid, approximately $1,125,655 and $675,500 as of March 31, 1999 and December 31, 1998, respectively, was paid or to be paid to unaffiliated persons participating in the Partnership's offering or rendering other services in connection with the Partnership's offering. (b) Acquisition Fees. Acquisition fees in an amount equal to 7.0% of the gross proceeds of the Partnership's offering ("Gross Proceeds"). Through March 31, 1999 and December 31, 1998, the aggregate amount of acquisition fees paid or accrued was approximately $789,740 and $464,500, respectively. (c) Acquisition Expense. The Partnership accrued to or paid to the General Partner or its affiliates for acquisition expense expended by such persons on behalf of the Partnership of approximately $51,849 and $28,800 as of March 31, 1999 and December 31, 1998, respectively. The limit on this reimbursement is 1.5% of Gross Proceeds. (d) Annual Asset Management Fee. An annual asset management fee in an amount equal to 0.2% of the Invested Assets. "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. Fees of $8,096 and $0 were incurred during the three months ended March 31, 1999 and December 31, 1998, respectively, of which $0 were paid during the three months ended March 31, 1999 and December 31, 1998. (e) Subordinated Disposition Fee. A subordinated disposition fee in an amount equal to 1% of the sale price received in connection with the sale or disposition of a Housing Complex. Subordinated disposition fees will be subordinated to the prior return of the Limited Partners' capital contributions and payment of the Return on Investment to the Limited Partners. "Return on Investment" means an annual, cumulative but not compounded, "return" to the Limited Partners (including Low Income Housing Credits) as a class on their adjusted capital contributions commencing for each Limited Partner on the last day of the calendar quarter during which the Limited Partner's capital contribution is received by the Partnership, calculated at the following rates: (i) 12% through December 31, 2008, and (ii) 6% for the balance of the Partnerships term. No disposition fees have been paid. (f) Operating Expenses. The Partnership reimbursed the General Partner or its affiliates for operating expenses of approximately $1,000 and $3,000 during the three months ended March 31, 1999 and the period ended December 31, 1998, respectively. (g) Interest in Partnership. The General Partner will receive 1% of the Partnership's allocated Low Income Housing Credits. No Low Income Housing Credits have been allocated. The General Partner is also entitled to receive 1% of cash distributions. There have been no distributions of cash to the General Partner. 27 Item 12. Security Ownership of Certain Beneficial Owners and Management (a) Security Ownership of Certain Beneficial Owners No person is known to own beneficiary in excess of 5% of the outstanding Limited Partnership Interests. (b) Security Ownership of Management Neither the General Partner, its affiliates, nor any of the officers or directors of the General Partner or its affiliates own directly or beneficially any Units in the Partnership. (c) Changes in Control The management and control of the General Partner may be changed at any time in accordance with its organizational documents, without the consent or approval of the Limited Partners. In addition, the Partnership Agreement provides for the admission of one or more additional and successor General Partners in certain circumstances. First, with the consent of any other General Partners and a majority-in-interest of the Limited Partners, any General Partner may designate one or more persons to be successor or additional General Partners. In addition, any General Partner may, without the consent of any other General Partner or the Limited Partners, (i) substitute in its stead as General Partner any entity which has, by merger, consolidation or otherwise, acquired substantially all of its assets, stock or other evidence of equity interest and continued its business, or (ii) cause to be admitted to the Partnership an additional General Partner or Partners if it deems such admission to be necessary or desirable so that the Partnership will be classified a partnership for Federal income tax purposes. Finally, a majority-in-interest of the Limited Partners may at any time remove the General Partner of the Partnership and elect a successor General Partner. Item 13. Certain Relationships and Related Transactions The General Partner manages all of the Partnership's affairs. The transactions with the General Partner are primarily in the form of fees paid by the Partnership for services rendered to the Partnership and the General Partner's interest in the Partnership, as discussed in Item 11 and in the notes to the Partnership's financial statements. 28 PART IV. Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a)(1) Financial statements included in Part II hereof: Report of Independent Certified Public Accountants Balance Sheets, March 31, 1999 and December 31, 1998 Statements of Operations for the three months ended March 31, 1999 and the period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 Statements of Partners' Equity (Deficit) for the three months ended March 31, 1999 and the period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 Statements of Cash Flows for the three months ended March 31, 1999 and the period August 20, 1998 (Date Operations Commenced) Through December 31, 1998 Notes to Financial Statements (a)(2) Financial statement schedules included in Part IV hereof: Report of Independent Certified Public Accountants on Financial State- ment Schedules Schedule III, Real Estate Owned by Local Limited Partnerships (b) Reports on form 8-K 1. A Form 8-K dated May 14, 1999 was filed on May 13, 1999 reporting the Partnership's change in fiscal year end to March 31. No financial statements were included. (c) Exhibits. 3.1 Agreement of Limited Partnership dated as of March 3, 1997, filed as Exhibit 3.1 to Post-Effective Amendment No. 1 to the Registration Statement, is hereby incorporated herein as Exhibit 3.1. 3.2. First Amendment to Agreement of Limited Partnership dated as of August 29, 1997 filed as Exhibit 3.2 to Post-Effective Amendment No. 6 to registration Statement, is hereby incorporated herein as Exhibit 3.2. 10.1 Amended and Restated Agreement of Limited Partnership of Trenton Vill- age Apts., L.P. filed as exhibit 10.1 to the current report on Form 8-K dated August 11, 1998, is herein incorporated by reference herein as Exhibit 10.1. 10.2 Second Amended and Restated Agreement of Limited Partnership of United Development Co., L.P.-97.0. filed as Exhibit 10.1 to the amendment to the current report on Form 8-K/A dated September 22, 1998, is herein incorporated herein by reference as Exhibit 10.2. 10.3 First Amendment to the Amended and Restated Agreement of Limited Partnership of United Development Co., L.P. -97.0 filed as Exhibit 10.2 to the amendment to the current report on Form 8-K/A dated September 22, 1998 is hereby incorporated herein by reference as Exhibit 10.3. 10.4 Amended and Restated Agreement of Limited Partnership of Desloge Assoc- iates I, L.P. filed as Exhibit 10.1 to the current report on Form 8-K dated December 11, 1998, is herein incorporated by reference herein as Exhibit 10.4. 10.5 Amended and Restated Agreement of Limited Partnership of Brighton Ridge Apartments, L.P. filed as Exhibit 10.1 to the amendment to the current report on Form 8/KA dated December 28, 1998, is herein incorporated by reference as Exhibit 10.5. 29 10.6 First Amendment to the Amended and Restated Agreement of Limited Partnership of Brighton Ridge Apartments, L.P. filed as Exhibit 10.2 to the amendment to the current report on Form 8K/A dated December 28, 1998, is hereby incorporated by reference herein as Exhibit 10.6. 10.7 Second Amendment to the Amended and Restated Agreement of Limited Partnership of Brighton Ridge Apartments, L.P. filed as Exhibit 10.3 to the amendment to the current report on Form 8K/A dated December 28, 1998, is hereby incorporated by reference herein as Exhibit 10.7. 21.1 Financial statements of United Development Co., L.P - 97.0 (60 Homes) for the year ended December 31, 1998, together with auditors report thereon, a significant subsidiary of the Partnership. (d) Financial statement schedules follow as set forth in subsection (a)(2) hereof. 30 Report of Independent Certified Public Accountants on Financial Statement Schedules To the Partners WNC Housing Tax Credit Fund VI, L.P., Series 6 The audits referred to in our report dated August 10, 1999, relating to the 1999 and 1998 financial statements of WNC Housing Tax Credit Fund VI, L.P., Series 6, which is contained in Item 8 of this Form 10-K, included the audit of the accompanying financial statement schedules. The financial statement schedules are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statement schedules based upon our audits. In our opinion, such financial statement schedules present fairly, in all material respects, the information set forth therein. /s/ BDO SEIDMAN, LLP BDO SEIDMAN, LLP Orange County, California August 10, 1999 31 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 1999
---------------------------- ------------------------------------------------ As of March 31, 1999 As of December 31, 1998 ---------------------------- ------------------------------------------------ Total Amount of Encumbrances Investment in Investment of Local Property Net Local Limited Paid Limited and Accumulated Book Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value - ---------------------------------------------------------------------------------- ------------------------------------------------ Brighton Ridge Limited Edgefield, South Partnership Carolina $ 989,000 $ 396,000 $ 607,000 $ 1,304,000 $ 25,000 $ 1,279,000 Desloge Associates I, L.P. Desloge, Missouri 1,063,000 872,000 634,000 135,000 - 135,000 Ottowa I, L.P. Oglesby, Illinois 403,000 282,000 - - - - Preservation Partners I, L.P. Pontiac and Taylorville, Illinois 514,000 232,000 - - - - Trenton Village Apartments, Trenton, Missouri 1,025,000 769,000 - 728,000 - 728,000 L.P. United Development Co. Memphis, 97.0, L.P Tennessee $ 2,813,000 $ 2,119,000 539,000 940,000 - 940,000 --------- --------- --------- --------- ------- --------- $ 6,807,000 $ 4,670,000 $ 1,780,000 $ 3,107,000 $ 25,000 $ 3,082,000 ========= ========= ========= ========= ======= =========
32 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 1999
--------------------------------------------------------------------------- For the period August 20, 1998 Through December 31, 1998 --------------------------------------------------------------------------- Year Investment Estimated Partnership Name Rental Income Net Income Acquired Completion Date - ------------------------------------------------------------------------------------------------------------------- Brighton Ridge Limited Partnership $ 194,000 $ 28,000 1998 1999 Desloge Associates I, L.P. - - 1998 1999 Ottawa I, L.P. - - 1999 1999 Preservation Partners I, L.P. - - 1999 1999 Trenton Village Apartments, L.P. - 8,000 1998 1999 United Development Co. 97.0, L.P - 25,000 1998 1999 -------- ------- $ 194,000 $ 61,000 ======== =======
33 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships December 31, 1998
------------------------------------------------------------------------------ As of December 31, 1998 ------------------------------------------------------------------------------ Total Amount of Encumbrances Investment in Investment of Local Property Net Local Limited Paid Limited and Accumulated Book Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value - ------------------------------------------------------------------------------------------------------------------------------------ Brighton Ridge Limited Edgefield, South Partnership Carolina $ 989,000 $ 396,000 $ 607,000 $ 1,304,000 $ 25,000 $ 1,279,000 Desloge Associates I, L.P. Desloge, Missouri 1,063,000 872,000 634,000 135,000 - 135,000 Trenton Village Apartments, Trenton, Missouri 1,025,000 769,000 - 728,000 - 728,000 L.P. United Development Co. Memphis, 97.0, L.P Tennessee 2,813,000 2,119,000 539,000 940,000 - 940,000 --------- --------- --------- --------- ------- --------- $ 5,890,000 $ 4,156,000 $ 1,780,000 $ 3,107,000 $ 25,000 $ 3,082,000 ========= ========= ========= ========= ======= =========
34 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships December 31, 1998
--------------------------------------------------------------------------- For the period August 20, 1998 Through December 31, 1998 --------------------------------------------------------------------------- Year Investment Estimated Partnership Name Rental Income Net Income Acquired Completion Date - ------------------------------------------------------------------------------------------------------------------- Brighton Ridge Limited Partnership $ 194,000 $ 28,000 1998 1999 Desloge Associates I, L.P. - - 1998 1999 Ottawa I, L.P. - - 1999 1999 Preservation Partners I, L.P. - - 1999 1999 Trenton Village Apartments, L.P. - 8,000 1998 1999 United Development Co. 97.0, L.P - 25,000 1998 1999 -------- ------- $ 194,000 $ 61,000 ======== =======
35 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WNC HOUSING TAX CREDIT FUND VI, L.P., Series 6 By: WNC & Associates, Inc. General Partner By: /s/ John B. Lester, Jr. John B. Lester, Jr., President of WNC & Associates, Inc. Date: August 23, 1999 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ Wilfred N. Cooper, Sr. Wilfred N. Cooper, Sr., Chairman of the Board of WNC & Associates, Inc. Date: August 23, 1999 By: /s/ John B. Lester, Jr. John B. Lester, Jr., Director of WNC & Associates, Inc. Date: August 23, 1999 By: /s/ Michael L. Dickenson Michael L. Dickenson, Vice-President - Chief Financial Officer of WNC & Associates, Inc. Date: August 23, 1999 By: /s/ David N. Shafer David N. Shafer , Director of WNC & Associates, Inc. Date: August 23, 1999 36 EX-27 2 FDS --
5 0001037156 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 1 US DOLLARS 3-MOS MAR-31-1999 JAN-01-1999 MAR-31-1999 1 2,690,665 0 0 0 0 3,584,035 0 0 12,376,189 0 0 0 0 0 10,054,623 12,376,189 0 15,869 0 19,118 47,263 0 0 44,014 0 44,014 0 0 0 44,014 4.26 0
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