10-K/A 1 n6-6k03.txt NAT 6-6 33103 10-KA FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March, 31, 2003 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number: 333-24111 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.) 17782 Sky Park Circle, Irvine, CA 92614 (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| Indicate by check mark whether the registrant is an accelerated filer. Yes No X . -------- ---------- State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. INAPPLICABLE DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). NONE EXPLANATORY NOTE WNC Housing Tax Credit Fund VI, L.P., Series 6 is filing this amendment to its Annual Report on Form 10-K for the period ended March 31, 2003 to restate its financial statements as of March 31, 2003 and for the year then ended (included in Item 8 of the Form 10-K). As discussed below, the Partnership has invested in Local Limited Partnerships. The Partnership was unable to obtain audited financial statements for one of the Local Limited Partnerships at the original filing date of the Form 10-K, July 9, 2003. Those audited financial statements have been obtained, and the restatement reflects the changes in amounts and interest in results of operations from that previously estimated by the Partnership. Additionally, as a result of management's assessment of the carrying value of the investment in Local Limited Partnerships, the Partnership reduced the carrying value of one of its investments in a Local Limited Partnership. 2 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"). The chairman and president 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. 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. Since inception, the Partnership has received and accepted subscriptions for 20,500 Units in the amount of $20,456,595, net of dealer discounts of $16,100 and volume discounts of $27,305. 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 Complexes") which will qualify for the Low Income Housing Credit. In general, under Section 42 of the Internal Revenue Code, an owner of low-income housing can receive the Low Income Housing Credit to be used to reduce Federal taxes otherwise due in each year of a ten-year period. In general, under Section 17058 of the California Revenue and Taxation Code, an owner of low-income housing can receive the Low Income Housing Credit to be used against California taxes otherwise due in each year of a four-year period. Each Housing Complex is subject to a fifteen year compliance period (the "Compliance Period"), and under state law may have to be maintained as low income housing for 30 or more years. In general, in order to avoid recapture of Low Income Housing Credits, the Partnership does not expect that it will dispose of its interests in Local Limited Partnerships ("Local Limited Partnership Interests") or approve the sale by any Local Limited Partnership of its Housing Complex prior to the end of the applicable Compliance Period. Because of (i) the nature of the Housing Complexes, (ii) the difficulty of predicting the resale market for low-income housing 15 or more years in the future, and (iii) the ability of government lenders to disapprove of transfer, it is not possible at this time to predict whether the liquidation of the Partnership's assets and the disposition of the proceeds, if any, in accordance with the Partnership's Agreement of Limited Partnership, dated March 3, 1997 as amended on August 29, 1997 ("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, 2003, the Partnership had invested in fifteen Local Limited Partnerships. Each of these Local Limited Partnerships owns a 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. Certain Risks and Uncertainties An investment in the Partnership and the Partnership's investments in Local Limited Partnerships and their Housing Complexes are subject to risks. These risks may impact the tax benefits of an investment in the Partnership, and the amount of proceeds available for distribution to the Limited Partners, if any, on liquidation of the Partnership's investments. Some of those risks include the following: The Low Income Housing Credit rules are extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Credits and the fractional recapture of Low Income Housing Credits already taken. In most cases the annual amount of Low Income Housing Credits that an individual can use is limited to the tax liability due on the person's last $25,000 of taxable income. The Local Limited Partnerships may be unable to sell the Housing Complexes at a profit. Accordingly, the Partnership may be unable to distribute any cash to its investors. Low Income Housing Credits may be the only benefit from an investment in the Partnership. The Partnership 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 Low Income Housing Credits, a fractional recapture of prior Low Income Housing Credits, and a loss of the Partnership's investment in the Housing Complex would occur. The Partnership is a limited partner or non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership's investments in Local Limited Partnerships, nor the Local Limited Partnerships' investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and Low Income Housing Credits and recapture of Low Income Housing Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others. The Partnership may be unable to timely provide financial reports to the investors, which would adversely affect the Limited Partners' ability to monitor the Partnership's financial condition and the results of its operations. The ability of Limited Partners to claim tax losses from the Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Credits and tax losses allocable to the investors could be reduced if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in the Partnership. Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes. No trading market for the Units exists or is expected to develop. Investors may be unable to sell their Units except at a discount and should consider their Units to be a long-term investment. Individual investors will have no recourse if they disagree with actions authorized by a vote of the majority of Limited Partners. 4 Exit Strategy The IRS compliance period for low-income housing tax credit properties is generally 15 years from occupancy following construction or rehabilitation completion. WNC was one of the first in the industry to offer investments using the tax credit. Now these very first programs are completing their compliance period. With that in mind, we are continuing our review of the Partnership's holdings, with special emphasis on the more mature properties including those that have satisfied the IRS compliance requirements. Our review will consider many factors including extended use requirements on the property (such as those due to mortgage restrictions or state compliance agreements), the condition of the property, and the tax consequences to the investors from the sale of the property. Upon identifying those properties with the highest potential for a successful sale, refinancing or syndication, we expect to proceed with efforts to liquidate those properties. Our objective is to maximize the investors' return wherever possible and, ultimately, to wind down those funds that no longer provide tax benefits to investors. To date no properties in the Partnership have been selected. Local Limited Partnership Matters The Partnership, as a limited partner or limited liability company member in each Local Limited Partnership, may be unable to affect the selection or monitor the progress of the auditors of a Local Limited Partnership. The partnership agreement or operating agreement of each Local Limited Partnership includes disincentives for the failure of the Local Limited Partnership to timely deliver audited financial statements to the Partnership. However, there can be no absolute assurance that the Partnership will be able to timely obtain audited financial statements from each Local Limited Partnership. In such a case, the Partnership might estimate its interest in the results of the operations of the Local Limited Partnership. For the Partnership fiscal years ended March 31, 2003 and 2002, the Partnership was unable to obtain audited financial statements from one of its Local Limited Partnerships, Cotton Mill Elderly Living Center L.P. ("Cotton Mill"), as of and for the Cotton Mill fiscal years ended December 31, 2002 and 2001. Subsequent to the filing date of the Partnership's original Form 10-K for the period ended March 31, 2003, the Partnership obtained the audited financial statements of Cotton Mill for the Cotton Mill fiscal years ended December 31, 2002 and 2001. Additionally, as a result of the Partnership's assessment of the carrying value of the investment in Kechel Towers, L.P., the Partnership reduced the carrying value of its investments in that Local Limited Partnership. As a result, the Partnership has restated its financial statements for the year ended March 31, 2003 to reflect the differences in the Partnership's estimated interest in the results of the operations in Cotton Mill, and the Partnership's actual interest in Cotton Mill based on the audited financial statements of Cotton Mill for the Cotton Mill fiscal year ended December 31, 2002 and to record an impairment in the investment in Kechel Towers, L.P. The Partnership has not restated its financial statements for the year ended March 31, 2002; the differences in the Partnership's estimated interest in the results of the operations in Cotton Mill, and the Partnership's actual interest in Cotton Mill based on the audited financial statements of Cotton Mill for the Cotton Mill fiscal year ended December 31, 2001 were deemed by the Partnership not to be material to the financial statements of the Partnership for the year ended March 31, 2002. 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 fifteen Housing Complexes as of the dates and for the periods indicated: 5
---------------------------- ---------------------------------------------- As of March 31, 2003 As of December 31, 2002 ---------------------------- ---------------------------------------------- Partnership's Amount of Original Encumbrances Total Investment Investment Estimated Low of Local Local Limited General Partner in Local Limited Paid to Number Income Housing Limited Partnership Name Location Name Partnership Date of Units Occupancy Credits Partnerships ------------------------------------------------------------------------------------------------------------------------------------ (Restated) Boonville Boonville, Central Missouri Associates I, Missouri Counties' L.P. Human Development Corporation $ 2,195,000 $ 2,195,000 48 100% $ 3,027,000 $ 785,000 Brighton Edgefield, The Piedmont Ridge South Foundation of Apartments, Carolina South Carolina, L.P. Inc. 926,000 926,000 44 100% 1,302,000 969,000 Cotton Rock Elderly Living Mill Island, Development, Elderly Illinois Inc. and Quad Cities Living Redevelopment Center, L.P. Resources, Inc. 1,040,000 1,040,000 31 90% 1,445,000 768,000 Country Club Richmond, Mark-Dana Investors, L.P. Virginia Corporation 305,000 305,000 97 92% 359,000 2,714,000 Desloge Associates Desloge, East Missouri Action I, L.P. Missouri Agency, Inc. 1,059,000 1,059,000 32 94% 1,629,000 592,000 Kechel Logansport, Compass Square Towers, Indiana Development L.P. Corporation 1,348,000 1,191,000 23 100% 1,258,000 259,000 Ottawa I, Oglesby, Michael K. L.P. Illinois Moore 403,000 403,000 32 91% 592,000 1,481,000 Preservation Partners I, Pontiac and Michael K. Moore and L.P. Taylorville, Affordable Housing Illinois Development Fund, Inc. 514,000 514,000 60 93% 756,000 2,013,000 St. Susanne Mt. Vernon, Southwind Associates Missouri Community I, L.P. Development 255,000 255,000 16 100% 337,000 654,000 Summer Wood Camden, ACHR Housing Ltd. Alabama Corporation 1,237,000 1,237,000 32 94% 1,707,000 947,000
6
---------------------------- ---------------------------------------------- As of March 31, 2003 As of December 31, 2002 ---------------------------- ---------------------------------------------- Partnership's Amount of Original Encumbrances Total Investment Investment Estimated Low of Local Local Limited General Partner in Local Limited Paid to Number Income Housing Limited Partnership Name Location Name Partnership Date of Units Occupancy Credits Partnerships ------------------------------------------------------------------------------------------------------------------------------------ Trenton Village Trenton, MBL Development, Apartments, L.P. Missouri Co. 1,018,000 1,018,000 32 94% 1,497,000 681,000 United Memphis, Harold E. Development Co., Tennessee Buehler, Sr. and L.P. - 97.0. JoEllen Buehler 2,813,000 2,813,000 60 98% 4,107,000 1,280,000 Wagner Wagner, Lutheran Social Partnership South Services of South 99 Limited Dakota Dakota and Partnership Weinburg Investments, Inc. 245,000 208,000 26 92% 334,000 779,000 West Liberty West Joe B. Curd, Family Liberty, Jr.and Janie Apartments, Ltd. Kentucky Sheets Curd 351,000 298,000 20 100% 474,000 1,211,000 West Mobile Theodore, Apartment County Alabama Developers, Housing, Inc. and Ltd. Thomas H. Cooksey 1,858,000 1,858,000 55 95% 2,543,000 1,359,000 ------------ ----------- --- --- ------------ ------------ $ 15,567,000 $15,320,000 608 96% $ 21,367,000 $ 16,492,000 ============ =========== === === ============ ============
7
--------------------------------------- ---------------------------------------------- For the year ended December 31, 2002 Low Income Housing Credits -------------------------------------------------------------------- ---------------------------------------------- Credits Allocated Year to be First Partnership Name Rental Income Net Income/(loss) to Partnership Available -------------------------------------------------------------------- ---------------------------------------------- (Restated) (Restated) Boonville Associates I, L.P. $ 163,000 $ (98,000) 99.97% 2001 Brighton Ridge Apartments L.P. 242,000 (41,000) 98.99% 1999 Cotton Mill Elderly Living Center, L.P. 138,000 (92,000) 99.98% 2000 Country Club Investors, L.P. 560,000 (48,000) 66.99% 1999 Desloge Associates I, L.P. 93,000 (54,000) 99.89% 1999 Kechel Towers, L.P. 96,000 (67,000) 99.98% 1999 Ottawa I, L.P. 143,000 (67,000) 99.98% 1999 Preservation Partners I, L.P. 271,000 (72,000) 99.98% 1999 St. Susanne Associates I, L.P. 69,000 (17,000) 99.98% 2000 Summer Wood Ltd. 77,000 (76,000) 99.98% 1999 Trenton Village Apartments, L.P. 111,000 (16,000) 99.98% 1999 United Development Co. L.P. 97.0, L.P. 471,000 (79,000) 99.98% 1999 Wagner Partnership 99 Limited Partnership 95,000 (22,000) 99.98% 2001 West Liberty Family Apartments, Ltd. 3,000 (6,000) 99.98% 2002 West Mobile County Housing, Ltd. 209,000 (103,000) 99.98% 2000 ---------- ------------- $2,741,000 $ (858,000) ========== =============
8 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 were 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, 2003, there were 1,026 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. d) No unregistered securities were sold by the Partnership during the year ended March 31, 2003. Item 5b. NOT APPLICABLE Item 6. Selected Financial Data Selected balance sheet information for the Partnership is as follows:
March 31 December 31 ------------------------------------------------------------ ---------------------------- 2003 2002 2001 2000 1999 1998 ------------ ------------- ------------ ------------ ------------ ------------ (Restated) ASSETS Cash and cash equivalents $ 722,715 $ 751,327 $ 1,152,887 $ 4,501,538 $ 2,690,665 $ 372,505 Subscriptions receivable - - - - 893,370 1,030,915 Investments in limited partnerships, net 13,562,908 14,585,268 15,439,696 13,829,634 7,748,624 6,440,762 Loans receivable - 50,000 50,000 154,878 - - Other assets 7,436 2,059 170 31,378 1,043,530 50,000 ------------ ------------- ------------ ------------ ------------ ------------ $ 14,293,059 $ 15,388,654 $ 16,642,753 $ 18,517,428 $ 12,376,189 $ 7,894,182 ============ ============= ============ ============ ============ ============
9
March 31 December 31 ------------------------------------------------------------ ---------------------------- 2003 2002 2001 2000 1999 1998 ------------ ------------- ------------ ------------ ------------ ------------ (Restated) Payables to limited partnerships $ 246,175 $ 246,185 $ 238,129 $ 1,252,287 $ 2,137,275 $ 1,734,427 Loan payable - - - - - 113,269 Accrued fees and expenses due to general partner and affiliates 42,903 43,577 22,952 35,171 184,291 173,323 PARTNERS' EQUITY 14,003,981 15,098,892 16,381,672 17,229,970 10,054,623 5,873,163 ------------ ------------- ------------ ------------ ------------ ------------ $ 14,293,059 $ 15,388,654 $ 16,642,753 $ 18,517,428 $ 12,376,189 $ 7,894,182 ============ ============= ============ ============ ============ ============
Selected results of operations, cash flows and other information for the Partnership are as follows: For the For the three period from months August 20, For the years ended ended 1998 to March 31 March 31 December 31 ------------------------------------------------------------- ------------- ------------- 2003 2002 2001 2000 1999 1998 ----------- ------------- ------------ ------------ ------------- ------------- (Restated) Net income(loss) from operations (Note 1) $ (355,745) $ (146,542) $ (39,047) $ 97,572 $ (3,249) $ (1,501) Equity in income(loss) of limited partnerships (739,166) (1,136,238) (813,901) (520,281) 47,263 60,610 Other losses - - - (85,727) - - ----------- ------------- ------------ ------------ ------------- ------------- Net income (loss) $ (1,094,911) $ (1,282,780) $ (852,948) $ (508,436) $ 44,014 $ 59,109 =========== ============= ============ ============ ============= ============= Net income (loss) allocated to: General partner $ (10,949) $ (12,828) $ (8,529) $ (5,084) $ 440 $ 591 =========== ============= ============ ============ ============= ============= Limited partners $ (1,083,962) $ (1,269,952) $ (844,419) $ (503,352) $ 43,574 $ 58,518 =========== ============= ============ ============ ============= ============= Net income (loss) per limited partner unit $ (52.88) $ (61.95) $ (41.19) $ (25.55) $ 4.26 $ 16.38 =========== ============= ============ ============ ============= ============= Outstanding weighted limited partner units 20,500 20,500 20,500 19,697 10,218 3,573 =========== ============= ============ ============ ============= =============
Note 1 - Loss from operations for the year ended March 31, 2003 includes a charge for impairment losses on investments in limited partnerships of $231,646. (See Note 2 to the audited financial statements.) 10
For the For the three period from months August 20, For the years ended ended 1998 to March 31 March 31 December 31 ------------------------------------------------------------- ------------- ------------- 2003 2002 2001 2000 1999 1998 ----------- ------------- ------------ ------------ ------------- ------------- Net cash provided by (used in): Operating activities $ (78,602) $ (76,258) $ 56,115 $ 28,533 $ 34,356 $ 1,554 Investing activities 49,990 (325,302) (3,403,846) (6,692,518) (1,914,981) (4,525,457) Financing activities - - (920) 8,474,858 4,198,785 4,896,408 ----------- ------------- ------------ ------------ ------------- ------------- Net change in cash and cash equivalents (28,612) (401,560) (3,348,651) 1,810,873 2,318,160 372,505 Cash and cash equivalents, beginning of period 751,327 1,152,887 4,501,538 2,690,665 372,505 - ----------- ------------- ------------ ------------ ------------- ------------- Cash and cash equivalents, end of period $ 722,715 $ 751,327 $ 1,152,887 $ 4,501,538 $ 2,690,665 $ 372,505 =========== ============= ============ ============ ============= =============
Low Income Housing Credit per Unit was as follows for the period ended December 31: 2002 2001 2000 1999 1998 -------------- -------------- --------------- -------------- ------------- Federal $ 101 $ 84 $ 72 $ 25 $ - State - - - - - -------------- -------------- --------------- -------------- ------------- Total $ 101 $ 84 $ 72 $ 25 $ - ============== ============== =============== ============== ============= Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements With the exception of the discussion regarding historical information, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other discussions elsewhere in this Form 10-K contain forward looking statements. Such statements are based on current expectations subject to uncertainties and other factors which may involve known and unknown risks that could cause actual results of operations to differ materially from those projected or implied. Further, certain forward-looking statements are based upon assumptions about future events which may not prove to be accurate. Risks and uncertainties inherent in forward looking statements include, but are not limited to, our future cash flows and ability to obtain sufficient financing, level of operating expenses, conditions in the low income housing tax credit property market and the economy in general, as well as legal proceedings. Historical results are not necessarily indicative of the operating results for any future period. Subsequent written and oral forward looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by cautionary statements in this Form 10-K and in other reports we filed with the Securities and Exchange Commission. The following discussion should be read in conjunction with the Financial Statements and the Notes thereto included elsewhere in this filing. 11 Critical Accounting Policies and Certain Risks and Uncertainties The Partnership believes that the following discussion addresses the Partnership's most significant accounting policies, which are the most critical to aid in fully understanding and evaluating the Partnership's reported financial results, and certain of the Partnership's risks and uncertainties. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Method of Accounting For Investments in Limited Partnerships The Partnership accounts for its investments in limited partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships' results of operations and for any contributions made or 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 a comparison of the carrying amount to future undiscounted net cash flows expected to be generated. If an investment is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the investment exceeds fair value. The accounting policies of the Local Limited Partnerships are generally consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and are being amortized over 30 years. Equity in losses of the Local Limited Partnerships for each year ended March 31 have been recorded by the Partnership based on nine months of reported results provided by the Local Limited Partnerships for each year ended December 31 and on three months of results estimated by management of the Partnership for each three-month period ended March 31. Management's estimate for the three-month period is based on either actual unaudited results reported by the Local Limited Partnerships or historical trends in the operations of the Local Limited Partnerships. Equity in losses of the Local Limited Partnerships are 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 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 income. Income Taxes No provision for income taxes has been recorded in the financial statements as any liability for income taxes is the obligation of the partners of the Partnership. Certain Risks and Uncertainties An investment in the Partnership and the Partnership's investments in Local Limited Partnerships and their Housing Complexes are subject to risks. These risks may impact the tax benefits of an investment in the Partnership, and the amount of proceeds available for distribution to the Limited Partners, if any, on liquidation of the Partnership's investments. Some of those risks include the following: 12 Certain Risks and Uncertainties, continued The Low Income Housing Credit rules are extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Credits and the fractional recapture of Low Income Housing Credits already taken. In most cases the annual amount of Low Income Housing Credits that an individual can use is limited to the tax liability due on the person's last $25,000 of taxable income. The Local Limited Partnerships may be unable to sell the Housing Complexes at a profit. Accordingly, the Partnership may be unable to distribute any cash to its investors. Low Income Housing Credits may be the only benefit from an investment in the Partnership. The Partnership 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 Low Income Housing Credits, a fractional recapture of prior Low Income Housing Credits, and a loss of the Partnership's investment in the Housing Complex would occur. The Partnership is a limited partner or non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership's investments in Local Limited Partnerships, nor the Local Limited Partnerships' investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and Low Income Housing Credits and recapture of Low Income Housing Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others. The Partnership may be unable to timely provide financial reports to the investors, which would adversely affect the Limited Partners' ability to monitor the Partnership's financial condition and the results of its operations. The ability of Limited Partners to claim tax losses from the Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Credits and tax losses allocable to the investors could be reduced if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in the Partnership. Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes. No trading market for the Units exists or is expected to develop. Investors may be unable to sell their Units except at a discount and should consider their Units to be a long-term investment. Individual investors will have no recourse if they disagree with actions authorized by a vote of the majority of Limited Partners. To date, certain Local Limited Partnerships have incurred significant operating losses and 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 Partner 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 tax credits could occur. 13 Financial Condition The Partnership's assets at March 31, 2003 consisted primarily of $723,000 in cash, aggregate investments in fifteen Local Limited Partnerships of $13,563,000 (restated) and other assets of $7,000. Liabilities at March 31, 2003 primarily consisted of $246,000 of estimated future capital contributions to the Local Limited Partnerships and $43,000 of accrued fees and advances due to the General Partner and affiliates. Results of Operations Year Ended March 31, 2003 Compared to Year Ended March 31, 2002. The Partnerships net loss for the year ended March 31, 2003 was $(1,095,000), (restated) reflecting a decrease of $188,000 (restated) from the net loss experienced for the year ended March 31, 2002 of $(1,283,000). The decrease in net loss is due to a decrease in the equity in losses of limited partnerships which decreased by $397,000 (restated) due to an increase in occupancy as more of the Housing Complexes of the fifteen local limited partnerships achieved stabilized occupancy, offset by an increase in operating expense of $(199,000), (restated) which was primarily due to a $(232,000) increase in impairment loss. The impairment loss is due to the fact that the net investment balance exceeded the remaining tax credits along with any residual value in one limited partnership. Along with a reduction in interest and reporting fee income of $10,000. Year Ended March 31, 2002 Compared to Year Ended March 31, 2001. The Partnerships net loss for the year ended March 31, 2002 was $(1,283,000), reflecting an increase of $(430,000) from the net loss experienced for the year ended March 31, 2001 of $(853,000). The increase in net loss is due to an increase in the equity in losses of limited partnerships which increased by $(322,000) due the maturity in the rent-up of the fourteen local limited partnerships in operation and by a reduction in interest and reporting fee income of $99,000 along with an increase in operating expense of $9,000. Liquidity and Capital Resources Year Ended March 31, 2003 Compared to Year Ended March 31, 2002. The net decrease in cash during the year ended March 31, 2003 was $(29,000), compared to a net decrease in cash for the year ended March 31, 2002 of $(402,000). This change of $373,000 was primarily due to a decline in investing activities related to purchase of Limited Partnership interests of $335,000, a decline in distribution received from limited partnerships of $10,000 and the receipt of cash as a result of the repayment of a loan receivable in the amount of $50,000. Year Ended March 31, 2002 Compared to Year Ended March 31, 2001. The net decrease in cash during the year ended March 31, 2001 was $(402,000), compared to a net decrease in cash for the year ended March 31, 2001 of $(3,349,000). This change of $2,947,000 was primarily due to a decline in investing activities related to purchase of Limited Partnership interests of approximately $3,079,000 offset by an increase of $132,000 in cash used in operating activities. The Partnership expects its future cash flows, together with its net available assets at March 31, 2003, to be sufficient to meet all future cash requirements. Other Matters NONE 14
Future Contractual Cash Obligations The following table summarizes our future contractual cash obligations as of March 31, 2003: 2004 2005 2006 2007 2008 Thereafter Total --------- --------- --------- --------- --------- ------------ ------------ Asset Management Fees $ 96,888 $ 63,893 $ 63,893 $ 63,893 $ 63,893 $ 2,683,506 $ 3,035,966 Capital Contributions Payable to Lower Tier Partnerships 246,175 - - - - - 246,175 --------- --------- --------- --------- --------- ------------ ------------ Total contractual cash obligations $ 343,063 $ 63,893 $ 63,893 $ 63,893 $ 63,893 $ 2,683,506 $ 3,282,141 ========= ========= ========= ========= ========= ============ ============
(1) Asset Management Fees are payable annually until termination of the Partnership, which is to occur no later than 2052. The estimate of the fees payable included herein assumes the retention of the Partnership's interest in all Housing Complexes until 2052. Amounts due to the General Partner as of March 31, 2003 have been included in the 2004 column. For additional information on our Asset Management Fees and Capital Contributions Payable to Lower Tier Partnerships, see Notes 3, 4 and 6 to the financial statements included elsewhere herein. 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 investments using the tax credit. Now these very first programs are completing their compliance period. With that in mind, we are continuing our review of the Partnership's holdings, with special emphasis on the more mature properties including those that have satisfied the IRS compliance requirements. Our review will consider many factors including extended use requirements on the property (such as those due to mortgage restrictions or state compliance agreements), the condition of the property, and the tax consequences to the investors from the sale of the property. Upon identifying those properties with the highest potential for a successful sale, refinancing or syndication, we expect to proceed with efforts to liquidate those properties. Our objective is to maximize the investors' return wherever possible and, ultimately, to wind down those funds that no longer provide tax benefits to investors. To date no properties in the Partnership have been selected. Impact of New Accounting Pronouncements In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations", which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred with the associated asset retirement costs being capitalized as a part of the carrying amount of the long-lived asset. SFAS No. 143 also includes disclosure requirements that provide a description of asset retirement obligations and reconciliation of changes in the components of those obligations. The statement is effective for fiscal years beginning after June 15, 2002. The Partnership does not expect the adoption of SFAS No. 143 to have a material effect on the Partnership's financial position or results of operations. In August 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of Long-Lived Assets," which addresses accounting and financial reporting for the impairment or disposal of long-lived assets. This standard was effective for the Partnership's financial statements beginning January 1, 2002. The implementation of SFAS No. 144 did not have a material impact on the Partnership's financial position or results of operations. 15 Impact of New Accounting Pronouncements, countinued In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No. 145 rescinded three previously issued statements and amended SFAS No. 13, "Accounting for Leases." The statement provides reporting standards for debt extinguishments and provides accounting standards for certain lease modifications that have economic effects similar to sale-leaseback transactions. The statement is effective for certain lease transactions occurring after May-15, 2002 and all other provisions of the statement shall be effective for financial statements issued on or after May-15, 2002. The implementation of SFAS No. 145 did not have a material impact on the Partnership's financial position or results of operations. In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which updates accounting and reporting standards for personnel and operational restructurings. The Partnership adopted SFAS No. 146 for exit, disposal or other restructuring activities initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material effect on the Partnership's financial position or results of operations. In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." The adoption of FIN 45 did not have a material impact on the Partnership's financial position or results of operations. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an Amendment to SFAS No. 123." SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method on accounting for stock-based employee compensation. The implementation of SFAS No. 148 is not expected to have a material effect on the Partnership's financial position or results of operations. In January 2003, the FASB issued Interpretation No. 46 ("FIN46"), "Consolidation of Variable Interest Entities," FIN 46 provides guidance on when a company should include the assets, liabilities, and activities of a variable interest entity ("VIE'') in its financial statements and when it should disclose information about its relationship with a VIE. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it absorbs the majority of the entity's expected losses, the majority of the expected returns, or both. The provisions of FIN 46 were effective February 1, 2003 for all arrangements entered into after January 31, 2003. FIN 46 is effective in the second quarter of 2004 for those arrangements entered into prior to January 31, 2003. We are currently reviewing whether we have relationships with VIEs and, if so, whether we should consolidate them and disclose information about them as the primary beneficiary or disclose information about them as an interest holder. We may have to consolidate some of our equity investments in partnerships based on recent interpretations from accounting professionals. We currently record the amount of our investment in these partnerships as an asset on our balance sheet, recognize our share of partnership income or losses in our income statement, and disclose how we account for material types of these investments in our 2003 financial statements. However, we do not yet know the extent of the impact of consolidating the assets and liabilities of these partnerships on our balance sheet because of the complexities of applying FIN 46, the evolving interpretations from accounting professionals, and the nuances of each individual partnership. Item 7A. Quantitative and Qualitative Disclosures About Market Risk NOT APPLICABLE Item 8. Financial Statements and Supplementary Data 16 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 sheet of WNC Housing Tax Credit Fund VI, L.P., Series 6 (a California Limited Partnership) (the "Partnership") as of March 31, 2003 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. 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 investments in limited partnerships audited by other auditors represented $11,908,523 of the total assets of the Partnership at March 31, 2003, and $821,916 of the Partnership's equity in losses of limited partnerships for the year ended March 31, 2003. 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. The 2002 and 2001 financial statements were audited by other auditors, and their report thereon, dated June 4, 2003, stated that 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 had been furnished to them. There opinion, insofar as it relates to the amounts included in the financial statements for the limited partnerships which were audited by others, was based solely on the reports of the other auditors. Additionally, their report stated that the Partnership was unable to obtain audited financial statements for one of its investments, Cotton Mill Elderly Living Center, L.P. ("Cotton Mill"), as of and for the year ended December 31, 2001. The Partnership's investment in Cotton Mill totaled $770,000 (unaudited) as of March 31, 2002. The results of operations recorded by the Partnership with respect to its investment in Cotton Mill during the year ended March 31, 2002 totaled $(244,000) (unaudited). The report of the other auditor contained an audit scope limitation paragraph for the effects of such adjustments and disclosures, if any, as might have been determined to be necessary had an audit of the 2001 financial statements of Cotton Mill been obtained. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audit and the reports of 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, 2003 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. /s/Reznick Fedder & Silverman Bethesda, Maryland April 21, 2004 17 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) BALANCE SHEETS
March 31 ---------------------------------- 2003 2002 -------------- ------------- (Restated) ASSETS Cash and cash equivalents $ 722,715 $ 751,327 Investments in limited partnerships, net (Notes 3 and 4) 13,562,908 14,585,268 Loan receivable (Note 2) - 50,000 Other assets 7,436 2,059 -------------- ------------- $ 14,293,059 $ 15,388,654 ============== ============= LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Liabilities: Payables to limited partnerships (Note 6) $ 246,175 $ 246,185 Accrued fees and advances due to General Partner and affiliate (Note 4) 42,903 43,577 -------------- ------------- Total liabilities 289,078 289,762 -------------- ------------- Commitments and contingencies Partners' equity (deficit) General partner (64,438) (53,489) Limited partners (25,000 units authorized; 20,500 units issued and outstanding) 14,068,419 15,152,381 -------------- ------------- Total partners' equity 14,003,981 15,098,892 -------------- ------------- $ 14,293,059 $ 15,388,654 ============== =============
See accompanying notes to financial statements 18 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) STATEMENTS OF OPERATIONS
For the Years Ended March 31 --------------------------------------------------------- 2003 2002 2001 -------------- ----------------- ---------------- (Restated) Interest income $ 10,418 $ 32,552 $ 118,871 Reporting fee income 13,343 1,250 13,885 -------------- ----------------- ---------------- Total income 23,761 33,802 132,756 -------------- ----------------- ---------------- Operating expenses: Amortization (Notes 3 and 4) 51,548 51,548 51,548 Management fees (Note 4) 63,893 59,808 58,310 Impairment on investment in Limited Partnership (Note 3) 231,646 - - Other 32,419 68,988 61,945 -------------- ----------------- ---------------- Total operating expenses 379,506 180,344 171,803 -------------- ----------------- ---------------- Loss from operations (355,745) (146,542) (39,047) Other expenses and losses: Equity in losses of limited partnerships (Note 3) (739,166) (1,136,238) (813,901) -------------- ----------------- ---------------- Total other expenses and losses (739,166) (1,136,238) (813,901) -------------- ----------------- ---------------- Net loss $ (1,094,911) $ (1,282,780) $ (852,948) ============== ================= ================ Net loss allocated to: General partner $ (10,949) $ (12,828) $ (8,529) ============== ================= ================ Limited partners $ (1,083,962) $ (1,269,952) $ (844,419) ============== ================= ================ Net loss per limited partner unit $ (52.88) $ (61.95) $ (41.19) ============== ================= ================ Outstanding weighted limited partner units 20,500 20,500 20,500 ============== ================= ================
See accompanying notes to financial statements 19 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) STATEMENTS OF PARTNERS' EQUITY (DEFICIT) For The Years Ended March 31, 2003, 2002 and 2001
General Limited Partner Partners Total --------------- --------------- --------------- Partners' equity (deficit) at March 31, 2000 $ (32,128) $ 17,262,098 $ 17,229,970 Collection of notes receivable - 5,000 5,000 Offering expenses (4) (346) (350) Net loss (8,529) (844,419) (852,948) --------------- --------------- --------------- Partners' equity (deficit) at March 31, 2001 (40,661) 16,422,333 16,381,672 Net loss (12,828) (1,269,952) (1,282,780) --------------- --------------- --------------- Partners' equity (deficit) at March 31, 2002 (53,489) 15,152,381 15,098,892 Net loss (Restated) (10,949) (1,083,962) (1,094,911) --------------- --------------- --------------- Partners' equity (deficit) at March 31, 2003 (Restated) $ (64,438) $ 14,068,419 $ 14,003,981 =============== =============== ===============
See accompanying notes to financial statements 20 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) STATEMENTS OF CASH FLOWS
For The Years Ended March 31 -------------------------------------------------- 2003 2002 2001 --------------- ------------ ------------- (Restated) Cash flows from operating activities: Net loss $ (1,094,911) $ (1,282,780) $ (852,948) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Amortization 51,548 51,548 51,548 Impairment loss on investment in Limited Partnership 231,646 - - Equity in losses of limited partnerships 739,166 1,136,238 813,901 Change in other assets (5,377) (1,889) 31,208 Change in accrued fees and expenses due to general partner and affiliates (674) 20,625 12,406 --------------- ------------ ------------- Net cash (used in) provided by operating activities (78,602) (76,258) 56,115 Cash flows from investing activities: Investments in limited partnerships, net (10) (335,137) (3,487,688) Loans receivable, net 50,000 - 104,878 Accrued and unpaid acquisition fees and advances due to affiliate of general partner - - (19,055) Distributions from limited partnerships - 9,835 (1,981) --------------- ------------ ------------- Net cash provided by (used in) investing 49,990 (325,302) (3,403,846) activities Cash flows from financing activities: Subscriptions receivable - - 5,000 Offering expenses - - (5,920) --------------- ------------ ------------- Net cash used in financing activities - - (920) Net change in cash and cash equivalents (28,612) (401,560) (3,348,651) Cash and cash equivalents, beginning of year 751,327 1,152,887 4,501,538 --------------- ------------ ------------- Cash and cash equivalents, end of year $ 722,715 $ 751,327 $ 1,152,887 =============== ============ ============= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Interest paid $ - $ 34,336 $ 17,633 =============== ============ ============= Taxes paid $ 800 $ 800 $ 800 =============== ============ =============
See accompanying notes to financial statements 21 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For The Years Ended March 31, 2003, 2002 and 2001 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"). The chairman and president own substantially all the outstanding stock of WNC. The business of the Partnership is conducted primarily through WNC, as the Partnership has no employees of its own. The Partnership shall continue in full force and effect until December 31, 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, 2003 and 2002, 20,500 units, representing subscriptions in the amount of $20,456,595, net of discounts of $27,305 for volume purchases and dealer discounts of $16,100 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. 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: 22 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued ------------------------------------------------------------------------------- Risks and Uncertainties, continued ---------------------------------- The Low Income Housing Credit rules are extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Credits and the fractional recapture of Low Income Housing Credits already taken. In most cases the annual amount of Low Income Housing Credits that an individual can use is limited to the tax liability due on the person's last $25,000 of taxable income. The Local Limited Partnerships may be unable to sell the Housing Complexes at a profit. Accordingly, the Partnership may be unable to distribute any cash to its investors. Low Income Housing Credits may be the only benefit from an investment in the Partnership. The Partnership 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 Low Income Housing Credits, a fractional recapture of prior Low Income Housing Credits, and a loss of the Partnership's investment in the Housing Complex would occur. The Partnership is a limited partner or non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership's investments in Local Limited Partnerships, nor the Local Limited Partnerships' investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and Low Income Housing Credits and recapture of Low Income Housing Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others. The ability of Limited Partners to claim tax losses from the Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Credits and tax losses allocable to the investors could be reduced if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in the Partnership. Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes. No trading market for the Units exists or is expected to develop. Investors may be unable to sell their Units except at a discount and should consider their Units to be a long-term investment. Individual investors will have no recourse if they disagree with actions authorized by a vote of the majority of Limited Partners. 23 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued ------------------------------------------------------------------------------- Exit Strategy ------------- The IRS compliance period for low-income housing tax credit properties is generally 15 years from occupancy following construction or rehabilitation completion. WNC was one of the first in the industry to offer investments using the tax credit. Now these very first programs are completing their compliance period. With that in mind, the Partnership is continuing to review the Partnership's holdings, with special emphasis on the more mature properties including those that have satisfied the IRS compliance requirements. The Partnership's review will consider many factors including extended use requirements on the property (such as those due to mortgage restrictions or state compliance agreements), the condition of the property, and the tax consequences to the investors from the sale of the property. Upon identifying those properties with the highest potential for a successful sale, refinancing or syndication, the Partnership expects to proceed with efforts to liquidate those properties. The Partnership's objective is to maximize the investors' return wherever possible and, ultimately, to wind down those funds that no longer provide tax benefits to investors. To date no properties in the Partnership have been selected. 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 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 a comparison of the carrying amount to future undiscounted net cash flows expected to be generated. If an investment is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the investment exceeds fair value. The accounting policies of the Local Limited Partnerships are generally consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment and amortized over 30 years (see Note 3). Equity in losses from Local Limited Partnerships for the years ended March 31, 2003, 2002 and 2001 have been recorded by the Partnership based on nine months of reported results provided by the Local Limited Partnerships and on three months of results estimated by management of the Partnership. Management's estimate for the three-month period is based on either actual unaudited results reported by the Local Limited Partnerships or historical trends in the operations of the Local Limited Partnerships. Equity in losses of Local Limited Partnerships allocated to the Partnership will not be 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 accelerated to the extent of losses available. A loss in value from a Local Limited Partnership other than a temporary decline would be recorded as an impairment loss. Impairment is measured by comparing the investment carrying amount to the sum of the total amount of the remaining tax credits allocated to the fund and the estimated residual value of the investment. Accordingly, the Partnership recorded an impairment loss of $231,646, during the year ended March 31, 2003. 24 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001 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 $2,817,761 at the end of all periods presented. Use of Estimates ---------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Cash and Cash Equivalents ------------------------- The Partnership considers all highly liquid investments with remaining maturities of three months or less when purchased to be cash equivalents. The Partnership had no cash equivalents at the end of all periods presented. Concentration of Credit Risk ---------------------------- At March 31, 2003, 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 partner unit is calculated pursuant to Statement of Financial Accounting Standards No. 128, Earnings Per Share. Net income per unit includes no dilution and is computed by dividing income available to limited partners by the weighted average number of units outstanding during the period. Calculation of diluted net income per unit is not required. Reporting Comprehensive Income ------------------------------ The Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income established standards for the reporting and display of comprehensive income (loss) and its components in a full set of general-purpose financial statements. The Partnership had no items of other comprehensive income during the years ended March 31, 2003, 2002 and 2001, as defined by SFAS No. 130. 25 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued ------------------------------------------------------------------------------- New Accounting Pronouncements ----------------------------- In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations", which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred with the associated asset retirement costs being capitalized as a part of the carrying amount of the long-lived asset. SFAS No. 143 also includes disclosure requirements that provide a description of asset retirement obligations and reconciliation of changes in the components of those obligations. The statement is effective for fiscal years beginning after June 15, 2002. The Partnership does not expect the adoption of SFAS No. 143 to have a material effect on the Partnership's financial position or results of operations. In August 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of Long-Lived Assets," which addresses accounting and financial reporting for the impairment or disposal of long-lived assets. This standard was effective for the Partnership's financial statements beginning January 1, 2002. The implementation of SFAS No. 144 did not have a material impact on the Partnership's financial position or results of operations. In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No. 145 rescinded three previously issued statements and amended SFAS No. 13, "Accounting for Leases." The statement provides reporting standards for debt extinguishments and provides accounting standards for certain lease modifications that have economic effects similar to sale-leaseback transactions. The statement is effective for certain lease transactions occurring after May 15, 2002 and all other provisions of the statement shall be effective for financial statements issued on or after May 15, 2002. The implementation of SFAS No. 145 did not have a material impact on the Partnership's financial position or results of operations. In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which updates accounting and reporting standards for personnel and operational restructurings. The Partnership adopted SFAS No. 146 for exit, disposal or other restructuring activities initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material effect on the Partnership's financial position or results of operations. In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." The adoption of FIN 45 did not have a material impact on the Partnership's financial position or results of operations. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an Amendment to SFAS No. 123." SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method on accounting for stock-based employee compensation. The implementation of SFAS No. 148 is not expected to have a material effect on the Partnership's financial position or results of operations. 26 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued ------------------------------------------------------------------------------- In January 2003, the FASB issued Interpretation No. 46 ("FIN46"), "Consolidation of Variable Interest Entities," FIN 46 provides guidance on when a company should include the assets, liabilities, and activities of a variable interest entity ("VIE'') in its financial statements and when it should disclose information about its relationship with a VIE. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it absorbs the majority of the entity's expected losses, the majority of the expected returns, or both. The provisions of FIN 46 were effective February 1, 2003 for all arrangements entered into after January 31, 2003. FIN 46 is effective in the second quarter of 2004 for those arrangements entered into prior to January 31, 2003. We are currently reviewing whether we have relationships with VIEs and, if so, whether we should consolidate them and disclose information about them as the primary beneficiary or disclose information about them as an interest holder. We may have to consolidate some of our equity investments in partnerships based on recent interpretations from accounting professionals. We currently record the amount of our investment in these partnerships as an asset on our balance sheet, recognize our share of partnership income or losses in our income statement, and disclose how we account for material types of these investments in our 2003 financial statements. However, we do not yet know the extent of the impact of consolidating the assets and liabilities of these partnerships on our balance sheet because of the complexities of applying FIN 46, the evolving interpretations from accounting professionals, and the nuances of each individual partnership. NOTE 2 - LOAN RECEIVABLE ------------------------ Loans receivable represent amounts loaned by the Partnership to certain Local Limited Partnerships in which the Partnership may invest. These loans are generally 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 (11.5% and 11.5% at March 31, 2003 and 2002, respectively). A loan receivable with a balance of $50,000 at March 31, 2002 was due from one Local Limited Partnership, in which an interest was not acquired. As of March 31, 2003, the loan had been repaid. NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS -------------------------------------------- As of March 31, 2003, the Partnership had acquired Limited Partnership interests in fifteen Local Limited Partnerships, respectively, each of which owns one Housing Complex, except for one Local Limited Partnership which owns three Housing Complexes, consisting of an aggregate of 608 apartment units. The respective Local General Partners of the Local Limited Partnerships manage the day-to-day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership. The Partnership, as a limited partner, is generally entitled to 99.9%, 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 reflected in the balance sheets at March 31, 2003 and 2002 are approximately $1,148,000 and $2,193,000, respectively, greater than the Partnership's equity at the preceding December 31 as shown in the Local Limited Partnerships' combined financial statements presented below. 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 in the Local Limited Partnership's financial statements (see Note-6). The Partnership's investment is also lower than the Partnership's equity as shown in the Local Limited Partnership's combined financial statements due to the estimated losses recorded by the Partnership for the three month period ended March 31. 27 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001 NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued ------------------------------------------------------- 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 from the Local Limited Partners are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as income. As of March 31, 2003, no investment accounts in Local Limited Partnerships had reached a zero balance. Following is a summary of the equity method activity of the investments in the Local Limited Partnerships for the periods presented:
For The Years Ended March 31, ------------------------------------------------------- 2003 2002 2001 ------------- -------------- -------------- (Restated) Investments per balance sheet, beginning of period $ 14,585,268 $ 15,439,696 $ 13,829,634 Capital contributions paid, net - 298,125 2,403,096 Capital contributions to be paid - 52,605 36,689 Impairment loss on investment in Limited Partnership (231,646) - - Equity in losses of limited partnerships (739,166) (1,136,238) (813,901) Tax credit adjustments - (7,537) 33,745 Amortization of paid acquisition fees and costs (51,548) (51,548) (51,548) Distributions received from limited partnerships - (9,835) 1,981 ------------- -------------- -------------- Investment per balance sheet, end of period $ 13,562,908 $ 14,585,268 $ 15,439,696 ============= ============== ==============
28 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001 NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued ------------------------------------------------------- The financial information from the individual financial statements of the Limited Partnerships include rental and interest subsidies. Rental subsidies are included in total revenues and interest subsidies are generally netted in interest expense. Approximate combined condensed financial information from the individual financial statements of the Local Limited Partnerships as of December 31 and for the years then ended is as follows (Combined condensed financial information for Cotton Mill has been excluded from the 2001 and 2000 presentations below): COMBINED CONDENSED BALANCE SHEETS
2002 2001 ---------------- ---------------- ASSETS (Restated) Buildings and improvements (net of accumulated depreciation for 2002 and 2001 of $3,988,000 and $2,815,000, respectively) $ 30,692,000 $ 28,712,000 Land 1,714,000 1,414,000 Construction in progress - 170,000 Due from affiliates 170,000 447,000 Other assets 1,391,000 1,312,000 ---------------- ---------------- $ 33,967,000 $ 32,055,000 ================ ================ LIABILITIES AND PARTNERS' EQUITY Mortgage and construction loans payable $ 16,492,000 $ 14,816,000 Due to affiliates 1,775,000 1,791,000 Other liabilities 471,000 463,000 ---------------- ---------------- 18,738,000 17,070,000 ---------------- ---------------- PARTNERS' CAPITAL WNC Housing Tax Credit Fund VI, L.P., Series 6 12,415,000 12,392,000 Other partners 2,814,000 2,593,000 ---------------- ---------------- 15,229,000 14,985,000 ---------------- ---------------- $ 33,967,000 $ 32,055,000 ================ ================
29 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued ------------------------------------------------------- COMBINED CONDENSED STATEMENTS OF OPERATIONS 2002 2001 2000 ----------------- ----------------- ------------------- (Restated) Revenues $ 2,835,000 $ 2,385,000 $ 2,131,000 ----------------- ----------------- ------------------- Expenses: Operating expenses 1,768,000 1,569,000 1,300,000 Interest expense 674,000 610,000 602,000 Depreciation and amortization 1,251,000 1,086,000 981,000 ----------------- ----------------- ------------------- Total expenses 3,693,000 3,265,000 2,883,000 ----------------- ----------------- ------------------- Net loss $ (858,000) $ (880,000) $ (752,000) ================= ================= =================== Net loss allocable to the Partnership, before equity in losses of Cotton Mill $ (840,000) $ (862,000) $ (734,000) ================= ================= =================== Net loss recorded by the Partnership, before equity in income (losses) of Cotton Mill (for 2001 and 2000) $ - $ (892,000) $ (789,000) Net loss of Cotton Mill recorded by the Partnership (unaudited) (for 2001 and 2000) - (244,000) (25,000) ----------------- ----------------- ------------------- Net loss recorded by the Partnership $ (739,000) $ (1,136,000) $ (814,000) ================= ================= ===================
Certain Local Limited Partnerships have incurred significant operating losses and/or have working capital deficiencies. In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or the Local General Partner 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 tax credits could occur. NOTE 4 - RELATED PARTY TRANSACTIONS ----------------------------------- Under the terms of the Partnership Agreement, the Partnership has paid or 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, 2003 and 2002, the Partnership incurred acquisition fees of $1,435,000. Accumulated amortization of these capitalized costs was $193,710 and $145,874 for March 31, 2003 and 2002, respectively. 30 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001 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 have not exceeded 1.5% of the gross proceeds. As of March 31, 2003 and 2002, the Partnership incurred acquisition costs of $111,334, which have been included in investments in limited partnerships. Accumulated amortization was $14,812 and $11,100 as of March 31, 2003 and 2002, 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 $63,893, $59,808 and $58,310, were incurred during the years ended March 31, 2003, 2002 and 2001, respectively, of which $65,110, $40,548 and $53,904, were paid during the years ended March 31, 2003, 2002 and 2001, respectively. 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 -------------------------------- 2003 2002 ------------- --------------- Asset management fee payable $ 32,995 $ 34,212 Reimbursement for expenses paid by the General partner or an affiliate 9,908 9,365 ------------- --------------- $ 42,903 $ 43,577 ============= ===============
31 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001
NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) ---------------------------------------------------- The following is a summary of the quarterly operations for the years ended March 31, 2003 and 2002: June 30 September 30 December 31 March 31 --------------- --------------- --------------- --------------- (Restated) 2003 ---- Income $ 3,000 $ 3,000 $ 2,000 $ 16,000 Operating expenses (36,000) (38,000) (37,000) (269,000) Equity in losses of limited partnerships (265,000) (265,000) (176,000) (33,000) Net loss (298,000) (300,000) (211,000) (286,000) Net loss available to limited partners (295,000) (297,000) (209,000) (283,000) Net loss per limited partnership unit (14) (15) (10) (14) 2002 ---- Income $ 15,000 $ 5,000 $ 9,000 $ 4,000 Operating expenses (51,000) (42,000) (36,000) (51,000) Equity in losses of limited partnerships (190,000) (189,000) (281,000) (476,000) Net loss (226,000) (226,000) (308,000) (523,000) Net loss available to limited partners (224,000) (223,000) (306,000) (517,000) Net loss per limited partnership unit (11) (11) (15) (25)
32 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001
NOTE 6 - PAYABLES TO LIMITED PARTNERSHIPS ----------------------------------------- Payables to limited partnerships represent amounts which are due at various times based on conditions specified in the Local Limited Partnership agreements. These contributions are payable in installments and are generally due upon the limited partnerships achieving certain operating and development benchmarks (generally within two years of the Partnership's initial investment). 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 - RESTATEMENT -------------------- The Partnership, as a limited partner or limited liability company member in each Local Limited Partnership, may be unable to affect the selection or monitor the progress of the auditors of a Local Limited Partnership. The partnership agreement or operating agreement of each Local Limited Partnership includes disincentives for the failure of the Local Limited Partnership to timely deliver audited financial statements to the Partnership. However, there can be no absolute assurance that the Partnership will be able to timely obtain audited financial statements from each Local Limited Partnership. In such a case, the Partnership might estimate its interest in the results of the operations of the Local Limited Partnership. For the Partnership fiscal years ended March 31, 2003 and 2002, the Partnership was unable to obtain audited financial statements from one of its Local Limited Partnerships, Cotton Mill Elderly Living Center L.P. ("Cotton Mill"), as of and for the Cotton Mill fiscal years ended December 31, 2002 and 2001. Subsequent to the filing date of the Partnership's original Form 10-K for the period ended March 31, 2003, the Partnership obtained the audited financial statements of Cotton Mill for the Cotton Mill fiscal years ended December 31, 2002 and 2001. Additionally, as a result of the Partnership's assessment of the carrying value of the investment in Kechel Towers, L.P., the Partnership reduced the carrying value of its investments in that Local Limited Partnership by $231,646. As a result, the Partnership has restated its financial statements for the year ended March 31, 2003 to reflect the differences in the Partnership's estimated interest in the results of the operations in Cotton Mill, and the Partnership's actual interest in Cotton Mill based on the audited financial statements of Cotton Mill for the Cotton Mill fiscal year ended December 31, 2002. The Partnership has not restated its financial statements for the year ended March 31, 2002; the differences in the Partnership's estimated interest in the results of the operations in Cotton Mill, and the Partnership's actual interest in Cotton Mill based on the audited financial statements of Cotton Mill for the Cotton Mill fiscal year ended December 31, 2001 were deemed by the Partnership not to be material to the financial statements of the Partnership for the year ended March 31, 2002. The following table shows the effect of the restatement on the Balance Sheet as previously reported: Year Ending March 31, 2003 --------------------------------------------- As Previously As Restated Reported --------------------- ------------------- Investment in limited partnerships, net $ 13,562,908 $ 13,763,028 Total assets 14,293,059 14,493,179 Partners' equity (deficit) General parnter (64,438) (62,437) Limited partners 14,068,419 14,266,538 Total partners' equity 14,003,981 14,204,101
33 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001
NOTE 8 - RESTATEMENT, continued ------------------------------- The following table shows the effect of the restatement on the Statement of Operations as previously reported: Year Ending March 31, 2003 ---------------------------------------------- As Previously As Restated Reported --------------------- ------------------- Equity in losses of limited partnerships $ (739,166) $ (770,692) Net loss (1,094,911) (894,791) Net loss allocated to: General partner (10,949) (8,948) Limited partners (1,083,962) (885,843) Net loss per limited partner unit (52.88) (43.21) The following table shows the effect of the restatement on the Statement of Partners' Equity (Deficit) as previously reported: Year Ending March 31, 2003 --------------------------------------------- As Previously As Restated Reported ------------------- ------------------ General Partner Partners' equity (deficit) at March 31, 2002 $ (53,489) $ (53,489) Net loss (10,949) (8,948) ---------------- -------------- Partners' equity (deficit)at March 31, 2003 (64,438) (62,437) Limited Partners Partners' equity (deficit) at March 31, 2002 15,152,381 15,152,381 Net loss (1,083,962) (885,843) ---------------- -------------- Partners' equity (deficit)at March 31, 2003 14,068,419 14,266,538 Total Partners' equity (deficit) at March 31, 2002 15,098,892 15,098,892 Net loss (1,094,911) (894,791) ---------------- -------------- Partners' equity (deficit)at March 31, 2003 14,003,981 14,204,101
34 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2003, 2002 and 2001
NOTE 8 - RESTATEMENT, continued ------------------------------- The following table shows the effect of the restatement on the Statement of Cash Flows as previously reported: Year Ending March 31, 2003 ---------------------------------------------- As Previously As Restated Reported --------------------- ------------------- Cash flows from operating activities: Net loss $ (1,094,911) $ (894,791) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Impairment loss on investment in Limited Partnership 231,646 - Equity in losses of limited partnerships (739,166) (770,692)
35
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure NOT APPLICABLE PART III. Item 10. Directors and Executive Officers of the Registrant (a) Identification of Directors, (b) Identification of Executive Officers, (c) --------------------------------------------------------------------------- Identification of Certain Significant Employees, (d) Family Relationships, --------------------------------------------------------------------------- and (e) Business Experience --------------------------- The Partnership has no directors, executive officers or employees of its own. The following biographical information is presented for the directors, executive officers and significant employees of Associates, which has principal responsibility for the Partnership's affairs. Associates is a California corporation which was organized in 1971. Its officers and significant employees are: Wilfred N. Cooper, Sr. Chairman of the Board Wilfred N. Cooper, Jr. President and Chief Executive Officer David N. Shafer, Esq. Executive Vice President and Director of Asset Management Sylvester P. Garban Senior Vice President - Institutional Investments David C. Turek Senior Vice President - Originations Thomas J. Riha, CPA Vice President - Chief Financial Officer Michael J. Gaber Vice President - Acquisitions Diemmy T. Tran Vice President - Portfolio Management J. Brad Hurlbut Director of Syndications
In addition to Wilfred N. Cooper, Sr., the directors of Associates are Wilfred N. Cooper, Jr., David N. Shafer, and Kay L. Cooper. The principal shareholder of Associates is a trust established by Wilfred N. Cooper, Sr. Wilfred N. Cooper, Sr., age 72, is the founder and Chairman of the Board of Directors of Associates, a Director of WNC Capital Corporation, and a general partner in some of the partnerships previously sponsored by Associates. Mr. Cooper has been actively involved in the affordable housing industry since 1968. Previously, during 1970 and 1971, he was founder and a principal of Creative Equity Development Corporation, a predecessor of Associates, and of Creative Equity Corporation, a real estate investment firm. For 12 years before that, Mr. Cooper was employed by Rockwell International Corporation, last serving as its manager of housing and urban developments where he had responsibility for factory-built housing evaluation and project management in urban planning and development. He has testified before committees of the U.S. Senate and the U.S. House of Representatives. Mr. Cooper is a Life Director of the National Association of Home Builders and a National Trustee for NAHB's Political Action Committee, and the Chairman of NAHB's Multifamily Council. He is a Director of the National Housing Conference and a member of NHC's Executive Committee, and a founder and Director of the California Housing Consortium. He is the husband of Kay Cooper and the father of Wilfred N. Cooper, Jr. Mr. Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree. Wilfred N. Cooper, Jr., age 40, is President, Chief Executive Officer, Secretary and a Director and a member of the Acquisition Committee of Associates. He is President of, and a registered principal with, WNC Capital Corporation, and is a Director of WNC Management, Inc. He has been involved in real estate investment and acquisition activities since 1988 when he joined Associates. Previously, he served as a Government Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of the Editorial Advisory Boards of Affordable ---------- Housing Finance and LIHC Monthly Report, a Steering Member of the Housing Credit --------------- ------------------- Group of the National Association of Home Builders, an Alternate Director of NAHB, a member of the Advisory Board of the New York State Association for Affordable Housing and a member of the Urban Land Institute. He is the son of Wilfred Cooper, Sr. and Kay Cooper. Mr. Cooper graduated from The American University in 1985 with a Bachelor of Arts degree. 36 David N. Shafer, age 50, is Executive Vice President, a Director, Director of Asset Management and a member of the Acquisition Committee of Associates, and a Director and Secretary of WNC Management, Inc. Mr. Shafer has been active in the real estate industry since 1984. Before joining Associates in 1990, he was engaged as an attorney in the private practice of law with a specialty in real estate and taxation. Mr. Shafer is a Director and President of the California Council of Affordable Housing, and a member of the State Bar of California. Mr. Shafer graduated from the University of California at Santa Barbara in 1978 with a Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris Doctor degree cum laude and from the University of San Diego in 1986 with a Master of Law degree in Taxation. Sylvester P. Garban, age 57, is Senior Vice President - Institutional Investments of Associates. Mr. Garban has been involved in real estate investment activities since 1978. Before joining Associates in 1989, he served as Executive Vice President with MRW, Inc., a real estate development and management firm. Mr. Garban is a member of the National Association of Affordable Housing Lenders and the Financial Planning Association. He graduated from Michigan State University in 1967 with a Bachelor of Science degree in Business Administration. David C. Turek, age 48, is Senior Vice President - Originations of Associates. His experience with real estate investments and finance has continued since 1976, and he has been employed by Associates since 1996. Previously, from 1995 to 1996, Mr. Turek served as a consultant for a national tax credit sponsor where he was responsible for on-site feasibility studies and due diligence analyses of tax credit properties. From 1992 to 1995 he served as Executive Vice President for Levcor, Inc., a multi-family development company, and from 1990 to 1992 he served as Vice President for the Paragon Group where he was responsible for tax credit development activities. He is a Director of the National Housing and Rehabilitation Association, the Rural Rental Housing Association of Texas, and the Alabama Council of Affordable Rental Housing. Mr. Turek graduated from Southern Methodist University in 1976 with a Bachelor of Business Administration degree. Thomas J. Riha, age 47, is Vice President - Chief Financial Officer and a member of the Acquisition Committee of Associates and President, Treasurer and a Director of WNC Management, Inc. He has been involved in real estate acquisition and investment activities since 1979. Before joining Associates in 1994, Mr. Riha was employed by Trust Realty Advisor, a real estate acquisition and management company, last serving as Vice President - Operations. He is a Director of the Task Force on Housing Credit Certification of the National Association of Home Builders. Mr. Riha graduated from the California State University, Fullerton in 1977 with a Bachelor of Arts degree cum laude in Business Administration with a concentration in Accounting and is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants. Michael J. Gaber, age 37, is Vice President - Acquisitions and a member of the Acquisition Committee of Associates. Mr. Gaber has been involved in real estate acquisition, valuation and investment activities since 1989 and has been associated with Associates since 1997. Prior to joining Associates, he was involved in the valuation and classification of major assets, restructuring of debt and analysis of real estate taxes with H.F. Ahmanson & Company, parent of Home Savings of America. Mr. Gaber graduated from the California State University, Fullerton in 1991 with a Bachelor of Science degree in Business Administration - Finance. Diemmy T. Tran, age 37, is Vice President - Portfolio Management of Associates. She is responsible for overseeing portfolio management and investor reporting for all WNC funds, and for monitoring investment returns for all WNC institutional funds. Ms. Tran has been involved in real estate asset management and finance activities for 12 years. Prior to joining Associates in 1998, Ms. Tran served as senior asset manager for a national Tax Credit sponsor and as an asset specialist for the Resolution Trust Corporation where she was responsible for the disposition and management of commercial loan and REO portfolios. Ms. Tran is licensed as a California real estate broker. She graduated from California State University, Northridge in 1989 with a Bachelor of Science degree in finance and a minor in real estate. J. Brad Hurlbut, age 43, is Director of Syndications of Associates. He is responsible for the financial structuring of WNC's institutional funds. Mr. Hurlbut has 20 years of experience in real estate investment and development. Prior to joining WNC in 2000, he served as corporate controller for Great Western Hotels Corporation. Mr. Hurlbut has been an enrolled agent licensed to practice before the IRS since 1984. He graduated from the University of Redlands in 1981 with a Bachelor of Science degree in business management and from California State University, Fullerton in 1985 with a Master of Science degree in taxation. Kay L. Cooper, age 66, is a Director of Associates. Mrs. Cooper was the sole proprietor of Agate 108, a manufacturer and retailer of home accessory products, from 1975 until its sale in 1998. She is the wife of Wilfred Cooper, Sr. and the mother of Wilfred Cooper, Jr. Mrs. Cooper graduated from the University of Southern California in 1958 with a Bachelor of Science degree. 37 (f) Involvement in Certain Legal Proceedings ---------------------------------------- Inapplicable. (g) Promoters and Control Persons ----------------------------- Inapplicable. (h) Audit Committee Financial Expert -------------------------------- Neither the Partnership nor Associates has an audit committee. Item 11. Executive Compensation The Partnership has no officers, employees, or directors. However, under the terms of the Partnership Agreement the Partnership is obligated to the General Partner or its affiliates for the following fees: (a) 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 $63,893, $59,808 and $58,310 were incurred during the years ended March 31, 2003, 2002 and 2001, respectively, of which $65,110, $40,548 and $53,904 were paid for the years ended March 31, 2003, 2002 and 2001, respectively. (b) 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. (c) Operating Expenses. The Partnership reimbursed the General Partner or its affiliates for operating expenses of approximately $44,000, $33,000 and $46,000 during the years ended March 31, 2003, 2002 and 2001, respectively. (d) Interest in Partnership. The General Partner receives 1% of the Partnership's allocated Low Income Housing Credits, which approximated $21,000, $0 and $0 for the General Partner for the years ended March 31, 2003, 2002 and 2001,respectivley. The General Partner is also entitled to receive 1% of cash distributions. There were no distributions of cash to the General Partner during the years ended March 31, 2003, 2002 and 2001. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (a) Securities Authorized for Issuance Under Equity Compensation Plans ------------------------------------------------------------------ Inapplicable 38 (b) Security Ownership of Certain Beneficial Owners ----------------------------------------------- No person is known to own beneficially in excess of 5% of the outstanding units. (c) Security Ownership of Management -------------------------------- Neither the General Partner, its affiliates, nor any of the officers or directors of the General Partner or its affiliates own directly or beneficially any Units in the Partnership. (d) Changes in Control ------------------ The management and control of the General Partner and of Associates may be changed at any time in accordance with their respective organizational documents, without the consent or approval of the Limited Partners. In addition, the Partnership Agreement provides for the admission of one or more additional and successor General Partners in certain circumstances. First, with the consent of any other General Partners and a majority-in-interest of the Limited Partners, any General Partner may designate one or more persons to be successor or additional General Partners. In addition, any General Partner may, without the consent of any other General Partner or the Limited Partners, (i) substitute in its stead as General Partner any entity which has, by merger, consolidation or otherwise, acquired substantially all of its assets, stock or other evidence of equity interest and continued its business, or (ii) cause to be admitted to the Partnership an additional General Partner or Partners if it deems such admission to be necessary or desirable so that the Partnership will be classified a partnership for Federal income tax purposes. Finally, a majority-in-interest of the Limited Partners may at any time remove the General Partner of the Partnership and elect a successor General Partner. Item 13. Certain Relationships and Related Transactions The General Partner manages all of the Partnership's affairs. The transactions with the General Partner are primarily in the form of fees paid by the Partnership for services rendered to the Partnership, reimbursement of expenses, and the General Partner's interest in the Partnership, as discussed in Item 11 and in the notes to the Partnership's financial statements. Item 14. Controls and Procedures Associates, on behalf of the Partnership, maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission ("SEC") is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on their most recent evaluation, which was completed within 90 days of the filing of this Annual Report on Form 10-K, our Principal Executive Officer and Principal Financial Officer believe that our disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934, as amended) are effective. There were no significant changes in internal controls or in other factors that could significantly affect these internal controls subsequent to the date of their most recent evaluation. 39 PART IV. Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a)(1) Financial statements included in Part II hereof: ------------------------------------------------ Report of Independent Certified Public Accountants Balance Sheets, March 31, 2003 and 2002 Statements of Operations for the years ended March 31, 2003, 2002 and 2001 Statements of Partners' Equity (Deficit) for the years ended March 31, 2003, 2002 and 2001 Statements of Cash Flows for the years ended March 31, 2003, 2002 and 2001 Notes to Financial Statements (a)(2) Financial statement schedules included in Part IV hereof: --------------------------------------------------------- Report of Independent Certified Public Accountants on Financial Statement Schedules Schedule III, Real Estate Owned by Local Limited Partnerships (b) Reports on form 8-K ------------------- NONE (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 Village 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 Associates 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. 10.6 Amended and Restated Agreement of Limited Partnership of Preservation Partners I Limited Partnership filed as Exhibit 10.1 to the current report on Form 8-K dated January 29, 1999, is herein incorporated by reference as Exhibit 10.6. 40 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. 10.8 Amended and Restated Agreement of Limited Partnership of Ottawa I Limited Partnership filed as Exhibit 10.2 to the current report on Form 8-K dated January 29, 1999, is herein incorporated by reference as Exhibit 10.8. 10.9 Amended and Restated Agreement of Limited Partnership of Summer Wood, Ltd. Filed as Exhibit 10.1 to the current report on Form 8-K dated May 7, 1999, is herein incorporated by reference as Exhibit 10.9. 10.10 Amended and Restated Agreement of Limited Partnership of West Mobile County Housing Ltd filed as Exhibit 10.1 to the current report on Form 8-K dated July 16, 1999, is herein incorporated by reference as Exhibit 10.10. 10.11 Amended and Restated Agreement of Limited Partnership of Cotton Mill Elderly Living Center, L.P. filed as Exhibit 10.11 to the current report Form 10-K dated August 10, 2000, is herein incorporated by reference as Exhibit 10.11. 10.12 Amended and Restated Agreement of Limited Partnership of Country Club Investors, L.P. filed as Exhibit 10.12 to the current report Form 10-K dated August 10, 2000, is herein incorporated by reference as Exhibit 10.12. 10.13 Amended and Restated Agreement of Limited Partnership of Kechel Tower L.P. filed as Exhibit 10.13 to the current report Form 10-K dated August 10, 2000, is herein incorporated by reference as Exhibit 10.13. 10.14 Amended and Restated Agreement of Limited Partnership of St. Susanne Associates I, L.P. filed as Exhibit 10.14 to the current report Form 10-K dated August 10, 2000, is herein incorporated by reference as Exhibit 10.14. 10.15 Amended and Restated Agreement of Limited Partnership of Boonville Associates I, L.P. filed as Exhibit 10.15 to the current report Form 10-K dated July 31, 2001, is herein incorporated by reference as Exhibit 10.15. 10.16 Amended and Restated Agreement of Limited Partnership of Wagner Partnership 99 Limited Partnership filed as Exhibit 10.16 to the current report Form 10-K dated July 31, 2001, is herein incorporated by reference as Exhibit 10.16. 31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-15(e) and 15d-15(e), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) 31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-15(e) and 15d-15(e), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) 32.1 Certification of the Principal Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) 32.2 Certification of the Principal Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) (d) Financial statement schedules follow as set forth in subsection (a)(2) ---------------------------------------------------------------------- hereof. ------- 41 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Partners WNC Housing Tax Credit Fund VI, L.P., Series 6 The audit referred to in our report dated April 21, 2004 relating to the 2003 financial statements of WNC Housing Tax Credit Fund VI, L.P., Series 6 (the "Partnership"), which are contained in Item 8 of this Form 10-K, included the audit of the accompanying financial statement schedule "Real Estate Owned by Local Limited Partnerships March 31, 2003." This financial statement schedule is the responsibility of the Partnership's management. Our responsibility is to express an opinion on this financial statement schedule based upon our audit. The 2002 financial statements were audited by other auditors, whose audit included the audit of the accompanying financial statement schedules for 2002 contained in Item 8 of this Form 10-K. Their report thereon, dated June 4, 2003, contained an audit scope limitation paragraph describing the inability of the Partnership to obtain audited financial statements of one Local Limited Partnership. In our opinion, based on our audit and the reports of the other auditors, such financial statement schedule referred to above presents fairly, in all material respects, the information set forth therein. /s/Reznick Fedder & Silverman Bethesda, Maryland April 21, 2004 42 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2003
------------------------------- --------------------------------------------------- As of March 31, 2003 As of December 31, 2002 ------------------------------------------------------------------------------------ Total Original Encumbrances Total Investment Amount of of Local in Local Limited Investment Limited Property and Accumulated Net Book Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value ------------------------------------------------------------------------------------------------------------------------------------ (Restated) (Restated) (Restated) (Restated) Boonville Boonville, Associates I, L.P. Missouri $ 2,195,000 $ 2,195,000 $ 785,000 $ 3,916,000 $ 203,000 $ 3,713,000 Brighton Ridge Edgefield, Limited Partnership South Carolina 926,000 926,000 969,000 2,383,000 310,000 2,073,000 Cotton Mill Elderly Rock Island, Living Center, L.P. Illinois 1,040,000 1,040,000 768,000 2,114,000 137,000 1,977,000 Country Club Richmond, Investors, L.P. Virginia 305,000 305,000 2,714,000 3,741,000 744,000 2,997,000 Desloge Associates Desloge, I, L.P. Missouri 1,059,000 1,059,000 592,000 2,072,000 262,000 1,810,000 Kechel Logansport, Towers, L.P. Indiana 1,348,000 1,191,000 259,000 1,895,000 219,000 1,676,000 Ottowa I, Oglesby, L.P. Illinois 403,000 403,000 1,481,000 2,036,000 338,000 1,698,000 Preservation Pontiac and Partners I, Taylorville, L.P. Illinois 514,000 514,000 2,013,000 2,689,000 448,000 2,241,000 St. Susanne Mt. Vernon, Associates I, L.P. Missouri 255,000 255,000 654,000 996,000 70,000 926,000 Summer Wood, Camden, Ltd. Alabama 1,237,000 1,237,000 947,000 2,117,000 257,000 1,860,000 Trenton Village Trenton, Apartments, L.P. Missouri 1,018,000 1,018,000 681,000 2,122,000 172,000 1,950,000
43 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2003
------------------------------- --------------------------------------------------- As of March 31, 2003 As of December 31, 2002 ------------------------------------------------------------------------------------ Total Original Encumbrances Total Investment Amount of of Local in Local Limited Investment Limited Property and Accumulated Net Book Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value ------------------------------------------------------------------------------------------------------------------------------------ (Restated) (Restated) (Restated) (Restated) United Development Memphis, Co. 97.0, L.P. Tennessee 2,813,000 2,813,000 1,280,000 4,448,000 563,000 3,885,000 Wagner Partnership Wagner, Associates I, L.P. South Dakota 245,000 208,000 779,000 1,281,000 50,000 1,231,000 West Liberty Family West Liberty, Apartments, Ltd. Kentucky 351,000 298,000 1,211,000 1,491,000 7,000 1,484,000 West Mobile County Theodore, Housing, Ltd. Alabama 1,858,000 1,858,000 1,359,000 3,230,000 345,000 2,885,000 ------------- ------------- ------------- ------------- ------------ ------------- $ 15,567,000 $ 15,320,000 $ 16,492,000 $ 36,531,000 $ 4,125,000 $ 32,406,000 ============= ============= ============= ============= ============ =============
44 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2003
------------------------------------------------------------------------------- For the Year Ended December 31, 2002 ------------------------------------------------------------------------------- Year Investment Estimated Completion Partnership Name Rental Income Net Loss Acquired Date -------------------------------------------------------------------------------------------------------------------- (Restated) (Restated) Boonville Associates I, L.P. $ 163,000 $ (98,000) 2000 2001 Brighton Ridge Limited Partnership 242,000 (41,000) 1998 1999 Cotton Mill Elderly Living Center, L.P. 138,000 (92,000) 1999 2000 Country Club Investors, L.P. 560,000 (48,000) 1999 1998 Desloge Associates I, L.P. 93,000 (54,000) 1998 1999 Kechel Towers, L.P. 96,000 (67,000) 1998 1999 Ottawa I, L.P. 143,000 (67,000) 1999 1999 Preservation Partners I, L.P. 271,000 (72,000) 1999 1999 St. Susanne Associates I, L.P. 69,000 (17,000) 1999 2000 Summer Wood Ltd. 77,000 (76,000) 1999 1999 Trenton Village Apartments, L.P. 111,000 (16,000) 1998 1999 United Development Co. 97.0, L.P. 471,000 (79,000) 1998 1999 Wagner Partnership 99 Limited Partnership 95,000 (22,000) 2000 2001 West Liberty Family Apartments, Ltd. 3,000 (6,000) 2001 2002 West Mobile County Housing, Ltd. 209,000 (103,000) 1999 2000 ------------ ------------ $ 2,741,000 $ (858,000) ============ ============
45 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2002
------------------------------- --------------------------------------------------- As of March 31, 2002 As of December 31, 2001 ------------------------------------------------------------------------------------ Total Original Encumbrances Total Investment Amount of of Local in Local Limited Investment Limited Property and Accumulated Net Book Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value ------------------------------------------------------------------------------------------------------------------------------------ Boonville Boonville, Associates I, L.P. Missouri $ 2,195,000 $ 2,195,000 $ 808,000 $ 3,881,000 $ 49,000 $ 3,832,000 Brighton Ridge Edgefield, Limited Partnership South Carolina 926,000 926,000 1,012,000 2,378,000 234,000 2,144,000 Cotton Mill Elderly Rock Island, Living Center, L.P. Illinois 1,040,000 1,040,000 * * * * Country Club Richmond, Investors, L.P. Virginia 305,000 305,000 2,747,000 3,727,000 625,000 3,102,000 Desloge Associates Desloge, I, L.P. Missouri 1,059,000 1,059,000 604,000 2,071,000 185,000 1,886,000 Kechel Logansport, Towers, L.P. Indiana 1,348,000 1,191,000 517,000 1,895,000 152,000 1,743,000 Ottowa I, Oglesby, L.P. Illinois 403,000 403,000 1,491,000 2,021,000 251,000 1,770,000 Preservation Pontiac and Partners I, Taylorville, L.P. Illinois 514,000 514,000 2,028,000 2,657,000 331,000 2,326,000 St. Susanne Mt. Vernon, Associates I, L.P. Missouri 255,000 255,000 657,000 996,000 43,000 953,000 Summer Wood, Camden, Ltd. Alabama 1,237,000 1,237,000 849,000 2,116,000 179,000 1,937,000
* Results Cotton Mill Elderly Living Center, L.P. have not been audited and thus have been excluded. See Note 3 to the financial statements and report of independent certified public accountants. 46 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2002
------------------------------- --------------------------------------------------- As of March 31, 2002 As of December 31, 2001 ------------------------------------------------------------------------------------ Total Original Encumbrances Total Investment Amount of of Local in Local Limited Investment Limited Property and Accumulated Net Book Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value ------------------------------------------------------------------------------------------------------------------------------------ Trenton Village Trenton, Apartments, L.P. Missouri 1,018,000 1,018,000 696,000 2,123,000 121,000 2,002,000 United Development Memphis, Co. 97.0, L.P. Tennessee 2,813,000 2,813,000 1,291,000 4,448,000 400,000 4,048,000 Wagner Partnership Wagner, Associates I, L.P. South Dakota 245,000 208,000 759,000 1,280,000 18,000 1,262,000 West Liberty Family West Liberty, Apartments, Ltd. Kentucky 351,000 298,000 (1) 290,000 (1) 290,000 West Mobile County Theodore, Housing, Ltd. Alabama 1,858,000 1,858,000 1,357,000 3,228,000 227,000 3,001,000 ------------- ------------- ------------- ------------- ------------ ------------- $ 15,567,000 $ 15,320,000 $ 14,816,000 $ 33,111,000 $ 2,815,000 $ 30,296,000 ============= ============= ============= ============= ============ =============
(1) The apartment complexes are under construction and cost certification has yet to be completed. * Results of Cotton Mill Elderly Living Center, L.P. have not been audited and thus have been excluded. See Note 3 to the financial statements and report of independent certified public accountants. 47 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2002
------------------------------------------------------------------------------- For the Year Ended December 31, 2001 ------------------------------------------------------------------------------- Year Investment Estimated Completion Partnership Name Rental Income Net Loss Acquired Date -------------------------------------------------------------------------------------------------------------------- Boonville Associates I, L.P. $ 19,000 $ (84,000) 2000 2001 Brighton Ridge Limited Partnership 240,000 (34,000) 1998 1999 Cotton Mill Elderly Living Center, L.P. * * 1999 2000 Country Club Investors, L.P. 532,000 (52,000) 1999 1998 Desloge Associates I, L.P. 90,000 (57,000) 1998 1999 Kechel Towers, L.P. 87,000 (84,000) 1998 1999 Ottawa I, L.P. 137,000 (82,000) 1999 1999 Preservation Partners I, L.P. 246,000 (71,000) 1999 1999 St. Susanne Associates I, L.P. 65,000 (18,000) 1999 2000 Summer Wood Ltd. 68,000 (84,000) 1999 1999 Trenton Village Apartments, L.P. 111,000 (38,000) 1998 1999 United Development Co. 97.0, L.P. 464,000 (98,000) 1998 1999 Wagner Partnership 99 Limited Partnership 42,000 (45,000) 2000 2001 West Liberty Family Apartments, Ltd. (1) (1) 2001 2002 West Mobile County Housing, Ltd. 199,000 (133,000) 1999 2000 ------------ ------------ $ 2,300,000 $ (880,000) ============ ============
(1) The apartment complexes are under construction and cost certification has yet to be completed. * Results of Cotton Mill Elderly Living Center, L.P. have not been audited and thus have been excluded. See Note 3 to the financial statements and report of independent certified public accountants. 48 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2001
------------------------------- --------------------------------------------------- As of March 31, 2001 As of December 31, 2000 ------------------------------------------------------------------------------------ Total Original Encumbrances Total Investment Amount of of Local in Local Limited Investment Limited Property and Accumulated Net Book Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value ------------------------------------------------------------------------------------------------------------------------------------ Boonville Boonville, Associates I, L.P. Missouri $ 2,195,000 $ 2,195,000 $ - $ 779,000 $ - $ 779,000 Brighton Ridge Edgefield, Limited Partnership South Carolina 926,000 926,000 1,048,000 2,378,000 159,000 2,219,000 Cotton Mill Elderly Rock Island, Living Center, L.P. Illinois 1,040,000 1,040,000 ** ** ** ** Country Club Richmond, Investors, L.P. Virginia 305,000 268,000 2,777,000 3,696,000 506,000 3,190,000 Desloge Associates Desloge, I, L.P. Missouri 1,059,000 1,059,000 622,000 2,071,000 107,000 1,964,000 Kechel Logansport, Towers, L.P. Indiana 1,291,000 1,127,000 520,000 1,895,000 85,000 1,810,000 Ottowa I, Oglesby, L.P. Illinois 403,000 403,000 1,501,000 1,998,000 165,000 1,833,000 Preservation Pontiac and Partners I, Taylorville, L.P. Illinois 514,000 514,000 2,043,000 2,629,000 215,000 2,414,000 St. Susanne Mt. Vernon, Associates I, L.P. Missouri 255,000 255,000 660,000 991,000 24,000 967,000
** Results of Cotton Mill Elderly Living Center were not audited in 2001 and thus have been excluded to aid in comparability. See Note 3 to the financial statements and report of independent certified public accountants. 49 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2001
------------------------------- --------------------------------------------------- As of March 31, 2001 As of December 31, 2000 ------------------------------------------------------------------------------------ Total Original Encumbrances Total Investment Amount of of Local in Local Limited Investment Limited Property and Accumulated Net Book Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value ------------------------------------------------------------------------------------------------------------------------------------ Summer Wood, Camden, Ltd. Alabama 1,237,000 1,237,000 850,000 2,116,000 98,000 2,018,000 Trenton Village Trenton, Apartments, L.P. Missouri 1,018,000 1,018,000 711,000 2,123,000 69,000 2,054,000 United Development Memphis, Co. 97.0, L.P. Tennessee 2,813,000 2,813,000 1,304,000 4,216,000 - 4,216,000 Wagner Partnership Wagner, Associates I, L.P. South Dakota 245,000 208,000 219,000 492,000 - 492,000 West Mobile County Theodore, Housing, Ltd. Alabama 1,858,000 1,858,000 1,367,000 3,228,000 87,000 3,141,000 ------------- ------------- ------------- ------------- ------------ ------------- $ 15,159,000 $ 14,921,000 $ 13,622,000 $ 28,612,000 $ 1,515,000 $ 27,097,000 ============= ============= ============= ============= ============ =============
50 WNC Housing Tax Credit Fund VI, L.P. Series 6 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2001
------------------------------------------------------------------------------- For the Year Ended December 31, 2000 ------------------------------------------------------------------------------- Year Investment Estimated Completion Partnership Name Rental Income Net Loss Acquired Date -------------------------------------------------------------------------------------------------------------------- Boonville Associates I, L.P. $ - $ - 2000 2001 Brighton Ridge Limited Partnership 213,000 (57,000) 1998 1999 Cotton Mill Elderly Living Center, L.P. ** ** 1999 2000 Country Club Investors, L.P. 537,000 (51,000) 1999 1998 Desloge Associates I, L.P. 90,000 (64,000) 1998 1999 Kechel Towers, L.P. 92,000 (118,000) 1998 1999 Ottawa I, L.P. 156,000 (53,000) 1999 1999 Preservation Partners I, L.P. 237,000 (84,000) 1999 1999 St. Susanne Associates I, L.P. 56,000 (12,000) 1999 2000 Summer Wood Ltd. 63,000 (91,000) 1999 1999 Trenton Village Apartments, L.P. 111,000 (15,000) 1998 1999 United Development Co. 97.0, L.P. 416,000 (123,000) 1998 1999 Wagner Partnership 99 Limited Partnership 4,000 (1,000) 2000 2001 West Mobile County Housing, Ltd. 102,000 (83,000) 1999 2000 ------------ ------------ $ 2,077,000 $ (752,000) ============ ============
** Results of Cotton Mill Elderly Living Center were not audited in 2001 and thus have been excluded to aid in comparability. See Note 3 to the financial statements and report of independent certified public accountants 51 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6 By: WNC & Associates, Inc., General Partner By: /s/ Wilfred N. Cooper, Jr. -------------------------- Wilfred N. Cooper, Jr., President of WNC & Associates, Inc. Date: October 6, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Wilfred N. Cooper, Jr. -------------------------- Wilfred N. Cooper, Jr., Chief Executive Officer, President and Director of WNC & Associates, Inc. (principal executive officer) Date: October 6, 2004 By: /s/ Thomas J. Riha ------------------ Thomas J. Riha, Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc. (principal financial officer and principal accounting officer) Date: October 6, 2004 By: /s/ Wilfred N. Cooper, Sr. -------------------------- Wilfred N. Cooper, Sr., Chairman of the Board of WNC & Associates, Inc. Date: October 6, 2004 By: /s/ David N. Shafer ------------------- David N Shafer, Director of WNC & Associates, Inc. Date: October 6, 2004 52