FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
OR
o 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: 0-24855
WNC HOUSING TAX CREDIT FUND VI, L.P.,
Series 5
California 33-0745418
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3158 Redhill Avenue, Suite 120
Costa Mesa, CA 92626
(Address of principal executive offices)
(714) 662-5565
(Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet, September 30, 1998 and December 31, 1997..............2
Statement of Operations For the Three and Nine Months ended
September 30, 1998 ................................................3
Statement of Partners' Equity
For the Nine Months ended September 30, 1998.......................4
Statement of Cash Flows
For the Nine Months ended September 30, 1998.......................5
Notes to Financial Statements........................................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................12
Item 3. Quantitative and Qualitative Disclosures About Market Risks.........14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................................15
Item 2 Changes in Securities and Use of Proceeds............................15
Item 3 Defaults Upon Senior Securities......................................15
Item 4 Submission of Matters to a Vote of Security Holders..................15
Item 5 Other Information....................................................15
Item 6. Exhibits and Reports on Form 8-K....................................16
Signatures...................................................................17
<PAGE>
Part I. Financial Information
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
BALANCE SHEETS
September 30, 1998 and December 31, 1997
1998 1997
---- ----
ASSETS
Cash and cash equivalents $ 3,914,979 $ 5,498,424
Cash in escrow 6,446,998
Subscriptions receivable - Note 6 - 631,885
Loans receivable - Note 2 280,194 878,894
Investment in limited
partnerships - Note 3 18,733,148 2,398,460
Due from affiliate 100,000
Other assets 26,102 5,042
----------- -----------
$ 29,501,421 $ 9,412,705
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payable to limited partnerships
- Note 5 $ 8,553,563 $ 860,671
Accrued fees and expenses due to
general partner and affiliates
- Note 4 59,217 361,900
----------- ------------
8,612,780 1,222,571
----------- ------------
Commitments and contingencies - Note 8
Partners' equity (deficit):
General partner (14,269) (12,452)
Limited partners (25,000 units authorized,
25,000 and 9,834 units issued and
outstanding at September 30, 1998 and
December 31, 1997, respectively) 20,902,910 8,202,586
----------- -----------
Total partners' equity 20,888,641 8,190,134
----------- -----------
$ 29,501,421 $ 9,412,705
=========== ===========
UNAUDITED
See Accompanying Notes to Financial Statements
2
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENT OF OPERATIONS
For The Three and Nine Months Ended September 30, 1998
and For the Period August 29, 1997 (date
operations commenced through September 30, 1997
1998 1997
------------------------ -----------
Three Nine
Months Months Period
Interest income $ 113,223 $ 236,590 $ 129
------- ------- --------
Operating expenses:
Amortization 15,050 32,210 289
Asset management fees -Note 4 29,265 47,300
Accounting and legal expense 1,345 1,345
Other 3,294 6,862 43
----- - ----- --------
Total operating expenses 48,954 87,717 332
------ ------ --------
Income (loss) from operations 64,269 148,873 (203)
Equity in loss from
limited partnerships - Note 3 (14,200) (40,300) -
------- ------- --------
Net income $ 50,069 $ 108,573 $ (203)
====== ======= ========
Net income allocated to:
General partner $ 50 $ 109 $ (2)
======= ======= ========
Limited partners $ 50,019 $ 108,464 $ (201)
====== ======= ========
Net income per weighted limited
partner units (18,841 and 1,369) $ 2.65 $ 5.76 $ (0.15)
======= ======== ========
UNAUDITED
See Accompanying Notes to Financial Statements
3
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
For The Nine Months Ended September 30, 1998 and For the Period August 29, 1997
(Date Operations Commenced) through September 30, 1997
For the nine months ended September 30, 1998
- --------------------------------------------
General Limited
Partner Partner Total
------- ------- -----
Equity (deficit),
December 31, 1997 $ (12,452) $ 8,202,586 $ 8,190,134
Sale of limited partnership units,
net of discounts 15,122,795 15,122,795
Offering expenses (1,926) (1,923,685) (1,925,611)
Capital issued for notes
receivable -Note 6 (607,250) (607,250)
Net income 109 108,464 108,573
-------- ---------- ----------
Equity (deficit), September 30, 1998 $ (14,269) $ 20,902,910 $ 20,888,641
======== ========== ==========
For the Period August 29, 1997 (Date Operations Commenced)
through September 30, 1997
General Limited
Partner Partner Total
------- ------- -----
Contribution from the general partner $ 100 $ 1,000 $ 1,100
Sale of limited partnership units,
net of discounts 3,216,000 3,216,000
Offering expenses (3,469) (343,471) (346,940)
Capital issued for notes receivable (30,000) (30,000)
Net loss (2) (201) (203)
-------- ---------- ----------
Equity (deficit),
September 30, 1997 $ (3,371) $ 2,843,328 $ 2,839,957
======== ========= ==========
UNAUDITED
See Accompanying Notes to Financial Statements
4
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30,
1998 and For the Period August 29, 1997 (date Operations
Commenced) through September 30, 1997
1998 1997
---- ----
Cash flows used by operating activities:
Net income $ 108,573 $ (203)
Adjustments to reconcile net income to net
cash used in operating activities:
Equity in loss of limited partnerships 40,300
Amortization 32,210 289
Asset management fee 47,300
Change in other assets (21,060) (129)
Change in accrued fees and expenses
due to general partner and affiliates (63,152) -
---------- ---------
Net cash provided (used) by operating activities 144,171 (43)
---------- ---------
Cash flows used by investing activities:
Investment in limited partnerships (7,101,011)
Acquisition fees and costs (1,114,910) (98,000)
Accrued acquisition fees and costs (31,457)
Paid into escrow (6,446,998)
Distributions from limited partnerships 315 -
---------- ---------
Net cash used by investing activities (14,694,061) (98,000)
---------- ---------
Cash flows provided by financing activities:
Capital contributions 15,147,430 2,498,100
Offering expenses (2,180,985) (241,220)
---------- ---------
Net cash provided by financing activities 12,966,445 2,256,880
---------- ---------
Net increase(decrease) in cash and cash e
quivalents (1,583,445) 2,158,837
Cash and cash equivalents, beginning of period 5,498,424 -
---------- ---------
Cash and cash equivalent, end of period $ 3,914,979 $ 2,158,837
========== =========
(Continued)
UNAUDITED
See Accompanying Notes to Financial Statements
5
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
(A California Limited Partnership)
STATEMENT OF CASH FLOWS (CONTINUED)
For the Nine Months Ended September 30, 1998
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
During the nine months ended September 30, 1998 the Partnership incurred, but
did not pay, $7,692,892 of payables to limited partnership in connection with
the acquisition of limited partnership interests.
During the nine months ended September 30, 1998 the Partnership applied $498,700
from a loan receivable to the respective note payables to limited partnership in
connection with the acquisition of limited partnership interests.
During the nine months ended September 30, 1998 $607,250 of capital
contributions were recorded as notes receivable.
- --------------------------------------------------------------------------------
During the period August 29, 1997 (date operations commenced) through September
30, 1997 the Partnership incurred, but did not pay, $239,578 of payables to
affiliates for acquisitions costs, and fees and offering expenses (see Note 3).
During the period August 29, 1997 (date operations commenced) through September
30, 1997, $689,000 of capital contributions were recorded as subscriptions
receivable.
UNAUDITED
See Accompanying Notes to Financial Statements
6
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
(A California Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 1998
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
- ------------
WNC Housing Tax Credit Fund, VI, L.P., ("the Partnership") was formed under the
California Revised Limited Partnership Act on March 3, 1997 and commenced
operations on August 29, 1997. The Partnership was formed to invest primarily in
other limited partnerships which will own and operate multi-family housing
complexes that will qualify for low income housing credits.
The information contained in the following notes to the financial statements is
condensed from that which would appear in the annual financial statements;
accordingly, the financial statements included herein should be reviewed in
conjunction with the financial statements and related notes thereto contained in
the Partnership's Annual Report of December 31, 1997.
In the opinion of the management, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of September 30,
1998 and the results of operations and changes in cash flows for the nine months
ended September 30, 1998. Accounting measurements at interim dates inherently
involve greater reliance on estimates than at year end. The results of
operations for the interim period presented are not necessarily indicative of
the results for the entire year.
The general partner of the Partnership is WNC & Associates, Inc. (the "General
Partner"). Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns just
less than 70% of the outstanding stock of WNC & Associates, Inc. John B. Lester,
Jr. is the original limited partner of the Partnership and owns, through the
Lester Family Trust, just less than 30% of the outstanding stock of WNC &
Associates, Inc.
Pursuant to the Partnership Agreement, the Partnership is authorized to sell
25,000 units of limited partnership interests ("Units") at $1,000 per Unit of
which 25,000 Units in the amount of $24,918,175 had been sold as of September
30, 1998,.
Allocations Under the Terms of the Partnership Agreement
- --------------------------------------------------------
The General Partner has a .01% interest in operating profits and losses, taxable
income and loss and in cash available for distribution from the Partnership. The
limited partners will be allocated the remaining 99.9% of these items in
proportion to the number of their respective Units.
7
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
(A California Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1998
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------
Allocations Under the Terms of the Partnership Agreement (Continued)
After the limited partners have received sale or refinancing proceeds equal to
their capital contributions and their return on investment (as defined in the
Partnership's Agreement of Limited Partnership) and the General Partner has
received a subordinated disposition fee (as described in Note 3 below) any
additional sale or refinancing proceeds will be distributed 90% to the limited
partners (in proportion to the number of their respective Units) and 10% to the
General Partner.
Method of Accounting For Investment 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 each limited partnership's results of operations and
for any distributions received. Costs incurred by the Partnership in acquiring
the investments in limited partnerships are capitalized as part of the
investment.
Losses from the limited partnerships will not be recognized to the extent that
the individual investment balance would be adjusted below zero.
Cash and Cash Equivalents
The Partnership considers all bank certificates of deposit with a maturity of
less than three months to be cash equivalents.
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling Units. 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 partners' capital.
8
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
(A California Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1998
NOTE 2 - LOANS RECEIVABLE
- -------------------------
Loans receivable represent amounts loaned by the Partnership to certain limited
partnerships in which the Partnership may invest. These loans will be applied
against the first capital contribution due if the Partnership ultimately
acquires a limited partnership interest. In the event that the Partnership does
not acquire a limited partnership interest, the loans are to be repaid with
interest at a rate which is equal to the rate charged to an affiliate of the
general partner (8.75 % at September 30,1998). Loan receivable of $498,700 at
December 31, 1997 was applied to capital contributions due for limited
partnership interest acquired in January 1998. Loan receivable of $100,000 at
December 31, 1997 was repaid by a partnership that the Partnership had declined
to acquire. Loans receivable with a balance of $260,194 at September 30, 1998
and December 31, 1997 was collectible from a partnership which was in
negotiation to be acquired at September 30, 1998 and was subsequently applied to
capital contributions due for limited partnership interest acquired in November
1998 (see Note 8). Loan receivable with a balance of $20,000 at September 30,
1998 and December 31, 1997 was collectible from a limited partnership that the
Partnership had declined to acquire and is to be repaid by the other partnership
to the Partnership in 1998.
NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS
- -------------------------------------------
The following is a summary of the investment in limited partnerships and
reconciliation to the limited partnership accounts as of September 30, 1998 and
December 31, 1997:
1998 1997
---- ----
Investment balance,
beginning of period $ 2,398,460 $ -
Capital contributions to limited partnerships 7,101,011 836,632
Loan receivable applied 498,700
Capital contributions payable 7,692,892 860,671
Capitalized acquisition fees and costs 1,114,910 701,018
Distributions from limited partnerships (315)
Equity in income (loss) of limited partnerships (40,300) 2,395
Amortization of acquisition fees and costs (32,210) (2,256)
---------- ---------
Investment balance
end of period $ 18,733,148 $ 2,398,460
========== =========
9
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
(A California Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1998
NOTE 4- RELATED PARTY TRANSACTIONS
Under the terms of its Agreement of Limited Partnership, the Partnership is
obligated to the General Partner or its affiliates for the following items:
Acquisition fees up to 7% of the gross proceeds from the sale of Units.
Through September 31, 1998 and December 31, 1997, the Partnership incurred
acquisition fees of $1,667,972 and $1,003,472, respectively, which have
been included in investments in limited partnerships.
Reimbursements of cost incurred by an affiliate of the General Partner in
connection with acquisition of Investees. These reimbursements will not
exceed 1.5% of the gross proceeds. As of September 30, 1998 and December
31, 1997, the Partnership incurred acquisition costs of $147,956 and
$36,518, respectively, which have been included in investments in limited
partnerships.
An annual management fee not to exceed .2% of the Partnership's invested
assets (defined by the Partnership's Agreement of Limited Partnership as
the Partnership's capital contributions to limited partnerships plus its
allocable percentage of the permanent financing of the limited
partnerships). The Partnership has incurred fees of $47,300 for the nine
months ended September 30, 1998.
A subordinated disposition fee in an amount equal to 1% of the sales price
of real estate sold. Payment of this fee is subordinated to the limited
partners receiving a return on investment (as defined in the Partnership's
Agreement of Limited Partnership) and is payable only if services are
rendered in the sales effort.
Accrued fees and advances due to affiliates of the General Partner included in
the accompanying balance sheet consists of the following at September 30, 1998
and December 31, 1997:
1998 1997
---- ----
Acquisition fees $ (1,548) $ 62,878
Advances made for acquisition costs,
organizational,offering and selling expenses 13,062 294,310
Asset management fees 47,300
Other 403 4,712
--------- ---------
Total accrued fees and advances $ 59,217 $ 361,900
========= ========
10
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
(A California Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1998
NOTE 5 - PAYABLE TO LIMITED PARTNERSHIPS
- ----------------------------------------
Payable to limited partnerships at September 30, 1998 represents amounts which
are due at various times based on conditions specified in the respective local
limited partnership agreements. These contributions are payable in installments,
generally due upon the local limited partnership achieving certain operating
benchmarks, and are generally expected to be paid within two years of the
Partnership's initial investment.
NOTE 6 - SUBSCRIPTION AND INVESTOR NOTES RECEIVABLE
- ---------------------------------------------------
As of September 30, 1998, the Partnership had received subscriptions for 25,000
units which included promissory notes of $958,400. Limited partners who
subscribe for ten or more units of limited partnership interest ($10,000) could
elect to pay 50% of the purchase price in cash upon subscription and the
remaining 50% by the delivery of a promissory note bearing fixed interest at the
rate of 5.5% per annum. Interest rates are established quarterly. Principal and
interest are due (i) January 31, 1999 if the investor subscribes on or before
September 30, 1998, (ii) September 30, 1999 if the investor subscribes between
July 1, 1998 and December 31, 1998 or (iii) January 31, 2000 if the investor
subscribes after December 31, 1998. The amount of promissory notes receivable
during the nine months ended September 30, 1998 ($958,400) is presented as a
reduction in partners' equity.
Subscriptions receivable at December 31, 1997 presented on the accompanying
balance sheet of $631,885 were received subsequent to December 31, 1997 and
accordingly have been classified as an asset
NOTE 7 - INCOME TAXES
- ---------------------
The Partnership will not make a provision for income taxes since all income and
losses will be allocated to the Partners for inclusion in their respective
returns.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------
Subsequent to September 30, 1998, the Partnership acquired one limited
partnership interest which required capital contributions totaling $1,276,884 of
which $260,194 has been advanced as of September 30, 1998 and is reflected in
the loans receivable in the accompanying balance sheet as of September 30, 1998
(see Note 2).
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Liquidity and Capital Resources
- -------------------------------
The Partnership is raising equity capital from investors by means of its
Offering, and is applying such capital, including the installment payments on
the Promissory Notes as received, to the purchase price and acquisition fees and
costs of Local Limited Partnership Interests, Reserves and expenses. As of
August 29, 1997 the Partnership had received cash subscriptions funds of
$1,400,000, thereby satisfying the minimum offering condition. As of September
30, 1998, the Partnership had received and accepted subscriptions in the amount
of $24,918,175, net of discounts of $81,825 (25,000 Units), of which $958,400
was represented by Promissory Notes.
As of September 30, 1998, the Partnership was indebted to WNC & Associates, Inc.
in the amount of approximately $59,200. The component items of such indebtedness
were as follows: advances to pay front-end fees of approximately $13,100,
accrued asset management fees of approximately $47,300 and other advances of
approximately $400, offset by accrued acquisition fees over paid by
approximately $1,500.
As of September 30, 1998 and December 31, 1997, the Partnership had made capital
contributions to Local Limited Partnerships of approximately $8,436,300 and
$836,600 and had commitments of approximately $8,553,600 and $860,700 for those
limited partnership interests acquired. Further, the Partnership had loans
outstanding to Local Limited Partnerships as of September 30, 1998 and as of
December 31, 1997, of approximately $280,200 and $878,900, respectively. Of the
amount outstanding as of December 31, 1997, approximately $498,700 was loaned to
EL RENO and was applied to the Partnership's purchase price upon acquisition of
this Limited Partnership Interest in January 1998 and the amount of $100,000
made to TULSA-CRESTVEIW, was repaid during July, 1998. The balance of $280,000
is still outstanding as of September 30, 1998 and consist of two loans:
approximately $260,200 was made to Apartment Housing of Theodore, and was
applied to the Partnership's purchase price upon acquisition of this Limited
Partnership Interest in November, 1998; and $20,000 to ASLAND to be repaid in
1998.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $1,583,400 for the nine
month period ended September 30, 1998. This decrease in cash consisted of cash
provided by operating activities of approximately $144,200, and financing
activities of approximately $12,966,400, offset by cash used in investing
activities, of approximately $14,694,100. Cash provided from financing
activities consisted of capital contributions from limited partners of
approximately $15,147,400 less offering expenses of approximately $2,181,000.
Cash used by investing activities consisted of payments to limited partnerships
of approximately $7,101,000, cash paid into escrow of approximately $6,447,000
and capitalized acquisitions costs of approximately $1,146,400, offset by a cash
distribution from a limited partnership of approximately $300. Cash provided and
used by the operating activities of the Partnership was minimal compared to its
other activities. Cash provided from operations consisted primarily of interest
received on cash deposits and investor notes receivable, and cash used in
operations consisted primarily of payments for operating fees and expenses. The
major components of all these activities are discussed in greater detail below.
It is not expected that any of the Local Limited Partnerships in which the
Partnership will invest will generate cash from operations sufficient to provide
12
<PAGE>
distributions to the Unitholders in any significant amount. Such cash from
operations, if any, would first be used to meet operating expenses of the
Partnership, including the payment of the Asset Management Fee.
The Partnership's investments will not be readily marketable and may be affected
by adverse general economic conditions which, in turn, could substantially
increase the risk of operating losses for the Apartment Complexes, the Local
Limited Partnerships and the Partnership. These problems may result from a
number of factors, many of which cannot be controlled. Nevertheless, the General
Partner anticipates that capital raised from the sale of the Units will be
sufficient to fund the Partnership's future investment commitments and proposed
operations.
The Partnership will establish working capital Reserves of at least 3% of
Capital Contributions, an amount which is anticipated to be sufficient to
satisfy general working capital and administrative expense requirements of the
Partnership including payment of the Asset Management Fee as well as expenses
attendant to the preparation of tax returns and reports to the Unitholders and
other investor servicing obligations of the Partnership. Liquidity would,
however, be adversely affected by unanticipated or greater than anticipated
operating costs. The Partnership's liquidity could also be affected by defaults
or delays in payment of the Promissory Notes, from which a portion of the
working capital Reserves is expected to be funded. To the extend that working
capital Reserves are insufficient to satisfy the cash requirements of the
Partnership, it is anticipated that additional funds would be sought through
bank loans or other institutional financing. The Partnership may also apply any
cash distributions received from the Local Limited Partnerships for such
purposes or to replenish or increase working capital Reserves.
Under the Partnership Agreement the Partnership does not have the ability to
assess the Unitholders for additional Capital Contributions to provide capital
if needed by the Partnership or Local Limited Partnerships. Accordingly, if
circumstances arise that cause the Local Limited Partnerships to require capital
in addition to that contributed by the Partnership and any equity of the Local
General Partners, the only sources from which such capital needs will be able to
be satisfied (other than the limited Reserves available at the Partnership
level) will be (i) third-party debt financing (which may not be available if, as
expected, the Apartment Complexes owned by the Local Limited Partnerships are
already substantially leveraged), (ii) additional equity contributions or
advances of the Local General Partners, (iii) other equity sources (which could
adversely affect the Partnership's interest in Tax Credits, cash flow and/or
proceeds of sale or refinancing of the Apartment Complexes and result in adverse
tax consequences to the Unitholders), or (iv) the sale or disposition of the
Apartment Complexes (which could have the same adverse effects as discussed in
(iii) above). There can be no assurance that funds from any of such sources
would be readily available in sufficient amounts to fund the capital
requirements of the Local Limited Partnerships in question. If such funds are
not available, the Local Limited Partnerships would risk foreclosure on their
Apartment Complexes if they were unable to renegotiate the terms of their first
mortgages and any other debt secured by the Apartment Complexes to the extent
the capital requirements of the Local Limited Partnerships relate to such debt.
The Partnership's capital needs and resources are expected to undergo major
changes during its first several years of operations as a result of the
completion of its Offering of Units and its acquisition of investments.
Thereafter, the Partnership's capital needs and resources are expected to be
relatively stable over the holding periods of the investments, except to the
extent of proceeds received in payment of Promissory Notes and disbursed to fund
the Partnership's deferred obligations.
13
<PAGE>
Results of Operations
- ---------------------
As reflected on its Statements of Operations, the Partnership had net income of
approximately $108,600 for the nine months ended September 30, 1998. The
component items of revenue and expense are discussed below.
Revenue. The Partnership's revenues consisted entirely of interest earned on
Promissory Notes and cash deposits held in financial institutions (i) as
Reserves, or (ii) pending investment in Local Limited Partnerships. Interest
revenue in future years will be a function of prevailing interest rates and the
amount of cash balances. It is anticipated that the Partnership will maintain
cash Reserves in an amount not materially in excess of the minimum amount
required by its Partnership Agreement, which is 3% of Capital Contributions.
Expenses. The most significant component of operating expenses is expected to be
the Asset Management Fee. The Asset Management Fee is equal to 0.2% of that
portion of Invested Assets (i.e., the sum of the Partnership's investment in
Local Limited Partnerships plus the Partnership's allocable share of the
mortgage loans on and other debts related to, the Apartment Complexes owned by
such Local Limited Partnerships) which are attributable to apartment units
receiving government assistance.
Amortization expense consist of the amortization over a period of 30 years of
the Acquisition Fee and other expenses attributable to the acquisition of Local
Limited Partnership Interests.
Because the amounts of the Asset Management Fee and amortization expense
primarily are determined by the gross proceeds from the Offering, and the number
and size of Apartment Complexes, until termination of the Offering and
investment of the net proceeds therefrom the Partnership cannot predict with any
accuracy what these amounts will be.
Item 3: Quantitative and Qualitative Disclosures Above Market Risks
None.
Part II. Other Information
Item 1. Legal Proceedings
None.
14
Item 2. Changes in Securities and Use of Proceeds
As of September 30, 1998 the Partnership has received subscriptions for 25,000
units of limited partnership interest ("Units") for an aggregate gross amount of
capital contributions of $25,000,000 attributable to such subscriptions in an
offering which commenced on July 16, 1997. At September 30, 1998, the gross
capital contributions consisted of cash of $23,959,775, notes receivable of
958,400 and discounts of $81,825. At September 30, 1998, approximately
$3,183,100 was paid or due to WNC & Associates, Inc. or WNC Capital Corporation,
affiliates, for selling commissions, wholesaling activities and in reimbursement
of other organization and offering expenses. Included therein are selling
commissions of approximately $1,683,115 and wholesaling and other organization
and offering expenses of approximately $750,000 which were reallowed to
non-affiliates. At September 30, 1998, approximately $21,735,100 is invested in
Local Limited Partnership Interests or Reserves as follows:
<TABLE>
<CAPTION>
Paid or to be
paid to General
Partner or Paid or to be
affiliates paid to others Total
---------- -------------- -----
<S> <C> <C> <C>
Local limited
Partnership Interests $ 16,989,900 $ 16,989,900
Acquisition fees $ 1,668,000 1,668,000
Acquisition costs 148,000 148,000
Reserves and to be invested
2,929,200 2,929,200
-------------- ----------- -----------
$ 1,668,000 $ 20,067,100 $ 21,735,100
============== ============ ==========
</TABLE>
Item 3. Defaults Upon Senior Securities
None.
Item 4 Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
15
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
Exhibits
None.
Reports on Form 8-K
Amendment No. 1 to current report on Form 8-K dated April 30, 1998 was
filed on July 6, 1998. Proforma financial information required by Article 11 of
Regulation S-X was provided under Item 7 of the amendment No. 1 to the current
report filed on May 15, 1998.
Amendment No. 2 to current report on Form 8-K dated April 30, 1998 was
filed on July 20, 1998. Proforma financial information required by Article 11 of
Regulation S-X was provided under Item 7 of the amendment No. 1 to the current
report filed on May 15, 1998
Amendment No. 1 to current report on Form 8-K dated May 31, 1998 was filed
on July 22, 1998. Proforma financial information required by Article 11 of
Regulation S-X was provided under Item 7 of the amendment No. 1 to the current
report filed on June 15, 1998.
Amendment No. 2 to current report on Form 8-K dated May 31, 1998 was filed
on July 28, 1998. Proforma financial information required by Article 11 of
Regulation S-X was provided under Item 7 of the amendment No. 1 to the current
report filed on June 15, 1998
Amendment No. 3 to current report on Form 8-K dated April 30, 1998 was
filed on September 1, 1998. Proforma financial information required by Article
11 of Regulation S-X was provided under Item 7 of the amendment No. 1 to the
current report filed on May 15, 1998
16
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5 and Series 6
By: WNC & Associates, Inc. General Partner
By: /s/ John B. Lester, Jr.
-----------------------------------------------------
John B. Lester, Jr . President
Date: November 20, 1998
By: /s/ Theodore M. Paul
- -----------------------------------------------------
Theodore M. Paul Vice President - Finance
Date: November 20, 1998
17
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001036500
<NAME> WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 3,914,979
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,914,979
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,501,421
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,888,641
<TOTAL-LIABILITY-AND-EQUITY> 29,501,421
<SALES> 0
<TOTAL-REVENUES> 236,590
<CGS> 0
<TOTAL-COSTS> 87,717
<OTHER-EXPENSES> 40,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 108,573
<INCOME-TAX> 0
<INCOME-CONTINUING> 108,573
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,573
<EPS-PRIMARY> 5.76
<EPS-DILUTED> 0
</TABLE>
