FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
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
(714) 662-5565
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
(A California Limited Partnership)
INDEX TO FORM 10-Q
For the Quarter Ended December 31, 1999
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
December 31,1999 and March 31, 1999.................................3
Statements of Operations
For the three and nine months ended December 31, 1999 and 1998......4
Statement of Partners' Equity (Deficit)
For the nine months ended December 31, 1999.........................5
Statements of Cash Flows
For the nine months ended December 31, 1999 and 1998................6
Notes to Financial Statements ........................................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................14
Item 3. Quantitative and Qualitative Disclosures About Market Risk......17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................17
Item 6. Exhibits and Reports on Form 8-K................................17
Signatures .............................................................18
2
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999
----------------- --------------
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,646,298 $ 3,103,129
Funds held in escrow disbursement account 773,599 4,834,997
Investment in limited partnerships - Note 2 19,297,093 19,968,445
Subscriptions receivable - 38,600
Other assets 219,659 30,814
------------ ------------
$ 21,936,649 $ 27,975,985
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Payable to limited partnerships - Note 4 $ 1,105,160 $ 6,131,391
Accrued fees and expenses due to
general partner and affiliates - Note 3 121,429 159,973
------------ ------------
1,226,589 6,291,364
------------ ------------
Partners' equity (deficit):
General partner (41,992) (32,246)
Limited partners ( 25,000 units issued
and outstanding) 20,752,052 21,716,867
------------ ------------
Total partners' equity 20,710,060 21,684,621
------------ ------------
$ 21,936,649 $ 27,975,985
============ ============
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 1999 and1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
------------------------------ --------------------------------
Three Nine Three Nine
Months Months Months Months
------ ------ ------ ------
<S> <C> <C> <C> <C>
Interest income $ 22,340 $ 92,240 $ 49,415 $ 233,109
---------- ---------- --------- ----------
22,340 92,240 49,415 233,109
---------- ---------- --------- ----------
Operating expenses:
Amortization 16,134 48,335 15,140 40,586
Asset management fees - Note 3 15,195 50,385 19,082 65,510
Legal and accounting 184 21,291 (2,000) (655)
Other 50,146 216,790 1,238 8,040
---------- ---------- --------- ----------
Total operating expenses 81,659 336,801 33,460 113,481
---------- ---------- --------- ----------
Income (loss) from operations (59,319) (244,561) 15,955 119,628
Equity in loss from
limited partnerships - Note 2 (259,675) (620,999) (69,894) (96,609)
---------- ---------- --------- ----------
Net income (loss) $ (318,994) $ (865,560) $ (53,939) $ 23,019
========== ========== ========= ==========
Net income (loss) allocated to:
General partner $ (3,190) $ (8,656) $ (539) $ 230
========== ========== ========= ==========
Limited partners $ (315,804) $ (856,904) $ (53,400) $ 22,789
========== ========== ========= ==========
Net loss per weighted limited
partner unit (25,000 and 21,008
units issued and outstanding at
December 31, 1999 and 1998) $ (13) $ (34) $ (3) $ 1
========== ========== ========= ==========
</TABLE>
See accompanying notes to financial statements
4
<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 December 31, 1999
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
------- -------- -----
<S> <C> <C> <C>
Partners' equity (deficit), March 31, 1999 $ (32,246) $ 21,716,867 $ 21,684,621
Offering expense (1,090) (107,911) (109,001)
Net loss for the nine months ended
December 31, 1999 (8,656) (856,904) (865,560)
----------- ------------ ------------
Partners' equity (deficit), December 31, 1999 $ (41,992) $ 20,752,052 $ 20,710,060
=========== ============ ============
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 1999 and 1998
(unaudited)
1999 1998
---- ----
Cash flows from operating activities:
Net loss $ (865,560) $ 23,019
Adjustments to reconcile net loss to net
cash used in operating activities:
Equity in loss from limited partnerships 620,999 33,765
Amortization 48,335 103,430
Asset management fees 50,385 65,510
Change in other assets (12,802) (43,930)
Accrued fees and expense due to
general partner and affiliates (45) (330,895)
---------- ----------
Net cash used in operating activities (158,688) (149,101)
---------- ----------
Cash flows from investing activities:
Investment in limited partnerships (944,712) (6,890,239)
Funds paid into escrow (5,505,543)
Loans receivable 20,002 878,894
Advances to limited partnerships (196,045) -
Acquisition fees payable (77,778) -
Acquisition costs and fees (18,103) (871,001)
---------- ----------
Net cash used in investing activities (1,216,636) (12,387,889)
---------- ----------
Cash flows from financing activities:
Capital contributions from partners - 9,144,585
Notes receivable investor 38,600 631,885
Offering expenses (120,107) (1,329,747)
---------- ----------
Net cash provided by (used in) financing
activities (81,507) 8,446,723
---------- ----------
Net decrease in cash and cash equivalents (1,456,831) (4,090,267)
---------- ----------
Cash and cash equivalents, beginning of period 3,103,129 7,612,155
---------- ----------
Cash and cash equivalents, end of period $ 1,646,298 $ 3,521,888
========== ==========
See accompanying notes to financial statements
6
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 1999 and 1998
(unaudited)
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
Funds held in Escrow were applied to
capital contributions payable to limited partnerships $ 4,061,398
==========
See accompanying notes to financial statements
7
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
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 audited financial statements and related notes thereto
contained in the WNC Housing Tax Credit Fund VI, L.P., Series 5 (the
"Partnership") Annual Report on form 10-K for the year end March 31, 1999
(audited). 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.
In the opinion of the General Partner, the unaudited financial statements
contain all adjustments (consisting of normal recurring accruals) necessary to
present fairly the financial position as of December 31, 1999 and the results of
operations and changes in cash flows for the nine months then ended.
Organization
WNC Housing Tax Credit Fund VI, L.P., Series 5, a California Limited Partnership
(the "Partnership"), was formed on March 3, 1997 under the laws of the state of
California, and commenced operations on August 29, 1997. The Partnership was
formed to invest primarily in other limited partnerships and limited liability
companies (the "Local Limited Partnerships") which own and operate multi-family
housing complexes (the "Housing Complex") that are eligible for low income
housing credits. The local general partners (the "Local General Partners") of
each Local Limited Partnership retain responsibility for maintaining, operating
and managing the Housing Complex.
The general partner is WNC & Associates, Inc. ("WNC") (the "General Partner"), a
California limited partnership. Wilfred N. Cooper, Sr., through the Cooper
Revocable Trust, owns 66.8% of the outstanding stock of WNC. John B. Lester was
the original limited partner of the Partnership and owns, through the Lester
Family Trust, 28.6% of the outstanding stock of WNC.
The partnership agreement authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). The offering of Units concluded on July 9, 1998 at which
time 25,000 Units representing subscriptions in the amount of $24,918,175, net
of discount of $54,595 for volume purchases and $27,230 for dealer discounts,
had been accepted. The General Partner has a 1% interest in operating profits
and losses, taxable income and losses, in cash available for distribution from
the Partnership and tax credits. The limited partners will be allocated the
remaining 99% interest 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 3) 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.
8
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Risks and Uncertainties
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the low income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
to mortgage indebtedness. If a Local Limited Partnership does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex and low-income housing credits. As a limited partner of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local Limited Partnerships, and will rely totally on the
Local General Partners of the Local Limited Partnerships for management of the
Local Limited Partnerships. The value of the Partnership's investments will be
subject to changes in national and local economic conditions, including
unemployment conditions, which could adversely impact vacancy levels, rental
payment defaults and operating expenses. This, in turn, could substantially
increase the risk of operating losses for the Housing Complexes and the
Partnership. In addition, each Local Limited Partnership is subject to risks
relating to environmental hazards and natural disasters, which might be
uninsurable. Because the Partnership's operations will depend on these and other
factors beyond the control of the General Partner and the Local General
Partners, there can be no assurance that the anticipated low income housing
credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the low income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All management decisions will
be made by the General Partner.
Method of Accounting for Investments in Limited Partnerships
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnership's are 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.
Offering Expenses
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred in connection with selling
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
$3,357,441 and $3,248,440 as of December 31, 1999 and March 31, 1999,
respectively.
9
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents
Net Income (Loss) Per Weighted Limited Partner Unit
Net income (loss) per weighted limited partnership unit is calculated pursuant
to Statement of Financial Accounting Standards No. 128, Earnings Per Share. Net
income (loss) per unit includes no dilution and is computed by dividing loss
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.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of December 31, 1999 and March 31, 1999, the Partnership has acquired limited
partnership interests in 13 Local Limited Partnerships, each of which owns one
Housing Complex consisting of an aggregate of 591 apartment units. As of
December 31, 1999 and March 31, 1999 construction or rehabilitation of 1 of the
Housing Complexes were still in process. The respective general partners of the
Local Limited Partnerships manage the day-to-day operations of the entities.
Significant Local Limited Partnership business decisions require approval from
the Partnership. The Partnership, as a limited partner, is generally entitled to
99%, 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.
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.
10
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(unaudited)
NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS, CONTINUED
The following is a summary of the equity method activity of the investment in
Local Limited Partnerships for the nine months ended December 31, 1999 and the
three months ended March 31, 1999:
December 31, 1999 March 31, 1999
----------------- --------------
Investment balance, beginning of period $ 19,968,445 $ 19,927,953
Capital contributions to limited partnerships (20,121) -
Acquisition fees and costs - 58,777
Equity in loss from limited partnerships (620,999) (22,000)
Capitalized acquisition fees and costs 18,103 77,826
Amortization of acquisition costs (48,335) (15,334)
------------ -----------
Investment per balance sheet, end of period $ 19,297,093 $ 19,968,445
============ ===========
Selected financial information for the nine months ended December 31 from the
combined financial statements of the limited partnerships in which the
partnership has invested is as follows:
1999 1998
---- ----
Total revenue $ 1,187,800 $ 816,400
------------ -----------
Interest expense 440,800 202,358
Depreciation 563,100 211,791
Operating expenses 809,800 500,090
------------ -----------
Total Expenses 1,813,700 914,239
------------ -----------
Net loss $ (625,900) $ (97,839)
============ ===========
Net loss allocable to the Partnership $ (620,999) $ (96,609)
============ ===========
Net loss recognized by the Partnership $ (620,999) $ (96,609)
============ ===========
11
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(unaudited)
NOTE 3- RELATED PARTY TRANSACTIONS
(a) Annual Asset Management Fee. An annual asset management fee in an amount
equal to 0.5% of invested assets (the sum of the Partnership's Investment
in Local Limited Partnership Interests and the Partnership's allocable
share of the amount of the mortgage loans on and other debts related to,
the Housing Complexes owned by such Local Limited Partnerships). Fees of
$50,385 and $65,510 were incurred during the nine months ended December 31,
1999 and 1998, respectively. No management fees have been paid during the
nine months ended December 31, 1999 and 1998..
(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) Interest in Partnership. The General Partners receive 1% of the
Partnership's allocated Low Income Housing Credits. The General Partners
are also entitled to receive 1% of cash distributions. There were no
distributions of cash to the General Partners during the nine months ended
December 31, 1999 or 1998.
Accrued fees and advance due to affiliates of the General Partner included in
the balance sheet consist of the following at December 31, 1998 and March 31,
1999:
December 31, 1999 March 31, 1999
----------------- --------------
Asset management fee $ 97,562 $ 47,177
Acquisition fee payable - 77,778
Reimbursement due on expenses
paid by affiliate 16,795 26,759
Other 7,072 8,259
----------- -----------
Total related party payables $ 121,429 $ 159,973
=========== ===========
NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
Payables to limited partnerships represent amounts which are due at various
times based on conditions specified in the respective limited partnership
agreements. These contributions are payable in installments and are generally
due upon the limited partnerships achieving certain development and operating
benchmarks (generally within two years of the Partnership's initial investment).
12
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(unaudited)
NOTE 5 - SUBSCRIPTIONS RECEIVABLE
During the six months ended December 31, 1999 and the three months ended March
31,1999 the Partnership received payments in the amount of $38,600 and $0,
respectively of subscriptions receivable. Reducing the subscriptions receivable
balance to $ 0 and $38,600 as of December 31,1999 and March 31, 1999,
respectively.
NOTE 6 - INCOME TAXES
No provision for income taxes has been made, as the liability for income taxes
is an obligation of the partners of the Partnership.
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Financial Condition
The Partnership's assets at December 31, 1999 consisted primarily of $1,646,000
in cash and aggregate investments in the fourteen Local Limited Partnerships of
$19,297,000. Liabilities at December 31, 1999 consisted primarily of $1,105,000
of payables to limited partnerships.
Results of Operations
Three Months Ended December 31, 1999 Compared to Three Months Ended December 31,
1998. The Partnership's net loss for the three months ended December 31, 1999
was $(319,000), reflecting an increase of $265,000 from the net loss experienced
for the three months ended December 31, 1998. The increase in net loss is
primarily due to equity in losses from limited partnerships which increased by
$190,000 to $(260,000) for the three months ended December 31, 1999 from
$(70,000) for the three months ended December 31, 1998. This increase was a
result of the Local Limited Partnerships completing construction and going into
operation. None of the investments in such Local Limited Partnerships had
reached $0 at December 31, 1999. Since the Partnership's liability with respect
to its investments is limited, losses in excess of investment are not
recognized. Along with the increase in equity in losses from limited
partnerships, there was an increase in loss from operations of $75,000 for the
three months ended December 31, 1999 to $(59,000), from $16,000 for the three
months ended December 31, 1998, due to a decrease of interest income of $26,000
and an increase in operating expenses of $49,000. The increase of other
operating expenses primarily resulted from a loss in sale of securities of
$(47,000).
Nine Months Ended December 31, 1999 Compared to Nine Months Ended December 31,
1998. The Partnership's net loss for the nine months ended December 31, 1999 was
$(866,000), reflecting an increase of $889,000 from the net gain experienced for
the nine months ended December 31, 1998. The increase in net loss is primarily
due to equity in losses from limited partnerships which increased by $524,000 to
$(621,000) for the nine months ended December 31, 1999 from $(97,000) for the
nine months ended December 31, 1998. This increase was a result of the Local
Limited Partnerships completing construction and starting operations. None of
the investments in such Local Limited Partnerships had reached $0 at December
31, 1999. Since the Partnership's liability with respect to its investments is
limited, losses in excess of investment are not recognized. Along with the
increase in equity in losses from limited partnerships, there was an increase in
loss from operations of $365,000 for the nine months ended December 31, 1999 to
$(245,000) from $120,000 for the nine months ended December 31, 1998, due to a
decrease of interest income of $141,000 and an increase in operating expenses of
$224,000., The increase of other operating expenses primarily resulted from a
loss in sale of securities of $(206,000).
Cash Flows
Nine Months Ended December 31, 1999 Compared to Nine Months Ended December 31,
1998. Net cash used during the nine months ended December 31, 1999 was
$(1,457,000), reflecting a decrease of $2,333,000, compared to a net use of cash
for the nine months ended December 31, 1998 of $(4,090,000). The change was due
primarily to a decrease in cash used in investing activities of $11,171,000
which resulted from a decrease in cash payments for investments in limited
partnerships of $5,946,000, a decrease in cash paid into escrow accounts of
$5,505,000, and a decrease in acquisition costs of $853,000, offset by, a
decrease in cash collected on loans receivable of $859,000, an increase in
acquisition fees paid of $78,000 and an increase in advances to limited
partnerships of $196,000. Offsetting the decrease in cash used by investing
activites, is the cash provided by financing activities which decreased by
$8,529,000, as the result of a decrease in capital contributions from investors
of $9,145,000, and a decrease in cash collected from investors of $594,000,
offset by a decrease in offering expenses of $1,210,000. The cash used by
operating activities increased by $10,000. The increase is the result of a
decrease in interest income of $140,000, an increase in other operating expenses
of $231,000, offset by a decrease in cash paid to the general partner and
affiliates of $331,000 and a decrease in other assets of $30,000.
14
<PAGE>
During the nine months ended December 31, 1999 and 1998, accrued payables, which
consist primarily of related party management fees due to the General Partner,
decreased by $39,000. The General Partner does not anticipate that these accrued
fees will be paid until such time as capital reserves are in excess of future
foreseeable working capital requirements of the partnership.
The Partnership expects its future cash flows, together with its net available
assets at December 31, 1999, to be sufficient to meet all currently foreseeable
future cash requirements.
15
<PAGE>
Impact of Year 2000
WNC & Associates, Inc.
Status of Readiness
Information Technology (IT) Systems. The Partnership relies on the IT systems of
WNC, its general partner. IT systems include computer hardware and software used
to produce financial reports and tax return information. This information is
then used to generate reports to investors and regulatory agencies, including
the Internal Revenue Service and the Securities and Exchange Commission. The IT
systems of WNC are year 2000 compliant.
Non-IT Systems. The Partnership also relies on the non-IT systems of WNC. Non-IT
systems include machinery and equipment such as telephones, voice mail and
electronic postage equipment. Except for one telephone system, the non-IT
systems of WNC are year 2000 compliant. The one telephone system will require
the replacement of one computer and one software application, both of which will
be completed on or before December 15, 1999.
Service Providers. WNC also relies on the IT and non-IT systems of service
providers. Service providers include utility companies, financial institutions,
telecommunications carriers, municipalities, and other outside vendors. WNC has
obtained verbal assurances from its material service providers (electrical power
provider, financial institutions and telecommunications carriers) that their IT
and non-IT systems are year 2000 compliant. There can be no assurance that this
compliance information is correct. There also can be no assurance that the
systems of other, less-important service providers and outside vendors will be
year 2000 compliant.
Costs to Address Year 2000 Issues
The cost to address year 2000 issues for WNC has been less than $20,000. The
cost to replace the telephone system noted above will be less than $5,000. The
cost to deal with potential year 2000 issues of other outside vendors cannot be
estimated at this time.
Risk of Year 2000 Issues
The most reasonable and likely result from non-year 2000 compliance of systems
of the service providers noted above will be the disruption of normal business
operations for WNC. This disruption would, in turn, lead to delays in performing
reporting and fiduciary responsibilities on behalf of the Partnership. The worst
case scenario would be the replacement of a service provider. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.
Local Limited Partnerships
Status of Readiness
WNC is in the process of obtaining year 2000 certifications from each Local
General Partner of each Local Limited Partnership. Those certifications will
represent to the Partnership that the IT and non-IT systems critical to the
operation of the Housing Complexes and investor reporting to the Partnership are
year 2000 compliant. These certifications will also represent to the Partnership
that the IT and non-IT systems of property management companies, independent
accountants, electrical power providers, financial institutions and
telecommunications carriers used by the Local Limited Partnership are year 2000
compliant.
There can be no assurance that the representations in the certifications will be
correct. There also can be no assurance that the systems of other,
less-important service providers and outside vendors, upon which the Local
Limited Partnerships rely, will be year 2000 compliant.
16
<PAGE>
Costs to Address Year 2000 Issues
There will be no cost to the Partnership as a result of assessing year 2000
issues for the Local Limited Partnerships. The cost to deal with potential year
2000 issues of the Local Limited Partnerships cannot be estimated at this time.
Risk of Year 2000 Issues
There may be Local General Partners who indicate that they or their property
management company are not year 2000 compliant and do not have plans to become
year 2000 compliant before the end of 1999. There may be other Local General
Partners who are unwilling to respond to the certification request. The most
likely result of either non-compliance or failure to respond will be the removal
and replacement of the property management company and/or the Local General
Partner with year 2000 compliant operators.
Despite the efforts to obtain certifications, there can be no assurance that the
Partnership will be unaffected by year 2000 issues. The most reasonable and
likely result from non-year 2000 compliance will be the disruption of normal
business operations for the Local Limited Partnerships, including but not
limited to the possible failure to properly collect rents and meet their
obligations in a timely manner. This disruption would, in turn, lead to delays
by the Local Limited Partnerships in performing reporting and fiduciary
responsibilities on behalf of the Partnership. The worst-case scenario would
include the initiation of foreclosure proceedings on the property by mortgage
debt holders. Under these circumstances, WNC or its affiliates will take actions
necessary to minimize the risk of foreclosure, including the removal and
replacement of a Local General Partner by the Partnership. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
NONE
Part II. Other Information
Item 1. Legal Proceedings
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
17
<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/ Will N. Cooper, Jr.
Will N. Cooper, Jr., President
WNC & Associates, Inc.
Date: February 22, 2000
By: /s/ Michael L. Dickenson
Michael L. Dickenson, Vice-President - Chief Financial Officer
WNC & Associates, Inc.
Date: February 22, 2000
18
<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> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,646,298
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,646,298
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,936,649
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,710,060
<TOTAL-LIABILITY-AND-EQUITY> 21,936,649
<SALES> 0
<TOTAL-REVENUES> 92,240
<CGS> 0
<TOTAL-COSTS> 336,801
<OTHER-EXPENSES> 620,999
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (865,560)
<INCOME-TAX> 0
<INCOME-CONTINUING> (865,560)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (865,560)
<EPS-BASIC> (34)
<EPS-DILUTED> 0
</TABLE>
