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: 0-26869
WNC HOUSING TAX CREDIT FUND VI, L.P.,
Series 6
California 33-0391978
(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 6
(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 For the period August 20, 1998 (Date Operations
Commenced)
through December 31, 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 For
the period August 20, 1998 (Date Operations
Commenced)
through December 31, 1998...........................................6
Notes to Financial Statements .........................................8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................15
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 6
(A California Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999
----------------- --------------
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 4,511,236 $ 2,690,665
Loans receivable - Note 2 - 1,043,530
Investment in limited partnerships - Note 3 15,435,194 7,748,624
Subscription receivable - Note 7 - 893,370
Other assets 25,870 -
--------------- -------------
$ 19,972,300 $ 12,376,189
=============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to limited partnerships - Note 5 $ 2,844,403 $ 2,137,275
Due to affiliate 154,878 -
Accrued fees and expenses due to
general partner and affiliates - Note 4 35,567 184,291
Accounts payable 415 -
--------------- -------------
3,035,263 2,321,566
--------------- -------------
Partners' equity (deficit):
General partner (26,346) (13,659)
Limited partners (25,000 units authorize, 20,500 and 16,963,383 10,068,282
11,776 units issued and outstanding at September 30,
and March 31, 1999)
--------------- -------------
Total partners' equity 16,937,037 10,054,623
--------------- -------------
$ 19,972,300 $ 12,376,189
=============== =============
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 1999 (unaudited) and
For the Period August 20, 1998 (Date Operations Commenced)
Through December 31, 1998
<TABLE>
<CAPTION>
1999 1998
---------------------------- ------------------------------
For the period August 20,
1998 (Date Operations
Three Nine Commenced) through
Months Months December 31, 1998
------ ------ -------------------------
<S> <C> <C> <C>
Interest income $ 72,091 $ 187,045 $ 6,003
---------- ---------- -------------------
72,091 187,045 6,003
---------- ---------- -------------------
Operating expenses:
Amortization 12,887 32,729 3,055
Asset management fees - Note 4 12,409 31,018 -
Legal and accounting 9,035 20,201 -
Other 57,597 113,912 4,449
---------- ---------- -------------------
Total operating expenses 91,928 197,860 7,504
---------- ---------- -------------------
Loss from operations (19,837) (10,815) (1,501)
Equity in income from limited partnerships 50,779 19,470 60,610
---------- ---------- -------------------
Net income $ 30,942 $ 8,655 $ 59,109
========== ========== ===================
Net loss allocated to:
General partner $ 309 $ 87 $ 591
========== ========== ===================
Limited partners $ 30,633 $ 8,568 $ 58,518
========== ========== ===================
Net loss per weighted limited
partner unit (20,500 and 3,573 units
outstanding at December 31, 1999 and 1998) $ 1 $ - $ 16
========== ========== ===================
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(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 $ (13,659) $ 10,068,282 $ 10,054,623
Sale of limited partnership units,
Net of discounts - 8,718,260 8,718,260
Sale of limited partnership units issued for
promissory notes receivable - Note 7 - (730,100) (730,100)
Collection of promissory notes receivable 163,000 163,000
Offering expense (12,774) (1,264,627) (1,277,401)
Net income for the nine months ended
December 31, 1999 87 8,568 8,655
---------- ------------ ------------
Partners' equity (deficit), December 31, 1999 $ (26,346) $ 16,693,383 $ 16,937,037
========== ============ ============
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 1999 (unaudited) and
For the Period August 20,1998 (Date Operations Commenced)
Through December 31, 1998
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 8,655 $ 59,109
Adjustments to reconcile net income to net
cash used in operating activities:
Equity in loss from limited partnerships (19,470) (60,610)
Amortization 32,729 3,055
Asset management fees 11,918 -
Change in other assets (20,875) -
Accrued fees and expense due to
general partner and affiliates (36,084) 8,280
Accounts payable 415 -
----------- ----------
Net cash provided by (used in) operating activities (22,712) 9,834
----------- ----------
Cash flows from investing activities:
Investment in limited partners (5,089,547) (4,155,453)
Loan receivable (50,000)
Capitalized acquisition fees and costs (685,691) (493,327)
Acquisition fees payable (68,330) 126,823
----------- ----------
Net cash used in investing activities (5,843,568) (4,571,957)
----------- ----------
Cash flows from financing activities:
Initial partner contributions - 1,100
Sale of limited partner units, net of discounts 7,988,160 6,679,750
Collection of subscriptions receivable 888,375 (1,030,915)
Collection of notes receivable 163,000 -
Offering expenses (1,352,684) (828,576)
Loan payable - 113,269
----------- ----------
Net cash provided by financing activities 7,686,851 4,934,628
----------- ----------
Net increase in cash and cash equivalents 1,820,571 372,505
Cash and cash equivalents, beginning of period 2,690,665 -
----------- ----------
Cash and cash equivalents, end of period $ 4,511,236 $ 372,505
=========== ==========
See accompanying notes to financial statements
6
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS- CONTINUED
For the Nine Months Ended December 31, 1999
(unaudited)
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
The Partnership has incurred but did not pay-
Capital contributions in connection
with investments in limited partnerships $ 5,796,675
===========
Loans receivable were applied to notes payable
in connection with investments in limited
partnerships $ 1,043,530
===========
The Partnership has incurred but did not pay -
Acquisition costs in connection with investments
in limited partnerships $ 19,055
===========
The Partnership has received notes for Units $ 730,100
===========
The Partnership has received discounts for Units $ 5,740
===========
See accompanying notes to financial statements
7
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(unaudited)
NOTE 1 - 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 6 (the
"Partnership") Annual Report 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 accompanying unaudited financial
statements contain all adjustments (consisting of only 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
ended.
Organization
WNC Housing Tax Credit Fund VI, L.P., Series 6 (the "Partnership") was formed on
March 3, 1997 under the laws of the State of California, and commenced
operations on August 20, 1998. Prior to August 20, 1998, the Partnership was
considered a development-stage enterprise. The Partnership was formed to invest
primarily in other limited partnerships ("the Local Limited Partnerships") which
own and operate multi-family housing complexes (the "Housing Complexes") that
are eligible for low income housing tax credits. The local general partners (the
"Local General Partners") of each Local Limited Partnership retain
responsibility for developing, constructing, maintaining, operating and managing
the Housing Complex.
The general partner is WNC & Associates, Inc. ("WNC" or the "General Partner").
Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns 66.8% of the
outstanding stock of WNC. John B. Lester, Jr. is the original limited partner of
the Partnership and owns, through the Lester Family Trust, 28.6% of the
outstanding stock of WNC.
The Partnership agreement authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). As of December 31, 1999, 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 (see Note
7). As of March 31, 1999, 11,776 Units, representing subscriptions in the amount
of $11,738,335, net of discounts of $27,305 for volume purchases and dealer
discounts of $10,360, had been accepted. 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.
8
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(unaudited)
NOTE 1 - 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
Partnerships 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.
9
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(unaudited)
NOTE 1 - 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 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 partners' capital and amounted to $2,756,336 and $1,478,935 as of
December 31, 1999 and March 31, 1999, respectively
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents.
Net Loss Per Limited Partner Unit
Net loss per limited partnership unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net 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 - LOANS RECEIVABLE
Loans receivable represent amounts advanced by the Partnership to two Local
Limited Partnerships. The Partnership at December 31, 1999 has applied the
advances against the first capital contributions due upon the purchase of the
Local Limited Partnership in July 1999.
NOTE 3- INVESTMENTS IN LIMITED PARTNERSHIPS
As of the December 31, 1999 and March 31, 1999, the Partnership had acquired
limited partnership interests in thirteen and six Local Limited Partnerships,
respectively, each of which owns one Housing Complex except one that owns three
Housing Complexes. These thirteen Housing Complexes consist of an aggregate of
538 apartment units. As of the December 31, 1999 and March 31, 1999,
construction or rehabilitation of four and five, respectively, of the Housing
Complexes was still in process. The respective general partners of the Local
Limited Partnerships manage the day-to-day operations of the entities.
Significant Local Limited Partnership business decisions, as defined, require
the approval of the Partnership. The Partnership, as a limited partner, is
generally entitled to 99%, as specified in the Local Limited
10
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(unaudited)
NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS, CONTINUED
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.
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 $ 7,748,624 $ 6,440,762
Capital contribution paid, 3,827,967 514,697
Capital contribution payable 2,123,586 402,848
Loan receivable applied 1,043,530 -
Equity in income from limited partnerships 19,470 47,263
Capitalized acquisition fees and costs 704,746 348,261
Amortization of acquisition costs (32,729) (5,207)
------------ -----------
Investment per balance sheet, end of period $ 15,435,194 $ 7,748,624
============ ===========
11
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(unaudited)
NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS, CONTINUED
Selected financial information for the nine months ended December 31, 1999 and
for the period August 20,1998 (Date Operations Commenced) through December 31,
1998 from the combined financial statements of the limited partnerships in which
the partnership has invested is as follows:
1999 1998
---- ----
Total revenue $ 529,600 $ 236,400
----------- ------------
Interest expense 97,700 37,300
Depreciation 111,500 23,000
Operating expenses 301,000 115,200
----------- ------------
Total Expenses 510,200 175,500
----------- ------------
Net loss $ 19,400 $ 60,900
=========== ============
Net loss allocable to the Partnership $ 19,470 $ 60,610
=========== ============
Net loss recognized by the
Partnership $ 19,470 $ 60,610
=========== ============
NOTE 4 - RELATED PARTY TRANSACTIONS
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or its affiliates for the following fees:
(a) Organization and Offering Expenses. The Partnership accrued or paid to the
General Partner or its affiliates as of December 31, 1999 and March 30,
1999 approximately $2,756,336 and $1,478,935, respectively, for selling
commissions and other fees and expenses of the Partnership's offering of
Units. Of the total accrued or paid, approximately $2,141,336 and
$1,125,655 as of December 31, 1999 and March 30, 1999, respectively, was
paid or to be paid to unaffiliated persons participating in the
Partnership's offering or rendering other services in connection with the
Partnership's offering.
(b) Acquisition Fees. Acquisition fees in an amount equal to 7.0% of the gross
proceeds of the Partnership's offering ("Gross Proceeds"). Through December
31, 1999 and March 31, 1999, the aggregate amount of acquisition fees paid
or accrued was approximately $1,435,000 and $789,740, respectively.
(c) Acquisition Expense. The Partnership accrued to or paid to the General
Partner or its affiliates for acquisition expense expended by such persons
on behalf of the Partnership of approximately $111,334 and $51,849 as of
December 31, 1999 and March 31, 1999, respectively. The limit on this
reimbursement is 1.5% of Gross Proceeds.
12
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS, CONTINUED
(d) Annual Asset Management Fee. An annual asset management fee in an amount
equal to 0.2% of the Invested Assets. "Invested Assets" means the sum of
the Partnership's Investment in Local Limited Partnerships and the
Partnership's allocable share of mortgage loans on and other debts related
to the Housing Complexes owned by such Local Limited Partnerships. Fees of
$31,018 and $8,096 were incurred during the nine months ended December 31,
1999 and three months March 31, 1999, respectively, of which $19,100 and $0
was paid during the nine months ended December 31, 1999 and three months
ended March 31, 1999, respectively.
(e) Subordinated Disposition Fee. A subordinated disposition fee in an amount
equal to 1% of the sale price received in connection with the sale or
disposition of a Housing Complex. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital
contributions and payment of the Return on Investment to the Limited
Partners. "Return on Investment" means an annual, cumulative but not
compounded, "return" to the Limited Partners (including Low Income Housing
Credits) as a class on their adjusted capital contributions commencing for
each Limited Partner on the last day of the calendar quarter during which
the Limited Partner's capital contribution is received by the Partnership,
calculated at the following rates: (i) 12% through December 31, 2008, and
(ii) 6% for the balance of the Partnerships term. No disposition fees have
been paid.
(f) Interest in Partnership. The General Partner will receive 1% of the
Partnership's allocated Low Income Housing Credits. No Low Income Housing
Credits have been allocated. The General Partner is also entitled to
receive 1% of cash distributions. There have been no distributions of cash
to the General Partner.
The accrued fees and expenses due to the General Partner and affiliates consist
of the following:
December 31, 1999 March 31, 1999
----------------- --------------
Acquisition fees $ - $ 68,330
Asset management fee payable 20,014 8,096
Commissions payable to affiliate - 29,129
Reimbursement for expenses paid
by an affiliate (3,502) 78,736
Acquisition expense reimbursement
due to affiliate 19,055 -
----------- -----------
$ 35,567 $ 184,291
=========== ===========
13
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(unaudited)
NOTE 5 - PAYABLES TO LIMITED PARTNERSHIPS
Payables to limited partnerships represent amounts which are due at various
times based on conditions specified in the limited partnership agreements. These
contributions are payable in installments and are due upon the Local Limited
Partnerships achieving certain operating and development benchmarks (generally
within two years of the Partnership's initial investment).
NOTE 6 - 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.
NOTE 7 - SUBSCRIPTIONS AND NOTES RECEIVABLE
During the nine months period ending December 31, 1999, the Partnership received
subscriptions for 8,724 Units, net of dealer discounts, and promissory notes
receivable of $5,740 and $567,100, respectively.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
During the nine months period ending December 31, 1999, the Partnership acquired
six limited partnerships interests which required capital contributions totaling
approximately $6,995,083, of which $1,043,530 has been advanced as of March 31,
1999 and has been reflected in loans receivable in the balance sheet (see Note
2) and $3,827,967 had been contributed during the nine months period ending
December 31, 1999.
14
<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 $4,511,000
in cash and aggregate investments in the thirteen Local Limited Partnerships of
$15,435,000. Liabilities at December 31, 1999 primarily consisted of $2,844,000
payable to limited partnerships, $155,000 note payable, and $36,000 of and
accrued fees and expenses due to the General Partner, respectively.
Results of Operations
Three Months Ended December 31, 1999 . The Partnership's net income for the
three months ended December 31, 1999 was $31,000, consisting of interest income
of $72,000, and equity in income from limited partnerships of 51,000, offset by
operating expenses of $(92,000).
Nine Months Ended December 31, 1999. The Partnership's net income for the nine
months ended December 31, 1999 was $9,000, consisting of interest income of
$187,000, and equity in income from limited partnerships of 19,000, offset by
operating expenses of $198,000.
Cash Flows
Nine Months Ended December 31, 1999. Net cash provided during the nine months
ended December 31, 1999 was $1,821,000. The cash flow consists of cash provided
by financing activities of $7,687,000, offset by cash used in investing
activities of $5,844,000, and cash used in operating activities of $23,000. Cash
provided by financing primarily was generated by the sale of Units and
collection of subscriptions receivable offset by offering costs. Cash used by
investing activities resulted from the purchase of interest in Local Limited
Partnerships and the associated acquisitions cost and fees.
During the nine months ended December 31, 1999, accrued payables, consisting of
accrued offering, acquisition, and management fees decreased by $148,000.
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
Form 8K - Current report dated July 16, 1999
Form 8K - Amended Current Report dated September 16, 1999
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 6
By: WNC & Associates, Inc. General Partner
By: /s/ Will Cooper, Jr.
Will 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> 0001037156
<NAME> WNC Housing Tax Credit Fund VI, L.P., Series 6
<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> 4,511,236
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,511,236
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,972,300
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16,937,037
<TOTAL-LIABILITY-AND-EQUITY> 19,972,300
<SALES> 0
<TOTAL-REVENUES> 187,045
<CGS> 0
<TOTAL-COSTS> 197,860
<OTHER-EXPENSES> 10,815
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,655
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,655
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,655
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
