SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 25, 2000
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(Exact name of registrant as specified in its charter)
California 333-76435 33-0761517
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, California 92626
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 662-5565
N/A
Former name or former address, if changed since last report)
022/A.edg
<PAGE>
Item 7. Financial Statements and Exhibits
a. Financial Statements of Businesses Acquired
2nd Fairhaven, LLC
Independent Auditor's Report..................................FS-1
Balance Sheet, December 31, 1999..............................FS-2
Statement of Income and Members' Equity, Year Ended
December 31, 1999.......................................FS-3
Statement of Cash Flows From November 30, 1997 (Date
of inception) to December 31, 1999......................FS-4
Notes to Financial Statements.................................FS-5
b. Proforma Financial Information
Pro Forma Balance Sheet, December 31, 1999 (Unaudited)........FS-8
Pro Forma Statement of Operations for the Period
September 3, 1999 (Date Operations Commenced)
through December 31, 1999 (Unaudited)...................FS-9
Notes to Pro Forma Financial Statements......................FS-10
c. Exhibits
10.1 Amended and Restated Operating Agreement of
2nd Fairhaven, LLC*
----------
*Previously filed.
2
<PAGE>
To the Members of Second Fairhaven, LLC:
Independent Auditor's Report
----------------------------
I have audited the accompanying balance sheet of Second Fairhaven, LLC as of
December 31, 1999 and the related statement of income and members' equity for
the year then ended and the related statement of cash flows for the period from
November 30, 1997 (date of inception) to December 31, 1999. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Second Fairhaven, LLC at December
31, 1999, and the results of its operations and its cash flows for the period
then ended in conformity with generally accepted accounting principles.
THOMAS S. CHAMBERS
Denton, Maryland
March 6, 2000
FS-1
<PAGE>
SECOND FAIRHAVEN, LLC
BALANCE SHEET
December 31, 1999
ASSETS
Property and Equipment, at cost:
Land and improvements $ 104,610
Buildings 1,132,289
Furniture and equipment 7,294
-------------
Total property and equipment 1,244,193
Less: accumulated depreciation (19,306)
-------------
Net property and equipment 1,224,887
-------------
Other Assets:
Cash 1,951
Restricted cash 9,540
Prepaid expenses 8,691
Rent receivable 6,185
Indirect fees 186,142
-------------
Total Other Assets 212,509
-------------
TOTAL ASSETS $ 1,437,396
===========
LIABILITIES AND MEMBERS' EQUITY
Long-term debt $ 1,003,824
-----------
Other liabilities:
Accounts payable 4,061
Interest payable 1,922
Loans payable to members 134,891
Accrued start-up fees 257,800
Security deposits 2,340
------------
Total Other Liabilities 401,014
------------
Members' Equity 32,558
------------
TOTAL LIABILITIES AND MEMBERS' EQUITY $ 1,437,396
===========
The accompanying notes are an integral part of this financial statement.
FS-2
<PAGE>
SECOND FAIRHAVEN, LLC
STATEMENT OF INCOME AND MEMBERS' EQUITY
Year ended December 31, 1999
REVENUES
Rents $ 58,157
Interest 69
---------
Total Revenue 58,226
---------
EXPENSES
Property expenses:
Grounds Maintenance 1,115
Insurance 3,010
Maintenance and repairs 749
Management fees 5,234
Professional Fees 109
Salaries 10,215
Supplies 1,683
Taxes 7,997
Utilities 6,386
Depreciation and amortization 27,964
Interest 13,476
Miscellaneous 362
-----------
Total Expenses 78,300
-----------
NET LOSS (20,074)
MEMBERS' EQUITY, January 1 52,632
----------
MEMBERS' EQUITY, December 31 $ 32,558
============
The accompanying notes are an integral part of this financial statement.
FS-3
<PAGE>
SECOND FAIRHAVEN, LLC
STATEMENT OF CASH FLOWS
From November 30, 1997 (Date of inception) to December 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received on behalf of tenants $ 51,972
Cash paid to suppliers and employees (41,490)
Interest received 69
Interest paid (11,554)
------------
Net cash used by operating activities (1,003)
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,181,193)
Transfers from restricted cash accounts 17,925
Transfers to restricted cash accounts (27,465)
------------
Net cash used by investing activities (1,190,733)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 1,005,062
Principal paid on long-term debt (1,238)
Security deposits received 2,340
Funds loaned by members 134,891
Members' capital contributions 52,632
------------
Net cash provided by financing activities 1,193,687
-----------
NET INCREASE IN CASH 1,951
Cash, November 30, 1997 -
------------
CASH, DECEMBER 31, 1999 $ 1,951
=============
RECONCILIATION OF NET LOSS TO CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (20,074)
Depreciation and amortization 27,964
Change in receivables and prepaid expenses (14,876)
Change in accounts payable and accrued interest 5,983
-------------
Net Cash Used by Operating Activities $ (1,003)
=============
The accompanying notes are an integral part of this financial statement.
FS-4
<PAGE>
SECOND FAIRHAVEN, LLC
NOTES TO FINANCIAL STATEMENTS
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of organization and operations - Second Fairhaven, LLC is a Maryland
limited liability company that was formed in November, 1997 to construct and
operate a 18-unit apartment complex in Federalsburg, Maryland. The project is
administered by the U.S. Department of Agriculture (RECD). Under this program
the Company provides housing to the low and moderate income elderly, subject to
regulation by RECD as to rental charges and operating methods. Lower rental
charges to tenants are recovered by the Company through rent subsidies provided
by RECD.
During the year ended December 31, 1999, rental revenue from RECD totaled
$36,582, representing 62.8% of total revenue.
Accounting method and income taxes - The Company uses the accrual method of
accounting for both financial statement and income tax purposes, whereby income
is recognized as earned and expenses are recognized as incurred.
The company is taxed as a partnership for federal and state income taxes;
therefore, all members recognize their respective shares of income or loss on
their individual tax returns. Consequently, a provision for income taxes has not
been included in the accompanying financial statements.
Use of estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Cash and cash equivalents - For purposes of the statement of cash flows, the
Company considers all checking and savings accounts available for the normal
operating activities of the business to be cash. Other cash balances that are
restricted for security deposits, property replacements and escrows are excluded
from cash for purposes of cash flows.
Building and equipment - The building, equipment and land are reflected at
original cost to the Company. Depreciation is calculated using straight and
accelerated methods over the following useful lives of the property:
Land improvements 20 years
Buildings 40 years
Furniture, fixtures & equipment 5 - 10 years
Deferred charges - The Company has incurred various start-up costs payable to
brokers and the General Partners. These costs have been capitalized and are
being amortized on a straight-line basis over fifteen years.
FS-5
<PAGE>
SECOND FAIRHAVEN, LLC
NOTES TO FINANCIAL STATEMENTS
NOTE B: RESTRICTED CASH
Restricted cash consists of the following amounts deposited at banks as required
by the mortgage note payable to Farmers' Home Administration:
Tax and insurance escrow $ 1,713
Reserve for replacement 5,480
Security deposits 2,347
-----
Total $ 9,540
========
NOTE C: LONG-TERM DEBT
Long-term debt consists of a mortgage payable to Farmers' Home Administration.
The mortgage is secured by substantially all property of the Company and is
payable in monthly installments of $2,132, including interest at 1.0%, through
April 2049.
Principal retirements in the years subsequent to December 31, 1999 are expected
to be:
2000 $ 2,605
2001 2,786
2002 2,980
2003 3,187
2004 3,409
Thereafter 988,857
-------
Total $ 1,003,824
============
Under the terms of the mortgage with Farmers Home Administration, the Company is
required to make monthly deposits into restricted cash accounts. As of December
31, 1999 those amounts are as follows:
Reserve for replacement $ 877
Tax and insurance escrow 1,485
-----
Total $ 2,326
========
FS-6
<PAGE>
SECOND FAIRHAVEN, LLC
NOTES TO FINANCIAL STATEMENTS
NOTE D: RELATED PARTY TRANSACTIONS
Cabell Corporation, a corporation controlled by the General Member, provides all
personnel for the Company operations and is reimbursed for the direct costs
associated with these services which amounted to $10,215 for the year ended
December 31, 1999. Cabell Corporation is also paid a fee for management of the
project equal to 9% of rent income, which totaled $5,234 for 1999. At December
31, 1999, $812 was owed by the Partnership for these fees.
NOTE E: CAPITALIZED INTEREST
During the period of construction from November 30, 1997 to May 1, 1999, the
Company incurred and paid interest costs in the amount of $46,593. These costs
have been capitalized as a component of buildings.
FS-7
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 7
(A California Limited Partnership)
PROFORMA BALANCE SHEET
December 31, 1999
ASSETS
Historical Proforma Proforma
Balance Adjustments Balance
Cash and cash equivalents $ 2,195,749 $ 1,001,440
(82,880)
(785,550) $ 2,328,759
Subscriptions receivable 803,590 785,550 1,589,140
Investment in limited
partnerships 341,570 888,074
82,880 1,312,524
Other assets 440 - 440
----------- ----------- -----------
$ 3,341,349 $ 1,889,514 $ 5,230,863
=========== =========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Notes payable to
limited partnerships $ - $ 888,074 $ 888,074
Commisions payable 44,730 - 44,730
Accrued fees and
expenses due to
general partner
and affiliates 155,449 - 155,449
----------- ----------- -----------
200,179 888,074 1,088,253
----------- ----------- -----------
Partners' equity (deficit):
General partner (4,659) (1,826) (6,485)
Limited partners 3,145,829 1,003,266 4,149,095
----------- ----------- -----------
Total partners' equity 3,141,170 1,001,440 4,142,610
----------- ----------- -----------
$ 3,341,349 $ 1,889,514 $ 5,230,863
=========== =========== ===========
Unaudited
See Accompanying Notes to Proforma Financial Statements
FS-8
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
PROFORMA STATEMENT OF OPERATIONS
For the Period September 3, 1999 (Date Operations Commenced)
through December 31, 1999
Historical Proforma Proforma
Balance Adjustments Balance
Interest income $6,082 $6,082
-------- -------
Operating expenses:
Amortization 700 700
Other 12 12
-------- -------
Total operating expenses 712 712
-------- -------
Income from operations 5,370 5,370
Equity in income (loss)
from limited partnerships - (6,690) (6,690)
-------- ------- -------
Net loss $ 5,370 $(6,690) $(1,320)
======== ======== ========
Unaudited
See Accompanying Notes to Proforma Financial Statements
FS-9
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO UNAUDITED PROFORMA FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The information contained in the following notes to the proforma balance sheet
is condensed from that which appears in the financial statements. Accordingly,
this proforma balance sheet should be reviewed in conjunction with the financial
statements and related notes thereto contained in the WNC Housing Tax Credit
Fund VI, L.P., Series 7 financial statements dated December 31, 1999. WNC
Housing Tax Credit Fund VI, L.P., Series 7 is referred to in these notes as the
"Partnership."
NOTE 2 - INTRODUCTION TO PROFORMA ADJUSTMENTS
As of December 31, 1999, the Partnership had not acquired a limited partnership
interest in any limited partnerships. Subsequent to December 31, 1999, the
Partnership has acquired an interest in two limited partnerships: 2nd Fairhaven
Manor, LLC (FAIRHAVEN) and School Square Limited Partnership (SCHOOL SQUARE).
Each owns one apartment complex. The Partnership is negotiating to acquire a
limited partnership interest in one other partnership that owns one apartment
complex: Red Oaks Estates, L.P. (RED OAKS). These investments commit the
Partnership to capital contributions as follows:
FAIRHAVEN $ 356,860
SCHOOL SQUARE 285,574
RED OAKS 245,640
-----------
$ 888,074
===========
FS-10
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO UNAUDITED PROFORMA FINANCIAL STATEMENTS (Continued)
NOTE 2 - INTRODUCTION TO PROFORMA ADJUSTMENTS (Continued)
- ---------------------------------------------
In accordance with Article 11, Proforma Financial Information of Regulation S-X
of the Securities and Exchange Commission, the accompanying proforma balance
sheet was computed assuming that the limited partnerships discussed above were
acquired at the end of the period presented. The first adjustment to cash and
the adjustment to partners' equity of $1,001,440 reflects the net proceeds from
December 31, 1999 to February 9, 1999 from issuance of 1,304 units of limited
partners' capital ($1,304,000 less notes receivable and commissions and offering
costs of $120,000 and $182,560, respectively.) The third adjustment to cash and
the adjustment to subscriptions receivable of $785,550 reflects the increase in
subscriptions receivable from the above subscriptions. The adjustment to
investment in limited partnerships and the first adjustment to notes payable to
limited partnerships of $888,074 reflects the Partnership's acquisition of the
three limited partnership interests as if the Partnership's date of acquisition
was December 31, 1999. The second adjustment to investment in limited
partnerships and the second adjustment to cash of $82,880 reflects the
acquisition fee from the proceeds raised from December 31, 1999 to February 9,
2000.
The accompanying proforma statement of operations was computed assuming that the
limited partnerships were acquired on the date the Partnership commenced
operations. The SCHOOL SQUARE and RED OAKS apartment complexes were under
construction or rehabilitation during the period presented and had no operations
which should be reported. FAIRHAVEN had operations during the period presented
and a proforma income adjustment of $(6,690) has been recorded to equity in
income (loss) of limited partnerships in the Proforma Statement of Operations to
reflect these operations. The Partnership uses the equity method of accounting
to account for its investments in these local limited partnerships
FS-11
<PAGE>
SIGNATURES
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 hereunto duly authorized.
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
Date: March 29, 2000 By: WNC & Associates, Inc.,
General Partner
By: /s/ MICHAEL L. DICKENSON
Michael L. Dickenson,
Vice President - Chief Financial
Officer
5
