FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
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: 0-26048
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
California 33-0563307
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
Title of Securities Exchanges on which Registered
None N/A
Securities registered pursuant to section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST N/A
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 ____ Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
None
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
May 4, 1993
Year ended (inception)To
December 31, 1995 December 31,1994 December 31, 1993
----------------- ---------------- -----------------
Revenues $68,682 $ 8 $ 0
Partnership operating
expenses 86,499 67,946 11,634
Equity in loss of
Local Partnerships (727,986) (413,316) ( 0)
-------- -------- -------
Net loss $ (745,803) $ (396,001) $ (11,634)
========= ========= =========
Net loss per Limited
Partnership Interest $(73.83) $ (50.35) (a) $(23.55)
======= ======= =======
Total assets $ 8,355,140 $ 10,391,250 $ 2,389,712
========= ========== =========
Net investment in
Local Partnerships $ 6,928,034 $ 7,852,303 $ 355,087
========= ========== ========
Capital contributions payable
to Local Partnerships $799,745 $ 2,289,218 $ 125,263
======= ========= ========
Accrued fees and expenses
due to affiliates $ 65,438 $ 75,820 $1,229,220
====== ====== =========
(a) Limited Partners were not admitted to the Partnership until January 1994.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations:
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $696,900 for the period
ended December 31, 1995. This decrease in cash consists of cash (used by) and
provided by the Partnership's operating, investing activities and financing
activities of approximately $55,400, $(914,800) and $162,500, respectively. Cash
used by investing activities consisted primarily of capital contributions to
Local Limited Partnerships of approximately $1,317,000, and payment of
capitalized costs totaling approximately $7,100. Cash provided by investing
activities consisted of a the collection of loans receivable and advances of
approximately $409,300. Cash used by financing activities consisted of advances
to General Partner and affiliates of approximately $47,000 and cash provided by
consisted of capital contributions from partners and offering expense
adjustments of $145,000 and 64,500, respectively. Cash provided by and used by
the operating activities of the Partnership was minimal compared to its other
activities. Cash provided by operating activities consisted primarily of
interest received on cash deposits, and cash used in operating activities
consisted primarily of payments for operating fees and expenses. The major
components of all these activities are discussed in greater detail below.
<PAGE>
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
increase in cash and cash equivalents of approximately $2,106,700 for the period
ended December 31, 1994. This increase in cash was provided by the Partnership's
operating and financing activities, including the proceeds from the offering.
Cash from financing activities for the period of approximately $7,113,635 was
sufficient to fund the investing activities of the Partnership in the aggregate
amount of approximately $5,053,500, which consisted primarily of capital
contributions to Local Limited Partnerships of approximately $4,972,300, less
loans repaid by Local Limited Partnerships and acquisition costs and fees of
approximately $760,400. Cash provided by and used by the operating activities of
the Partnership was minimal compared to its other activities. Cash provided by
operating activities consisted primarily of interest received on cash deposits,
and cash used in operating activities consisted primarily of payments for
operating fees and expenses. The major components of all these activities are
discussed in greater detail below.
The Partnership is indebted to WNC & Associates, Inc., at December 31, 1995 and
December 31, 1994 in the amount of approximately $65,400 and $75,800,
respectively. The component items of such indebtedness are as follows:
1995 1994
---- ----
Advances to pay acquisition fees $31,700
Advances due to (from) affiliate made for
acquisition costs, organizational, offering
and selling expenses (1,200) 14,100
Asset management fees 66,600 30,000
------ ------
Total $65,400 $76,800
======= =======
As of December 31, 1995, the Partnership has received approximately $10,000,000
from the sale of Units. Approximately $8,116,000 (81%) of which has been
committed to the purchase price and acquisition fees and costs of investments in
20 Local Limited Partnership Interests. The Partnership had made capital
contributions to Local Limited Partnerships in the amount of approximately
$6,477,000 as of December 31, 1995.
Prior to sale of the Apartment Complexes, it is not expected that any of the
Local Limited Partnerships in which the Partnership has invested or will invest
will generate cash sufficient to provide distributions to the Partnership of any
material amount. Distributions to the Partnership would first by used to meet
operating expenses of the Partnership, including the payment of the asset
management fee to the General Partner. See Item 11 hereof. As a result, it is
not anticipated that the Partnership will provide distributions to the Limited
Partners prior to the sale of the Apartment Complexes, if ever.
The Partnership's investments are not 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 by the General Partner.
Nevertheless, the General Partner anticipates that capital raised from the sale
of the Units is sufficient to fund the Partnership's operations.
The Partnership has established 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 excluding payment of the asset management fee as well as expenses
attendant to the preparation of tax returns and reports to the Limited Partners
and other investor servicing obligations of the Partnership. Liquidity would,
however, be adversely affected by unanticipated or greater than anticipated
operating costs. To the extent 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
<PAGE>
financing. The General Partner may also apply any cash distributions received
from the Local Limited Partnerships for such purposes or to replenish or
increase working capital reserves.
Under its Partnership Agreement the Partnership does not have the ability to
assess its partners 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 Low Income Housing Credits, cash
flow and/or proceeds of sale or refinancing of the Apartment Complexes and
result in adverse tax consequences to the Limited Partners), 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 requirement 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 their first several years of operations as a result of the
completion of their offerings of Units and their 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 deferred obligations of the Partnerships.
Results of Operations
- ---------------------
As reflected on its Statements of Operations, the Partnership had losses of
approximately $745,800 and $396,000 for the years ended December 31, 1995 and
1994, respectively. 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 Fees is equal to the greater of
(i) $2,000 for each Apartment Complex or (ii) 0.275% of gross proceeds, and will
be decreased or increased annually based on changes to the Consumer Price Index.
The annual management fee incurred was $36,667 and $30,000 for the years ended
December 31, 1995 and 1994, respectively.
Amortization expense consists of the amortization of capitalized acquisition
fees and costs and of organization costs over a period of 30 years and t years
respectively.
Office expense consist of the Partnership's administrative expenses, such as
accounting and legal fees, bank charges and investor reporting expenses.
<PAGE>
Equity in losses from Limited Partnerships. The Partnership's equity in losses
from Limited Partnerships is generally equal to approximately 99% of the
aggregate net loss of the Limited Partnerships. After rent-up, the Local Limited
Partnerships are expected to generate losses during each year of operations;
this is so because, although rental income is expected to exceed cash operating
expenses, depreciation and amortization deductions claimed by the Local Limited
Partnerships are expected to exceed net rental income.
Item 8. Financial Statements and Supplementary Data:
<PAGE>
WNC HOUSING TAX CREDIT FUND, IV, L.P., SERIES 1
(A California Limited Partnership)
FINANCIAL STATEMENTS
For The Years Ended December 31, 1995 and 1994
with
INDEPENDENT AUDITORS' REPORT THEREON
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC Housing Tax Credit Fund IV, L.P., Series 1
We have audited the accompanying consolidated balance sheets of WNC Housing Tax
Credit Fund IV, L.P., Series 1 (a California Limited Partnership) (the
Partnership) as of December 31, 1995 and 1994 and the related statements of
operations, partners' equity (deficit) and cash flows for the years then ended
and for the period May 4, 1993 (date of inception) to December 31, 1993. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit certain of the financial statements of the limited
partnerships in which WNC Housing Tax Credit Fund IV, L.P., Series 1 is a
limited partner. These investments, as discussed in Note 3 to the financial
statements, are accounted for by the equity method. The financial statements of
certain of the limited partnerships, representing 83% and 76% of investments in
limited partnerships at December 31, 1995 and 1994, respectively, were audited
by other auditors whose reports have been furnished to us, and our opinion,
insofar as it relates to the amounts included for such limited partnerships, is
based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the 1995
and 1994 financial statements referred to above present fairly, in all material
respects, the financial position of WNC Housing Tax Credit Fund IV, L.P., Series
1 (a California Limited Partnership) as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for the years then ended and for
the period May 4, 1993 (date of inception) to December 31, 1993 in conformity
with generally accepted accounting principles.
Irvine, California
February 29, 1996, except
as to Note 3 which is as of
May 9, 1997
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1995 and 1994
ASSETS 1995 1994
---- ----
Cash and cash equivalents $ 1,410,867 $ 2,107,761
Advances receivable (Note 2) --- 409,286
Investments in limited partnerships
(Note 3) 6,928,034 7,852,303
Other assets 16,239 21,900
--------- ---------
$ 8,355,140 $ 10,391,250
========= ==========
LIABILITIES AND PARTNERS'
EQUITY (DEFICIT)
Liabilities:
Payables to limited partnerships
(Note 5) $ 799,745 $ 2,289,218
Accrued fees and advances due to
General Partner and affiliate
(Note 4) 65,438 75,820
--------- -------
Total liabilities 865,183 2,365,038
========= =========
Partners' equity (deficit) (Note 7):
General partner (25,001) (18,188)
Limited partners (10,000 units
authorized - 10,000 units
outstanding at December 31, 1995
and 1994) 7,514,958 8,044,400
--------- ---------
Total partners' equity 7,489,957 8,026,212
--------- ---------
$ 8,355,140 $ 10,391,250
========= ==========
See accompanying notes to financial statements
FS-3
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
1995 1994 1993
---- ---- ----
Interest income $ 68,682 $ 85,261 $ ---
-------- -------- --------
Operating expenses:
Amortization 30,926 20,797 ---
Asset management fees
(Note 4) 36,667 30,000 ---
Interest expense --- 4,327 11,563
Other 18,906 12,822 71
-------- -------- --------
Total operating expenses 86,499 67,946 11,634
-------- -------- --------
Income (loss) from operations (17,817) 17,315 (11,634)
Equity in losses from limited
partnerships (Note 3) (727,986) (413,316) ---
-------- -------- --------
Net loss $ (745,803) $ (396,001) $ (11,634)
======== ======== ========
Net loss allocated to:
General partner $ (7,458) $ (3,960) $ (116)
Limited partners (738,345) (392,041) (11,518)
-------- -------- --------
Total net loss allocated $ (745,803) $ (396,001) $ (11,634)
======== ======== ========
Net loss per weighted limited
partner units $ (73.83) $ (50.35) $ (23.55)
======== ======== ========
Outstanding weighted limited
partner units 10,000 7,787 489
======== ======== ========
See accompanying notes to financial statements
FS-4
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
General Limited
Partner Partners Total
Capital contribution from
General Partner $ 100 $ --- $ 100
Capital contributions --- 978,000 978,000
Capital issued for notes
receivable (Note 7) --- (56,000) (56,000)
Offering expenses (1,219) (120,701) (121,920)
Net loss (116) (11,518) (11,634)
---------- ---------- ----------
Equity (deficit)
December 31, 1993 (1,235) 789,781 788,546
Capital contributions --- 9,022,000 9,022,000
Offering expenses (12,993) (1,286,340) (1,299,333)
Collection of notes receivable
(Note 7) --- 56,000 56,000
Capital issued for notes
receivable (Note 7) --- (145,000) (145,000)
Net loss (3,960) (392,041) (396,001)
---------- ---------- ----------
Equity (deficit)
December 31, 1994 (18,188) 8,044,400 8,026,212
Collection of notes receivable
(Note 7) --- 145,000 145,000
Offering expenses 645 63,903 64,548
Net loss (7,458) (738,345) (745,803)
---------- ---------- ----------
Equity (deficit)
December 31, 1995 $ (25,001) $ 7,514,958 $ 7,489,957
========== ========== ==========
See accompanying notes to financial statements
FS-5
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
Net loss $ (745,803) $ (396,001) $ (11,634)
Adjustments to reconcile net
loss to net cash provided
(used) by operating activities:
Amortization 30,926 20,797 ---
Equity in loss of limited
partnerships 727,986 413,316 ---
Accrued asset management fees due
affiliate of general partner 36,667 30,000 ---
Accrued interest payable to
affiliate of general partner --- (10,862) 10,862
Change in accrued interest payable --- (701) 701
Change in other assets 5,661 (9,900) ---
---------- ---------- ---------
Net cash provided (used) by operating
activities 55,437 46,649 (71)
---------- ---------- ---------
Cash flows from investing activities:
Investments in limited partnerships,
net (1,317,044) (4,972,314) (187,800)
Changes in advances from general
partner and affiliates for
acquisition fees --- (8,179) ---
Change in advances receivable 409,286 687,310 (1,096,596)
Acquisition costs and fees (7,072) (760,369) ---
---------- ---------- ---------
Net cash used in investing activities (914,830) (5,053,552) (1,284,396)
---------- ---------- ---------
Cash flows from financing activities:
Capital contributions from partners 145,000 9,855,000 100
Changes in advances from general
partner and affiliates for:
Acquisition of limited partnerships (47,049) (1,039,414) 1,039,414
Offering adjustments (expenses) --- (156,636) ---
Offering adjustments (expenses) 64,548 (1,299,333) ---
Proceeds (payments) on loan payable --- (245,982) 245,982
---------- ---------- ---------
Net cash provided by financing
activities 162,499 7,113,635 1,285,496
---------- ---------- ---------
Net increase in cash and cash
equivalents (696,894) 2,106,732 1,029
Cash, beginning of year 2,107,761 1,029 ---
---------- ---------- ---------
Cash, end of year $ 1,410,867 $ 2,107,761 $ 1,029
========== ========== =========
Continued
FS-6
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
1995 1994 1993
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest paid $ --- $ 15,890 $ ---
======== ======== ========
Income taxes paid $ 800 $ 800 $ ---
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
During the years ended December 31, 1995 and 1994, the Partnership incurred, but
did not pay $36,667 and $30,000, respectively, of management fees due to an
affiliate.
During the year ended December 31, 1994, the Partnership incurred, but did not
pay $2,163,955 of payables to limited partnerships (in connection with its
investments in limited partnerships).
During the year ended December 31, 1994, the Partnership incurred, but did not
pay acquisitions fees of $31,691 payable to an affiliate.
The Partnership had incurred payables (in connection with its investment in the
limited partnership) of $125,263 as of December 31, 1993.
The Partnership had subscriptions receivable and notes receivable for capital
contributions of $922,000 and $56,000, respectively, at December 31, 1993 (Note
7).
The Partnership had incurred offering costs of $121,920 and acquisition fees and
expenses of $42,024 and organization costs of $15,000 which were payable to an
affiliate of the general partner as of December 31, 1993.
See accompanying notes to financial statements
FS-7
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
- ------------
WNC Housing Tax Credit Fund IV, L.P., Series 1 (the "Partnership") was formed
under the California Revised Limited Partnership Act on May 4, 1993, and
commenced operations on October 20, 1993. 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 general partner is WNC Tax Credit Partners, IV, L.P. (the "General
Partner"), a California limited partnership. WNC & Associates, Inc. is the
general partner of the General Partner. Wilfred N. Cooper, Sr., through the
Cooper Revocable Trust, owns 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, 30% of the outstanding stock of WNC &
Associates, Inc.
The Partnership Agreement authorized the sale of 10,000 units of limited
partnership interests at $1,000 per Unit ("Units"). The offering of Units
concluded in July 1994 at which time 10,000 Units in the amount of $10,000,000
had been accepted. The General Partner has a 1% 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% 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 a
subordinated disposition fee (as described in Note 4), 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.
The Partnership's investments in limited partnerships are subject to the risks
incident to the management and ownership of multifamily residential real estate,
and include the risks that neither the Partnership's investments nor the
apartment complexes owned by the limited partnerships will be readily
marketable. Additionally there can be no assurance that the Partnership will be
able to dispose of its interest in the 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
apartment complexes and the Partnership. The apartment complexes could be
subject to loss through foreclosure. In addition, each limited partnership is
subject to risks relating to environmental hazards which might be uninsurable.
Because the Partnership's ability to control its operations will depend on these
and other factors beyond the control of the General Partner and the general
partners of the limited partnerships, there can be no assurance that Partnership
operations will be profitable or that the anticipated housing tax credits will
be available to limited partners.
Continued
FS-8
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
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 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
and amortized over 30 years (see Note 3).
Losses from limited partnerships allocated to the Partnership will not be
recognized to the extent that the investment balance would be adjusted below
zero.
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 reported period. Actual
results could materially differ from those estimates.
Cash and Cash Equivalents
- -------------------------
The Partnership considers all investments with remaining maturities of three
months or less when purchased to be cash equivalents.
Concentration of Credit Risk
- ----------------------------
At December 31, 1995, the Partnership maintained cash balances at certain
financial institutions in excess of the federally insured maximum.
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred in connection with the
selling of limited partnership interests in the Partnership. The General Partner
is obligated to pay all offering and organization costs in excess of 15%
(including sales commissions) of the total offering proceeds. Offering expenses
are reflected as a reduction of limited partners' capital. The Partnership has
incurred offering and selling expenses to date of $606,705 and $750,000,
respectively, as of December 31, 1995, which are reflected as a reduction of
partners' equity. During 1995, it was determined by management that offering
costs were overstated by $64,548 at December 31, 1994. Accordingly, during 1995,
the correction of such overstatement has been reflected as a reduction to
offering costs and accrued fees and advances due to General Partner and
affiliate.
Organization Costs
- ------------------
Organization costs are being amortized on the straight-line method over 60
months. Organization costs amounted to $15,000 as of December 31, 1995 and 1994.
Accumulated amortization amounted to $6,000 and $3,000 as of December 31, 1995
and 1994, respectively.
Continued
FS-9
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Net Loss Per Limited Partner Unit
- ---------------------------------
Net loss per limited partner unit is computed by dividing the limited partners'
share of net loss by the weighted number of limited partner units outstanding
during the period.
NOTE 2 - ADVANCES RECEIVABLE
- ----------------------------
For 1994, advances represent amounts paid to three limited partnerships which
the Partnership did not acquire. These amounts, which are noninterest-bearing,
were repaid in 1995 by affiliates of the General Partner who became the limited
partner in these three limited partnerships.
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of December 31, 1995 and 1994, the Partnership had acquired limited
partnership interests in twenty limited partnerships, each of which owns one
apartment complex. As of December 31, 1995, construction on all apartment
complexes was complete. The respective general partners of the limited
partnerships manage the day to day operations of the limited partnerships.
Significant limited partnership business decisions require approval of the
Partnership. The Partnership, as a limited partner, is entitled to up to 99%, as
specified in the partnership agreements, of the operating profits and losses of
the limited partnerships upon its acquisition of its limited partnership
interests.
The Partnership's investments in the limited partnerships as shown in the
accompanying balance sheet as of December 31, 1995 and 1994 are approximately
$1,519,000 and $2,319,000, respectively, greater than the Partnership's equity
as shown in the limited partnership's financial statements. This difference is
primarily due to acquisition costs related to the acquisition of the investment
that have been capitalized in the Partnership's investment account and will be
amortized over 30 years and capital contributions accrued but not paid.
Following is a summary of the components of the Partnership's investments in
limited partnerships as of December 31, 1995 and 1994:
1995 1994
Investments per balance sheet,
beginning of period $ 7,852,303 $ 355,087
Capital contributions to limited
partnerships --- 7,136,269
Tax credit adjustments and
distributions (172,429) ---
Continued
FS-10
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
1995 1994
---- ----
Capitalized acquisition fees
and costs 4,072 792,060
Equity in losses of limited
partnerships (727,986) (413,316)
Amortization of capitalized
acquisition fees and costs (27,926) (17,797)
--------- ---------
Investments per balance sheet,
end of period $ 6,928,034 $ 7,852,303
========= =========
Approximate selected financial information from the combined financial
statements of the limited partnerships at December 31, 1995 and 1994 and for the
periods then ended is as follows:
COMBINED BALANCE SHEETS
ASSETS 1995 1994
---- ----
Cash $ 918,000 $ 702,000
Land 1,586,000 1,364,000
Construction in progress --- 6,705,000
Buildings, net 31,916,000 21,397,000
Due from affiliates 94,000 1,069,000
Other assets 559,000 147,000
---------- ----------
$ 35,073,000 $ 31,384,000
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Construction and mortgage loans payable $ 26,396,000 $ 22,526,000
Other liabilities 2,600,000 2,394,000
---------- ----------
Total liabilities 28,996,000 24,920,000
---------- ----------
Partners' equity:
WNC Housing Tax Credit Fund IV, L.P.,
Series 1 5,409,000 5,533,000
Other partners 668,000 931,000
---------- ----------
Total partners' equity 6,077,000 6,464,000
---------- ----------
$ 35,073,000 $ 31,384,000
========== ==========
Continued
FS-11
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
COMBINED STATEMENTS OF OPERATIONS
1995 1994
---- ----
Revenues:
Operating $ 2,245,000 $ 811,000
Other (not allocable to Partnership) 90,000 30,000
--------- ---------
Total revenues 2,335,000 841,000
--------- ---------
Expenses:
Operating expenses 1,530,000 389,000
Interest expense 641,000 259,000
Depreciation 901,000 592,000
--------- ---------
Total expenses 3,072,000 1,240,000
--------- ---------
Net loss $ (737,000) $ (399,000)
========= =========
Net loss allocable to Partnership $ (728,000) $ (413,000)
========= =========
Certain limited partnerships have incurred operating losses and have working
capital deficiencies. In the event these limited partnerships continue to incur
operating losses, additional capital contributions by the Partnership may be
required to sustain the operations of such limited partnerships. If additional
capital contributions are not made when they are required, the Partnership's
investment in certain of such limited partnerships could be impaired.
One limited partnership, which represents 19% of the total combined equity of
the investments in limited partnerships, has insufficient cash flow to service
the limited partnership's indebtedness as required during 1996. In addition, the
limited partnership is in negotiations to restructure its construction loan
payable. The ultimate result of these negotiations could significantly impact
management's plans to hold its rental property in the normal course of business.
In the event the limited partnership is required to liquidate or sell its
property, the net proceeds could be significantly less than the carrying value
of such property. As of December 31, 1995, the carrying value of such property
totaled $7,615,430.
In September 1996, the original general partners of this limited partnership
were removed. The Los Angeles County Housing Development Corporation was named
as the sole general partner. The Partnership is currently in discussions with
the former general partners to restore them as limited partners in the limited
partnership with no or minimal ownership interest.
Continued
FS-12
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
NOTE 4 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Under the terms of the Partnership Agreement, the Partnership is obligated to
the General Partner or its affiliates for the following items:
Acquisition fees of up to 8% of the gross proceeds from the sale of
Partnership units as compensation for services rendered in connection
with the acquisition of limited partnerships. As of December 31, 1995,
the Partnership had incurred acquisition fees of approximately
$800,000. Acquisition fees are included in limited partnership
investment. Accumulated amortization amounted to $43,964 and $17,297 as
of December 31, 1995 and 1994, respectively.
Reimbursement of costs incurred by an affiliate of the General Partner
in connection with the acquisition of limited partnerships. These
reimbursements have not exceeded 1.2% of the gross proceeds. As of
December 31, 1995 and 1994, the Partnership incurred acquisition costs
of $38,157 and $34,084, respectively, which have been included in
limited partnership investment. Amortization was insignificant for 1995
and 1994.
An annual asset management fee equal to the greater amount of (i)
$2,000 for each apartment complex, or (ii) 0.275% of gross proceeds. In
either case, the fee will be decreased or increased annually based on
changes to the Consumer Price Index. However, in no event will the
maximum amount exceed 0.2% of the invested assets (defined as the
Partnership's capital contributions plus its allocable percentage of
the mortgage debt encumbering the apartment complexes) of the limited
partnerships. The Partnership incurred asset management fees of $36,667
and $30,000 for the year ended December 31, 1995 and 1994,
respectively. The Partnership incurred no management fees during 1993.
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 Agreement) and is payable only if services are rendered in
the sales effort.
During 1993, the Partnership incurred interest expense of $10,862 from
funds of $1,039,414 advanced to the Partnership by an affiliate of the
General Partner.
Continued
FS-13
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1995 and 1994, and
The Period May 4, 1993 (Date of Inception)
To December 31, 1993
NOTE 4 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
Accrued fees and advances due (to)/from General Partner and affiliate as of
December 31, 1995 and 1994 consist of the following:
1995 1994
---- ----
Acquisition fees $ --- $ (31,691)
Advances due (to)/from affiliate made
for acquisition costs, organizational,
offering and selling expenses 1,229 (14,129)
Asset management fees (66,667) (30,000)
$ (65,438) $ (75,820)
NOTE 5 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payable to limited partnership represent amounts which are due at various times
based on conditions specified in the limited partnership agreement. These
contributions are non-interest bearing, are payable in installments and are due
upon the limited partnership achieving certain operating benchmarks (generally
within two years of the Partnership's initial investment).
NOTE 6 - INCOME TAXES
- ---------------------
No provision for income taxes has been recorded in the accompanying financial
statements as any liability for income taxes is the obligation of the partners
of the Partnership.
NOTE 7 - INVESTOR NOTES RECEIVABLE
- ----------------------------------
As of December 31, 1994 and 1993, the Partnership had received notes receivable
of $145,000 and $56,000 in connection with the sale of partnership units.
Limited partners who subscribed 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 payable,
together with interest at a rate of 11% per annum, due no later than 13 months
after the subscription date. Since such notes were not collected as of the date
of issuance of the financial statements, the balance was reflected as a
reduction of partners' equity in the accompanying financial statements. Such
amounts were subsequently collected.
FS-14
<PAGE>
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:
Financial Statements
Report of independent public accountants.
Balance sheet as of December 31, 1995 and 1994
Statements of Operations for the years ended December 31, 1995 and December 31,
1994 and the period May 4, 1993 (inception) to December 31, 1993.
Statement of Partners' Equity for the years ended December 31, 1995 and December
31, 1994 and the period May 4, 1993 (inception) to December 31, 1993.
Statements of Cash Flows for the years ended December 31, 1995 and December 31,
1994 and the period May 4, 1993 (inception) to December 31, 1994.
Notes to Financial Statements.
Financial Statement Schedules:
These schedules are omitted because any required information is included in the
financial statements and notes thereto, or they are
not applicable, or not required.
Exhibits
(3) Articles of incorporation and by-laws: The registrant is not incorporated.
The Partnership Agreement is included as Exhibit B to the Prospectus, filed as
Exhibit 28.1 to Form 10-K for fiscal year ended December 31, 1995.
(10) Material contracts:
10.1 Second Amended and Restated Agreement of Limited Partnership of Beckwood
Manor Seven Limited Partnership filed as exhibit 10.1 to Form 8-K dated December
8, 1993 is hereby incorporated herein by reference as exhibit 10.1.
10.2 Amended and Restated Agreement of Limited Partnership of Alpine Manor, L.P.
filed as exhibit 10.3 to Post-Effective Amendment No. 1 dated February 16, 1994
is hereby incorporated herein by reference as exhibit 10.2.
10.3 Second Amended and Restated Agreement of Limited Partnership of Briscoe
Manor, Limited Partnership filed as exhibit 10.4 to Post-Effective Amendment No.
1 dated February 16, 1994 is hereby incorporated herein by reference as exhibit
10.3.
10.4 Amended and Restated Agreement and Certificate of Limited Partnership of
Evergreen Four, Limited Partnership filed as exhibit 10.5 to Post-Effective
Amendment No. 1 dated February 16, 1994 is hereby incorporated herein by
reference as exhibit 10.4.
10.5 Amended and Restated Agreement and Certificate of Limited Partnership of
Fawn Haven, Limited Partnership filed as exhibit 10.6 to Post-Effective
Amendment No. 1 dated February 16, 1994 is hereby incorporated herein by
reference as exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of Fort Stockton,
L.P. filed as exhibit 10.7 to Post-Effective Amendment No. 1 dated February 16,
1994 is hereby incorporated herein by reference as exhibit 10.6.
10.7 Amended and Restated Agreement of Limited Partnership and Certificate of
Limited Partnership of Madisonville Manor Senior Citizens Complex, Ltd. filed as
exhibit 10.8 to Post-Effective Amendment No. 1 dated February 16, 1994 is hereby
incorporated herein by reference as exhibit 10.7.
10.8 Amended and Restated Agreement of Limited Partnership and Certificate of
Limited Partnership of Mt. Graham Housing, Ltd. filed as exhibit 10.9 to
Post-Effective Amendment No. 1 dated February 16, 1994 is hereby incorporated
herein by reference as exhibit 10.8.
10.9 Amended and Restated Agreement of Limited Partnership and Certificate of
Limited Partnership of Northside Plaza Apartments, Ltd. filed as exhibit 10.10
to Post-Effective Amendment No. 1 dated February 16, 1994 is hereby incorporated
herein by reference as exhibit 10.9.
10.10 Amended and Restated Agreement of Limited Partnership of Pampa Manor, L.P.
filed as exhibit 10.11 to Post-Effective Amendment No. 1 dated February 16, 1994
is hereby incorporated herein by reference as exhibit 10.10.
<PAGE>
10.11 Amended and Restated Agreement of Limited Partnership of Vernon Manor,
L.P. filed as exhibit 10.12 to Post-Effective Amendment No. 1 dated February 16,
1994 is hereby incorporated herein by reference as exhibit 10.11.
10.12 Amended and Restated Agreement of Limited Partnership and Certificate of
Limited Partnership of Waterford Place, A Limited Partnership filed as exhibit
10.13 to Post-Effective Amendment No. 1 dated February 16, 1994 is hereby
incorporated herein by reference as exhibit 10.12.
10.13 Amended and Restated Agreement of Limited Partnership Yantis, Ltd filed as
exhibit 10.13 to Post-Effective Amendment No. 1 dated February 16, 1994 is
hereby incorporated herein by reference as exhibit 10.13.
10.14 Third Amended and Restated Agreement of Limited Partnership and
Certificate of Limited Partnership of Indian Creek Limited Partnership filed as
exhibit 10.16 to Post-Effective Amendment No. 2 dated March 11, 1994 is hereby
incorporated herein by reference as exhibit 10.14.
10.15 Agreement of Limited Partnership of Laurel Creek Apartments filed as
exhibit 10.1 to Form 8-K dated May 25, 1994 is hereby incorporated herein by
reference as exhibit 10.15.
10.16 Second Amended and Restated Agreement of Limited Partnership of Sandpiper
Square, A Limited Partnership filed as exhibit 10.2 to Form 8-K dated May 25,
1994 is hereby incorporated herein by reference as exhibit 10.16.
10.17 Amended and Restated Agreement of Limited Partnership of Regency Court
Partners filed as exhibit 10.1 to Form 8-K dated June 30, 1994 is hereby
incorporated herein by reference as exhibit 10.17.
10.18 Disposition and Development Agreement By and Between The Community
Development Commission of the County of Los Angeles and Regency Court Partners
(including forum of Ground Lease) filed as exhibit 10.2 to Form 8-K dated June
30, 1994 is hereby incorporated herein by reference as exhibit 10.18.
10.19 Amended and Restated Agreement of Limited Partnership of Baycity Village
Apartments, Limited Partnership filed as exhibit 10.19 to Post-Effective
Amendment No. 4 dated July 14, 1994 is hereby incorporated herein by reference
as exhibit 10.19.
10.20 Second Amended and Restated Agreement of Limited Partnership of Hidden
Valley Limited Partnership filed as exhibit 10.20 to Post-Effective Amendment
No. 4 dated July 14, 1994 is hereby incorporated herein by reference as exhibit
10.20.
10.21 Amended and Restated Agreement of Limited Partnership of HOI Limited
Partnership of Lenoir and Amendments thereto filed as exhibit 10.21 to
Post-Effective Amendment No. 4 dated July 14, 1994 is hereby incorporated herein
by reference as exhibit 10.20.
Reports on Form 8-K
No reports on From 8-K were filed during the fourth quarter ended December 31,
1995.
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1
By: WNC Tax Credit Partners IV, L.P. General Partner
By: WNC & Associates, Inc. General Partner
By:/s/ John B. Lester, Jr.
- -----------------------------------------------------
John B. Lester, Jr. President
Date: January 18, 1999
By: /s/ Theodore M. Paul
- -----------------------------------------------------
Theodore M. Paul Vice President - Finance
Date: January 18, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Wilfred N. Cooper, Sr.
- -----------------------------------------------------
Wilfred N. Cooper, Sr. Director and Chairman of the Board
Date: January 18, 1999
By: /s/ John B. Lester, Jr.
- -----------------------------------------------------
John B. Lester, Jr. Director and Secretary
Date: January 15, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000913496
<NAME> WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,410,867
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,410,867
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,355,140
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,489,957
<TOTAL-LIABILITY-AND-EQUITY> 8,355,140
<SALES> 0
<TOTAL-REVENUES> 68,682
<CGS> 0
<TOTAL-COSTS> 86,499
<OTHER-EXPENSES> 727,986
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (745,803)
<INCOME-TAX> 0
<INCOME-CONTINUING> (745,803)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (745,803)
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</TABLE>
