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 June 30, 1996
OR
| | 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: 0-28370
WNC Housing Tax Credit Fund IV, L.P. - Series 2
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
California 33-0596399
WNC Housing Tax Credit Fund IV, L.P. - Series 2
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 622-5565
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>
Part I. Financial Information
Item 1. Financial Statements
Index
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(a California Limited Partnership)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED June 30, 1996
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets, June 30, 1996 and December 31, 1995....................3
Statement of Operations
For the six and three months ended June 30, 1996.....................4
Statement of Partners' Equity
For the six months ended June 30, 1996...............................5
Statement of Cash Flows
For the six months ended June 30, 1996...............................6
Notes to Financial Statements..........................................8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......................12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................15
Item 6. Exhibits and Reports on Form 8K...............................15
Signatures............................................................16
-2-
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P. - SERIES 2
(A California Limited Partnership)
BALANCE SHEETS
June 30, 1996 and December 31, 1995
1996 1995
------ ------
ASSETS
Cash and cash equivalents $ 3,351,930 $ 5,285,730
Investment in limited
partnerships - Note 2 10,411,179 9,417,744
Other assets - Note 4 9,516 29,568
------ ------
$ 13,772,625 $ 14,733,042
=========== ==========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accrued fees and expenses due to
general partner and affiliates - Note 3 $ 146,983 $ 146,685
Payable to limited partnerships -Note 4 1,532,786 2,134,797
--------- ---------
1,679,769 2,281,482
--------- ---------
Partners' equity (deficit):
General partner (31,384) (27,796)
Limited partners (20,000 units
authorized, 15,600 units issued
and outstanding) 12,124,240 12,479,356
---------- ----------
Total partners' equity 12,092,856 12,451,560
---------- ----------
$ 13,772,625 $ 14,733,042
========== ==========
UNAUDITED
See Accompanying Notes to Financial Statements
-3-
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P. - SERIES 2
(A California Limited Partnership)
STATEMENT OF OPERATIONS
For the Three and Six Months Ended June 30, 1996 and 1995
1996 1995
----------------- -----------------
Three Six Three Six
Months Months Months Months
Interest income $ 43,408 $ 94,076 $ 23,903 $ 32,372
------ ------ ------ ------
Operating expenses:
Amortization 9,397 18,746 5,774 10,178
Asset management fees-Note 4 10,725 21,450 4,000 10,167
Legal and accounting 6,260 6,260 2,350 2,350
Other 7,910 12,970 3,725 4,101
------ ------ ----- -----
Total operating expenses 34,292 59,426 15,849 26,796
------ ------- ------ ------
Income from operations 9,116 34,650 8,054 5,576
Equity in loss from
limited partnerships (115,800) (353,400) (51,780) (120,780)
Net loss $ (106,684) $ (318,750) $ (43,726) $ (115,204)
========= ========= ======== =========
Net loss allocated to:
General partner $ (1,067) $ (3,188) $ (437) $ (1,152)
======= ======= ===== =======
Limited partners $ (105,617) $ (315,562) $ (43,289) $ (114,052)
========= ========= ======== =========
Net loss per 15,600 and
9,253 weighted partner
units outstanding June 30,
1996 and 1995 $ (7) $ (20) $ (5) $ (12)
=== ==== === ====
UNAUDITED
See Accompanying Notes to Financial Statements
-4-
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P. - SERIES 2
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
For the Six Months Ended June 30, 1996 and 1995
For the Six Months Ended June 30, 1996
General Limited
Partner Partner Total
Equity (deficit), December 31, 1995 $ (27,796) $ 12,479,356 $ 12,451,560
Offering expenses (400) (39,554) (39,954)
Net loss for the six months ended
June 30, 1996 (3,188) (315,562) (318,750)
------- --------- ---------
Equity (deficit), June 30, 1996 $ (31,384) $ 12,124,240 $ 12,092,856
======== ========== ==========
For the Six Months Ended June 30, 1995
General Limited
Partner Partner Total
Equity (deficit), December 31, 1994 $ (9,902) $ 4,473,382 $ 4,463,480
Capital contributions (20,000
units authorized, 9,856 units
issued and outstanding 9,497,405 9,497,405
Offering expenses (9,794) (969,625) (979,419)
Capital issued for notes receivable (80,000) (80,000)
Net loss for the six months ended
June 30, 1995 (1,152) (114,052) (115,204)
------- --------- ---------
Equity (deficit), June 30, 1995 $ (20,848) $ 12,807,110 $ 12,786,262
======== =========== ===========
UNAUDITED
See Accompanying Notes to Financial Statements
-5-
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P. - SERIES 2
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
1996 1995
------ ------
Cash flows provided by operating activities:
Net loss $ (318,750) (115,204)
Adjustments to reconcile net loss to
net cash used in operating activities:
Equity in loss of limited partnerships 353,400 120,780
Amortization 18,746 10,178
Asset management fee 21,450 10,167
Change in other assets 20,052 (11,058)
Accrued fees and expense due to
general partner and affiliates 2,989 (404)
------ -----
Net cash provided by operating activities 97,887 14,459
------ ------
Cash flows used by investing activities:
Investments in limited partnerships (1,962,889) (1,541,656)
Acquisition costs and fees (52,120) (402,985)
Increase in cash in escrow
(900,000)
Distribution from limited partnerships 3,900 -
------ ------
Net cash flows used by investing activities: (2,011,109) (2,844,641)
----------- -----------
Cash flows provided (used) by financing activities:
Capital contributions from partners 9,417,405
Collection of subscriptions receivable 63,100
Decrease in loan payable (280,569)
Offering costs (20,578) (962,630)
Decrease in advances from affiliates - (211,080)
---- ---------
Net cash provided (used) by
financing activities (20,578) 8,026,226
------- ---------
Net decrease in cash and cash equivalents (1,933,800) 5,196,044
Cash and cash equivalents, beginning of period 5,285,730 720,130
Cash and cash equivalent, end of period $ 3,351,930 $ 5,916,174
=========== ===========
UNAUDITED
See Accompanying Notes to Financial Statements
-6-
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
STATEMENT OF CASH FLOWS - CONTINUED
For the Six months ended June 30, 1996 and 1995
Supplemental disclosure of noncash financing and investing activity:
During the six months ended June 30, 1996, the Partnership's Payables to Limited
Partnerships (in connection with its investments in limited partnerships)
decreased by $11,527 due to various price adjuster provisions in the respective
limited partnership agreements.
- -------------------------------------------------------------------------------
During the six months ended June 30, 1995, the Partnership's Payables to
Limited Partnerships (in connection with its investments in limited
partnerships) decreased by $135,360 due to various price adjuster provisions in
the respective limited partnership agreements.
UNAUDITED
See Accompanying Notes to Financial Statements
-7-
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC Housing Tax Credit Fund IV, L.P., Series 2 (the "Partnership") was formed
under the California Revised Limited Partnership Act on September 27, 1993, and
commenced operations on July 18, 1995. 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 of the Partnership 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.
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 Partnership's financial statements for the period ended
December 31, 1995 (audited).
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 June 30, 1996
and the results of operations and changes in cash flows for the six months ended
June 30, 1996.
Allocations Under the Terms of the Partnership Agreement
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 sale or refinancing proceeds equal
to their capital contributions and their return on investment (as defined in the
Partnership's Agreement of Limited Partnership) and the General Partner has
received a subordinated disposition fee (as described in Note 4 below), 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.
Method of Accounting For Investment in Limited Partnerships
The investment in limited partnerships is accounted for on the equity method of
accounting whereby the Partnership adjusts its investment balance for its share
of each limited partnership's results of operations and for any distributions
received. Costs incurred by the Partnership in acquiring the investments in
limited partnerships are capitalized as part of the investment account.
Losses from the limited partnerships will not be recognized to the extent that
the individual investment balance would be adjusted below zero.
Offering Expenses
Offering expenses will 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 15% (including
sales commissions) of the total offering proceeds. Offering expenses are
reflected as a reduction of partners' capital.
Organization Costs
Organization costs will be amortized on the straight-line method over 60 months.
Cash and Cash Equivalents
The Partnership considers investments with an original maturity of three months
or less as cash equivalents.
-8-
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS-CONTINUED
NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS
As of June 30, 1996 the Partnership had acquired limited partnership interests
in twenty limited partnerships each of which owns one Apartment Complex. As of
June 30, 1996, construction or rehabilitation of seventeen of the Apartment
Complexes had been completed and three were undergoing construction or
rehabilitation.
As of June 30, 1995 the Partnership had acquired limited partnership interests
in thirteen limited partnerships each of which owns one Apartment Complex. As of
June 30, 1995, construction or rehabilitation of eleven of the Apartment
Complexes had been completed and two were undergoing construction or
rehabilitation.
The Partnership, as a limited partner, is entitled to 95% to 99%, as specified
in the partnership agreements, of the operating profits and losses of the
limited partnerships upon the acquisition of its limited partnership interest.
Following is a summary of the components of investment in limited partnerships
as of June 30, 1996 and December 31, 1995
1996 1995
------ ------
Investment balance, beginning of period $ 9,417,744 $ 6,235,584
Investments in limited partnerships 1,360,878 3,099,425
Capitalized acquistion fees and costs 8,603 737,464
Equity in loss of limited partnerships (353,400) (628,521)
Distributions
(3,900)
Amortization of capitalized
acquisition costs (18,746) (26,208)
-------- --------
Investment balance,
end of period $ 10,411,179 $ 9,417,744
=========== ==========
Selected financial information from the financial statements of the limited
partnerships with operations for the six months ended June 30, 1996 and 1995 is
as follows (rounded to the nearest thousand):
-9-
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS-CONTINUED
NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED)
1996 1995
------ ------
Total revenue $ 1,173,000 $ 565,000
---------- --------
Interest expense 478,000 362,000
Depreciation 432,000 163,000
Operating expenses 620,000 162,000
---------- --------
Total expenses 1,530,000 687,000
---------- --------
Net loss $(357,000) $ (122,000)
========= =========
Net loss allocable to the
Partnership $ (353,400) $ (120,780)
========= =========
NOTE 3 - RELATED PARTY TRANSACTIONS
Under the terms of its Agreement of Limited Partnership, the Partnership is
obligated to the General Partner or its affiliates for the following items:
Acquisition fees of up to 8% of the gross proceeds from the sale of
Partnership units. During the six months ended June 30, 1996 and 1995
the Partnership incurred acquisition fees of $884 and $237,163.
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 to the limited partnerships plus its allocable
percentage of the permanent financing) of the limited partnerships which
are subsidized under one or more Federal, state or local government
programs. The Partnership has incurred fees of $21,450 and $10,167 for
the six months ended June 30, 1996 and 1995.
-10-
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS-CONTINUED
NOTE 3 - RELATED PARTY TRANSACTIONS (CONTINUED)
Reimbursement for organizational, offering and selling expenses advanced
by an affiliate of the General Partner on behalf of the Partnership.
These reimbursements plus all other organizational and offering expenses
inclusive of sales commissions will not exceed 15% of the gross
proceeds. The Partnership incurred offering during the six months ended
June 30, 1996 and 1995 of $39,954 and $10,167, respectively.
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
Agreement of Limited Partnership) and is payable only if services are
rendered in the sales effort.
Advances and fees payable due to general partner of $146,983 and $ 146, 685 at
June 30, 1996 and December 31, 1996, respectively consists of the following:
1996 1995
Asset management fee payable, $ 80,350 $ 58,900
Acquisition fees and expenses payable, 46,827 90,344
Advances for offering expense 19,376
Advances for expenses 430 (2,559)
------- --------
$ 146,983 $ 146,685
NOTE 4 - PAYABLE TO LIMITED PARTNERSHIPS
Payable to limited partnerships represent amounts which are due at various times
based on conditions specified in the respective limited partnership agreements.
These contributions are payable in installments, are generally due upon the
limited partnerships achieving certain operating benchmarks and are generally
expected to be paid within two years of the Partnership's initial investment.
NOTE 5- INCOME TAXES
The Partnership will not make a provision for income taxes since all items of
taxable income and loss will be allocated to the partners for inclusion in their
respective income tax returns.
-11-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
WNC Housing Tax Credit Fund IV, L.P., Series 2 (the Partnership) is a
California Limited Partnership formed under the laws of the State of California
on September 27, 1993, and commenced operations on July 18, 1995 to acquire
limited partnership interests in limited partnerships ("Limited Partnerships")
which own multifamily apartment complexes that are eligible for low-income
housing federal income tax credits (the "Housing Tax Credit").
The Partnership's offering of units terminated on July 26, 1996.
Liquidity and Capital Resources
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $1,934,000 for the six
months ended June 30, 1996. This decrease in cash consists of cash used by
investing and financing activities and cash provided by operating activities.
Cash was used by the investing activities of the Partnership during such period
in the aggregate amount of approximately $2,011,000, which consisted primarily
of capital contributions to Limited Partnerships. Cash used by financing
activities consisted entirely of payments for offering costs of approximately
$20,600. Cash was provided by the operating activities of the Partnership in
aggregate amount of approximately $98,000. Cash provided from operations
consisted primarily of interest received on cash deposits, and cash used in
operations consisted primarily of payments for operating fees and expenses. The
major components of all these activities are discussed in greater detail below.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
increase in cash and cash equivalents of approximately $5,196,000 for the six
months ended June 30, 1995. This increase in cash was provided by the
Partnership's financing activities, including the proceeds from the offering and
short term indebtedness described below. Cash from financing activities for the
period ended June 30, 1995 of approximately $8,026,000 was sufficient to fund
the investing activities of the Partnership during such period in the aggregate
amount of approximately $2,845,000, which consisted primarily of capital
contributions to Limited Partnerships. Cash provided and used by the operating
activities of the Partnership was minimal compared to its other activities. Cash
provided from operations consisted primarily of interest received on cash
deposits, and cash used in operations consisted primarily of payments for
operating fees and expenses. The major components of all these activities are
discussed in greater detail below.
As of December 31, 1995 and June 30, 1996 the Partnership was indebted to WNC &
Associates, Inc. in the amount of approximately $147,000. The component items of
such indebtedness were as follows: accrued acquisition fees of approximately
$90,000 and $47,000, respectively, advances to pay front-end fees of
approximately $0 and $19,000, respectively, accrued asset management fees of
approximately $59,000 and $80,000, respectively and advances for expenses of
approximately $(2,600) and $400, respectively.
As of August 1, 1996, the Partnership has received and accepted subscriptions
funds in the amount of $15,241,000. As of August 1, 1996, as of June 30, 1996
and as of December 31, 1995, the Partnership had made capital contributions to
Limited Partnerships in the amount of approximately $8,992,000 , $8,947,000 and
$8,342,000, respectively, and had commitments for additional capital
contributions of approximately $1,488,000, $1,533,000 and $994,000,
respectively.
Prior to sale of the Apartment Complexes, it is not expected that any of the
Limited Partnerships in which the Partnership has invested or will invest will
generate cash from operations sufficient to provide distributions to the Limited
Partners in any material amount. Such cash from operations, if any, would first
be used to meet operating expenses of the Partnership, including payment of the
asset management fee to the General Partner. 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.
The Partnership's investments will not be readily marketable and may be affected
by adverse general economic conditions which, in turn, could substantially
increase the risk of operating losses for the Apartment Complexes, the 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 will be sufficient to fund the Partnership's investment commitments
and proposed operations.
-12-
<PAGE>
The Partnership will establish working capital reserves of at least 3% of
capital contributions, an amount which is anticipated to be sufficient to
satisfy general working capital and administrative expense requirements of the
Partnership 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. The Partnership's liquidity could also be affected by defaults
or delays in payment of the Limited Partners' promissory notes, from which a
portion of the working capital reserves is expected to be funded. 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 financing. The General Partner may
also apply any cash distributions received from the Limited Partnerships for
such purposes or to replenish or increase working capital reserves.
Under the Partnership Agreements the Partnership does not have the ability to
assess the Limited Partners for additional capital contributions to provide
capital if needed by the Partnership or Limited Partnerships. Accordingly, if
circumstances arise that cause the Limited Partnerships to require capital in
addition to that contributed by the Partnership and any equity contributed by
the general partners of the Limited Partnerships, 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 Limited Partnerships are already substantially leveraged), (ii) additional
equity contributions or advances of the general partners of the Limited
Partnerships (in this regard, each local general partner is required to fund
operating deficits, but only for a period of two years following construction
completion), (iii) other equity sources (which could adversely affect the
Partnership's interest in Housing Tax 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
Limited Partnerships in question. If such funds are not available, the Limited
Partnerships would risk foreclosure on their Apartment Complexes if they were
unable to re-negotiate the terms of their first mortgages and any other debt
secured by the Apartment Complexes to the extent the capital requirements of the
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 Partnership.
Results of Operations
As of June 30, 1995 and 1996 the Partnership had acquired 13 and 20 Limited
Partnership Interests, respectively. Each of the 20 Limited Partnerships
receives or is expected to receive government assistance and each of them has
received a reservation for Housing Tax Credits. As of June 30, 1995, eleven of
the Apartment Complexes in the Partnership had commenced operations, as of June
30, 1996, seventeen of the Apartment Complexes had commenced operations.
Accordingly, the "Equity in losses from limited partnerships" for the periods
ended June 30, 1995 and June 30, 1996 reflected in the Statement of Operations
of the Partnership is not indicative of the amounts to be reported in future
years.
As reflected on its Statements of Operations, the Partnership had a loss of
approximately $316,000 and $115,000 for the six months ended June 30, 1996 and
1995, respectively. The component items of revenue and expense are discussed
below.
-13-
<PAGE>
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 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 was and is
expected to be the Asset Management Fee. The Asset Management Fee 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.
Amortization expense consist of the amortization over a period of 30 years of
the Acquisition Fee and other expenses attributable to the acquisition of
Limited Partnership Interests.
Because of the amounts of the Asset Management Fee and amortization expense
primarily are determined by the gross proceeds from the offering, the number and
size of Apartment Complexes and the number of investors, until termination of
the Offering and investment of the net proceeds therefrom the Partnership cannot
predict with any accuracy what these amounts will be.
Equity in Losses from Limited Partnership. The Partnership's equity in losses
from Limited Partnerships is equal to 96%-99% of the aggregate net losses of
each Limited Partnership incurred after admission of the Partnership as a
limited partner thereof.
After rent-up all 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 Limited Partnerships are expected to exceed net rental income.
The Partnership accounts for its investments in Local Partnerships using the
equity method of accounting, whereby the Partnership reduces its investment
balance for its share of Local Partnerships' losses and distributions. Losses
are not recognized to the extent that the investment balance would be adjusted
below zero.
-14-
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
None
Item 6. Exhibits and Reports on Form 8-K
1. None.
No reports on Form 8-K were filed during the quarter ended June 30, 1996.
-15-
<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 IV, L.P. - Series 2
By:_____________________________________________________
WNC Tax Credit Partners IV, L.P.
General Partner
Date: _____
By:_____________________________________________________
WNC & ASSOCIATES, INC.
General Partner
Date: _____
By:_____________________________________________________
John B. Lester, Jr.
President
Date: August 14, 1996
By:_____________________________________________________
Theodore M. Paul
Vice President - Finance
Date: August 14, 1996
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US CURRANCY
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 3,351,930
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,351,930
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,772,625
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 12,092,856
<TOTAL-LIABILITY-AND-EQUITY> 13,772,625
<SALES> 0
<TOTAL-REVENUES> 94,076
<CGS> 0
<TOTAL-COSTS> 59,426
<OTHER-EXPENSES> 353,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (318,750)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (318,750)
<EPS-PRIMARY> (20)
<EPS-DILUTED> (0)
</TABLE>
