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, 2000
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: 0-28370
WNC Housing Tax Credit Fund IV, L.P. - Series 2
California 33-0596399
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
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 ____ No X .
<PAGE>
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, 2000
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets, June 30, 2000 and March 31, 2000.................3
Statements of Operations
For the three months ended June 30, 2000 and 1999...............4
Statement of Partners' Equity (Deficit)
For the three months ended June 30, 2000........................5
Statements of Cash Flows
For the three months ended June 30, 2000 and 1999...............6
Notes to Financial Statements....................................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................13
Item 3. Quantitative and Qualitative Disclosures About Market Risks......14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................14
Item 6. Exhibits and Reports on Form 8...................................14
Signatures ...............................................................15
2
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 2000 March 31, 2000
------------------- --------------------
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 154,801 $ 180,133
Investments in limited Partnerships, net (Note 3) 8,114,783 8,311,454
Other assets 998 998
------------------- --------------------
$ 8,270,582 $ 8,492,585
=================== ====================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Accrued expenses $ 86,965 $ 86,965
------------------- --------------------
Accrued fees and expenses due to General Partner
and affiliates (Note 4) 76,909 72,598
Total Liabilities 163,874 159,563
------------------- --------------------
Partners' equity (deficit):
General partner (71,245) (68,982)
Limited partners (20,000 units authorized,
15,600 units issued and outstanding) 8,177,953 8,402,004
------------------- --------------------
Total partners' equity 8,106,708 8,333,022
------------------- --------------------
$ 8,270,582 $ 8,492,585
=================== ====================
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
-------------------- -------------------
<S> <C> <C>
Interest income $ 2,361 $ 4,448
-------------------- -------------------
Operating expenses:
Amortization 10,234 10,230
Asset management fees (Note 4) 11,000 10,725
Legal and accounting 7,097 9,056
Other 13,907 (2,549)
-------------------- -------------------
Total operating expenses 42,238 27,462
-------------------- -------------------
Loss from operations (39,877) (23,014)
-------------------- -------------------
Equity in losses of limited partnerships (Note 3) (186,437) (156,769)
-------------------- -------------------
Net loss $ (226,314) $ (179,783)
==================== ===================
Net loss allocated to:
General partner $ (2,263) $ (1,798)
==================== ===================
Limited partners $ (224,051) $ (177,985)
==================== ===================
Net loss per limited partner unit (15,600 units $ (14) $ (12)
==================== ===================
</TABLE>
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 (DEFICIT)
For the Three Months Ended June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
-------------- ---------------- ---------------
<S> <C> <C> <C>
Partners' equity (deficit) at March 31, 2000 $ (68,982) $ 8,402,004 $ 8,333,022
Net loss (2,263) (224,051) (226,314)
-------------- ---------------- ---------------
Partners' equity (deficit) at June 30, 2000 $ (71,245) $ 8,177,953 $ 8,106,708
============== ================ ===============
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Three Months Ended June 30, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (226,314) $ (179,783)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Amortization 10,234 10,230
Equity in losses of limited partnerships 186,437 156,769
Change in asset management fees payable 11,000 10,725
Change in accrued fees and expenses due to
General Partner and affiliates (6,689) 5,706
----------------- -----------------
Net cash provided by (used in) operating activities (25,332) 3,647
----------------- -----------------
Cash flows from investing activities:
Investment in limited partnerships, net - (209,076)
----------------- -----------------
Net cash flows used in investing activities: - (209,076)
----------------- -----------------
Net decrease in cash and cash equivalents (25,332) (205,429)
Cash and cash equivalents, beginning of period 180,133 552,348
----------------- -----------------
Cash and cash equivalents, end of period $ 154,801 $ 346,919
================= =================
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The accompanying condensed consolidated unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q for quarterly
reports under Section 13 or 15(d) of the Securities Exchange Act of 1934.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended June 30, 2000 are not necessarily
indicative of the results that may be expected for the fiscal year ending March
31, 2001. For further information, refer to the financial statements and
footnotes thereto included in the Partnership's annual report on Form 10-K for
the fiscal year ended March 31, 2000.
Organization
WNC Housing Tax Credit Fund IV, L.P., Series 2 (the "Partnership") was formed on
September 27, 1993 under the laws of the state of California and commenced
operations on July 18, 1994. The Partnership was formed to invest primarily in
other limited partnerships (the "Local Limited Partnerships") which own and
operate multi-family housing complexes (the "Housing Complex") that are eligible
for low income housing credits. The local general partners (the "Local General
Partners") of each Local Limited Partnership retain responsibility for
maintaining, operating and managing the Housing Complex.
The general partner is WNC Tax Credit Partners, IV, L.P. (the "General
Partner"), a California limited partnership. WNC & Associates, Inc. ("WNC") is
the general partner of the General Partner. Wilfred N. Cooper, Sr., through the
Cooper Revocable Trust, owns 66.8% of the outstanding stock of WNC. John B.
Lester, Jr. was the original limited partner of the Partnership and owns,
through the Lester Family Trust, 28.6% of the outstanding stock of WNC. Wilfred
N. Cooper, Jr., President of WNC, owns 2.1% of the outstanding stock of WNC.
The Partnership Agreement authorized the sale of 20,000 units at $1,000 per unit
("Units"). The offering of Units concluded in July 1995 at which time 15,600
Units representing subscriptions, net of discounts for volume purchases of more
than 100 units, in the amount of $15,241,000 had been accepted. The General
Partner has a 1% interest in operating profits and losses, taxable income and
losses, cash available for distribution from the Partnership and tax credits.
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 sale or refinancing equal
to their capital contributions and their return on investment (as defined in the
Partnership Agreement) and the General Partner has received proceeds equal to
its capital contributions and a subordinated disposition fee from the remainder,
any additional sale or refinancing proceeds will be distributed 90% to the
limited partners (in proportion to their respective investments) and 10% to the
General Partner.
Risks and Uncertainties
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
7
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
management and ownership of multi-unit residential real estate. Some of these
risks are that the low income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
to mortgage indebtedness. If a Local Limited Partnership does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex and low income housing credits. As a limited partner of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local Limited Partnerships, and will rely totally on the
Local General Partners of the Local Limited Partnerships for management of the
Local Limited Partnerships. The value of the Partnership's investments will be
subject to changes in national and local economic conditions, including
unemployment conditions, which could adversely impact vacancy levels, rental
payment defaults and operating expenses. This, in turn, could substantially
increase the risk of operating losses for the Housing Complexes and the
Partnership. In addition, each Local Limited Partnership is subject to risks
relating to environmental hazards and natural disasters which might be
uninsurable. Because the Partnership's operations will depend on these and other
factors beyond the control of the General Partner and the Local General
Partners, there can be no assurance that the anticipated low income housing
credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the low income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All management decisions will
be made by the General Partner.
Method of Accounting For Investments in Limited Partnerships
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnership are consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of the
investment account and are being amortized over 30 years.
Offering Expenses
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred 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 and amounted to $970,717 as of June 30, 2000
and March 31, 2000.
8
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.
Cash and Cash Equivalents
The Partnership considers highly liquid investments with maturities of three
months or less when purchased to be cash equivalents. As of June 30, 2000 and
March 31, 2000, the Partnership had no cash equivalents.
Net Loss Per Limited Partner Unit
Net loss per limited partnership unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit
includes no dilution and is computed by dividing loss available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net income per unit is not required.
NOTE 2 - UNCERTAINTY WITH RESPECT TO INVESTMENTS IN BROKEN BOW AND SIDNEY:
IMPAIRMENT OF INVESTMENTS
The Partnership has two investments accounted for under the equity method,
consisting of 99% limited partnership interests in each of Broken Bow Apartments
I, Limited Partnership ("Broken Bow") and Sidney Apartments I, Limited
Partnership ("Sidney").
The independent auditors engaged to perform the audits of Broken Bow and
Sidneys' financial statements as of and for the year ended December 31, 1999,
were unable to form an opinion on those financial statements. This was due to
the inability to obtain from the former local general partner certain general
ledger information for a period of approximately three months and reliable
confirmations of advances to/notes receivable from the former local general
partner. Further, the independent auditors were unable to obtain management
representation letters from the former property management company, which is an
affiliate of the former local general partner. As a result, the Partnership has
not included the financial information of Broken Bow and Sidney in the combined
condensed financial statements presented in Note 3 to the financial statements.
The combined condensed financial information presented in Note 3 for prior
periods has been restated to exclude the accounts of Broken Bow and Sidney. The
Partnership had reflected equity in the net losses of Broken Bow and Sidney
totaling $0 for the three months ended June 30, 2000 because the recognition of
any such loss would reduce the net investment account to a balance below zero.
(See note 3) Such estimates may be materially misstated due to the lack of
corroborative financial information.
Broken Bow and Sidney continue to experience negative cash flows from
operations. During the three month period ended June 30, 2000 and the year ended
March 31, 2000, the Partnership advanced $11,466 and $120,906 in cash to Broken
Bow and Sidney for operating expenses, including legal fees relating to certain
litigation involving these and other properties as outlined in Note 7, as well
9
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(unaudited)
NOTE 2 - UNCERTAINTY WITH RESPECT TO INVESTMENTS IN BROKEN BOW AND SIDNEY:
IMPAIRMENT OF INVESTMENTS - continued
as another $19,291 in cash from July 1, 2000 to November 8, 2000. WNC is
currently negotiating for a restructuring of the related bank loans, which would
increase cash flow from operations. WNC may not be successful in the
restructuring of these loans. If the loans are not restructured, the Partnership
may be unable to support these properties. Consequently, the Partnership may be
forced to sell all or a portion of its interests in these properties. Further,
the lender may attempt to foreclose on the Broken Bow and Sidney properties.
As a result of the foregoing, WNC has performed an evaluation of the
Partnership's remaining investment balances in Broken Bow and Sidney, including
the cash advances noted above and other anticipated costs. It has been
determined that an impairment adjustment is necessary and an impairment loss of
$766,559 has been recognized for the year ended March 31, 2000. This impairment
loss includes $558,688 in remaining net book value of the Partnership's
investments in Broken Bow and Sidney, the $120,906 and $30,753 cash advances, a
$37,670 accrual for anticipated legal costs, and $18,542 of estimated accounting
and other related costs.
As a result of the aforementioned operating difficulties and the litigation as
discussed in Note 7, there is uncertainty as to whether the Partnership will
ultimately retain its interests in Broken Bow and Sidney. If the investments are
sold or otherwise not retained, the Partnership could be subject to recapture of
tax credits and certain prior tax deductions. There is further uncertainty as to
costs that the Partnership may ultimately incur in connection with its
investments in Broken Bow and Sidney. The Partnership's financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of the periods presented, the Partnership had acquired limited partnership
interests in twenty-two Local Limited Partnerships, each of which owns one
Housing Complex consisting of an aggregate of 892 apartment units. As of June
30, 2000, construction or rehabilitation of all of the apartment complexes have
been completed. The respective general partners of the Local Limited
Partnerships manage the day-to-day operations of the entities. Significant Local
Limited Partnership business decisions require approval from the Partnership.
The Partnership, as a limited partner, is entitled to 96% to 99%, as specified
in the partnership agreements, of the operating profits and losses, taxable
income and losses and tax credits of the Limited Partnerships.
Equity in losses of Local Limited Partnerships is recognized in the financial
statements until the related investment account is reduced to a zero balance.
Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.
10
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(unaudited)
NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS - continued
Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for the periods presented:
<TABLE>
<CAPTION>
For the Three For the Year Ended
Months Ended March 31, 2000
June 30, 2000
-------------------- ---------------------
<S> <C> <C>
Investments per balance sheet, beginning of period $ 8,311,454 $ 10,092,782
Capital Contribution paid - (62,593)
Impairment loss on investments in limited
partnerships - (766,559)
Accrued expenses (Note 2) - 86,965
Cash advances (Note 2) - 120,906
Capital Contributions payable - (107,283)
Distributions received - (19,667)
Equity in losses of limited partnerships (186,437) (992,162)
Amortization of paid
acquisition fees and costs (10,234) (40,935)
==================== =====================
Investments per balance sheet, end of period $ 8,114,783 $ 8,311,454
==================== =====================
</TABLE>
11
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(unaudited)
NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS - continued
Selected financial information for the three months ended June 30 from the
unaudited combined financial statements of the limited partnerships in which the
Partnership has invested as follows: (Combined condensed financial information
for Broken Bow and Sidney have been excluded from the presentations below. See
Note 2 for further discussion):
COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
2000 1999
-------------------- ------------------
<S> <C> <C>
Revenues $ 957,000 $ 973,000
-------------------- ------------------
Expenses:
Interest expense 304,000 311,000
Depreciation 309,000 290,000
Operating expenses 541,000 491,000
-------------------- ------------------
Total expenses 1,154,000 1,092,000
-------------------- ------------------
Net loss $ $
(197,000) (119,000)
==================== ==================
Net loss allocable to the Partnership, before
equity in losses of Broken Bow and Sidney (197,000) (117,000)
-------------------- ------------------
Net loss recorded by the Partnership, before
equity in losses of Broken Bow and Sidney (186,000) (117,000)
Net loss of Broken Bow allocable to the Partnership (27,000) (29,000)
Net loss of Sidney allocable to the Partnership (12,000) (11,000)
Below zero adjustments of allocable losses of
Broken Bow and Sidney 39,000 -
-------------------- ------------------
Net loss recorded by the Partnership $ (186,000) $ (157,000)
==================== ==================
</TABLE>
Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partner may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired and the loss and recapture of the related tax credits could occur.
12
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or Associates for the following fees:
(a) Annual Asset Management Fee. An annual asset management fee of the greater
of (i) $2,000 per multi-family housing complex or (ii) 0.275% of Gross
Proceeds. The base fee amount will be adjusted annually based on changes in
the Consumer Price Index. However, in no event will the annual asset
management fee exceed 0.2% of Invested Assets. "Invested Assets" means the
sum of the Partnership's investment in Local Limited Partnerships and the
Partnership's allocable share of the amount of indebtedness related to the
Housing Complexes. Fees of $11,000 and $11,000 were incurred during the
three months ended June 30, 2000 and 1999, respectively. The Partnership
paid the General Partner or its affiliates $0 of those fees during the
three months ended June 30, 2000 and 1999, respectively.
(b) 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 preferred return of 16% through December 31, 2003 and
6% thereafter (as defined in the Partnership Agreement) and is payable only
if the General Partner or its affiliates render services in the sales
effort.
The accrued fees and expenses due to General Partner and affiliates consist of
the following:
<TABLE>
<CAPTION>
June 30, 2000 March 31, 2000
--------------------- --------------------
<S> <C> <C>
Reimbursement for expenses paid by the General
Partner or an affiliate $ - $ 6,689
Asset management fee payable 76,909 65,909
--------------------- --------------------
Total $ 76,909 $ 72,598
===================== ====================
</TABLE>
The General Partner does not anticipate that these accrued fees will be paid
until such time as capital reserves are in excess of future foreseeable working
capital requirements of the Partnership.
13
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(unaudited)
NOTE 5 - PAYABLES TO LIMITED PARTNERSHIPS
Payables to limited partnerships represent amounts which are due at various
times based on conditions specified in the 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 6- 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.
14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report contains forward-looking statements concerning the
Partnership's anticipated future revenues and earnings, adequacy of future cash
flow and related matters. These forward-looking statements include, but are not
limited to, statements containing the words "expect", "believe", "will", "may",
"should", "project", "estimate", and like expressions, and the negative thereof.
These statements are subject to risks and uncertainties that could cause actual
results to differ materially from the statements, including competition, as well
as those risks described in the Partnership's SEC reports, including the
Partnership's Form 10-K filed pursuant to the Securities and Exchange Act of
1934 on September 28, 2000.
The following discussion and analysis compares the results of operations for the
fiscal quarter ended June 30, 2000 and 1999, and should be read in conjunction
with the condensed consolidated financial statements and accompanying notes
included within this report.
Financial Condition
The Partnership's assets at June 30, 2000 consisted primarily of $155,000 in
cash and aggregate investments in the twenty-two Local Limited Partnerships of
$8,115,000. Liabilities at June 30, 2000 primarily consisted of $87,000 in
accrued expenses and $77,000 of accrued asset management fees due to the General
Partner.
Results of Operations
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999.
The Partnership's net loss for the three months ended June 30, 2000 was
$(226,000) reflecting an increase of $47,000 from the $(179,000) net loss
experienced for the three months ended June 30, 1999. The increase in net loss
is primarily due to equity in losses of limited partnerships which increased by
$30,000 to $(187,000) for the three months ended June 30, 2000 from $(157,000)
for the three months ended June 30, 1999. Along with the increase in equity in
losses of limited partnerships, there was an increase in loss from operations of
$17,000 for the three months ended June 30, 2000 to $(40,000) from $(23,000) for
the three months ended June 30, 1999.
Cash Flows
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999.
Net cash used during the three months ended June 30, 2000 was $(25,000) compared
to net cash used during the three months ended June 30, 1999 of $(205,000). The
change was due primarily to a decrease in cash used in investments in limited
partnerships of $(209,000) and an increase in cash used for operating activities
of $29,000.
During the three months ended June 30, 2000 and the year ended March 31, 2000,
accrued payables, which consist primarily of asset management fees due to the
General Partner, increased by $4,000. The General Partner does not anticipate
that these accrued fees will be paid in full until such time as capital reserves
are in excess of future foreseeable working capital requirements of the
Partnership.
The Partnership expects its future cash flows, together with its net available
assets at June 30, 2000, to be sufficient to meet all currently foreseeable
future cash requirements.
15
<PAGE>
Item 3. Quantitative and Qualitative Disclosures Above Market Risks
NOT APPLICABLE.
Part II. Other Information
Item 1. Legal Proceedings
NONE.
Item 6. Exhibits and Reports on Form 8-K
NONE.
16
<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
By: WNC & ASSOCIATES, INC. General Partner
By: /s/ Wilfred N. Cooper, Jr.
Wilfred N. Cooper, Jr.,
President - Chief Operating Officer of WNC & Associates, Inc.
Date: November 14, 2000
By: /s/ Michael L. Dickenson
Michael L. Dickenson,
Vice President - Chief Financial Officer of WNC & Associates, Inc.
Date: November 14, 2000
17
