FORM 10-K
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
For the fiscal year ended December 31, 1997
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: 33-76970
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
California 33-0531301
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 NOT APPLICABLE
Securities registered pursuant to section 12(g) of the Act:
NONE
<PAGE>
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
2
<PAGE>
Item 1. Business
PART I.
Organization
- ------------
WNC California Housing Tax Credits IV, Series 4 (the "Partnership") is a
California limited partnership formed under the laws of the State of California.
The Partnership was formed to acquire limited partnership interests in local
limited partnerships ("Local Limited Partnerships") which own multifamily
apartment complexes that are eligible for Federal and (in some cases) California
low-income housing tax credits (the "Low Income Housing Credit").
The general partner of the Partnership is WNC California Tax Credits IV,
L.P.(the "General Partner") The general partner of WNC California Tax Credit
Partners IV, L.P. is WNC & Associates, Inc. (Associates.) The business of the
Partnership is conducted primarily through Associates as the Partnership and the
General Partner have no employees of their own.
The Partnership conducted its public offering ("Offering") from July 1994 to
August 1995. 25,000 units of limited partnership interests ("Units"), at a price
of $1,000 per Unit were offered. Since inception a total of 11,500 Units
representing approximately $11,099,000 were sold throughout the offering.
Holders of Units are referred to herein as "Limited Partners."
The Partnership has applied and will apply funds raised through their public
offerings, including the installment payments of the Limited Partners'
promissory notes as received, to the purchase price and acquisition fees and
costs of Local Limited Partnership Interests, reserves and expenses of the
Offerings.
Description of Business
- -----------------------
The Partnership's principal business is to invest as a limited partner in Local
Limited Partnerships each of which will own and operate an apartment complex
("Apartment Complex") which will qualify for the federal Low Income Housing
Credit. The Tax Reform Act of 1986 (the "1986 Act replaced most existing federal
tax incentives for low-income housing with Section 42 of the Internal Revenue
Code, which provides for the Low Income Housing Credit. In general, an owner of
a low-income housing project under (i) federal law is entitled to receive the
Federal Low Income Housing Credit in each year of a ten-year period (the "Credit
Period") and (ii) under California Revenue and Taxation Section 17058 is
entitled to receive the California Low Income Housing Credit in each year of a
four-year period. The Apartment Complex is subject to a fifteen-year compliance
period (the "Compliance Period").
3
<PAGE>
In general, in order to avoid recapture of Tax Credits, the Partnership does not
expect that it will dispose of its interests in Local Limited Partnerships
("Local Limited Partnership Interests") or approve the sale by a Local Limited
Partnership of any Apartment Complex prior to the end of the applicable 15 year
Compliance Period. Because of (i) the nature of the Apartment Complexes, (ii)
the difficulty of predicting the resale market for low-income housing 15 or more
year in the future, and (iii) the inability of the Partnership to directly cause
the sale of Apartment Complexes by the general partner of the respective Local
Limited Partnerships ("Local General Partners"), but generally only to require
such Local General Partners to use their respective best efforts to find a
purchaser for the Apartment Complexes, it is not possible at this time to
predict whether the liquidation of substantially all of the Partnership's assets
and the disposition of the proceeds, if any, in accordance with the Partnership
Agreement will be able to be accomplished promptly at the end of the 15-year
period. If a Local Limited Partnership is unable to sell an Apartment Complex,
it is anticipated that the Local General Partner will either continue to operate
such Apartment Complex or take such other actions as the Local General Partner
believes to be in the best interest of the Local Limited Partnership. In
addition, circumstances beyond the control of the General Partner may occur
during the Compliance Period which would require the Partnership to approve the
disposition of an Apartment Complex prior to the end thereof.
As of December 31, 1997, the Partnership had invested in nine Local Limited
Partnerships. Each of these Local Limited Partnerships owns an Apartment Complex
that is eligible for the Low Income Housing Credit. These investments represent
approximately 100% of the offering proceeds available for investment.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of multifamily residential real
estate. Some of these risks are that neither the Partnership's investments nor
the Apartment Complexes owned by Local Limited Partnerships will be readily
marketable. Additionally, there can be no assurance that the Partnership will be
able to dispose of its interests in Local Limited Partnerships at the end of the
Compliance Period. 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 will be subject to loss through foreclosure. In addition, each Local
4
<PAGE>
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 Partners and the Local General Partners, there can be no assurance that
Partnership operations will be profitable or that the anticipated Low Income
Housing Credits will be available to Limited Partners.
Each of the Local Limited Partnerships has received financial assistance from
the FmHA. The Partnership's ability to exercise the voting rights granted it
under the Local Limited Partnership Agreements and to transfer its Local Limited
Partnership Interests is subject to restrictions which would not be present if
assistance were received. In this regard, FmHA approval generally will be
required in connection with the removal of a Local General Partner, the sale of
an Apartment Complex or the sale of a Local Limited Partnership Interest. Any
such approval may be withheld upon the discretion of FmHA.
As of December 31, 1997, eight of the nine Apartment Complexes were completed
and in operation. CHADRON was under construction. The Apartment Complexes owned
by the Local Limited Partnerships in which the Partnership has invested were
developed by the Local General Partners who acquired the sites and applied for
applicable mortgages and subsidies. The Partnership became the principal limited
partner in these Local Limited Partnerships pursuant to arm's-length
negotiations with the Local General Partners. As a limited partner, the
Partnerships liability for obligations of the Local Limited Partnership is
limited to its investment. The Local General Partner of the Local Limited
Partnership retains responsibility for developing, constructing, maintaining,
operating and managing the Apartment Complex.
The following is a schedule of the status as of December 31, 1997, of the
Apartment Complexes owned by Local Limited Partnerships in which The Partnership
was a limited partner:
5
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH THE PARTNERSHIP HAS AN INVESTMENT
AS OF DECEMBER 31, 1997
No. of Units Units Percentage of Total
Name & Location Apts. Completed Occupied Units Occupied
- --------------- ----- --------- -------- --------------
<S> <C> <C> <C> <C>
CHADRON APARTMENTS I 16 0 0 0%
Chadron, Nebraska
COLONIAL VILLAGE AUBURN 56 56 56 100%
Auburn, California
EAGLEVILLE ASSOCIATES I 16 16 12 75%
Eagleville, Montana
MAHARLIKA, LTD 69 69 58 84%
Stockton, California
PAWNEE ASSOCIATES I 20 20 16 80%
Pawnee, Illinois
RANCHERA VILLAGE APTS 14 14 14 100%
Santa Barbara, California
SYCAMORE HILLS 24 24 21 88%
Salem, Indiana
WILLS POINT CROSSING 36 36 33 92%
Wills Point, Texas
WOODLAKE VALENCIA 47 47 35 74%
Woodlake, California
--- --- ---
298 282 245 87%
=== === ===
</TABLE>
Description of Local Limited Partnerships
- -----------------------------------------
The Partnership has become a limited partner in Chadron Apartments I Limited
Partnership, a Nebraska limited partnership ("CHADRON"), Colonial Village
Auburn, a California limited partnership ("COLONIAL-AUBURN"); Eagleville
Associates I, a Missouri limited partnership ("EAGLEVILLE"); Maharlika, a
California Limited Partnership ("MAHARLIKA"); Rancheria Gardens Apartments, a
California limited partnership ("RANCHERIA"); Pawnee Associates I, L.P., a
Missouri limited partnership ("PAWNEE"); Sycamore Hills L.P., an Indiana limited
partnership ("SYCAMORE"); Wills Point Crossing, L.P., a Georgia limited
partnership qualified to do business in Texas ("WILLS POINT"); and Woodlake
Valencia Partners, a California limited partnership ("WOODLAKE").
CHADRON owns the Chadron Apartments in Chadron, Nebraska. COLONIAL-AUBURN owns
the Colonial Village Auburn Apartments in Auburn, California; EAGLEVILLE owns
the Shamrock Estates Apartments in Eagleville, Missouri; MAHARLIKA owns the
Filipino Community Building in Stockton, California; PAWNEE owns the Countryside
Manor Apartments in Pawnee, Illinois; RANCHERIA owns the Rancheria Gardens
Apartments in Santa Barbara, California; SYCAMORE owns the Sycamore Hills
Apartments in Salem, Indiana; WILLS POINT owns Wills Point Crossing Apartments
in Wills Point, Texas; and WOODLAKE owns Valencia House in Woodlake, California.
6
<PAGE>
The following tables contain information concerning the Local Limited
Partnerships identified above.
<TABLE>
<CAPTION>
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
Local Project Name Estimated Estimated Number of Basic Permanent Local Limited
Limited Construction Development Apartment Monthly Mortgage Loan Partnership's
Partnership Completion Cost With Units Rents Amount Anticipated Tax
Land Credits (1)
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Chadron Chadron November $1,016,432 4 2BR units $285 $400,000 $894,940
Apartments 1996 12 3BR units $385 FNBO (2) (federal)
8 buildings
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
Colonial- Colonial May 1995 $6,184,639 28 2BR units $458-555 $2,145,000 $4,467,790
Auburn Village 28 3BR units $528-640 Home (federal)
Auburn Savings (3)
Apartments $1,489,263
(California)
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
Eagleville Shamrock March $429,860 10 1BR units $191 $358,000 $150,280
Estates 1996 6 2BR units $250 RECDS (5) (federal)
Apartments
(4)
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
Maharlika Filipino October $3,162,402 69 1BR units 267 $436,000 $1,958,000
Community 1995 Home (federal)
Building Savings (6)
(4) $946,961
$451,800 (California
HOME (7)
$107,200
CDBG (7)
$603,200
RDA (7)
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
Pawnee Countryside June 1996 $773,261 10 1BR units $275 $615,264 $253,520
Manor 10 2BR units $304 RECDS (5) (federal)
Apartments
(4)
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
Rancheria Rancheria October $1,886,829 8 2BR units $463-565 $400,000 $1,334,550
Gardens 1995 5 3BR units $526-644 Santa (federal)
Apartments 1 4BR unit $716 Barbara Bank
& Trust (8) $462,852
(California)
$570,940
Santa
Barbara City
RDA (9)
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
Sycamore Sycamore August $840,000 22 1BR units $236 $814,800 $346,000
Hills 1994 2 2BR units $262 RECDS(5) (federal)
Apartments
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
Woodlake Valencia February $3,084,533 47 1 BR units $202 $176,121 $2,226,740
House 1996 $266 CCRC (10) (federal)
$290 $1,000,000
HOME (11) $1,136,985
(California)
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
Wills Wills Point September $1,021,000 8 1BR $240 $990,370 $447,050
Point Crossing 1995 units RECDS(5) (federal)
Apartments 28 2BR $275
units
- -------------- ------------- ------------- -------------- -------------- ------------- ---------------- -----------------
</TABLE>
7
<PAGE>
(1) Federal Low Income Housing Credits are available over a 10-year period. For
the year in which the credit first becomes available with respect to an
Apartment Complex, The Partnership will receive only that percentage of the
annual credit which corresponds to the number of months during which The
Partnership was a limited partner of the Local Limited Partnership, and during
which the Apartment Complex was completed and in service.
California Low Income Housing Credits are available over a four-year
period. The full amount of the first-year California Low Income Housing Credit
can be claimed in the year in which the low-income units are occupied,
regardless of the month of occupancy. Notwithstanding, the amount of the
California Low Income Housing Credits which can be allocated to The Partnership
by a Local Limited Partnership in the first year must be pro-rated if The
Partnership is not a limited partner of the Local Limited Partnership owning the
Apartment Complex at the time it is first placed in service.
(2) First National Bank of Omaha ("FNBO") will provide the mortgage loan for a
term of 12 years at a variable interest rate. The interest rate will be adjusted
every 36 months to an annual rate of 225 basis points over the three-year
Treasury Constant Maturities rate. The note will have a minimum rate of 8.5% and
a maximum rate of 12.5%. Principal and interest will be payable monthly based on
a 25-year amortization schedule.
(3) Home Savings of America ("HOME") will provide the mortgage loan at a fixed
interest rate equal to the rate established by the 11th District Federal Home
Loan Bank plus 1.5% per annum. The loan will be for a 15-year term, with
principal and interest payable monthly based on a 30-year amortization schedule.
The then outstanding principal amount will be due at maturity.
(4) Maharlika is senior citizen housing. Eagleville and Pawnee are
rehabilitation properties.
(5) RECDS (formally the Farmers Home Administration) of the United States
Department of Agriculture provides mortgage loans under the FmHA Section 515
Mortgage Loan Program. The mortgage loan is a 50-year loan and bears annual
interest at a market rate prior to reduction of the interest rate by a mortgage
interest subsidy to an annual rate of 1%, with principal and interest payable
monthly based on a 50-year amortization schedule.
(6) Home Savings of America will provide the first mortgage loan at a variable
interest rate equal to the rate established by the 11th District Federal Home
Loan Bank plus 2.5% per annum. The loan will be for a 15-year term, with
principal and interest payable monthly based on a 30-year amortization schedule.
The then outstanding principal amount will be due at maturity.
(7) HOME will provide the second mortgage loan at a fixed interest rate of 7.5%
per annum for a term and amortization period of 40 years, Community Development
Block Grant program ("CDBG") will provide the third mortgage loan at a fixed
interest rate of 3% per annum for a term and amortization period of 47 years,
and Stockton Redevelopment Agency ("RDA") will provide the fourth mortgage loan
at a fixed interest rate of 3% per annum for a term and amortization period of
45 years. Prior to maturity the loans will be paid annually, but only to the
extent cash from operations of the Apartment Complex is available therefor after
payment of operating expenses, debt service on the first mortgage and an amount
equal to $15,000. The unpaid balances will be due on the respective maturity
dates of the loans.
8
<PAGE>
(8) Santa Barbara Bank & Trust will provide the mortgage loan at an interest
rate determined as follows: years 1-15, a rate equal to the 20-year Treasury
Bond rate plus 2.875% per annum; years 16-30, a rate equal to the 5-year
Treasury Bond rate plus 2.5% per annum. Adjustments to the interest rate will be
made in years 16, 21 and 26. The term of the loan will be 30 years, with
principal and interest payable monthly based on a 30-year amortization period.
(9) Santa Barbara City Redevelopment Agency ("RDA") will provide the second
mortgage loan at a fixed interest rate of 4.5% per annum, with $5,000 to be paid
per year, and the balance to be accrued until maturity.
The term of the loan and the amortization period will be 30 years.
(10) California Community Reinvestment Corporation will provide a mortgage loan
for a term of 30 years at an annual interest rate of 9%, with principal and
interest payable monthly based on a 30-year amortization schedule.
(11) HOME will provide a mortgage loan for a term of 40 years at an annual
interest rate equal to the applicable Federal rate, with principal and interest
payable monthly based on a 40-year amortization schedule.
Chadron (CHADRON): Chadron (population 5,600) is the county seat of Dawes
County, and is in northwestern Nebraska at the intersection of U.S. Highways 385
and 20. Basic economic activities of Chadron, a county seat and college town,
include retail and wholesale sales, farming, ranching, cattle feeding,
transportation and tourism. The major employers for Chadron residents are
Chadron State College, Chadron Community Hospital and Chadron city schools
Auburn (COLONIAL-AUBURN): Auburn (population 10,500) , the county seat of Placer
County, is located at the intersection of Interstate Highway 80 and State
Highway 49, approximately 30 miles northeast of Sacramento. The population of
Auburn is approximately 10,500. The largest employment sector for Placer County
residents is in the services industry (primarily health services and hotel and
lodging services). Retail trade is the second largest employment sector. Some of
the largest manufacturing employers for Auburn residents are Coherent (optic and
laser systems), American Forest Products (lumber), and R&W Products (industrial
ceramics).
Eagleville (EAGLEVILLE): Eagleville (population 275) is in Harrison County, in
northeastern Missouri, at the intersection of Interstate Highway 35 and County
Highway N, approximately 14 miles north of Bethany. The major employers for
residents of Eagleville are Premium Standard Farm and Continental Grain.
Pawnee (PAWNEE): Pawnee (population 2,400) is in Sangamon County, in
west-central Illinois, on Interstate Highway 55. Springfield is located
approximately 15 miles north of Pawnee. The major employers for Pawnee residents
are Central Illinois Power and the state government.
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Stockton (MAHARLIKA): Stockton, the county seat of San Joaquin County, is
located approximately 80 miles east of San Francisco and 40 miles south of
Sacramento. In 1990, the population of Stockton was approximately 195,000.
Historically, the economy of Stockton has been based in agricultural production
and processing. In recent years the economic base has broadened to include
electronics and construction materials production. Stockton is also becoming a
major distribution center.
Santa Barbara (RANCHERIA): Santa Barbara, the county seat of Santa Barbara
County, is located on U.S. Highway 101 on the Pacific coast, 90 miles northwest
of Los Angeles. The population of Santa Barbara is approximately 370,000. The
economy of Santa Barbara is based primarily in tourism. The city's largest
employers are the University of California at Santa Barbara, Santa Barbara
County government, and Carter's Hospital.
Salem (SYCAMORE): Salem, the county seat of Washington County, Indiana, is
located approximately 100 miles south of Indianapolis in the southern portion of
Indiana at the intersection of State Highways 56, 60, 135, and 160. The
population of Salem is approximately 5,600. The largest categories of employment
in Washington County are manufacturing and wholesale and retail trade. The major
employers in the Salem area are Smith Cabinet & Child Craft (juvenile
furniture), ICM/Krebsoge (powder metal products), and Kimball International
(office furniture).
Woodlake (WOODLAKE): Woodlake, Tulare County, California is located at the
intersection of State Highways 245 and 216, approximately six miles northwest of
Visalia and approximately 50 miles southeast of Fresno. The population of
Woodlake is approximately 6,300. The major employers for Woodlake residents are
Dryvip Systems (stucco manufacturer), Fruit Growers (agricultural chemicals
manufacturer), and Golden State Packers (fruit packers).
Wills Point (WILLS POINT): Wills Point (population 3,000) is located in Van
Zandt County, in the northeast section of Texas, approximately 50 miles east of
Dallas, at the intersection of U.S. Highway 80 and State Highway 64. Canton, the
county seat, is located 13 miles southeast of Wills Point. The largest employers
for Wills Point residents are the school district and Cushie Manufacturing
(diapers).
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<PAGE>
<TABLE>
<CAPTION>
- --------------- -------------------------- ----------------- ----------------------------------------- -----------------
Sharing Ratio:
Allocations
Local Local and Sale or The
Limited General Property Refinancing Partnership's
Partnership Partners Manager (1) Cash Flow (2) Proceeds Capital
Contributions
<S> <C> <C> <C> <C> <C>
(3)
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
Chadron Retro Development Inc. Retro The Partnership: first 99/1 (4) $482,865
Management $2,500 25/75 (5)
Most Worshipful Prince Group, Inc. LGP: next $2,500
Hall Grand Lodge The balance:
The Partnership: 25%
LGP: 75%
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
Colonial- The S. P. Thomas Company FPI Management, 1995-1998: The 99/1 (4) $2,990,645
Auburn of Northern California, Inc. Partnership: first 51/49 (5)
Inc. $5,000,
balance to LGP;
Project GO, Inc. 1999-2002
The Partnership: first
$8,500 balance to LGP
Thereafter
The Partnership: 75%
LGP: 30%
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
Eagleville Joseph A. Shepherd Lockwood The Partnership: 99/1 (4) $78,920
Realty, Inc. Greater 15% or $300 50/50 (5)
Kenneth M. Vitor LGP: 40%
Balance: 50/50
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
Maharlika Daniels C. Logue Daniels C. The Partnership: 1/3 99/1 (4) $1,546,018
Logue LGP: 2/3 50/50 (5)
Cyrus Youssefi Development and
Construction
Co., Inc.
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
Pawnee Joseph A. Shepherd Lockwood The Partnership: 99/1 (4) $130,054
Realty, Inc. Greater 15% or $300 50/50 (5)
Kenneth M. Vitor LGP: 40%
Balance: 50/50
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
Rancheria Richard Bialosky Real Estate The Partnership: 1/3 99/1 (4) $949,966
Concepts, Inc. LGP: 2/3 50/50 (5)
Detlev Peikert
Community Housing
Assistance Program, Inc.
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
Sycamore Larry A. Swank Sterling The Partnership: 1st 99/1 (4) $184,972
Management $500 25/75 (5)
Lance A. Swank Ltd., Inc. LGP: 2nd $1,500
Balance:
The Partnership: 99%
LGP: 1%
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
Woodlake Philip R. Hammond, Jr. The Management The Partnership: 1/3 99/1 (4) $1,798,247
Company LGP: 2/3 51/49 (5)
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
Wills 1600 Capital M-DC Group, The Partnership: 1st 99/1 (4) $234,247
Point Company, Inc., dba $815 50/50 (5)
Inc. Alpha LGP: 2nd
Management $1,635
Balance: 99/1
- --------------- -------------------------- ----------------- -------------------------- -------------- -----------------
</TABLE>
11
<PAGE>
(1) The maximum annual management fee payable to the property manager
generally is determined pursuant to lender regulations. The Local
General Partners are authorized to employ either themselves or one of
their Affiliates, or a third party, as a property manager for leasing
and management of the Apartment Complex so long as the fee therefor
does not exceed the amount authorized and approved by the lender for
the Apartment Complex.
(2) Reflects the amount of the net cash flow from operations, if any, to be
distributed to The Partnership and the Local General Partners ("LGP")
of the Local Limited Partnership for each year of operations.
Generally, to the extent that the specific dollar amounts which are to
be paid are not paid annually, they will accrue and be paid from sale
or refinancing proceeds as an obligation of the Local Limited
Partnership.
(3) The Partnership will make its capital contributions to the Local
Limited Partnership in stages, with each contribution due when certain
conditions regarding construction or operations of the Apartment
Complex have been fulfilled.
(4) Subject to certain special allocations, reflects the respective
percentage interests of The Partnership and the Local General Partners
in profits, losses and Low Income Housing Credits commencing with entry
of The Partnership as a limited partner.
(5) Reflects the respective percentage interests of The Partnership and the
Local General Partners in any net cash proceeds from sale or refinancing of the
Apartment Complexes, after payment of the mortgage loan and other Local Limited
Partnership obligations, in the order set forth: Chadron: The Partnership's
capital contribution, and the Local General Partners' sales preparation fee.
Colonial-Auburn: The Partnership's capital contribution, and the Local General
Partners' sales preparation fee. Eagleville: The Partnership's capital
contribution, and the Local General Partners' sales preparation fee. Maharlika:
The Partnership's capital contribution, and the capital contribution of the
Local General Partners. Pawnee: The Partnership's capital contribution, and the
Local General Partners' sales preparation fee. Rancheria: The Local General
Partners' sales preparation fee, The Partnership's capital contribution, and the
capital contribution of the Local General Partners. Sycamore: The Partnership's
capital contribution, and the Local General Partners' sales preparation fee.
Woodlake: The Partnership's capital contribution, and the Local General
Partners' sales preparation fee. Wills Point: : An amount equal to the financial
interest of the Local General Partner, as determined in accordance with RECDS
regulations, The Partnership's capital contribution (less previous
distributions); an amount equal to any operating deficit loan to the Local
General Partner; and the Local General Partner's sales preparation fee. As used
above, the term "sales preparation fee" means a fee in the amount of 3% (6% for
Rancheria) of sale or refinancing proceeds.
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<PAGE>
Item 2. Properties
Through its investment in Local Limited Partnerships the Partnership holds
interests in Apartment Complexes. See Item 1 for information pertaining to these
Apartment Complexes.
Item 3. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Item 5a.
(a) The Units are not traded on a public exchange but were sold through a public
offering. It is not anticipated that any public market will develop for the
purchase and sale of any Unit. Units can be assigned only if certain
requirements in the Partnership Agreement of Limited Partnership ("Partnership
Agreement") are satisfied.
(b) At December 31, 1997, there were 431 Limited Partners.
(c) The Partnership was not designed to provide cash distributions to Limited
Partners in circumstances other than refinancing or disposition of its
investments in Local Limited Partnerships. The Limited Partners received the
following federal and California Low Income Housing Credits per Unit:
1997 1996
---- ----
Federal $86 $64
California $91 70
---- ---
$177 $134
==== ====
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years ended December 31, Period from December
----------------------------------------------------------- 19, 1994 to
December 31
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $65,307 $147,254 $160,888 $ 1,613
Partnership operating
expenses (70,549) (76,353) (137,234) (13,399)
Equity in losses from
limited partnerships (806,639) (528,288) (100,224) 2,212
--------- -------- -------- -----
Net loss $(811,881) $(457,387) $ (76,570) $ (9,574)
======== ======== ======== =======
Net loss per weighted
limited partner units $(70) $ (39) $ (9) $(11)
== === ==== ===
Total assets $8,801,763 $11,216,917 $12,347,056 $5,198,745
========= ========== =========== ==========
Investments in
limited partnerships $7,622,211 $8,467,424 $8,494,018 $ 3,355,553
========= ========= ========== ==========
Payable to
limited partnerships $363,634 $1,929,597 $2,785,857 $584,640
======= ========= ========== ========
Accrued fees and expenses
due to affiliates $6,445 $43,755 $102,526 $ 1,700,543
======= ====== ======== ===========
</TABLE>
The Partnership was organized on February 16, 1994 and had only minimal activity
until December 19, 1994, the date the Partnership's minimum offering requirement
was satisfied. The Partnership's Offering of Units commenced on September 1,
1994. Due to these factors and the nature of the Partnership's business (i.e.,
raising capital and acquiring Local Limited Partnership Interests over the first
several years of its term), the data provided above will not be directly
comparable from year to year. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
14
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Liquidity and Capital Resources
- -------------------------------
Since inception the Partnership has received $11,090,050 in cash from the sale
of Units. Substantially all of the $11,090,050 has been committed to the
purchase price and acquisiton fees and cost of investments in Local Limited
Partnerships, reserves and expenses of the offering. Although not presently the
case, the Partnership previously had identified its investments in advance of
receipt of sufficient cash capital to fund the investments. As of December 31,
1997, the Partnership had made capital contribution to Limited Partnerships in
the amount of approximately $8,032,300 and had further obligations of
approximately $363,600.
As of December 31, 1997, the Partnership was indebted to Associates in the
amount of approximately $6,400. The component of such indebtedness were as
follows: advances to pay front-end fees of approximately $1,100 and assets
management fees of approximately, $5,400.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $1,466,900. for the
period ended December 31, 1997. This decrease in cash consisted of cash used in
investing activities and financing activities offset by cash provided by
operations for the Partnership of approximately $(1,539,900), $(37,300) and
$110,400, respectively. Cash used in investing activities consisted of capital
contributions to Local Limited Partnerships and acquisitions fees paid to
Associates of approximately 1,555,200 and 3,600, respectively. Cash flows from
investing activities consisted of distributions from Local Limited Partnerships
and changes in other assets of approximately $6,000 and $12,900, respectively.
Cash flows used in financing activities consisted of payments to affiliates of
the general partner. Cash provided by operating activities consisted of interest
income. 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.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a
net decrease in cash and cash equivalents of approximately $1,212,500. for the
period ended December 31, 1996. This decrease in cash consisted of cash used in
investing activities offset by cash provided by financing and operating
activities of the Partnership of approximately ($1,369,900), $61,700 and $95,600
respectively. Cash used in investing activities consisted of capital
contributions to Local Limited Partnerships and acquisitions fees paid to
Associates of approximately 1,341,200 and 41,600, respectively. Cash flows from
investing activities consisted of changes in other assets of approximately
$12,900. Cash provided by financing activities consists of collection of notes
receivable from the Limited Partners and refund of offering costs offset by
payments to affiliates or the General Partner of approximately $172,500, $69,800
and $(180,600). Cash provided by operating activities consisted of primarily of
interest income. 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.
15
<PAGE>
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 same of the Apartment Complexes.
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 Limited Partnership Interests is sufficient to fund the Partnership's
operations.
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 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 Limited Partnership Interests will be sufficient to fund the
Partnership's investment commitments and proposed operations.
Subsequent to the close of its public offering the Partnership 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 including 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'
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 Local Limited Partnership for such purposes or
to replenish or increase working capital reserves.
16
<PAGE>
Under the Partnership Agreement, the Partnership does not have the ability to
assess their respective partners for additional capital contributions to provide
capital if needed by the Partnership or their Local Limited Partnership.
Accordingly, if circumstances arise that cause the Local Limited Partnerships to
require capital in addition to that contributed by the respective 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 because 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' capital needs and resources are expected to undergo major
changes during the first several years of operations as a result of the
completion of their respective offerings of Units and acquisition of
investments. Thereafter, the Partnership' capital needs and resources are
expected to be relatively stable over the holding periods of the investments.
Results of Operations
- ---------------------
As discussed in Item 1 above, as of December 31, 1997, the Partnership had
acquired interests in nine Local Limited Partnership Interests. Each of the
Apartment Complexes owned by such Local Limited Partnerships has received a
reservation or an allocation for Low Income Low Income Housing Credits.
Consistent with The Partnership's investment objectives, each Local Limited
Partnership is generating or is expected to generate Low Income Housing Credits
for a period of approximately ten years, commencing with completion of
construction or rehabilitation of its Apartment Complex and is generating or is
expected to generate losses until sale of the Apartment Complex.
17
<PAGE>
As reflected on its Statements of Operations, the Partnership had losses of
approximately $811,900 and $457,400 for the years ended December 31, 1997 and
1996, respectively. The component items of revenue and expense are discussed
below.
Revenue. Revenues consisted entirely of interest earned on Limited Partner
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 investor capital.
Expenses. The most significant component of operating expenses is expected to be
the Asset Management Fee. The Asset Management Fee is equal to the greater of
$2,000 for each Apartment Complex or 0.275 % of investor capital, and will be
increased based on changes in the Consumer Price Index. The Asset Management Fee
of approximately $31,625 was incurred in the years ended December 31, 1997 and
1996. The Partnership paid the General Partner or its affiliates $60,000 and
$45,000 of those fees in 1997 and 1996, respectively.
Amortization expense consists of the amortization over a period of 30 years of
the Acquisition Fee and other expenses attributable to the acquisition of Local
Limited Partnership Interests.
Office expense consists of The Partnership's administrative expenses, such as
accounting and legal fees, bank charges and investor reporting expenses.
Equity in Income from Local Limited Partnerships. The Partnership's equity in
income from Local Limited Partnerships is equal to approximately 99% of the
aggregate net income of the Local Limited Partnerships incurred after admission
of The Partnership as a limited partner thereof.
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.
18
<PAGE>
Item 8. Financial Statements and Supplementary Data
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
FINANCIAL STATEMENTS
For The Years Ended December 31, 1997, 1996 and 1995
with
INDEPENDENT AUDITORS' REPORT THEREON
19
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC California Housing Tax Credits IV, L.P., Series 4
We have audited the accompanying balance sheets of WNC California Housing Tax
Credits IV, L.P., Series 4 (a California Limited Partnership) (the
"Partnership") as of December 31, 1997 and 1996, and the related statements of
operations, partners' equity (deficit) and cash flows for the years ended
December 31, 1997, 1996 and 1995. 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
the financial statements of the limited partnerships in which WNC California
Housing Tax Credits IV, L.P., Series 4 is a limited partner. These investments,
as discussed in Note 2 to the financial statements, are accounted for by the
equity method. The investments in these limited partnerships represented 87% and
75% of the total assets of WNC California Housing Tax Credits IV, L.P., Series 4
at December 31, 1997 and 1996, respectively. Substantially all of the financial
statements of the limited partnerships were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to the
amounts included for the limited partnerships, is based solely on the reports 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 the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC California Housing Tax Credits IV, L.P., Series 4
(a California Limited Partnership) as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for the years ended December 31,
1997, 1996 and 1995, in conformity with generally accepted accounting
principles.
/s/CORBIN & WERTZ
-----------------
CORBIN & WERTZ
Irvine, California
April 10, 1998
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
----------------- ------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,147,906 $ 2,614,756
Receivables from affiliates (Note 3) 31,646 121,825
Investments in limited partnerships (Note 2) 7,622,211 8,467,424
Other assets - 12,912
--------------- ----------------
$ 8,801,763 $ 11,216,917
=============== ================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payable to limited partnerships (Note 4) $ 363,634 $ 1,929,597
Accrued fees and advances due to General
Partner and affiliate (Note 3) 6,445 43,755
--------------- ----------------
Total liabilities 370,079 1,973,352
--------------- ----------------
Partners' equity (deficit) (Note 6):
General partner (16,856) (8,737)
Limited partner (25,000 units authorized, 11,500 units
issued and outstanding at December 31, 1997 and 1996) 8,448,540 9,252,302
--------------- ----------------
Total partners' equity 8,431,684 9,243,565
--------------- ----------------
$ 8,801,763 $ 11,216,917
=============== ================
</TABLE>
See notes to accompanying financial statements
FS-2
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ------------------ ------------------
<S> <C> <C> <C>
Interest income $ 65,307 $ 147,254 $ 160,888
---------------- --------------- ----------------
Operating expenses:
Amortization 25,419 24,865 16,056
Partnership management fees (Note 3) 31,625 31,625 31,625
Interest expense (Note 3) - - 79,853
Office 13,505 19,863 9,700
---------------- --------------- ----------------
Total operating expenses 70,549 76,353 137,234
---------------- --------------- ----------------
(Loss) income from operations (5,242) 70,901 23,654
Equity in losses from limited partnerships
(Note 2) (806,639) (528,288) (100,224)
---------------- --------------- ----------------
Net loss $ (811,881) $ (457,387) $ (76,570)
================ =============== ===============
Net loss allocable to:
General partner $ (8,119) $ (4,574) $ (766)
================ =============== ===============
Limited partners $ (803,762) $ (452,813) $ (75,804)
================ =============== ===============
Net loss per weighted limited partner units $ (69.89) $ (39.38) $ (8.68)
=============== =============== ==============
Outstanding weighted limited partner
units 11,500 11,500 8,735
================ =============== ===============
</TABLE>
See notes to accompanying financial statements
FS-3
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
General Partner Limited Partners
Total
----------------- ------------------ ------------------
<S> <C> <C> <C>
Equity (deficit), January 1, 1995 $ (3,015) $ 1,703,189 $ 1,700,174
Capital contributions, net of discounts - 8,942,050 8,942,050
Collection of notes receivable (Note 6) - 145,500 145,500
Capital issued for notes receivable (Note 6) - (172,500) (172,500)
Offering expenses (1,080) (1,078,901) (1,079,981)
Net loss (766) (75,804) (76,570)
----------------- ---------------- ----------------
Equity (deficit), December 31, 1995 (4,861) 9,463,534 9,458,673
Collection of notes receivable (Note 6) - 172,500 172,500
Offering expenses (Note 3) 698 69,081 69,779
Net loss (4,574) (452,813) (457,387)
----------------- ---------------- ----------------
Equity (deficit), December 31, 1996 (8,737) 9,252,302 9,243,565
Net loss (8,119) (803,762) (811,881)
----------------- ---------------- ----------------
Equity (deficit), December 31, 1997 $ (16,856) $ 8,448,540 $ 8,431,684
================ =============== ===============
</TABLE>
See notes to accompanying financial statements
FS-4
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ------------------ ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (811,881) $ (457,387) $ (76,570)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Amortization 25,419 24,865 16,056
Equity in losses of limited partnerships 806,639 528,288 100,224
Change in receivables from affiliates 90,179 - -
Change in accrued interest payable - - (13,388)
---------------- --------------- ---------------
Net cash provided operating activities 110,356 95,766 26,322
---------------- --------------- ---------------
Cash flows from investing activities:
Investments in limited partnerships (1,555,241) (1,341,247) (2,501,693)
Distributions 6,000 - -
Acquisition fees (3,567) (41,572) (551,835)
Loans receivable - - 1,098,608
Other assets 12,912 12,912 (24,211)
---------------- --------------- ---------------
Net cash used in investing activities (1,539,896) (1,369,907) (1,979,131)
---------------- --------------- ---------------
Cash flows from financing activities:
Payments to affiliates or general partner, net (37,310) (180,596) (1,598,017)
Capital contributed - - 9,173,250
Offering costs - 69,779 (1,079,981)
Repayments from loan payable - - (1,200,000)
Collection on notes receivable - 172,500 -
---------------- --------------- ---------------
Net cash (used in) provided by financing
activities (37,310) 61,683 5,295,252
---------------- --------------- ---------------
Net change in cash (1,466,850) (1,212,458) 3,342,443
Cash and cash equivalents, beginning of year 2,614,756 3,827,214 484,771
---------------- --------------- ---------------
Cash and cash equivalents, end of year $ 1,147,906 $ 2,614,756 $ 3,827,214
================ =============== ===============
</TABLE>
Continued
See notes to accompanying financial statements
FS-5
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
For The Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ------------------ ------------------
SUPPLEMENTAL DISCLOSURE OF
NONCASH FINANCING AND INVESTING
ACTIVITY:
<S> <C> <C> <C>
The Partnership has incurred but not paid -
Capital contributions in connection with
with investments in limited partnerships $ - $ 382,865 $ 2,201,217
================ =============== ===============
The Partnership has not received -
Subscriptions in connection with capital
contributions $ - $ - $ 172,500
================ =============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Interest paid $ - $ - $ 93,241
================ =============== ===============
Taxes paid $ 800 $ 800 $ 800
================ =============== ===============
</TABLE>
See accompanying notes to financial statements
FS-6
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1997, 1996 and 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
- ------------
WNC California Housing Tax Credits IV, L.P., Series 4 (the "Partnership") was
formed under the California Revised Limited Partnership Act on February 16,
1994, and commenced operations on December 19, 1994. 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 California 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 up to 25,000 units of limited
partnership interest (Units) at $1,000 per Unit. The offering of Units concluded
in August 1995 at which time 11,500 Units representing subscriptions, net of
discounts of $400,950 for purchases of 100 units or more, in the amount of
$11,099,050 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 3 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.
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 interests 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.
FS-7
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1997, 1996 and 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Method of Accounting For Investment in Limited Partnerships
- -----------------------------------------------------------
The Partnership accounts for its investment in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the limited partnerships' results of operations and for
any distributions received. Costs incurred by the Partnership in acquiring the
investment 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.
Cash and Cash Equivalents
- -------------------------
The Partnership considers all investments with remaining maturities of three
months or less when purchased to be cash equivalents. The Partnership had no
cash equivalents at December 31, 1997. The Partnership had $1,835,700 of cash
equivalents at December 31, 1996.
Concentration of Credit Risk
- ----------------------------
As of December 31, 1997, the Partnership maintained cash balances at certain
financial institutions in excess of amounts insured by Federal agencies.
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. As of December 31,
1997, the Partnership had incurred offering and selling expenses of $757,234 and
$554,470, respectively (see Note 3). No organizational expenses have been
incurred to date.
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.
FS-8
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1997, 1996 and 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Net Loss Per Limited Partner Units
- ----------------------------------
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 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
At December 31, 1997, the Partnership had acquired limited partnership interests
in nine limited partnerships which own and operate apartment complexes
consisting of 298 apartment units. The accounting policies of the limited
partnerships are consistent with the Partnership. The Partnership, as a limited
partner, is generally entitled to 99% of the operating profits and losses of the
limited partnership.
The Partnership's investment in the limited partnership as shown in the
accompanying balance sheet as of December 31, 1997 and 1996, is approximately
$1,061,000 and $2,388,000, respectively, greater than the Partnership's equity
as shown in the limited partnership's financial statements. This difference is
due to acquisition and selection costs related to the acquisition of the
investments that have been capitalized in the Partnership's investment account
and will be amortized over 30 years and capital contributions accrued but not
paid (Note 3).
Following is a summary of the equity method activity of the investments in
limited partnerships for the years ended December 31:
<TABLE>
<CAPTION>
1997 1996
----------------- ------------------
<S> <C> <C>
Investments, beginning of year $ 8,467,424 $ 8,494,018
Total capital contributions made or accrued, net of
tax credit adjustments (10,722) 484,987
Capitalized acquisition costs and acquisition fees (see Note 3) 3,567 41,572
Distributions (6,000) -
Amortization of acquisition fees and costs (25,419) (24,865)
Equity in losses in limited partnerships (806,639) (528,288)
--------------- ----------------
Investments, end of year $ 7,622,211 $ 8,467,424
=============== ================
</TABLE>
FS-9
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1997, 1996 and 1995
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
The financial information from the individual financial statements of the
limited partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest subsidies are generally netted in
interest expense. Approximate combined condensed financial information from the
individual financial statements of the limited partnerships as of December 31
and for the years then ended is as follows:
COMBINED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
1997 1996
----------------- ------------------
ASSETS
<S> <C> <C>
Buildings and improvements, net of accumulated depreciation
for 1997 and 1996 of $1,223,000 and $605,000,
respectively $ 14,553,000 $ 15,138,000
Land 916,000 911,000
Construction in progress 1,181,000 37,000
Other assets 616,000 808,000
--------------- ----------------
Total assets $ 17,266,000 $ 16,894,000
=============== ================
LIABILITIES
Mortgage and construction loans payable $ 9,164,000 $ 8,286,000
Other liabilities (including payables to affiliates
of $717,000 and $1,288,000 for 1997 and 1996,
respectively) 1,496,000 2,491,000
--------------- ----------------
Total liabilities 10,660,000 10,777,000
--------------- ----------------
PARTNERS' CAPITAL
WNC California Housing Tax Credits IV, L.P., Series 4 6,561,000 6,079,000
Other partners 45,000 38,000
--------------- ----------------
Total partners' capital 6,606,000 6,117,000
--------------- ----------------
$ 17,266,000 $ 16,894,000
=============== ================
</TABLE>
FS-10
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1997, 1996 and 1995
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1997 1996 1995
--------------- ---------------- ----------------
<S> <C> <C> <C>
Total revenues $ 1,045,000 $ 842,000 $ 217,000
------------- ------------- --------------
Expenses:
Operating expenses 705,000 521,000 104,000
Interest expense 535,000 392,000 72,000
Depreciation and amortization 619,000 463,000 142,000
------------- ------------- --------------
Total expenses 1,859,000 1,376,000 318,000
------------- ------------- --------------
Net loss $ (814,000) $ (534,000) $ (101,000)
============= ============= ==============
Net loss allocable to the Partnership $ (807,000) $ (528,000) $ (100,000)
============= ============= ==============
</TABLE>
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.
NOTE 3 - RELATED PARTY TRANSACTIONS
- -----------------------------------
As of December 31, 1997, receivables from affiliates consist of amounts due from
an affiliate related to certain costs paid by the Partnership on behalf of such
affiliate. As of December 31, 1996, receivables from affiliates consists
primarily of amounts due from WNC California Housing Tax Credits IV, L.P.,
Series 5 related to the allocation of offering expenses incurred, as defined in
the Partnership Agreement. In connection with such allocation, offering expenses
were reduced by $69,779 during the year ended December 31, 1996.
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 7% 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, 1997
and 1996, acquisition fees of $654,580 have been incurred and included
in limited partnership investment. Accumulated amortization amounted to
$57,320 and $35,499 as of December 31, 1997 and 1996, respectively.
FS-11
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1997, 1996 and 1995
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
Reimbursement of costs incurred by an affiliate of the General Partner
in connection with the acquisition of limited partnerships. These
reimbursements will not exceed 1.0% of the gross proceeds. As of
December 31, 1997 and 1996, the Partnership has incurred acquisition
costs of $108,622 and $107,538, respectively, which have been included
in limited partnership investment. Accumulated amortization was $9,016
and $5,423 for 1997 and 1996, respectively.
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. Management fees of $31,625 were incurred for 1997, 1996
and 1995. Management fees of $60,000 and $45,000 were paid during 1997
and 1996, respectively. No amounts were paid during 1995.
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.
Accrued fees and advances due the General Partner and affiliate are summarized
as follows:
<TABLE>
<CAPTION>
1997 1996
----------------- ------------------
<S> <C> <C>
Acquisition fees $ - $ 23,993
Advances made for acquisition costs, organizational,
offering and selling expenses 1,055 1,512
Asset management fees 5,390 18,250
--------------- ----------------
$ 6,445 $ 43,755
=============== ================
</TABLE>
Amounts advanced to acquire limited partnerships bore interest at the rate
incurred by the affiliate on its line of credit which has ranged from 9.75% to
10.5% per annum. Interest incurred on these advances during the period ended
December 31, 1995 amounted to $38,174.
FS-12
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1997, 1996 and 1995
NOTE 4 - PAYABLE TO LIMITED PARTNERSHIPS
- ----------------------------------------
Payable to limited partnerships represents amounts which are due at various
times based on conditions specified in the limited partnership agreements. These
contributions are non-interest bearing, are payable in installments and are due
upon the limited partnership achieving certain operating and development
benchmarks (generally within two years of the Partnership's initial investment).
NOTE 5 - INCOME TAXES
- ---------------------
No provision for income taxes has been recorded in the accompanying financial
statements since all items of taxable income and loss will be allocated to the
partners for inclusion in their respective income tax returns.
NOTE 6 - SUBSCRIPTIONS AND INVESTOR NOTES RECEIVABLE
- ----------------------------------------------------
During 1995, 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 the rate of 8% per annum, due no later
than 13 months after the subscription date. Since the promissory notes had not
been collected as of the date of issuance of the financial statements, their
aggregate unpaid balance was reflected as a reduction of partners' equity in the
accompanying financial statements. The promissory notes accepted during 1995
amounted to $172,500 and were collected during 1996; notes accepted during 1994
amounted to $145,500 and were collected during 1995.
FS-13
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NONE
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers of its own. The following
biographical information is presented for the directors and executive officers
of Associates which has principal responsibility for the Partnership's affairs.
Directors and Executive Officers of WNC & Associates, Inc.
- ----------------------------------------------------------
The directors of Associates are Wilfred N. Cooper, Sr., who serves as Chairman
of the Board, John B. Lester, Jr., David N. Shafer, Wilfred N. Cooper, Jr. and
Kay L. Cooper. Substantially all of the shares of Associates are owned by
Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, and John B. Lester,
Jr., through the Lester Family Trust.
WILFRED N. COOPER, SR., age 67, has been the principal shareholder and a
Director of WNC & ASSOCIATES, INC. since its organization in 1971, of SHELTER
RESOURCE CORPORATION since its organization in 1981 and of WNC RESOURCES, INC.
from its organization in 1988 through its acquisition by WNC & ASSOCIATES, INC.
in 1991, serving as President of those companies until 1992 and as Chief
Executive Officer since 1992, and has been a Director of WNC CAPITAL CORPORATION
since its organization. He is also a general partner with WNC & ASSOCIATES, INC.
in WNC FINANCIAL GROUP, L.P. and WNC TAX CREDIT PARTNERS, L.P. During 1970 and
1971 he was a principal of Creative Equity Development Corporation, a
predecessor of WNC & ASSOCIATES, INC., and of Creative Equity Corporation, a
real estate investment firm. For 12 years prior to that, Mr. Cooper was employed
by Rockwell International Corporation, last serving as its manager of housing
and urban developments. Previously, he had responsibility for new business
development including factory-built housing evaluation and project management in
urban planning and development. Mr. Cooper is a Director of the Executive
Committee of the National Association of Home Builders (NAHB) and a past
Chairman of the NAHB's Rural Housing Council, a Director of the National Housing
Conference, a Director of the Affordable Housing Tax Credit Coalition, a past
President of the California Council of Affordable Housing (CCAH) (formerly Rural
Builders Council of California), and a past President of Southern California
Chapter II of the Real Estate Syndication and Securities Institute (RESSI) of
the National Association of Realtors (NAR). Mr. Cooper graduated from Pomona
College in 1956 with a Bachelor of Arts degree.
JOHN B. LESTER, JR., age 64, has been a shareholder, a Director and Secretary of
WNC & ASSOCIATES, INC. since 1986, Executive Vice President from 1986 to 1992,
and President and Chief Operating Officer since 1992, and has been a Director of
WNC CAPITAL CORPORATION since its organization. He was a shareholder, Executive
Vice President, Secretary and a Director of WNC RESOURCES, INC. from 1988
through its acquisition by WNC & ASSOCIATES, INC. in 1991. From 1973 to 1986 he
was Chairman of the Board and Vice President or President of E & L Associates,
Inc., a provider of engineering and construction services to the oil refinery
and petrochemical industries which he co-founded in 1973. Mr. Lester is a former
Director of the Los Angeles Chapter of the Associated General Contractors of
California. His responsibilities at WNC & ASSOCIATES, INC. include property
acquisitions and company operations. Mr. Lester graduated from the University of
Southern California in 1956 with a Bachelor of Science degree in Mechanical
Engineering.
20
<PAGE>
DAVID N. SHAFER, age 45, has been a Director of WNC & ASSOCIATES, INC. since
1997, a Senior Vice President since 1992, and General Counsel since 1990, and
served as Asset Management Director from 1990 to 1992, and has been a Director
and Secretary of WNC Management, Inc. since its organization. Previously he was
employed as an associate attorney by the law firms of Morinello, Barone, Holden
& Nardulli from 1987 until 1990, Frye, Brandt & Lyster from 1986 to 1987 and
Simon and Sheridan from 1984 to 1986. Mr. Shafer is a Director and President of
CCAH, a member of NAHB's Rural Housing Council, a past President of Southern
California Chapter II of RESSI, a past Director of the Council of Affordable and
Rural Housing and Development and a member of the State Bar of California. Mr.
Shafer graduated from the University of California at Santa Barbara in 1978 with
a Bachelor of Arts degree, from the New England School of Law in 1983 with a
Juris Doctor degree and from the University of San Diego in 1986 with a Master
of Law degree in Taxation.
WILFRED N. COOPER, JR., age 35, has been employed by WNC & ASSOCIATES, INC.
since 1988 and has been a Director since 1997 Executive Vice President since
1998, and a Senior Vice President since 1992. Mr. Cooper heads the Acquisition
Originations department at WNC, has been President of, and a registered
principal with, WNC CAPITAL CORPORATION, a member firm of the NASD, since its
organization, and has been a Director of WNC Management Inc. since its
organization. Previously, he was employed as a government affairs assistant by
Honda North America from 1987 to 1988, and as a legal assistant with respect to
Federal legislative and regulatory matters by the law firm of Schwartz, Woods
and Miller from 1986 to 1987. Mr. Cooper is an alternate director and member of
NAHB's Rural Housing Council and serves as Chairman of its Membership Committee.
Mr. Cooper graduated from The American University in 1985 with a Bachelor of
Arts degree.
THEODORE M. PAUL, age 42, has been Vice President - Finance of WNC & ASSOCIATES,
INC. since 1992 and Chief Financial Officer since 1990, and has been a Director
and Chief Financial Officer of WNC Management Inc. since its organization.
Previously, he was a Vice President and Chief Financial Officer of National
Partnership Investments Corp., a sponsor and general partner of syndicated
partnerships investing in affordable rental housing qualified for tax credits,
from 1986 until 1990, and was employed as an associate by the accounting firms
of Laventhol & Horwath, during 1985, and Mann & Pollack Accountants, from 1979
to 1984. Mr. Paul is a member of the California Society of Certified Public
Accountants and the American Institute of Certified Public Accountants. His
responsibilities at WNC & ASSOCIATES, INC. include supervision of investor
partnership accounting and tax reporting matters and monitoring the financial
condition of the Local Limited Partnerships in which the Partnership will
invest. Mr. Paul graduated from the University of Illinois in 1978 with a
Bachelor of Science degree and is a Certified Public Accountant in the State of
California.
THOMAS J. RIHA, age 43, has been Vice President - Asset Management of WNC &
ASSOCIATES, INC. since 1994, and has been a Director and Chief Executive Officer
of WNC Management Inc. since its organization. He has more than 17 years'
experience in commercial and multi-family real estate investment and management.
Previously, Mr. Riha was employed by Trust Realty Advisor, a real estate
acquisition and management company, from 1988 to 1994, last serving as Vice
President - Operations. His responsibilities at WNC & ASSOCIATES, INC. include
monitoring the operations and financial performance of, and regulatory
compliance by, properties in the WNC portfolio. Mr. Riha graduated from the
California State University, Fullerton in 1977 with a Bachelor of Arts degree
(cum laude) in Business Administration with a concentration in Accounting and is
a Certified Public Accountant in the State of California and a member of the
American Institute of Certified Public Accountants.
21
<PAGE>
SY P. GARBAN, age 52, has 20 years' experience in the real estate securities and
syndication industry. He has been associated with WNC & ASSOCIATES, INC., since
1989, serving as National Sales Director through 1992 and as Vice President -
National Sales since 1992. Previously, he was employed as Executive Vice
President by MRW, Inc., Newport Beach, California from 1980 to 1989, a real
estate development and management firm. Mr. Garban is a member of the
International Association of Financial Planners. He graduated from Michigan
State University in 1967 with a Bachelor of Science degree in Business
Administration.
CARL FARRINGTON, age 55, has been associated with WNC & ASSOCIATES, INC. since
1993, and has served as Director Originations since 1994. Mr. Farrington has
more than 12 years' experience in finance and real estate acquisitions.
Previously, he served as Acquisitions Director for The Arcand Company from 1991
to 1993, and as Treasurer and Director of Finance and Administrator for Polytron
Corporation from 1988 to 1991. Mr. Farrington is a member and Director of the
Council of Affordable and Rural Housing and Development. Mr. Farrington
graduated from Yale University with a Bachelor of Arts degree in 1966 and from
Dartmouth College with a Master of Business Administration in 1970.
DAVID TUREK, age 43, has been Director - Originations of WNC & ASSOCIATES, INC.
since 1996. He has 23 years' experience in real estate finance and acquisitions.
Previously, from 1995 to 1996 Mr. Turek served as a consultant for a national
Low Income Housing Credit sponsor where he was responsible for on-site
feasibility studies and due diligence analyses of Low Income Housing Credit
properties, from 1992 to 1995 he served as Executive Vice President for Levcor,
Inc., a multi-family development company, and from 1990 to 1992 he served as
Vice President for the Paragon Group where he was responsible for Low Income
Housing Credit development activities. Mr. Turek graduated from Southern
Methodist University in 1976 with a Bachelor of Business Administration degree.
N. PAUL BUCKLAND, age 36, has been employed by WNC & ASSOCIATES, INC. since 1994
and currently serves as Vice President - Acquisitions. He has 11 years'
experience in analysis pertaining to the development of multi-family and
commercial properties. Previously, from 1986 to 1994 he served on the
development team of the Bixby Ranch which constructed more than 700 apartment
units and more than one million square feet of "Class A" office space in
California and neighboring states, and from 1984 to 1986 he served as a land
acquisition coordinator with Lincoln Property Company where he identified and
analyzed multi-family developments. Mr. Buckland graduated from California State
University, Fullerton in 1992 with a Bachelor of Science degree in Business
Finance.
MICHELE M. TAYLOR, age 43, has been employed by WNC & ASSOCIATES, INC. since
1986, serving as a paralegal and office manager, and currently is the Investor
Services Director. Previously she was self-employed between 1982 and 1985 in
non-financial services activities and from 1978 to 1981 she was employed as a
paralegal by a law firm which specialized in real estate limited partnership
transactions. Ms. Taylor graduated from the University of California, Irvine in
1976 with a Bachelor of Arts degree.
THERESA I. CHAMPANY, age 40, has been employed by WNC & ASSOCIATES, INC. since
1989 and currently is the Marketing Services Director and a registered principal
with WNC CAPITAL CORPORATION. Previously, she was employed as Manager of
Marketing Services by August Financial Corporation from 1986 to 1989 and as
office manager and Assistant to the Vice President of Real Estate Syndications
by McCombs Securities Co., Inc. from 1979 to 1986. Ms. Champany attended
Manchester (Conn.) Community College from 1976 to 1978.
KAY L. COOPER, age 61, has been an officer and Director of WNC & ASSOCIATES,
INC. since 1971 and of WNC RESOURCES, INC. from 1988 through its acquisition by
WNC & ASSOCIATES, INC. in 1991. Mrs. Cooper has also been the sole proprietor of
Agate 108, a manufacturer and retailer of home accessory products, since 1975.
She is the wife of Wilfred N. Cooper, Sr., the mother of Wilfred N. Cooper, Jr.
and the sister of John B. Lester, Jr. Mrs. Cooper graduated from the University
of Southern California in 1958 with a Bachelor of Science degree.
22
<PAGE>
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or its affiliates for the following fees:
(a) Organization and Offering Expenses. The Partnership paid the General Partner
or its affiliates as of December 31, 1997 $1,311,700, consisting of commissions
and other fees and expenses of the Partnership's offering of Units of $554,500
and $757,200, respectively. Of the total paid to the General Partner or its
affiliates, approximately $1,081,700 was paid (reallowed) to unaffiliated
persons participating in the Partnership's offering or rendering other services
in connection with the Partnership's offering.
(b) Acquisition fees in an amount equal to 7% of the gross proceeds of the
Partnership's offering ("Gross Proceeds"). Through December 31, 1997, the
aggregate amount of acquisition fees of $654,580 have been paid or accrued to
the General Partner or its affiliates.
(c) The Partnership reimbursed the General Partner or its affiliates as of
December 31, 1997 for acquisition expenses expended by such persons on behalf of
the Partnership in the amounts $108,622.
(d) An annual asset management fee in an amount equal to 0.2% of invested assets
(the sum of the Partnership's Investment in Local Limited Partnership Interests
and the Partnership's allocable share of the amount of the mortgage loans on and
other debts related to, the Apartment Complexes owned by such Local Limited
Partnerships.). Fees of $31,625 were incurred for 1997, 1996, and 1995,
respectively. The Partnership paid the General Partner or its affiliates $60,000
and $45,000 of those fees in 1997 and 1996, respectively. No amounts were paid
in 1995.
(e) A subordinated disposition fee in an amount equal to 1% of the sale price
received in connection with the sale or disposition of an Apartment Complex or
Local Limited Partnership Interest. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital contributions
and payment of the Return on Investment to the Limited Partners. "Return on
Investment" means an annual, cumulative but not compounded, "return" to the
Limited Partners (including Low Income Housing Credits) as a class on their
adjusted capital contributions commencing for each Limited Partner on the last
day of the calendar quarter during which the Limited Partner's capital
contribution is received by the Partnership, calculated at the following rates:
(i) 14% through December 31, 2005, and (ii) 6% for the balance of the
Partnership's term. No disposition fees have been paid.
(f) The General Partner was allocated federal and California Housing Tax Credits
as follows:
1997 1996
Federal $9,950 $7,476
California 10,544 8,086
------- -------
20,494 15,562
====== ======
23
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
No person is known to the General Partner to own beneficially in excess of 5% of
the outstanding Units.
Security Ownership of Management
(a) Security Ownership of Certain Beneficial Owners
No person is known to own beneficially in excess of 5% of the outstanding
Limited Partnership Interests.
(b) Security Ownership of Management
Neither the General Partner, its affiliates nor any of the officers or
directors of Associates or its affiliates own directly or beneficially any
limited partnership interests in the Partnership.
(c) Changes in Control
The management and control of the General Partners may be changed at any time in
accordance with their respective organizational documents, without the consent
or approval of the Limited Partners. In addition, the Partnership Agreement
provides for the admission of one or more additional and successor General
Partners in certain circumstances.
First, with the consent of any other General Partners and a majority-in-interest
of the Limited Partners, any General Partner may designate one or more persons
to be successor or additional General Partners. In addition, any General Partner
may, without the consent of any other General Partner or the Limited Partners,
(I) substitute in its stead as General Partner any entity which has, by merger,
consolidation or otherwise, acquired substantially all of its assets, stock or
other evidence of equity interest and continued its business, or (ii) cause to
be admitted to the Partnership an additional General Partner or Partners if it
deems such admission to be necessary or desirable so that the Partnership will
be classified a partnership for Federal income tax purposes. Finally, a
majority-in-interest of the Limited Partners may at anytime remove the General
Partner of the Partnership and elect a successor General Partner
Item 13. Certain Relationships and Related Transactions
All of the Partnership's affairs are managed by the General Partner, through
Associates. The transactions with the General Partner and Associates are
primarily in the form of fees paid by the Partnership for services rendered to
the Partnership, as discussed in Item 11 and in the notes to the accompanying
financial statements.
24
<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, 1997 and 1996.
Statements of Operations for the years ended December 31, 1997, 1996, and 1995.
Statement of Partners' Equity for the years ended December 31, 1997, 1996, and
1995.
Statements of Cash Flows for the years ended December 31, 1997, 1996, and 1995.
Notes to Financial Statements.
Financial Statement Schedules:
N/A
(3) Articles of incorporation and by-laws: The registrant is not
incorporated. The Partnership Agreement included as Exhibit B to the
Prospectus, and the First Amendment to the Partnership Agreement
included in the Supplement dated April 30, 1996 to Prospectus, each of
which is included in Post-Effective No. 10 to Registration Statement on
Form S-11 dated May 3, 1996 are incorporated herein by reference as
Exhibit 3.
(10) Material contracts:
10.1 Escrow Agreement between Registrant and National Bank of Southern
California filed as exhibit 10.1 to the Pre-effective Amendment No. 2 to
Registration Statement on Form S-11 of the Partnership dated July 22, 1994
is hereby incorporated herein by reference as exhibit 10.1.
10.2 Amended and Restated Agreement of Limited Partnership of Colonial Village
Auburn filed as exhibit 10.1 to Form 8-K dated October 28, 1994 is hereby
incorporated herein by reference as exhibit 10.2
10.3 Amended and Restated Agreement of Limited Partnership of Sycamore Hills,
L.P. filed as exhibit 10.1 to Form 8-K dated January 9, 1995 is hereby
incorporated herein by reference as exhibit 10.3.
25
<PAGE>
10.4 Amended and Restated Agreement of Limited Partnership of Maharlika, a
California Limited Partnership filed as exhibit 10.1 to Form 8-K dated May
31, 1995 is hereby incorporated herein by reference as exhibit 10.4.
10.5 Amended and Restated Agreement of Limited Partnership of Wills Point
Crossing, L.P. filed as exhibit 10.1 to Form 8-K dated July 26, 1995 is
hereby incorporated herein by reference as exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of Rancheria Village
Apartments, a California Limited Partnership filed as exhibit 10.1 to Form
8-K dated September 26, 1995 is hereby incorporated herein by reference as
exhibit 10.6.
10.7 Amended and Restated Agreement of Limited Partnership of Woodlake Valencia
House, a California Limited Partnership. (1)
10.8 Amended and Restated Agreement of Limited Partnership of Pawnee Associates
I, L.P. (1)
10.9 Amended and Restated Agreement of Limited Partnership of Eagleville
Associates I, L.P. (1)
Reports on Form 8-K
No reports on form 8-K were filed during the fourth quarter ended December 31,
1997
26
<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 CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
By: WNC California Tax Credit Partners IV, L.P.
General Partner of the Registrant
By: WNC & Associates, Inc.
General Partner of WNC California Tax Credit Partners III, L.P.
By: /s/ John B. Lester, Jr.
- -----------------------------------------------------
John B. Lester, Jr. President of WNC & Associates, Inc.
Date: April 14, 1998
By: /s/ Theodore M. Paul
- -----------------------------------------------------
Theodore M. Paul Vice-President Finance of WNC & Associates, Inc.
Date: April 14, 1998
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 WNC & Associates, Inc.
Date: April 14, 1998
By: /s/John B. Lester, Jr.
- -----------------------------------------------------
John B. Lester, Jr. Director WNC & Associates, Inc.
Date: April 14, 1998
By: /s/David N. Shafer
- -----------------------------------------------------
David N. Shafer Director WNC & Associates, Inc.
Date: April 14, 1998
27
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000921052
<NAME> WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SER 4
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,147,906
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,147,906
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,801,763
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,431,684
<TOTAL-LIABILITY-AND-EQUITY> 8,801,763
<SALES> 0
<TOTAL-REVENUES> 65,307
<CGS> 0
<TOTAL-COSTS> 70,549
<OTHER-EXPENSES> 806,639
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (811,881)
<INCOME-TAX> 0
<INCOME-CONTINUING> (811,881)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (811,881)
<EPS-PRIMARY> (69.89)
<EPS-DILUTED> 0
</TABLE>
