FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
O ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended _____________________
OR
X TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from January 1, 1999 to March 31, 1999
Commission file number: 33-76970
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
California 33-0531301
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
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
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State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant.
INAPPLICABLE
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
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PART I.
Item 1. Business
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
on February 16, 1994. The Partnership was formed to acquire limited partnership
interests in other limited partnerships or limited liability companies ("Local
Limited Partnerships") which own multifamily housing complexes that are eligible
for low-income housing federal and, in certain cases, California income tax
credits ("Low Income Housing Credit").
The general partner of the Partnership is WNC California Tax Credit Partners IV,
L.P. (the "General Partner"). WNC & Associates, Inc. ("Associates") is the
general partner of the General Partner. Wilfred N. Cooper, Sr., through the
Cooper Revocable Trust, owns 66.8% of the outstanding stock of WNC. John B.
Lester, Jr. was the original limited partner of the Partnership and owns,
through the Lester Family Trust, 28.6% of the outstanding stock of Associates.
The business of the Partnership is conducted primarily through Associates, as
the Partnership has no employees of its own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission on July 26, 1994, the Partnership commenced a public offering of
25,000 Units of Limited Partnership Interest ("Units") at a price of $1,000 per
Unit. As of the close of the public offering on August 10, 1995, a total of
11,500 Units representing approximately $11,099,000 had been sold. Holders of
Units are referred to herein as "Limited Partners."
Description of Business
The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner or non-managing member in
Local Limited Partnerships each of which will own and operate a multi-family
housing complex (the "Housing Complex") which will qualify for the Low Income
Housing Credit. In general, under Section 42 of the Internal Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
to reduce Federal taxes otherwise due in each year of a ten-year period. In
general, under Section 17058 of the California Revenue and Taxation Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against California taxes otherwise due in each year of a four-year period. The
Housing Complex is subject to a fifteen-year compliance period (the "Compliance
Period"), and under state law may have to be maintained as low income housing
for 30 or more years.
In general, in order to avoid recapture of Low Income Housing 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 any Local Limited Partnership of its Housing Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Housing
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the ability of government
lenders to disapprove of transfer, it is not possible at this time to predict
whether the liquidation of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership's Agreement of Limited
Partnership, as amended by Supplements to the Prospectus thereto (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 its Housing
Complex, it is anticipated that the local general partner ("Local General
Partner") will either continue to operate such Housing Complex or take such
other actions as the Local General Partner believes to be in the best interest
of the Local Limited Partnership. Notwithstanding the preceding, circumstances
beyond the control of the General Partner or the Local General Partners may
occur during the Compliance Period, which would require the Partnership to
approve the disposition of a Housing Complex prior to the end thereof, possibly
resulting in recapture of Low Income Housing Credits.
3
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As of March 31, 1999, the Partnership had invested in 10 Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is eligible for the federal Low Income Housing Credit and four of them were
eligible for the California Low Income Housing Credits. Certain Local Limited
Partnerships may also benefit from government programs promoting low- or
moderate-income housing.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness. If a Local Limited Partnership does not makes its mortgage
payments, the lender could foreclose resulting in a loss of the Housing Complex
and Low Income Housing Credits. As a limited partner or non-managing member of
the Local Limited Partnerships, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships, and will rely
totally on the general partners or managing members of the Local Limited
Partnerships for management of the Local Limited Partnerships. The value of the
Partnership's investments will be subject to changes in national and local
economic conditions, including unemployment conditions, which could adversely
impact vacancy levels, rental payment defaults and operating expenses. This, in
turn, could substantially increase the risk of operating losses for the Housing
Complexes and the Partnership. In addition, each Local Limited Partnership is
subject to risks relating to environmental hazards and natural disasters, which
might be uninsurable. Because the Partnership's operations will depend on these
and other factors beyond the control of the General Partner and the Local
General Partners, there can be no assurance that the anticipated Low Income
Housing Credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the Low Income Housing Credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the Low
Income Housing Credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All Partnership management
decisions are made by the General Partner.
As a limited partner or non-managing member, the Partnership's liability for
obligations of each Local Limited Partnership is limited to its investment. The
Local General Partners of each Local Limited Partnership retain responsibility
for developing, constructing, maintaining, operating and managing the Housing
Complexes.
Item 2. Properties
Through its investment in Local Limited Partnerships the Partnership holds
limited partnership interests in Housing Complexes. The following table reflects
the status of the ten Housing Complexes as of the dates and for the periods
indicated.
4
<PAGE>
<TABLE>
<CAPTION>
------------------------------ ------------------------------------------------
As of March 31, 1999 As of December 31, 1998
------------------------------ ------------------------------------------------
Partnership's Estimated Encumbrances
Total Investment Amount of Low Income of Local
General Partner in Local Limited Investment Number of Occu- Housing Limited
Partnership Name Location Name Partnerships Paid to Date Units pancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chadron Chadron, Douglas E. Hiner $ 483,000 $ 391,000 16 94% $ 1,029,000 $ 800,000
Apartments I, L.P. Nebraska
Colonial Village Auburn, S.P. Thomas Company
Auburn California of Northern California
and Project Go, Inc.,
a California Non-profit
Corporation 2,979,000 2,979,000 56 98% 4,115,000 2,087,000
Eagleville Eagleville, Kenneth M. Vitor and
Associates I, L.P. Missouri Joseph A. Shepard 79,000 79,000 16 100% 145,000 356,000
Havana Associates Havana, Joseph A. Shepard 252,000 202,000 - - - -
I, L.P. Illinois
Maharlika, Ltd. Stockton, Daniels C. Logue and
California Cyrus Youssefi 1,524,000 1,524,000 69 96% 1,958,000 1,565,000
Pawnee Associates Pawnee, Kenneth M. Vitor and
I, L.P. Illinois Joseph A. Shepard 130,000 130,000 20 85% 239,000 539,000
Rancheria Village Santa Community Housing
Apartments, a Barbara, Program, Inc., Richard A.
California California Bialosky, Detlev Peikert,
Limited Francis C. Thompson,
Partnership Peter Koelsch, and Real
EstateConcepts, Inc. 950,000 950,000 14 100% 1,335,000 995,000
Sycamore Hills Salem, Larry A. Swank and Lance
L.P. Indiana A. Swank 185,000 185,000 24 100% 346,000 763,000
Wills Point Wills 1600 Capital Company, Inc. 234,000 234,000 36 97% 395,000 984,000
Crossing, L.P. Point,
Texas
Woodlake Valencia Woodlake, Philip R. Hammond, Jr.
Partners California and Diane M. Hammond 1,798,000 1,798,000 47 89% 2,522,000 952,000
---------- ---------- ---- ---- ---------- ----------
$ 8,614,000 $ 8,472,000 298 95% $ 12,084,000 $ 9,041,000
========== ========== ==== ==== ========== ==========
</TABLE>
5
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-----------------------------------------
For the year ended December 31, 1998
-----------------------------------------
Low Income Housing
Rental Net Credit Allocated to
Partnership Name Income Loss Partnership
- --------------------------------------------------------------------------------
Chadron Apartments I, L.P. $ 49,000 $ (57,000) 99%
Colonial Village Auburn 377,000 (130,000) 99%
Eagleville Associates I, L.P. 46,000 (12,000) 99%
Maharlika, Ltd. 110,000 (253,000) 99%
Pawnee Associates I, L.P. 65,000 (22,000) 99%
Rancheria Village Apartments, a 99%
California Limited Partnership 106,000 (47,000)
Sycamore Hills L.P. 85,000 (13,000) 99%
Wills Point Crossing, L.P. 103,000 (14,000) 99%
Woodlake Valencia Partners 84,000 (210,000) 99%
--------- ---------
$ 1,025,000 $ (758,000)
========= =========
6
<PAGE>
Item 3. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
PART II.
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 and none exists. Units can be
assigned only if certain requirements in the Partnership Agreement are
satisfied.
(b) At March 31, 1999, there were 429 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.
(d) No unregistered securities were sold by the Partnership during the three
months ended March 31, 1999.
Item 5b.
NOT APPLICABLE
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
<TABLE>
<CAPTION>
March 31 December 31
------------------------ ---------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited)
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and cash
equivalents $ 675,871 $ 1,161,152 $ 760,343 $ 1,147,906 $ 2,614,756 $ 3,827,214 $ 484,771
Receivables from
affiliates - 31,646 - 31,646 121,825 - -
Subscriptions
receivable - - - - - - 258,200
Loans receivable - - 201,611 - - - 1,098,608
Investments in limited
partnerships, net 6,899,934 7,391,045 6,845,203 7,622,211 8,467,424 8,494,018 3,355,553
Other assets - 189 - - 12,912 25,824 1,613
----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 7,575,805 $ 8,584,032 $ 7,807,157 $ 8,801,763 $ 11,216,917 $ 12,347,056 $ 5,198,745
=========== =========== =========== =========== =========== =========== ===========
LIABILITIES
Loan payable $ - $ - $ - $ - $ - $ - $ 1,200,000
Accrued interest
payable - - - - - - 13,388
Payable to limited
partnerships 142,124 363,634 91,746 363,634 1,929,597 2,785,857 584,640
Accrued fees and
expenses
due to general
partner
and affiliates (19,496) 18,415 62,779 6,445 43,755 102,526 1,700,543
PARTNERS' EQUITY 7,453,177 8,201,983 7,652,632 8,431,684 9,243,565 9,458,673 1,700,174
----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 7,575,805 $ 8,584,032 $ 7,807,157 $ 8,801,763 $ 11,216,917 $ 12,347,056 $ 5,198,745
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
7
<PAGE>
Selected results of operations, cash and other information for the Partnership
is as follows:
<TABLE>
<CAPTION>
For the Three Months For the Years Ended
Ended March 31 December 31
------------------------ ---------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) from
operations $ (11,927) $ (7,453) $ (28,938) $ (5,242) $ 70,901 $ 23,654 $ (11,786)
Equity in income
(loss) from
limited partnerships (187,528) (222,248) (750,114) (806,639) (528,288) (100,224) 2,212
--------- --------- --------- --------- --------- --------- ---------
Net loss $ (199,455) $ (229,701) $ (779,052) $ (811,881) $ (457,387) $ (76,570) $ (9,574)
========= ========= ========= ========= ========= ========= =========
Net loss allocated to:
General Partner $ (1,995) $ (2,297) $ (7,791) $ (8,119) $ (4,574) $ (766) $ (96)
========= ========= ========= ========= ========= ========= =========
Limited Partners $ (197,460) $ (227,404) $ (771,261) $ (803,762) $ (452,813) $ (75,804) $ (9,478)
========= ========= ========= ========= ========= ========= =========
Net loss per limited
partner unit $ (17.17) $ (19.77) $ (67.07) $ (69.89) $ (39.38) $ (8.68) $ (10.84)
========= ========= ========= ========= ========= ========= =========
Outstanding weighted
limited partner
units 11,500 11,500 11,500 11,500 11,500 8,735 874
========= ========= ========= ========= ========= ========= =========
For the Three Months For the Years Ended
Ended March 31 December 31
------------------------ ---------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited)
Net cash provided by
(used in):
Operating activities $ (87,823) $ 10,707 $ 84,603 $ 123,268 $ 108,678 $ 26,322 $ 1,602
Investing activities 3,351 2,539 (472,166) (1,552,808) (1,382,819) (1,979,131) (3,717,992)
Financing activities - - - (37,310) 61,683 5,295,252 4,201,161
--------- --------- --------- --------- --------- --------- ---------
Net change in cash
and cash equivalents (84,472) 13,246 (387,563) (1,466,850) (1,212,458) 3,342,443 484,771
Cash and cash
equivalents,
beginning of period 760,343 1,147,906 1,147,906 2,614,756 3,827,214 484,771 -
--------- --------- --------- --------- --------- --------- ---------
Cash and cash
equivalents,
end of period $ 675,871 $ 1,161,152 $ 760,343 $ 1,147,906 $ 2,614,756 $ 3,827,214 $ 484,771
========= ========= ========= ========= ========= ========= =========
</TABLE>
Low Income Housing Credit per limited partner unit was as follows for the year
ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Federal $ 99 $ 86 $ 64 $ 21 $ -
State 67 91 70 70 -
---- ---- ---- ---- ----
Total $ 166 $ 177 $ 134 $ 91 $ -
==== ==== ==== ==== ====
</TABLE>
8
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Financial Condition
The Partnership's assets at March 31, 1999 consisted primarily of $676,000 in
cash and aggregate investments in the ten Local Limited Partnerships of
$6,900,000. Liabilities at March 31, 1999 primarily consisted of $142,000 due to
limited partnerships.
Results of Operations
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
The Partnership's net loss for the three months ended March 31, 1999 was
$(199,000), reflecting a decrease of $31,000 from the net loss experienced for
the three months ended March 31, 1998. The decline in net loss is due to equity
in losses of limited partnerships which decreased by $34,000 to $(188,000) for
the three month period ended March 31, 1999 from $(222,000) for the three month
period ended March 31, 1998. The reduction in equity in losses of limited
partnerships was partially offset by loss from operations which increased by
$5,000 to $(12,000) for the three month period ended March 31, 1999 from
$(7,000) for the three month period ended March 31, 1998 due to a comparable
decrease in operating income.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997. The
Partnership's net loss for 1998 was $(779,000), reflecting a decrease of $33,000
from the net loss experienced in 1997. The decline in net loss is primarily due
to equity in losses from limited partnerships which declined to $(750,000) in
1998 from $(807,000) in 1997. The reduction in equity losses recognized was
partially offset by an increase in loss from operations of $(24,000) in 1998 to
$(29,000), from $(5,000) in 1997, due to a $5,000 increase in office expense
allocations and a $19,000 decrease in interest income.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996. The
Partnership's net loss for 1997 was $(812,000), reflecting an increase of
$355,000 from the net loss experienced in 1996. The increase in net loss is
primarily due to equity in losses from limited partnerships which increased to
$(807,000) in 1997 from $(528,000) in 1996. Income from operations decreased to
a net loss of $(5,000) in 1997 from net income of $71,000 in 1996. The decrease
in net income of $76,000 was primarily due to a decrease in interest income of
$82,000, partially offset by a $6,000 decrease in office expense allocations.
Cash Flows
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net decrease in cash during the three months ended March 31, 1999 was $(84,000),
compared to a net increase in cash for the three months ended March 31, 1998 of
$13,000. The change was due to an increase in cash paid to the General Partner
of affiliates of $94,000 and a decrease in operating income of $3,000.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997. Net cash
used in 1998 was $(388,000), compared to net cash used in 1997 of $(1,467,000).
The change was due primarily to a decrease in cash used for investments in Local
Limited Partnerships of $1,084,000 and a decrease in cash paid to the General
Partner or affiliates of $37,000 partially offset by an increase in operating
costs paid to third parties and a decline in distributions from Local Limited
Partnerships.
9
<PAGE>
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996. Net cash
used in 1997 was $(1,467,000), compared to $(1,212,000) in 1996. The change was
due primarily to an increase in cash used for investments in Local Limited
Partnerships of $176,000, a decrease in cash collections of notes receivable of
$173,000 and a decrease in offering cost refund of $70,000 partially offset by a
decrease in cash paid to the General Partner or affiliates of $144,000, a
decrease in operating costs paid to third parties of $14,000, and an increase in
distributions from Limited Partnerships of $6,000.
During the three months ended March 31, 1999 and the year ended December 31,
1998, accrued payables, which include related party management fees due to
Associates, decreased by $82,000 and increased by $56,000, respectively, due
primarily to payment of management fees during the three months ended March 31,
1999.
The Partnership expects its future cash flows, together with its net available
assets at March 31, 1999, to be sufficient to meet all currently forseeable
future cash requirements.
IMPACT OF YEAR 2000
WNC & Associates, Inc.
Status of Readiness
Information Technology (IT) Systems. The Partnership relies on the IT systems of
WNC, its ultimate general partner. IT systems include computer hardware and
software used to produce financial reports and tax return information. This
information is then used to generate reports to investors and regulatory
agencies, including the Internal Revenue Service and the Securities and Exchange
Commission. The IT systems of WNC are year 2000 compliant.
Non-IT Systems. The Partnership also relies on the non-IT systems of WNC. Non-IT
systems include machinery and equipment such as telephones, voice mail and
electronic postage equipment. Except for one telephone system, the non-IT
systems of WNC are year 2000 compliant. The one telephone system will require
the replacement of one computer and one software application, both of which will
be completed on or before October 1, 1999.
Service Providers. WNC also relies on the IT and non-IT systems of service
providers. Service providers include utility companies, financial institutions,
telecommunications carriers, municipalities, and other outside vendors. WNC has
obtained verbal assurances from its material service providers (electrical power
provider, financial institutions and telecommunications carriers) that their IT
and non-IT systems are year 2000 compliant. There can be no assurance that this
compliance information is correct. There also can be no assurance that the
systems of other, less-important service providers and outside vendors will be
year 2000 compliant.
Costs to Address Year 2000 Issues
The cost to address year 2000 issues for WNC has been less than $20,000. The
cost to replace the telephone system noted above will be less than $5,000. The
cost to deal with potential year 2000 issues of other outside vendors cannot be
estimated at this time.
Risk of Year 2000 Issues
The most reasonable and likely result from non-year 2000 compliance of systems
of the service providers noted above will be the disruption of normal business
operations for WNC. This disruption would, in turn, lead to delays in performing
reporting and fiduciary responsibilities on behalf of the Partnership. The worst
case scenario would be the replacement of a service provider. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.
10
<PAGE>
Local Limited Partnerships
Status of Readiness
WNC is in the process of obtaining year 2000 certifications from each Local
General Partner of each Local Limited Partnership. Those certifications will
represent to the Partnership that the IT and non-IT systems critical to the
operation of the Housing Complexes and investor reporting to the Partnership are
year 2000 compliant. These certifications will also represent to the Partnership
that the IT and non-IT systems of property management companies, independent
accountants, electrical power providers, financial institutions and
telecommunications carriers used by the Local Limited Partnership are year 2000
compliant.
There can be no assurance that the representations in the certifications will be
correct. There also can be no assurance that the systems of other,
less-important service providers and outside vendors, upon which the Local
Limited Partnerships rely, will be year 2000 compliant.
Costs to Address Year 2000 Issues
There will be no cost to the Partnership as a result of assessing year 2000
issues for the Local Limited Partnerships. The cost to deal with potential year
2000 issues of the Local Limited Partnerships cannot be estimated at this time.
Risk of Year 2000 Issues
There may be Local General Partners who indicate that they or their property
management company are not year 2000 compliant and do not have plans to become
year 2000 compliant before the end of 1999. There may be other Local General
Partners who are unwilling to respond to the certification request. The most
likely result of either non-compliance or failure to respond will be the removal
and replacement of the property management company and/or the Local General
Partner with year 2000 compliant operators.
Despite the efforts to obtain certifications, there can be no assurance that the
Partnership will be unaffected by year 2000 issues. The most reasonable and
likely result from non-year 2000 compliance will be the disruption of normal
business operations for the Local Limited Partnerships, including but not
limited to the possible failure to properly collect rents and meet their
obligations in a timely manner. This disruption would, in turn, lead to delays
by the Local Limited Partnerships in performing reporting and fiduciary
responsibilities on behalf of the Partnership. The worst-case scenario would
include the initiation of foreclosure proceedings on the property by mortgage
debt holders. Under these circumstances, WNC or its affiliates will take actions
necessary to minimize the risk of foreclosure, including the removal and
replacement of a Local General Partner by the Partnership. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
NONE.
Item 8. Financial Statements and Supplementary Data
11
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
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 March 31, 1999 and December 31, 1998, and the related
statements of operations, partners' equity (deficit) and cash flows for the
three months ended March 31, 1999 and the year ended December 31, 1998. 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. A significant portion of the financial statements of the limited
partnerships in which the Partnership is a limited partner were audited by other
auditors whose reports have been furnished to us. As discussed in Note 2 to the
financial statements, the Partnership accounts for its investments in limited
partnerships using the equity method. The portion of the Partnership's
investment in limited partnerships audited by other auditors represented 73% of
the total assets of the Partnership at March 31, 1999 and December 31, 1998. Our
opinion, insofar as it relates to the amounts included in the financial
statements for the limited partnerships which were audited by others, 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 March 31, 1999 and December 31, 1998,
and the results of its operations and its cash flows for the three months ended
March 31, 1999 and the year ended December 31, 1998, in conformity with
generally accepted accounting principles.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
July 21, 1999
12
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC California Housing Tax Credits IV, L.P., Series 4
We have audited the accompanying balance sheet of WNC California Housing Tax
Credits IV, L.P., Series 4 (a California Limited Partnership) (the
"Partnership") as of December 31, 1997, and the related statements of
operations, partners' equity (deficit) and cash flows for each of the years in
the two-year period ended December 31, 1997. 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 audit. 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% of
the total assets of WNC California Housing Tax Credits IV, L.P., Series 4 at
December 31, 1997. 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 these
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 the results of
its operations and its cash flows for each of the years in the two-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ CORBIN & WERTZ
CORBIN & WERTZ
Irvine, California
April 10, 1998
13
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
------------------------------ ------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(Unaudited)
ASSETS
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 675,871 $ 1,161,152 $ 760,343 $ 1,147,906
Receivables from affiliates (Note 3) - 31,646 - 31,646
Loans receivable (Note 7) - - 201,611 -
Investments in limited partnerships (Note 2) 6,899,934 7,391,045 6,845,203 7,622,211
Other assets - 189 - -
---------- ---------- ----------- ----------
$ 7,575,805 $ 8,584,032 $ 7,807,157 $ 8,801,763
========== ========== =========== ==========
LIABILITIES AND PARTNERS' EQUITY
(DEFICIT)
Liabilities:
Payable to limited partnerships (Note 4) $ 142,124 $ 363,634 $ 91,746 $ 363,634
Accrued fees and expenses due to General
Partner and affiliates (Note 3) (19,496) 18,415 62,779 6,445
---------- ---------- ----------- ----------
Total liabilities 122,628 382,049 154,525 370,079
---------- ---------- ----------- ----------
Commitments and contingencies
Partners' equity (deficit) (Note 6):
General partner (26,642) (19,153) (24,647) (16,856)
Limited partners (25,000 units authorized,
11,500 units issued and outstanding) 7,479,819 8,221,136 7,677,279 8,448,540
---------- ---------- ----------- ----------
Total partners' equity 7,453,177 8,201,983 7,652,632 8,431,684
---------- ---------- ----------- ----------
$ 7,575,805 $ 8,584,032 $ 7,807,157 $ 8,801,763
========== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements
14
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended
March 31 For the Years Ended December 31
---------------------------- -------------------------------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C>
Interest income $ 7,756 $ 10,896 $ 46,032 $ 65,307 $ 147,254
--------- ---------- --------- --------- ---------
Operating expenses:
Amortization (Note 2) 6,379 6,379 25,561 25,419 24,865
Asset management fees (Note 3) 7,906 7,906 31,625 31,625 31,625
Office 5,398 4,064 17,784 13,505 19,863
--------- ---------- --------- --------- ---------
Total operating expenses 19,683 18,349 74,970 70,549 76,353
--------- ---------- --------- --------- ---------
(Loss) income from operations (11,927) (7,453) (28,938) (5,242) 70,901
Equity in losses of limited
partnerships (Note 2) (187,528) (222,248) (750,114) (806,639) (528,288)
--------- ---------- --------- --------- ---------
Net loss $ (199,455) $ (229,701) $ (779,052) $ (811,881) $ (457,387)
========= ========== ========= ========= =========
Net loss allocated to:
General partner $ (1,995) $ (2,297) $ (7,791) $ (8,119) $ (4,574)
========= ========== ========= ========= =========
Limited partners $ (197,460) $ (227,404) $ (771,261) $ (803,762) $ (452,813)
========= ========== ========= ========= =========
Net loss per limited partner unit $ (17.17) $ (19.77) $ (67.07) $ (69.89) $ (39.38)
========= ========== ========= ========= =========
Outstanding weighted limited
partner units 11,500 11,500 11,500 11,500 11,500
========= ========== ========= ========= =========
</TABLE>
See accompanying notes to financial statements
15
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Three Months Ended March 31, 1999 and
For The Years Ended December 31, 1998, 1997 and 1996
General Limited
Partner Partners Total
------- -------- -----
Partners' equity (deficit)
at January 1, 1996 $ (4,861) $ 9,463,534 $ 9,458,673
Collection of notes receivable
(Note 6) - 172,500 172,500
Offering costs (Note 3) 698 69,081 69,779
Net loss (4,574) (452,813) (457,387)
--------- ----------- ----------
Partners' equity (deficit)
at December 31, 1996 (8,737) 9,252,302 9,243,565
Net loss (8,119) (803,762) (811,881)
--------- ----------- ----------
Partners' equity (deficit)
at December 31, 1997 (16,856) 8,448,540 8,431,684
Net loss (7,791) (771,261) (779,052)
--------- ----------- ----------
Partners' equity (deficit)
at December 31, 1998 (24,647) 7,677,279 7,652,632
Net loss (1,995) (197,460) (199,455)
--------- ----------- ----------
Partners' equity (deficit)
at March 31, 1999 $ (26,642) $ 7,479,819 $ 7,453,177
========= =========== ==========
See accompanying notes to financial statements
16
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months
Ended March 31 For the Years Ended December 31
-------------------------- -----------------------------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
(Unaudited)
Cash flows from operating activities:
<S> <C> <C> <C> <C> <C>
Net loss $ (199,455) $ (229,701) $ (779,052) $ (811,881) $ (457,387)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Amortization 6,379 6,379 25,561 25,419 24,865
Equity in losses of limited
partnerships 187,528 222,248 750,114 806,639 528,288
Change in receivables from
affiliates - - 31,646 90,179 -
Change in other assets - (189) - 12,912 12,912
Change in accrued fees and
expenses due to general
partner and affiliates (82,275) 11,970 56,334 - -
---------- ---------- ---------- ---------- ----------
Net cash provided by (used in)
operating activities (87,823) 10,707 84,603 123,268 108,678
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Investments in limited
partnerships, net (201,611) - (271,888) (1,555,241) (1,341,247)
Capitalized acquisition costs and
fees (27) - (1,584) (3,567) (41,572)
Distributions from limited
partnerships 3,378 2,539 2,917 6,000 -
Loans receivable 201,611 - (201,611) - -
---------- ---------- ---------- ---------- ----------
Net cash provided by (used in)
investing activities 3,351 2,539 (472,166) (1,552,808) (1,382,819)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Payments to affiliates or general
partner, net - - - (37,310) (180,596)
Offering costs - - - - 69,779
Collection on notes receivable - - - - 172,500
---------- ---------- ---------- ---------- ----------
Net cash (used in) provided by
financing activities - - - (37,310) 61,683
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents (84,472) 13,246 (387,563) (1,466,850) (1,212,458)
Cash and cash equivalents, beginning
of period 760,343 1,147,906 1,147,906 2,614,756 3,827,214
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of
period $ 675,871 $ 1,161,152 $ 760,343 $ 1,147,906 $ 2,614,756
========== ========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes paid $ - $ - $ 800 $ 800 $ 800
========== ========== ========== ========== ==========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITY:
During the three months ended March 31, 1999 and the year ended December 31,
1996, the Partnership incurred, but did not pay, $50,377 and $382,865 in
payables to a limited partnership.
See accompanying notes to financial statements
17
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC California Housing Tax Credits IV, L.P., Series 4 a California Limited
Partnership (the "Partnership"), was formed on February 16, 1994 under the laws
of the State of California, and began operations on July 26, 1994. The
Partnership was formed to invest primarily in other limited partnerships (the
"Local Limited Partnership") which own and operate multi-family housing
complexes (the "Housing Complex") that are eligible for low income housing
credits. The local general partners (the "Local General Partners") of each Local
Limited Partnership retain responsibility for maintaining, operating and
managing the Housing Complex.
The general partner is WNC California Tax Credit Partners, IV, L.P. (the
"General Partner"), a California limited partnership. WNC & Associates, Inc.
("WNC") is the general partner of the General Partner. Wilfred N. Cooper, Sr.,
through the Cooper Revocable Trust, owns 66.8% of the outstanding stock of WNC.
John B. Lester, Jr. was the original limited partner of the Partnership and
owns, through the Lester Family Trust, 28.6% of the outstanding stock of WNC.
The Partnership shall continue to be in full force and effect until December 31,
2050 unless terminated prior to that date pursuant to the partnership agreement
or law.
The financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.
The Partnership Agreement authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). 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 losses, in cash available for distribution from the Partnership and
tax credits of 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 proceeds
equal to its capital contribution and a subordinated disposition fee (as
described in Note 3) from the remainder, any additional sale or refinancing
proceeds will be distributed 90% to the limited partners (in proportion to their
respective investments) and 10% to the General Partner.
Change in Reporting Year End
The Partnership has elected to change its year end for financial reporting
purposes from December 31 to March 31. All financial information reflected in
the financial statements and related footnotes has been adjusted for this change
in year end except for the combined condensed financial information relating to
the Local Limited Partnerships included in Note 2.
Due to the change in year end, unaudited financial information as of and for the
three months ended March 31, 1998 is included in the financial statements for
comparative purposes only. The financial statements as of and for the three
months ended March 31, 1998 are unaudited but include all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of financial position and results of
operations of the Partnership for the interim period.
18
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Risks and Uncertainties
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the low income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy of Local Limited
Partnership Interests; limitations on removal of Local General Partners;
limitations on subsidy programs; and possible changes in applicable regulations.
The Housing Complexes are or will be subject to mortgage indebtedness. If a
Local Limited Partnership does not make its mortgage payments, the lender could
foreclose resulting in a loss of the Housing Complex and low income housing
credits. As a limited partner of the Local Limited Partnerships, the Partnership
will have very limited rights with respect to management of the Local Limited
Partnerships, and will rely totally on the Local General Partners of the Local
Limited Partnerships for management of the Local Limited Partnerships. The value
of the Partnership's investments will be subject to changes in national and
local economic conditions, including unemployment conditions, which could
adversely impact vacancy levels, rental payment defaults and operating expenses.
This, in turn, could substantially increase the risk of operating losses for the
Housing Complexes and the Partnership. In addition, each Local Limited
Partnership is subject to risks relating to environmental hazards and natural
disasters which might be uninsurable. Because the Partnership's operations will
depend on these and other factors beyond the control of the General Partner and
the Local General Partners, there can be no assurance that the anticipated low
income housing credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the low income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All management decisions will
be made by the General Partner.
Method of Accounting For Investments in Limited Partnerships
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnership's are consistent with those of the Partnership. Costs incurred by
the Partnership in acquiring the investment in limited partnerships are
capitalized as part of the investment account and are being amortized over 30
years (see Note 2).
Losses from limited partnerships for the years ended December 31, 1998, 1997 and
1996 have been recorded by the Partnership based on reported results provided by
the Local Limited Partnerships. Losses from limited partnerships for the three
months ended March 31, 1999 and 1998 have been estimated by management of the
Partnership. Losses from limited partnerships allocated to the Partnership will
not be recognized to the extent that the investment balance would be adjusted
below zero.
19
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Offering Expenses
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling limited
partnership interests in the Partnership. The General Partner is obligated to
pay all offering and organization costs in excess of 15% (including sales
commissions) of the total offering proceeds. Offering expenses are reflected as
a reduction of partners' capital and amounted to $1,312,054, at the end of all
periods presented.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.
Cash and Cash Equivalents
The Partnership considers highly liquid investments with remaining maturities of
three months or less when purchased to be cash equivalents. As of March 31, 1999
and December 31, 1998 and 1997 the Partnership had cash equivalents of $609,587,
$750,309 and $768,013, respectively.
Concentration of Credit Risk
At March 31, 1998, the Partnership maintained a cash balance at a certain
financial institution in excess of the maximum federally insured amounts.
Net Loss Per Limited Partner Unit
Net loss per limited partnership unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit
includes no dilution and is computed by dividing loss available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net income per unit is not required.
Reporting Comprehensive Income
In June 1997, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 130, Reporting Comprehensive Income. This statement establishes
standards for reporting the components of comprehensive income and requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be included in a financial statement that is
displayed with the same prominence as other financial statements. Comprehensive
income includes net income as well as certain items that are reported directly
within a separate component of Partners' equity and bypass net income. The
Partnership adopted the provisions of this statement in 1998. For the periods
presented, the Partnership has no elements of other comprehensive income, as
defined by SFAS No. 130.
20
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of the periods presented, the Partnership had acquired limited partnership
interests in nine Local Limited Partnerships each of which owns one Housing
Complex consisting of an aggregate of 298 apartment units. The respective
general partners of the Local Limited Partnerships manage the day-to-day
operations of the entities. Significant Local Limited Partnership business
decisions require approval from the Partnership. The Partnership, as a limited
partner, is generally entitled to 99%, as specified in the Local Limited
Partnership agreements, of the operating profits and losses, taxable income and
losses and tax credits of the Local Limited Partnerships.
The Partnership's investment in Local Limited Partnerships as shown in the
balance sheets at December 31, 1998 and 1997, is approximately $675,000 and
$1,061,000, respectively, greater than the Partnership's equity as shown in the
Local Limited Partnerships' financial statements. This difference is due to
unrecorded losses, acquisition, selection and other costs related to the
acquisition of the investments which have been capitalized in the Partnership's
investment account and capital contributions payable to the limited partnerships
which were netted against partner capital in the Local Limited Partnership's
financial statements.
Equity in losses of the Local Limited Partnerships is recognized in the
financial statements until the related investment account is reduced to a zero
balance. Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.
Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income. During the three month period ended March 31,
1999 and the year ended December 31, 1998, no investment accounts in Local
Limited Partnerships reached a zero balance.
Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for the periods presented:
<TABLE>
<CAPTION>
For the Three
Months Ended For the Years Ended
March 31 December 31
--------------- --------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Investments per balance sheet, beginning of period $ 6,845,203 $ 7,622,211 $ 8,467,424
Capital contributions paid, net of tax credit
adjustments 201,611 - (10,722)
Capital contributions payable 50,378 - -
Capitalized acquisition fees and costs 27 1,584 3,567
Equity in losses of limited partnerships (187,528) (750,114) (806,639)
Distributions received (3,378) (2,917) (6,000)
Amortization of paid acquisition fees and costs (6,379) (25,561) (25,419)
------------ ------------ ------------
Investments per balance sheet, end of period $ 6,899,934 $ 6,845,203 $ 7,622,211
============ ============ ============
</TABLE>
21
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996
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 against
interest expense. Approximate combined condensed financial information from the
individual financial statements of the Local Limited Partnerships as of December
31 and for the years then ended is as follows:
COMBINED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
1998 1997
---- ----
ASSETS
<S> <C> <C>
Buildings and improvements,(net of accumulated
depreciation for 1998 and 1997 of $1,838,000 and
$1,223,000, respectively) $ 15,124,000 $ 14,553,000
Land 916,000 916,000
Construction in progress - 1,181,000
Other assets 837,000 616,000
----------- -----------
$ 16,877,000 $ 17,266,000
=========== ===========
LIABILITIES
Mortgage and construction loans payable $ 9,041,000 $ 9,164,000
Other liabilities (including payables to affiliates of
$554,000 and $717,000 for 1998 and 1997,
respectively 1,584,000 1,496,000
----------- -----------
10,625,000 10,660,000
----------- -----------
PARTNERS' CAPITAL
WNC California Housing Tax Credits IV, L.P., Series 4 6,170,000 6,561,000
Other partners 82,000 45,000
----------- -----------
6,252,000 6,606,000
----------- -----------
$ 16,877,000 $ 17,266,000
=========== ===========
</TABLE>
22
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues $ 1,068,000 $ 1,045,000 $ 842,000
----------- ----------- -----------
Expenses:
Operating expenses 713,000 705,000 521,000
Interest expense 489,000 535,000 392,000
Depreciation and amortization 624,000 619,000 463,000
----------- ----------- -----------
Total expenses 1,826,000 1,859,000 1,376,000
----------- ----------- -----------
Net loss $ (758,000) $ (814,000) $ (534,000)
=========== =========== ===========
Net loss allocable to the Partnership $ (750,000) $ (807,000) $ (528,000)
=========== =========== ===========
Net loss recorded by the Partnership $ (750,000) $ (807,000) $ (528,000)
=========== =========== ===========
</TABLE>
Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partners may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired.
NOTE 3 - RELATED PARTY TRANSACTIONS
As of December 31, 1997, 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 has paid or is
obligated to the General Partner or its affiliates for the following items:
Acquisition fees equal to 7% of the gross proceeds from the sale of Units
as compensation for services rendered in connection with the acquisition of
Local Limited Partnerships. At the end of all periods presented, the
Partnership incurred acquisition fees of $654,580. Accumulated amortization
of these capitalized costs was $84,594, $79,140 and $57,320 as of March 31,
1999 and December 31, 1998 and 1997, respectively.
23
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
Reimbursement of costs incurred by an affiliate of the General Partner in
connection with the acquisition of Local Limited Partnerships. These
reimbursements will not exceed 1.0% of the gross proceeds. As of March 31,
1999 and December 31, 1998 and 1997, the Partnership incurred acquisition
costs of $112,707, $112,680 and $111,096, respectively, which have been
included in investments in limited partnerships. Accumulated amortization
was $13,685, $12,760 and $9,016 for March 31, 1999 and December 31, 1998
and 1997, respectively.
An annual asset management fee equal to the greater amount of (i) $2,000
for each Housing 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 of the Local Limited Partnerships, including
the Partnership's allocable share of the mortgages. Management fees of
$7,906 were incurred during the three months ended March 31, 1999 and
$31,625 were incurred for 1998, 1997 and 1996, respectively, of which,
$35,761 was paid during the three months ended March 31, 1999 and $31,646,
$60,000 and $45,000 were paid during 1998, 1997 and 1996, respectively.
A subordinated disposition fee in an amount equal to 1% of the sales price
of real estate sold. Payment of this fee is subordinated to the limited
partners receiving a preferred return of 14% through December 31, 2005 and
6% thereafter (as defined in the Partnership Agreement) and is payable only
if the General Partner or its affiliates render services in the sales
effort.
The accrued fees and expenses due to General Partner and affiliates consist of
the following at:
<TABLE>
<CAPTION>
March 31 December 31
--------------- -----------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C> <C>
Cash advances by WNC to acquire an interest in a
limited partnership (Note 7) $ - $ 55,200 $ -
Reimbursement for expenses paid by the General
Partner or an affiliate 2,990 2,210 1,055
Asset management fee payable (22,486) 5,369 5,390
----------- ----------- -----------
Total $ (19,496) $ 62,779 $ 6,445
=========== =========== ===========
</TABLE>
24
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
Payables to limited partnerships represent amounts which are due at various
times based on conditions specified in the limited partnership agreements. These
contributions 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 as any liability for income taxes is the obligation of the partners
of the Partnership.
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. The
promissory notes accepted during 1995 amounted to $172,500 and were collected
during 1996.
NOTE 7 - LOANS RECEIVABLE
Loans receivable represent amounts loaned by the Partnership to certain Local
Limited Partnerships in which the Partnership may invest. Loans receivable
consisted of one loan with a balance of $201,611 as of December 31, 1997 which
was applied as a capital contribution in 1999 upon finalization of its
acquisition of an interest in a new Local Limited Partnership.
25
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NOT APPLICABLE
PART III.
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 WNC & Associates, Inc. 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. The principal shareholders of WNC & Associates,
Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.
Wilfred N. Cooper, Sr., age 68, is the founder, Chief Executive Officer and a
Director of WNC & Associates, Inc., a Director of WNC Capital Corporation, and a
general partner in some of the programs previously sponsored by the Sponsor. Mr.
Cooper has been involved in real estate investment and acquisition activities
since 1968. Previously, during 1970 and 1971, he was founder and 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 where
he had responsibility for factory-built housing evaluation and project
management in urban planning and development. Mr. Cooper is a Director of the
National Association of Home Builders (NAHB) and a National Trustee for NAHB's
Political Action Committee, a Director of the National Housing Conference (NHC)
and a member of NHC's Executive Committee and a Director of the National
Multi-Housing Council (NMHC). Mr. Cooper graduated from Pomona College in 1956
with a Bachelor of Arts degree.
John B. Lester, Jr., age 65, is President, a Director, Secretary and a member of
the Acquisition Committee of WNC & Associates, Inc., and a Director of WNC
Capital Corporation. Mr. Lester has 27 years of experience in engineering and
construction and has been involved in real estate investment and acquisition
activities since 1986 when he joined the Sponsor. Previously, 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 graduated from the
University of Southern California in 1956 with a Bachelor of Science degree in
Mechanical Engineering.
Wilfred N. Cooper, Jr., age 36, is Executive Vice President, a Director and a
member of the Acquisition Committee of WNC & Associates, Inc. He is President
of, and a registered principal with, WNC Capital Corporation, a member firm of
the NASD, and is a Director of WNC Management, Inc. He has been involved in
investment and acquisition activities with respect to real estate since he
joined the Sponsor in 1988. Prior to this, he served as Government Affairs
Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of
the Advisory Board for LIHC Monthly Report, a Director of NMHC and an Alternate
Director of NAHB. He graduated from The American University in 1985 with a
Bachelor of Arts degree.
David N. Shafer, age 47, is Senior Vice President, a Director, General Counsel,
and a member of the Acquisition Committee of WNC & Associates, Inc., and a
Director and Secretary of WNC Management, Inc. Mr. Shafer has been involved in
real estate investment and acquisition activities since 1984. Prior to joining
the Sponsor in 1990, he was practicing law with a specialty in real estate and
taxation. Mr. Shafer is a Director and President of the California Council of
Affordable Housing 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 (cum laude) and from the University of San Diego in 1986 with a
Master of Law degree in Taxation.
26
<PAGE>
Michael L. Dickenson, age 42, is Vice President and Chief Financial Officer, and
a member of the Acquisition Committee of WNC & Associates, Inc., and Chief
Financial Officer of WNC Management, Inc. He has been involved with acquisition
and investment activities with respect to real estate since 1985. Prior to
joining the Sponsor in March 1999, he was the Director of Financial Services at
TrizecHahn Centers Inc., a developer and operator of commercial real estate,
from 1995 to 1999, a Senior Manager with E&Y Kenneth Leventhal Real Estate
Group, Ernst & Young, LLP, from 1988 to 1995, and Vice President of Finance with
Great Southwest Companies, a commercial and residential real estate developer,
from 1985 to 1988. Mr. Dickenson is a member of the Financial Accounting
Standards Committee for the National Association of Real Estate Companies and
the American Institute of Certified Public Accountants, and a Director of
HomeAid Southern California, a charitable organization affiliated with the
building industry. He graduated from Texas Tech University in 1978 with a
Bachelor of Business Administration - Accounting degree, and is a Certified
Public Accountant in California and Texas.
Thomas J. Riha, age 44, is Vice President - Asset Management and a member of the
Acquisition Committee of WNC & Associates, Inc. and a Director and Chief
Executive Officer of WNC Management, Inc. Mr. Riha has been involved in
acquisition and investment activities with respect to real estate since 1979.
Prior to joining the Sponsor in 1994, Mr. Riha was employed by Trust Realty
Advisor, a real estate acquisition and management company, last serving as Vice
President - Operations. 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 and a member of the American Institute of Certified Public
Accountants.
Sy P. Garban, age 53, is Vice President - National Sales of WNC & Associates,
Inc. and has been employed by the Sponsor since 1989. Mr. Garban has been
involved in real estate investment activities since 1978. Prior to joining the
Sponsor he served as Executive Vice President of MRW, Inc., 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.
N. Paul Buckland, age 36, is Vice President - Acquisitions of WNC & Associates,
Inc. He has been involved in real estate acquisitions and investments since 1986
and has been employed with WNC & Associates, Inc. since 1994. Prior to that, he
served on the development team of the Bixby Ranch that constructed apartment
units and Class A office space in California and neighboring states, and 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.
David Turek, age 44, is Vice President - Originations of WNC & Associates, Inc.
He has been involved with real estate investment and finance activities since
1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to
1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties. From 1990 to 1995, he was involved in the development of
conventional and tax credit multi-family housing. He is a Director with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.
Kay L. Cooper, age 62, is a Director of WNC & Associates, Inc. Mrs. Cooper was
the founder and sole proprietor of Agate 108, a manufacturer and retailer of
home accessory products, from 1975 until 1998. She is the wife of Wilfred N.
Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B.
Lester, Jr. Ms. Cooper graduated from the University of Southern California in
1958 with a Bachelor of Science degree.
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 during the current or future years for the following
fees:
(a) Acquisition Expenses. The Partnership incurred acquisition expenses of
$113,000 as of March 31, 1999 and December 31, 1998 and $111,000 as of
December 31, 1997. 27
<PAGE>
(b) Annual Asset Management Fee. An annual asset management fee the greater of
(i) $2,000 per multi-family housing complex, or (ii) 0.275% of Gross
Proceeds. The base fee amount will be adjusted annually based on the change
in the Consumer Price Index. However, in no event will the annual asset
management fee exceed 0.2% of Invested Assets. "Invested Assets" means the
sum of the Partnership's investment in Local Limited Partnerships and the
Partnership's allocable share of the amount of the indebtedness related to
the Housing Complexes. Fees of $7,900 and $32,000 were incurred during the
three months ended March 31, 1999 and the year ended December 31, 1998,
respectively. The Partnership paid the General Partner or its affiliates
$7,900 and $32,000 of those fees during the three months ended March 31,
1999 and the year ended December 31, 1998, respectively.
(c) Subordinated Disposition Fee. A subordinated disposition fee in an amount
equal to 1% of the sale price received in connection with the sale or
disposition of a Housing Complex. 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.
(d) Operating Expense. The Partnership reimbursed the General Partner or its
affiliates for operating expenses of approximately $5,000 and $2,000 during
the three months ended March 31, 1999 and the year ended December 31, 1998,
respectively.
(e) Interest in Partnership. The General Partners receive 1% of the
Partnership's allocated Low Income Housing Credits, which approximated
$19,000 for the General Partner for the year ended December 31, 1998. The
General Partners are also entitled to receive 1% of cash distributions.
There were no distributions of cash to the General Partners during the
three months ended March 31, 1999 or the year ended December 31,1998.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
(a) Security Ownership of Certain Beneficial Owners
No person is known to own beneficially in excess of 5% of the outstanding
Units.
(b) Security Ownership of Management
Neither the General Partner, its affiliates nor any of the officers or
directors of the General Partner or its affiliates own directly or
beneficially any Units in the Partnership.
(c) Changes in Control
The management and control of the General Partner 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
28
<PAGE>
Item 13. Certain Relationships and Related Transactions
The General Partner manages all of the Partnership's affairs. The transactions
with the General Partner are primarily in the form of fees paid by the
Partnership for services rendered to the Partnership and the General Partner's
interests in the Partnership, as discussed in Item 11 and in the notes to the
Partnership's financial statements.
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial statements included in Part II hereof:
Report of Independent Certified Public Accountants
Independent Auditors' Report
Balance Sheets, March 31, 1999 and 1998 (Unaudited) and December 31,
1998 and 1997
Statements of Operations for the three months ended March 31, 1999 and
1998 (Unaudited) and the years ended December 31, 1998, 1997 and 1996
Statements of Partners' Equity (Deficit) for the three months ended
March 31, 1999 and for the years ended December 31, 1998, 1997 and
1996
Statements of Cash Flows for the three months ended March 31, 1999 and
1998 (Unaudited) and for the years ended December 31, 1998, 1997 and
1996
Notes to Financial Statements
(a)(2) Financial statement schedules included in Part IV hereof:
Report of Independent Certified Public Accountants on Financial State
ment Schedules
Schedule III - Real Estate Owned by Local Limited Partnerships
(b) Reports on Form 8-K
1. A Form 8-K dated May 13, 1999 was filed on May 14, 1999 reporting the
Partnership's change in fiscal year end to March 31. No financial
statements were included.
(c) Exhibits.
3.1 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.
10.1 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
29
<PAGE>
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.
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 filed as exhibit 10.7
to Form 10-K dated July 1, 1999 is hereby incorporated herein by
reference as exhibit 10.7.
10.8 Amended and Restated Agreement of Limited Partnership of Pawnee
Associates I, L.P. filed as exhibit 10.8 to Form 10-K dated
July 1, 1999 is hereby incorporated herein by reference as exhibit
10.8.
10.9 Amended and Restated Agreement of Limited Partnership of Eagleville
Associates I, L.P. filed as exhibit 10.9 to Form 10-K dated
July 1, 1999 is hereby incorporated herein by reference as exhibit
10.9.
21.1 Financial Statements of Colonial Village Auburn, for the years ended
December 31, 1998 and 1997 together with auditors report thereon; a
significant subsidiary of the Partnership, filed as exhibit 21.1 to
Form 10-K dated July 1, 1999 is hereby incorporated herein by
reference as exhibit 21.1.
(d) Financial statement schedules follow, as set forth in subsection
(a)(2) hereof.
30
<PAGE>
Report of Independent Certified Public Accountants on
Financial Statement Schedules
To the Partners
WNC California Housing Tax Credits IV, L.P., Series 4
The audits referred to in our report dated July 21, 1999, relating to the 1999
and 1998 financial statements of WNC California Housing Tax Credits IV, L.P.,
Series 4 (the "Partnership"), which is contained in Item 8 of this Form 10-K,
included the audit of the accompanying financial statement schedules. The
financial statement schedules are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statement schedules based upon our audits.
In our opinion, such financial statement schedules present fairly, in all
material respects, the financial information set forth therein.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
July 21, 1999
31
<PAGE>
WNC California Housing Tax Credit Fund IV, L.P. Series 4
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
--------------------------------- -----------------------------------------------------
As of March 31, 1999 As of December 31, 1998
--------------------------------- -----------------------------------------------------
Partnership's Total Amount of Encumbrances of Net
Investment in Local Investment Local Limited Property and Accumulated Book
Partnership Name Location Limited Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chadron Apartments I, L.P. Chadron,
Nebraska $ 483,000 $ 391,000 $ 800,000 $ 1,265,000 $ 33,000 $ 1,232,000
Colonial Village Auburn Auburn,
California 2,979,000 2,979,000 2,087,000 5,326,000 685,000 4,641,000
Eagleville Associates I, L.P. Eagleville,
Missouri 79,000 79,000 356,000 416,000 43,000 373,000
Havana Associates, I, Havana,
Limited Partnership Illinois 252,000 202,000 - - - -
Maharlika, Ltd. Stockton,
California 1,524,000 1,524,000 1,565,000 3,038,000 370,000 2,668,000
Pawnee Associates I, L.P. Pawnee,
Illinois 130,000 130,000 539,000 684,000 63,000 621,000
Rancheria Village Apartments, Santa Barbara,
a California Limited California 950,000 950,000 995,000 1,848,000 104,000 1,744,000
Partnership
Sycamore Hills L.P. Salem,
Indiana 185,000 185,000 763,000 989,000 162,000 827,000
Wills Point Crossing, L.P. Wills Point,
Texas 234,000 234,000 984,000 1,256,000 97,000 1,159,000
Woodlake Valencia Partners Woodlake,
California 1,798,000 1,798,000 952,000 3,056,000 281,000 2,775,000
---------- ---------- ---------- ---------- ---------- ----------
$ 8,614,000 $ 8,472,000 $ 9,041,000 $ 17,878,000 $ 1,838,000 $ 16,040,000
========== ========== ========== ========== ========== ==========
</TABLE>
32
<PAGE>
WNC California Housing Tax Credit Fund IV, L.P. Series 4
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
For the year ended December 31, 1998
----------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net loss Acquired Status Life (Years)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Chadron Apartments I, L.P. $ 49,000 $ (57,000) 1996 Completed 40
Colonial Village Auburn 377,000 (130,000) 1994 Completed 27.5
Eagleville Associates I,
L.P. 46,000 (12,000) 1996 Completed 27.5
Maharlika, Ltd. 110,000 (253,000) 1995 Completed 27.5
Pawnee Associates I, L.P. 65,000 (22,000) 1996 Completed 27.5
Rancheria Village
Apartments, a California
Limited Partnership 106,000 (47,000) 1995 Completed 40
Sycamore Hills L.P. 85,000 (13,000) 1995 Completed 27.5
Wills Point Crossing, L.P. 103,000 (14,000) 1995 Completed 40
Woodlake Valencia Partners 84,000 (210,000) 1995 Completed 27.5
--------- ---------
$ 1,025,000 $ (758,000)
========= =========
</TABLE>
33
<PAGE>
WNC California Housing Tax Credit Fund IV, L.P. Series 4
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
As of December 31, 1998
---------------------------------------------------------------------------------------
Partnership's Total Amount of Encumbrances of Net
Investment in Local Investment Local Limited Property and Accumulated Book
Partnership Name Location Limited Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chadron Apartments I, L.P. Chadron,
Nebraska $ 483,000 $ 391,000 $ 800,000 $ 1,265,000 $ 33,000 $ 1,232,000
Colonial Village Auburn Auburn,
California 2,979,000 2,979,000 2,087,000 5,326,000 685,000 4,641,000
Eagleville Associates I, L.P. Eagleville,
Missouri 79,000 79,000 356,000 416,000 43,000 373,000
Maharlika, Ltd. Stockton,
California 1,524,000 1,524,000 1,565,000 3,038,000 370,000 2,668,000
Pawnee Associates I, L.P. Pawnee,
Illinois 130,000 130,000 539,000 684,000 63,000 621,000
Rancheria Village Apartments, Santa Barbara,
a California Limited California 950,000 950,000 995,000 1,848,000 104,000 1,744,000
Partnership
Sycamore Hills L.P. Salem,
Indiana 185,000 185,000 763,000 989,000 162,000 827,000
Wills Point Crossing, L.P. Wills Point,
Texas 234,000 234,000 984,000 1,256,000 97,000 1,159,000
Woodlake Valencia Partners Woodlake,
California 1,798,000 1,798,000 952,000 3,056,000 281,000 2,775,000
---------- ---------- ---------- ---------- ---------- ----------
$ 8,362,000 $ 8,270,000 $ 9,041,000 $ 17,878,000 $ 1,838,000 $ 16,040,000
========== ========== ========== ========== ========== ==========
</TABLE>
34
<PAGE>
WNC California Housing Tax Credit Fund IV, L.P. Series 4
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
For the year ended December 31, 1998
----------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net loss Acquired Status Life (Years)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Chadron Apartments I, L.P. $ 49,000 $ (57,000) 1996 Completed 40
Colonial Village Auburn 377,000 (130,000) 1994 Completed 27.5
Eagleville Associates I, 46,000 (12,000) 1996 Completed 27.5
L.P.
Maharlika, Ltd. 110,000 (253,000) 1995 Completed 27.5
Pawnee Associates I, L.P. 65,000 (22,000) 1996 Completed 27.5
Rancheria Village
Apartments, a California
Limited Partnership 106,000 (47,000) 1995 Completed 40
Sycamore Hills L.P. 85,000 (13,000) 1995 Completed 27.5
Wills Point Crossing, L.P. 103,000 (14,000) 1995 Completed 40
Woodlake Valencia Partners 84,000 (210,000) 1995 Completed 27.5
--------- ---------
$ 1,025,000 $ (758,000)
========= =========
</TABLE>
35
<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: August 4, 1999
By: /s/ Michael L. Dickenson
Michael L. Dickenson,
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: August 4, 1999
By: /s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., General Partner
Date: August 4, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By /s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., Chairman of the Board of WNC & Associates, Inc.
Date: August 4, 1999
By: /s/ John B. Lester, Jr.
John B. Lester, Jr., Director of WNC & Associates, Inc.
Date: August 4, 1999
By: /s/ David N. Shafer
David N Shafer, Director of WNC & Associates, Inc.
Date: August 4, 1999
36
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000921052
<NAME> WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., SERIES 4
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 675,871
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 675,871
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,575,805
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,453,177
<TOTAL-LIABILITY-AND-EQUITY> 7,575,805
<SALES> 0
<TOTAL-REVENUES> 7,756
<CGS> 0
<TOTAL-COSTS> 19,683
<OTHER-EXPENSES> 187,528
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (199,455)
<INCOME-TAX> 0
<INCOME-CONTINUING> (199,455)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (199,455)
<EPS-BASIC> (17.17)
<EPS-DILUTED> 0
</TABLE>
