FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 33-76970
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P.,
Series 4
California 33-0601852
(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
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
INDEX TO FORM 10-Q
For the Quarter Ended September 30, 2000
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
September 30, 2000 and March 31, 2000..............................2
Statements of Operations
For the Three and Six Months Ended September 30, 2000 and 1999.....3
Statement of Partners' Equity (Deficit)
For the Six Months Ended September 30, 2000........................4
Statements of Cash Flows
For the Six Months Ended September 30, 2000 and 1999...............5
Notes to Financial Statements...............................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................13
Item 3. Quantitative and Qualitative Disclosures
About Market Risks................................................14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................14
Item 6. Exhibits and Reports on Form 8-K...................................14
Signatures.................................................................15
1
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 2000 March 31, 2000
-------------------- --------------------
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 455,240 $ 497,221
Receivables from affiliates 1,400 25
Investments in limited partnerships (Notes 2 and 3) 5,637,698 6,052,638
-------------------- --------------------
$ 6,094,338 $ 6,549,884
==================== ====================
LIABILITIES AND PARTNERS' EQUITY
(DEFICIT)
Liabilities:
Payables to limited partnerships (Note 5) $ - $ 25,977
Accrued expenses 22,758 23,835
Accrued fees and expenses due to General
Partner and affiliates (Note 4) 20,956 8,124
-------------------- --------------------
Total liabilities 43,714 57,936
-------------------- --------------------
Commitments and contingencies
Partners' equity (deficit):
General partner (40,667) (36,254)
Limited partners (25,000 units authorized,
11,500 units issued and outstanding) 6,091,291 6,528,202
-------------------- --------------------
Total partners' equity 6,050,624 6,491,948
-------------------- --------------------
$ 6,094,338 $ 6,549,884
==================== ====================
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended September 30, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
------------------------------ --------------------------------
Three Six Three Six
Months Months Months Months
------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
Interest income $ 21 $ 108 $ 4,291 $ -
Miscellaneous income 4,513 9,784 - 911
------------ -------------- ------------- --------------
4,534 9,892 4,291 911
------------ -------------- ------------- --------------
Operating expenses:
Amortization (Note 3) 6,409 12,818 6,394 12,788
Asset management fees (Note 4) 7,906 15,812 7,906 15,812
Other 15,661 20,842 29,791 17,341
------------ -------------- ------------- --------------
Total operating expenses 29,976 49,472 44,091 45,941
------------ -------------- ------------- --------------
Loss from operations (25,442) (39,580) (39,800) (45,030)
Equity in losses of
limited partnerships (Note 3) (200,872) (401,744) (131,953) (319,481)
------------ -------------- ------------- --------------
Net loss $ (226,314) $ (441,324) $ (171,753) $ (364,511)
============ ============== ============= ==============
Net loss allocated to:
General partner $ (2,263) $ (4,413) $ (1,718) $ (3,645)
============ ============== ============= ==============
Limited partners $ (224,051) $ (436,911) $ (170,035) $ (360,866)
============ ============== ============= ==============
Net loss per limited partner unit $ (19) $ (38) $ (15) $ (31)
============ ============== ============= ==============
Outstanding weighted limited
partner units 11,500 11,500 11,500 11,500
============ ============== ============= ==============
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
For the Six Months Ended September 30, 2000
(unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
-------------- --------------- ---------------
<S> <C> <C> <C>
Partners' equity (deficit) at March 31, 2000 $ (36,254) $ 6,528,202 $ 6,491,948
Net loss (4,413) (436,911) (441,324)
-------------- --------------- ---------------
Partners' equity (deficit) at September 30, 2000 $ (40,667) $ 6,091,291 $ 6,050,624
============== =============== ===============
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Six Months Ended September 30, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
----------------------- -----------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (441,324) $ (364,511)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization 12,818 12,788
Equity in losses of limited partnerships 401,744 319,482
Change in accrued expenses - -
Change in accrued fees and expenses due
to General Partner and affiliates 11,755 15,379
----------------------- -----------------------
Net cash used in operating activities (15,007) (16,862)
----------------------- -----------------------
Cash flows from investing activities:
Investments in limited partnerships (27,352) (42,496)
Distributions from limited partnerships 378 1,569
----------------------- -----------------------
Net cash used in investing activities (26,974) (40,927)
----------------------- -----------------------
Net decrease in cash and
cash equivalents (41,981) (57,789)
Cash and cash equivalents, beginning
of period 497,221 675,871
----------------------- -----------------------
Cash and cash equivalents, end of period $ 455,240 $ 618,082
======================= =======================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes paid $ 800 $ 800
======================= =======================
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The accompanying condensed unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q for quarterly reports under
Section 13 or 15(d) of the Securities Exchange Act of 1934. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and six months ended September 30, 2000 are not necessarily indicative of
the results that may be expected for the fiscal year ending March 31, 2001. For
further information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-K for the fiscal year
ended March 31, 2000.
Organization
WNC 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.
Wilfred N. Cooper, Jr., President of WNC, owns 2.1% 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.
6
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
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 4) from the remainder, any additional sale or refinancing
proceeds will be distributed 90% to the limited partners (in proportion to their
respective investments) and 10% to the General Partner.
Risks and Uncertainties
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
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 3).
7
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
(unaudited)
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 September 30,
2000 and March 31, 2000 the Partnership had cash equivalents of $425,000 and
$450,000, respectively.
Concentration of Credit Risk
At September 30, 2000, 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 loss per unit is not required.
Reporting Comprehensive Income
In September 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.
8
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
(unaudited)
NOTE 2 - UNCERTAINTY WITH RESPECT TO INVESTMENT IN CHADRON
The Partnership has an investment, accounted for under the equity method,
consisting of a 99% limited partnership investment in Chadron Apartments I,
Limited Partnership ("Chadron"), a Nebraska limited partnership. The investment
in Chadron carried on the Partnership's balance sheet at September 30, 2000 and
March 31, 2000 totals $290,841 and $329,597 (which represent approximately 5%
and 5% of total investment in limited partnerships of the Partnership),
respectively. The Partnership has reflected equity in the net losses of Chadron
totaling $38,756 ($3.37 per limited partnership unit) for the six months ended
September 30, 2000.
Chadron, together with five other Local Limited Partnerships in two other low
income housing tax credit funds sponsored by WNC (collectively referred to as
the "Defendants"), is a defendant in a lawsuit. The lawsuit has been filed by
eight partnerships (the "Plaintiffs") and seeks recovery of $811,715. All of the
Defendants involved in the lawsuit had the same general partner and the
Plaintiffs allege that the local general partner accepted funds from them and
improperly loaned those funds to the Defendants. The Defendants have filed
actions against the general partner for violating the limited partnership
agreements and for breach of fiduciary duties. During 1999, the Defendants held
a partners' meeting and voted to remove the local general partner. A receiver
was appointed by the District Court of Douglas County, Nebraska to oversee the
operations of the Defendants as a result of an injunction filed against the
local general partner by the defendants to prevent the local general partner
from further acting as the general partner of the Defendants.
Legal costs in the amount of $31,645 were incurred through March 31, 2000,
including an accrual for management's estimate of future legal costs of $16,667,
which is the Partnership's prorated portion of the collective accrual of
$100,000 booked across the three affected WNC sponsored low income housing tax
credit funds. In addition, the Partnership has accrued $5,000 for estimated
additional audit fees and recognized approximately $3,300 for estimated costs
related to the receivership, which is included in other expenses. No additional
legal costs were incurred during the six months ended September 30, 2000.
The independent auditors engaged to perform an audit of Chadron's financial
statements as of and for the year ended December 31, 1999 were unable to form an
opinion on those financial statements due to the lack of general ledger
information for a period of approximately three months, the inability to obtain
reliable confirmations of advances to/notes receivable from the former general
partner and the inability to obtain a management representation letter from the
former management company which is an affiliate of the former general partner.
As a result, the Partnership has not included the financial information of
Chadron in the combined condensed statement of operations presented in Note 3.
The combined condensed financial information for previous periods presented in
Note 3 has been restated to exclude the accounts of Chadron.
The Partnership has recognized equity in losses of Chadron totaling $38,756 for
the six months ended September 30, 2000 as pro-rated from the amount of $82,794
for the year ended March 31, 2000 based on nine months of reported results
provided by Chadron and on three months of results estimated by management of
the Partnership. Such estimates may be materially misstated due to the lack of
corroborative financial information, as discussed above.
9
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
(unaudited)
NOTE 2 - UNCERTAINTY WITH RESPECT TO INVESTMENT IN CHADRON, continued
The accompanying financial statements have been prepared assuming that the
Partnership will be able to realize its investment in Chadron. Chadron is a
defendant in the litigation described above and may owe substantial liabilities
not currently reflected in its financial statements in the event a judgment is
rendered against Chadron. Chadron has and is currently experiencing negative
cash flows from operations and is currently in default on its construction loan.
Chadron may not be able to refinance its construction loan into a permanent
loan, which would increase cash flow from operations. Furthermore, the
Partnership may have to sell its investment in Chadron. If the construction loan
is not refinanced, the construction lender may foreclose on Chadron. In
addition, Chadron may not be successful in its defense of the aforementioned
litigation. As a result, the Partnership may lose its investment in Chadron and
be subject to tax credit recapture. There is an uncertainty as to the amounts
the Partnership will ultimately realize from its investment in Chadron. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of the periods presented, the Partnership had acquired limited partnership
interests in ten Local Limited Partnerships each of which owns one Housing
Complex consisting of an aggregate of 314 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.
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 six months ended September 30, 2000
and the year ended March 31, 2000, 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>
September 30, 2000 March 31, 2000
---------------------- -------------------
<S> <C> <C>
Investments per balance sheet, beginning of period $ 6,052,638 $ 6,899,934
Capitalized acquisition fees and costs - 1,921
Equity in losses of limited partnerships (401,744) (817,069)
Distributions received (378) (6,509)
Amortization of paid acquisition fees and costs (12,818) (25,639)
---------------------- -------------------
Investments per balance sheet, end of period $ 5,637,698 $ 6,052,638
====================== ===================
</TABLE>
10
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
(unaudited)
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
Selected financial information for the six months ended September 30 from the
unaudited combined financial statements of the limited partnerships in which the
Partnership has invested as follows: (Combined condensed financial information
for Chadron Apartments I Limited Partnership has been excluded from the
presentations below. See Note 2 for further discussion):
COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
2000 1999
--------------- ---------------
<S> <C> <C>
Revenues $ 542,000 $ 559,000
--------------- ---------------
Expenses:
Operating expenses 379,000 370,000
Interest expense 233,000 241,000
Depreciation and amortization 297,000 242,000
--------------- ---------------
Total expenses 909,000 853,000
--------------- ---------------
Net loss $ (367,000) $ (294,000)
=============== ===============
Net loss allocable to the Partnership before equity in
losses of Chadron $ (363,000) $ (291,000)
=============== ===============
Net loss of Chadron allocable to and recorded by
the Partnership (39,000) (28,000)
--------------- ---------------
Net loss recorded by the Partnership $ (402,000) $ (319,000)
=============== ===============
</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 and the loss and recapture of the related tax credits could occur.
11
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
(unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS
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:
(a) 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 $15,812 were incurred during each of the
six months ended September 30, 2000 and 1999, of which $8,940 and $0
were paid during the six months ended September 30, 2000 and 1999,
respectively.
(b) A subordinated disposition fee in an amount equal to 1% of the sales
price of real estate sold. Payment of this fee is subordinated to the
limited partners receiving a preferred return of 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>
September 30, 2000 March 31, 2000
--------------------- -------------------
<S> <C> <C>
Reimbursement for expenses paid by the General
Partner or an affiliate $ 13,885 $ 7,925
Asset management fee payable 7,071 199
--------------------- -------------------
Total $ 20,956 $ 8,124
===================== ===================
</TABLE>
NOTE 5 - 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 6 - INCOME TAXES
No provision for income taxes has been recorded in the accompanying financial
statements as any liability for income taxes is the obligation of the partners
of the Partnership.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report contains forward-looking statements concerning the
Partnership's anticipated future revenues and earnings, adequacy of future cash
flow and related matters. These forward-looking statements include, but are not
limited to, statements containing the words "expect", "believe", "will", "may",
"should", "project", "estimate", and like expressions, and the negative thereof.
These statements are subject to risks and uncertainties that could cause actual
results to differ materially from the statements, including competition, as well
as those risks described in the Partnership's SEC reports, including the
Partnership's Form 10-K filed pursuant to the Securities and Exchange Act of
1934 on August 3, 2000.
The following discussion and analysis compares the results of operations for the
three and six months ended September 30, 2000 and 1999, and should be read in
conjunction with the condensed financial statements and accompanying notes
included within this report.
Financial Condition
The Partnership's assets at September 30, 2000 consisted primarily of $455,000
in cash and cash equivilants and aggregate investments in the ten Local Limited
Partnerships of $5,638,000. Liabilities at September 30, 2000 primarily
consisted of $23,000 in accrued expenses and $21,000 due to the General Partner.
Results of Operations
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999. The Partnership's net loss for the three months ended September 30,
2000 was $(226,000), reflecting an increase of $54,000 from the net loss
experienced for the three months ended September 30, 1999 of $(172,000). The
increase in net loss is due to equity in losses of limited partnerships which
increased by $69,000 to $(201,000) for the three month period ended September
30, 2000 from $(132,000) for the three month period ended September 30, 1999 and
loss from operations which decreased by $15,000 to $(25,000) for the three month
period ended September 30, 2000 from $(40,000) for the three month period ended
September 30, 1999.
Six Months Ended September 30, 2000 Compared to Six Months Ended September 30,
1999. The Partnership's net loss for the six months ended September 30, 2000 was
$(441,000), reflecting an increase of $76,000 from the net loss experienced for
the six months ended September 30, 1999 of $(365,000). The increase in net loss
due to equity in losses of limited partnerships which increased by $82,000 to
$(402,000) for the six month period ended September 30, 2000 from $(320,000) for
the six month period ended September 30, 1999. This was partially offset by a
decrease in operating losses of $5,000 to $(40,000) for the period ended
September 30, 2000 from $(45,000) for the period ended September 30, 1999.
Cash Flows
Six Months Ended September 30, 2000 Compared to Six Months Ended September 30,
1999. Net cash used during the six months ended September 30, 2000 was $(42,000)
compared to cash used for the six months ended September 30, 1999 of $(58,000).
The change was due to a decrease in capital contributions paid to limited
partnerships of $15,000.
During the six months ended September 30, 2000, accrued payables, which consist
primarily of management fees due to the General Partner, increased by $13,000.
The General Partner does not anticipate that these accrued fees will be paid
until such time as capital reserves are in excess of future foreseeable working
capital requirements of the partnership.The Partnership expects its future cash
flows, together with its net available assets at September 30, 2000, to be
sufficient to meet all currently forseeable future cash requirements.
13
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risks
NOT APPLICABLE
Part II. Other Information
Item 1. Legal Proceedings
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
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<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WNC CALIFORNIA HOUSING TAX CREDITS IV, L.P., Series 4
By: WNC & ASSOCIATES, INC. General Partner of the Registrant
By: /s/ Will N. Cooper, Jr.
Will N Cooper, Jr.,
President - Chief Operating Officer of WNC & Associates, Inc.
Date: January 4, 2001
By: /s/ Thomas J. Riha
Thomas J. Riha,
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: January 4, 2001
15
