FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 0-21895
WNC HOUSING TAX CREDIT FUND V, L.P., Series 3
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
California 33-6163848
WNC HOUSING TAX CREDIT FUND V, L.P., Series 3
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 HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2000
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
June 30, 2000 and March 31, 2000 3
Statements of Operations
For the Three Months Ended June 30, 2000 and 1999 4
Statement of Partners' Equity (Deficit)
For the Three Months Ended June 30, 2000 5
Statements of Cash Flows
For the Three Months Ended June 30, 2000 and 1999 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures About Market Risks 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 2000 March 31, 2000
----------------- -------------------
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 241,525 $ 365,942
Investment in limited partnerships (Note 3) 10,776,118 10,968,078
----------------- -------------------
$ 11,017,643 $ 11,334,020
================= ===================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Due to limited partnerships (Note 5) $ - $ 72,938
Accrued expenses 108,007 149,735
Accrued fees and expenses due to
General Partner and affiliates (Note 4) 22,827 26,540
----------------- -------------------
Total Liabilities 130,834 249,213
----------------- -------------------
Partners' equity (deficit):
General partner (66,623) (64,643)
Limited partners (25,000 units authorized and
18,000 units issued and outstanding) 10,953,432 11,149,450
----------------- -------------------
Total partners' equity 10,886,809 11,084,807
----------------- -------------------
$ 11,017,643 $ 11,334,020
================= ===================
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
--------------------- -----------------------
<S> <C> <C>
Interest income $ 4,469 $ 9,386
Other income 5,032 -
--------------------- -----------------------
Total income 9,501 9,386
--------------------- -----------------------
Operating expenses:
Amortization (Note 3) 11,098 9,055
Asset management fees (Note 4) 12,375 12,375
Other 5,231 5,976
--------------------- -----------------------
Total operating expenses 28,704 27,406
--------------------- -----------------------
Loss from operations (19,203) (18,020)
Equity in losses of limited partnerships (Note 3) (178,795) (293,818)
--------------------- -----------------------
Net loss $ (197,998) $ (311,838)
===================== =======================
Net loss allocated to:
General partner $ (1,980) $ (3,118)
===================== =======================
Limited partners $ (196,018) $ (308,720)
===================== =======================
Net loss per limited partnership unit $ (11) $ (17)
===================== =======================
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
For the Three Months Ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
------------------- ------------------- -------------------
<S> <C> <C> <C>
Partners' equity (deficit) at March 31, 2000 $ (64,643) $ 11,149,450 $ 11,084,807
Net loss (1,980) (196,018) (197,998)
------------------- ------------------- -------------------
Partners' equity (deficit) at June 30, 2000 $ (66,623) $ 10,953,432 $ 10,886,809
=================== =================== ===================
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Three Months Ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------------- ------------------
<S> <C> <C>
Net loss $ (197,998) $ (311,838)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Equity in losses of limited partnerships 178,795 293,818
Amortization 11,098 9,055
Accrued expenses (41,728) -
Change in accrued fees and expenses due to
General Partner and affiliates (3,713) 17,552
----------------- ------------------
Net cash provided by (used in) operating activities (53,546) 8,587
----------------- ------------------
Cash flows from investing activities:
Investment in limited partnerships, net (72,938) -
Distributions from local limited partnerships 2,067 2,425
Acquisition costs and fees - (25,000)
----------------- ------------------
Net cash used in investing activities (70,871) (22,575)
----------------- ------------------
Net decrease in cash and cash equivalents (124,417) (13,988)
Cash and cash equivalents, beginning of period 365,942 911,080
----------------- ------------------
Cash and cash equivalents, end of period $ 241,525 $ 897,092
================= ==================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes paid $ 800 $ 800
================= ==================
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The accompanying condensed consolidated unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q for quarterly
reports under Section 13 or 15(d) of the Securities Exchange Act of 1934.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended June 30, 2000 are not necessarily
indicative of the results that may be expected for the fiscal year ending March
31, 2001. For further information, refer to the financial statements and
footnotes thereto included in the Partnership's annual report on Form 10-K for
the fiscal year ended March 31, 2000.
Organization
WNC Housing Tax Credit Fund V, L.P., Series 3 ("the Partnership") is a
California Limited Partnership formed under the laws of the State of California
on March 28, 1995, and commenced operations on October 24, 1995. The Partnership
was formed to acquire limited partnership interests in other limited
partnerships or limited liability companies ("Local Limited Partnerships") which
own multifamily apartment complexes that are eligible for low-income housing
federal and, in some cases, California income tax credits (the "Low Income
Housing Credit").
The general partner of the Partnership is WNC & Associates, Inc. (the "General
Partner" or "Associates"). Wilfred N. Cooper, Sr., through the Cooper Revocable
Trust, owns 66.8% of the outstanding stock of Associates. 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. Wilfred N. Cooper,
Jr., President of WNC, owns 2.1% of the outstanding stock of WNC. The business
of the Partnership is conducted primarily through the General Partner as the
Partnership has no employees of its own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission on July 26, 1995, 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, January 21, 1996 a total of 18,000
Units representing subscriptions in the amount of $17,558,985, net of $441,015
of discounts for volume purchases, had been sold.The General Partner has a 1%
interest in operating profits and losses, taxable income and losses, cash
available for distribution from the Partnership and tax credits. The limited
partners will be allocated the remaining 99% of these items in proportion to
their respective investments.
Sempra Energy Financial, a California corporation, which is not an affiliate of
the Partnership or General Partner, has purchased 4,560 Units, which represent
25.3% of the Units outstanding for the Partnership. Sempra Energy Financial
invested $4,282,600. A discount of $277,400 was allowed due to a volume
discount. Western Financial Savings Bank, which is not an affiliate of the
Partnership or General Partner, has purchased 1,068 units, which represent 5.9%
of the Units outstanding for the Partnership. Western Financial Savings Bank
invested $1,000,000. A discount of $68,000 was allowed due to a volume discount.
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.
7
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(Unaudited)
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
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
Partnerships are consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of the
investment account and are being amortized over 30 years.
Offering Expenses
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred in connection 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 limited partners' capital and amounted to $2,132,000
at the end of all periods presented.
8
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(Unaudited)
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.
Cash and Cash Equivalents
The Partnership considers highly liquid investments with remaining maturities of
three months or less when purchased to be cash equivalents. As of June 30, 2000
and March 31, 2000, the Partnership had cash equivalents of $0.
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.
Concentration of Credit Risk
At June 30, 2000, the Partnership maintained cash balances at certain financial
institutions in excess of the federally insured maximum. Reporting Comprehensive
Income
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.
NOTE 2 - UNCERTAINTY WITH RESPECT TO INVESTMENTS IN ALLIANCE, EVERGREEN AND
HASTINGS: IMPAIRMENT OF INVESTMENTS
The Partnership has three investments accounted for under the equity method,
consisting of a 99% limited partnership interest in each of Alliance Apartments
I, Limited Partnership ("Alliance"), Evergreen Apartments I, Limited Partnership
("Evergreen"), and Hastings Apartments I, Limited Partnership ("Hastings").
The independent auditors engaged to perform an audit of Alliance, Evergreen, and
Hastings' financial statements as of and for the year ended December 31, 1999,
were unable to form an opinion on those financial statements. This was due to
the inability to obtain from the former local general partner certain general
ledger information for a period of approximately three months and reliable
confirmations of advances to/notes receivable from the former local general
partner. Further, the independent auditors were unable to obtain management
representation letters from the former property management company, which is an
9
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(Unaudited)
NOTE 2 - UNCERTAINTY WITH RESPECT TO INVESTMENTS IN ALLIANCE, EVERGREEN AND
HASTINGS: IMPAIRMENT OF INVESTMENTS, continued
affiliate of the former local general partner. As a result, the Partnership has
not included the financial information of Alliance, Evergreen and Hastings in
the combined condensed financial statements presented in Note 3. The combined
condensed financial information presented in Note 3 for prior periods has been
restated to exclude the accounts of Alliance, Evergreen and Hastings. The
Partnership has reflected equity in the net losses of Alliance, Evergreen and
Hastings totaling $0 for the three months ended June 30, 2000, because the
recognition of any such loss would reduce the net investment account to a
balance below zero. See Note 3 for explanation. Such estimates may be materially
misstated due to the lack of corroborative financial information.
Alliance, Evergreen and Hastings continue to experience negative cash flows from
operations. During the three months ended June 30, 2000, the Partnership
advanced $41,728 in cash to Alliance, Evergreen and Hastings for operating
expenses, including legal fees relating to certain litigation involving these
and other properties as outlined in Note 7. These advances were written off at
March 31, 2000 as part of an impairment analysis, under which the book value of
the investments in Allianc, Evergreen, and Hastings and various advances were
written off in full. Subsequent to June 30, 2000 the Partnershup advanced
approximately $96,000 in cash to Alliance, Evergreen, and Hastings, which has
not been reserved as of June 30, 2000. WNC is currently negotiating for a
restructuring of the related bank loans, which would increase cash flow from
operations. WNC may not be successful in the restructuring of these loans. If
the loans are not restructured, the Partnership may be unable to support these
properties. Consequently, the Partnership may be forced to sell all or a portion
of its interests in these properties. Further, the lender may attempt to
foreclose on the Alliance, Hastings and Evergreen properties.
As a result of the aforementioned operating difficulties and the litigation as
discussed in Note 7, there is uncertainty as to whether the Partnership will
ultimately retain its interests in Alliance, Evergreen and Hastings. If the
investments are sold or otherwise not retained, the Partnership could be subject
to recapture of tax credits and certain prior tax deductions. There is further
uncertainty as to costs that the Partnership may ultimately incur in connection
with its investments in Alliance, Evergreen and Hastings. The Partnership's
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of the periods presented, the Partnership has acquired limited partnership
interests in 18 Local Limited Partnerships, each of which owns one Housing
Complex consisting of an aggregate of 1,196 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, except for one of the
investments in which it is entitled to 49.49% of such amounts.
Equity in losses of Local Limited Partnerships is recognized in the financial
statements until the related investment account is reduced to a zero balance.
Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.
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. At March 31, 2000 and through the three months
ended June 30, 2000, the net investments in the three Local Limited Partnerships
discussed in Note 2 had reached a zero balance.
10
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(Unaudited)
NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS, continued
Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for the periods presented below (Combined condensed
financial information for Alliance, Evergreen and Hastings have been excluded
from the presentation below. See Note 2 for further discussion):
<TABLE>
<CAPTION>
June 30, 2000 March 31, 2000
----------------- --------------------
<S> <C> <C>
Investments per balance sheet - beginning of period $ 10,968,078 $ 12,250,789
Capital Contributions paid, net - 25,000
Capitalized acquisition fees and costs - 233,141
Impairment loss on investments in limited
partnerships (Note 2) - (995,804)
Cash advanced (Note 2) - 205,080
Accrued Expense (Note 2) - 146,135
Equity in losses of limited partnerships (178,795) (853,824)
Distributions received (2,067) -
Amortization of paid capitalized acquisition fees and costs (11,098) (42,439)
----------------- --------------------
Investments per balance sheet - end of period $ 10,776,118 $ 10,968,078
================= ====================
</TABLE>
Selected financial information for the three months ended June 30 from the
unaudited combined financial statements of the limited partnerships in which the
Partnership has invested as follows (Combined condensed financial information
for Alliance, Evergreen and Hastings have been excluded from the presentation
below. See Note 2 for further discussion):
<TABLE>
<CAPTION>
2000 1999
--------------- -------------------
<S> <C> <C>
Total revenue $ 1,364,000 $ 1,378,000
--------------- -------------------
Interest expense 380,000 440,000
Depreciation 356,000 371,000
Operating expenses 819,000 791,000
--------------- -------------------
Total expenses 1,555,000 1,602,000
--------------- -------------------
Net loss $ (191,000) $ (224,000)
=============== ===================
Net loss allocable to the Partnership, before equity in
losses of Alliance, Evergreen, and Hastings $ (179,000) $ (208,000)
=============== ===================
Net loss recorded by the Partnership, before equity
in losses of Alliance, Evergreen, and Hastings $ (179,000) $ (208,000)
Net loss of Alliance allocable to the Partnership (12,000) (16,000)
Net loss of Evergreen allocable to the Partnership (18,000) (55,000)
Net loss of Hastings allocable to the Partnership (12,000) (15,000)
Below zero adjustments of the net allocable losses
of Alliance, Evergreen, and Hastings 42,000 -
--------------- -------------------
Net loss recorded by the Partnership $ (179,000) $ (294,000)
=============== ===================
</TABLE>
11
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(Unaudited)
NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS, continued
Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partner may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired and the loss and recapture of the related tax credits could occur.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or Associates for the following fees:
(a) Annual Asset Management Fee. An annual asset management fee of the greater
of (i) $2,000 per multi-family housing complex or (ii) 0.275% of Gross
Proceeds. The base fee amount will be adjusted annually based on changes in
the Consumer Price Index. However, in no event will the annual asset
management fee exceed 0.2% of Invested Assets. "Invested Assets" means the
sum of the Partnership's Investment in Local Limited Partnerships and the
Partnership's allocable share of the amount of mortgages on and other
indebtedness related to the Housing Complexes. Fees of $12,375 were
incurred during each of the three months ended June 30, 2000 and 1999. The
Partnership paid the General Partner or its affiliates $0 of these fees
during each of the three months ended June 30, 2000 and 1999.
(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, 2006 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 the General Partner and affiliates consist
of the following:
<TABLE>
<CAPTION>
June 30, 2000 March 31, 2000
--------------------- ----------------------
<S> <C> <C>
Reimbursements for expenses paid by the
General Partner or an affiliate $ - $ 26,540
Acquisition expenses payable 10,452 -
Asset management fee payable 12,375 -
--------------------- ----------------------
Total $ 22,827 $ 26,540
===================== ======================
</TABLE>
12
<PAGE>
WNC HOUSING CREDIT FUND V, L.P. SERIES 3
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2000
(Unaudited)
NOTE 5 - PAYABLES TO LIMITED PARTNERSHIPS
Payables to limited partnerships at June 30, 2000 represent amounts which are
due at various times based on conditions specified in the respective local
limited partnership agreements. These contributions are payable in installments,
generally due upon the local limited partnership achieving certain operating
benchmarks (generally expected to be paid 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.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
During the year ended March 31, 2000, WNC identified a potential problem with a
developer who, at the time, was the local general partner in six Local Limited
Partnerships. The Partnership has 99% limited partnership investments in three
of those six Local Limited Partnerships. Those investments are Alliance
Apartments I, Evergreen Apartments I and Hastings Apartments I. All the
properties continue to experience operating deficits. The local general partner
ceased funding the operating deficits, which placed the Local Limited
Partnerships in jeopardy of foreclosure. Consequently, WNC voted to remove the
local general partner and the management company from the Local Limited
Partnerships. After the local general partner contested its removal, WNC
commenced legal action on behalf of the Local Limited Partnerships and was
successful in getting a receiver appointed to manage the Local Limited
Partnerships and an unaffiliated entity appointed as property manager. WNC was
subsequently successful in attaining a summary judgment to confirm the removal
of the local general partner, the receiver was discharged and WNC now controls
all six of the Local Limited Partnerships.
The six Local Limited Partnerships (hereinafter referred to as "Defendants") are
now defendants in a separate lawsuit. The lawsuit has been filed by eight other
partnerships in which the local general partner of the Local Limited
Partnerships is or was involved (the "Plaintiffs"). The Plaintiffs allege that
the local general partner accepted funds from the Plaintiffs and improperly
loaned these funds to the Defendants. Discovery in this lawsuit is ongoing and
WNC will continue to pursue an aggressive defense on behalf of the Defendants.
The Partnership has a 99% limited partnership investment in Cascade Pines, L.P.
II ("Cascade"). Cascade is a defendant in a wrongful death lawsuit and a related
injury lawsuit. Cascade carries general liability and extended liability
insurance. Discovery for these lawsuits is ongoing, but the management of
Cascade and WNC are unable to determine the outcome of these lawsuits at this
time or their impact, if any, on the Partnership's financial statements. Should
Cascade be unsuccessful in its defense and the insurer denies coverage, which
they have indicated that they might, or the insurance coverage proves to be
inadequate, the Partnership may be required to sell its investment or may
otherwise lose its investment in Cascade. Loss of the Cascade investment could
result in recapture of tax credits and certain prior tax deductions.
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report contains forward-looking statements concerning the
Partnership's anticipated future revenues and earnings, adequacy of future cash
flow and related matters. These forward-looking statements include, but are not
limited to, statements containing the words "expect", "believe", "will", "may",
"should", "project", "estimate", and like expressions, and the negative thereof.
These statements are subject to risks and uncertainties that could cause actual
results to differ materially from the statements, including competition, as well
as those risks described in the Partnership's SEC reports, including the
Partnership's Form 10-K filed pursuant to the Securities and Exchange Act of
1934 on September 1, 2000.
The following discussion and analysis compares the results of operations for the
three months ended June 30, 2000 and 1999, and should be read in conjunction
with the condensed consolidated financial statements and accompanying notes
included within this report.
Financial Condition
The Partnership's assets at June 30, 2000 consisted primarily of $242,000 in
cash and aggregate investments in the eighteen Local Limited Partnerships of
$10,776,000. Liabilities at June 30, 2000 primarily consisted of $108,000 of
accrued expenses and $23,000 of accrued asset management fees and reimbursements
due to the General Partner and affiliates.
Results of Operations
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999.
The Partnership's net loss for the three months ended June 30, 2000 was
$(198,000), reflecting a decrease of $114,000 from the net loss experienced for
the three months ended June 30, 1999 of $(312,000). The decrease in net loss is
due to equity in losses of limited partnerships which decreased by $115,000 to
$(179,000) for the three month period ended June 30, 2000 from $(294,000) for
the three month period ended June 30, 1999, due to write off in full of three
Local Limited Partnership Interests discussed in Note 2, offset by an increase
in operating loss of $1,000 to $(19,000) for the three months ended June 30,
2000 from $(18,000) for the three months ended June 30, 1999.
Cash Flows
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999.
Net decrease in cash during the three months ended June 30, 2000 was $(124,000)
compared to a net decrease in cash for the three months ended June 30, 1999 of
$(14,000). The change was due primarily to an increase in investments in limited
partnerships of $(73,000), a decrease in accrued expenses of $(42,000), a
decrease in accrued fees and expenses due to General Partner or affiliate of
$(32,000), offset by a decrease in acquisition costs and fees of $36,000.
During the three months ended June 30, 2000 and the year ended March 31, 2000,
accrued payables, which consist primarily of management fees due to the General
Partner, decreased by $(4,000).
The Partnership expects its future cash flows, together with its net available
assets at June 30, 2000, to be sufficient to meet all currently forseeable
future cash requirements.
14
<PAGE>
Item 3. Quantitative and Qualitative Disclosures Above Market Risks
NONE
Part II. Other Information
Item 1. Legal Proceedings
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
15
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND V, L.P., Series 3
By: WNC & ASSOCIATES, INC. General Partner
By: /s/ Wilfred N Cooper, Jr.
Wilfred N Cooper, Jr.,
President - Chief Operating Officer of WNC & Associates, Inc.
Date: December 8, 2000
By: /s/ Michael L Dickenson
Michael L. Dickenson,
Vice President - Chief Financial Officer of WNC & Associates, Inc.
Date: December 8, 2000
16
