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, 2003
OR
|_|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: 333-76435-01
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 8
California 33-0761517
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17782 Sky Park Circle
Irvine, CA 92614-6404
(Address of principal executive offices)
(714) 662-5565
(Telephone number)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(Former name, former address and former fiscal year, if changed since last
report)
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
--------- ----------
Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act).
Yes No X
--------- ----------
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
INDEX TO FORM 10-Q
For the Quarterly Period Ended June 30, 2003
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
June 30, 2003 and March 31, 2003........................................3
Statements of Operations
For the three months ended June 30, 2003 and 2002.......................4
Statement of Partners' Equity (Deficit)
For the three months ended June 30, 2003................................5
Statements of Cash Flows
For the three months ended June 30, 2003 and 2002.......................6
Notes to Financial Statements.............................................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................15
Item 3. Quantitative and Qualitative Disclosures about Market Risk......16
Item 4. Controls and Procedures.........................................16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................16
Signatures...............................................................17
Certifications...........................................................18
2
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
BALANCE SHEETS
June 30, 2003 March 31, 2003
------------- --------------
(unaudited)
ASSETS
Cash and cash equivalents $ 661,268 $ 663,747
Investments in limited partnerships
(Notes 2 and 3) 7,712,151 7,786,112
---------------------- ----------------------
Total Assets $ 8,373,419 $ 8,449,859
====================== ======================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to limited partnerships (Note 4) $ 197,347 $ 197,347
Accrued fees and expenses due to
General Partner and affiliates (Note 3) 26,409 21,606
---------------------- ----------------------
Total Liabilities 223,756 218,953
---------------------- ----------------------
Commitment and contingencies
Partners' Equity (Deficit)
General partner (854) (773)
Limited partners (25,000 units authorized
and 9,814 units issued and outstanding
at June 30, 2003 and March 31, 2003) 8,150,517 8,231,679
---------------------- ----------------------
Total Partners' Equity 8,149,663 8,230,906
---------------------- ----------------------
Total liabilities and partners' equity $ 8,373,419 $ 8,449,859
====================== ======================
See accompanying notes to financial statements
3
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2003 and 2002
(unaudited)
2003 2002
------------------------- -----------------------
Three Months Three Months
------------------------- -----------------------
Interest Income $ 1,238 $ 5,033
------------------------- -----------------------
Operating expenses
Amortization 7,613 7,502
Asset Management fees 5,871 5,871
Legal and accounting fees 3,570 3,675
Other 1,233 2,634
------------------------- -----------------------
Total operating expenses 18,287 19,682
------------------------- -----------------------
Loss from operations (17,049) (14,649)
Equity in (losses) income of limited
partnerships (64,194) 15,711
------------------------- -----------------------
Net income (loss) $ (81,243) $ 1,062
========================= =======================
Net income (loss) allocated to :
General Partner $ (81) $ 1
========================= =======================
Limited Partners $ (81,162) $ 1,061
========================= =======================
Net loss per limited partner unit $ (8.27) $ (.11)
========================= =======================
Outstanding weighted
limited partner units 9,814 9,814
========================= =======================
See accompanying notes to financial statements
4
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
For the Three Months Ended June 30, 2003
(unaudited)
General Partner Limited Partners Total
Partners' equity (deficit), March 31, 2003 $ (773) $ 8,231,679 $ 8,230,906
Net loss (81) (81,162) (81,243)
-------------------- -------------------- --------------------
Partners' equity (deficit), June 30, 2003 $ (854) $ 8,150,517 $ 8,149,663
==================== ==================== ====================
See accompanying notes to financial statements
5
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Three Months Ended June 30, 2003 and 2002
(unaudited)
2003 2002
------------------- ---------------------
Cash flows from operating activities:
Net income (loss) $ (81,243) $ 1,062
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in losses (income) of limited partnerships 64,194 (15,711)
Amortization 7,613 7,502
Accrued fees and expenses due to
General Partner and affiliates 4,803 3,214
------------------- ---------------------
Net cash used in operating activities (4,633) (3,933)
------------------- ---------------------
Cash flows from investing activities:
Notes payable to limited partnerships - (116,500)
Distributions from limited partnerships 2,154 -
------------------- ---------------------
Net cash provided by (used in) investing activities 2,154 (116,500)
------------------- ---------------------
Cash flows from financing activities:
Financing fee payable - (2,960)
------------------- ---------------------
Net cash used in financing activities - (2,960)
------------------- ---------------------
Net change in cash and cash equivalents (2,479) (123,393)
Cash and cash equivalents, beginning of period 663,747 1,127,639
------------------- ---------------------
Cash and cash equivalents, end of period $ 661,268 $ 1,004,246
=================== =====================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes paid $ - $ 800
=================== =====================
See accompanying notes to financial statements
6
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Quarterly Period Ended June 30, 2003
(unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------
General
- -------
The accompanying condensed unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America 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 accounting principles generally accepted in the United States of
America 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, 2003 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 31, 2004. 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,
2003.
Organization
- ------------
WNC Housing Tax Credit Fund, VI, L.P., Series 8 (the "Partnership") was formed
under the California Revised Limited Partnership Act on September 16, 1997 and
commenced operations on November 17, 2000, the effective date of its public
offering pursuant to the Securities and Exchange Commission's approval of the
Partnership's Pre-Effective Amendment No. 5 to Form S-11 initially filed on July
16, 1999. The Partnership was formed to invest primarily in other limited
partnerships or limited liability companies which will own and operate
multifamily housing complexes that are eligible for low-income housing federal
and, in certain cases, California income tax credits ("Low-income Housing
Credit").
The Partnership shall continue in full force and effect until December 31, 2060
unless terminated prior to that date, pursuant to the partnership agreement or
law.
The general partner is WNC & Associates, Inc. ("WNC") (the "General Partner"), a
California limited partnership. The chairman and president own substantially all
of the outstanding stock of WNC. The business of the Partnership is conducted
primarily through WNC, as the Partnership has no employees of its own.
The partnership agreement authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). As of June 30, 2003, 9,814 Units, representing subscriptions
in the amount of $9,807,585, net of dealer discounts of $6,370 and volume
discounts of $45, had been accepted. The General Partner has 0.1% interest in
operating profits and losses, taxable income and losses, cash available for
distribution from the Partnership and tax credits of the Partnership. The
limited partners will be allocated the remaining 99.9% 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 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
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period June 30, 2003
(unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------
Risks and Uncertainties
- -----------------------
An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:
The Low-Income Housing Credit rules are extremely complicated. Noncompliance
with these rules results in the loss of future Low-Income Housing Credits and
the fractional recapture of Low-Income Housing Credits already taken. In most
cases the annual amount of Low-Income Housing Credits that an individual can use
is limited to the tax liability due on the person's last $25,000 of taxable
income. The Local Limited Partnerships may be unable to sell the Housing
Complexes at a profit. Accordingly, the Partnership may be unable to distribute
any cash to its investors. Low-Income Housing Credits may be the only benefit
from an investment in the Partnership.
The Partnership has invested in a limited number of Local Limited Partnerships.
Such limited diversity means that the results of operation of each single
Housing Complex will have a greater impact on the Partnership. With limited
diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage indebtedness. If a Local Limited Partnership failed to
pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
Low-Income Housing Credits, a fractional recapture of prior Low-Income Housing
Credits, and a loss of the Partnership's investment in the Housing Complex would
occur. The Partnership is a limited partner or non-managing member of each Local
Limited Partnership. Accordingly, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships. The Partnership
will rely totally on the Local General Partners. Neither the Partnership's
investments in Local Limited Partnerships, nor the Local Limited Partnerships'
investments in Housing Complexes, are 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 interests in Local Limited
Partnerships; limitations on removal of Local General Partners; limitations on
subsidy programs; and possible changes in applicable regulations. Uninsured
casualties could result in loss of property and Low-Income Housing Credits and
recapture of Low-Income Housing Credits previously taken. The value of real
estate is subject to risks from fluctuating economic conditions, including
employment rates, inflation, tax, environmental, land use and zoning policies,
supply and demand of similar properties, and neighborhood conditions, among
others.
The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low-Income Housing
Credits and tax losses allocable to the investors could be reduced if the IRS
were successful in such a challenge. The alternative minimum tax could reduce
tax benefits from an investment in the Partnership. Changes in tax laws could
also impact the tax benefits from an investment in the Partnership and/or the
value of the Housing Complexes.
No trading market for the Units exists or is expected to develop. Investors may
be unable to sell their Units except at a discount and should consider their
Units to be a long-term investment. Individual investors will have no recourse
if they disagree with actions authorized by a vote of the majority of Limited
Partners.
8
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period June 30, 2003
(unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
- -------------------------------------------------------------------------------
Exit Strategy
- -------------
The IRS compliance period for low-income housing tax credit properties is
generally 15 years from occupancy following construction or rehabilitation
completion. WNC was one of the first in the industry to offer investments using
the tax credit. Now these very first programs are completing their compliance
period.
With that in mind, the Partnership is continuing to review the Partnership's
holdings, with special emphasis on the more mature properties including those
that have satisfied the IRS compliance requirements. The Partnership's review
will consider many factors including extended use requirements on the property
(such as those due to mortgage restrictions or state compliance agreements), the
condition of the property, and the tax consequences to the investors from the
sale of the property.
Upon identifying those properties with the highest potential for a successful
sale, refinancing or syndication, the Partnership expects to proceed with
efforts to liquidate those properties. The Partnership's objective is to
maximize the investors' return wherever possible and, ultimately, to wind down
those funds that no longer provide tax benefits to investors. To date no
properties in the Partnership have been selected.
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 Partnerships' results of operations
and for any contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local Limited
Partnership for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by a comparison of the carrying
amount to future undiscounted net cash flows expected to be generated. If an
investment is considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the investment exceeds
fair value. The accounting policies of the Local Limited Partnership's are
generally 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 (Notes 2 and 3).
Equity in income and equity in losses of limited partnerships for the periods
ended June 30, 2003 and 2002 have been recorded by the Partnership based on
three months of results estimated by management of the Partnership. Management's
estimate for the three-month period is based on either actual unaudited results
reported by the Local Limited Partnerships or historical trends in the
operations of the Local Limited Partnerships. Equity in losses from the Local
Limited Partnerships allocated to the Partnership will not be recognized to the
extent that the investment balance would be adjusted below zero. As soon as the
investment balance reaches zero, amortization of the related costs of acquiring
the investment are accelerated to the extent of losses available (see Note 2 ).
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 4% (excluding
sales commissions) of the total offering proceeds. Offering expenses are
reflected as a reduction of limited partners' capital and amounted to $1,269,405
as of June 30, 2003 and March 31, 2003.
9
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period June 30, 2003
(unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
- -------------------------------------------------------------------------------
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents. As of
June 30, 2003, the Partnership had no cash equivalents.
Concentration of Credit Risk
- ----------------------------
At June 30, 2003, the Partnership maintained cash balances at certain financial
institutions in excess of the federally insured maximum.
Net Income Per Limited Partner Unit
- -----------------------------------
Net income per limited partner unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net income per unit
includes no dilution and is computed by dividing income 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
- ------------------------------
The Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income established standards for the reporting and display of
comprehensive income (loss) and its components in a full set of general-purpose
financial statements. The Partnership had no items of other comprehensive income
for all the periods presented, as defined by SFAS No. 130.
New Accounting Pronouncements
- -----------------------------
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations", which requires that the fair value of a liability for
an asset retirement obligation be recognized in the period in which it is
incurred with the associated asset retirement costs being capitalized as a part
of the carrying amount of the long-lived asset. SFAS No. 143 also includes
disclosure requirements that provide a description of asset retirement
obligations and reconciliation of changes in the components of those
obligations. The statement is effective for fiscal years beginning after June
15, 2002. The adoption of SFAS No. 143 did not have a material impact on the
Partnerhip's financial position or results of operations.
In August 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of
Long-Lived Assets," which addresses accounting and financial reporting for the
impairment or disposal of long-lived assets. This standard was effective for the
Partnership's financial statements beginning January 1, 2002. The implementation
of SFAS No. 144 did not have a material impact on the Partnership's financial
position or results of operations.
10
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period June 30, 2003
(unaudited)
NOTE 1 -ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
- --------------------------------------------------------------
New Accounting Pronouncements, continued
- ----------------------------------------
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS No. 145 rescinded three previously issued statements and amended SFAS No.
13, "Accounting for Leases." The statement provides reporting standards for debt
extinguishments and provides accounting standards for certain lease
modifications that have economic effects similar to sale-leaseback transactions.
The statement is effective for certain lease transactions occurring after May
15, 2002 and all other provisions of the statement shall be effective for
financial statements issued on or after May 15, 2002. The implementation of SFAS
No. 145 did not have a material impact on the Partnership's financial position
or results of operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which updates accounting and reporting
standards for personnel and operational restructurings. The Partnership adopted
SFAS No. 146 for exit, disposal or other restructuring activities initiated
after December 31, 2002. The adoption of SFAS No. 146 did not have a material
effect on the Partnership's financial position or results of operations.
In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." The adoption of FIN 45 did not have a
material impact on the Partnership's finacial position or results of operations.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment to SFAS No. 123." SFAS
No. 148 provides alternative methods of transition for a voluntary change to the
fair value based method on accounting for stock-based employee compensation. The
adoption of SFAS No. 148 did not have a material impact on the Partnership's
financial position or results of operations.
In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." The adoption of FIN 46 did not
have a material impact on the Partnership's financial position or results of
operations.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of the periods presented, the Partnership has acquired limited partnership
interests in six Local Limited Partnerships, each of which owns one Housing
Complex consisting of an aggregate of 216 apartment units. As of June 30, 2003,
construction or rehabilitation of the Housing Complexes has been completed. The
respective general partners of the Local Limited Partnerships manage the
day-to-day operations of the entities. Significant Local Limited Partnership
business decisions require approval from the Partnership. The Partnership, as a
limited partner, is generally entitled to 99.98%, 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.
11
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period June 30, 2003
(unaudited)
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, CONTINUED
- -------------------------------------------------------
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. As of June 30, 2003, no investment accounts in
Local Limited Partnerships had reached a zero balance.
The following is a summary of the equity method activity of the investments in
local limited partnerships as of:
June 30, 2003 March 31, 2003
--------------------- --------------------
Investments in limited partnerships, beginning of
period $ 7,786,112 $ 8,173,367
Tax credit adjustment - (15,413)
Equity in losses of limited partnership (64,194) (341,390)
Distributions from limited partnerships (2,154) -
Amortization of capitalized acquisition fees and costs (7,613) (30,452)
--------------------- --------------------
Investments in limited partnerships, end of period $ 7,712,151 $ 7,786,112
===================== ====================
12
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period June 30, 2003
(unaudited)
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, CONTINUED
- -------------------------------------------------------
Selected financial information for the three months ended June 30, 2003 from the
unaudited combined condensed financial statements of the limited partnerships in
which the Partnership has invested are as follows:
COMBINED CONDENSED STATEMENT OF OPERATIONS
2003 2002
-------------------- ------------------
Revenues $ 245,000 85,000
-------------------- ------------------
Expenses:
Interest expense 75,000 19,000
Depreciation & amortization 93,000 21,000
Operating expenses 147,000 29,000
-------------------- ------------------
Total expenses 315,000 69,000
-------------------- ------------------
Net income (loss) $ (70,000) 16,000
==================== ==================
Net income (loss) allocable to the Partnership $ (70,000) 16,000
==================== ==================
Net income (loss) recorded by the Partnership $ (70,000) 16,000
==================== ==================
NOTE 3 - RELATED PARTY TRANSACTIONS
- -----------------------------------
The Partnership has no officer, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or its affiliates for the following fees:
(a) Acquisition fees of 7% of the gross proceeds from the sale of Units as
compensation for services rendered in connection with the acquisition of
Local Limited Partnerships. As of June 30, 2003 and March 31, 2003, the
Partnership incurred acquisition fees of $686,980. Accumulated amortization
of these capitalized costs was $46,079 and $40,352 as of June 30, 2003 and
March 31, 2003, respectively.
(b) Acquisition costs of 2% of the gross proceeds from the sale of Units as
full reimbursement of costs incurred by the General Partner in connection
with the acquisition of Local Limited Partnerships. As of June 30, 2003 and
March 31, 2003, the Partnership incurred acquisition costs of $196,280.
Accumulated amortization of these capitalized costs was $13,344 and $11,707
as of June 30, 2003 and March 31, 2003, respectively.
(c) An annual asset management fee not to exceed 0.2% of the invested assets
(defined as the Partnership's capital contributions plus reserves of the
Partnership of up to 5% of gross proceeds plus its allocable percentage of
the mortgage debt encumbering the housing complexes) of the Local Limited
Partnerships. Management fees of $5,871 were incurred in each of the three
months ended June 30, 2003 and 2002, respectively. The Partnership paid the
General Partner or its affiliates $5,871 and $0 of these fees during the
three months ended June 30, 2003 and 2002, respectively.
13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Period June 30, 2003
(unaudited)
NOTE 3 - RELATED PARTY TRANSACTIONS, CONTINUED
- ----------------------------------------------
(d) A subordinated disposition fee in an amount equal to 1% of the sales price
of real estate sold. Payment of this fee is subordinated to the limited
partners receiving a return on investment (as defined in the Partnership
Agreement) and is payable only if the General Partner or its affiliates
render services in the sales effort.
Accrued fees and expenses due to the General Partner and affiliates consisted of
the following as of:
June 30, 2003 March 31, 2003
---------------------- ---------------------
Asset management fees payable $ 17,687 $ 17,687
Reimbursements for expenses paid by the
General Partner or an affiliate 8,722 3,919
---------------------- ---------------------
Total $ 26,409 $ 21,606
====================== =====================
NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payables to limited partnerships amounting to $197,347 at June 30, 2003 and
March 31, 2003 represent amounts, which are due at various times based on
conditions specified in the respective limited partnership agreements. These
contributions are payable in installments and are generally due upon the limited
partnerships achieving certain development and operating benchmarks (generally
within two years of the Partnership's initial investment).
NOTE 5 - INCOME TAXES
- ---------------------
No provision for income taxes will be recorded in the financial statements, as
any liability for income taxes is the obligation of the partners of the
Partnership.
14
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
With the exception of the discussion regarding historical information,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other discussions elsewhere in this Form 10-Q contain
forward-looking statements. Such statements are based on current expectations
subject to uncertainties and other factors, which may involve known and unknown
risks that could cause actual results of operations to differ materially from
those projected or implied. Further, certain forward-looking statements are
based upon assumptions about future events, which may not prove to be accurate.
Risks and uncertainties inherent in forward-looking statements include, but are
not limited to, our future cash flows and ability to obtain sufficient
financing, level of operating expenses, conditions in the low-income housing tax
credit property market and the economy in general, as well as legal proceedings.
Historical results are not necessarily indicative of the operating results for
any future period.
Subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by
cautionary statements in this Form 10-Q and in other reports we filed with the
Securities and Exchange Commission. The following discussion should be read in
conjunction with the condensed Financial Statements and the Notes thereto
included elsewhere in this filing.
The following discussion and analysis discusses the results of operations for
the three months ended June 30, 2003 and June 30, 2002, 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 June 30, 2003 consisted primarily of $661,000 in
cash and aggregate investments in the six Local Limited Partnerships of
$7,712,000. Liabilities at June 30, 2003 primarily consisted of $197,000 of
notes payable to limited partnerships and $26,000 in accrued expenses and
management fees due to the General Partner or affiliates.
Results of Operations
Three Months Ended June 30, 2003 Compared to Three Months Ended June 30, 2002.
The Partnership's net loss for the three months ended June 30, 2003 was
$(81,000) reflecting an increase of $(82,000) from the net income of $1,000
experienced for the three months ended June 30, 2002. The increase in net loss
is primarily due to an increase of equity in losses from limited partnerships of
$(80,000) from $16,000 of income for the three months ended June 30, 2002 to
$(64,000) of losses for the three months ended June 30, 2003 as properties
became fully operational. Along with the increase of equity in losses from
limited partnerships, loss from operations increased by $(2,000) due to a
decrease in interest income of $4,000 and a decrease in other operating expenses
of approximately $(2,000) for the three months ended June 30, 2003.
Cash Flows
Year Ended June 30, 2003 Compared to Year Ended June 30, 2002. Net decrease in
cash during the three months ended June 30, 2003 was $(2,000), compared to a net
decrease in cash for the three months ended June 30, 2002 of $(123,000)
reflecting a decrease in cash used of $121,000. The change in net cash used is
due primarily to a decrease of $(119,000) in cash used in investing activities,
due to the decrease in capital contributions to Local Limited Partnerships as
their balances were paid down, and a decrease in net cash used by financing
activities by $(3,000) due to the completion of syndication process. The
decrease in cash used by financing activities was offset by an increase of
$1,000 in cash used in operating activities for the three months June 30, 2003.
The Partnership expects its future cash flows, together with its net available
assets at June 30, 2003, to be sufficient to meet all currently foreseeable
future cash requirements.
15
Item 3. Quantitative and Qualitative Disclosures About Market Risk
NOT APPLICABLE
Item 4. Controls and Procedures
Within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's
Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Exchange Act Rule 13a- 14. Based
upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and
procedures are effective. There were no significant changes in the
Company's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their
evaluation.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Reports on Form 8-K.
1. NONE
(b) Exhibits.
---------
99.1 Certification of the Principal Executive Officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
Act of 2002. (filed herewith)
99.2 Certification of the Principal Financial Officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
Act of 2002. (filed herewith)
16
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 VI, L.P., Series 8
- ----------------------------------------------
(Registrant)
By: WNC & Associates, Inc., General Partner
By: /s/ Wilfred N. Cooper, Jr.
-------------------------
Wilfred N. Cooper, Jr.
President and Chief Operating Officer of WNC & Associates, Inc.
Date: August 14, 2003
By: /s/ Thomas J. Riha
------------------
Thomas J. Riha
Vice President and Chief Financial Officer of WNC & Associates, Inc.
Date: August 14, 2003
17
CERTIFICATIONS
I, Wilfred N. Cooper, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of WNC Housing
Tax Credit Fund VI, L.P. Series 8;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: August 14, 2003
/s/ Wilfred N. Cooper, Jr.
--------------------------
President and Chief Executive Officer of WNC & Associates, Inc.
18
CERTIFICATIONS
I, Thomas J. Riha, certify that:
1. I have reviewed this quarterly report on Form 10-Q of WNC Housing
Tax Credit Fund VI, L.P. Series 8;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: August 14, 2003
/s/ Thomas J. Riha
------------------
Vice-President and Chief Financial Officer of WNC & Associates, Inc.
19