Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 2008
For the Quarterly Period Ended September 30, 2008
For the Quarterly Period Ended December 31, 2008
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: 333-124115
333-124116
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 14
20-2355224
California 20-2355303
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17782 Sky Park Circle, Irvine, CA 92614
( Address of principle executive offices )
(714) 622-5565
( Telephone Number )
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 has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes ___No _X__
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer___ Accelerated filer___ Non-accelerated filer___X__
Smaller reporting company___
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes ___No _X__
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
INDEX TO FORM 10-Q
For the Quarterly Period Ended June 30, 2008
For the Quarterly Period Ended September 30, 2008
For the Quarterly Period Ended December 31, 2008
WNC Housing Tax Credit Fund VI, L.P., Series 14 ("Series 14") currently has no
assets or liabilities and has had no operations. Accordingly, no financial
information is included herein for Series 14.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
As of June 30, 2008, September 30, 2008, December 31, 2008 and
March 31, 2008......................................................3
Statements of Operations
For the Three Months Ended June 30, 2008 and 2007...................4
For the Three and Six Months Ended September 30, 2008 and 2007......5
For the Three and Nine Months Ended December 31, 2008 and 2007......6
Statements of Partners' Equity (Deficit)
For the Three Months Ended June 30, 2008 ...........................7
For the Six Months Ended September 30, 2008 ........................7
For the Nine Months Ended December 31, 2008 ........................7
Statements of Cash Flows
For the Three Months Ended June 30, 2008 and 2007...................8
For the Six Months Ended September 30, 2008 and 2007...............10
For the Nine Months Ended December 31, 2008 and 2007...............12
Notes to Financial Statements............................................14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................27
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......32
Item 4T. Controls and Procedures ......................................32
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................33
Item 1A. Risk Factors....................................................33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.....33
Item 3. Defaults Upon Senior Securities.................................33
Item 4. Submission of Matters to a Vote of Security Holders.............33
Item 5. Other Information...............................................33
Item 6. Exhibits........................................................34
Signatures............................................................. .35
2
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
BALANCE SHEETS
(Unaudited)
June 30, September 30, December 31, March 31,
2008 2008 2008 2008
---------------- -------------- --------------- -------------
ASSETS
Cash and cash equivalents $ 2,244,793 $ 1,924,292 $ 1,774,091 $ 3,715,123
Investments in Local Limited Partnerships, net
(Notes 2 and 3) 15,235,211 14,540,383 13,870,230 15,943,480
---------------- --------------- -------------- -------------
Total Assets $ 17,480,004 $ 16,464,675 $ 15,644,321 $ 19,658,603
=============== =============== ============== ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to Local Limited Partnerships (Note 4) $ 1,878,784 $ 1,530,390 $ 1,337,043 $ 3,353,604
Accrued expenses 17,765 - - 17,765
Accrued fees and expenses due to
General Partner and affiliates (Note 3) 162,507 184,573 240,633 111,896
--------------- -------------- ------------- ------------
Total Liabilities 2,059,056 1,714,963 1,577,676 3,483,265
--------------- -------------- -------------- -----------
Partners equity (deficit):
General Partner (2,738) (3,410) (4,093) (1,984)
Limited Partners (25,000 Partnership Units authorized;
20,981 Partnership Units issued and outstanding) 15,423,686 14,753,122 14,070,738 16,177,322
--------------- ------------ -------------- ------------
Total Partners Equity (Deficit) 15,420,948 14,749,712 14,066,645 16,175,338
-------------- ---------------- -------------- -----------
Total Liabilities and Partners Equity (Deficit)$ 17,480,004 $ 16,464,675 $ 15,644,321 $ 19,658,603
============== ================ =============== ============
See accompanying notes to financial statements
3
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2008 and 2007
(Unaudited)
2008 2007
----------------- ------------------
Three Months Three Months
----------------- ------------------
Reporting fees $ 1,500 $ -
----------------- ------------------
Operating expenses:
Amortization (Note 2) 17,175 9,720
Asset management fees (Note 3) 44,762 32,098
Asset management expenses 4,161 3,175
Impairment loss 80,344 -
Legal and accounting fees 290 884
Other 1,398 1,203
----------------- ------------------
Total operating expenses 148,130 47,080
----------------- ------------------
Loss from operations (146,630) (47,080)
Equity in losses of Local Limited
Partnerships (Note 2) (610,750) (453,836)
Interest income 2,990 118,483
----------------- ------------------
Net loss $ (754,390) $ (382,433)
================= ==================
Net loss allocated to:
General Partner $ (754) $ (382)
================= ==================
Limited Partners $ (753,636) $ (382,051)
================= ==================
Net loss per
Partnership Unit $ (35.92) $ (18.21)
================= ==================
Outstanding weighted
Partnership Units 20,981 20,981
================= ==================
See accompanying notes to financial statements
4
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended
September 30, 2008 and 2007
(Unaudited)
2008 2007
------------------------------------- ---------------------------------------
Three Six Three Six
Months Months Months Months
----------------- --------------- ---------------- -----------------
Other income $ - $ - $ 7 $ 7
Reporting fees 5,833 7,333 - -
----------------- --------------- ---------------- -----------------
Total operating income 5,833 7,333 7 7
Operating expenses:
Amortization (Note 2) 17,175 34,350 13,298 23,018
Asset management fees (Note 3) 44,681 89,443 37,395 69,493
Asset management expenses 3,384 7,545 3,745 6,920
Impairment loss - 80,344 - -
Legal and accounting fees 8,882 9,172 13,550 14,434
Other 5 1,403 33 1,236
--------------- --------------- ---------------- -----------------
Total operating expenses 74,127 222,257 68,021 115,101
--------------- --------------- ---------------- -----------------
Loss from operations (68,294) (214,924) (68,014) (115,094)
Equity in losses of Local
Limited Partnerships (Note 2) (610,750) (1,221,500) (460,172) (914,008)
Interest income 7,808 10,798 97,539 216,022
---------------- -------------- ---------------- -----------------
Net loss $ (671,236) $ (1,425,626) $ (430,647) $ (813,080)
================ ============== =============== =================
Net loss allocated to:
General Partner $ (672) $ (1,426) $ (431) $ (813)
================ ============== =============== =================
Limited Partners $ (670,564) $ (1,424,200) $ (430,216) $ (812,267)
================ ============== =============== =================
Net loss per
Partnership Unit $ (31.96) $ (67.88) $ (20.50) $ (38.71)
================ ============== =============== =================
Outstanding weighted
Partnership Units 20,981 20,981 20,981 20,981
================ ============== ================ =================
See accompanying notes to financial statements
5
WNC HOUSING TAX CREDIT FUND VI L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended December 31, 2008 and 2007
(Unaudited)
2008 2007
----------------------------------- ----------------------------------------
Three Nine Three Nine
Months Months Months Months
-------------- -------------- ----------------- --------------
Other income $ - $ - $ - $ 7
Reporting fees - 7,333 - -
-------------- -------------- ----------------- --------------
Total operating income - 7,333 - 7
Operating expenses:
Amortization (Note 2) 17,175 51,525 17,175 40,193
Asset management fees (Note 3) 44,625 134,068 44,142 113,635
Asset management expenses 1,889 9,434 4,458 11,378
Impairment loss - 80,344 - -
Legal and accounting fees 9,536 18,708 - 14,434
Other 9 1,412 2,068 3,304
-------------- -------------- ----------------- --------------
Total operating expenses 73,234 295,491 67,843 182,944
-------------- -------------- ----------------- --------------
Loss from operations (73,234) (288,158) (67,843) (182,937)
Equity in losses of Local
Limited Partnerships (Note 2) (610,750) (1,832,250) (472,853) (1,386,861)
Interest income 917 11,715 63,586 279,608
-------------- -------------- ----------------- --------------
Net loss $ (683,067) $ (2,108,693) $ (477,110) $ (1,290,190)
============== ============== ================= ==============
Net loss allocated to:
General Partner $ (683) $ (2,109) $ (477) $ (1,290)
============== ============== ================= ==============
Limited Partners $ (682,384) $ (2,106,584) $ (476,633) $ (1,288,900)
============== ============== ================= ==============
Net loss per
Partnerships Units $ (32.52) $ (100.40) $ (22.72) $ (61.43)
============== ============== ================= ==============
Outstanding weighted
Partnership Units 20,981 20,981 20,981 20,981
============== ============== ================= ==============
See accompanying notes to financial statements
6
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF PARTNERS EQUITY (DEFICIT)
For the Three Months Ended June 30, 2008, Six Months Ended September 30, 2008
and Nine Months Ended December 31, 2008
(Unaudited)
For the Three Months Ended June 30, 2008
General Limited
Partner Partners Total
--------------- ---------------- ------------------
Partners equity (deficit) at March 31, 2008 $ (1,984) $ 16,177,322 $ 16,175,338
Net loss (754) (753,636) (754,390)
--------------- ---------------- -----------------
Partners equity (deficit) at June 30, 2008 $ (2,738) $ 15,423,686 $ 15,420,948
=============== ================ =================
For the Six Months Ended September 30, 2008
General Limited
Partner Partners Total
--------------- ---------------- ------------------
Partners equity (deficit) at March 31, 2008 $ (1,984) $ 16,177,322 $ 16,175,338
Net loss (1,426) (1,424,200) (1,425,626)
--------------- ---------------- ------------------
Partners equity (deficit) at September 30, 2008 $ (3,410) $ 14,753,122 $ 14,749,712
=============== ================ ==================
For the Nine Months Ended December 31, 2008
General Limited
Partner Partners Total
--------------- ---------------- ------------------
Partners equity (deficit) at March 31, 2008 $ (1,984) $ 16,177,322 $ 16,175,338
Net loss (2,109) (2,106,584) (2,108,693)
--------------- ---------------- ------------------
Partners equity (deficit) at December 31, 2008 $ (4,093) $ 14,070,738 $ 14,066,645
=============== ================ ==================
See accompanying notes to financial statements
7
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
For the Three Months Ended June 30, 2008 and 2007
(Unaudited)
2008 2007
---------------- ------------------
Cash flows from operating activities:
Net loss $ (754,390) $ (382,433)
Adjustments to reconcile net loss to net
cash provided operating activities:
Amortization 17,175 9,720
Equity in losses of Local Limited Partnerships 610,750 453,836
Impairment loss 80,344 -
Change in accrued fees and expenses due to
General Partner and affiliates 50,611 (43,179)
---------------- ------------------
Net cash provided by operating activities 4,490 37,944
---------------- ------------------
Cash flows used in investing activities:
Investment in Local Limited Partnerships, net (1,474,820) (2,154,047)
---------------- ------------------
Net cash used in investing activities (1,474,820) (2,154,047)
---------------- ------------------
Cash flows used in financing activities:
Offering expenses - (14,070)
---------------- ------------------
Net cash used in financing activities - (14,070)
---------------- ------------------
Net decrease in cash (1,470,330) (2,130,173)
Cash, beginning of period 3,715,123 11,964,300
---------------- ------------------
Cash, end of period $ 2,244,793 $ 9,834,127
================ ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Taxes paid $ - $ -
================ ==================
SIGNIFICANT NONCASH INVESTING AND FINANCING ACTIVITIES
Offering expenses included within due to General Partner
and affiliates $ - $ 1,400
================= ===================
See accompanying notes to financial statements
8
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
For the Three Months Ended June 30, 2008 and 2007
(Unaudited)
The Partnership increased its investment in Local Limited
Partnerships and decreased prepaid acquisition fees and costs$ $ - $ 270,386
=================== ===================
The Partnership increased its investment in Local Limited
Partnerships for unpaid capital contributions payable to Local
Limited Partnerships $ - $ 279,550
=================== ===================
See accompanying notes to financial statements
9
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Six Months Ended September 30, 2008 and 2007
(Unaudited)
2008 2007
-------------- ----------------
Cash flows from operating activities:
Net loss $ (1,425,626) $ (813,080)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Amortization 34,350 23,018
Equity in losses of Local Limited Partnerships 1,221,500 914,008
Impairment loss 80,344 -
Change in accrued expenses (17,765) 9,765
Change in accrued fees and expenses due to
General Partner and affiliates 72,677 (53,125)
-------------- ----------------
Net cash provided by (used in) operating activities (34,520) 80,586
-------------- ----------------
Cash flows used in investing activities:
Investments in Local Limited Partnerships, net (1,757,311) (4,284,896)
Distributions received from Local Limited Partnerships 1,000 -
-------------- ----------------
Net cash used in investing activities (1,756,311) (4,284,896)
-------------- ----------------
Cash flows provided by financing activities:
Collection of promissory notes receivable - 142,085
Offering expenses - (22,722)
-------------- ----------------
Net cash provided by financing activities - 119,363
-------------- ----------------
Net decrease in cash (1,790,831) (4,084,947)
Cash, beginning of period 3,715,123 11,964,300
-------------- ----------------
Cash, end of period $ 1,924,292 $ 7,879,353
============== ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Taxes paid $ - $ -
============== ================
SIGNIFICANT NONCASH INVESTING AND FINANCING
ACTIVITIES
Offering expenses included within due to General
Partner and affiliates $ - $ 1,400
============== ================
The Partnership decreased its investment in Local Limited
Partnerships and decreased its payables to Local Limited
Partnerships for tax credits not generated $ 65,903 $ -
============== ================
See accompanying notes to financial statements
10
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
For the Six Months Ended September 30, 2008 and 2007
(Unaudited)
The Partnership increased its investment in Local Limited
Partnerships and decreased prepaid acquisition fees and costs $ - $ 910,151
=================== ===================
The Partnership increased its investment in Local Limited
Partnerships for unpaid capital contributions payable to Local
Limited Partnerships $ - $ 2,229,178
=================== ===================
See accompanying notes to financial statements
11
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 2008 and 2007
(unaudited)
2008 2007
--------------- ----------------
Cash flows from operating activities:
Net loss $ (2,108,693) $ (1,290,190)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Amortization 51,525 40,193
Equity in losses of Local Limited Partnerships 1,832,250 1,386,861
Impairment loss 80,344 -
Change in accrued expenses (17,765) 9,765
Change in accrued fees and expenses due to General
Partner and/or affiliates 128,736 (11,156)
--------------- ---------------
Net cash provided by (used in) operating activities (33,603) 135,473
--------------- ----------------
Cash flows used in investing activities:
Investments in Local Limited Partnerships, net (1,908,429) (5,994,461)
Distributions received from Local Limited Partnerships 1,000 -
--------------- ----------------
Net cash used in investing activities (1,907,429) (5,994,461)
--------------- ----------------
Cash flows provided by financing activities:
Collection of promissory notes receivable - 142,085
Offering expenses - (24,122)
--------------- ----------------
Net cash provided by financing activities - 117,963
--------------- ----------------
Net decrease in cash (1,941,032) (5,741,025)
Cash, beginning of period 3,715,123 11,964,300
--------------- ----------------
Cash, end of period $ 1,774,091 $ 6,223,275
=============== ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Taxes paid $ - $ -
=============== ================
SIGNIFICANT NONCASH INVESTING AND FINANCING ACTIVITIES
The Partnership decreased its investment in Local Limited
Partnerships and decreased its payables to Local Limited
Partnerships for tax credits not generated $ 108,131 $ -
=============== ================
See accompanying notes to financial statements
12
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
For the Nine Months Ended December 31, 2008 and 2007
(unaudited)
The Partnership increased its investment in Local Limited
Partnerships and decreased prepaid acquisition fees and costs $ - $ 910,151
=================== ===================
The Partnership increased its investment in Local Limited
Partnerships for unpaid capital contributions payable to Local
Limited Partnerships $ 2,229,178 $ 2,229,178
=================== ===================
See accompanying notes to financial statements
13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 1 - 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, 2008, six months ended September 30, 2008 and nine months ended
December 31, 2008 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 31, 2009. 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,
2008.
Organization
------------
WNC Housing Tax Credit Fund VI, L.P., Series 13, a California Limited
Partnership (the "Partnership") (a Development Stage Enterprise), was formed on
February 7, 2005 under the laws of the State of California, and commenced
operations on December 14, 2005. The Partnership was formed to invest primarily
in other limited partnerships and limited liability companies (the "Local
Limited Partnerships") which own and operate multi-family housing complexes (the
"Housing Complex") that are eligible for Low Income Housing Tax Credits. The
local general partners (the "Local General Partners") of each Local Limited
Partnership retain responsibility for maintaining, operating and managing the
Housing Complex. Each Local Limited Partnership is governed by its agreement of
limited partnership (the "Local Limited Partnership Agreement").
WNC Housing Tax Credit Fund VI, L.P., Series 14 ("Series 14") currently has no
assets or liabilities and has had no operations. Accordingly, no financial
information is included herein for Series 14.
The general partner of the Partnership is WNC National Partners, LLC (the
"General Partner".) The general partner of the General Partner is WNC &
Associates, Inc. ("Associates"). The chairman and the president of Associates
owns all of the outstanding stock of Associates. The business of the Partnership
is conducted primarily through Associates, as the Partnership and General
Partner have no employees of their own.
The Partnership shall continue in full force and effect until December 31, 2070,
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 authorizes the sale of up to 25,000 units at $1,000
per partnership Unit ("Partnership Units"). As of March 31, 2006, subscriptions
for 7,691 Units had been accepted by the Partnership. The required minimum
offering amount of $1,400,000 was achieved by December 14, 2005. As of March 31,
2007 total subscriptions for 20,981 Partnership Units had been accepted,
representing $20,965,400 which is net of volume discounts of $4,540 and dealer
discounts of $11,060. The General Partner has a 0.1% interest in operating
profits and losses, taxable income and losses, in cash available for
distribution from the Partnership and Low Income Housing Tax Credits. The
investors (the "Limited Partners") in the Partnership will be allocated the
remaining 99.9% of these items in proportion to their respective investments.
This offering was closed on September 21, 2006.
14
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------
The proceeds from the disposition of any of the Housing Complexes will be used
first to pay debts and other obligations per the respective Local Limited
Partnership Agreement. Any remaining proceeds will then be paid to the
Partnership. The sale of a Housing Complex may be subject to other restrictions
and obligations. Accordingly, there can be no assurance that a Local Limited
Partnership will be able to sell its Housing Complex. Even if it does so, there
can be no assurance that any significant amounts of cash will be distributed to
the Partnership. Should such distributions occur, the Limited Partners will be
entitled to receive distributions from the proceeds remaining after payment of
Partnership obligations and funding reserves, equal to their capital
contributions and their return on investment (as defined in the Partnership
Agreement). The General Partner would then be entitled to receive proceeds equal
to their capital contributions 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
-----------------------
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 Tax Credits rules are extremely complicated.
Noncompliance with these rules results in the loss of future Low Income Housing
Tax Credits and the fractional recapture of Low Income Housing Tax Credits
already taken. In most cases the annual amount of Low Income Housing Tax 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 price which would result in the Partnership
realizing cash distributions or proceeds from the transaction. Accordingly, the
Partnership may be unable to distribute any cash to its limited partners. Low
Income Housing Tax 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
future Low Income Housing Tax Credits, a fractional recapture of prior Low
Income Housing Tax Credits, and a loss of the Partnership's investment in the
Housing Complex would occur. The Partnership is a limited partner or a
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 Tax Credits and recapture of Low Income
Housing Tax 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 Tax
Credits and tax losses allocable to Limited Partners 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.
15
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------
No trading market for the Partnership Units exists or is expected to develop.
Limited Partners may be unable to sell their Partnership Units except at a
discount and should consider their Partnership Units to be a long-term
investment. Individual Limited Partners will have no recourse if they disagree
with actions authorized by a vote of the majority of Limited Partners.
Anticipated future and existing cash resources of the Partnership are not
sufficient to pay existing liabilities of the Partnership. However,
substantially all of the existing liabilities of the Partnership are payable to
the General Partner and/or its affiliates. Though the amounts payable to the
General Partner and/or its affiliates are contractually currently payable, the
Partnership anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual obligations until capital reserves are
in excess of the aggregate of then existing contractual obligations and then
anticipated future foreseeable obligations of the Partnership. The Partnership
would be adversely affected should the General Partner and/or its affiliates
demand current payment of the existing contractual obligations and or suspend
services for this or any other reason.
Exit Strategy
-------------
The Compliance Period for a Housing Complex is generally 15 years following
construction or rehabilitation completion. Associates was one of the first in
the industry to offer syndicated investments in Low Income Housing Tax Credits.
The initial programs are completing their Compliance Periods.
With that in mind, as of December 31, 2008, the General Partner has not begun
reviewing the Housing Complexes for potential disposition, since none of the
Housing Complexes have satisfied the IRS compliance requirements. Once the
Housing Complexes have satisfied the IRS compliance requirements, the review
will take into many consideration many factors, including extended use
requirements (such as those due to mortgage restrictions or state compliance
agreements), the condition of the Housing Complexes, and the tax consequences to
the Limited Partners from the sale of the Housing Complexes.
Upon identifying those Housing Complexes with the highest potential for a
successful sale, refinancing or syndication, the Partnership will expect to
proceed with efforts to liquidate them. The objective is to maximize the Limited
Partners return wherever possible and, ultimately, to wind down the
Partnership. Local Limited Partnership interests may be disposed of any time by
the General Partner in its discretion. No Local Limited Partnerships have been
identified for disposition as of December 31, 2008.
Subsequent to December 31, 2008, on December 24, 2009 the Partnership identified
two Local Limited Partnerships, Fernwood Meadows, L.P. ("Fernwood") and Sierra's
Run, L.P. ("Sierra's Run") for disposition in order to generate sufficient
equity to complete the purchase of Davenport Housing VII, L.P. (See footnote 3
to the audited financial statements.) On February 12, 2010, Fernwood and
Sierra's Run were sold, subject to a condition subsequent that the Limited
Partners approve the sales by a majority in interest of the Limited Partners.
The approval of the Limited Partners will be sought as the transfers were to a
limited partnership that is affiliated with the Partnership. Fernwood and
Sierra's Run were sold for an aggregate purchase price of $2,829,427. The
Partnership's net investment balances in Fernwood and Sierra's Run were
$1,904,702 and $1,805,558, respectively, at the time of the sale. Accordingly,
the Partnership would recognize a loss on the sale of Local Limited Partnerships
in the amount of approximately $881,000 if the sales are approved by the Limited
Partners.
Fernwood and Sierra's Run will complete their 15-year compliance periods in
2022; therefore there is a risk of tax credit recapture. The maximum exposure of
recapture (excluding the interest and penalties related to the recapture) is
$177,508 and $170,246, respectively, for Fernwood and Sierra's Run, which
equates to $16.57 per Partnership Unit in the aggregate. Under the
circumstances, the General Partner believes there is a reasonable expectation
that each Local Limited Partnership will continue to be operated as qualified
low income housing for the balance of its compliance period, and, accordingly,
does not anticipate that there will be any recapture.
16
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------
Method of Accounting for Investments in Local Limited Partnerships
------------------------------------------------------------------
The Partnership accounts for its investments in Local 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 the estimated value derived by
management, generally consisting of the sum of the remaining future Low Income
Housing Tax Credits estimated to be allocable to the Partnership and the
estimated residual value to the Partnership. If an investment is considered to
be impaired, the Partnership reduces the carrying value of its investment in any
such Local Limited Partnership. The accounting policies of the Local Limited
Partnerships, generally, are expected to be consistent with those of the
Partnership. Costs incurred by the Partnership in acquiring the investments are
capitalized as part of the investment and are being amortized over 30 years (see
Note 2).
"Equity in losses of Local Limited Partnerships" for each of the periods ended
June 30, 2008, September 30, 2008, December 31, 2008 and 2007, respectively have
been recorded by the Partnership. Management's estimate for the three, six and
nine-month periods is based on either actual unaudited results reported by the
Local Limited Partnerships or historical trends in the operations of the Local
Limited Partnerships. In subsequent annual financial statements, upon receiving
the actual annual results reported by the Local Limited Partnerships, management
reverses its prior estimate and records the actual results reported by the Local
Limited Partnerships. Equity in losses from the Local Limited Partnerships
allocated to the Partnership are not recognized to the extent that the
investment balance would be adjusted below zero. As soon as the investment
balance reaches zero, the related costs of acquiring the investment are impaired
(see Note 2). If the Local Limited Partnerships reported 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 (see Note 2).
The Partnership does not consolidate the accounts and activities of the Local
Limited Partnerships, which are considered Variable Interest Entities under
Financial Accounting Standards Board ("FASB") Interpretation No. 46-Revised,
"Consolidation of Variable Interest Entities", because the Partnership is not
considered the primary beneficiary. The Partnership's balance in investments in
Local Limited Partnerships, plus the risk of recapture of tax credits previously
recognized on such investments, represents the maximum exposure to loss in
connection with such investments. The Partnership's exposure to loss on the
Local Limited Partnerships is mitigated by the condition and financial
performance of the underlying Housing Complexes as well as the strength of the
Local General Partners and their guarantees against Low Income Housing Tax
Credit recapture.
Distributions received by the Partnership are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as distribution income. For all periods presented none of
the investment balances had reached zero.
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 original maturities
of three months or less when purchased to be cash equivalents. As of June 30,
2008, September 30, 2008, December 31, 2008 and March 31, 2008, the Partnership
had cash equivalents of approximately $2,185,000, $1,886,000, $1,736,000 and
$3,664,000, respectively.
17
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------
Concentration of Credit Risk
----------------------------
For all periods presented, the Partnership maintained cash balances at certain
financial institutions in excess of the federally insured maximum. The
Partnership believes it is not exposed to any significant financial risk on
cash.
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 periods
presented, as defined by SFAS No. 130.
Income Taxes
------------
No provision for income taxes has been recorded in the financial statements as
any liability and or benefits for income taxes flows to the partners of the
Partnership and is their obligation and/or benefit. For income tax purposes the
Partnership reports on a calendar year basis.
In June 2006, the FASB issued Interpretation No. 48 "Accounting for Uncertainty
in Income Taxes" (FIN 48), an interpretation of FASB Statement No. 109. FIN 48
provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Partnership's tax returns to determine whether the tax positions
are more-likely-than-not of being sustained upon examination by the applicable
tax authority, based on the technical merits of the tax position, and then
recognizing the tax benefit that is more-likely-than-not to be realized. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax expense in the current reporting period. As required, the
Partnership adopted FIN 48 effective April 1, 2007 and concluded that the effect
is not material to its financial statements. Accordingly, no cumulative effect
adjustment related to the adoption of FIN 48 was recorded.
Net Loss Per Partnership Unit
-----------------------------
Net loss per Partnership Unit is calculated pursuant to Statement of Financial
Accounting Standards No. 128, Earnings Per Share. Net loss per Partnership Unit
includes no dilution and is computed by dividing loss allocated to Limited
Partners by the weighted average number of Partnership Units outstanding during
the period. Calculation of diluted net loss per Partnership Unit is not
required.
Revenue Recognition
-------------------
The Partnership is entitled to receive reporting fees from the Local Limited
Partnerships. The intent of the reporting fees is to offset (in part)
administrative costs incurred by the Partnership in corresponding with the Local
Limited Partnerships. Due to the uncertainty of the collection of these fees,
the Partnership recognizes reporting fees as collections are made.
Amortization
------------
Acquisition fees and costs are being amortized over 30 years using the
straight-line method. Amortization expense for the three months ended June 30,
2008 and 2007 was $17,175 and $9,720, respectively. For the six months ended
September 30, 2008 and 2007 amortization expense was $34,350 and $23,018,
respectively, and for the nine months ended December 31, 2008 and 2007 it was
$51,525 and $40,193, respectively.
18
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------
Impairment
----------
A loss in value from a Local Limited Partnership other than a temporary decline
is recorded as an impairment loss. Impairment is measured by comparing the
investment carrying amount to the sum of the total of the remaining Low Income
Housing Tax Credits allocated to the Partnership and the estimated residual
value to the Partnership. For the the three months ended June 30, 2008 and 2007,
the Partnership recorded an impairment loss of $80,344 and $0, respectively. For
the six months ended September 30, 2008 and 2007 an impairment loss of $80,344
and $0, respectively, was recorded and for the nine months ended December 31,
2008 and 2007, an impairment loss of $80,344 and $0, respectively, was recorded.
The Partnership also evaluates its intangibles for impairment in connection with
its investments in Local Limited Partnerships. Impairment on the intangibles is
measured by comparing the investment's carrying amount after impairment and the
related intangible assets to the sum of the total of the remaining Low Income
Housing Tax Credits allocated to the Partnership and the estimated residual
value of the investment. During each of the three months ended June 30, 2008 and
2007, the six months ended September 30, 2008 and 2007 and the nine months ended
December 31, 2008 and 2007, there was no impairment loss recorded on the related
intangibles.
Syndication Costs
-----------------
Costs paid in connection with the offering of the Partnership Units are charged
against the Limited Partner's equity as incurred.
Offering Expenses
-----------------
Nonaccountable organization and offering expense reimbursements are included as
syndication costs and charged against the Limited Partners equity, except for
$75,000 which was charged to operations during the year ended March 31, 2006.
The sales commission that was paid to third-party broker dealers for the selling
of Partnership Units were also included as syndication costs and charged against
the Limited Partners equity.
NOTE 2 - INVESTMENTS IN LOCAL 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 647 apartment units. The respective Local
General Partners of the Local Limited Partnerships manage the day to day
operations of the entities. Significant Local Limited Partnership business
decisions, as defined, 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.
A loss in value from a Local Limited Partnership other than a temporary decline
is recorded as an impairment loss. Impairment is measured by comparing the
investment carrying amount to the sum of the total of the remaining Low Income
Housing Tax Credits allocated to the Partnership and the estimated residual
value to the Partnership. For the the three months ended June 30, 2008 and 2007,
the Partnership recorded an impairment loss of $80,344 and $0, respectively. For
the six months ended September 30, 2008 and 2007 an impairment loss of $80,344
and $0, respectively, was recorded and for the nine months ended December 31,
2008 and 2007, an impairment loss of $80,344 and $0, respectively, was recorded.
The Partnership also evaluates its intangibles for impairment in connection with
its investments in Local Limited Partnerships. Impairment on the intangibles is
measured by comparing the investment's carrying amount after impairment and the
related intangible assets to the sum of the total of the remaining Low Income
Housing Tax Credits allocated to the Partnership and the estimated residual
value of the investment. During each of the three months ended June 30, 2008 and
2007, the six months ended September 30, 2008 and 2007 and the nine months ended
December 31, 2008 and 2007, there was no impairment loss recorded on the related
intangibles.
19
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------
The following is a summary of the equity method activity of the investments in
Local Limited Partnerships for the periods presented below:
For the Three For the Year
Months Ended Ended
June 30, 2008 March 31, 2008
----------------------- ------------------
Investments per balance sheet, beginning of period $ 15,943,480 $ 8,726,771
Investments purchased and paid - 5,970,905
Capital contributions payable, net - 2,252,595
Equity in losses of Local Limited Partnerships (610,750) (1,859,713)
Impairment loss (80,344) -
Tax credit adjustments - 139
Capitalized acquisition costs and fees - 910,151
Amortization of capitalized acquisition fees and costs (17,166) (57,332)
Amortization of capitalized warehouse interest and
costs (9) (36)
---------------------- ------------------
Investments per balance sheet, end of period $ 15,235,211 $ 15,943,480
===================== ==================
For the Six For the Year
Months Ended Ended
September 30, 2008 March 31, 2008
----------------------- ------------------
Investments per balance sheet, beginning of period $ 15,943,480 $ 8,726,771
Investments purchased and paid - 5,970,905
Capital contributions payable, net - 2,252,595
Equity in losses of Local Limited Partnerships (1,221,500) (1,859,713)
Impairment loss (80,344) -
Distributions received from Local Limited
Partnerships (1,000) -
Tax credit adjustments (65,903) 139
Capitalized acquisition costs and fees - 910,151
Amortization of capitalized acquisition fees and costs (34,332) (57,332)
Amortization of capitalized warehouse interest and
costs (18) (36)
--------------------- ------------------
Investments per balance sheet, end of period $ 14,540,383 $ 15,943,480
===================== ==================
20
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------
For the Nine For the Year
Months Ended Ended
December 31, 2008 March 31, 2008
----------------------- -----------------
Investments per balance sheet, beginning of period $ 15,943,480 $ 8,726,771
Investments purchased and paid - 5,970,905
Capital contributions payable, net - 2,252,595
Equity in losses of Local Limited Partnerships (1,832,250) (1,859,713)
Impairment loss (80,344) -
Distributions received from Local Limited
Partnerships (1,000)
Tax credit adjustments (108,131) 139
Capitalized acquisition costs and fees - 910,151
Amortization of capitalized acquisition fees and costs (51,498) (57,332)
Amortization of capitalized warehouse interest and
costs (27) (36)
----------------------- -----------------
Investments per balance sheet, end of period $ 13,870,230 $ 15,943,480
======================== ==================
For the Three Months For the Year Ended
Ended
June 30, 2008 March 31, 2008
----------------------- --------------------
Investments in Local Limited Partnerships, net $ 13,442,292 $ 14,133,386
Acquisition fees and costs, net of accumulated amortization of
$96,333 and $79,167 1,791,957 1,809,123
Warehouse interest and costs, net of accumulated amortization
of $77 and $68 962 971
----------------------- --------------------
Investments per balance sheet, end of period $ 15,235,211 $ 15,943,480
======================= ====================
For the Six Months For the Year Ended
Ended
September 30, 2008 March 31, 2008
----------------------- --------------------
Investments in Local Limited Partnerships, net $ 12,764,639 $ 14,133,386
Acquisition fees and costs, net of accumulated amortization of
$113,499 and $79,167 1,774,791 1,809,123
Warehouse interest and costs, net of accumulated amortization
of $86 and $68 953 971
----------------------- --------------------
Investments per balance sheet, end of period $ 14,540,383 $ 15,943,480
======================= ====================
21
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------
For the Nine Months For the Year Ended
Ended
December 31, 2008 March 31, 2008
----------------------- --------------------
Investments in Local Limited Partnerships, net $ 12,111,661 $ 14,133,386
Acquisition fees and costs, net of accumulated amortization of
$130,665 and $79,167 1,757,625 1,809,123
Warehouse interest and costs, net of accumulated amortization
of $95 and $68 944 971
----------------------- --------------------
Investments per balance sheet, end of period $ 13,870,230 $ 15,943,480
======================= ====================
Selected financial information for the three months ended June 30, 2008 and 2007
from the unaudited combined condensed financial statements of the Local Limited
Partnerships in which the Partnership has invested is as follows:
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2008 2007
---------------------- ------------------
Revenues $ 1,129,000 $ 812,000
---------------------- ------------------
Expenses:
Interest expense 305,000 350,000
Depreciation and amortization 473,000 221,000
Operating expenses 962,000 695,000
---------------------- ------------------
Total expenses 1,740,000 1,266,000
---------------------- ------------------
Net loss $ (611,000) $ (454,000)
====================== ==================
Net loss allocable to the Partnership $ (611,000) $ (454,000)
====================== ==================
Net loss recorded by the Partnership $ (611,000) $ (454,000)
======================= ==================
Selected financial information for the six months ended September 30, 2008 and
2007 from the unaudited combined condensed financial statements of the Local
Limited Partnerships in which the Partnership has invested is as follows:
22
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2008 2007
------------------- ---------------------
Revenues $ 2,258,000 $ 1,713,000
------------------- ---------------------
Expenses:
Interest expense 610,000 723,000
Depreciation and amortization 947,000 457,000
Operating expenses 1,923,000 1,463,000
------------------- ---------------------
Total expenses 3,480,000 2,643,000
------------------- ---------------------
Net loss $ (1,222,000) $ (930,000)
=================== =====================
Net loss allocable to the Partnership $ (1,222,000) $ (914,000)
=================== =====================
Net loss recorded by the Partnership $ (1,222,000) $ (914,000)
=================== =====================
Selected financial information for the nine months ended December 31, 2008 and
2007 from the unaudited combined condensed financial statements of the Local
Limited Partnerships in which the Partnership has invested is as follows:
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2008 2007
---------------------- ------------------
Revenues $ 3,387,000 $ 2,570,000
---------------------- ------------------
Expenses:
Interest expense 915,000 1,085,000
Depreciation and amortization 1,420,000 686,000
Operating expenses 2,885,000 2,194,000
---------------------- ------------------
Total expenses 5,220,000 3,965,000
---------------------- ------------------
Net loss $ (1,833,000) $ (1,395,000)
====================== ==================
Net loss allocable to the Partnership $ (1,832,000) $ (1,387,000)
====================== ==================
Net loss recorded by the Partnership $ (1,832,000) $ (1,387,000)
====================== ==================
Certain Local Limited Partnerships incurred operating losses and/or 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 Low Income Housing Tax Credits could occur.
23
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------
Troubled Housing Complexes
--------------------------
One Local Limited Partnership, Davenport Housing VII, L.P., ("Davenport")
started construction in October 2006 and was scheduled to be completed in June
2008. Construction was delayed due to the original Local General Partner
defaulting on his construction guarantee and resulting disputed mechanic liens
on the property. In November 2008, the original Local General Partner was
replaced with a new Local General Partner, Shelter Resource Corporation due to
restrictions implemented by the Iowa Finance Authority ("IFA"). Subsequently,
with IFA's approval, the defaulting original Local General Partner was removed
from the Partnership leaving Shelter Resource Corporation as the sole Local
General Partner.
As of March 31, 2009 construction of the property was 75% complete and a
certificate of occupancy was granted for both buildings in December 2009. The
Partnership engaged all sub-contractors to sign new construction contracts,
along with lien releases for any and all work done after their engagement.
Subsequent to December 31, 2007, the Partnership has voluntarily advanced
$868,486 to Davenport for construction related costs.
It is anticipated that Davenport will be fully completed by March 31, 2010 and
achieve stabilized operations by May 31, 2010. Davenport has been awarded state
historical tax credits from the State of Iowa, federal historical credits and
federal Low Income Housing Tax Credits. The State historical credits are given
in the form of a refund check from the State in conjunction with the State tax
return filing. The net amount of the check after applicable federal taxes will
be contributed back to the property to help fund construction shortfalls.
Davenport was also allocated additional federal Low Income Housing Tax Credits
as well as federal historical tax credits. Upon the Limited Partners' approval
of the disposition of Sierra's Run and Fernwood, the Partnership will purchase
the additional credits. See the exit strategy in footnote 1 regarding the
disposition of Sierra's Run and Fernwood.
NOTE 3 - 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 fees:
(a) Acquisition fees of up to 7% of the gross proceeds from the sale of
Partnership Units as compensation for services rendered in connection
with the acquisition of Local Limited Partnerships. At the end of all
periods presented, the Partnership incurred acquisition fees of
$1,468,670. Accumulated amortization of these capitalized costs was
$101,633, $88,281, $74,929 and $61,577 as of December 31, 2008,
September 30, 2008, June 30, 2008 and March 31, 2008, respectively.
(b) Reimbursement of costs incurred by the General Partner or an affiliate
of Associates in connection with the acquisition of Local Limited
Partnerships. These reimbursements have not exceeded 2% of the gross
proceeds. As of the end of all periods presented, the Partnership
incurred acquisition costs of $419,620, which have been included in
investments in Local Limited Partnerships. Accumulated amortization
was $29,032, $25,218, $21,404 and $17,590 as of December 31, 2008,
September 30, 2008, June 30, 2008 and March 31, 2008, respectively.
(c) An annual asset management fee not to exceed 0.5% of the invested
assets (defined as the sum of the Partnership's investment in Local
Limited Partnerships, plus the revenues of the Partnership of up to 5%
of gross Partnership Unit sales proceeds, and the Partnership's
allocable share of the amount of the mortgage loans on, and other
debts related to, the Housing Complexes) of the Local Limited
Partnerships. Asset management fees of $44,762 and $32,098 were
incurred during the three months ended June 30, 2008 and 2007,
respectively. For the six months ended September 30, 2008 and 2007,
the Partnership incurred asset
24
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
----------------------------------------------
management fees of $89,443 and $69,493, respectively. Management fees
of $134,068 and $113,635 were incurred during the nine months ended
December 31, 2008 and 2007, respectively. The Partnership paid the
General Partner or its affiliates $0 and $79,139 of those fees during
the three months ended June 30, 2008 and 2007, respectively, $15,000
and $114,436 during the six months ended September 30, 2008 and 2007,
respectively, and $15,000 and $114,436 during the nine months ended
December 31, 2008 and 2007, respectively.
(d) A subordinated disposition fee will be paid 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.
No disposition fees have been incurred for all periods presented.
(e) The Partnership reimburses the General Partner or its affiliates for
operating expenses incurred on behalf of the Partnership. Operating
expense reimbursements were $0 during each of the three months ended
June 30, 2008 and 2007 $19,886 and $19,607 for the six months ended
September 30, 2008 and 2007, respectively, and $19,886 and $28,306
during the nine months ended December 31, 2008 and 2007, respectively.
The accrued fees and expenses due to General Partner and affiliates consisted of
the following at:
June 30, 2008 September 30, December 31, March 31, 2008
2008 2008
---------------- ----------------- ----------------- --------------
Asset management fee payable $ 142,621 $ 172,302 $ 216,927 $ 97,859
Reimbursement for expenses paid
by General Partners or an
affiliate on behalf of the
Partnership 19,886 12,271 23,706 14,037
---------------- ----------------- ----------------- --------------
Total $ 162,507 $ 184,573 $ 240,633 $ 111,896
================ ================= ================= ==============
The General Partner and/or its affiliates do not anticipate that these accrued
fees will be paid in full until such time as capital reserves are in excess of
future foreseeable working capital requirements of the Partnership.
NOTE 4 - PAYABLES TO LOCAL LIMITED PARTNERSHIPS
-----------------------------------------------
Payables to Local Limited Partnerships amounting to $1,337,043, $1,530,390,
$1,878,784 and $3,353,604 at December 31, 2008, September 30, 2008, June 30,
2008 and March 31, 2008, respectively, 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 and are
generally due upon the Local Limited Partnerships achieving certain development
and operating benchmarks (generally within two years of the Partnership's
initial investment). The payables to Local Limited Partnerships are subject to
adjustment in certain circumstances. Payables to Local Limited Partnerships were
increased for tax credit adjusters during the three months ended June 30, 2008
and 2007 in the amount of $0 and $139, respectively, during the six months ended
September 30, 2008 and 2007 in the amount of $(65,903) and $139, respectively,
and during the nine months ended December 31, 2008 and 2007 in the amount of
$(108,131) and $139, respectively.
25
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarterly Periods Ended June 30, 2008, September 30, 2008 and
December 31, 2008
(Unaudited)
NOTE 5 - SUBSEQUENT EVENTS
--------------------------
Subsequent to December 31, 2008, the Partnership advanced $868,486 to one Local
Limited Partnership, Davenport. Davenport has been experiencing construction
issues. All advances were reserved in full in the period they were advanced. See
Troubled Housing Complexes in footnote 2 for further details regarding the
construction related issues.
Subsequent to December 31, 2008, on December 24, 2009 the Partnership identified
two Local Limited Partnerships, Fernwood and Sierra's Run, for disposition in
order to generate sufficient equity to complete the purchase of Davenport (See
troubled Housing Complexes in footnote 2). On February 12, 2010, Fernwood and
Sierra's Run were sold, subject to a condition subsequent that the Limited
Partners approve the sales by a majority in interest of the Limited Partners.
See the exit strategy in footnote 1 for additional information regarding the
disposition of these two Local Limited Partnerships.
26
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, this
"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 the
Partnership or persons acting on its behalf are expressly qualified in their
entirety by cautionary statements in this Form 10-Q and in other reports filed
with the Securities and Exchange Commission. The following discussion should be
read in conjunction with the Financial Statements and the Notes thereto included
elsewhere in this filing.
The following discussion and analysis compares the results of operations for the
three months ended June 30, 2008 and 2007, the three and six months ended
September 30, 2008 and 2007, and the three and nine months ended December 31,
2008 and 2007, and should be read in conjunction with the combined condensed
financial statements and accompanying notes included within this report.
Financial Condition
The Partnership's assets at June 30, 2008 consisted of $2,245,000 in cash and
cash equivalents and aggregate investments in the ten Local Limited Partnerships
of $15,235,000. Liabilities at June 30, 2008 consisted of $163,000 of accrued
annual asset management fees and reimbursement for expenses paid by the General
Partner and/or its affiliates, accrued expenses of $18,000 and payables due to
Local Limited Partnership of $1,879,000.
The Partnership's assets at September 30, 2008 consisted of $1,924,000 in cash
and cash equivalents and aggregate investments in the ten Local Limited
Partnerships of $14,540,000. Liabilities at September 30, 2008 consisted of
$185,000 of accrued annual asset management fees and reimbursement for expenses
paid by the General Partner and/or its affiliates and payables due to Local
Limited Partnership of $1,530,000.
The Partnership's assets at December 31, 2008 consisted of $1,774,000 in cash
and cash equivalents and aggregate investments in the ten Local Limited
Partnerships of $13,870,000. Liabilities at December 31, 2008 consisted of
$241,000 of accrued annual asset management fees and reimbursement for expenses
paid by the General Partner and/or its affiliates and payables due to Local
Limited Partnership of $1,337,000.
Results of Operations
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
The Partnership's net loss for the three months ended June 30, 2008 was
$(754,000), reflecting an increase of approximately $(372,000) from the net loss
of $(382,000) for the three months ended June 30, 2007. Equity in losses of
Local Limited Partnerships increased by $(157,000) from the three months ended
June 30, 2007 due to the Partnership acquiring additional interest in three
Local Limited Partnerships as well as the operations of six of the previously
acquired limited partnerships interests were fully operational. The asset
management fees increased by approximately $(13,000) due to the fact that the
fees are earned based on the invested assets, which is the sum of the
Partnership's investment in Local Limited Partnerships, plus the revenues of the
Partnership of up to 5% of gross Partnership Unit sales proceeds, and the
Partnership's allocable share of the amount of the mortgage loans on, and other
debts related to, the Housing Complexes. As of June 30, 2007 the Partnership had
27
interest in seven Local Limited Partnerships compared to ten as of June 30,
2008, therefore the invested assets calculation increased allowing the asset
management fee to also increase. The amortization expense increased by $(7,000)
since acquisition costs and fees are amortized once the Local Limited
Partnership that the fees and costs are associated with is acquired. All of the
Local Limited Partnerships had been acquired by June 30, 2008. There was an
impairment loss of $(80,000) recorded during the three months ended June 30,
2008 compared to no impairment loss recorded for the three months ended June 30,
2007. The impairment loss can vary from year to year depending on the operations
of the underlying Housing Complexes as well as the amount of Low Income Housing
Tax Credits that are used each year for each of the Local Limited Partnerships.
The reporting fee income increased by $1,000 for the three months ended June 30,
2008 compared to the three months ended June 30, 2007 due to the fact that Local
Limited Partnerships pay the reporting fee to the Partnership when the Local
Limited Partnership's cash flow will allow for the payment. The interest income
decreased by $(115,000) due in large part to the cash balance as of June 30,
2008 being significantly lower compared to the ending cash balance as of June
30, 2007. In addition, the interest rates were lower in 2008 compared to 2007.
Three Months Ended September 30, 2008 Compared to the Three Months Ended
September 30, 2007 The Partnership's net loss for the three months ended
September 30, 2008 was $(671,000), reflecting an increase of approximately
$(240,000) from the net loss of $(431,000) for the three months ended September
30, 2007. Equity in losses of Local Limited Partnerships increased by $(151,000)
for the three months ended September 30, 2008 compared to the three months ended
September 30, 2007. During the entire three months ended September 30, 2008 the
Partnership held limited partnership interests in ten Local Limited Partnerships
of which nine were in stabilized operations generating losses. During the three
months ended September 30, 2007 the Partnership acquired three Local Limited
Partnerships during that time period therefore only recorded a portion of losses
for those particular Local Limited Partnerships as well as the losses from the
other six Local Limited Partnerships that had completed construction and were
generating losses. The amortization increased by $(4,000) since acquisition
costs and fees are amortized once the Local Limited Partnership that the fees
and costs are associated with is acquired. The asset management fees increased
by approximately $(7,000) due to the fact that the fees are earned based on the
invested assets, which is the sum of the Partnership's investment in Local
Limited Partnerships, plus the revenues of the Partnership of up to 5% of gross
Partnership Unit sales proceeds, and the Partnership's allocable share of the
amount of the mortgage loans on, and other debts related to, the Housing
Complexes. As of September 30, 2007 the Partnership had interest in ten Local
Limited Partnerships, but had only had three of them for one month compared to
ten as of September 30, 2008, which were held for the entire three months,
therefore the invested assets calculation increased allowing the asset
management fee to also increase. The legal and accounting fees decreased by
$5,000 for the three months ended September 30, 2008 compared to the three
months ended September 30, 2007 due to the timing of when the work was
performed. The reporting fee income increased by $6,000 for the three months
ended September 30, 2008 compared to the three months ended September 30, 2007
due to the fact that Local Limited Partnerships pay the reporting fee to the
Partnership when the Local Limited Partnership's cash flow will allow for the
payment. The interest income decreased by $(90,000) due in large part to the
significantly lower cash balance as of September 30, 2008 compared to the ending
cash balance as of September 30, 2007. In addition the interest rates were lower
in 2008 compared to 2007.
Six Months Ended September 30, 2008 Compared to the Six Months Ended September
30, 2007 The Partnership's net loss for the six months ended September 30, 2008
was $(1,426,000), reflecting an increase of approximately $(613,000) from the
net loss of $(813,000) for the six months ended September 30, 2007. Equity in
losses of Local Limited Partnerships increased by $(307,000) for the six months
ended September 30, 2008 compared to the six months ended September 30, 2007.
During the entire six months ended September 30, 2008 the Partnership held
limited partnership interests in ten Local Limited Partnerships of which nine
were in stabilized operations generating losses. During the six months ended
September 30, 2007 the Partnership acquired three Local Limited Partnerships
during that time period therefore only recorded a portion of losses for those
three particular Local Limited Partnerships as well as the losses from the other
six Local Limited Partnerships that had completed construction and were
generating losses. The amortization increased by $(11,000) since acquisition
costs and fees are amortized once the Local Limited Partnership that the fees
and costs are associated with is acquired. There was an impairment loss of
$(80,000) recorded during the six months ended September 30, 2008 compared to no
impairment loss recorded for the six months ended September 30, 2007. The
impairment loss can vary from year to year depending on the operations of the
underlying Housing Complexes as well as the amount of Low Income Housing Tax
Credits that are used each year for each of the Local Limited Partnerships. The
asset management fees increased by approximately $(20,000) due to the fact that
the fees are earned based on the invested assets, which is the sum of the
Partnership's investment in Local Limited Partnerships, plus the revenues of the
Partnership of up to 5% of gross Partnership Unit sales proceeds, and the
Partnership's allocable share of the amount of the mortgage loans on,
28
and other debts related to, the Housing Complexes. As of September 30, 2007 the
Partnership had interest in ten Local Limited Partnerships, but had owned three
of them for only one month compared to ten as of September 30, 2008, which were
held for the entire six months. Therefore the invested assets calculation
increased allowing the asset management fee to also increase. The legal and
accounting fees decreased by $5,000 for the six months ended September 30, 2008
compared to the six months ended September 30, 2007 due to the timing of when
the work was performed. The reporting fee income increased by $7,000 for the six
months ended September 30, 2008 compared to the six months ended September 30,
2007 due to the fact that Local Limited Partnerships pay the reporting fee to
the Partnership when the Local Limited Partnership's cash flow will allow for
the payment. The interest income decreased by $(205,000) due in large part to
the significantly lower cash balance as of September 30, compared to the ending
cash balance as of September 30, 2007. In addition the interest rates in 2008
were lower compared to 2007.
Three Months Ended December 31, 2008 Compared to the Three Months Ended December
31, 2007 The Partnership's net loss for the three months ended December 31, 2008
was $(683,000), reflecting an increase of approximately $(206,000) from the net
loss of $(477,000) for the three months ended December 31, 2007. Equity in
losses of Local Limited Partnerships increased by $(138,000) for the three
months ended December 31, 2008 compared to the three months ended December 31,
2007. For the three months ended December 31, 2007 the Local Limited
Partnerships were completing the lease up phase therefore the losses being
generated were less than the losses for the three months ended December 31,
2008. The legal and accounting fees increased by $(10,000) for the three months
ended December 31, 2008 compared to the three months ended December 31, 2007 due
to the timing of when the work was performed. The interest income decreased by
$(63,000) due in large part to the significantly lower cash balance as of
December 31, 2008 compared to the ending cash balance as of December 31, 2007.
In addition the interest rates were lower in 2008 compared to 2007.
Nine Months Ended December 31, 2008 Compared to Nine Months Ended December 31,
2007 The Partnership's net loss for the nine months ended December 31, 2008 was
$(2,109,000), reflecting an increase of approximately $(819,000) from the net
loss of $(1,290,000) for the nine months ended December 31, 2007. Equity in
losses of Local Limited Partnerships increased by $(445,000) for the nine months
ended December 31, 2008 compared to the nine months ended December 31, 2007.
During the entire nine months ended December 31, 2008 the Partnership held
limited partnership interests in ten Local Limited Partnerships of which nine
were in stabilized operations generating losses. During the nine months ended
December 31, 2007 the Partnership acquired three Local Limited Partnerships
during that time period therefore only recorded a portion of losses for those
three particular Local Limited Partnerships as well as the losses from the other
six Local Limited Partnerships that had completed construction and were
generating losses. The amortization increased by $(11,000) since acquisition
costs and fees are amortized once the Local Limited Partnership that the fees
and costs are associated with is acquired. There was an impairment loss of
$(80,000) recorded during the nine months ended December 31, 2008 compared to no
impairment loss recorded for the nine months ended December 31, 2007. The
impairment loss can vary from year to year depending on the operations of the
underlying Housing Complexes as well as the amount of Low Income Housing Tax
Credits that are used each year for each of the Local Limited Partnerships. The
asset management fees increased by approximately $(20,000) due to the fact that
the fees are earned based on the invested assets, which is the sum of the
Partnership's investment in Local Limited Partnerships, plus the revenues of the
Partnership of up to 5% of gross Partnership Unit sales proceeds, and the
Partnership's allocable share of the amount of the mortgage loans on, and other
debts related to, the Housing Complexes. As of December 31, 2007 the Partnership
had interest in ten Local Limited Partnerships, but had owned three of them for
only four months compared to ten as of December 31, 2008, which were held for
the entire nine months. Therefore the invested assets calculation increased
allowing the asset management fee to also increase. The legal and accounting
fees increased by $(4,000) for the nine months ended December 31, 2008 compared
to the nine months ended December 31, 2007 due to the timing of when the work
was performed. The reporting fee income increased by $7,000 for the nine months
ended December 31, 2008 compared to the nine months ended December 31, 2007 due
to the fact that Local Limited Partnerships pay the reporting fee to the
Partnership when the Local Limited Partnership's cash flow will allow for the
payment. The interest income decreased by $(268,000) due in large part to the
significantly lower cash balance as of December 31, 2008 compared to the ending
cash balance as of December 31, 2007. In addition the interest rates were lower
in 2008 compared to 2007.
29
Capital Resources and Liquidity
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Net cash used during the three months ended June 30, 2008 was $(1,470,000),
compared to net cash used during the three months ended June 30, 2007 of
$(2,130,000), reflecting a change of $660,000. During the three months ended
June 30, 2008, the Partnership paid capital contributions to Local Limited
Partnerships in the amount of $(1,475,000) compared to $(2,154,000) during the
three months ended June 30, 2007, which is a net difference of $679,000. Capital
contributions to Local Limited Partnerships are usually paid within the first
two years of acquiring the interests, once certain benchmarks are met. During
the three months ended June 30, 2007 the Partnership paid offering costs of
$(15,000) to the General Partner or an affiliate compared to no offering costs
paid during the three months ended June 30, 2008. The offering was completed in
September 2006, and offering costs were fully paid during the period ended June
30, 2007.
Six Months Ended September 30, 2008 Compared to Six Months Ended September 30,
2007 Net cash used during the six months ended September 30, 2008 was
$(1,791,000) compared to net cash used during the six months ended September 30,
2007 of $(4,085,000), reflecting a change of $2,294,000. During the six months
ended September 30, 2008, the Partnership paid capital contributions to Local
Limited Partnerships in the amount of $(1,757,000) compared to $(4,285,000),
which is a net decrease of $2,528,000. Capital contributions to Local Limited
Partnerships are usually paid within the first two years of acquiring the
interests, once certain benchmarks are met. During the six months ended
September 30, 2007, the Partnership collected $142,000 in promissory notes
receivable which was the remaining balance of those staged sales and the
Partnership also paid offering costs of $(23,000) during the same time period.
During the six months ended September 30, 2007 the Partnership paid the General
Partner or an affiliate $(115,000) in accrued asset management fees compared to
$(15,000) paid during the six months ended September 30, 2008. Additionally
during the six months ended September 30, 2008 the Partnership paid $(18,000) in
accrued expenses for accounting work that had been performed.
Nine Months Ended December 31, 2008 Compared to Nine Months Ended December 31,
2007 Net cash used during the nine months ended December 31, 2008 was
$(1,941,000) compared to net cash used during the nine months ended December 31,
2007 of $(5,741,000), reflecting a change of $3,800,000. During the nine months
ended December 31, 2008, the Partnership paid capital contributions to Local
Limited Partnerships in the amount of $(1,908,000) compared to $(5,994,000),
which is a net decrease of $4,086,000. Capital contributions to Local Limited
Partnerships are usually paid within the first two years of acquiring the
interests, once certain benchmarks are met. During the nine months ended
December 31, 2007, the Partnership collected $142,000 in promissory notes
receivable which was the remaining balance of those staged sales and the
Partnership also paid offering costs of $(24,000) during the same time period.
During the nine months ended December 31, 2007 the Partnership paid the General
Partner or an affiliate $(115,000) in accrued asset management fees compared to
$(15,000) paid during the nine months ended December 31, 2008. There was
$(20,000) paid to the General Partner or an affiliate during the nine months
ended December 31, 2008 for reimbursement of operating expenses paid by the
General Partner on behalf of the Partnership compared to $(28,000) paid during
the nine months ended December 31, 2007. Additionally during the nine months
ended December 31, 2008 the Partnership paid $(18,000) in accrued expenses for
accounting work that had been performed. The Partnership also received
$(268,000) less interest income during the nine months ended December 31, 2008,
as described above in the results of operations discussion.
During the three, six and nine months ended June 30, 2008, September 30, 2008
and December 31, 2008, accrued payables, which consist primarily of related
party management fees and advances due to the General Partner, increased by
$51,000, $73,000 and $129,000.
Recent Accounting Changes
The Partnership has elected to be treated as a pass-through entity for income
tax purposes and, as such, is not subject to income taxes. Rather, all items of
taxable income, deductions and tax credits are passed through to and are
reported by its owners on their respective income tax returns. The
Partnership's federal tax status as a pass-through entity is based on its legal
status as a partnership. Accordingly, the Partnership is not required to take
any tax positions in order to qualify as a pass-through entity. The Partnership
is required to file and does file tax returns with the Internal Revenue Service
and other taxing authorities. Accordingly, these financial statements do not
reflect a provision for income taxes and the Partnership has no other tax
positions which must be considered for disclosure.
In September 2006, the FASB issued SFAS No. 157 ("SFAS 157"), Fair Value
Measurements, which provides enhanced guidance for using fair value to measure
assets and liabilities. SFAS 157 also requires expanded information about the
30
extent to which the Partnership measures assets and liabilities at fair value,
the information used to measure fair value, and the effect of fair value
measurements on earnings. The standard applies whenever other standards require
(or permit) assets or liabilities to be measured at fair value. The standard
does not expand the use of fair value in any new circumstances. In 2008, the
FASB issued FASB Staff Position 157-2 ("FAS FSP 157-2"), Effective Date of FASB
Statement No. 157, which delays the effective date of SFAS 157 for nonfinancial
assets and nonfinancial liabilities, except for items that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually), to fiscal years beginning after November 15, 2008, and interim
periods within those fiscal years. The Partnership does not anticipate either of
these pronouncements will have a material impact on the Partnership's financial
statements.
In February 2007, the FASB issued SFAS No. 159 ("SFAS 159"), The Fair Value
Option for Financial Assets and Financial Liabilities - Including an amendment
of FASB Statement No. 115. SFAS 159 permits the choice of measuring financial
instruments and certain other items at fair value. SFAS 159 is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
The Partnership does not anticipate that this pronouncement will have a material
impact on the Partnership s financial statements.
In December 2007, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 141(R) ("SFAS 141R"), which amends SFAS No. 141, and provides
revised guidance for recognizing and measuring identifiable assets and goodwill
acquired, liabilities assumed, and any noncontrolling interest in the acquiree.
SFAS 141R is effective for fiscal years beginning after December 15, 2008 and is
to be applied prospectively. SFAS 141R also requires changes to the accounting
for transaction costs, certain contingent assets and liabilities, and other
balances in a business combination. In addition, in partial acquisitions, when
control is obtained, the acquiring company must measure and record all of the
target's assets and liabilities, including goodwill, at fair value as if the
entire target company had been acquired. It also provides disclosure
requirements to enable users of the financial statements to evaluate the nature
and financial effects of the business combination. The Partnership is currently
evaluating the impacts and disclosures of this pronouncement, but would not
expect SFAS 141R to have a material impact on the Partnership's financial
statements.
On December 4, 2007, the FASB issued SFAS No. 160 ("SFAS 160"), Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS
160 replaces the concept of minority interest with noncontrolling interests in
subsidiaries. Noncontrolling interests will now be reported as a component of
equity in the consolidated statement of financial position. Earnings
attributable to noncontrolling interests will continue to be reported as part of
consolidated earnings; however, SFAS 160 requires that income attributable to
both controlling and noncontrolling interests be presented separately on the
face of the consolidated income statement. In addition, SFAS 160 provides that
when losses attributable to noncontrolling interests exceed the noncontrolling
interest's basis, losses continue to be attributed to the noncontrolling
interest as opposed to being absorbed by the consolidating entity. SFAS 160
required retroactive adoption of the presentation and disclosure requirements
for existing minority interests. All other requirements of SFAS 160 shall be
applied prospectively. SAS 160 is effective for the first annual reporting
period beginning on or after December 15, 2008. The Partnership does not expect
SFAS 160 to have a material impact on the Partnership's financial statements.
In November 2008 the FASB ratified EITF No. 08-6, Equity Method Investment
Accounting Considerations, which clarifies the accounting for how to account for
certain transactions and impairment considerations involving equity method
investments. This Issue shall be effective in fiscal years beginning on or after
December 15, 2008, and interim periods within those fiscal years. This Issue
shall be applied prospectively. Earlier application by an entity that has
previously adopted an alternative accounting policy is not permitted. The
transition disclosures in paragraphs 17 and 18 of Statement 154 shall be
provided, if applicable. The Partnership does not expect this pronouncement to
have a material impact on the Partnership's financial statements.
In December 2008, the FASB issue FASB No. FAS 140-4 and FIN46(R)-8 (the "FSP"),
Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets
and Interests in Variable Interest Entities. It amends SFAS 140 to require
public entities to provide additional disclosures about transferors' continuing
involvements with transferred financial assets. The FSP is effective for public
companies in their first reporting period (interim or annual) that ends after
December 15, 2008. The FSP also amends FIN46R to require public enterprises,
including sponsors that have a variable interest in a variable interest entity
("VIE"), to provide additional disclosures about their involvement with VIEs.
The FSP also requires disclosures by a public enterprise that is (a) a sponsor
of a qualifying special-purpose entity (SPE) that holds a variable interest in
the qualifying SPE but was not the transferor of financial assets to the
qualifying SPE and (b) a servicer of a qualifying SPE that holds a significant
variable interest in the qualifying SPE but was not the transferor of financial
assets to the qualifying SPE. The Partnership does not expect the FSP to have a
material impact on the Partnership's financial statements.
31
In April 2009, the FASB issued FSP 107-1 and APB 28-1 "Interim Disclosures about
Fair Value of Financial Instruments." The FSP requires disclosure about the
method and significant assumptions used to establish the fair value of financial
instruments for interim reporting periods as well as annual statements. The FSP
is effective for the Partnership as of June 30, 2009 and the Partnership does
not expect the FSP will impact the Partnership's financial condition or results
of operations.
In May 2009, the FASB issued guidance regarding subsequent events, which was
subsequently updated in February 2010. This guidance established general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. In particular, this guidance sets forth the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements, and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. This guidance
is effective for financial statements issued for fiscal years and interim
periods ending after June 15, 2009, and will therefore be adopted by the
Partnership for the quarter ended June 30, 2009. The adoption is not expected to
have a significant impact on the subsequent events that the Partnership reports,
either through recognition or disclosure, in the financial statements. In
February 2010, the FASB amended its guidance on subsequent events to remove the
requirement to disclose the date through which an entity has evaluated
subsequent events, alleviating conflicts with current SEC guidance. This
amendment was effective immediately and therefore the Partnership did not
include the disclosure in this Form 10-Q.
In June 2009, the FASB issued the Accounting Standards Codification
("Codification"). Effective July 1, 2009, the Codification is the single source
of authoritative accounting principles recognized by the FASB to be applied by
non-governmental entities in the preparation of financial statements in
conformity with U.S. generally accepted accounting principles ("GAAP"). The
Codification is intended to reorganize, rather than change, existing GAAP. The
Codification is effective for financial statements issued for interim and annual
periods ending after September 15, 2009. As such, all references to currently
existing GAAP will be removed and will be replaced with plain English
explanations of the Partnership's accounting policies beginning with financial
statements for the interim period ended September 30, 2009. The adoption of the
Codification is not expected to have a material impact on the Partnership's
financial position or results of operations.
In June 2009, the FASB issued an amendment to the accounting and disclosure
requirements for the consolidation of VIEs. The amended guidance modifies the
consolidation model to one based on control and economics, and replaces the
current quantitative primary beneficiary analysis with a qualitative analysis.
The primary beneficiary of a VIE will be the entity that has (1) the power to
direct the activities of the VIE that most significantly impact the VIE's
economic performance and (2) the obligation to absorb losses or receive benefits
that could potentially be significant to the VIE. If multiple unrelated parties
share such power, as defined, no party will be required to consolidate the VIE.
Further, the amended guidance requires continual reconsideration of the primary
beneficiary of a VIE and adds an additional reconsideration event for
determination of whether an entity is a VIE. Additionally, the amendment
requires enhanced and expanded disclosures around VIEs. This amendment is
effective for fiscal years beginning after November 15,2009. The adoption of
this guidance on April 1, 2010 is not expected to have a material effect on the
Partnership's financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
NOT APPLICABLE
Item 4T. Controls and Procedures
(a) Disclosure controls and procedures
-----------------------------------
As of the end of the periods covered by this report, the Partnership's
General Partner, under the supervision and with the participation of
the Chief Executive Officer and Chief Financial Officer of Associates,
carried out an evaluation of the effectiveness of the Partnership's
"disclosure controls and procedures" as defined in Securities Exchange
Act of 1934 Rule 13a-15 and 15d-15. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer have concluded
that, as of the end of the period covered by this report, the
Partnership's disclosure controls and procedures were not effective to
ensure that material information required to be disclosed in the
Partnership's periodic report filings with SEC is recorded, processed,
summarized and reported within the
32
time period specified by the SEC's rules and forms, consistent with
the definition of "disclosure controls and procedures" under the
Securities Exchange Act of 1934.
The Partnership must rely on the Local Limited Partnerships to provide
the Partnership with certain information necessary to the timely
filing of the Partnership's periodic reports. Factors in the
accounting at the Local Limited Partnerships have caused delays in the
provision of such information during past reporting periods, and
resulted in the Partnership's inability to file its periodic reports
in a timely manner.
Once the Partnership has received the necessary information from the
Local Limited Partnerships, the Chief Executive Officer and the Chief
Financial Officer of Associates believe that the material information
required to be disclosed in the Partnership's periodic report filings
with SEC is effectively recorded, processed, summarized and reported,
albeit not in a timely manner. Going forward, the Partnership will use
the means reasonably within its power to impose procedures designed to
obtain from the Local Limited Partnerships the information necessary
to the timely filing of the Partnership's periodic reports.
(b) Changes in internal controls
----------------------------
There were no changes in the Partnership's internal control over
financial reporting that occurred during the quarters ended June 30,
2008, September 30, 2008 and December 31, 2008 that materially
affected, or are reasonably likely to materially affect, the
Partnership's internal control over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
NONE
Item 1A. Risk Factors
No material changes in risk factors as previously disclosed in the
Partnership's Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
33
Item 6. Exhibits
31.1 Certification of the Principal Executive Officer pursuant to Rule
13a-14 and 15d-14, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002. (filed herewith)
31.2 Certification of the Principal Financial Officer pursuant to Rule
13a-14 and 15d-14, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002. (filed herewith)
32.1 Section 1350 Certification of the Chief Executive Officer. (filed
herewith)
32.2 Section 1350 Certification of the Chief Financial Officer. (filed
herewith)
34
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 13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 14
By: WNC National Partners, LLC
General Partner
By: WNC & Associates, Inc.,
By: /s/ Wilfred N. Cooper, Jr.
------------------------------
Wilfred N. Cooper, Jr.
President and Chief Executive Officer of WNC & Associates, Inc.
Date: April 1, 2010
By: /s/ Melanie R. Wenk
------------------------
Melanie R. Wenk
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: April 1, 2010
