-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T5kSDenJrICkPRoEKdZQEzi+Z/199++fUBcKghETgickZwyiNfv36dCuqdMRLrMs Yy/VU907Zcsu4+W6whEQ3A== 0001084067-05-000014.txt : 20050126 0001084067-05-000014.hdr.sgml : 20050126 20050126160550 ACCESSION NUMBER: 0001084067-05-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050126 DATE AS OF CHANGE: 20050126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WNC HOUSING TAX CREDIT FUND IV L P SERIES 1 CENTRAL INDEX KEY: 0000913496 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 330563307 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26048 FILM NUMBER: 05550212 BUSINESS ADDRESS: STREET 1: 17782 SKY PARK CIRCLE CITY: IRVINE STATE: CA ZIP: 92614-6404 BUSINESS PHONE: 7146625565 MAIL ADDRESS: STREET 1: 17782 SKY PARK CIRCLE CITY: IRVINE STATE: CA ZIP: 92614-6404 10-Q 1 nf41123.txt NAT 4-1 10-Q DEC 31 2004 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2004 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: 0-26048 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1 California 33-0563307 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 17782 Sky Park Circle Irvine, CA 92614-6404 (Address of principal executive offices) (714) 662-5565 (Telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ -------- Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act). Yes No X --------- ---------- WNC HOUSING TAX CREDIT FUND IV, L.P. SERIES 1 (A California Limited Partnership) INDEX TO FORM 10-Q For the Quarter Ended December 31, 2004 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets December 31, 2004 and March 31, 2004.........................3 Statements of Operations For the Three and Nine Months Ended December 31, 2004 and 2003.....................................................4 Statement of Partners' Equity (Deficit) For the Nine Months Ended December 31, 2004..................5 Statements of Cash Flows For the Nine Months Ended December 31, 2004 and 2003.........6 Notes to Financial Statements..................................7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.........................14 Item 3. Quantitative and Qualitative Disclosures about Market Risk....15 Item 4. Procedures and Controls.......................................15 PART II.OTHER INFORMATION Item 1. Legal Proceedings.............................................16 Item 2. Changes in Securities and Use of Proceeds.....................16 Item 3. Defaults Upon Senior Securities...............................16 Item 4. Submission of Matters to a Vote of Security Holders...........16 Item 5. Other Information.............................................16 Item 6. Exhibits......................................................16 Signatures............................................................17 2 WNC HOUSING TAX CREDIT FUND IV, L.P. SERIES 1 (A California Limited Partnership) BALANCE SHEETS
December 31, 2004 March 31, 2004 ---------------------- ------------------ (unaudited) ASSETS Cash and cash equivalents $ 175,454 $ 222,356 Investments in limited partnerships, net (Note 2) 1,329,494 1,395,876 ---------------------- ------------------ Total assets $ 1,504,948 $ 1,618,232 ====================== ================== Liabilities: Payable to limited partnership (Note 4) $ 2,303 $ 2,303 Accrued fees and expenses due to General Partner and affiliates (Note 3) 163,507 158,992 ---------------------- ------------------ Total liabilities 165,810 161,295 ---------------------- ------------------ Commitments and contingencies Partners' equity (deficit): General Partner (86,510 ) (85,332) Limited Partners (10,000 units authorized; 10,000 units issued and outstanding) 1,425,648 1,542,269 ---------------------- ------------------ Total partners' equity 1,339,138 1,456,937 ---------------------- ------------------ $ 1,504,948 $ 1,618,232 ====================== ==================
See accompanying notes to financial statements 3 WNC HOUSING TAX CREDIT FUND IV, L.P. SERIES 1 (A California Limited Partnership) STATEMENTS OF OPERATIONS For the Three and Nine Months Ended December 31, 2004 and 2003 (unaudited)
2004 2003 ----------------------------------------- ------------------------------------------ Three Months Nine Months Three Months Nine Months ------------------- ---------------- ------------------ ----------------- Interest income $ 119 $ 447 $ 463 $ 1,614 Distribution income - 5,098 - 5,898 ------------------- ---------------- ------------------ ----------------- 119 5,545 463 7,512 ------------------- ---------------- ------------------ ----------------- Operating expenses: Amortization (Note 2) 2,481 7,443 5,953 17.859 Asset management fees (Note 3) 10,500 31,500 10,500 31,500 Legal & accounting 4,925 21,750 180 18,176 Other 3,930 6,721 1,691 5,817 ------------------- ---------------- ------------------ ----------------- Total operating expenses 21,836 67,414 18,324 73,352 ------------------- ---------------- ------------------ ----------------- Loss from operations (21,717 ) (61,869 ) (17,861 ) (65,840) Equity in losses of limited partnerships (Note 2) (17,786 ) (55,930 ) (47,975 ) (143,925) ------------------- ---------------- ------------------ ----------------- Net loss $ (39,503 ) $ (117,799 ) $ (65,836 ) $ (209,765) =================== ================ ================== ================= Net loss allocated to: General partner $ (395 ) $ (1,178 ) $ (659 ) $ (2,098) =================== ================ ================== ================= Limited partners $ (39,108 ) $ (116,621 ) $ (65,177 ) $ (207,667) =================== ================ ================== ================= Net loss per limited partner unit $ (4 ) $ (12 ) $ (7 ) $ (21) =================== ================ ================== ================= Outstanding weighted limited partner units 10,000 10,000 10,000 10,000 =================== ================ ================== =================
See accompanying notes to financial statements 4 WNC HOUSING TAX CREDIT FUND IV, L.P. SERIES 1 (A California Limited Partnership) STATEMENT OF PARTNERS' EQUITY (DEFICIT) For the Nine Months Ended December 31, 2004 (unaudited)
General Limited Partner Partners Total --------------- ------------------- --------------- Partners' equity (deficit) at March 31, 2004 $ (85,332 ) $ 1,542,269 $ 1,456,937 Net loss (1,178 ) (116,621 ) (117,799) --------------- ------------------- --------------- Partners' equity (deficit) at December 31, 2004 $ (86,510 ) $ 1,425,648 $ 1,339,138 =============== =================== ===============
See accompanying notes to financial statements 5 WNC HOUSING TAX CREDIT FUND IV, L.P. SERIES 1 (A California Limited Partnership) STATEMENTS OF CASH FLOWS For the Nine Months Ended December 31, 2004 and 2003 (unaudited)
2004 2003 ------------------ ----------------- Cash flows from operating activities: Net loss $ (117,799 ) $ (209,765) Adjustments to reconcile net loss to net cash used in operating activities: Amortization 7,443 17,859 Equity in losses of limited partnerships 55,930 143,925 Change in accrued fees and expenses due to General Partner and affiliates 4,515 1,198 ------------------ ----------------- Net cash used in operating activities (49,911 ) (46,783) ------------------ ----------------- Cash flows from investing activities: Distributions received from limited partnerships 3,009 15,389 ------------------ ----------------- Net decrease in cash and cash equivalents (46,902 ) (31,394) Cash and cash equivalents, beginning of period 222,356 238,047 ------------------ ----------------- Cash and cash equivalents, end of period $ 175,454 $ 206,653 ================== ================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Taxes paid $ - $ - ================== =================
See accompanying notes to financial statements 6 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarter Ended December 31, 2004 (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 and nine months ended December 31, 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2005. 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, 2004. Organization - ------------ WNC Housing Tax Credit Fund IV, L.P., Series 1, a California Limited Partnership (the "Partnership"), was formed on May 4, 1993 under the laws of the state of California, and commenced operations on October 20, 1993. The Partnership was formed to invest primarily in other limited partnerships (the "Local Limited Partnerships") which own and operate multi-family housing complexes (the "Housing Complex") that are eligible for low-income housing credits. The local general partners (the "Local General Partners") of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complex. The general partner of the Partnership is WNC Tax Credit Partners IV, L.P. ("TCP IV"). The general partner of TCP IV is WNC & Associates, Inc. ("Associates"). The chairman and president own substantially all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through Associates as neither TCP IV nor the Partnership have employees of their own. The Partnership Agreement authorized the sale of up to 10,000 units at $1,000 per Unit ("Units"). The offering of Units concluded in July 1994 at which time 10,000 Units in the amount of $10,000,000 had been accepted. The General Partner has 1% interest in operating profits and losses, taxable income and losses, cash available for distribution from the Partnership and tax credits. The limited partners will be allocated the remaining 99% of these items in proportion to their respective investments. After the limited partners have received proceeds from sale or refinancing equal to their capital contributions and their return on investment (as defined in the Partnership Agreement) and the General Partner has received proceeds equal to its capital contribution and subordinated disposition fee (as described in Note 3) from the remainder, any additional sale or refinancing proceeds will be distributed 90% to the limited partners (in proportion to their respective investments) and 10% to the General Partner. 7 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarter Ended December 31, 2004 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- Certain Risks and Uncertainties - ------------------------------- An investment in the Partnership and the Partnership's investments in Local Limited Partnerships and their Housing Complexes are subject to risks. These risks may impact the tax benefits of an investment in the Partnership, and the amount of proceeds available for distribution to the Limited Partners, if any, on liquidation of the Partnership's investments. Some of those risks include the following: The Low-Income Housing Credit rules are extremely complicated. Noncompliance with these rules results in the loss of future Low-Income Housing Credit s and the fractional recapture of Low-Income Housing Credits already taken. In most cases the annual amount of Low-Income Housing Credits that an individual can use is limited to the tax liability due on the person's last $25,000 of taxable income. The Local Limited Partnerships may be unable to sell the Housing Complexes at a profit. Accordingly, the Partnership may be unable to distribute any cash to its investors. Low-Income Housing Credits may be the only benefit from an investment in the Partnership. The Partnership has invested in a limited number of Local Limited Partnerships. Such limited diversity means that the results of operation of each single Housing Complex will have a greater impact on the Partnership. With limited diversity, poor performance of one Housing Complex could impair the Partnership's ability to satisfy its investment objectives. Each Housing Complex is subject to mortgage indebtedness. If a Local Limited Partnership failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the first 15 years, the loss of any remaining future Low-Income Housing Credits, a fractional recapture of prior Low-Income Housing Credits, and a loss of the Partnership's investment in the Housing Complex would occur. The Partnership is a limited partner or non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership's investments in Local Limited Partnerships, nor the Local Limited Partnerships' investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and Low-Income Housing Credits and recapture of Low-Income Housing Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others. The ability of Limited Partners to claim tax losses from the Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low-Income Housing Credits and tax losses allocable to the investors could be reduced if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in the Partnership. Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes. Substantially all of the Low Income Housing Credits anticipated to be realized from the Local Limited Partnerships have been realized. The Partnership does not anticipate being allocated a significant amount of Low Income Housing Credits from the Local Limited Partnerships in the future. Until the Local Limited Partnerships have completed the 15 year Low Income Housing Credit compliance period risks exist for potential recapture of prior low Income Housing Credits. 8 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarter Ended December 31, 2004 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- No trading market for the Units exists or is expected to develop. Investors may be unable to sell their Units except at a discount and should consider their Units to be a long-term investment. Individual investors will have no recourse if they disagree with actions authorized by a vote of the majority of Limited Partners. Method of Accounting for Investments in Limited Partnerships - ------------------------------------------------------------ The Partnership accounts for its investments in limited partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships' results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable. Recoverability of such investment is measured by a comparison of the carrying amount to future undiscounted net cash flows expected to be generated. If an investment is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the investment exceeds fair value. The accounting policies of the Local Limited Partnerships are generally consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and are being amortized over 30 years (see Note 2). Equity in losses of limited partnerships for the periods ended December 31, 2004 and 2003 have been recorded by the Partnership based on nine months of reported results estimated by management of the Partnership. Management's estimate for the nine-month period is based on either actual unaudited results reported by the Local Limited Partnerships or historical trends in the operations of the Local Limited Partnerships. Equity in losses from the 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, amortization of the related costs of acquiring the investment are accelerated to the extent of losses available (see Note 2). If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended. Offering Expenses - ----------------- Offering expenses consist of underwriting commissions, legal fees, printing, filing and recordation fees, and other costs incurred with selling limited partnership interests in the Partnership. The General Partner is obligated to pay all offering and organization costs in excess of 15% (including sales commissions) of the total offering proceeds. Offering expenses are reflected as a reduction of limited partners' capital and amounted to $1,356,705 at the end of all periods presented. 9 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarter Ended December 31, 2004 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- Exit Strategy - ------------- The IRS compliance period for low-income housing tax credit properties is generally 15 years from occupancy following construction or rehabilitation completion. WNC was one of the first in the industry to offer investments using the tax credit. Now these very first programs are completing their compliance period. With that in mind, we are continuing our review of the Partnership's holdings, with special emphasis on the more mature properties including those that have satisfied the IRS compliance requirements. Our review will consider many factors including extended use requirements on the property (such as those due to mortgage restrictions or state compliance agreements), the condition of the property, and the tax consequences to the investors from the sale of the property. Upon identifying those properties with the highest potential for a successful sale, refinancing or syndication, we expect to proceed with efforts to liquidate those properties. Our objective is to maximize the investors' return wherever possible and, ultimately, to wind down those funds that no longer provide tax benefits to investors. To date no properties in the Partnership have been selected. 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. 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. 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. The Partnership had no cash equivalents as of December 31, 2004 and March 31, 2004. Concentration of Credit Risk - ---------------------------- At December 31, 2004, the Partnership maintained a cash balance at a certain financial institution in excess of the maximum federally insured amounts. Net Loss Per Limited Partner Unit - --------------------------------- Net loss per limited partner unit is calculated pursuant to Statement of Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit includes no dilution and is computed by dividing loss available to limited partners by the weighted average number of units outstanding during the period. Calculation of diluted net income per unit is not required. 10 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarter Ended December 31, 2004 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- 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. New Accounting Pronouncements - ----------------------------- In January 2003, the FASB issued Interpretation No. 46 ("FIN46"), "Consolidation of Variable Interest Entities." FIN 46 provides guidance on when a company should include the assets, liabilities, and activities of a variable interest entity ("VIE") in its financial statements and when it should disclose information about its relationship with a VIE. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it absorbs the majority of the entity's expected losses, the majority of the expected returns, or both. In December 2003, the FASB issued a revision of FIN 46 ("FIN 46R") to clarify some of its provisions. The revision results in multiple effective dates based on the nature as well as the creation date of the VIE. VIEs created after January 31, 2003, but prior to January 1, 2004, may be accounted for either based on the original interpretations or the revised interpretations. However, all VIEs must be accounted for under the revised interpretations as of March 31, 2004, when FIN 46R is effective for the Partnership. This Interpretation would require consolidation by the Partnership of certain Local Limited Partnerships' assets and liabilities and results of operations if the Partnership determined that the Local Limited Partnership was a VIE and that the Partnership was the "Primary Beneficiary." Minority interests may be recorded for the Local Limited Partnerships' ownership share attributable to other Limited Partners. Where consolidation of Local Limited Partnerships is not required, additional financial information disclosures of Local Limited Partnerships may be required. The Partnership has assessed the potential consolidation effects of the Interpretation and concluded that the adoption of the Interpretation will not have a material impact on the financial statements of the Partnership. NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS - -------------------------------------------- As of the periods presented, the Partnership had acquired limited partnership interests in twenty-one Local Limited Partnerships, each of which owns one housing complex, consisting of an aggregate of 812 apartment units. The respective general partners of the Local Limited Partnerships manage the day to day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership. The Partnership, as a limited partner, is generally entitled to 99%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses and tax credits of the Local Limited Partnerships. Equity in losses of the Local Limited Partnerships is recognized in the financial statements until the related investment account is reduced to a zero balance. Losses incurred after the investment account is reduced to zero are not recognized. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended. Distributions received by limited partners are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as income. 11 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarter Ended December 31, 2004 (unaudited) NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued - ------------------------------------------------------- Following is a summary of the equity method activity of the investments in Local Limited Partnerships for the periods presented below:
For the Nine Months For the Year Ended Ended December 31, 2004 March 31, 2004 ----------------------- ------------------- Investments per balance sheet, $ 1,395,876 $ 1,965,138 beginning of period Distributions received from limited partnerships (3,009 ) (27,494) Equity in losses of limited partnerships (55,930 ) (399,732) Impairment losses - (124,048) Amortization of capitalized acquisition fees and costs (7,443 ) (17,988) ----------------------- ------------------- Investments per balance sheet, end of period $ 1,329,494 $ 1,395,876 ======================= =================== Selected financial information for the nine months ended December 31, 2004 and 2003 from the unaudited combined condensed financial statements of the limited partnership in which the Partnership has invested is as follows: 2004 2003 ------------------- ------------------- Revenues $ 2,809,000 $ 2,686,000 ------------------- ------------------- Expenses: Interest expense 625,000 646,000 Depreciation and amortization 809,000 807,000 Operating expenses 1,936,000 1,688,000 ------------------- ------------------- Total expenses 3,370,000 3,141,000 ------------------- ------------------- Net loss $ (561,000 ) $ (455,000) =================== =================== Net loss allocable to the Partnership $ (552,000 ) $ (448,000) =================== =================== Net loss recorded by the Partnership $ (56,000 ) $ (144,000) =================== =================== Certain Local Limited Partnerships have incurred significant 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 tax credits could occur.
12 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarter Ended December 31, 2004 (unaudited) NOTE 3 - RELATED PARTY TRANSACTIONS - ----------------------------------- Under the terms of the Partnership Agreement the Partnership is obligated to the General Partner or its affiliates for the following items: (a) Annual Asset Management Fee. An annual asset management fee equal to the greater amount of (i) $2,000 for each apartment complex, or (ii) 0.275% of gross proceeds. The base fee amount will be adjusted annually based on changes to the Consumer Price Index. However, in no event will the annual asset management fee exceed 0.2% of the invested assets of the Local Limited Partnerships, including the Partnership's allocable share of the mortgages. Asset management fees of $31,500 were incurred during each of nine months ended December 31, 2004 and 2003. The Partnership paid $ 30,000 of those asset management fees for each of the nine months ended December 31, 2004 and 2003. (b) Subordinated Disposition Fee. A subordinated disposition fee in an amount equal to 1% of the sales price of real estate sold. Payment of this fee is subordinated to the limited partners receiving a preferred return of 16% through December 31, 2003 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort. (c) The Partnership reimburses the General Partner or its affiliates for operating expenses incurred in behalf of the Partnership. Operating expense reimbursements are approximately $25,456 and $24,295 for the nine months ended December 31, 2004 and 2003, respectively. The accrued fees and advances due to General Partner and affiliates consisted of the following:
December 31, 2004 March 31, 2004 ---------------------- -------------------- Reimbursement for expenses paid by the General Partner or an affiliate $ 4,840 $ 1,825 Asset management fee payable 158,667 157,167 ---------------------- -------------------- Total $ 163,507 $ 158,992 ====================== ====================
NOTE 4 - PAYABLE TO LIMITED PARTNERSHIP - --------------------------------------- Payables to limited partnerships represent amounts, which are due at various times based on conditions specified in the limited partnership agreement. These contributions are payable in installments and are due upon the limited partnership achieving certain operating and development benchmarks (generally within two years of the Partnership's initial investment). 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements With the exception of the discussion regarding historical information, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other discussions elsewhere in this Form 10-Q contain forward-looking statements. Such statements are based on current expectations subject to uncertainties and other factors, which may involve known and unknown risks that could cause actual results of operations to differ materially from those, projected or implied. Further, certain forward-looking statements are based upon assumptions about future events, which may not prove to be accurate. Risks and uncertainties inherent in forward-looking statements include, but are not limited to, our future cash flows and ability to obtain sufficient financing, level of operating expenses, conditions in the low-income housing tax credit property market and the economy in general, as well as legal proceedings. Historical results are not necessarily indicative of the operating results for any future period. Subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by cautionary statements in this Form 10-Q and in other reports we filed with the Securities and Exchange Commission. The following discussion should be read in conjunction with the condensed unaudited Financial Statements and the Notes thereto included elsewhere in this filing. The following discussion and analysis compares the results of operations for the three and nine months ended December 31, 2004 and 2003, and should be read in conjunction with the condensed financial statements and accompanying notes included within this report. Financial Condition The Partnership's assets at December 31, 2004 consisted primarily of $175,000 in cash and aggregate investments in the twenty-one Local Limited Partnerships of $1,329,000. Liabilities at December 31, 2004 consisted primarily of $166,000 in accrued asset management fees and expenses payable to the General Partner. Results of Operations Three Months Ended December 31, 2004 Compared to Three Months December 31, 2003. The Partnership's net loss for three months ended December 31, 2004 was $(40,000), reflecting a decrease of $26,000 from the net loss experienced for the three months ended December 31, 2003 of $(66,000). The decrease in net loss is primarily due to equity in losses from Local Limited Partnerships which decreased by $30,000 to $(18,000) for the three months ended December 31, 2004 from $(48,000) for the three months ended December 31, 2003. The decrease in equity in losses of Local Limited Partnerships is due to the Partnership not recognizing certain losses of the Local Limited Partnerships. The investments in such Local Limited Partnerships had reached $0 at December 31, 2004. Since the Partnership's liability with respect to its investments is limited, losses in excess of investment are not recognized. The decrease in the equity in losses from Local Limited Partnerships was offset with an increase in losses from operations of approximately $(4,000) to $(22,000) for the three months ended December 31, 2004 from $(18,000) for the three months ended December 31, 2003. The increase in losses from operations was due to a $(5,000) increase in legal and accounting expenses, a $(2,000) increase in other operating expenses offset by a $3,000 decrease in amortization. Nine Months Ended December 31, 2004 Compared to Nine Months December 31, 2003. The Partnership's net loss for the nine months ended December 31, 2004 was $(118,000), reflecting a decrease of $92,000 from the net loss experienced for the nine months ended December 31, 2003 of $(210,000). The decrease in net loss is primarily due to equity in losses of Local Limited Partnerships which decreased by $88,000 to $(56,000) for the nine months ended December 31, 2004 from $(144,000) for the nine months ended December 31, 2003. The decrease in equity in losses of Local Limited Partnerships is due to the Partnership not recognizing certain losses of the Local Limited Partnerships. The investments in such Local Limited Partnerships had reached $0 at December 31, 2004. Since the Partnership's liability with respect to its investments is limited, losses in excess of investment are not recognized. In addition to the decrease in equity in losses of Local Limited Partnerships there was also a decrease of $4,000 in loss from operations to $(62,000) for the nine months ended December 31, 2004 from $(66,000) for the nine months ended December 31, 2003. The decrease in loss from operations was contributed by a $10,000 decrease in amortization, offset by a $(1,000) increase in other operating expense, a $(1,000) decrease in interest income, a $(1,000) decrease in distribution income along with a ($3,000) increase in legal and accounting. 14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Cash Flows Nine Months Ended December 31, 2004 Compared to Nine Months Ended December 31, 2003. Net cash used during the nine months ended December 31, 2004 was $(47,000), compared to net cash used in the nine months ended December 31, 2003 of $(31,000). The $(16,000) increase in net cash used was due to a $(12,000) decrease in distributions received from limited partnerships along with a $(4,000) decrease in accrued fees and expense due to general partner and affiliates. During the nine months ended December 31, 2004, accrued payables, which consist primarily of related party management fees and advances due to the General Partner, increased by approximately $5,000. Item 3. Quantitative and Qualitative Disclosures about Market Risk NOT APPLICABLE Item 4. Procedures and Controls As of the end of the period 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 Fund'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 Principal Financial Officer have concluded that as of the end of the period covered by this report, the Partnership's disclosure controls and procedures were adequate and effective in timely alerting them to material information relating to the Partnership required to be included in the Partnership's periodic SEC filings. Changes in internal controls. There were no changes in the Partnership's internal control over financial reporting that occurred during the quarter ended December 31, 2004 that materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. 15 Part II. Other Information Item 1. Legal Proceedings NONE Item 2. Changes in 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 Item 6. Exhibits 31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-15(e) and 15d-15(e), 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-15(e) and 15d-15(e), 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) 16 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1 By: WNC Tax Credit Partners IV, L.P. General Partner of the Registrant By: WNC & ASSOCIATES, INC. General Partner of WNC Tax Credit Partners IV, L.P. By: /s/ Wilfred N. Cooper Jr. ------------------------- Wilfred N. Cooper, Jr. President and Chief Executive Officer of WNC & Associates, Inc. Date: January 25, 2005 By: /s/ Thomas J. Riha ------------------ Thomas J. Riha, Senior Vice President - Chief Financial Officer of WNC & Associates, Inc. Date: January 25, 2005 17 < EX-31 2 ex311n41.txt EXHIBIT 31-1 NAT 4-1 Exhibit 31-1 CERTIFICATIONS I, Wilfred N. Cooper, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 25, 2005 /s/ Wilfred N. Cooper Jr. -------------------------- President and Chief Executive Officer of WNC & Associates, Inc. EX-32 3 ex321n41.txt EXHIBIT 32-1 NAT 4-1 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of WNC Housing Tax Credit Fund IV, L.P., Series 1 (the "Partnership") for the period ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), and pursuant to 18 U.S.C., section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, I, Wilfred N. Cooper, Jr., President and Chief Executive Officer of WNC & Associates, Inc., general partner of the General Partner of the Partnership, hereby certify that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. . The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership. /s/WILFRED N. COOPER, JR. - ------------------------- Wilfred N. Cooper, Jr. President and Chief Executive Officer of WNC & Associates, Inc. Date: January 25, 2005 EX-32 4 ex322n41.txt EXHIBIT 32-2 NAT 4-1 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of WNC Housing Tax Credit Fund IV, L.P., Series 1 (the "Partnership") for the period ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), and pursuant to 18 U.S.C., section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, I, Thomas J. Riha, Chief Financial Officer of WNC & Associates, Inc., general partner of the General Partner of the Partnership, hereby certify that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership. /s/THOMAS J. RIHA - ----------------- Thomas J. Riha Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc January 25, 2005 EX-31 5 ex312n41.txt EXHIBIT 31-2 NAT 4-1 Exhibit 31-2 CERTIFICATIONS I, Thomas J. Riha, certify that: 1. I have reviewed this quarterly report on Form 10-Q of WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date:January 25, 2005 /s/ Thomas J. Riha ------------------- Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc. -----END PRIVACY-ENHANCED MESSAGE-----