-----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, Qvc/yg6jgKzlwBNkZqcKlyk8erzLXd5YVzbBNwiocZmuRZjxXfOEoNLlzbBbPlvB K7KoUCpWa1A0nXEXDMmGxQ== 0000913497-98-000002.txt : 19980603 0000913497-98-000002.hdr.sgml : 19980603 ACCESSION NUMBER: 0000913497-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980602 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 CENTRAL INDEX KEY: 0000913497 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 330596399 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-28370 FILM NUMBER: 98640694 BUSINESS ADDRESS: STREET 1: 3158 REDHILL AVE STE 120 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7146625565 10-Q 1 FORM 10-Q 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 March 31, 1998 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: 0-28370 WNC Housing Tax Credit Fund IV, L.P. - Series 2 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) California 33-0596399 3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626 (714) 622-5565 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ____ No X WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (a California Limited Partnership) INDEX TO FORM 10-Q FOR THE QUARTER ENDED March 31, 1998 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets, March 31, 1998 and December 31, 1997.....................3 Statement of Operations For the three months ended March 31, 1998 and 1997..............4 Statement of Partners' Equity For the three months ended March 31, 1998 and 1997..............5 Statement of Cash Flows For the three months ended March 31, 1998 and 1997..............6 Notes to Financial Statements............................................8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.....................13 Item 3. Quantitative and Qualitative Disclosures Above Market Risks........16 PART II. OTHER INFORMATION Item 1 Legal Proceedings..................................................16 Item 6. Exhibits and Reports on Form 8.....................................16 Signatures ................................................................17 WNC HOUSING TAX CREDIT FUND IV, L.P. - SERIES 2 (A California Limited Partnership) BALANCE SHEETS March 31, 1998 and December 31, 1997 1998 1997 ---- ---- ASSETS Cash and cash equivalents $ 1,383,197 $ 1,480,862 Investment in limited partnerships - Note 2 9,510,560 9,738,583 Loans receivable 259,496 259,496 Due from affiliate Note 3 7,911 18,636 Other assets 10,885 1,609 ---------- ---------- $ 11,172,049 $ 11,499,186 =========== ========== LIABILITIES AND PARTNERS' EQUITY Liabilities: Accrued fees and expenses due to general partner and affiliates - Note 3 $ 3,195 $ 1,137 Payable to limited partnerships -Note 4 275,392 411,543 -------- ------- 278,587 412,680 -------- ------- Partners' equity (deficit): General partner (43,377) (41,447) Limited partners (20,000 units authorized, 15,600 units issued and outstanding) 10,936,839 11,127,953 ----------- ---------- Total partners' equity 10,893,462 11,086,506 ---------- ---------- $ 11,172,049 $ 11,499,186 =========== ========== UNAUDITED See Accompanying Notes to Financial Statements 3 WNC HOUSING TAX CREDIT FUND IV, L.P. - SERIES 2 (A California Limited Partnership) STATEMENT OF OPERATIONS For the Three Months Ended March 31, 1998 and 1997 1998 1997 ---- ---- Interest income $ 21,520 $ 24,514 ------- ------- Operating expenses: Amortization 10,230 10,160 Asset management fees - Note 3 10,725 10,725 Legal and accounting 1,512 1,700 Other 545 1,275 ------ ----- Total operating expenses 23,012 23,860 ------- ------ Income from operations (1,492) 654 Equity in loss from limited partnerships (191,552) (187,500) -------- -------- Net loss $ (193,044) $ (186,846) ========= ========= Net loss allocated to: General partner $ (1,930) $ (1,868) ======= ======= Limited partners $ (191,114) $ (184,978) ========= ========= Net loss per 15,600 units outstanding March 31, 1998 and 1997 $ (12) $ (12) ======== ==== UNAUDITED See Accompanying Notes to Financial Statements 4 WNC HOUSING TAX CREDIT FUND IV, L.P. - SERIES 2 (A California Limited Partnership) STATEMENT OF PARTNERS' EQUITY For the Three Months Ended March 31, 1998 and 1997
For the Three Months Ended March 31, 1998 General Limited Partner Partner Total ------- ------- ----- Equity (deficit), December 31, 1997 $ (41,447) $ 11,127,953 $ 11,086,506 Net loss for the three months ended March 31, 1998 (1,930) (191,114) (193,044) -------- --------- ---------- Equity (deficit), March 31, 1998 $ (43,377) $ 10,936,839 $ 10,893,462 ======== =========== ========== For the Three Months Ended March 31, 1997 General Limited Partner Partner Total ------- ------- ----- Equity (deficit), December 31, 1996 $ (33,756) $ 11,889,346 $ 11,855,590 Net loss for the three months ended March 31, 1997 (1,868) (184,978) (186,846) -------- --------- ---------- Equity (deficit), March 31, 1997 $ (35,624) $ 11,704,368 $ 11,668,744 ======== ========== ==========
UNAUDITED See Accompanying Notes to Financial Statements 5 WNC HOUSING TAX CREDIT FUND IV, L.P. - SERIES 2 (A California Limited Partnership) STATEMENT OF CASH FLOWS For the Three Months Ended March 31, 1998 and 1997 1998 1997 ---- ---- Cash flows provided by operating activities: Net loss $ (193,044) $ (186,846) Adjustments to reconcile net loss to net cash provided by operating activities: Equity in loss of limited partnerships 191,552 187,500 Amortization 10,230 10,160 Asset management fee 10,725 10,725 Change in other assets (9,276) 1,578 Accrued fees and expense due to general partner and affiliates 2,058 3,501 ------ ------ Net cash provided by operating activities 12,245 26,618 ------- ------ Cash flows used in investing activities: Investments in limited partnerships (112,860) (427,709) Acquisition costs and fees - (526) Distribution from limited partnerships 2,950 5,163 -------- ------- Net cash flows used by investing activities: (109,910) (423,072) --------- -------- Net decrease in cash and cash equivalents (97,665) (396,454) Cash and cash equivalents, beginning of period 1,480,862 2,371,389 --------- --------- Cash and cash equivalent, end of period $ 1,383,197 $ 1,974,935 ========= ========= (Continued) UNAUDITED See Accompanying Notes to Financial Statements 6 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2 (A California Limited Partnership) STATEMENT OF CASH FLOWS - CONTINUED For the Three months ended March 31, 1998 and 1997 Supplemental disclosure of noncash financing and investing activity: During the three months ended March 31, 1998, the Partnership's Payables to Limited Partnerships (in connection with its investments in limited partnerships) decreased by $23,291 due to various price adjuster provisions in the respective limited partnership agreements. - -------------------------------------------------------------------------------- During the three months ended March 31, 1997, the Partnership's Payables to Limited Partnerships (in connection with its investments in limited partnerships) increased by $10,394 due to various price adjuster provisions in the respective limited partnership agreements. UNAUDITED See Accompanying Notes to Financial Statements 7 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - --------------------------------------------------- Organization - ------------ WNC Housing Tax Credit Fund IV, L.P., Series 2 (the "Partnership") was formed under the California Revised Limited Partnership Act on September 27, 1993, and commenced operations on July 18, 1995. The Partnership was formed to invest primarily in other limited partnerships which will own and operate multi-family housing complexes that will qualify for low income housing credits. The general partner of the Partnership is WNC Tax Credit Partners IV, L.P. (the "General Partner"), a California limited partnership. WNC & Associates, Inc. is the general partner of the General Partner. Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns 70% of the outstanding stock of WNC & Associates, Inc. John B. Lester, Jr. is the original limited partner of the Partnership and owns, through the Lester Family Trust, 30% of the outstanding stock of WNC & Associates, Inc. General - ------- The information contained in the following notes to the financial statements is condensed from that which would appear in the annual financial statements; accordingly, the financial statements included herein should be reviewed in conjunction with the audited financial statements and related notes thereto contained in the Partnership's financial statements for the period ended December 31, 1997 (audited). In the opinion of the General Partner, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 1998 and the results of operations and changes in cash flows for the three months ended March 31, 1998 and 1997. Allocations Under the Terms of the Partnership Agreement - -------------------------------------------------------- The General Partner has a 1% interest in operating profits and losses, taxable income and loss and in cash available for distribution from the Partnership. The limited partners will be allocated the remaining 99% of these items in proportion to their respective investments. After the limited partners have received sale or refinancing proceeds equal to their capital contributions and their return on investment (as defined in the Partnership's Agreement of Limited 8 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS-CONTINUED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- Partnership) and the General Partner has received a subordinated disposition fee (as described in Note 4 below), 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. Method of Accounting For Investment in Limited Partnerships The investment in limited partnerships is accounted for on the equity method of accounting whereby the Partnership adjusts its investment balance for its share of each limited partnership's results of operations and for any distributions received. Costs incurred by the Partnership in acquiring the investments in limited partnerships are capitalized as part of the investment account. Losses from the limited partnerships will not be recognized to the extent that the individual investment balance would be adjusted below zero. Offering Expenses - ----------------- Offering expenses will consist of underwriting commissions, legal fees, printing, filing and recordation fees, and other costs incurred with selling limited partnership interests in the Partnership. The General Partner is obligated to pay all offering and organization costs in excess of 15% (including sales commissions) of the total offering proceeds. Offering expenses are reflected as a reduction of partners' capital. Organization Costs - ------------------ Organization costs will be amortized on the straight-line method over 60 months. Cash and Cash Equivalents - ------------------------- The Partnership considers investments with an original maturity of three months or less as cash equivalents. 9 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS-CONTINUED NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS - ------------------------------------------- As of March 31, 1998 the Partnership had acquired limited partnership interests in twenty one limited partnerships each of which owns one Apartment Complex. As of March 31, 1998, construction or rehabilitation of all of the Apartment Complexes had been completed. As of March 31, 1997 the Partnership had acquired limited partnership interests in twenty limited partnerships each of which owns one Apartment Complex. As of March 31, 1997, construction or rehabilitation of nineteen of the Apartment Complexes had been completed and one was undergoing construction or rehabilitation. The Partnership, as a limited partner, is entitled to 95% to 99%, as specified in the partnership agreements, of the operating profits and losses of the limited partnerships upon the acquisition of its limited partnership interest. Following is a summary of the components of investment in limited partnerships as of March 31, 1998 and December 31, 1997: 1998 1997 ---- ---- Investment balance, beginning of period $ 9,738,583 $ 10,096,100 Capital contributions to limited partnerships, net (23,291) 194,036 Capital contributions to be paid 225,720 Capitalized acquisition fees and costs - 8,278 Equity in loss of limited partnerships (191,552) (737,115) Distributions (2,950) (7,613) Amortization of capitalized acquisition costs (10,230) (40,823) --------- -------- Investment balance, end of period $ 9,510,560 $ 9,738,583 ========= ============ Selected financial information from the financial statements of the limited partnerships with operations for the three months ended March 31, 1998 and 1997 is as follows (rounded to the nearest thousand): 10 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS-CONTINUED NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED) - ------------------------------------------------------- 1997 1997 ---- ---- Total revenue $ 1,004,000 $ 731,000 ---------- ------- Interest expense 351,000 293,000 Depreciation 334,000 261,000 Operating expenses 512,000 366,000 -------- ------- Total expenses 1,197,000 920,000 --------- ------- Net loss $ (193,000) $ (189,000) ========= ======== Net loss allocable to the Partnership $ (191,552) $ (187,000) ========= ======== NOTE 3 - RELATED PARTY TRANSACTIONS - ----------------------------------- Under the terms of its Agreement of Limited Partnership, the Partnership is obligated to the General Partner or its affiliates for the following items: Acquisition fees of up to 8% of the gross proceeds from the sale of Partnership units. During the three months ended March 31, 1997 the Partnership incurred acquisition fees of $884. No acquisition fees were incurred during the three months ended March 31, 1998. 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. In either case, the fee will be decreased or increased annually based on changes to the Consumer Price Index. However, in no event will the maximum amount exceed 0.2 % of the invested assets (defined as the Partnership's capital contributions to the limited partnerships plus its allocable percentage of the permanent financing) of the limited partnerships which are subsidized under one or more Federal, state or local government programs. The Partnership incurred management fees of $10,725 for each three month period ended March 31, 1998 and 1997. 11 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS-CONTINUED NOTE 3 - RELATED PARTY TRANSACTIONS (CONTINUED) - ----------------------------------------------- Reimbursement for organizational, offering and selling expenses advanced by an affiliate of the General Partner on behalf of the Partnership. These reimbursements plus all other organizational and offering expenses inclusive of sales commissions will not exceed 15% of the gross proceeds. The Partnership incurred no offering costs during the three months ended March 31, 1998 and 1997. A subordinated disposition fee in an amount equal to 1% of the sales price of real estate sold. Payment of this fee is subordinated to the limited partners receiving a return on investment (as defined in the Agreement of Limited Partnership) and is payable only if services are rendered in the sales effort. Advances and fees payable due to general partner of $3,195 and $1,137 at March 31, 1998 and December 31, 1997, consisted of advances made for operating costs. NOTE 4 - PAYABLE TO LIMITED PARTNERSHIPS - ---------------------------------------- Payable to limited partnerships represent amounts which are due at various times based on conditions specified in the respective limited partnership agreements. These contributions are payable in installments, are generally due upon the limited partnerships achieving certain operating benchmarks and are generally expected to be paid within two years of the Partnership's initial investment. NOTE 5- INCOME TAXES - -------------------- The Partnership will not make a provision for income taxes since all items of taxable income and loss will be allocated to the partners for inclusion in their respective income tax returns. NOTE 6 - COMMITMENTS AND CONTINGENCIES - -------------------------------------- The Partnership is negotiating to acquire an interest in one limited partnership which would commit the Partnership to a capital contribution of approximately $1,255,000, of which $259,496 had been advanced as of March 31, 1998 and December 31, 1997. The amount advanced has been presented as loans receivable in the accompanying balance sheet. 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation WNC Housing Tax Credit Fund IV, L.P., Series 2 (the Partnership) is a California Limited Partnership formed under the laws of the State of California on September 27, 1993, and commenced operations on July 18, 1995 to acquire limited partnership interests in limited partnerships ("Limited Partnerships") which own multifamily apartment complexes that are eligible for low-income housing federal income tax credits (the "Housing Tax Credit"). The Partnership's offering of units terminated on July 26, 1996 Liquidity and Capital Resources ------------------------------- Overall, as reflected in its Statement of Cash Flows, the Partnership had a net decrease in cash and cash equivalents of approximately $97,700 for the three months ended March 31, 1998. This decrease in cash consists of cash used by investing of approximately $110,000 and cash provided by operating activities of approximately $12,000. Cash was used by the investing activities of the Partnership during such period consisted primarily of capital contributions to Limited Partnerships of approximately $113,000 offset by cash provided by distributions from limited partnerships of approximately $3,000. Cash provided from operations consisted primarily of interest received on cash deposits, and cash used in operations consisted primarily of payments for operating fees and expenses. The major components of all these activities are discussed in greater detail below. Overall, as reflected in its Statement of Cash Flows, the Partnership had a net decrease in cash and cash equivalents of approximately $396,500 for the three months ended March 31, 1997. This decrease in cash consists of cash used by investing and cash provided by investing and operating activities. Cash was used by the investing activities of the Partnership during such period in the aggregate amount of approximately $423,000, which consisted primarily of capital contributions to Limited Partnerships of approximately $428,000, offset by distributions from the local limited partnerships of approximately $5,000. Cash provided from operations consisted primarily of interest received on cash deposits, and cash used in operations consisted primarily of payments for operating fees and expenses. The major components of all these activities are discussed in greater detail below. . As of March 31, 1998 and December 31, 1997 the Partnership was indebted to WNC & Associates, Inc. in the amount of approximately $3,000 and $1,000, respectively. and consisted entirely of advances for operating expenses. As of March 31, 1998, the Partnership has received and accepted subscriptions funds in the amount of $15,600,000. 13 As of March 31, 1998 and December 31, 1997, the Partnership had made capital contributions to Limited Partnerships in the amount of approximately $10,566,000 and $10,453,000, respectively, and had commitments for additional capital contributions of approximately $275,000 and $412,000, respectively. Prior to sale of the Apartment Complexes, it is not expected that any of the Limited Partnerships in which the Partnership has invested or will invest will generate cash from operations sufficient to provide distributions to the Limited Partners in any material amount. Such cash from operations, if any, would first be used to meet operating expenses of the Partnership, including payment of the asset management fee to the General Partner. As a result, it is not anticipated that the Partnership will provide distributions to the Limited Partners prior to the sale of the Apartment Complexes. The Partnership's investments will not be readily marketable and may be affected by adverse general economic conditions which, in turn, could substantially increase the risk of operating losses for the Apartment Complexes, the Limited Partnerships and the Partnership. These problems may result from a number of factors, many of which cannot be controlled by the General Partner. Nevertheless, the General Partner anticipates that capital raised from the sale of the Units will be sufficient to fund the Partnership's investment commitments and proposed operations. The Partnership will establish working capital reserves of at least 3% of capital contributions, an amount which is anticipated to be sufficient to satisfy general working capital and administrative expense requirements of the Partnership excluding payment of the asset management fee as well as expenses attendant to the preparation of tax returns and reports to the Limited Partners and other investor servicing obligations of the Partnership. Liquidity would, however, be adversely affected by unanticipated or greater than anticipated operating costs. The Partnership's liquidity could also be affected by defaults or delays in payment of the Limited Partners' promissory notes, from which a portion of the working capital reserves is expected to be funded. To the extent that working capital reserves are insufficient to satisfy the cash requirements of the Partnership, it is anticipated that additional funds would be sought through bank loans or other institutional financing. The General Partner may also apply any cash distributions received from the Limited Partnerships for such purposes or to replenish or increase working capital reserves. Under the Partnership Agreements the Partnership does not have the ability to assess the Limited Partners for additional capital contributions to provide capital if needed by the Partnership or Limited Partnerships. Accordingly, if circumstances arise that cause the Limited Partnerships to require capital in addition to that contributed by the Partnership and any equity contributed by the general partners of the Limited Partnerships, the only sources from which such capital needs will be able to be satisfied (other than the limited reserves available at the Partnership level) will be (i) third-party debt financing (which may not be available, if, as expected, the Apartment Complexes owned by the Limited Partnerships are already substantially leveraged), (ii) additional equity contributions or advances of the general partners of the Limited Partnerships (in this regard, each local general partner is required to fund operating deficits, but only for a period of two years following construction completion), (iii) other equity sources (which could adversely affect the Partnership's interest in Housing Tax Credits, cash flow and/or proceeds of 14 sale or refinancing of the Apartment Complexes and result in adverse tax consequences to the Limited Partners), or (iv) the sale or disposition of the Apartment Complexes (which could have the same adverse effects as discussed in (iii) above). There can be no assurance that funds from any of such sources would be readily available in sufficient amounts to fund the capital requirement of the Limited Partnerships in question. If such funds are not available, the Limited Partnerships would risk foreclosure on their Apartment Complexes if they were unable to re-negotiate the terms of their first mortgages and any other debt secured by the Apartment Complexes to the extent the capital requirements of the Limited Partnerships relate to such debt. The Partnership's capital needs and resources are expected to undergo major changes during their first several years of operations as a result of the completion of their offerings of Units and their acquisition of investments. Thereafter, the Partnership's capital needs and resources are expected to be relatively stable over the holding periods of the investments except to the extent of proceeds received in payment of promissory notes and disbursed to fund the deferred obligations of the Partnership. Results of Operations - --------------------- As of December 31, 1997 and March 31, 1998 the Partnership had acquired 21 Limited Partnership Interests. Each of the 21 Limited Partnerships receives or is expected to receive government assistance and each of them has received a reservation for Housing Tax Credits. As of December 31, 1997 and March 31, 1998, all of the Apartment Complexes in the Partnership had commenced operations. As reflected on its Statements of Operations, the Partnership had a loss of approximately $193,000 for the three months ended March 31, 1998. The component items of revenue and expense are discussed below. Revenue. The Partnership's revenues consisted entirely of interest earned on promissory notes and cash deposits held in financial institutions (i) as reserves, or (ii) pending investment in Limited Partnerships. Interest revenue in future years will be a function of prevailing interest rates and the amount of cash balances. It is anticipated that the Partnership will maintain cash Reserves in an amount not materially in excess of the minimum amount required by its Partnership Agreement, which is 3% of capital contributions. Expenses. The most significant component of operating expenses was and is expected to be the Asset Management Fee. The Asset Management Fee is equal to the greater of (i) $2,000 for each Apartment Complex or (ii) 0.275% of gross proceeds, and will be decreased or increased annually based on changes to the Consumer Price Index. Amortization expense consist of the amortization over a period of 30 years of the Acquisition Fee and other expenses attributable to the acquisition of Limited Partnership Interests. 15 Equity in Losses from Limited Partnership. The Partnership's equity in losses from Limited Partnerships is equal to 96% to 99% of the aggregate net losses of each Limited Partnership incurred after admission of the Partnership as a limited partner thereof. After rent-up all Limited Partnerships are expected to generate losses during each year of operations; this is so because, although rental income is expected to exceed cash operating expenses, depreciation and amortization deductions claimed by the Limited Partnerships are expected to exceed net rental income. The Partnership accounts for its investments in Local Partnerships using the equity method of accounting, whereby the Partnership reduces its investment balance for its share of Local Partnerships' losses and distributions. Losses are not recognized to the extent that the investment balance would be adjusted below zero. Item 3. Quantitative and Qualitative Disclosures Above Market Risks NONE. Part II. Other Information Item 1. Legal Proceedings NONE. Item 6. Exhibits and Reports on Form 8-K 1. None. No reports on Form 8-K were filed during the quarter ended March 31, 1998. 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 2 By: WNC Tax Credit Partners IV, L.P. General Partner By: WNC & ASSOCIATES, INC. General Partner By: /s/ John B. Lester, Jr. - ----------------------------------------------------- John B. Lester, Jr. President Date: June 1, 1998 By: /s/ Theodore M. Paul - ----------------------------------------------------- Theodore M. Paul Vice President - Finance Date: June 1, 1998 17 EX-27 2 FDS --
5 0000913497 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2 1 US DOLLARS 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 1 1,383,197 0 0 0 0 1,383,197 0 0 11,172,049 0 0 0 0 0 10,893,462 11,172,049 0 21,520 0 23,012 191,552 0 0 (193,044) 0 (193,044) 0 0 0 (193,044) (12) 0
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