-----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, BtWcd0En+0m7vB6eSwNUbhUmIi15nzgUfhDkkvUInLHCPlTuIomnUoAahD9YTL54 zqD25NCR/oTeFgshsy3uOw== 0001084067-03-000099.txt : 20031114 0001084067-03-000099.hdr.sgml : 20031114 20031114153329 ACCESSION NUMBER: 0001084067-03-000099 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031114 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: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28370 FILM NUMBER: 031004127 BUSINESS ADDRESS: STREET 1: 3158 REDHILL AVE STE 120 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7146625565 10-Q 1 n42q903.txt QUARTERLY REPORT 9-30-03 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 September 30, 2003 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ___________ Commission file number: 0-28370 WNC Housing Tax Credit Fund IV, L.P. - Series 2 California 33-0596399 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 17782 Sky Park Circle Irvine, CA 92614-6404 (Address of principal executive offices) (714) 662-5565 (Telephone number) 3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626 (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No X - --------- ---------- WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) INDEX TO FORM 10-Q For the Quarter Ended September 30, 2003 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets September 30, 2003 and March 31, 2003............................3 Statements of Operations For the three and six months ended September 30, 2003 and 2002...4 Statement of Partners' Equity (Deficit) For the six months ended September 30, 2003......................5 Statements of Cash Flows For the six months ended September 30, 2003 and 2002.............6 Notes to Financial Statements......................................7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................17 Item 3. Quantitative and Qualitative Disclosures about Market Risks.......20 Item 4. Procedures and Controls...........................................20 PART II. OTHER INFORMATION Item 1. Legal Proceedings.................................................20 Item 6. Exhibits and Reports on Form 8-K..................................20 Signatures.................................................................21 2 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) BALANCE SHEETS
September 30, 2003 March 31, 2003 ------------------------ -------------------- (unaudited) ASSETS Cash and cash equivalents $ 15,108 $ 16,162 Investments in limited partnerships, net (Note 3) 5,821,162 6,098,332 Other assets 998 998 ------------------------ -------------------- $ 5,837,268 $ 6,115,492 ======================== ==================== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Liabilities: Accrued fees and expenses due to General Partner and affiliates (Note 4) $ 386,625 $ 359,174 ------------------------ -------------------- Commitments and Contingencies (Note 6) Partners' equity (deficit): General Partner (97,806) (94,749) Limited Partners (20,000 units authorized, 15,600 units issued and outstanding) 5,548,449 5,851,067 -------------------- ------------------------ Total partners' equity 5,450,643 5,756,318 ------------------------ -------------------- $ 5,837,268 $ 6,115,492 ======================== ====================
See accompanying notes to financial statements 3 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) STATEMENTS OF OPERATIONS For the Three and Six Months Ended September 30, 2003 and 2002 (unaudited)
2003 2002 ----------------------------------------- ------------------------------------------ Three Months Six Months Three Months Six Months ----------------- ----------------- ----------------- ------------------ Interest income $ 33 $ 81 $ 102 $ 222 Miscellaneous income 68 3,058 - - ----------------- ----------------- ----------------- ------------------ 101 3,139 102 222 ----------------- ----------------- ----------------- ------------------ Operating expenses: Amortization (Note 3) 9,422 18,844 9,422 18,844 Asset management fees (Note 4) 11,000 22,000 11,000 22,000 Legal & accounting 14,800 19,889 12,632 14,327 Other 1,466 7,871 927 7,216 ----------------- ----------------- ----------------- ------------------ Total operating expenses 36,688 68,604 33,981 62,387 ----------------- ----------------- ----------------- ------------------ Loss from operations (36,587) (65,465) (33,879) (62,165) Equity in losses of limited partnerships (Note 3) (120,105) (240,210) (134,229) (272,500) ----------------- ----------------- ----------------- ------------------ Net loss $ (156,692) $ (305,675) $ (168,108) $ (334,665) ================= ================= ================= ================== Net loss allocated to: General Partner $ (1,567) $ (3,057) $ (1,681) $ (3,347) ================= ================= ================= ================== Limited Partners $ (155,125) $ (302,618) $ (166,427) $ (331,318) ================= ================= ================= ================== Net loss per weighted limited partner unit $ (10) $ (19) $ (11) $ (21) ================= ================= ================= ================== Outstanding weighted limited partner units 15,600 15,600 15,600 15,600 ================= ================= ================= ==================
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 (DEFICIT) For the Six Months Ended September 30, 2003 (unaudited)
General Limited Partner Partners Total ---------------- --------------- ---------------- Partners' equity (deficit) at March 31, 2003 $ (94,749) $ 5,851,067 $ 5,756,318 Net loss (3,057) (302,618) (305,675) ---------------- --------------- ---------------- Partners' equity (deficit) at September 30, 2003 $ (97,806) $ 5,548,449 $ 5,450,643 ================ =============== ================
See accompanying notes to financial statements 5 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) STATEMENTS OF CASH FLOWS For the Six Months Ended September 30, 2003 and 2002 (unaudited)
2003 2002 ----------------- ----------------- Cash flows from operating activities: Net loss $ (305,675) $ (334,665) Adjustments to reconcile net loss to net cash used in operating activities: Amortization 18,844 18,844 Equity in losses of limited partnerships 240,210 272,500 Change in other assets - 3,000 Change in accrued fees and expenses due to General Partner and affiliates 27,451 25,604 ----------------- ----------------- Net cash used in operating activities (19,170) (14,717) ----------------- ----------------- Cash flows from investing activities: Distributions from limited partnerships 18,116 7,940 ----------------- ----------------- Net decrease in cash and cash equivalents (1,054) (6,777) Cash and cash equivalents, beginning of period 16,162 32,342 ----------------- ----------------- Cash and cash equivalents, end of period $ 15,108 $ 25,565 ================= ================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Taxes paid $ - $ 800 ================ =================
See accompanying notes to financial statements 6 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarter Ended September 30, 2003 (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 six months ended September 30, 2003 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2004. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the fiscal year ended March 31, 2003. Organization - ------------ WNC Housing Tax Credit Fund IV, L.P., Series 2 (the "Partnership") was formed on September 27, 1993 under the laws of the state of California and commenced operations on July 18, 1994. 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. (the "General Partner") a California limited partnership. The general partner of the General Partner 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 the general partner as the Partnership has no employees of its own. The Partnership shall continue in full force and effect until December 31, 2050 unless terminated prior to that date pursuant to the partnership agreement or law. The Partnership Agreement authorized the sale of 20,000 units at $1,000 per unit ("Units"). The offering of Units concluded in July 1995 at which time 15,600 Units representing subscriptions, net of discounts for volume purchases of more than 100 units, in the amount of $15,241,000 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 contributions and a subordinated disposition fee from the remainder, any additional sale or refinancing proceeds will be distributed 90% to the limited partners (in proportion to their respective investments) and 10% to the General Partner. 7 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For the Quarter Ended September 30, 2003 (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 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. 8 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarter Ended September 30, 2003 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- Certain Risks and Uncertainties, 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. Exit Strategy - ------------- The IRS compliance period for low-income housing tax credit properties is generally 15 years from occupancy following construction or rehabilitation completion. WNC was one of the first in the industry to offer investments using the tax credit. Now these very first programs are completing their compliance period. With that in mind, the Partnership is continuing to review the Partnership's holdings, with special emphasis on the more mature properties including those that have satisfied the IRS compliance requirements. The Partnership's review will consider many factors including extended use requirements on the property (such as those due to mortgage restrictions or state compliance agreements), the condition of the property, and the tax consequences to the investors from the sale of the property. Upon identifying those properties with the highest potential for a successful sale, refinancing or syndication, the Partnership expects to proceed with efforts to liquidate those properties. The Partnership's objective is to maximize the investors' return wherever possible and, ultimately, to wind down those funds that no longer provide tax benefits to investors. To date no properties in the Partnership have been selected. Method of Accounting For Investments in Limited Partnerships - ------------------------------------------------------------ The Partnership accounts for its investments in limited partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships' results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable. Recoverability of such investment is measured by a comparison of the carrying amount to future undiscounted net cash flows expected to be generated. If an investment is considered to be impaired (see Note 2), the impairment to be recognized is measured by the amount by which the carrying amount of the investment exceeds fair value. The accounting policies of the Local Limited Partnership 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 Notes 3 and 4). Equity in losses from Local Limited Partnerships for the periods ended September 30, 2003 and 2002 have been recorded by the Partnership based on six months of results estimated by management of the Partnership. Management's estimate for the six-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 of limited partnerships allocated to the Partnership will not be recognized to the extent that the investment balance would be adjusted below zero. As soon as the investment balance reaches zero, the related costs of acquiring the investment are accelerated to the extent of losses available (see Note 3). 9 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarter Ended September 30, 2003 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- 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 partners' capital and amounted to $1,971,172 at the end of all periods presented. 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 highly liquid investments with maturities of six months or less when purchased to be cash equivalents. The Partnership had no cash equivalents at the end of all periods presented. 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. 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 during periods presented, as defined by SFAS No. 130. 10 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarter Ended September 30, 2003 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- New Accounting Pronouncements - ----------------------------- In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations", which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred with the associated asset retirement costs being capitalized as a part of the carrying amount of the long-lived asset. SFAS No. 143 also includes disclosure requirements that provide a description of asset retirement obligations and reconciliation of changes in the components of those obligations. The statement is effective for fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 did not have a material effect on the Partnership's financial position or results of operations. In August 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of Long-Lived Assets," which addresses accounting and financial reporting for the impairment or disposal of long-lived assets. This standard was effective for the Partnership's financial statements beginning January 1, 2002. The implementation of SFAS No. 144 did not have a material impact on the Partnership's financial position or results of operations. In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No. 145 rescinded six previously issued statements and amended SFAS No. 13, "Accounting for Leases." The statement provides reporting standards for debt extinguishments and provides accounting standards for certain lease modifications that have economic effects similar to sale-leaseback transactions. The statement is effective for certain lease transactions occurring after May 15, 2002 and all other provisions of the statement shall be effective for financial statements issued on or after May 15, 2002. The implementation of SFAS No. 145 did not have a material impact on the Partnership's financial position or results of operations. In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which updates accounting and reporting standards for personnel and operational restructurings. The Partnership adopted SFAS No. 146 for exit, disposal or other restructuring activities initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material effect on the Partnership's financial position or results of operations. In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." The adoption of FIN 45 did not have a material impact on the Partnership's financial position or results of operations. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an Amendment to SFAS No. 123." SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method on accounting for stock-based employee compensation. The implementation of SFAS No. 148 is not expected to have a material effect on the Partnership's financial position or results of operations. 11 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarter Ended September 30, 2003 (unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- 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. The provisions of FIN 46 were effective February 1, 2003 for all arrangements entered into after January 31, 2003. FIN 46 is effective in the second quarter of 2004 for those arrangements entered into prior to January 31, 2003. We are currently reviewing whether we have relationships with VIEs and, if so, whether we should consolidate them and disclose information about them as the primary beneficiary or disclose information about them as an interest holder. We may have to consolidate some of our equity investments in partnerships based on recent interpretations from accounting professionals. We currently record the amount of our investment in these partnerships as an asset on our balance sheet, recognize our share of partnership income or losses in our income statement, and disclose how we account for material types of these investments in our 2003 financial statements. However, we do not yet know the extent of the impact of consolidating the assets and liabilities of these partnerships on our balance sheet because of the complexities of applying FIN 46, the evolving interpretations from accounting professionals, and the nuances of each individual partnership. NOTE 2 - UNCERTAINTY WITH RESPECT TO INVESTMENTS IN BROKEN BOW AND SIDNEY: - -------------------------------------------------------------------------------- IMPAIRMENT OF INVESTMENTS ------------------------- The Partnership has two investments accounted for under the equity method, consisting of 99% limited partnership interests in each of Broken Bow Apartments I, Limited Partnership ("Broken Bow") and Sidney Apartments I, Limited Partnership ("Sidney"). Due to operational difficulties and negative cash flows in 2000, foreclosure procedures were commenced by the lender of these two Local Limited Partnerships. As a result, the Partnership, Broken Bow, Sidney, and a WNC subsidiary executed a work-out agreement with the lender (the "Agreement"), which was effective December 14, 2001. Broken Bow was required to pay to the lender $165,000 as a partial settlement of the indebtedness due and owing by Broken Bow due to the fact that their loan was a construction loan. The Partnership advanced the aforementioned monies to Broken Bow and fully reserved the amount as of March 31, 2002. The balance of the indebtedness due and owing to the lender by Broken Bow was satisfied by the execution of two promissory notes. The first note of $85,000, bears interest at 7% per annum, and requires principal and interest payments totaling $600 per month through April 2014, at which date the unpaid principal balance is due. The second note of $500,000, bears interest at 1% per annum, and has payments due monthly out of available cash flow, as defined, with the unpaid principal balance due April 2014. The balance of the indebtedness due and owing to the lender by Sidney was satisfied by the execution of two promissory notes. The first note totals $130,000, bears interest at 7% per annum, and requires principal and interest payments totaling $900 per month through April 2012, at which date the unpaid principal is due. The second note totals $300,000, bears interest at 1% per annum, and has payments due monthly out of available cash flow, as defined, with the unpaid principal balance due April 2014. The Partnership and a WNC subsidiary have executed a guarantee for the payment of both notes of Broken Bow and Sidney. In addition, several other commitments were made. Broken Bow and Sidney executed a grant deed to the lender in the event that either entity defaults under the terms and provisions of the notes. The deeds are held in escrow, and if Broken Bow or Sidney defaults on either note, the lender may, at its option, record the respective deed. In addition, the Partnership has assigned the lender as additional collateral all of its residual value interests, as defined, in all of the Local Limited Partnerships. The Partnership and the Local Limited Partnerships are prohibited from selling, assigning, transferring or further encumbering the Housing Complexes retained by each Local Limited Partnership without the approval of the lender. 12 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarter Ended September 30, 2003 (unaudited) NOTE 2 - UNCERTAINTY WITH RESPECT TO INVESTMENTS IN BROKEN BOW AND SIDNEY: - -------------------------------------------------------------------------------- IMPAIRMENT OF INVESTMENTS, continued ------------------------------------ As a result of the operating difficulties mentioned above, there is uncertainty as to additional costs, if any, that the Partnership may incur in connection with its investment in Broken Bow and Sidney and as to whether the Partnership will ultimately retain its interest in these Local Limited Partnerships. In the event the Partnership does not successfully retain its interest in Broken Bow and Sidney, the Partnership would be exposed to the cessation and recapture of the related tax credits. The Partnership's financial statements do not include any adjustments that might result from the outcome of these uncertainties. NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS - -------------------------------------------- As of the periods presented, the Partnership had acquired limited partnership interests in twenty-two Local Limited Partnerships, each of which owns one Housing Complex consisting of an aggregate of 892 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 entitled to 96% to 99%, as specified in the partnership agreements, of the operating profits and losses, taxable income and losses and tax credits of the Limited Partnerships. Equity in losses of Local Limited Partnerships is recognized in the financial statements until the related investment account is reduced to a zero balance. Losses incurred after the investment account is reduced to zero are not recognized. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended. Distributions received by limited partners are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero would be recognized as income. The following is a summary of the equity method activity of the investments in Local Limited Partnerships for the periods presented:
For the Six Months Ended For the Year Ended September 30, 2003 March 31, 2003 ------------------------ ------------------- Investments in limited partnerships, beginning of period $ 6,098,332 $ 6,677,963 Distributions received from limited partnerships (18,116) (12,825) Equity in losses of limited partnerships (240,210) (529,118) Amortization of capitalized acquisition fees and costs (18,844) (37,688) ------------------------ ------------------- Investments in limited partnerships, end of period $ 5,821,162 $ 6,098,332 ======================== ===================
13 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarter Ended September 30, 2003 (unaudited) NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued - ------------------------------------------------------- Selected financial information for the six months ended September 30, 2003 and 2002 from the unaudited combined condensed financial statements of the limited partnerships in which the Partnership has invested are as follows:
COMBINED CONDENSED STATEMENTS OF OPERATIONS 2003 2002 -------------------- ------------------ Revenues $ 2,161,000 $ 2,061,000 -------------------- ------------------ Expenses: Interest expense 576,000 550,000 Depreciation & amortization 668,000 679,000 Operating expenses 1,317,000 1,274,000 -------------------- ------------------ Total expenses 2,561,000 2,503,000 -------------------- ------------------ Net loss $ (400,000) $ (442,000) ==================== ================== Net loss allocable to the Partnership $ (395,000) $ (437,000) ==================== ================== Net loss recorded by the Partnership $ (240,000) $ (273,000) ==================== ==================
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 Partner may be required to sustain the operations of such Local Limited Partnerships. If additional capital contributions are not made when they are required, the Partnership's investment in certain of such Local Limited Partnerships could be impaired, and the loss and recapture of the related tax credits could occur (furthermore, see Note 6). 14 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarter Ended September 30, 2003 (unaudited) NOTE 4 - RELATED PARTY TRANSACTIONS - ----------------------------------- The Partnership has no officers, employees, or directors. However, under the terms of the Partnership Agreement the Partnership is obligated to the General Partner or its affiliates for the following fees: (a) Annual Asset Management Fee. An annual asset management fee of the greater of (i) $2,000 per multi-family housing complex or (ii) 0.275% of Gross Proceeds. The base fee amount will be adjusted annually based on changes in the Consumer Price Index. However, in no event will the annual asset management fee exceed 0.2% of Invested Assets. "Invested Assets" means the sum of the Partnership's investment in Local Limited Partnerships and the Partnership's allocable share of the amount of indebtedness related to the Housing Complexes. Asset Management fees of $22,000 were incurred during each of the six months ended September 30, 2003 and 2002. The Partnership paid the General Partner or its affiliates $0 and $1,875 of those fees during the six months ended September 30, 2003 and 2002, respectively. (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. The accrued fees and expenses due to General Partner and affiliates consisted of the following:
September 30, 2003 March 31, 2003 -------------------- -------------------- Reimbursement for expenses paid by the General Partner or an affiliate $ 172,341 $ 166,890 Asset management fee payable 214,284 192,284 -------------------- -------------------- Total $ 386,625 $ 359,174 ==================== ====================
The General Partner does not anticipate that these accrued fees will be paid until such time as capital reserves are in excess of future foreseeable working capital requirements of the Partnership. NOTE 5 - INCOME TAXES - --------------------- No provision for income taxes has been recorded in the accompanying financial statements as any liability for income taxes is the obligation of the partners of the Partnership. NOTE 6 - COMMITMENTS AND CONTINGENCIES - -------------------------------------- During 2000, WNC removed a developer who, at the time, was the local general partner in six Local Limited Partnerships. The Partnership has a 99% limited partnership interest in two of those six Local Limited Partnerships. Those investments are Broken Bow Apartments I, Limited Partnership, and Sidney Apartments I, Limited Partnership. The six Local Limited Partnerships (hereinafter referred to as "Defendants") were defendants in a lawsuit. The six Local Limited Partnerships (hereinafter referred to as "Defendants") were defendants in a lawsuit. 15 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For the Quarter Ended September 30, 2003 (unaudited) NOTE 6 - COMMITMENTS AND CONTINGENCIES, continued - ------------------------------------------------- The lawsuit was filed by eight other partnerships in which the former Local General Partner of the Local Limited Partnerships is or was involved (the "Plaintiffs"). The Plaintiffs allege that the Local General Partner accepted funds from the Plaintiffs and improperly loaned these funds to the Defendants. In July 2001, this lawsuit was settled for an aggregate amount of $35,000. The Partnership's allocated share of $11,700 was paid in full at March 31, 2002. The Partnership currently has insufficient working capital to fund its operations. WNC and Associates, Inc., the general partner of the General Partner of the Partnership, has agreed to provide advances sufficient enough to fund the operations and working capital requirements of the Partnership through November 15, 2004. 16 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward Looking Statements With the exception of the discussion regarding historical information, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other discussions elsewhere in this Form 10-Q contain forward-looking statements. Such statements are based on current expectations subject to uncertainties and other factors, which may involve known and unknown risks that could cause actual results of operations to differ materially from those projected or implied. Further, certain forward-looking statements are based upon assumptions about future events, which may not prove to be accurate. Risks and uncertainties inherent in forward looking statements include, but are not limited to, our future cash flows and ability to obtain sufficient financing, level of operating expenses, conditions in the low income housing tax credit property market and the economy in general, as well as legal proceedings. Historical results are not necessarily indicative of the operating results for any future period. Subsequent written and oral forward looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by cautionary statements in this Form 10-Q and in other reports we filed with the Securities and Exchange Commission. The following discussion should be read in conjunction with the condensed Financial Statements and the Notes thereto included elsewhere in this filing. The following discussion and analysis compares the results of operations for the three and six months ended September 30, 2003 and 2002, and should be read in conjunction with the condensed financial statements and accompanying notes included within this report. Uncertainty and Commitments with Respect to Investment in Broken Bow and Sidney The Partnership has two investments accounted for under the equity method, consisting of 99% limited partnership interests in each of Broken Bow Apartments I, Limited Partnership ("Broken Bow") and Sidney Apartments I, Limited Partnership ("Sidney"). Due to operational difficulties and negative cash flows in 2000, foreclosure procedures were commenced by the lender of these two Local Limited Partnerships. As a result, the Partnership, Broken Bow, Sidney, and a WNC subsidiary executed a work-out agreement with the lender (the "Agreement"), which was effective December 14, 2001. Broken Bow was required to pay to the lender $165,000 as a partial settlement of the indebtedness due and owing by Broken Bow due to the fact that their loan was a construction loan. The Partnership advanced the aforementioned monies to Broken Bow and fully reserved the amount as of March 31, 2002. The balance of the indebtedness due and owing to the lender by Broken Bow was satisfied by the execution of two promissory notes. The first note of $85,000, bears interest at 7% per annum, and requires principal and interest payments totaling $600 per month through April 2014, at which date the unpaid principal balance is due. The second note of $500,000, bears interest at 1% per annum, and has payments due monthly out of available cash flow, as defined, with the unpaid principal balance due April 2014. The balance of the indebtedness due and owing to the lender by Sidney was satisfied by the execution of two promissory notes. The first note totals $130,000, bears interest at 7% per annum, and requires principal and interest payments totaling $900 per month through April 2012, at which date the unpaid principal is due. The second note totals $300,000, bears interest at 1% per annum, and has payments due monthly out of available cash flow, as defined, with the unpaid principal balance due April 2014. The Partnership and a WNC subsidiary have executed a guarantee for the payment of both notes of Broken Bow and Sidney. In addition, several other commitments were made. Broken Bow and Sidney executed a grant deed to the lender in the event that either entity defaults under the terms and provisions of the notes. The deeds are held in escrow, and if Broken Bow or Sidney defaults on either note, the lender may, at its option, record the respective deed. In addition, the Partnership has assigned the lender as additional collateral all of its residual value interests, as defined, in all of 17 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Uncertainty and Commitments with Respect to Investment in Broken Bow and Sidney, continued the Local Limited Partnerships. The Partnership and the Local Limited Partnerships are prohibited from selling assigning, transferring or further encumbering the Housing Complexes retained by each Local Limited Partnership without the approval of the lender. As a result of the operating difficulties mentioned above, there is uncertainty as to additional costs, if any, that the Partnership may incur in connection with its investment in Broken Bow and Sidney and as to whether the Partnership will ultimately retain its interest in these Local Limited Partnerships. In the event the Partnership does not successfully retain its interest in Broken Bow and Sidney, the Partnership would be exposed to the cessation and recapture of the related tax credits. The Partnership's financial statements do not include any adjustments that might result from the outcome of these uncertainties. Financial Condition The Partnership's assets at September 30, 2003 consisted primarily of $15,000 in cash and aggregate investments in the twenty-two Local Limited Partnerships of $5,821,000. Liabilities at September 30, 2003 primarily consisted of $214,000 in accrued asset management fees and $172,000 of accrued fees and expenses due to the General Partner or affiliates. Results of Operations Three Months Ended September 30, 2003 Compared to Three Months Ended September 30, 2002. The Partnership's net loss for the three months ended September 30, 2003 was $(157,000) reflecting a decrease of $11,000 from the $(168,000) net loss experienced for the three months ended September 30, 2002. The decrease in net loss is primarily due to equity in losses of Local Limited Partnerships, which decreased by $14,000 to $(120,000) for the three months ended September 30, 2003 from $(134,000) for the six months ended September 30, 2002. 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 September 30, 2003. 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 is offset by an increse of $(3,000) in the loss from operations. The increase is due to legal, accounting and other operating expenses increasing by $(3,000) for the period ended September 30, 2003 compared to the period ended September 30, 2002. Six Months Ended September 30, 2003 Compared to Six Months Ended September 30, 2002. The Partnership's net loss for the six months ended September 30, 2003 was $(306,000) reflecting a decrease of $29,000 from the $(335,000) net loss experienced for the six months ended September 30, 2002 The decrease in net loss is primarily due to equity in losses of Local Limited Partnerships, which decreased by $33,000 to $(240,000) for the six months ended September 30, 2003 from $(273,000) for the six months ended September 30, 2002. 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 September 30, 2003. Since the Partnership's liability with respect to its investments is limited, losses in excess of investment are not recognized. The decrease in equity in losses of Local Limited Partnerships is offset by an increase in loss from operation of $(4,000), to $(66,000) for the six months ended September 30, 2003 from $(62,000) for the six months ended September 30, 2002 due to a $3,000 increase in miscellaneous income and an increase of approximately $(7,000) in legal, accounting and other operating expenses. 18 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Cash Flows Six Months Ended September 30, 2003 Compared to Six Months Ended September 30, 2002. Net cash used during the six months ended September 30, 2003 was $(1,000) compared to net cash used during the six months ended September 30, 2002 of $(7,000). The $6,000 difference was due primarily to an increase in cash provided by investing activities of $10,000, which were distributions received from limited partnerships. That increase was offset by an increase in cash used in operating activities of approximately $(4,000). During the six months ended September 30, 2003, accrued payables, which consist primarily of asset management fees due to the General Partner and reimbursements for expenses, paid by the general partner or an affiliate, increased by $27,000. The General Partner does 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. The Partnership currently has insufficient working capital to fund its operations. WNC and Associates, Inc., the general partner of the Partnership, has agreed to continue providing advances sufficient to fund the operations and working capital requirements of the Partnership through November 15, 2004. 19 Item 3. Quantitative and Qualitative Disclosures above Market Risks NOT APPLICABLE. Item 4. Procedures and Controls Within the 90 days prior to the date of this report, the General Partners of the Partnership carried out an evaluation, under the supervision and with the participation of Associates' management, including Associates' Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures pursuant to Exchange Act Rule 13a- 14. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Partnership's disclosure controls and procedures are effective. There were no significant changes in the Partnership's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. Part II. Other Information Item 1. Legal Proceedings NONE Item 6. Exhibits and reports on Form 10-K (a) Reports on Form 8-K ------------------- 1. NONE (b) Exhibits -------- 99.1 Certification of the Principal Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) 99.2 Certification of the Principal Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) 20 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 of the Registrant By: WNC & ASSOCIATES, INC., General Partner By: /s/ Wilfred N. Cooper, Jr. --------------------------- Wilfred N. Cooper, Jr., President Chief Operating Officer of WNC & Associates, Inc. Date: November 14, 2003 By: /s/ Thomas J. Riha ------------------ Thomas J. Riha, Vice President Chief Financial Officer of WNC & Associates, Inc. Date: November 14, 2003 21 EX-31 2 n42x31-1.txt EXECUTIVE OFFICER CERTIFICATION SECTION 302 CERTIFICATIONS I, Wilfred N. Cooper, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of WNC HOUSING TAX CREDITS FUND IV, L.P., Series 2; 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 periods covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as 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 (the registrant's fourth fiscal quarter in the case of an annual report) 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 and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial statements. Date: November 14, 2003 /s/ Wilfred N. Cooper, Jr. --------------------------- [Signature] President and Chief Executive Officer of WNC & Associates, Inc. EX-31 3 n42x31-2.txt FINANCIAL OFFICER CERTIFICATION UNDER SECTION 302 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 CREDITS FUND IV, L.P., Series 2; 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 periods covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as 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 (the registrant's fourth fiscal quarter in the case of an annual report) 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 and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial statements. Date: November 14, 2003 /s/ Thomas J. Riha ------------------- [Signature] Vice-President - Chief Financial Officer of WNC & Associates, Inc. EX-32 4 n42x32-1.txt EXECUTIVE OFFICER CERTIFICATION UNDER SECTION 906 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 2 (the "Partnership") for the period ended September 30, 2003 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. November 14, 2003 EX-32 5 n42x32-2.txt FINANCIAL OFFICER CERTIFICATION UNDER SECTION 906 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 2 (the "Partnership") for the period ended September 30, 2003 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 Chief Financial Officer of WNC & Associates, Inc. November 15, 2003 -----END PRIVACY-ENHANCED MESSAGE-----