FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT For the transition period.........to......... Commission file number 0-9704 ANGELES PARTNERS IX (Exact name of small business issuer as specified in its charter) California 95-3417137 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) ANGELES PARTNERS IX CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 1997 Assets Cash and cash equivalents: Unrestricted $ 810 Restricted--tenant security deposits 124 Accounts receivable (net of allowance for $11,000) 52 Escrow for taxes 178 Restricted escrows 609 Other assets 594 Investment properties: Land $ 3,083 Buildings and related personal property 33,090 36,173 Less accumulated depreciation (21,338) 14,835 $ 17,202 Liabilities and Partners' Deficit Liabilities Accounts payable $ 130 Tenant security deposits 125 Accrued taxes 155 Other liabilities 169 Mortgage notes payable 19,924 Partners' Deficit General partner $ (208) Limited partners (19,975 units issued and outstanding) (3,093) (3,301) $ 17,202 See Accompanying Notes to Consolidated Financial Statements b) ANGELES PARTNERS IX CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1997 1996 Revenues: Rental income $ 1,785 $ 1,722 Other income 98 98 Total revenues 1,883 1,820 Expenses: Operating 692 644 General and administrative 66 54 Maintenance 245 307 Depreciation 443 411 Interest 437 457 Property taxes 110 115 Bad debt 11 -- Total expenses 2,004 1,988 Net loss $ (121) $ (168) Net loss allocated to general partner (1%) $ (1) $ (2) Net loss allocated to limited partners (99%) (120) (166) Net loss $ (121) $ (168) Net loss per limited partnership unit $ (6.01) $ (8.31) See Accompanying Notes to Consolidated Financial Statements c) ANGELES PARTNERS IX CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data) Limited Partnership General Limited Units Partner Partners Total Original capital contributions 20,000 $ 1 $ 20,000 $ 20,001 Partners' deficit at December 31, 1996 19,975 $ (207) $ (2,973) $ (3,180) Net loss for the three months ended March 31, 1997 -- (1) (120) (121) Partners' deficit at March 31, 1997 19,975 $ (208) $ (3,093) $ (3,301) <FN> See Accompanying Notes to Consolidated Financial Statements d) ANGELES PARTNERS IX CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Three Months Ended March 31, 1997 1996 Cash flows from operating activities: Net loss $ (121) $ (168) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 443 411 Amortization of loan costs and discounts 28 36 Bad debt expense 11 -- Change in accounts: Restricted cash 3 14 Accounts receivable (7) (27) Escrows for taxes 120 55 Other assets (4) -- Accounts payable (120) 100 Tenant security deposit liabilities (4) (13) Accrued taxes (174) (77) Other liabilities (29) (27) Net cash provided by operating activities 146 304 Cash flows from investing activities: Property improvements and replacements (120) (183) Deposits to restricted escrows (29) -- Net cash used in investing activities (149) (183) Cash flows from financing activities: Payments on mortgage notes payable (55) (62) Loan costs (9) (4) Net cash used in financing activities (64) (66) Net (decrease) increase in cash (67) 55 Cash and cash equivalents at beginning of period 877 451 Cash and cash equivalents at end of period $ 810 $ 506 Supplemental disclosure of cash flow information: Cash paid for interest $ 410 $ 422 <FN> See Accompanying Notes to Consolidated Financial Statements e) ANGELES PARTNERS IX NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Angeles Realty Corporation (the "General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in Angeles Partner IX's (the "Partnership") annual report on Form 10-KSB for the fiscal year ended December 31, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - TRANSACTION WITH AFFILIATES The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following amounts were paid to the General Partner and affiliates for the three months ended March 31, 1997 and 1996: 1997 1996 (in thousands) Property management fees $ 93 $ 91 Reimbursement of services of affiliates 55 61 The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the General Partner, who receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations is not significant. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Partnership's investment properties consist of five apartment complexes. The following table sets forth the average occupancy of the properties for the three months ended March 31, 1997 and 1996: Average Occupancy Property 1997 1996 Pines of Northwest Crossing Apartments 92% 90% Houston, Texas Panorama Terrace Apartments (1) 90% 94% Birmingham, Alabama Forest River Apartments (2) 89% 95% Gadsden, Alabama Village Green Apartments 93% 92% Montgomery, Alabama Rosemont Crossing Apartments (3) 94% 88% San Antonio, Texas (1)Occupancy at Panorama Terrace Apartments decreased due to 1600 new units built in the Birmingham area, which has softened the rental market. (2)Occupancy at Forest River Apartments has decreased due to the attractive incentives that Gadsden area finance companies are offering to first time home buyers. Additionally, 20% of renters in this market are students who did not move in until mid first-quarter. (3)Occupancy at Rosemont Crossing has increased due to a stronger rental market and attractive move-in specials. The Partnership's net loss for the three months ended March 31, 1997, was $121,000 verses $168,000 for the three months ended March 31, 1996. The decreased net loss is the result of increased rental revenues. The increase in rental revenues for the three months ended March 31, 1997, is a result of increases in occupancy at Rosemont Crossing Apartments, The Pines of Northwest Crossing Apartments and Village Green Apartments. This was partially offset by a decrease in occupancy at Panorama Terrace Apartments and Forest River Apartments. In addition, rental revenues increased as a result of increased rental rates at all of the Partnership's investment properties. Operating expenses increased due to increased rental incentives and advertising in an effort to boost occupancy at the Partnership's investment properties. Additionally, operating expenses increased due to increased utility expenses. Maintenance expenses decreased as a result of a decrease in non-recurring repairs at Panorama Terrace Apartments, Village Green Apartments and the Pines of Northwest Crossing Apartments. During the first quarter of 1996, Village Green Apartments underwent major landscaping and Panorama Terrace Apartments and the Pines of Northwest Crossing Apartments underwent non-recurring work on the exterior of the buildings. Included in maintenance expense for the three months ended March 31, 1997, is $36,000 of major repairs and maintenance comprised of exterior painting and major landscaping. Included in maintenance expense for the three months ended March 31, 1996, is $14,000 of major repairs and maintenance comprised of exterior and interior building improvements. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan. At March 31, 1997, the Partnership had unrestricted cash of $810,000 versus $506,000 at March 31, 1996. Net cash provided by operating activities decreased primarily due to a decrease in accounts payable and accrued taxes, which is due to the timing of such payments. This was partially offset by a decrease in escrows for taxes, as such tax payments were funded by amounts held in escrow. Net cash used in investing activities decreased due to a decrease in property improvements and replacements. Net cash used in financing activities decreased as a result of a reduction in payments on mortgage notes due to the refinancing of the mortgage note secured by Village Green Apartments in 1996. The Partnership's primary source of cash is from the operations of its properties and from financing placed on such properties. Cash for these sources is utilized for property operations, capital improvements, and/or repayment of debt. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the various properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of $19,924,000, net of discount, is amortized over varying periods with required balloon payments of $18,258,000 from August 2002 to November 2003, at which time the properties will either be refinanced or sold. In November 1996, the Partnership refinanced the mortgage debt secured by Village Green Apartments. The new loan has a principal amount of $4,900,000 and has a maturity date of November 1, 2003. This note carries an interest rate of 7.33% per annum. Future cash distributions will depend on the levels of cash generated from operations, property sales and the availability of cash reserves. No cash distributions were paid during the three months ended March 31, 1997, or the three months ended March 31, 1996. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On March 4, 1994, an employee at The Pines of Northwest Crossing Apartments ("Plaintiff") allegedly sustained personal injuries during the ordinary course of business. The Plaintiff remained out of work until March 24, 1994. The Plaintiff alleges that upon his return back to work, he was terminated in retaliation for having filed a worker's compensation claim. The Plaintiff seeks actual damages, exemplary damages, attorney's fees and court costs. The General Partner can not predict the outcome of this proceeding or the range of settlement for the Plaintiff, if settled in favor of the Plaintiff; however the General Partner believes that this claim is without merit and intends to vigorously defend it. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature. The General Partner believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition, or operations of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a)Exhibits: Exhibit 27, Financial Data Schedule, is filed as and exhibit to this report. (b)No reports on Form 8-K were filed during the three months ended March 31, 1997. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES PARTNERS IX By: Angeles Realty Corporation General Partner By: /s/ Carroll D. Vinson Carroll D. Vinson President By: /s/ Robert D. Long, Jr. Robert D. Long, Jr. Vice President/CAO Date: May 13, 1997