FORM 10-QSB--QUARTERLY OR TRANSITIONAL 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
(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, 2001
[ ] 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 0-14283
ANGELES INCOME PROPERTIES, LTD. IV
(Exact name of small business issuer as specified in its charter)
California 95-3974194
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENT OF NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
September 30, 2001
Assets
Cash and cash equivalents $ 185
Receivables and deposits 174
Restricted escrow 675
Other assets 22
Investment property 11,840
12,896
Liabilities
Accounts payable 107
Tenant security deposit liabilities 10
Accrued property taxes 87
Other liabilities 186
Mortgage payable 12,509
Estimated costs during the period of liquidation 124
13,023
Net liabilities in liquidation $ (127)
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES INCOME PROPERTIES, LTD. IV
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
Period From August 23 through September 30, 2001
Net liabilities in liquidation at August 22, 2001 $ (127)
Changes in net liabilities in liquidation attributed to:
Decrease in cash and cash equivalents (165)
Increase in receivables and deposits 50
Increase in restricted escrows 61
Increase in accounts payable (86)
Decrease in other liabilities 100
Decrease in mortgage note payable 28
Decrease in estimated costs during the period of
liquidation 12
Net liabilities in liquidation at September 30, 2001 $ (127)
See Accompanying Notes to Consolidated Financial Statements
c)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
August 22, 2001
Assets
Cash and cash equivalents $ 350
Receivables and deposits, net of allowance for
doubtful accounts of $169 124
Restricted escrows 614
Other assets 366
Investment property:
Land $ 2,414
Buildings and related personal property 18,205
20,619
Less accumulated depreciation (13,969) 6,650
$ 8,104
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 21
Tenant security deposit liabilities 10
Accrued property taxes 87
Other liabilities 287
Mortgage note payable 14,507
Partners' Deficit
General partner $ (158)
Limited partners (131,585 units issued and
outstanding) (6,650) (6,808)
$ 8,104
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Period From Period From
July 1 through Three Months Ended January 1 through Nine Months Ended
August 22, September 30, August 22, September 30,
2001 2000 2001 2000
Revenues:
Rental income $ 504 $ 824 $ 2,031 $ 2,565
Other income 48 19 69 61
Total revenues 552 843 2,100 2,626
Expenses:
Operating 241 449 956 1,208
General and 19 63 137 143
administrative
Depreciation 157 237 627 711
Interest 230 376 959 1,102
Property taxes 20 30 81 108
Bad debt (recovery)
expense, net -- (18) 67 51
Total expenses 667 1,137 2,827 3,323
Net loss $ (115) $ (294) $ (727) $ (697)
Net loss allocated to
general partner (2%) $ (2) $ (6) $ (15) $ (14)
Net loss allocated to
limited partners (98%) (113) (288) (712) (683)
$ (115) $ (294) $ (727) $ (697)
Net loss per limited $ (0.86) $ (2.19) $ (5.41) $ (5.19)
partnership unit
Distributions per limited
partnership unit $ -- $ -- $ -- $ 7.08
See Accompanying Notes to Consolidated Financial Statements
e)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT/NET LIABILITIES IN
LIQUIDATION
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 131,800 $ 1 $65,900 $65,901
Partners' deficit at
December 31, 2000 131,585 $ (138) $(5,938) $(6,076)
Distributions to partners -- (5) -- (5)
Net loss for the period ended
August 22, 2001 -- (15) (712) (727)
Partners' deficit at
August 22, 2001 131,585 $ (158) $(6,650) (6,808)
Adjustment to liquidation basis
(Note C) 6,681
Net liabilities in liquidation
at August 22, 2001 $ (127)
See Accompanying Notes to Consolidated Financial Statements
f)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Period From
January 1 through Nine Months Ended
August 22, September 30,
2001 2000
Cash flows from operating activities:
Net loss $ (727) $ (697)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 627 711
Amortization of loan costs and leasing
commissions 41 86
Bad debt expense, net 67 51
Change in accounts:
Receivables and deposits 166 295
Other assets (32) 40
Accounts payable (79) 1
Tenant security deposit liabilities (6) 10
Accrued property taxes (41) (32)
Other liabilities 43 (9)
Net cash provided by operating activities 59 456
Cash flows from investing activities:
Lease commission paid -- (59)
Property improvements and replacements (11) (69)
Net deposits to restricted escrows (129) (144)
Deposit on sale of investment in joint venture 50 --
Net cash used in investing activities (90) (272)
Cash flows from financing activities:
Payments on mortgage note payable (150) (154)
Distribution to partners (94) (950)
Net cash used in financing activities (244) (1,104)
Net decrease in cash and cash equivalents (275) (920)
Cash and cash equivalents at beginning of period 625 1,170
Cash and cash equivalents at end of period $ 350 $ 250
Supplemental disclosure of cash flow information:
Cash paid for interest $ 949 $ 1,082
A distribution of approximately $89,000 was declared and accrued at December 31,
2000. This distribution was paid during the period ended August 22, 2001.
See Accompanying Notes to Consolidated Financial Statements
g)
ANGELES INCOME PROPERTIES, LTD. IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
As of August 22, 2001, Angeles Income Properties, Ltd. IV (the "Partnership" or
"Registrant") adopted the liquidation basis of accounting due to the sale of its
joint venture interest in its sole investment property. Upon passing the
one-year right of rescission under the sale of the Partnership's joint venture
interest entered into on August 22, 2001, the Partnership is expected to
terminate.
The Partnership and ARC II have entered into a contract with an unrelated third
party to sell their ownership in the joint venture that indirectly owns Factory
Merchants Mall. The contract closed on August 22, 2001. The Partnership received
$49,750 for its 99.5% ownership and Angeles Realty Corporation ("ARC II")
received $250 for its 0.5% ownership of the joint venture. For a period of one
year after the transaction, should the lender declare a default under the
mortgage debt encumbering the Factory Merchants Mall property as a result of
this transfer or prior act or omission of the lower tier partnership which owns
the Factory Merchants Mall property, the purchaser has the right to transfer the
ownership interest back to the Partnership and ARC II with the cash being paid
back to the purchaser. Assuming that the aforementioned recission right does not
occur, the Partnership will then be terminated.
This sale transaction will be complete upon the elapse of the right of
recission. Until that time, the purchaser can transfer the ownership interest
back to the Partnership and ARC II. Therefore, the consolidated statement of net
liabilities in liquidation will include the operations of the joint venture
property. The funds received by the Partnership for its joint venture interest
are currently being considered as a deposit from the purchaser in advance of the
sales transaction completion and are included in other liabilities on the
accompanying statement of net liabilities in liquidation.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its financial statements at August 22, 2001,
to the liquidation basis of accounting. Consequently, assets have been valued at
estimated net realizable value and liabilities are presented at their estimated
settlement amounts, including estimated costs associated with carrying out the
liquidation of the Partnership and estimated operations of the joint venture
property. The valuation of assets and liabilities necessarily requires many
estimates and assumptions and there are substantial uncertainties in carrying
out the liquidation. The actual realization of assets and settlement of
liabilities could be higher or lower than amounts indicated and is based upon
estimates of ARC II (or the "General Partner") as of the date of the
consolidated financial statements.
Included in liabilities in the statement of net liabilities in liquidation as of
September 30, 2001 is approximately $124,000 of cost, net of income, that the
General Partner estimates will be incurred during the period of liquidation
based on the assumption that the liquidation process will be completed by August
22, 2002. If the mortgage encumbering the joint venture property is refinanced
during the one year right of rescission period without the current mortgage
being called due as the result of the change in ownership of the joint venture,
the liquidation period will be shorter than currently projected.
Principles of Consolidation
The consolidated financial statements include a joint venture which owns Factory
Merchants AIP IV, L.P., and AIP IV Factory GP, LLC., which the Partnership held
a majority interest in until its sale on August 22, 2001. Due to the nature of
the right of rescission, the statement of net liabilities in liquidation
includes amounts for the joint venture property. All significant interentity
balances have been eliminated. The General Partner is an affiliate of Apartment
Investment and Management Company ("AIMCO"), a publicly traded real estate
investment trust.
Note B - Transactions with Affiliated Parties
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 certain payments to affiliates for
services and reimbursement of certain expenses incurred by affiliates on behalf
of the Partnership.
The following amounts were paid or accrued to the General Partner and affiliates
during the nine months ended September 30, 2001 and 2000, respectively:
2001 2000
(in thousands)
Reimbursement for services of affiliates (included
in general and administrative expense) $ 65 $ 36
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $65,000 and $36,000 for the
nine months ended September 30, 2001 and 2000, respectively.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 28,838 limited partnership units in
the Partnership representing 21.92% of the outstanding units at September 30,
2001. A number of these units were acquired pursuant to tender offers made by
AIMCO or its affiliates. Under the Partnership Agreement, unitholders holding a
majority of the Units are entitled to take action with respect to a variety of
matters, which would include voting on certain amendments to the Partnership
Agreement and voting to remove the General Partner. When voting on matters,
AIMCO would in all likelihood vote the Units it acquired in a manner favorable
to the interest of the General Partner because of its affiliation with the
General Partner.
Note C - Adjustment to Liquidation Basis of Accounting
At August 22, 2001, in accordance with the liquidation basis of accounting,
assets were adjusted to their estimated net realizable value and liabilities
were adjusted to their settlement amount. The net adjustment required to convert
to the liquidation basis of accounting was an increase in net assets of
approximately $6,681,000 which is included in the Statement of Changes in
Partners' Deficit/Net Liabilities In Liquidation. The adjustments are summarized
as follows:
Increase in
Net Assets
(in thousands)
Adjustment from book value of property and
improvements to estimated net realizable value $ 5,190
Adjustment of mortgage note payable to estimated
settlement amount 1,970
Adjustment of other assets and liabilities, net (479)
Net increase in net assets $ 6,681
Note D - Distribution
During the period ended August 22, 2001, the Partnership paid distributions of
approximately $89,000 from operations, of which approximately $87,000 ($0.66 per
limited partnership unit) is allocable to the limited partners. This
distribution was declared and accrued as of December 31, 2000. During the nine
months ended September 30, 2000, the Partnership paid a cash distribution from
operations of approximately $950,000, of which approximately $931,000 ($7.08 per
limited partnership unit) was paid to the limited partners. In conjunction with
the transfer of funds from the majority-owned joint venture to the Partnership
during the period ended August 22, 2001, approximately $5,000 was distributed to
the general partner of the majority-owned joint venture.
Note E - Segment Reporting
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" established standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports. It
also established standards for related disclosures about products and services,
geographic areas, and major customers. As defined in SFAS No. 131, the
Partnership has only one reportable segment. The General Partner believes that
segment-based disclosures will not result in a more meaningful presentation than
the consolidated financial statements as currently presented.
Note F - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purports to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain general partner entities by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs filed an amended complaint. The General Partner filed demurrers to
the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. On July 20, 2001, plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which, together with a demurrer filed by other defendants, is
currently scheduled to be heard on November 15, 2001. The Court has set the
matter for trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. The matters are currently scheduled to be heard on
November 15, 2001.
The General Partner does not anticipate that any costs, whether legal or
settlement costs, associated with these cases will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussions of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment property consists of one commercial property. The
following table sets forth the average occupancy of the property for the period
ended August 22, 2001 and the nine months ended September 30, 2000,
respectively:
Average Occupancy
Property 2001 2000
Factory Merchants Mall 86% 90%
Pigeon Forge, Tennessee
As of August 22, 2001, Angeles Income Properties, Ltd. IV (the "Partnership" or
"Registrant") adopted the liquidation basis of accounting due to the sale of its
joint venture interest in its sole investment property. Upon passing the
one-year right of rescission under the sale of the Partnership's joint venture
interest entered into on August 22, 2001, the Partnership is expected to
terminate.
The Partnership and ARC II have entered into a contract with an unrelated third
party to sell their ownership in the joint venture that indirectly owns Factory
Merchants Mall. The contract closed on August 22, 2001. The Partnership received
$49,750 for its 99.5% ownership and Angeles Realty Corporation ("ARC II")
received $250 for its 0.5% ownership of the joint venture. For a period of one
year after the transaction, should the lender declare a default under the
mortgage debt encumbering the Factory Merchants Mall property as a result of
this transfer or prior act or omission of the lower tier partnership which owns
the Factory Merchants Mall property, the purchaser has the right to transfer the
ownership interest back to the Partnership and ARC II with the cash being paid
back to the purchaser. Assuming that the aforementioned recission right does not
occur, the Partnership will then be terminated.
This sale transaction will be complete upon the elapse of the right of
recission. Until that time, the purchaser can transfer the ownership interest
back to the Partnership and ARC II. Therefore, the consolidated statement of net
liabilities in liquidation will include the operations of the joint venture
property. The funds received by the Partnership for its joint venture interest
are currently being considered as a deposit from the purchaser in advance of the
sales transaction completion and are included in other liabilities on the
accompanying statement of net liabilities in liquidation.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its financial statements at August 22, 2001,
to the liquidation basis of accounting. Consequently, assets have been valued at
estimated net realizable value and liabilities are presented at their estimated
settlement amounts, including estimated costs associated with carrying out the
liquidation of the Partnership and estimated operations of the joint venture
property. The valuation of assets and liabilities necessarily requires many
estimates and assumptions and there are substantial uncertainties in carrying
out the liquidation. The actual realization of assets and settlement of
liabilities could be higher or lower than amounts indicated and is based upon
estimates of ARC II (or the "General Partner") as of the date of the
consolidated financial statements.
Included in liabilities in the statement of net liabilities in liquidation as of
September 30, 2001 is approximately $124,000 of cost, net of income, that the
General Partner estimates will be incurred during the period of liquidation
based on the assumption that the liquidation process will be completed by August
22, 2002. If the mortgage encumbering the joint venture property is refinanced
during the one year right of rescission period without the current mortgage
being called due as the result of the change in ownership of the joint venture,
the liquidation period will be shorter than currently projected.
Results from Operations
The Partnership realized a net loss of approximately $727,000 for the period
ending August 22, 2001 as compared to a net loss of approximately $697,000 for
the nine months ended September 30, 2000. The increase in net loss for the
period ending August 22, 2001 as compared to the nine months ended September 30,
2000 is due to a decrease in total revenues partially offset by a decrease in
total expenses. The majority of the increase in net loss is attributable to
reporting less than nine months of activity for 2001, resulting from the
adoption of liquidation basis on August 22, 2001. Excluding the effect of the
difference in time periods being reported, total revenues decreased due to a
decrease in rental income partially offset by an increase in other income.
Rental income decreased due to decreased rent revenue and percentage rent caused
by increased competition in the local market for comparable commercial space.
Other income increased primarily due to an increase in lease cancellation fees
partially offset by a decrease in interest income due a decrease in cash held in
interest bearing accounts.
Excluding the effect of the difference in time periods being reported, total
expenses decreased due to a decrease in operating and property tax expenses
partially offset by an increase in bad debt expense. The decrease in operating
expense is due lower merchant association dues, which are affected by the
decrease in rental income at Factory Merchant Mall. The decrease in property tax
expense is due to a lowering of assessed value on the Partnership's remaining
property through August 22, 2001. Bad debt expense increased due to an increase
in past due account receivables.
Included in general and administrative expenses for the period ended August 22,
2001 and the nine months ended September 30, 2000, are reimbursements to the
General Partner allowed under the Partnership Agreement associated with its
management of the Partnership. In addition, costs associated with the quarterly
and annual communications with investors and regulatory agencies and the annual
audit required by the Partnership Agreement are also included.
Liquidity and Capital Resources
At August 22, 2001, the Partnership had cash and cash equivalents of
approximately $350,000 as compared to approximately $250,000 at September 30,
2000. For the period ended August 22, 2001, cash and cash equivalents decreased
approximately $275,000 from the Partnership's year ended December 31, 2000. This
decrease in cash and cash equivalents is due to approximately $90,000 of cash
used in investing activities and approximately $244,000 of cash used in
financing activities partially offset by approximately $59,000 of cash provided
by operating activities. The cash used in investing activities consists of net
deposits to restricted escrows maintained by the mortgage lender and, to a
lesser extent, property improvements and replacements offset by the deposit
received from the sale of joint venture interest. Cash used in financing
activities consists of payments of principal made on the mortgage encumbering
Factory Merchants Mall and payment of a distribution accrued in the prior year.
The Partnership invests its working capital reserves in interest bearing
accounts.
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 property to adequately maintain the physical asset
and other operating needs of the Registrant and to comply with Federal, state,
and local legal and regulatory requirements. Capital improvements planned for
the Partnership's property is detailed below.
Factory Merchants Mall
During the period ended August 22, 2001, the Partnership completed approximately
$11,000 of capital improvements consisting of parking area improvements and
tenant improvements. These improvements were funded from operating cash flow.
During the period ended August 22, 2001, the Partnership paid distributions of
approximately $89,000 from operations, of which approximately $87,000 ($0.66 per
limited partnership unit) is allocable to the limited partners. This
distribution was declared and accrued as of December 31, 2000. During the nine
months ended September 30, 2000, the Partnership paid a cash distribution from
operations of approximately $950,000, of which approximately $931,000 ($7.08 per
limited partnership unit) was paid to the limited partners. In conjunction with
the transfer of funds from the majority-owned joint venture to the Partnership
during the period ended August 22, 2001, approximately $5,000 was distributed to
the general partner of the majority-owned joint venture. The attached statement
of net assets in liquidation includes cash of both the Partnership and the joint
venture property. However, the cash of the joint venture property is currently
not available to the Partnership. Once the right of rescission expires and when
the Partnership terminates, any cash available after payment of Partnership
termination costs will be distributed to the partners. However, based on current
estimates, there will be no cash available to distribute at that time.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 28,838 limited partnership units in
the Partnership representing 21.92% of the outstanding units at September 30,
2001. A number of these units were acquired pursuant to tender offers made by
AIMCO or its affiliates. Under the Partnership Agreement, unitholders holding a
majority of the Units are entitled to take action with respect to a variety of
matters, which would include voting on certain amendments to the Partnership
Agreement and voting to remove the General Partner. When voting on matters,
AIMCO would in all likelihood vote the Units it acquired in a manner favorable
to the interest of the General Partner because of its affiliation with the
General Partner.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purports to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain general partner entities by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs filed an amended complaint. The General Partner filed demurrers to
the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. On July 20, 2001, plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which, together with a demurrer filed by other defendants, is
currently scheduled to be heard on November 15, 2001. The Court has set the
matter for trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. The matters are currently scheduled to be heard on
November 15, 2001.
The General Partner does not anticipate that any costs, whether legal or
settlement costs, associated with these cases will be material to the
Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
None.
b) Reports on Form 8-K:
Current Report on Form 8-K dated August 23, 2001 and filed August
28, 2001, disclosing the sale of the Partnership's and ARC II's
ownership in the joint venture that indirectly owns Factory
Merchants Mall.
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 INCOME PROPERTIES, LTD. IV
By: Angeles Realty Corporation II
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date: