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 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period.........to......... Commission file number 0-9136 ANGELES PARTNERS VIII (Exact name of small business issuer as specified in its charter) California 95-3264317 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 55 Beattie Place, P.O. 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 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 VIII CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1998 Assets Cash and cash equivalents $ 267 Receivables and deposits 377 Other assets 138 Investment properties: Land $ 543 Buildings and related personal property 14,984 15,527 Less accumulated depreciation (10,949) 4,578 $ 5,360 Liabilities and Partners' Deficit Liabilities Accounts payable $ 60 Tenant security deposit liabilities 80 Accrued property taxes 493 Accrued interest 2,384 Other liabilities 366 Notes payable, $1,721 in default 16,737 Partners' Deficit General partner $ (182) Limited partners (11,855 units issued (14,578) (14,760) and outstanding) $ 5,360 See Accompanying Notes to Consolidated Financial Statements b) ANGELES PARTNERS VIII CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended Nine Months Ended September 30, September 30, 1998 1997 1998 1997 Revenues: Rental income $ 945 $ 928 $ 2,788 $ 2,728 Other income 54 61 162 155 Total revenues 999 989 2,950 2,883 Expenses: Operating 395 389 1,220 1,111 General and administrative 29 38 109 103 Depreciation 178 169 514 499 Interest 472 465 1,420 1,378 Property taxes 114 67 245 331 Total expenses 1,188 1,128 3,508 3,422 Net loss $ (189) $ (139) $ (558) $ (539) Net loss allocated to general partner (1%) $ (2) $ (1) $ (6) $ (5) Net loss allocated to limited partners (99%) (187) (138) (552) (534) $ (189) $ (139) $ (558) $ (539) Net loss per limited partnership unit $(15.79) $(11.64) $(46.60) $(45.04) See Accompanying Notes to Consolidated Financial Statements c) ANGELES PARTNERS VIII CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data) Limited Partnership General Limited Units Partner Partners Total Original capital contributions 12,000 $ 121 $ 12,000 $ 12,121 Partners' deficit at December 31, 1997 11,855 $ (176) $ (14,026) $ (14,202) Net loss for the nine months ended September 30, 1998 -- (6) (552) (558) Partners' deficit at September 30, 1998 11,855 $ (182) $ (14,578) $ (14,760) See Accompanying Notes to Consolidated Financial Statements d) ANGELES PARTNERS VIII CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 1998 1997 Cash flows from operating activities: Net loss $ (558) $ (539) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 514 499 Amortization of loan costs 41 42 Change in accounts: Receivables and deposits (246) (121) Other assets 7 (22) Accounts payable 30 (41) Tenant security deposit liabilities 8 13 Accrued property taxes 128 207 Accrued interest 374 410 Other liabilities 114 80 Net cash provided by operating activities 412 528 Cash flows from investing activities: Property improvements and replacements (261) (170) Receipt of insurance proceeds -- 65 Net cash used in investing activities (261) (105) Cash flows from financing activities: Payments on notes payable (212) (161) Net cash used in financing activities (212) (161) Net (decrease) increase in cash and cash equivalents (61) 262 Cash and cash equivalents at beginning of period 328 193 Cash and cash equivalents at end of period $ 267 $ 455 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,004 $ 927 See Accompanying Notes to Consolidated Financial Statements e) ANGELES PARTNERS VIII NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 30, 1998 NOTE A - GOING CONCERN The accompanying consolidated financial statements have been prepared assuming Angeles Partners VIII (the "Partnership") will continue as a going concern. The Partnership has incurred recurring operating losses and continues to suffer from inadequate liquidity. In addition, the Partnership is in default on a portion of its mortgage notes payable and does not generate sufficient cash flows to meet current debt-service requirements on its subordinated debt. The Partnership incurred an operating loss of approximately $558,000 for the nine months ended September 30, 1998, and Angeles Realty Corporation (the "General Partner") expects this trend to continue. The Partnership realized net cash from operations of approximately $412,000; however, interest of approximately $374,000 was accrued during the nine months ended September 30, 1998 on a note payable and on the second mortgage securing one of the Partnership's investment properties. The Partnership's second mortgage to Angeles Mortgage Investment Trust ("AMIT") in the amount of $1,350,000 plus accrued interest, which is secured by Bercado Shores Apartments, has been in default since 1993 due to nonpayment of interest and the maturity of the note in 1995. This indebtedness is recourse to the Partnership and the estimated fair value of this property is less than the total of its first and second mortgages. This property remains subject to foreclosure under the terms of the second mortgage agreement. Pursuant to a series of transactions, affiliates of the General Partner acquired ownership interests in AMIT. On September 17, 1998, AMIT was merged with and into Insignia Properties Trust ("IPT"), the sole shareholder of the General Partner (See "Note C"). As a result, IPT became the holder of the AMIT debt. The Partnership had initiated discussions to negotiate a work-out with AMIT. IPT has indicted that it is reviewing its options with respect to this second mortgage. The Partnership's note payable of approximately $556,000, including accrued interest, due to Angeles Acceptance Pool, L.P. ("AAP") matured in November of 1997. The Partnership is currently in negotiations with the lender and hopes to either extend this note or settle the liability at a reduced amount. There can be no assurance that these negotiations with the lenders will be successful. If the Partnership is unable to successfully complete its negotiations with either or both of the lenders, the Partnership will be required to explore other alternatives, including the filing for protection under the Chapter 11 of the Federal Bankruptcy Code, or it is likely that the Partnership's properties will be lost through foreclosure. No other sources of additional financing are apparent and the General Partner currently has not developed alternative plans to remedy the liquidity problems the Partnership is currently experiencing. The General Partner anticipates that Brittany Point will generate sufficient cash flows for the next twelve months to meet its operating expenses, debt service requirements and to fund capital expenditures. The General Partner anticipates that Bercado Shores will generate sufficient cash flows for the next twelve months to cover its operating expenditures, however it is not expected to be able to completely fund desired capital expenditures or to pay its scheduled debt service on its second mortgage to IPT. The Partnership's plan is to fund these items to the extent of available cash flow. The Partnership will fund its administrative expenses for the next twelve months by using cash on hand at September 30, 1998, and cash flow generated during 1998. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from this uncertainty. NOTE B - 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 the General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 1998, are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended December 31, 1997. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. Principles of Consolidation The consolidated financial statements of the Partnership include its 99% limited partnership interests in Brittany Point AP VIII, L.P. and Brittany Point GP, L.P. The Partnership may remove the General Partner of Brittany Point AP VIII, L.P. and Brittany Point GP, L.P.; therefore, these partnerships are controlled and consolidated by the Partnership. All significant interpartnership balances have been eliminated. NOTE C - 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 of the General Partner for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were paid or accrued to the General Partner and its affiliates during the nine months ended September 30, 1998 and 1997, respectively: 1998 1997 (in thousands) Property management fees, included in $148 $144 operating expenses Reimbursement for services of affiliates (including approximately $13,000 and $7,000 of reimbursements for construction oversight costs in 1998 and 1997, respectively), included in general and administrative and operating expenses and investment properties 86 82 For the period of January 1, 1997 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the General Partner with an 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 master policy. The agent assumed the financial obligations to the affiliate of the General Partner, which received payment 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 obligation was not significant. In June 1990, AMIT provided secondary financing on the Partnership's investment properties. Total indebtedness was approximately $2,920,000 at September 30, 1998, of which $1,350,000 was in default at September 30, 1998 (see "Note A"). Total interest expense related to this debt was approximately $525,000 and $466,000 for the nine month periods ended September 30, 1998 and 1997, respectively. Accrued interest related to this debt was approximately $2,106,000 at September 30, 1998. As discussed in Note A, IPT is now the holder of the AMIT debt. In November 1992, AAP, a Delaware limited partnership which now controls the working capital loan previously provided by Angeles Capital Investment, Inc. ("ACII"), was organized. Angeles Corporation ("Angeles") is the 99% limited partner of AAP and Angeles Acceptance Directives, Inc.("AAD"), which is wholly- owned by IPT, was, until April 14, 1995, the 1% general partner of AAP. On April 14, 1995, as part of a settlement of claims between affiliates of the General Partner and Angeles, AAD resigned as general partner of AAP and simultaneously received a .5% limited partner interest in AAP. An affiliate of Angeles now serves as the general partner of AAP. This indebtedness, which is included in notes payable, was approximately $371,000 at September 30, 1998, and is in default due to non-payment upon maturity in November of 1997 (see "Note A"). Interest is accruing monthly at prime plus 0.75% (9.25% at September 30, 1998). Total interest expense for this loan was approximately $26,000 for each of the nine months ended September 30, 1998 and 1997. Total accrued interest for this loan was approximately $185,000 at September 30, 1998. NOTE D - TRANSFER OF CONTROL - SUBSEQUENT EVENT On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control of the General Partner. In addition, AIMCO also acquired approximately 51% of the outstanding common shares of beneficial interest of IPT, the sole shareholder of the General Partner. Also, effective October 1, 1998, IPT and AIMCO entered into an Agreement and plan of Merger pursuant to which IPT is to be merged with and into AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires the approval of the holders of a majority of the outstanding IPT Shares. AIMCO has agreed to vote all of the IPT Shares owned by it in favor of the IPT Merger and has granted an irrevocable limited proxy to unaffiliated representatives of IPT to vote the IPT Shares acquired by AIMCO and its subsidiaries in favor of the IPT Merger. As a result of AIMCO's ownership and its agreement, the vote of no other holder of IPT is required to approve the merger. The General Partner does not believe that this transaction will have a material effect on the affairs and operations of the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of two apartment complexes. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 1998 and 1997: Average Occupancy 1998 1997 Bercado Shores Apartments Mishawaka, Indiana 93% 92% Brittany Point Apartments Huntsville, Alabama 92% 94% Results of Operations The Partnership realized a net loss of approximately $189,000 and $558,000 for the three and nine months ended September 30, 1998, compared to a net loss of approximately $139,000 and $539,000 for the three and nine months ended September 30, 1997. The slight increase in net loss for the nine months ended September 30, 1998 was due to an increase in operating and interest expenses to a large extent offset by an increase in rental income and a decrease in property taxes. Operating expense increased due to increases in maintenance salaries at both of the Partnership's investment properties, an increase in tax services related to a successful tax appeal on behalf of the Bercado Shores Apartment property and an increase in contract maintenance expense at Brittany Point Apartments. Interest expense increased over the same period in 1997 due to increased default interest charged on the second mortgage note secured by Bercado Shores (see discussion of AMIT note below). Rental income increased as a result of rental rate increases at both of the Partnership's investment properties and an increase in occupancy at Bercado Shores Apartments. These increases in rental income were partially offset by a decline in occupancy at Brittany Point Apartments. The decrease in tax expense is attributable to a reduction in taxes for 1998 and 1997 following the successful tax appeal for Bercado Shores Apartments in 1997. Included in operating expense for the nine months ended September 30, 1998 is approximately $66,000 of major repairs and maintenance comprised primarily of gutter repairs and exterior building repairs. For the nine months ended September 30, 1997, approximately $56,000 of major repairs and maintenance comprised primarily of gutter and swimming pool repairs are included in operating expense. 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. Liquidity and Capital Resources The Partnership held cash and cash equivalents of approximately $267,000 at September 30, 1998 compared to approximately $455,000 at September 30, 1997. The net decrease in cash and cash equivalents for the nine months ended September 30, 1998 was $61,000 as compared to a net increase in cash and cash equivalents of approximately $262,000 for the same period in 1997. Net cash provided by operating activities primarily decreased as a result of an increase in receivables and deposits due to a larger increase in tax and insurance escrows. Net cash used in investing activities increased as a result of increased property improvements and replacements in 1998, offset by insurance proceeds received in 1997, with none received in 1998. Net cash used in financing activities increased due to increased principal payments on notes payable. No distributions were made by the Partnership during the nine months ended September 30, 1998 or 1997 nor are any anticipated in the near-term. The Partnership's second mortgage to Angeles Mortgage Investment Trust ("AMIT") in the amount of $1,350,000 plus accrued interest, which is secured by Bercado Shores Apartments, has been in default since 1993 due to nonpayment of interest and the maturity of the note in 1995. This indebtedness is recourse to the Partnership and the estimated fair value of this property is less than the total of its first and second mortgages. This property remains subject to foreclosure under the terms of the second mortgage agreement. Pursuant to a series of transactions, affiliates of the General Partner acquired ownership interests in AMIT. On September 17, 1998, AMIT was merged with and into Insignia Properties Trust ("IPT"), the sole shareholder of the General Partner. As a result, IPT became the holder of the AMIT debt. The Partnership had initiated discussions to negotiate a work-out with AMIT. IPT has indicated that it is reviewing its options with respect to this second mortgage. The Partnership's note payable and accrued interest of approximately $556,000 due to Angeles Acceptance Pool, L.P. ("AAP") matured in November of 1997. The Partnership is currently in negotiations with the lender and hopes to either extend this note or settle the liability at a reduced amount. There can be no assurance that these negotiations with the lenders will be successful. If the Partnership is unable to successfully complete its negotiations with either or both of the lenders, the Partnership will be required to explore other alternatives, including the filing for protection under the Chapter 11 of the Federal Bankruptcy Code, or it is likely that the Partnership's properties will be lost through foreclosure. No other sources of additional financing are apparent and the General Partner currently has not developed alternative plans to remedy the liquidity problems the Partnership is currently experiencing. The General Partner anticipates that Brittany Point will generate sufficient cash flows for the next twelve months to meet its operating expenses, debt service requirements and to fund capital expenditures. The General Partner anticipates that Bercado Shores will generate sufficient cash flows for the next twelve months to cover its operating expenditures, however it is not expected to be able to completely fund desired capital expenditures or to pay its scheduled debt service on its second mortgage to IPT. The Partnership's plan is to fund these items to the extent of available cash flow. The Partnership will fund its administrative expenses for the next twelve months by using cash on hand at September 30, 1998, and cash flow generated during 1998. Transfer of Control; Subsequent Event On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control of the General Partner. In addition, AIMCO also acquired approximately 51% of the outstanding common shares of beneficial interest of IPT, the sole shareholder of the General Partner. Also, effective October 1, 1998, IPT and AIMCO entered into an Agreement and plan of Merger pursuant to which IPT is to be merged with and into AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires the approval of the holders of a majority of the outstanding IPT Shares. AIMCO has agreed to vote all of the IPT Shares owned by it in favor of the IPT Merger and has granted an irrevocable limited proxy to unaffiliated representatives of IPT to vote the IPT Shares acquired by AIMCO and its subsidiaries in favor of the IPT Merger. As a result of AIMCO's ownership and its agreement, the vote of no other holder of IPT is required to approve the merger. The General Partner does not believe that this transaction will have a material effect on the affairs and operations of the Partnership. Year 2000 General Description of the Year 2000 Issue and the Nature and Effects of the Year 2000 on Information Technology (IT) and Non-IT Systems The Year 2000 Issue is the result of computer programs being written using two digits rather than four to define the applicable year. The Partnership is dependent upon the General Partner and its affiliates for management and administrative services ("Managing Agent"). Any computer programs or hardware that have date-sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. The Managing Agent has determined that it will be required to modify or replace significant portions of its software and certain hardware so that those systems will properly utilize dates beyond December 31, 1999. The Managing Agent presently believes that with modifications or replacements of existing software and certain hardware, the Year 2000 Issue can be mitigated. However, if such modifications and replacements are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Managing Agent and the Partnership. Status of Progress in Becoming Year 2000 Compliant The Managing Agent's plan to resolve the Year 2000 Issue involves the following four phases: assessment, remediation, testing and implementation. To date, the Managing Agent has fully completed its assessment of all information systems that could be significantly affected by the Year 2000, and has begun the remediation, testing and implementation phase on both hardware and software systems. Assessments are continuing in regards to embedded systems in operating equipment. The Managing Agent anticipates having all phases complete by June 1, 1999. In addition to the areas the Partnership is relying on the Managing Agent to verify compliance with, the Partnership has certain operating equipment, primarily at the property sites, which needed to be evaluated for Year 2000 compliance. The focus of the General Partner was to the security systems, elevators, heating-ventilation-air-conditioning systems, telephone systems and switches, and sprinkler systems. The General Partner is currently engaged in the identification of all non-compliant operational systems, and is in the process of estimating the costs associated with any potential modifications or replacements needed to such systems in order for them to be Year 2000 compliant. It is not expected that such costs would have a material adverse affect upon the operations of the Partnership. Risk Associated with the Year 2000 The General Partner believes that the Managing Agent has an effective program in place to resolve the Year 2000 issue in a timely manner and has appropriate contingency plans in place for critical applications that could affect the Partnership's operations. To date, the General Partner is not aware of any external agent with a Year 2000 issue that would materially impact the Partnership's results of operations, liquidity or capital resources. However, the General Partner has no means of ensuring that external agents will be Year 2000 compliant. The General Partner does not believe that the inability of external agents to complete their Year 2000 resolution process in a timely manner will have a material impact on the financial position or results of operations of the Partnership. However, the effect of non-compliance by external agents is not readily determinable. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 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 NUANCES, ET AL. V. INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the General Partner and several of their affiliated partnerships and corporate entities. The complaint 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 the acquisition by Insignia Financial Group, Inc. and entities which were, at the time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates as well as a recently announced agreement between Insignia and AIMCO. The complaint seeks 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 have filed an amended complaint. The General Partner has filed demurrers to the amended complaint which are scheduled to be heard on January 8, 1999. The General Partner believes the action to be without merit, and intends to vigorously defend it. On July 30, 1998 certain entities claiming to own limited partnership interests in certain limited partnerships whose general partners were, at the time, affiliates of Insignia filed a complaint in the Superior Court of the State of California, County of Los Angeles. The action, entitled EVEREST PROPERTIES LLC V. INSIGNIA FINANCIAL GROUP, INC., involves 44 real estate limited partnerships (including the Partnership) in which the plaintiffs allegedly own interests and which Insignia Affiliates allegedly manage or control (the "Subject Partnerships"). The complaint names as defendants Insignia, several Insignia Affiliates alleged to be managing partners of the defendant limited partnerships, the Partnership and the Managing General Partner. Plaintiffs allege that they have requested from, but have been denied by each of the Subject Partnerships, lists of their respective limited partners for the purpose of making tender offers to purchase up to 4.9% of the limited partner units of each of the Subject Partnerships. The complaint also alleges that certain of the defendants made tender offers to purchase limited partner units in many of the Subject Partnerships, with the alleged result that plaintiffs have been deprived of the benefits they would have realized from ownership of the additional units. The plaintiffs assert eleven causes of action, including breach of contract, unfair business practices, and violations of the partnership statutes of the states in which the Subject Partnerships are organized. Plaintiffs seek compensatory, punitive and treble damages. The General Partner filed an answer to the complaint on September 15, 1998. The General Partner believes the claims to be without merit and intends to defend the action vigorously. The General Partner is unaware of any other pending or outstanding litigation that is not of a routine nature. The General Partner believes that all such other matters will be resolved without a material adverse effect upon the Partnership's financial condition, results of operations, or liquidity. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None. SIGNATURES In accordance with the requirements of the Exchange Act, the Partnership caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES PARTNERS VIII By: Angeles Realty Corporation as General Partner By: /s/Patrick Foye Patrick Foye Executive Vice President By: /s/Timothy R. Garrick Timothy R. Garrick Vice President - Accounting (Duly Authorized Officer) Date: November 13, 1998