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 March 31, 2000
[ ] 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___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 1,351
Receivables and deposits, net of $293 allowance
for doubtful accounts 417
Restricted escrows 683
Other assets 424
Investment property:
Land $ 2,414
Buildings and related personal property 18,104
20,518
Less accumulated depreciation (12,639) 7,879
$ 10,754
Liabilities and Partners' Deficit
Liabilities
Tenant security deposit liabilities $ 6
Accrued property taxes 202
Other liabilities 189
Mortgage note payable 14,814
Partners' Deficit
General partner $ (105)
Limited partners (131,585 units issued and
outstanding) (4,352) (4,457)
$ 10,754
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
b)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2000 1999
Revenues:
Rental income $ 916 $ 936
Other income 22 55
Total revenues 938 991
Expenses:
Operating 397 438
General and administrative 47 45
Depreciation 237 269
Interest 371 376
Property taxes 40 60
Total expenses 1,092 1,188
Net income (loss) $ (154) $ (197)
Net income (loss) allocated
to general partner (2%) $ (3) $ (4)
Net income (loss) allocated
to limited partners (98%) (151) (193)
$ (154) $ (197)
Net income (loss) per limited
partnership unit $ (1.15) $ (1.47)
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
c)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 131,800 $ 1 $65,900 $65,901
Partners' deficit at
December 31, 1999 131,585 $ (102) $(4,201) $(4,303)
Net income for the three months
ended March 31, 2000 -- (3) (151) (154)
Partners' deficit at
March 31, 2000 131,585 $ (105) $(4,352) $(4,457)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
d)
ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ (154) $ (197)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation 237 269
Amortization of loan costs and leasing commissions 33 29
Change in accounts:
Receivables and deposits 169 251
Other assets 14 15
Accounts payable (35) 10
Accrued property taxes 41 (91)
Other liabilities (40) (466)
Net cash provided by (used in) operating
activities 265 (180)
Cash flows from investing activities:
Lease commissions paid -- (23)
Net deposits to restricted escrows (34) (34)
Net cash used in investing activities (34) (57)
Cash flows used in financing activities:
Payments on mortgage note payable (50) (44)
Net increase (decrease) in cash and cash equivalents 181 (281)
Cash and cash equivalents at beginning of period 1,170 3,637
Cash and cash equivalents at end of period $1,351 $3,356
Supplemental disclosure of cash flow information:
Cash paid for interest $ 362 $ 367
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
e)
ANGELES INCOME PROPERTIES, LTD. IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Angeles Income
Properties, Ltd. IV (the "Partnership" or "Registrant") 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 II ("ARC II"
or the "General Partner"), all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 2000, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1999.
Principles of Consolidation
The consolidated financial statements of the Partnership include its
wholly-owned limited partnership interest in Factory Merchants, AIP IV, L.P. and
AIP IV GP, LP. The Partnership may remove the general partner of Factory
Merchants, AIP IV, L.P. and AIP IV GP, LP; therefore, the partnerships are
controlled and consolidated by the Partnership. All significant interpartnership
balances have been eliminated. Minority interest is immaterial and not shown
separately in the consolidated financial statements.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged 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, AIMCO acquired 100% ownership interest in
the General Partner. The General Partner does not believe that this transaction
has had or will have a material effect on the affairs and operations of the
Partnership.
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 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 three months ended March 31, 2000 and 1999:
2000 1999
(in thousands)
Reimbursement for services of affiliates
(included in operating and general and
administrative expenses and investment properties) $ 17 $ 27
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $17,000 and $27,000 for the
three months ended March 31, 2000 and 1999, respectively.
AIMCO and its affiliates currently own 27,432 limited partnership units in the
Partnership representing 20.847% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will make one or more additional
offers to acquire additional limited partnership interests in the Partnership
for cash or in exchange for units in the operating partnership of AIMCO. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. As a result of its
ownership of 20.847% of the outstanding units, AIMCO is in a position to
significantly influence all voting decisions with respect to the Registrant.
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 their
affiliation with the General Partner.
Note D - Distribution
No distributions were made during the three months ended March 31, 2000 and
1999.
Note E - Segment Reporting
Description of the types of products and services from which reportable segment
derives its revenues:
The Partnership has one reportable segment: commercial properties. The
Partnership's commercial property segment consists of one retail shopping center
in Tennessee at March 31, 2000. This property leases space to various specialty
retail outlets and fast food enterprises at terms ranging from 1 to 9 years. The
Partnership's other commercial property was sold on June 16, 1999.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in the Partnership's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1999.
Segment information for the three months ended March 31, 2000 and 1999 is shown
in the tables below (in thousands). The "Other" column includes Partnership
administration related items and income and expense not allocated to the
reportable segment.
2000 Commercial Other Totals
Rental income $ 916 $ -- $ 916
Other income 12 10 22
Interest expense 371 -- 371
Depreciation expense 237 -- 237
General and administrative expense -- 47 47
Segment income (loss) 120 (37) 83
Total assets 9,752 1,002 10,754
<PAGE>
1999 Commercial Other Totals
Rental income $ 936 $ -- $ 936
Other income 25 30 55
Interest expense 376 -- 376
Depreciation 269 -- 269
General and administrative expense -- 45 45
Segment loss (182) (15) (197)
Total assets 11,664 3,039 14,703
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. 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 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 the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one 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 and the Insignia Merger (see
"Note B - Transfer of Control"). 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 have 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 final court approval, on
behalf of the Partnership and all limited partners who own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, 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 class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the General Partner and its affiliates
terminated the proposed settlement. Certain plaintiffs have filed a motion to
disqualify some of the plaintiffs' counsel in the action. The General Partner
does not anticipate that costs associated with this case 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.
<PAGE>
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 three
months ended March 31, 2000 and 1999:
Average Occupancy
Property 2000 1999
Factory Merchants Mall 88% 92%
Pigeon Forge, Tennessee
The General Partner attributes the decrease in occupancy to the loss of several
tenants during the second half of 1999 and to reduced rental footage by several
existing tenants during 1999.
Results from Operations
The Partnership realized a net loss of approximately $154,000 for the three
months ended March 31, 2000 as compared to a net loss of approximately $197,000
for the comparable period in 1999. The decrease in net loss for the three months
ended March 31, 2000 is primarily due to a decrease in total expenses which was
offset by a slight decrease in total revenues. The decrease in total expenses is
due to a decrease in operating and depreciation expense. The decrease in
operating expense is due to a decrease in common area expenses at Factory
Merchants Mall. The decrease in common area expense is due to the decrease in
contract grounds projects. The decrease in total revenues and remaining expenses
is primarily due to the Partnership owning one investment property at March 31,
2000 as compared to two investment properties at March 31, 1999 (Eastgate Mall
was sold on June 16, 1999). Excluding the operations of Eastgate Mall, the
Partnership had an increase in total revenues and a decrease in total expenses,
primarily due to a decrease in operating expense as discussed above. The
increase in total revenues is due to an increase in rental income partially
offset by a decrease in other income. The increase in rental income is primarily
due to an increase in percentage rent and a decrease in bad debt expense. This
was partially offset by the decrease in occupancy discussed above. The decrease
in other income is related to decreased late charges and a decrease in cash held
in interest bearing accounts.
Included in general and administrative expenses for the three months ended March
31, 2000 and 1999, 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.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property 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
At March 31, 2000, the Partnership had cash and cash equivalents of
approximately $1,351,000 as compared to approximately $3,356,000 at March 31,
1999. For the three months ended March 31, 2000, cash and cash equivalents
increased approximately $181,000 from the Partnership's year ended December 31,
1999. This increase in cash and cash equivalents is due to approximately
$265,000 of cash provided by operating activities which was partially offset by
approximately $50,000 of cash used in financing activities and approximately
$34,000 of cash used in investing activities. Cash used in financing activities
consists of payments of principal made on the mortgage encumbering Factory
Merchants Mall. The cash used in investing activities consists of net deposits
to restricted escrows maintained by the mortgage lender. The Partnership invests
its working capital reserves in a money market account.
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 three months ended March 31, 2000, no capital improvements were made
at Factory Merchants Mall. As the property is currently being marketed for sale,
capital improvements will be made only as needed.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $14,814,000 matures in October 2006. The General
Partner will attempt to refinance such indebtedness and/or sell the property
prior to such maturity date. Although the property is currently being marketed
for sale, there is no guarantee when, or if, a buyer and the Partnership agree
to terms that are mutually acceptable to complete a sale transaction. If the
property cannot be refinanced or sold for a sufficient amount, the Registrant
will risk losing such property through foreclosure.
There were no cash distributions for the three months ended March 31, 2000 and
1999. The Registrant's distribution policy is reviewed on a semi-annual basis.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of the debt
maturity, refinancing and/or property sale. There can be no assurance, however,
that the Registrant will generate sufficient funds from operations after
required capital expenditures to permit distributions to its partners during the
remainder of 2000 or subsequent periods.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEDINGS
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. 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 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 the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one 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 and the Insignia Merger (see
"Part 1 - Financial Information, Item 1. Financial Statements, Note B - Transfer
of Control"). 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 have 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 final court approval, on behalf of the Partnership and all
limited partners who own units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Superior Court of the
State of California, County of San Mateo, 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
class plaintiffs' counsel to enter the settlement. On December 14, 1999, the
General Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The General Partner does not anticipate that costs associated with
this case will be material to the Partnership's overall operations.
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 filed during the quarter ended March 31, 2000.
<PAGE>
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:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Income Properties, LTD. IV 2000 First Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000763049
<NAME> Angeles Income Properties, LTD. IV
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,351
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 20,518
<DEPRECIATION> 12,639
<TOTAL-ASSETS> 10,754
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 14,814
0
0
<COMMON> 0
<OTHER-SE> (4,457)
<TOTAL-LIABILITY-AND-EQUITY> 10,754
<SALES> 0
<TOTAL-REVENUES> 938
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,092
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 371
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (154)
<EPS-BASIC> (1.15)<F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
