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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 11-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 1-14373
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
INSIGNIA FINANCIAL GROUP, INC.
401(k) RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
INSIGNIA FINANCIAL GROUP, INC.
200 PARK AVENUE
NEW YORK, NEW YORK 10166
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INSIGNIA FINANCIAL GROUP, INC.
401(k) RETIREMENT SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
TABLE OF CONTENTS
PAGE
Independent Auditors' Reports 1
Audited Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2001 and 2000 3
Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2001 4
Notes to Financial Statements 5
SUPPLEMENTAL SCHEDULE
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 9
INDEX OF EXHIBITS
Exhibit 23.1 - Consent of Independent Auditors
Exhibit 23.2 - Consent of Ernst & Young LLP, Independent Auditors
INDEPENDENT AUDITORS' REPORT
Advisory Committee
Insignia Financial Group, Inc.
401(k) Retirement Savings Plan:
We have audited the accompanying statement of net assets available for benefits
of Insignia Financial Group, Inc. 401(k) Retirement Savings Plan as of December
31, 2001, and the related statement of changes in net assets available for
benefits for the year then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits as of December 31,
2001 and the changes in net assets available for benefits for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule H, line 4i -
schedule of assets (held at end of year) at December 31, 2001, is presented for
the purpose of additional analysis and is not a required part of the basic
financial statements, but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedule
is the responsibility of the Plan's management. The supplemental schedule has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ KPMG LLP
New York, New York
June 27, 2002
1
REPORT OF INDEPENDENT AUDITORS
Advisory Committee
Insignia Financial Group, Inc.
401(k) Retirement Savings Plan
We have audited the accompanying statement of net assets available for benefits
of Insignia Financial Group, Inc. 401(k) Retirement Savings Plan as of December
31, 2000. The statement of net assets available for benefits is the
responsibility of the Plan's management. Our responsibility is to express an
opinion on this statement of net assets available for benefits based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statement of net assets
available for benefits is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement of net assets available for benefits. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall statement of net assets available
for benefits presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the statement of net assets available for benefits referred to
above presents fairly, in all material respects, the net assets available for
benefits of the Plan at December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
June 18, 2001
2
INSIGNIA FINANCIAL GROUP, INC.
401(k) RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
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ASSETS
Cash and cash equivalents $ 43,202 $ 58,080
Investments, at fair value:
Mutual funds 46,124,737 42,754,778
Collective trust funds 5,727,156 3,890,188
Common stock 1,840,761 1,878,346
Loans to participants 1,719,344 1,559,382
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Total investments at fair value 55,411,998 50,082,694
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Net assets available for benefits $ 55,455,200 $ 50,140,774
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See accompanying notes to financial statements.
3
INSIGNIA FINANCIAL GROUP, INC.
401(k) RETIREMENT SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2001
Additions to net assets attributed to:
Investment income (loss):
Net depreciation in fair value of investments $ (4,460,446)
Interest and dividends 1,597,373
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Total investment loss (2,863,073)
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Contributions:
Employer 2,217,819
Participants 8,299,445
Rollover 1,600,449
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Total contributions 12,117,713
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Total additions 9,254,640
Deductions from net assets attributed to:
Participants' distribution and withdrawals 3,777,695
Administrative expenses 162,519
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Total deductions 3,940,214
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Net increase 5,314,426
Net assets available for benefits at beginning of year 50,140,774
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Net assets available for benefits at end of year $ 55,455,200
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See accompanying notes to financial statements.
4
INSIGNIA FINANCIAL GROUP, INC.
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001
(1) DESCRIPTION OF THE PLAN
The following description of the Insignia Financial Group, Inc. 401(k)
Retirement Savings Plan (the Plan) provides only general information.
Participants should refer to the Summary Plan Description for a more
complete description of the Plan's provisions.
(a) GENERAL
Effective September 15, 1998, Insignia/ESG Holdings, Inc.
established the Insignia/ESG Holdings, Inc. 401(k) Retirement
Savings Plan for the benefit of its eligible employees. Effective
November 2, 1998, Insignia/ESG Holdings, Inc. became Insignia
Financial Group, Inc. (the Company) and the Plan's name was
changed to Insignia Financial Group, Inc. 401(k) Retirement
Savings Plan. The Plan is a defined contribution plan covering
all employees who have attained age 21. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
(b) CONTRIBUTIONS
Each year, participants may contribute up to 15% of their pretax
annual compensation, as defined in the Plan. Participants may also
contribute amounts representing distributions from other qualified
defined benefit or defined contribution plans. The Company, at the
beginning of each Plan year, will determine the amount of any
discretionary matching contributions to be made to the Plan during
that year. The Company elected to make a contribution equal to 50%
of a participant's contribution, up to a maximum of 6% of
compensation that a participant contributes to the Plan, for the
period from September 15, 1998 (inception of the Plan) to December
31, 2001. Additional amounts may be contributed at the option of
the Company's board of directors.
(c) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions and allocations of (a) the Company's contributions
and (b) plan earnings. Forfeited balances of terminated
participants' nonvested accounts are used to reduce the Plan's
ordinary and necessary administrative expenses or employer
contributions. Total forfeitures for the year ended December 31,
2001 were $131,685. The benefit to which a participant is entitled
is the benefit that can be provided from the participant's vested
account.
(d) VESTING
Participants are immediately vested in their contributions plus
actual earnings thereon. A participant who is an employee on or
after the effective date of the Plan shall become vested in the
Company's matching contributions in 25% increments with 100%
vesting occurring after the completion of four years of service.
(e) PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $700
up to a maximum equal to the lesser of $50,000 or 50% of their
vested account. Loan terms range from 1-5 years or up to 10 years
for the purchase of a primary residence. The loans are secured by
the
5
balance in the participant's account and bear interest based on
the prime interest rate plus 1% as reported in The Wall Street
Journal for the day on which the loan application is approved.
Principal and interest is paid ratably through employee payroll
deductions.
(f) PAYMENT OF BENEFITS
Upon termination, death, disability, or retirement, a participant
may receive a lump-sum amount or in monthly, quarterly, or annual
installments over a fixed, reasonable period of time, not
exceeding the life expectancy of the participant or the joint life
and last survivor expectancy of the participant and the named
beneficiary. In either case, the participant may only receive the
amount equal to the vested value of his or her account.
(g) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has
the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA.
In the event of Plan termination, participants will become 100%
vested in their accounts.
(h) ADMINISTRATIVE EXPENSES
Administrative expenses are paid by the Plan.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The financial statements have been prepared on the accrual basis
of accounting.
(b) INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. The shares of
registered investment companies are valued at quoted market prices
which represent the net asset values of shares held by the Plan at
year-end. Securities traded on a national securities exchange are
valued at the last reported sales price on the last business day
of the Plan year. The participant loans are valued at their
outstanding balances which approximate fair value.
Included in the investments of the Plan are shares of a unitized
stock fund consisting of cash and shares of Apartment Investment
and Management Company (AIMCO) common stock (Insignia Wasting
Fund). The AIMCO common stock originated when the predecessor Plan
Sponsor merged with AIMCO and the Plan Sponsor's stock was
converted to AIMCO shares. No contributions are allowed into the
Insignia Wasting Fund and the fund will eventually be dissolved.
Purchases and sales of securities are recorded on a trade-date
basis. Dividends are recorded on the ex-dividend date. Interest
income is recorded on the accrual basis.
6
(c) USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ
from those estimates.
(d) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(e) RISKS AND UNCERTAINTIES
The Plan offers a number of investment options which include
underlying investment securities. Investment securities, in
general, are exposed to various risks, such as interest rate,
credit, and overall market volatility risk. Due to the level of
risk associated with certain investment securities, it is
reasonable to expect that changes in the values of investment
securities will occur in the near term and that such changes could
materially affect participant account balances.
The Plan's exposure to a concentration of credit risk is limited
by the diversification of investments across all
participant-directed fund elections. Additionally, the investments
within each participant-directed fund election are further
diversified into varied financial instruments, with the exception
of the Insignia Financial Group, Inc. Fund and Insignia Wasting
Fund.
(f) RECLASSIFICATIONS
Certain items in 2000 have been reclassified to conform with
current year presentation.
7
(3) INVESTMENTS
During 2001, the Plan's investments (including investments purchased,
sold as well as held during the year) depreciated in fair value as
determined by quoted market prices as follows:
Common stock $ (218,191)
Mutual funds (4,242,255)
Collective trust funds --
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$ (4,460,446)
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Investments that represent 5% or more of the fair value of the Plan's net
assets are as follows:
DECEMBER 31
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2001 2000
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Fidelity Puritan Fund $ 6,455,539 5,989,385
Fidelity Magellan Fund 7,889,786 7,301,288
Fidelity Contrafund 11,153,779 12,257,709
Fidelity Equity Income Fund 8,449,213 8,255,874
Fidelity Growth and Income Fund 5,017,880 4,478,064
Fidelity Managed Income Portfolio 5,727,156 3,890,188
(4) INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue
Service dated September 18, 1998, stating that the Plan is qualified
under Section 401(a) of the Internal Revenue Code (the Code), and
therefore, the related trust is exempt from taxation. Once qualified, the
Plan is required to operate in conformity with the Code to maintain its
qualification. The Plan has been amended since receiving the
determination letter. The Plan Administrator believes that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the
Plan is qualified and the related trust is tax exempt.
(5) TRANSACTIONS WITH PARTIES-IN-INTEREST
Certain fees incurred during the year for legal, accounting, and other
services were paid by the Company on behalf of the Plan.
8
INSIGNIA FINANCIAL GROUP, INC.
401(k) RETIREMENT SAVINGS PLAN
Schedule H, Line 4i -
Schedule of Assets (Held at End of Year)
December 31, 2001
(c) DESCRIPTION OF INVESTMENT,
INCLUDING MATURITY DATE,
(b) IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, PAR OR (d) CURRENT
(a) LESSOR OR SIMILAR PARTY MATURITY VALUE VALUE
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Mutual Funds:
* Fidelity Puritan Fund 365,339 shares $ 6,455,539
* Fidelity Magellan Fund 75,703 shares 7,889,786
* Fidelity Contrafund 260,785 shares 11,153,779
* Fidelity Equity Income Fund 173,246 shares 8,449,213
* Fidelity Growth and Income Fund 134,240 shares 5,017,880
* Fidelity Low Priced Stock Fund 97,494 shares 2,673,289
* Fidelity Diversified International Fund 93,851 shares 1,790,684
* Fidelity U.S. Bond Index Fund 249,497 shares 2,694,567
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46,124,737
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Collective Trust Funds:
* Fidelity Managed Income Portfolio 5,727,156 shares 5,727,156
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Common Stock:
* Insignia Wasting Fund 93,227 shares 476,278
* Insignia Financial Group, Inc. Fund 296,474 shares 1,364,483
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1,840,761
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* Loans to participants Interest ranging from 6.5% and
9.7% and maturity dates from 2002
to 2009 1,719,344
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$ 55,411,998
======================
* Indicates party-in-interest to the Plan.
See accompanying independent auditors' report.
9
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
INSIGNIA FINANCIAL GROUP, INC.
401(k) RETIREMENT SAVINGS PLAN
By: /s/ Adam B. Gilbert
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Name: Adam B. Gilbert
Title: Member of Benefits Committee
and Executive Vice President
Date: June 28, 2002