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, 1998
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from.........to.........
Commission file number 0-10304
ANGELES PARTNERS X
(Exact name of small business issuer as specified in its charter)
California 95-3557899
(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 X
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, 1998
(in thousands, except unit data)
Assets
Cash and cash equivalents $ 1,345
Receivables and deposits 247
Restricted escrows 416
Other assets 274
Investment properties:
Land $ 1,117
Buildings and related personal property 14,104
15,221
Less accumulated depreciation (9,810) 5,411
$ 7,693
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 339
Tenant security deposit liabilities 35
Accrued property taxes 27
Other liabilities 208
Notes payable 12,515
Partners' Deficit
General partner's $ (240)
Limited partners' (18,625 units
issued and outstanding) (5,191) (5,431)
$ 7,693
See Accompanying Notes to Consolidated Financial Statements
b)
ANGELES PARTNERS X
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 $ 777 $ 928 $ 2,340 $ 3,045
Other income 67 53 166 168
Gain on sale of investment
property -- 4,831 -- 4,831
Total revenues 844 5,812 2,506 8,044
Expenses:
Operating 396 437 1,110 1,363
General and administrative 44 46 137 130
Depreciation 164 197 480 636
Interest 295 417 938 1,359
Property taxes 76 81 228 283
Total expenses 975 1,178 2,893 3,771
(Loss) income before
extraordinary item (131) 4,634 (387) 4,273
Extraordinary gain on
forgiveness of debt 2,185 -- 2,185 --
Extraordinary loss on early
extinguishment of debt -- (539) -- (539)
Net income $ 2,054 $ 4,095 $ 1,798 $ 3,734
Net income allocated to
general partner (1%) $ 21 $ 41 $ 18 $ 37
Net income allocated to
limited partners (99%) 2,033 4,054 1,780 3,697
$ 2,054 $ 4,095 $ 1,798 $ 3,734
Per limited partnership unit:
(Loss) income before
extraordinary item $ (6.99) $246.18 $(20.57) $227.02
Extraordinary item 116.14 (28.63) 116.14 (28.63)
Net income $109.15 $217.55 $ 95.57 $198.39
Limited partnership units
outstanding 18,625 18,635 18,625 18,635
See Accompanying Notes to Consolidated Financial Statements
c)
ANGELES PARTNERS X
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 18,714 $ 1 $18,714 $18,715
Partners' deficit at
December 31, 1997 18,625 $ (253) $(6,971) $(7,224)
Distributions to partners -- (5) -- (5)
Net income for the nine months
ended September 30, 1998 -- 18 1,780 1,798
Partners' deficit at
September 30, 1998 18,625 $ (240) $(5,191) $(5,431)
See Accompanying Notes to Consolidated Financial Statements
d)
ANGELES PARTNERS X
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1998 1997
Cash flows from operating activities:
Net income $ 1,798 $ 3,734
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 480 636
Amortization of discounts and loan costs 45 72
Extraordinary loss on early extinguishment of debt -- 539
Extraordinary gain on forgiveness of debt (2,185) --
Gain on sale of investment property -- (4,831)
Loss on disposal of property 12 --
Change in accounts:
Receivables and deposits 55 112
Other assets 34 (8)
Accounts payable 220 (16)
Tenant security deposit liabilities (3) (19)
Accrued property taxes (79) 15
Due to affiliate -- (533)
Other liabilities 79 107
Net cash provided by (used in)
operating activities 456 (192)
Cash flows from investing activities:
Property improvements and replacements (444) (333)
Net deposits to restricted escrows (47) (33)
Proceeds from sale of investment property -- 6,987
Net cash (used in) provided by
investing activities (491) 6,621
Cash flows from financing activities:
Payments on notes payable (99) (133)
Repayment of notes payable (30) (4,993)
Debt extinguishment costs -- (372)
Loan costs paid (17) (11)
Distributions to partners (5) (14)
Net cash used in financing activities (151) (5,523)
Net (decrease) increase in cash and cash equivalents (186) 906
Cash and cash equivalents at beginning of period 1,531 378
Cash and cash equivalents at end of period $ 1,345 $ 1,284
Supplemental disclosure of cash flow information:
Cash paid for interest $ 789 $ 1,179
See Accompanying Notes to Consolidated Financial Statements
e)
ANGELES PARTNERS X
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements for Angeles
Partners X (the "Partnership") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of Angeles Realty Corporation (the "General Partner"), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1998, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1998. 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, 1997.
Reclassifications
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 Cardinal Woods Apartments, Ltd., Carriage APX, Ltd. and
Vista APX, Ltd. The Partnership may remove the General Partner of these lower
tiers; therefore, the partnerships are deemed controlled and therefore are
consolidated by the Partnership. All significant interpartnership balances have
been eliminated. Minority interest is immaterial and not shown separately in the
financial statements.
NOTE B - DISPOSITION OF RENTAL PROPERTY
On August 15, 1997, Cardinal Woods Apartments located in Cary, North Carolina,
was sold to an unaffiliated party for $7,100,000. After closing expenses of
approximately $113,000, the proceeds received by the Partnership were
approximately $6,987,000. The Partnership used most of the proceeds from the
sale of the property to pay off the debt encumbering the property. The first
mortgage was approximately $3,782,000 and the second mortgage was approximately
$122,000. Both the first and second mortgages were scheduled to mature in
October 2003. The property was also encumbered by a note payable to Angeles
Mortgage Investment Trust ("AMIT") (see "Note C") of approximately $588,000. On
September 17, 1998, AMIT was merged with and into Insignia Properties Trust
("IPT"), the sole shareholder of the General Partner. The Partnership also paid
off a note payable to Angeles Acceptance Pool, L.P. ("AAP") (see "Note C") in
the amount of approximately $501,000. The remaining net proceeds were used to
establish additional cash reserves for 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.
Affiliates of the General Partner provide property management and asset
management services to the Partnership. The partnership agreement provides for
certain payments to affiliates for services and as reimbursement of certain
expenses incurred by affiliates on behalf of the Partnership. The following
expenses were paid or accrued to the General Partner and affiliates for the nine
month periods ended September 30, 1998 and 1997:
1998 1997
(in thousands)
Property management fees (included in operating expenses) $125 $174
Reimbursement for services of affiliates including $9,000
and $14,000 of construction services reimbursements in
1998 and 1997, respectively, (included in investment
properties, general and administrative and operating
expenses) 84 102
In addition, the Partnership paid approximately $4,000 during the nine month
period ended September 30, 1998 to an affiliate of the General Partner for
reimbursements of costs related to the loan refinancing at Carriage Hills in
November 1997. These costs were capitalized as loan costs and are being
amortized over the term of the loan.
For the period from 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 that accrued to the benefit of the affiliate of the General Partner by
virtue of the agent's obligations was not significant.
AMIT, a real estate investment trust, provided unsecured loans to the
Partnership. Concurrent with the sale of Cardinal Woods Apartments on August 15,
1997, the Partnership repaid approximately $588,000 to AMIT. In addition, upon
the refinancing of Carriage Hills on November 20, 1997, approximately $1,432,000
was repaid to AMIT. The Partnership also had a loan that was previously secured
by Vista Hills Apartments; however, the second mortgage was released in 1992 as
part of the terms and conditions for refinancing the first mortgage. A
multifamily rider was executed between the Partnership and the first mortgage
holder for Vista APX, stating that any subordinated debt must be non-
foreclosable and have a maturity date not less than 2 years beyond the maturity
of the refinanced first mortgage. The agreement also provided for interest to
be paid based on available cash flow. In June 1996, but effective March 31,
1996, this loan was modified, adding non-default accrued interest payable to the
loan balance and waiving accrued, but unpaid, default interest and late charges.
The modified note would have matured in September 2002 and provided for interest
at 12.5% on the original $1,300,000 note amount. The debt restructuring was
accounted for as a modification of terms. The total future cash payments under
the restructured loan exceed the carrying value of the loan as of the date of
restructure. Consequently, interest on the restructured debt was being recorded
at an effective rate of 10.8% which is the rate required to equate the present
value of the total future cash payments under the new terms with the carrying
amount of the loan at the date of restructure. As part of the modification,
AMIT was granted a first priority lien on the Partnership's 99% limited
partnership interest in the Vista APX lower-tier partnership which owns Vista
Hills Apartments. The lender's recourse was limited to the assets of Vista APX;
the debt was non-recourse to the other assets of the Partnership. This loan,
with a carrying amount of approximately $1,561,000 plus accrued interest of
approximately $325,000, was assigned to AAP on December 31, 1997 and was
ultimately forgiven by AAP in August 1998. As a result of the repayments and
assignment mentioned above, the Partnership has no outstanding obligations to
AMIT at September 30, 1998. Total interest expense on financing provided by
AMIT was approximately $313,000 for the nine months ended September 30, 1997.
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 working capital loan funded Vista APX's operating deficits in prior years.
As a result of the sale of Cardinal Woods Apartments on August 15, 1997,
$501,000 of the then outstanding debt to AAP was repaid. The remaining Vista
APX note payable of $150,000 became due November 25, 1997. Upon maturity, Vista
APX did not have the means with which to satisfy the maturing debt obligation.
The loan was unsecured; AAP's recourse was limited to the assets of Vista APX.
The debt was non-recourse to the other assets of the Partnership. In August
1998, the General Partner negotiated a settlement with AAP, whereby the
Partnership paid AAP $30,000, and the remainder of the debt owed AAP, including
the $1,561,000 note previously assigned to AAP by AMIT, was forgiven. Total
interest expense for these loans and for the $1,561,000 note assigned to AAP by
AMIT on December 31, 1997 was approximately $104,000 and $39,000 for the nine
months ended September 30, 1998 and 1997, respectively.
During August 1998, an affiliate of the General Partner (the "Purchaser")
commenced a tender offer for limited partnership interests in the Partnership.
The Purchaser offered to purchase up to 8,000 of the outstanding units of
limited partnership interest in the Partnership, at $150 per Unit, net to the
seller in cash. The Purchaser has extended the tender offer expiration date to
November 16, 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 entity which
controls 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 remaining investment properties consist of three apartment
complexes. The following table sets forth the average occupancy of the
properties for the nine month periods ended September 30, 1998, and 1997:
Average Occupancy
Property 1998 1997
Greentree Apartments
Mobile, Alabama 96% 99%
Carriage Hills Apartments
East Lansing, Michigan 93% 95%
Vista Hills Apartments
El Paso, Texas 83% 75%
The General Partner attributes the increase in occupancy at Vista Hills to
effective marketing and improved market conditions.
The Partnership realized net income of $1,798,000 for the nine month period
ended September 30, 1998, compared to net income of $3,734,000 for the nine
months ended September 30, 1997. The Partnership's net income for the three
months ended September 30, 1998 was approximately $2,054,000 compared to net
income of approximately $4,095,000 for the three months ended September 30,
1997. The decrease in net income for the three and nine months ended September
30, 1998, as compared to the corresponding period in 1997 is primarily
attributable to the gain recognized on the sale of Cardinal Woods on August 15,
1997, offset partially by the loss on early extinguishment of debt. On August
15, 1997, Cardinal Woods Apartments, located in Cary, North Carolina, was sold
to an unaffiliated party for $7,100,000. The Partnership used a portion of the
proceeds from the sale of the property to pay off the debt encumbering the
property. After closing expenses of approximately $113,000, and the payoff of
the debt encumbering the property, the net proceeds received by the Partnership
were approximately $1,994,000. The net proceeds were used to establish
additional cash reserves for the Partnership.
Vista APX did not have the means with which to pay its $150,000 outstanding
indebtedness to AAP which matured in November 1997. The loan was unsecured;
AAP's recourse was limited to the assets of Vista APX. In August 1998, the
General Partner negotiated a settlement with AAP, whereby the Partnership paid
AAP $30,000, and the remainder of the debt owed AAP, including the $1,561,000
note previously assigned to AAP by AMIT, was forgiven. For financial statement
purposes, the forgiveness resulted in a gain of approximately $2,185,000.
Excluding the operations of Cardinal Woods and the gain on forgiveness of debt,
the net loss for the nine months ended September 30, 1998 decreased
approximately $263,000, primarily due to increased revenues and reduced interest
expense. Rental revenue at the remaining properties increased primarily due to
increased occupancy and lower rental concessions at Vista Hills. Other income
increased as a result of increased interest income due to higher average cash
balances resulting from cash received from the sale of Cardinal Woods. Interest
expense excluding Cardinal Woods decreased by approximately $215,000 due to the
refinance of Carriage Hill's debt at a lower interest rate and the payoff of
other notes payable with proceeds received from the sale of Cardinal Woods.
Included in operating expenses for the nine months ended September 30, 1998 was
approximately $51,000 for major repairs and maintenance, which was comprised
primarily of landscaping and exterior building repairs. For the nine months
ended September 30, 1997, approximately $46,000 was spent for major repairs and
maintenance, primarily made up of tennis court, exterior building, and parking
lot repairs and landscaping.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
At September 30, 1998, the Partnership held cash and cash equivalents of
approximately $1,345,000 compared to approximately $1,284,000 at September 30,
1997. The net decrease in cash and cash equivalents for the nine months ended
September 30, 1998 was approximately $186,000 compared to a net increase of
approximately $906,000 for the nine month period ended September 30, 1997. Net
cash provided by operating activities increased primarily due to the payment
made in 1997 of a $581,000 payable to an affiliate for reimbursement of
services, which had been accruing for several years. Net cash used in investing
activities increased primarily due to the proceeds received from the sale of
Cardinal Woods Apartments during the nine months ended September 30, 1997 and
increased property improvements and replacements in 1998. Net cash used in
financing activities decreased primarily due to the repayment of notes payable
and prepayment penalties incurred as a result of the sale of Cardinal Woods in
1997.
On November 20, 1997, the Partnership refinanced the mortgage debt encumbering
Carriage Hills Apartments. The refinancing replaced indebtedness of
approximately $4,769,000 with a new mortgage in the amount of $5,400,000 at an
interest rate of 7.39%. The former indebtedness included a first mortgage of
approximately $3,379,000 with an interest rate of 9.84% and a note payable to
AMIT (see "Note C") of approximately $1,432,000 with an interest rate of 10.2%.
Payments on the new debt are due on the first day of each month until the loan
matures on December 1, 2004. Through September 30, 1998, total capitalized loan
costs were approximately $133,000.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
federal, state, and local legal and regulatory requirements. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The General Partner is currently assessing the need for capital improvements at
each of the Partnership's properties. To the extent that additional capital
improvements are required, the Partnership's distributable cash flow, if any,
may be adversely affected, at least in the short term. After the sale of
Cardinal Woods, the refinance of Carriage Hills, and the forgiveness of the AAP
debt, the Partnership's outstanding indebtedness of $12,515,000 (net of
discount) has maturity dates ranging from September 2000 to December 2004, with
balloon payments due at maturity. The General Partner will attempt to refinance
such indebtedness or sell the properties prior to such maturity date. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
will risk losing such properties through foreclosure. Future cash distributions
will depend on the levels of net cash generated from operations, refinancings,
property sales and the availability of cash reserves. There were no
distributions to the limited partners during the nine months ended September 30,
1998 or 1997. The Partnership's distribution policy will be reviewed on a
quarterly basis. There can be no assurance, however, that the Partnership will
generate sufficient funds from operations to permit further distributions to its
partners in 1998 or subsequent periods.
In the third quarter of 1998, the General Partner entered into a contract with
an unaffiliated party for the sale of Vista Hills. The potential buyer is
currently performing due diligence on the property, and the closing is expected
to happen at the end of November 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 Insignia Properties
Trust ("IPT"), the entity which controls 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 effect 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 of 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 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 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 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 entitled Everest Properties LLC. v.
Insignia Financial Group, Inc. in the Superior Court of the State of California,
County of Los Angeles. The action 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 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 Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The General Partner of the Partnership believes
that all such pending or outstanding litigation will be resolved without a
material adverse effect upon the business, financial condition or operations of
the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is attached as an exhibit to this
report.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS X
By: Angeles Realty Corporation
Its 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Angeles Partners X 1998 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000317900
<NAME> ANGELES PARTNERS X
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,345
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 15,221
<DEPRECIATION> 9,810
<TOTAL-ASSETS> 7,693
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 12,515
0
0
<COMMON> 0
<OTHER-SE> (5,431)
<TOTAL-LIABILITY-AND-EQUITY> 7,693
<SALES> 0
<TOTAL-REVENUES> 2,506
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,893
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 938
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,798
<EPS-PRIMARY> 95.57<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
