#  

# UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

# Form 10-Q

 

(Mark One)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2009

 

or

 

[ ]   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 0-10304

 

 

## ANGELES PARTNERS X 

(Exact name of registrant as specified in its charter)

 
| California                      | 95-3557899          |
|---------------------------------|---------------------|
| (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

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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.  

[X] Yes  [ ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes  [ ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 
| Large accelerated filer [ ]                                               | Accelerated filer [ ]         |
|---------------------------------------------------------------------------|-------------------------------|
| Non-accelerated filer [ ] 

(Do not check if a smaller reporting company) | Smaller reporting company [X] |

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes  [X] No

 

### PART I – FINANCIAL INFORMATION
 

 

**Item 1.     Financial Statements.**

 

 

ANGELES PARTNERS X 

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

 

 

 

June 30,

December 31,

 

2009

2008

 

(Unaudited)

(Note)

Assets

 

 

Cash and cash equivalents

    $    29

    $   184

Receivables and deposits

         15

         13

Other assets

         90

         96

Investment property:

 

 

Land

        101

        101

Buildings and related personal property

     7,138

     7,109

 

      7,239

      7,210

Less accumulated depreciation

    (5,943)

    (5,839)

 

     1,296

      1,371

 

    $1,430

    $1,664

Liabilities and Partners' Deficit 

 

 

Liabilities

 

 

Accounts payable

    $    27

    $    10

Tenant security deposit liabilities

         31

         31

Accrued property taxes

        107

         57

Other liabilities

         59

         80

Due to affiliates (Note B)

         --

          9

Mortgage note payable 

     5,360

     5,360

 

 5,584

     5,547

Partners' Deficit

 

 

General partners

       (233)

       (231)

Limited partners (18,625 units issued and

 

 

outstanding)

    (3,921)

    (3,652)

 

    (4,154)

    (3,883)

 

    $ 1,430

    $1,664

 

Note: The consolidated balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

*See Accompanying Notes to Consolidated Financial Statements*

 
 

ANGELES PARTNERS X 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 (in thousands, except per unit data)

 

 

 

 

 

 

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2009

2008

2009

2008

Revenues:

 

 

 

 

Rental income

 $  347

 $  337

 $  708

 $  691

Other income

     38

     48

     73

     82

Total revenues

    385

    385

    781

    773

 

 

 

 

 

Expenses:

  

 

 

 

Operating

    167

    173

    324

    331

General and administrative

     20

     31

     38

     56

Depreciation

     52

     49

    104

     96

Interest

     27

     61

     53

    132

Property taxes

     54

     52

    108

    104

Total expenses

    320

    366

    627

    719

 

 

 

 

 

Net income 

 $   65

 $   19

 $  154

 $   54

 

 

 

 

 

Net income allocated to general

 

 

 

 

partners (1%)

 $    1

 $    1

 $    2

 $    1

 

 

 

 

 

Net income allocated to limited

 

 

 

 

partners (99%)

     64

     18

    152

     53

 

 $   65

 $   19

 $  154

 $   54

Net income per limited

 

 

 

 

 partnership unit

 $ 3.44

 $  .97

 $ 8.16

 $ 2.85

 

 

 

 

 

Distributions per limited

 

 

 

 

 partnership unit

 $ 9.34

 $ 6.93

 $22.60

 $ 6.93

 

*See Accompanying Notes to Consolidated Financial Statements*

 
 

ANGELES PARTNERS X 

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT 

(Unaudited)

(in thousands, except unit data)

 

 

 

 

 

 

 

Limited

 

 

 

 

Partnership

General

Limited

 

 
UnitsPartnersPartners
Total

 

 

 

 

 

Original capital contributions

18,714

$     1

 $18,714

 $18,715

 

 

 

 

 

Partners' deficit at

 

 

 

 

December 31, 2008

18,625

 $  (231)

 $ (3,652)

 $ (3,883)

 

 

 

 

 

Distributions to partners

    --

      (4)

     (421)

     (425)

 

 

 

 

 

Net income for the six months

 

 

 

 

ended June 30, 2009

   --

      2

     152

      154

 

 

 

 

 

Partners' deficit 

 

 

 

 

at June 30, 2009

18,625

 $  (233)

 $(3,921)

 $(4,154)

 

*See Accompanying Notes to Consolidated Financial Statements*

ANGELES PARTNERS X 
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

 

Six Months Ended

 

June 30,

 

2009

2008

Cash flows from operating activities:

 

 

Net income 

$   154

$    54

Adjustments to reconcile net income to net cash provided

 

 

by operating activities:

 

 

Depreciation

    104

     96

Amortization of loan costs 

     20

     21

Change in accounts:

 

 

Receivables and deposits

      (2)

      5

Other assets

     (14)

      3

Accounts payable

     17

      (1)

Accrued property taxes

     50

     50

Due to affiliates

      (9)

     --

Other liabilities

    (21)

     (6)

Net cash provided by operating activities

    299

    222

 

 

 

Cash flows used in investing activities:

 

 

Property improvements and replacements

    (29)

   (139)

 

 

 

Cash flows used in financing activities:

 

 

Distributions to partners

   (425)

   (130)

 

 

 

Net decrease in cash and cash equivalents

    (155)

     (47)

 

 

 

Cash and cash equivalents at beginning of period

    184

    144

 

 

 

Cash and cash equivalents at end of period

$    29

$    97

 

 

 

Supplemental disclosure of cash flow information:

 

 

Cash paid for interest

$    28

$   120

 

 

 

Supplemental disclosure of non-cash activity:

 

 

Property improvements and replacements included in 

 

 

 accounts payable

$    --

$    15

 

*See Accompanying Notes to Consolidated Financial Statements*

ANGELES PARTNERS X 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 
Note A – Basis of Presentation
 

The accompanying unaudited consolidated financial statements of Angeles Partners X (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-Q and Article 8-03 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  The general partner responsible for management of the Partnership's business is Angeles Realty Corporation (the "General Partner" or "ARC").  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 six month periods ended June 30, 2009 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2009.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.  The General Partner is a wholly owned subsidiary of Apartment Investment and Management Company (“AIMCO”), a publicly traded real estate investment trust.

 

The Partnership’s management evaluated for subsequent events through the time this Quarterly Report on Form 10-Q was filed on August 12, 2009.

 

Recent Accounting Pronouncement

 

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 168,*The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162*, or SFAS No. 168, which is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  Upon the effective date of SFAS No. 168, the FASB Accounting Standards Codification, or the Codification, will become the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission, or SEC, under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative.  Following SFAS No. 168, the FASB will issue Accounting Standards Updates that serve to update the Codification. The Partnership does not anticipate that SFAS No. 168 will have a significant effect on its consolidated financial statements. 

 
Note B – Transactions with Affiliated Parties
 

The Partnership has no employees and depends 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.  

 

Affiliates of the General Partner receive 5% of gross receipts from the Partnership’s property as compensation for providing property management services. The Partnership paid to such affiliates approximately $38,000 and $39,000 for the six months ended June 30, 2009 and 2008, respectively, which are included in operating expenses.

 

Affiliates of the General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $14,000 and $29,000 for the six months ended June 30, 2009 and 2008, respectively. These amounts areincluded in general and administrative expenses and investment property.  The portion of these reimbursements included in investment property for the six months ended June 30, 2009 and 2008 are construction management services provided by an affiliate of the General Partner of approximately $1,000 and $9,000, respectively.
 

Pursuant to the Partnership Agreement, the General Partner is entitled to receive a distribution equal to 4% of the aggregate disposition price of sold properties. The Partnership paid a distribution of approximately $210,000 to the General Partner related to the sale of Greentree Apartments in 2003. The Partnership paid a distribution of approximately $154,000 to the General Partner related to the sale of Vista Hills Apartments in 1999. These distributions are subordinate to the limited partners receiving their original capital contributions plus a cumulative preferred return of 6% per annum of their adjusted capital investment, as defined in the Partnership Agreement. If the limited partners have not received these returns when the Partnership terminates, the General Partner will be required to return these amounts to the Partnership.

 

The Partnership Agreement provides for a fee equal to 5% of “net cash flow from operations”, as defined in the Partnership Agreement, to be paid to the General Partner for executive and administrative services.   This fee is subordinate to the limited partners receiving a cumulative return of 5% per annum on their adjusted capital investment, as defined in the Partnership Agreement.  The General Partner earned a fee of approximately $4,000 for the six months ended June 30, 2008, which was included in general and administrative expenses. For the year 2008, the Partnership accrued a fee of approximately $9,000, which was reversed during the six months ended June 30, 2009, as it was determined that the criteria for payment of the fee would not be met. The General Partner was entitled to a fee of approximately $13,000 for the six months ended June 30, 2009. However, this fee was not accrued as it was determined that the criteria for payment of the fee would not be met.

 

The Partnership insures its property up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers’ compensation, property casualty, general liability and vehicle liability.  The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. During the six months ended June 30, 2009, the Partnership was charged by AIMCO and its affiliates approximately $22,000 for insurance coverage and fees associated with policy claims administration. Additional charges will be incurred by the Partnership during 2009 as other insurance policies renew later in the year.  The Partnership was charged by AIMCO and its affiliates approximately $32,000 for insurance coverage and fees associated with policy claims administration during the year ended December 31, 2008.

 

**Note C – Fair Value of Financial Instruments**

 

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates their fair value due to the short-term maturity of these instruments. The Partnership estimates the fair value of its long-term debt by discounting future cash flows using a discount rate commensurate with that currently believed to be available to the Partnership for similar term, long-term debt.  At June 30, 2009, the fair value of the Partnership's long-term debt at the Partnership's incremental borrowing rate approximated its carrying value. 

 
Note D – Contingencies
 

As previously disclosed, AIMCO Properties, L.P. and NHP Management Company, both affiliates of the General Partner, were defendants in a lawsuit, filed as acollective action in August 2003 in the United States District Court for the District of Columbia, alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week (“overtime claims”). The plaintiffs also contended that AIMCO Properties, L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call" (“on-call claims”).  In March 2007, the court in the District of Columbia decertified the collective action. In July 2007, plaintiffs’ counsel filed individual cases in Federal court in 22 jurisdictions. In the second quarter of 2008, AIMCO Properties, L.P. settled the overtime cases involving 652 plaintiffs and established a framework for resolving the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel. As a result, the lawsuits asserted in the 22 Federal courts have been dismissed.  During the fourth quarter of 2008, the settlement amounts for alleged unpaid overtime to employees were paid by those partnerships where the respective employees had worked. The Partnership was not required to pay any settlement amounts. At this time, the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel are not resolved. The parties have selected six “on-call” claims that will proceed forward through the arbitration process and have selected arbitrators. The arbitrations have not yet been scheduled. The General Partner is uncertain as to the amount of any additional loss that may be allocable to the Partnership. Therefore, the Partnership cannot estimate whether any additional loss will occur or a potential range of loss.
 

The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment property that are not of a routine nature arising in the ordinary course of business.

 
Environmental
 

Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certainhazardous substances present on a property, including lead-based paint. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances.  The presence of,  or the failure to manage or remedy properly,  hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its property, the Partnership could potentially be liable for environmental liabilities or costs associated with its property.

 
Mold
 

The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements.  The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure.  Affiliates of the General Partner have implemented policies, procedures, third-party audits and training and the General Partner believes that these measures will prevent or eliminate mold exposure and will minimize the effects that mold may have on residents.  To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions.  Because the law regarding mold is unsettled and subject to change the General Partner can make no assurance that liabilitiesresulting from the presence of or exposure to mold will not have a material adverse effect on the Partnership’s consolidated financial condition or results of operations.
**Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.**
 

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Quarterly Report contains or may contain information that is forward-looking, including, without limitation, statements regarding the effect of redevelopments, the Partnership’s future financial performance, including the Partnership’s ability to maintain current or meet projected occupancy and rent levels, and the effect of government regulations. Actual results may differ materially from those described in these forward-looking statements and, in addition, will be affected by a variety of risks and factors some of which are beyond the Partnership’s control including, without limitation: financing risks, including the availability and cost of financing and the risk that the Partnership’s cash flows from operations may be insufficient to meet required payments of principal and interest; natural disasters and severe weather such as hurricanes; national and local economic conditions; the general level of interest rates; energy costs; the terms of governmental regulations that affect the Partnership’s property and interpretations of those regulations; the competitive environment in which the Partnership operates; real estate risks, including fluctuations inreal estate values and the general economic climate in local markets and competition for tenantsin such markets; insurance risk; development risks; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by the Partnership. Readers should carefully review the Partnership’s consolidated financial statements and the notes thereto, as well as the other documents the Partnership files from time to time with the Securities and Exchange Commission.
 

The Partnership's investment property consists of one apartment complex. The following table sets forth the average occupancy of the Partnership's property for the six months ended June 30, 2009 and 2008:

 

 

Average Occupancy

Property

2009

2008

 

 

 

Carriage Hills Apartments

95%

98%

  East Lansing, Michigan

 

 

 

The Partnership attributes the decrease in occupancy at Carriage Hills Apartments to a decline in students from the area college leasing apartments.

 

The Partnership’s financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment property, interest rates on mortgage loans, costs incurred to operate the investment property, general economic conditions and weather. 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, the General Partner may use rental concessions and rental rate reductions to offset softening market conditions; accordingly, there is no guarantee that the General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership such as the local economic climate and weather can adversely or positively affect the Partnership’s financial results.

 

Results of Operations

 

The Partnership’s net income for the three and six months ended June 30, 2009 was approximately $65,000 and $154,000, respectively, compared to net income of approximately $19,000 and $54,000 for the three and six months ended June 30, 2008,respectively.  The increase in net income for both the three and six months ended June 30, 2009 is due to a decrease in total expenses. The increase in net income for the six months ended June 30, 2009 is also due to an increase in total revenues. Total revenues remained constant for the three months ended June 30, 2009.
 

Total expenses decreased for both the three and six months ended June 30, 2009 due to decreases in interest, operating and general and administrative expenses, partially offset by an increase in depreciation expense. Property tax expense remained relatively constant for the comparable periods. The decrease in interest expense for both periods is due to a decrease in interest on the debt encumbering Carriage Hills Apartments as a result of a decrease in the variable interest rate. Operating expenses decreased for both periods due to a decrease in clean up costs related to a casualty in 2007 and employee housing, partially offset by an increase in salaries and related benefits at the Partnership’s investment property. The increase in depreciation expense for both periods is due to property improvements and replacements placed into service at the Partnership’s investment property during the past twelve months.

 

The decrease in general and administrative expenses for both the three and six months ended June 30, 2009 is due to a decrease in the management fee based on net cash from operations payable to the Managing General Partner and a decrease in reimbursements to the General Partner as allowed under the Partnership Agreement. Also included in general and administrative expenses for the three and six months ended June 30, 2009 and 2008 are costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement.

 

Total revenues remained constant for the three months ended June 30, 2009 as an increase in rental income was offset by a decrease in other income. Total revenues increased for the six months ended June 30, 2009 due to an increase in rental income, partially offset by a decrease in other income. The increase in rental income for both periods is due to an increase in the average rental rate, partially offset by a decrease in occupancy at Carriage Hills Apartments. The decrease in other income for both periods is due to a decrease in lease cancellation fees at Carriage Hill Apartments.

 

Liquidity and Capital Resources  

 

At June 30, 2009, the Partnership had cash and cash equivalents of approximately $29,000 compared to approximately $97,000 at June 30, 2008.  Cash and cash equivalents decreased approximately $155,000 since December 31, 2008 due to approximately $425,000 and $29,000 of cash used in financing and investing activities, respectively, partially offset by approximately $299,000 of cash provided by operating activities. Cash used in financing activities consisted of distributions to partners. Cash used in investing activities consisted of property improvements and replacements. The Partnership invests its working capital reserves in interest bearing accounts.

 

The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the investment property 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.  The General Partner monitors developments in the area of legal and regulatory compliance. Capital improvements planned for the Partnership's property are detailed below.

 

During the six months ended June 30, 2009, the Partnership completed approximately $29,000 of capital improvements at the property, consisting primarily of clubhouse renovations and floor covering replacement. These improvements were funded from operations.  The Partnership regularly evaluates the capital improvement needs of the property.  While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2009. Such capital expenditures will depend on the physicalcondition of the property as well as anticipated cash flow generated by the property.
 

Capital expenditures will be incurred only if cash is available from operations or from Partnership reserves.  To the extent that capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term.

 

The Partnership’s assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness encumbering the Partnership’s property of approximately $5,360,000requires monthly payments of interest only and a balloon payment of $5,360,000 due upon maturity during 2010.  The General Partner will attempt to refinance such indebtedness and/or sell the property prior to such maturity date.  If the property cannot be refinanced or sold for a sufficient amount, the Partnership may risk losing such property through foreclosure.

 

The Partnership distributed the following amounts during the six months ended June 30, 2009 and 2008 (in thousands, except per unit data):

 

 

Six Months

Per Limited

Six Months

Per Limited

 

Ended June 30,

Partnership

Ended June 30,

Partnership

 

2009

Unit

2008

Unit

 

 

 

 

 

Refinance (1)

   $   425

  $22.60

   $   130

   $  6.93

 

(1)   Distributions from the September 2007 refinancing of the mortgage encumbering Carriage Hills Apartments.

 

Future cash distributions will depend on the levels of net cash generated from operations, the timing of the debt maturity, refinancing and/or property sale. The Partnership's cash available for distribution is reviewed on a monthly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit any additional distributions to its partners in 2009 or subsequent periods.

 

Other

 

In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 11,518 limited partnership units (the "Units") in the Partnership representing 61.84% of the outstanding Units at June 30, 2009.  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 acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers.  Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner.  As a result of its ownership of 61.84% of the outstanding Units, AIMCO and its affiliates are in a position to control all such voting decisions with respect to the Partnership.  Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder.  As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO as its sole stockholder.

 

Critical Accounting Policies and Estimates

 

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States which require the Partnership to make estimates and assumptions.  The Partnership believes that of its significantaccounting policies, the following may involve a higher degree of judgment and complexity.   
 

Impairment of Long-Lived Asset

 

Investment property is recorded at cost, less accumulated depreciation, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of the property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnership’s estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.

 

Real property investment is subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of the Partnership’s investment property. These factors include, but are not limited to, general economic climate; competition from other apartment communities and other housing options; local conditions, such as loss of jobs or an increase in the supply of apartments that might adversely affect apartment occupancy or rental rates; changes in governmental regulations and the related cost of compliance; increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents; and changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing. Any adverse changes in these factors could cause impairment of the Partnership’s asset.

 

Revenue Recognition

 

The Partnership generally leases apartment units for twelve-month terms or less.  The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area.  Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease.  The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.

 

**Item 4T.**    **Controls and Procedures.**

 

**(a)   Disclosure Controls and Procedures.**

 

The Partnership’s management, with the participation of the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures are effective.

 

**(b)   Changes in Internal Control Over Financial Reporting.**

 

There has been no change in the Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.
****
PART II - OTHER INFORMATION
** **

** **

**Item 1.     Legal Proceedings.**

 

As previously disclosed, AIMCO Properties, L.P. and NHP Management Company, both affiliates of the General Partner, were defendants in a lawsuit, filed as a collective action in August 2003 in the United States District Court for the District of Columbia, alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week (“overtime claims”). The plaintiffs also contended that AIMCO Properties, L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call" (“on-call claims”).  In March 2007, the court in the District of Columbia decertified the collective action. In July 2007, plaintiffs’ counsel filed individual cases in Federal court in 22 jurisdictions. In the second quarter of 2008, AIMCO Properties, L.P. settled the overtime cases involving 652 plaintiffs and established a framework for resolving the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel. As a result, the lawsuits asserted in the 22 Federal courts have been dismissed.  During the fourth quarter of 2008, the settlement amounts for alleged unpaid overtime to employees were paid by those partnerships where the respective employees had worked. The Partnership was not required to pay any settlement amounts. At this time, the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel are not resolved. The parties have selected six “on-call” claims that will proceed forward through the arbitration process and have selected arbitrators. The arbitrations have not yet been scheduled. The General Partner is uncertain as to the amount of any additional loss that may be allocable to the Partnership. Therefore, the Partnership cannot estimate whether any additional loss will occur or a potential range of loss.

 

**Item 6.     Exhibits.**

 

See Exhibit Index.

 

The agreements included as exhibits to this Form 10-Q contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

 
- should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; 

 
- have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; 

 
- may apply standards of materiality in a way that is different from what may be viewed as material to an investor; and 

 
- were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. 

 

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. The Partnership acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-Q not misleading. Additional information about the Partnership may be found elsewhere in this Form 10-Q and the Partnership’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
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**SIGNATURES**
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly 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

 

 

Date: August 12, 2009

By:  /s/Steven D. Cordes

 

      Steven D. Cordes

 

      Senior Vice President

 

 

Date: August 12, 2009

By:  /s/Stephen B. Waters

 

      Stephen B. Waters

 

      Senior Director

 

 

 

 

**ANGELES PARTNERS X**
** **

**EXHIBIT INDEX**

 

**Exhibit Number****   Description**

 

 

     3.1         Amended Certificate and Agreement of Limited Partnership dated June 24, 1980, filed in Form 10-K dated October 31, 1982, and is incorporated herein by reference.

 

     10.4        Purchase and Sale Agreement with Exhibits - Carriage Hills Apartments filed in Current Report on Form 8-K dated July 30, 1982, and incorporated herein by reference.

     

10.23       Future Advance Mortgage dated September 21, 2007 between Carriage APX, a Michigan limited partnership, and Transamerica Occidental Life Insurance Company, an Iowa corporation, filed in Current Report on Form 8-K dated September 21, 2007 and incorporated herein by reference. 

 

10.24       Secured Promissory Note dated September 21, 2007 between Carriage APX, a Michigan limited partnership, and Transamerica Occidental Life Insurance Company, an Iowa corporation, filed in Current Report on Form 8-K dated September 21, 2007 and incorporated herein by reference.

 

10.25       Carveout Guarantee and Indemnity Agreement dated September 21, 2007 between AIMCO Properties, L.P., a Delaware limited partnership, and Transamerica Occidental Life Insurance Company, an Iowa corporation, filed in Current Report on Form 8-K dated September 21, 2007 and incorporated herein by reference.

 

31.1        Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

31.2        Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1        Certification of equivalent of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

99A         Agreement of Limited Partnership for Angeles Partners X GP Limited Partnership between Angeles Realty Corporation and Angeles Partners X, L.P. entered into on September 15, 1993, filed in Form 10-QSB dated September 30, 1993, which is incorporated herein by reference.