<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
For the quarterly period ended JUNE 30, 1999
of
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CPA(R):14
A MARYLAND Corporation
IRS Employer Identification No. 13-3951476
SEC File Number 000-25771
50 ROCKEFELLER PLAZA,
NEW YORK, NEW YORK 10020
(212) 492-1100
CPA(R):14 has SHARES OF COMMON STOCK registered pursuant to Section
12(g) of the Act.
CPA(R):14 is not registered on any exchanges.
CPA(R):14 does not have any Securities registered pursuant to Section
12(b) of the Act.
CPA(R):14 is unaware of any delinquent filers pursuant to Item 405 of
Regulation S-K.
CPA(R):14 (1) has filed all reports required by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or
for 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.
CPA(R):14 has no active market for common stock at August 9, 1999.
22,458,395 shares of common stock, $.001 Par Value outstanding at
August 9, 1999.
<PAGE> 2
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
PART I
------
<S> <C> <C>
Item 1. - Financial Information*
Condensed Consolidated Balance Sheets, December 31, 1998 and June
30, 1999 2
Condensed Consolidated Statements of Income for the three and six
months ended June 30, 1998 and 1999 3
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 1999 4
Notes to Condensed Consolidated Financial Statements 5-7
PART II - Other Information
Item 4. - Submission of Matters to a Vote of Security Holders 8
Signatures 9
</TABLE>
* The summarized financial information contained herein is unaudited; however,
in the opinion of management, all adjustments necessary for a fair presentation
of such financial information have been included.
-1-
<PAGE> 3
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
PART I
Item 1. - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
--------------- ---------------
(Note) (Unaudited)
<S> <C> <C>
ASSETS:
Land and buildings, net of accumulated
depreciation of $175,977 at December 31, 1998
and $518,269 at June 30, 1999 $ 44,566,025 $ 58,284,824
Equity investments 36,097,004 78,256,457
Cash and cash equivalents 26,747,058 77,696,135
Other assets 545,842 1,521,026
------------- -------------
Total assets $ 107,955,929 $ 215,758,442
============= =============
LIABILITIES:
Limited recourse mortgage notes payable $ 9,690,338
Accrued interest 26,346
Accounts payable to affiliates $ 537,874 891,110
Accounts payable and accrued expenses 169,735 105,994
Deferred acquisition fees payable to affiliate 1,628,828 2,456,646
Dividends payable 1,365,622 2,603,735
Prepaid rental income and security deposits 343,767 408,767
------------- -------------
Total liabilities 4,045,826 16,182,936
------------- -------------
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value; authorized, 40,000,000 shares; issued and
outstanding, 11,837,901 and 22,458,395 shares at
December 31, 1998 and June 30, 1999 11,838 22,458
Additional paid-in capital 105,705,582 203,929,867
Distributions in excess of accumulated earnings (1,643,957) (4,111,516)
------------- -------------
104,073,463 199,840,809
Less treasury stock at cost, 16,900 and 27,745
shares at December 31, 1998 and June 30, 1999 (163,360) (265,303)
------------- -------------
Total shareholders' equity 103,910,103 199,575,506
------------- -------------
Total liabilities and
shareholders' equity $ 107,955,929 $ 215,758,442
============= =============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Note: The balance sheet at December 31, 1998 has been derived from the audited
consolidated financial statements at that date.
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<PAGE> 4
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS of INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1999 June 30, 1998 June 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 2,200 $1,225,382 $ 2,200 $2,245,540
Other interest income 318,586 290,669 318,586 543,975
--------- ---------- --------- ----------
320,786 1,516,051 320,786 2,789,515
--------- ---------- --------- ----------
Expenses:
Depreciation and amortization 5,666 189,777 5,666 345,199
Interest 25 123,027 25 158,206
General and administrative 129,958 283,191 246,587 447,524
Property expenses 11,113 349,238 11,113 598,743
--------- ---------- --------- ----------
146,762 945,233 263,391 1,549,672
--------- ---------- --------- ----------
Income before income from
equity investments 174,024 570,818 57,395 1,239,843
Income from equity investments 612,934 945,856
--------- ---------- --------- ----------
Net income $ 174,024 $1,183,752 $ 57,395 $2,185,699
========= ========== ========= ==========
Basic and diluted earnings per share $.06 $.07 $.04 $.15
==== ==== ==== ====
Weighted average shares outstanding
- basic and diluted 2,811,656 16,071,527 1,423,540 14,349,579
========== ========== ========= ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
-3-
<PAGE> 5
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
-----------------------------
1998 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 57,395 $ 2,185,699
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 5,666 345,199
Straight-line rent adjustments (78,823)
Increase in other assets (63,100) (46,649)
Increase in accrued interest 26,346
Increase (decrease) in accounts payable and
accrued expenses 62,150 (63,741)
Increase in accounts payable to affiliates 251,325 154,823
Increase in prepaid rental income and
security deposits 198,000 65,000
------------ ------------
Net cash provided by operating activities 511,436 2,587,854
------------ ------------
Cash flows from investing activities:
Acquisitions of real estate and equity investments
and other capitalized costs (7,388,482) (55,804,696)
Equity distributions received in excess of
equity income (3,181,895) 411,970
------------ ------------
Net cash used in investing activities (10,570,377) (55,392,726)
------------ ------------
Cash flows from financing activities:
Proceeds from sale of stock, net of costs 43,417,183 98,234,905
Dividends paid (3,415,145)
Proceeds from mortgages 9,700,000
Payment of mortgage principal (9,662)
Deferred financing costs and mortgage deposits (654,206)
Purchase of treasury stock (101,943)
------------ ------------
Net cash provided by financing activities 43,417,183 103,753,949
------------ ------------
Net change in cash and cash equivalents 33,358,242 50,949,077
Cash and cash equivalents, beginning of period 200,000 26,747,058
------------ ------------
Cash and cash equivalents, end of period $ 33,558,242 $ 77,696,135
============ ============
Interest paid $ 131,860
============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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<PAGE> 6
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements of
Corporate Property Associates 14 Incorporated and its wholly-owned subsidiaries
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Article 10 of Regulation S-X of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. All significant intercompany balances and transactions
have been eliminated. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
the results of the interim period presented have been included. The results of
operations for the interim period are not necessarily indicative of results for
the full year. For further information, refer to the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
Note 2. Organization and Offering:
The Company was formed on June 4, 1997 under the General Corporation Law of
Maryland for the purpose of engaging in the business of investing in and owning
industrial and commercial real estate. Subject to certain restrictions and
limitations, the business of the Company is managed by Carey Property Advisors,
a Pennsylvania limited partnership (the "Advisor").
A maximum of 30,000,000 shares are being offered to the public on a best efforts
basis by Carey Financial Corporation ("Carey Financial"), an affiliate of the
Advisor, and selected dealers at a price of $10 per share. The offering
commenced November 10, 1997. Since the inception of the offering, 22,438,395
shares ($224,383,950) have been issued including 10,620,494 shares issued since
December 31, 1998. In April 1999, the Company filed an offering with the
Securities and Exchange Commission to sell up to an additional 40,000,000 shares
on a best efforts basis.
Note 3. Transactions with Related Parties:
The Company's asset management and performance fees payable to the Advisor are
each 1/2 of 1% per annum of Average Invested Assets, as defined in the
Prospectus. Until the Company has achieved a 7% cumulative rate of cash flow
from operations, as defined in the Prospectus, the Advisor will not be entitled
to receive the performance fee. At such time as the Advisor is entitled to
receive the performance fee, the Advisor will have the option of receiving such
fee in cash or restricted shares of the Company. Asset management fees for the
three-month and six-month periods ended June 30, 1999 were $155,512 and
$276,809, respectively, with performance fees in like amount, and general and
administrative reimbursements were $88,436 and $130,523, respectively. For both
the three-month and six-month periods ended June 30, 1998, asset management fees
were $5,557, with performance fees in like amount, and general and
administrative reimbursements were $20,000 and $100,000, respectively.
Note 4. Commitments and Contingencies:
The Company is liable for certain expenses of the offering which are being
deducted from the gross proceeds of the offering up to a maximum of $10,500,000
assuming the sale of 30,000,000 Shares. The Company is currently paying selling
commissions of $0.65 (6.5%) per share sold except for any shares sold to the
Advisor, its affiliates, the selected dealers or any of their employees for
their own accounts. The Company is paying a selected dealer fee not to exceed 1%
of the price of each share sold by the selected dealer. The Company is
reimbursing Carey Financial for expenses (including fees and expenses of its
counsel) and for the costs of sales and wholesaling services. To the extent, if
any, that all organization and offering expenses, excluding selling commissions,
and any fees paid and expenses reimbursed to the selected dealers or paid on
behalf of the selected dealers, exceed 3.5% of the gross proceeds of the
offering, such excess will be paid by the Advisor.
-5-
<PAGE> 7
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 5. Lease Revenues:
The Company's operations consist of the investment in and the leasing of
industrial and commercial real estate. The financial reporting sources of the
lease revenues for the six month periods ended June 30, 1998 and 1999 are as
follows:
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Per Statements of Income
Rental income $2,200 $2,245,540
Adjustment:
Share of leasing revenues
from equity investments 2,410,436
------ ----------
$2,200 $4,655,976
====== ==========
</TABLE>
For the six-month period ended June 30, 1998 and 1999, the Company earned its
proportionate net lease revenues from its investments as follows:
<TABLE>
<CAPTION>
1998 % 1999 %
---- - ---- -
<S> <C> <C> <C> <C>
Advanced Micro Devices, Inc. (a) $1,524,250 33%
Best Buy Co., Inc. 979,493 21
Intesys Technologies, Inc. (a) 460,144 10
Burlington Motor Carrier, Inc. $2,200 100% 396,000 8
Compucom Systems, Inc. (a) 329,880 7
The Benjamin Ansehl Company 324,875 7
Contraves Brashear Systems L.P. 321,750 7
Production Resource Group LLC 223,422 5
CheckFree Holdings Corporation (a) 96,162 2
------ --- ---------- ---
$2,200 100% $4,655,976 100%
====== === ========== ===
</TABLE>
(a) Represents the Company's proportionate share of lease revenues from its
equity investments
Note 6. Equity Investments:
The Company holds interests in five entities at June 30, 1999 (and two at
December 31, 1998) in which its ownership interest is 50% or less. All of the
underlying investments were formed and are owned with affiliates that have
similar investment objectives as the Company. The Company owns a 33.33% interest
in an entity that in December 1998 purchased property and is net leased to
Advanced Micro Devices, Inc.. The Company holds interests of 50%, 33.33% and 50%
in entities that entered into net leases with Intesys Technologies, Inc.,
Compucom Systems, Inc. and CheckFree Holdings Corporation, respectively, during
the six-month period ended June 30, 1999 and an interest in a limited liability
company that net leases a property to Etec Systems, Inc. ("Etec"). The interest
in the Etec investment is limited to a 49.99% interest in a building under
construction on the Etec property with Corporate Property Associates 12
Incorporated ("CPA(R):12"), an affiliate, owning all remaining interests in the
property. Summarized combined financial information of the Company's equity
investees is as follows:
<TABLE>
<CAPTION>
(In thousands) December 31, 1998 June 30,1999
----------------- ------------
<S> <C> <C>
Assets (primarily real estate) $56,069 $257,403
Liabilities (primarily mortgage notes payable) 16,276 124,304
Members' equity 39,793 133,099
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30,1999
------------
<S> <C>
Revenues (primarily rental revenues) $ 8,169
Expenses (primarily interest on mortgage and depreciation) 4,995
Net income 3,174
</TABLE>
-6-
<PAGE> 8
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 7. Acquisitions:
A. On June 3, 1999, the Company and Carey Diversified LLC ("CDC"), an
affiliate, both through 50% ownership interests in a limited liability
company purchased land and building in Norcross, Georgia for $30,785,340
and assumed existing net leases with CheckFree Corporation, Inc.
("CheckFree"). CheckFree's lease obligations have been unconditionally
guaranteed by its parent company, CheckFree Holdings, Inc.
The CheckFree leases have remaining terms through December 31, 2015. The
annual combined rent on the leases is currently $2,564,321. The annual rent
on the land lease with CheckFree provides for annual rent of $76,577 with
stated rent increases effective January 2000, 2005 and 2010. Annual rent on
the building lease is $2,487,744 with rent increases scheduled for January
2004 and each year thereafter based on a formula indexed to increases in
the Consumer Price Index ("CPI"), capped at 2.5% per year.
The purchase of the CheckFree property was financed with a limited recourse
mortgage loan of $15,800,000 collateralized by a deed of trust on the
CheckFree property and lease assignments. The loan bears interest at an
annual variable rate of interest equal to the sum of the London InterBank
Offered Rate ("LIBOR") and 2.5% and provides for scheduled principal
payments that approximate a twenty-five year amortization schedule. The
loan is scheduled to mature on June 1, 2006 at which time a balloon payment
will be due. The loan is prepayable at any time without premium.
The Company and CDC also assumed an existing agreement to construct an
additional office building at the CheckFree property on a build-to-suit
basis at a cost not to exceed $11,060,745. Upon completion of construction,
which is scheduled for June, 2000, CheckFree's annual rent will increase by
approximately $1,550,000. The Company and CDC have obtained limited
recourse mortgage financing of $7,500,000 that will be used to partially
fund the construction. The loan bears interest at an annual variable rate
equal to the sum of LIBOR and 2.5% with principal payment installments,
effective August 1, 2000, based on a twenty-five year amortization
schedule. This loan will also mature on June 1, 2006 at which time a
balloon payment will be due.
The Company will account for its interests in the CheckFree limited
liability company under the equity method of accounting.
B. On June 29, 1999, the Company purchased a property in Harrisburg, North
Carolina for $7,805,807 upon which a build-to-suit facility will be
constructed and net leased to Builders' Supply and Lumber Co., Inc
("Builders' Supply"). A deposit of $5,035,510 has been made in a
construction escrow account. Completion of construction is expected to
occur in February 2000 at which time an initial lease term of twenty years
will commence. Annual rent initially will be $760,000 with rent increases
each year based on a formula indexed to increases in the CPI, capped at 2%
per year. The lease provides for a renewal term of ten years at the option
of Builders' Supply.
Note 8. Subsequent Events:
On July 19, 1999, the Company purchased land and building in Gardenia,
California for $6,282,723 and entered into a net lease with Scott Co. of
California ("Scott"). The lease obligations of Scott are unconditionally
guaranteed by its parent company, The Scott Companies, Inc. The Scott lease has
an initial term of twenty years with three five-year renewal terms at Scott's
option. Annual rent is $681,000 with rent increases every three years based on a
formula indexed to increases in the CPI.
In connection with the Scott purchase, the Company obtained $3,000,000 of
limited recourse mortgage financing collateralized by a deed of trust and a
lease assignment. The loan provides for monthly payments of interest and
principal of $22,709 at an annual interest rate of 8.21%. The loan matures in
August 2009 at which time a balloon payment will be due.
-7-
<PAGE> 9
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
PART II
-------
Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended June 30, 1999, no matters were submitted to a
vote of security holders.
-8-
<PAGE> 10
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
09 /01/99 By: /s/ John J. Park
--------- ----------------------------------------
Date John J. Park
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
09/01/99 By: /s/ Claude Fernandez
--------- ----------------------------------------
Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Accounting Officer)
-9-
