UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2003
[ ] 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 0-14248
ANGELES PARTNERS XIV
(Exact Name of Registrant as Specified in Its Charter)
California 95-3959771
(State or other jurisdiction of (I.R.S. 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)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENT OF NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
March 31, 2003
Assets
Cash and cash equivalents $ 7,407
Receivables and deposits 110
7,517
Liabilities
Accounts payable 4
Other liabilities 254
Notes payable, in default 11,746
Accrued interest, in default 4,187
Due to affiliates 130
Estimated costs during the period of liquidation 48
16,369
Net liabilities in liquidation $(8,852)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
For the Three Months
Ended March 31,
2003
Net liabilities in liquidation at beginning of period $ (8,182)
Changes in net liabilities in liquidation attributed to:
Increase in cash and cash equivalents 6,337
Decrease in receivables and deposits (151)
Decrease in restricted escrows (206)
Decrease in other assets (77)
Decrease in investment properties (32,654)
Decrease in accounts payable 32
Decrease in tenant security deposits 123
Decrease in accrued property taxes 327
Increase in other liabilities (56)
Decrease in notes payable 16,817
Decrease in accrued interest payable 6,157
Decrease in due to affiliates 2,408
Decrease in estimated costs during the period of
liquidation 273
Net liabilities in liquidation at end of period $ (8,852)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended
March 31, 2002
Revenues:
Rental income $ 1,278
Other income 66
Total revenues 1,344
Expenses:
Operating 458
General and administrative 83
Depreciation 355
Interest 828
Property taxes 104
Total expenses 1,828
Net loss $ (484)
Net loss allocated to general partners (1%) $ (5)
Net loss allocated to limited partners (99%) (479)
$ (484)
Net loss per limited partnership unit $(11.03)
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XIV
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,2002
Cash flows from operating activities:
Net loss $ (484)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 355
Amortization of loan costs 6
Change in accounts:
Receivables and deposits (141)
Other assets (12)
Accounts payable 14
Accrued property taxes 104
Accrued interest 341
Due to affiliates (24)
Other liabilities 110
Net cash provided by operating activities 269
Cash flows from investing activities:
Property improvements and replacements (83)
Net deposits to restricted escrows (27)
Net cash used in investing activities (110)
Cash flows used in financing activities:
Principal payments on notes payable (87)
Net increase in cash and cash equivalents 72
Cash and cash equivalents at beginning of period 1,177
Cash and cash equivalents at end of period $ 1,249
Supplemental disclosure of cash flow information:
Cash paid for interest $ 465
At March 31, 2002 and December 31, 2001, approximately $79,000 of property
improvements and replacements were included in Due to affiliates.
See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XIV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
As of December 31, 2002, Angeles Partners XIV (the "Partnership" or
"Registrant") adopted the liquidation basis of accounting due to the imminent
loss of its two remaining investment properties.
The Partnership had unsecured working capital loans in the amount of
approximately $4,576,000 plus related accrued interest of approximately
$4,295,000 at December 31, 2002. These loans were in default at December 31,
2002 as a result of non-payment of interest and principal upon their maturity in
November 1997. These loans were originally payable to Angeles Acceptance Pool,
L.P. ("AAP"). During the year ended December 31, 2000, AAP transferred ownership
of the loans to Saticoy Investments Company, LLC ("Saticoy"), a wholly owned
entity of The PNL Companies. During the year ended December 31, 2002, Saticoy
transferred ownership of the loans to AIMCO Properties, L.P., an affiliate of
Angeles Realty Corporation II ("ARC II" or the "Managing General Partner"). This
indebtedness is recourse to the Partnership.
During the year ended December 31, 2001, the Managing General Partner signed a
forebearance agreement with Saticoy. The Managing General Partner agreed to
market Waterford Square Apartments for sale. The forebearance period began June
1, 2001 and was to end the earlier of March 1, 2002 or the date Waterford Square
Apartments was sold. The Managing General Partner and Saticoy negotiated
extensions of the forebearance agreement until July 1, 2002, at which time it
expired. The Partnership sold Waterford Square Apartments on March 31, 2003.
After deducting for closing costs, a portion of the sale proceeds was used to
repay the first lien mortgage debt on the property. Subsequent to March 31,
2003, the remaining sale proceeds were used to repay certain Angeles Mortgage
Investment Trust ("AMIT") debt and a portion of the unsecured working capital
loans.
In addition the Partnership had two notes which were recourse to the Partnership
and were owed to AMIT, an affiliate of the Managing General Partner. One of the
two notes in the amount of approximately $2,405,000 originally matured in March
1998. The Managing General Partner negotiated with the holder of the note to
extend this indebtedness through March 2002. This loan plus accrued interest of
approximately $592,000 at March 31, 2003 was in default at March 31, 2003 as a
result of non-payment of interest and principal upon its maturity in March 2002.
As a result of the sale of Waterford Square Apartments, this indebtedness was
repaid subsequent to March 31, 2003. The remaining note with a principal balance
of approximately $4,765,000 matured on March 1, 2003 and was in default due to
non-payment. Accrued interest on this note was approximately $5,792,000 at March
31, 2003. An affiliate of the Managing General Partner obtained a judgment
against the Partnership in December 2002. An affiliate of the Managing General
Partner had also initiated foreclosure proceedings against Fox Crest Apartments,
the Partnership's other investment property, and on March 25, 2003, the judgment
against the Partnership became final, and AIMCO became the owner of all
beneficial interest in Fox Crest Apartments. As a result, approximately
$4,970,000 of accrued interest related to AMIT debt and approximately $1,592,000
of accrued interest related to the working capital loans was extinguished during
the three months ended March 31, 2003.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its consolidated financial statements at
December 31, 2002, to the liquidation basis of accounting. Consequently, assets
have been valued at estimated net realizable value and liabilities are presented
at their estimated settlement amounts, including estimated costs associated with
carrying out the liquidation of the Partnership. The valuation of assets and
liabilities necessarily requires many estimates and assumptions and there are
substantial uncertainties in carrying out the liquidation. The actual
realization of assets and settlement of liabilities could be higher or lower
than amounts indicated and is based upon the Managing General Partner's
estimates as of the date of the consolidated financial statements.
The Managing General Partner estimates that the liquidation process will be
completed by June 30, 2003. Because the success in realization of assets and the
settlement of liabilities is based on the Managing General Partner's best
estimates, the liquidation period may be shorter than projected or it may be
extended beyond the projected period.
Note B - Disposition of Investment Property
On March 31, 2003, the Partnership sold Waterford Square Apartments to an
unrelated third party for a gross sales price of $18,200,000. The net proceeds
realized by the Partnership were approximately $6,395,000 after payment of
closing costs and the first lien mortgage debt on the property. Subsequent to
March 31, 2003, these proceeds were used to repay certain AMIT debt and a
portion of the unsecured working capital loans.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership.
As compensation for providing property management services, affiliates of the
Managing General Partner were entitled to receive 5% of gross receipts from
Foxcrest Apartments and 7.82% of gross receipts from Waterford Square Apartments
during the three months ended March 31, 2003 and 2002. The Registrant paid to
such affiliates approximately $85,000 and $89,000 for the three months ended
March 31, 2003 and 2002, respectively.
Affiliates of the Managing General Partner were eligible to receive
reimbursements of accountable administrative expenses amounting to approximately
$49,000 and $53,000 for the three months ended March 31, 2003 and 2002,
respectively. The Partnership owed the affiliates approximately $106,000 at
March 31, 2003 for reimbursements of accountable administrative expenses. As a
result of the foreclosure on Fox Crest Apartments, approximately $2,342,000 in
liabilities representing reimbursements due to affiliates were extinguished.
AMIT provided financing (the "AMIT Loans") to the Partnership. Pursuant to a
series of transactions, affiliates of the Managing General Partner acquired
ownership interests in AMIT. On September 17, 1998, AMIT was merged with and
into Insignia Properties Trust ("IPT"), the entity which controlled the Managing
General Partner. Effective February 26, 1999, IPT was merged into AIMCO. Thus,
AIMCO is the current holder of the AMIT loans. The principal balances on the
AMIT Loans total approximately $7,170,000 at March 31, 2003, accrue interest at
a rate of 12.5% per annum and are recourse to the Partnership. One of the two
notes totaling approximately $2,405,000 originally matured in March 1998. The
Managing General Partner negotiated with AMIT to extend this indebtedness
through March 2002. The Partnership was in default with respect to this note as
a result of non-payment of interest and principal upon its maturity in March
2002. Subsequent to March 31, 2003, this debt was repaid with proceeds from the
sale of Waterford Square Apartments. The remaining note with a principal balance
of approximately $4,765,000 matured March 1, 2003 and the Partnership is
currently in default due to non-payment upon its maturity. A portion of this
debt was extinguished during the three months ended March 31, 2003 as a result
of the foreclosure on Fox Crest Apartments. Total accrued interest on the AMIT
loans was approximately $6,384,000 at March 31, 2003.
The Partnership insured its properties 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 and vehicle
liability. The Partnership insured its properties above the AIMCO limits through
insurance policies obtained by AIMCO from insurers unaffiliated with the
Managing General Partner. During 2002, the Partnership's cost for insurance
coverage and fees associated with policy claims administration provided by AIMCO
and its affiliates was approximately $100,000.
Note D - 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. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Managing General Partner and
several of their affiliated partnerships and corporate entities. The action
purports to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) which are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Managing General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs seek monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking dismissal
of the action. In lieu of responding to the motion, the plaintiffs filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. On May 14, 2001, the Court heard the
demurrer to the third amended complaint. On July 10, 2001, the Court issued an
order sustaining defendants' demurrer on certain grounds. On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs filed a fourth amended class and derivative action complaint. On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On
October 5, 2001, the Managing General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint, which was heard on December 11, 2001.
On February 2, 2002, the Court served its order granting in part the demurrer.
The Court has dismissed without leave to amend certain of the plaintiffs'
claims. On February 11, 2002, plaintiffs filed a motion seeking to certify a
putative class comprised of all non-affiliated persons who own or have owned
units in the partnerships. The Managing General Partner and affiliated
defendants oppose the motion. On April 29, 2002, the Court held a hearing on
plaintiffs' motion for class certification and took the matter under submission
after further briefing, as ordered by the court, was submitted by the parties.
On July 10, 2002, the Court entered an order vacating the trial date of January
13, 2003 (as well as the pre-trial and discovery cut-off dates) and stayed the
case in its entirety through November 7, 2002 so that the parties could have an
opportunity to discuss settlement. On October 30, 2002, the court entered an
order extending the stay in effect through January 10, 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing General Partner and affiliated
defendants moved to strike the first amended complaint in its entirety for
violating the Court's July 10, 2001 order granting in part and denying in part
defendants' demurrer in the Nuanes action, or alternatively, to strike certain
portions of the complaint based on the statute of limitations. Other defendants
in the action demurred to the fourth amended complaint, and, alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions and took the matters under submission. On February 4, 2002, the
Court served notice of its order granting defendants' motion to strike the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002, the plaintiffs filed a notice appealing the order striking
the complaint. Before completing briefing on the appeal, the parties stayed
further proceedings in the appeal pending the Court's review of the proposed
settlement described below.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. On April 4, 2003, the
Court preliminarily approved the settlement and scheduled a hearing on final
approval for June 2, 2003. While the Nuanes and Heller actions will be dismissed
if the settlement is finally approved, the settlement only benefits limited
partners as of December 20, 2002 in those limited partnerships named in the
complaint that are not in the process of being liquidated or that have not
already been liquidated. The Partnership's limited partners will not be entitled
to any proceeds from the settlement since the Partnership is in the process of
being liquidated. The Partnership's limited partners should have received a
Notice to Non-Settling Persons.
The Managing General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. The discussions of the Registrant's
business and results of operations, including forward-looking statements
pertaining to such matters, do not take into account the effects of any changes
to the Registrant's business and results of operations. Actual results may
differ materially from those described in the forward-looking statements and
will be affected by a variety of risks and factors including, without
limitation: national and local economic conditions; the terms of governmental
regulations that affect the Registrant and interpretations of those regulations;
the competitive environment in which the Registrant operates; financing risks,
including the risk that cash flows from operations may be insufficient to meet
required payments of principal and interest; real estate risks, including
variations of real estate values and the general economic climate in local
markets and competition for tenants in such markets; and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
Results from Operations
On March 31, 2003, the Partnership sold Waterford Square Apartments to an
unrelated third party for a gross sales price of $18,200,000. The net proceeds
realized by the Partnership were approximately $6,395,000 after payment of
closing costs and the first lien mortgage debt on the property. Subsequent to
March 31, 2003, these proceeds were used to repay certain Angeles Mortgage
Investment Trust ("AMIT"), an affiliate of the Managing General Partner, debt
and a portion of the unsecured working capital loans.
At December 31, 2002, the Partnership adopted the liquidation basis of
accounting due to the imminent loss of its two remaining investment properties.
The Partnership was also in default on two unsecured working capital loans and
related accrued interest, in a default position with respect to one note with
recourse to the Partnership and also had lack of liquidity to meet the recourse
note that matured on March 1, 2003.
The Partnership had unsecured working capital loans in the amount of
approximately $4,576,000 plus related accrued interest of approximately
$4,295,000 at December 31, 2002. These loans were in default at December 31,
2002 as a result of non-payment of interest and principal upon their maturity in
November 1997. These loans were originally payable to Angeles Acceptance Pool,
L.P. ("AAP"). During the year ended December 31, 2000, AAP transferred ownership
of the loans to Saticoy Investments Company, LLC ("Saticoy"), a wholly owned
entity of The PNL Companies. During the year ended December 31, 2002, Saticoy
transferred ownership of the loans to AIMCO Properties, L.P., an affiliate of
Angeles Realty Corporation II ("ARC II" or the "Managing General Partner"). This
indebtedness is recourse to the Partnership.
During the year ended December 31, 2001, the Managing General Partner signed a
forebearance agreement with Saticoy. The Managing General Partner agreed to
market Waterford Square Apartments for sale. The forebearance period began June
1, 2001 and was to end the earlier of March 1, 2002 or the date Waterford Square
Apartments was sold. The Managing General Partner and Saticoy negotiated
extensions of the forebearance agreement until July 1, 2002, at which time it
expired. The Partnership sold Waterford Square Apartments on March 31, 2003.
After deducting for closing costs, a portion of the sale proceeds was used to
repay the first lien mortgage debt on the property. Subsequent to March 31,
2003, the remaining sale proceeds were used to repay certain AMIT debt and a
portion of the unsecured working capital loans.
In addition, the Partnership had two notes which were recourse to the
Partnership and were owed to AMIT. One of the two notes in the amount of
approximately $2,405,000 originally matured in March 1998. The Managing General
Partner negotiated with the holder of the note to extend this indebtedness
through March 2002. This loan plus accrued interest of approximately $592,000 at
March 31, 2003 was in default at March 31, 2003 as a result of non-payment of
interest and principal upon its maturity in March 2002. As a result of the sale
of Waterford Square Apartments, this indebtedness was repaid subsequent to March
31, 2003. The remaining note with a principal balance of approximately
$4,765,000 matured on March 1, 2003 and was in default due to non-payment.
Accrued interest on this note was approximately $5,792,000 at March 31, 2003. An
affiliate of the Managing General Partner obtained a judgment against the
Partnership in December 2002. This affiliate initiated foreclosure proceedings
against Fox Crest Apartments, the Partnership's other investment property and on
March 25, 2003, the judgment against the Partnership became final, and AIMCO
became the owner of all beneficial interest in Fox Crest Apartments. As a
result, approximately $4,970,000 of accrued interest related to AMIT debt and
approximately $1,592,000 of accrued interest related to the working capital
loans was extinguished during the three months ended March 31, 2003.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its consolidated financial statements at
December 31, 2002, to the liquidation basis of accounting. Consequently, assets
have been valued at estimated net realizable value and liabilities are presented
at their estimated settlement amounts, including estimated costs associated with
carrying out the liquidation of the Partnership. The valuation of assets and
liabilities necessarily requires many estimates and assumptions and there are
substantial uncertainties in carrying out the liquidation. The actual
realization of assets and settlement of liabilities could be higher or lower
than amounts indicated and is based upon the Managing General Partner's
estimates as of the date of the consolidated financial statements.
During the three months ended March 31, 2003, net liabilities in liquidation
increased by approximately $670,000. This increase is primarily due to a
decrease in investment properties, partially offset by an increase in cash and
cash equivalents and decreases in notes payable, accrued interest, due to
affiliates, and the estimated costs during the period of liquidation. The
decrease in the estimated costs during the period of liquidation is primarily
due to the reduced number of months until the Partnership's expected
liquidation. The increase in cash and cash equivalents and decreases in
investment properties, notes payable, accrued interest, and due to affiliates
are a result of the sale of Waterford Square Apartments and the foreclosure on
Fox Crest Apartments as discussed above.
The statement of net liabilities in liquidation as of March 31, 2003 includes
approximately $48,000 of costs, net of income, that the Managing General Partner
estimates will be incurred during the period of liquidation, based on the
assumption that the liquidation process will be completed by June 30, 2003.
Because the success in realization of assets and the settlement of liabilities
is based on the Managing General Partner's best estimates, the liquidation
period may be shorter or extended beyond the projected period.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 10,825 limited partnership units
(the "Units") in the Partnership representing 24.94% of the outstanding Units at
March 31, 2003. These Units were acquired pursuant to tender offers made by
AIMCO or its affiliates. Under the Partnership Agreement, unitholders holding a
majority of the units are entitled to take action with respect to a variety of
matters, which would include voting on certain amendments to the Partnership
Agreement and voting to remove the Managing General Partner. Although the
Managing General Partner owes fiduciary duties to the limited partners of the
Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as
its sole stockholder. As a result, the duties of the Managing General Partner,
as managing general partner, to the Partnership and its limited partners may
come into conflict with the duties of the Managing General Partner to AIMCO, as
its sole stockholder.
Item 3. Controls and Procedures
The principal executive officer and principal financial officer of the Managing
General Partner, who are the equivalent of the Partnership's principal executive
officer and principal financial officer, respectively, have, within 90 days of
the filing date of this quarterly report, evaluated the effectiveness of the
Partnership's disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c)) and have determined that such disclosure controls
and procedures are adequate. There have been no significant changes in the
Partnership's internal controls or in other factors that could significantly
affect the Partnership's internal controls since the date of evaluation. The
Partnership does not believe any significant deficiencies or material weaknesses
exist in the Partnership's internal controls. Accordingly, no corrective actions
have been taken.
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. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Managing General Partner and
several of their affiliated partnerships and corporate entities. The action
purports to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) which are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Managing General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs seek monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking dismissal
of the action. In lieu of responding to the motion, the plaintiffs filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. On May 14, 2001, the Court heard the
demurrer to the third amended complaint. On July 10, 2001, the Court issued an
order sustaining defendants' demurrer on certain grounds. On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs filed a fourth amended class and derivative action complaint. On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On
October 5, 2001, the Managing General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint, which was heard on December 11, 2001.
On February 2, 2002, the Court served its order granting in part the demurrer.
The Court has dismissed without leave to amend certain of the plaintiffs'
claims. On February 11, 2002, plaintiffs filed a motion seeking to certify a
putative class comprised of all non-affiliated persons who own or have owned
units in the partnerships. The Managing General Partner and affiliated
defendants oppose the motion. On April 29, 2002, the Court held a hearing on
plaintiffs' motion for class certification and took the matter under submission
after further briefing, as ordered by the court, was submitted by the parties.
On July 10, 2002, the Court entered an order vacating the trial date of January
13, 2003 (as well as the pre-trial and discovery cut-off dates) and stayed the
case in its entirety through November 7, 2002 so that the parties could have an
opportunity to discuss settlement. On October 30, 2002, the court entered an
order extending the stay in effect through January 10, 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing General Partner and affiliated
defendants moved to strike the first amended complaint in its entirety for
violating the Court's July 10, 2001 order granting in part and denying in part
defendants' demurrer in the Nuanes action, or alternatively, to strike certain
portions of the complaint based on the statute of limitations. Other defendants
in the action demurred to the fourth amended complaint, and, alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions and took the matters under submission. On February 4, 2002, the
Court served notice of its order granting defendants' motion to strike the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002, the plaintiffs filed a notice appealing the order striking
the complaint. Before completing briefing on the appeal, the parties stayed
further proceedings in the appeal pending the Court's review of the proposed
settlement described below.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. On April 4, 2003, the
Court preliminarily approved the settlement and scheduled a hearing on final
approval for June 2, 2003. While the Nuanes and Heller actions will be dismissed
if the settlement is finally approved, the settlement only benefits limited
partners as of December 20, 2002 in those limited partnerships named in the
complaint that are not in the process of being liquidated or that have not
already been liquidated. The Partnership's limited partners will not be entitled
to any proceeds from the settlement since the Partnership is in the process of
being liquidated. The Partnership's limited partners should have received a
Notice to Non-Settling Persons.
The Managing General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Amended Certificate and Agreement of Limited Partnership filed
in Form S-11 dated December 24, 1984 incorporated herein by
reference.
99 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K filed during the quarter ended March 31, 2003:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS XIV
By: Angeles Realty Corporation II
Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Thomas C. Novosel
Thomas C. Novosel
Senior Vice President and
Chief Accounting Officer
Date: May 15, 2003
CERTIFICATION
I, Patrick J. Foye, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Angeles Partners XIV;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/Patrick J. Foye
Patrick J. Foye
Executive Vice President of Angeles Realty
Corporation II, equivalent of the chief
executive officer of the Partnership
CERTIFICATION
I, Paul J. McAuliffe, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Angeles Partners XIV;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/Paul J. McAuliffe
Paul J. McAuliffe
Executive Vice President and Chief
Financial Officer of Angeles Realty
Corporation II, equivalent of the chief
financial officer of the Partnership
Exhibit 99
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of Angeles Partners XIV
(the "Partnership"), for the quarterly period ended March 31, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"),
Patrick J. Foye, as the equivalent of the chief executive officer of the
Partnership, and Paul J. McAuliffe, as the equivalent of the chief financial
officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Patrick J. Foye
Name: Patrick J. Foye
Date: May 15, 2003
/s/Paul J. McAuliffe
Name: Paul J. McAuliffe
Date: May 15, 2003
This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.