UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
---------------------------
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 0-20016
CNL INCOME FUND X, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-3004139
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 East South Street, Suite 500
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 422-1574
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Units of limited partnership interest ($10 per Unit)
(Title of class)
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 such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes X No
------- --------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $10 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
<PAGE>
PART I
Item 1. Business
CNL Income Fund X, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on April 16, 1990. The general partners of the Partnership are Robert A.
Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida corporation
(the "General Partners"). Beginning on September 9, 1991, the Partnership
offered for sale up to $40,000,000 of limited partnership interests (the
"Units") (4,000,000 Units at $10 per Unit) pursuant to a registration statement
on Form S-11 under the Securities Act of 1933, as amended, effective March 20,
1991. The offering terminated on March 18, 1992, at which date the maximum
offering proceeds of $40,000,000 had been received from investors who were
admitted to the Partnership as limited partners (the "Limited Partners").
The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food and family-style restaurant chains
(the "Restaurant Chains"). Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totalled
$35,200,000, and were used to acquire 47 Properties, including interests in nine
Properties owned by joint ventures in which the Partnership is a co-venturer,
and to establish a working capital reserve for Partnership purposes. During the
year ended December 31, 1995, the Partnership sold its Property in Denver,
Colorado, and reinvested the majority of the net sales proceeds in a Shoney's in
Fort Myers Beach, Florida. During the year ended December 31, 1996, the
Partnership reinvested the remaining net sales proceeds from the 1995 sale of
the Property in Denver, Colorado, in a Golden Corral Property located in
Clinton, North Carolina, with affiliates of the General Partners as
tenants-in-common. As a result of the above transactions, as of December 31,
1996, the Partnership owned 48 Properties, including nine Properties owned by
joint ventures in which the Partnership is a co-venturer and one Property owned
with an affiliate as tenants-in-common. The Partnership leases the Properties on
a triple-net basis with the lessee responsible for all repairs and maintenance,
property taxes, insurance and utilities.
The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. In general, the General Partners plan to seek the sale of some of
the Properties commencing seven to 12 years after their acquisition. The
Partnership has no obligation to sell all or any portion of a Property at any
particular time, except as may be required under property or joint venture
purchase options granted to certain lessees.
Leases
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. Generally, the leases of the Properties owned by the
Partnership and the joint ventures in which the Partnership is a co-venturer,
provide for initial terms ranging from 14 to 20 years (the average being 18
years) and expire between 2006 and 2016. All leases are on a triple-net basis,
with the lessee responsible for all repairs and maintenance, property taxes,
insurance and utilities. The leases of the Properties provide for minimum base
annual rental payments (payable in monthly installments) ranging from
approximately $26,200 to $198,500. All of the leases provide for percentage
rent, based on sales in excess of a specified amount. In addition, a majority of
the leases provide that, commencing in specified lease years (ranging from the
second to the sixth lease year), the annual base rent required under the terms
of the lease will increase.
Generally, the leases of the Properties provide for two to five
five-year renewal options subject to the same terms and conditions as the
initial lease. Certain lessees also have been granted options to purchase
Properties at the Property's then fair market value after a specified portion of
the lease term has elapsed. Under the terms of certain leases, the option
purchase price may equal the Partnership's original cost to purchase the
Property (including acquisition costs), plus a specified percentage from the
date of the lease or a specified percentage of the Partnership's purchase price,
if that amount is greater than the Property's fair market value at the time the
purchase option is exercised.
1
<PAGE>
The leases also generally provide that, in the event the Partnership
wishes to sell the Property subject to that lease, the Partnership first must
offer the lessee the right to purchase the Property on the same terms and
conditions, and for the same price, as any offer which the Partnership has
received for the sale of the Property.
In March 1996, the lease relating to the Perkins Property in Ft.
Pierce, Florida, was amended to provide for reduced annual base rent through
January 1, 1997. In connection therewith, the tenant exercised its first
five-year renewal option, for which the renewal period shall commence on October
25, 2011, and shall expire on October 24, 2016. Total rental payments under the
amended lease will be greater than the original lease during the term of the
lease.
Major Tenants
During 1996, three lessees (or group of affiliated lessees) of the
Partnership and its consolidated joint venture, (i) Golden Corral Corporation,
(ii) Foodmaker, Inc. and (iii) Flagstar Enterprises, Inc. and Denny's, Inc.
(which are affiliated entities under common control of Flagstar Corporation)
(hereinafter referred to as Flagstar Corporation), each contributed more than
ten percent of the Partnership's total rental income (including rental income
from the Partnership's consolidated joint venture and the Partnership's share of
rental income from eight Properties owned by unconsolidated joint ventures and
one Property owned with affiliates as tenants-in-common). As of December 31,
1996, Golden Corral Corporation was the lessee under leases relating to four
restaurants, Foodmaker, Inc. was the lessee under leases relating to seven
restaurants and Flagstar Corporation was the lessee under leases relating to ten
restaurants. It is anticipated that based on the minimum rental payments
required by the leases, these three lessees (or groups of affiliated lessees)
each will continue to contribute more than ten percent of the Partnership's
total rental income in 1997 and subsequent years. In addition, six Restaurant
Chains, Golden Corral Family Steakhouse Restaurants ("Golden Corral"), Hardee's,
Perkins, Burger King, Shoney's and Jack in the Box, each accounted for more than
ten percent of the Partnership's total rental income during 1996 (including
rental income from the Partnership's consolidated joint venture and the
Partnership's share of rental income from eight Properties owned by
unconsolidated joint ventures and one Property owned with affiliates as
tenants-in-common). In subsequent years, it is anticipated that these six
Restaurant Chains each will continue to account for more than ten percent of the
Partnership's total rental income to which the Partnership is entitled under the
terms of the leases. Any failure of these lessees or Restaurant Chains could
materially affect the Partnership's income. No single tenant or group of
affiliated tenants lease Properties with an aggregate carrying value, excluding
acquisition fees and certain acquisition expenses, in excess of 20 percent of
the total assets of the Partnership.
Joint Venture Arrangements
The Partnership has entered into a joint venture arrangement, Allegan
Real Estate Joint Venture, with an unaffiliated entity to purchase and hold one
Property. In addition, the Partnership has entered into three separate joint
venture arrangements, CNL Restaurant Investments III, Ashland Joint Venture and
Williston Real Estate Joint Venture, with affiliates of the General Partners, to
purchase and hold eight Properties.
The joint venture arrangements provide for the Partnership and its
joint venture partners to share in all costs and benefits associated with the
joint ventures in accordance with their respective percentage interests in the
joint ventures. The Partnership and its joint venture partners are also jointly
and severally liable for all debts, obligations and other liabilities of the
joint ventures.
CNL Restaurant Investments III's joint venture agreement does not
provide a fixed term, but continues in existence until terminated by either of
the joint venturers. Ashland Joint Venture has an initial term of 30 years and
Allegan Real Estate Joint Venture and Williston Real Estate Joint Venture each
have an initial term of 20 years and, after the expiration of the initial term,
each of the three joint ventures continues in existence from year to year unless
terminated at the option of any of the joint venturers or by an event of
dissolution. Events of dissolution include the bankruptcy, insolvency or
termination of any joint venturer, sale of the Property owned by the joint
venture and mutual agreement of the Partnership and its joint venture partners
to dissolve the joint venture.
The Partnership has management control of Allegan Real Estate Joint
Venture and shares management control equally with affiliates of the General
Partners for CNL Restaurant Investments III, Williston Real Estate Joint Venture
and Ashland Joint Venture. The joint venture agreements restrict each venturer's
ability to sell, transfer or assign its joint venture interest without first
offering it for sale to its joint venture partners, either upon such terms and
conditions as to which the venturers may agree or, in the event the venturers
cannot agree, on the same terms and conditions as any offer from a third party
to purchase such joint venture interest.
2
<PAGE>
Net cash flow from operations of CNL Restaurant Investments III,
Allegan Real Estate Joint Venture, Ashland Joint Venture and Williston Real
Estate Joint Venture is distributed 50 percent, 88.26%, 10.51% and 41 percent,
respectively, to the Partnership and the balance is distributed to each of the
other joint venture partners in accordance with their respective percentage
interest in the joint venture. Any liquidation proceeds, after paying joint
venture debts and liabilities and funding reserves for contingent liabilities,
will be distributed first to the joint venture partners with positive capital
account balances in proportion to such balances until such balances equal zero,
and thereafter in proportion to each joint venture partner's percentage interest
in the joint venture.
In addition to the above joint venture agreements, in January 1996, the
Partnership entered into an agreement to hold a Golden Corral Property as
tenants-in-common with affiliates of the General Partners. The agreement
provides for the Partnership and the affiliates to share in the profits and
losses of the Property in proportion to each co-venturer's percentage interest.
The Partnership owns a 13.37% interest in this Property.
Certain Management Services
CNL Investment Company, an affiliate of the General Partners provided
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership through December 31,
1994. Under this agreement, CNL Investment Company was responsible for
collecting rental payments, inspecting the Properties and the tenants' books and
records, assisting the Partnership in responding to tenant inquiries and notices
and providing information to the Partnership about the status of the leases and
the Properties. CNL Investment Company also assisted the General Partners in
negotiating the leases. For these services, the Partnership had agreed to pay
CNL Investment Company an annual fee of one percent of the sum of gross
operating revenues from Properties wholly owned by the Partnership plus the
Partnership's allocable share of gross revenues of joint ventures in which the
Partnership is a co-venturer, but not in excess of competitive fees for
comparable services. Under the management agreement, the management fee is
subordinated to receipt by the Limited Partners of an aggregate, ten percent,
cumulative, noncompounded annual return on their adjusted capital contributions
(the "10% Preferred Return"), calculated in accordance with the Partnership's
limited partnership agreement (the "Partnership Agreement").
Effective January 1, 1995, certain officers and employees of CNL
Investment Company became officers and employees of CNL Income Fund Advisors,
Inc., an affiliate of the General Partners, and CNL Investment Company assigned
its rights in, and its obligations under, the management agreement with the
Partnership to CNL Income Fund Advisors, Inc. In addition, effective October 1,
1995, CNL Income Fund Advisors, Inc. assigned its rights in, and its obligations
under, the management agreement with the Partnership to CNL Fund Advisors, Inc.
All of the terms and conditions of the management agreement, including the
payment of fees, as described above, remain unchanged.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
Competition
The fast-food and family-style restaurant business is characterized by
intense competition. The restaurants on the Partnership's Properties compete
with independently owned restaurants, restaurants which are part of local or
regional chains, and restaurants in other well-known national chains, including
those which offer different types of food and service.
At the time the Partnership elects to dispose of its Properties, other
than as a result of the exercise of tenant options to purchase Properties, the
Partnership will be in competition with other persons and entities to locate
purchasers for its Properties.
Employees
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of CNL Fund Advisors, Inc. perform
certain services for the Partnership. In addition, the General Partners have
available to them the resources and expertise of the officers and employees of
CNL Group, Inc., a diversified real estate company, and its affiliates, who may
also perform certain services for the Partnership.
Item 2. Properties
3
<PAGE>
As of December 31, 1996, the Partnership owned, either directly or
through joint venture arrangements, 48 Properties, located in 19 states.
Reference is made to the Schedule of Real Estate and Accumulated Depreciation
filed with this report for a listing of the Properties and their respective
costs, including acquisition fees and certain acquisition expenses.
Description of Properties
Land. The Partnership's Property sites range from approximately 14,000
to 200,900 square feet depending upon building size and local demographic
factors. Sites purchased by the Partnership are in locations zoned for
commercial use which have been reviewed for traffic patterns and volume.
Buildings. Each of the Properties owned by the Partnership include a
building that is one of a Restaurant Chain's approved designs. The buildings
generally are rectangular and are constructed from various combinations of
stucco, steel, wood, brick and tile. Building sizes range from approximately
1,800 to 10,700 square feet. All buildings on Properties acquired by the
Partnership are freestanding and surrounded by paved parking areas. Buildings
are suitable for conversion to various uses, although modifications may be
required prior to use for other than restaurant operations.
Generally, a lessee is required, under the terms of its lease
agreement, to make such capital expenditures as may be reasonably necessary to
refurbish restaurant buildings, premises, signs and equipment so as to comply
with the lessee's obligations, if applicable, under the franchise agreement to
reflect the current commercial image of its Restaurant Chain. These capital
expenditures are required to be paid by the lessee during the term of the lease.
Leases with Major Tenants. The terms of the leases with the
Partnership's major tenants as of December 31, 1996 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.
Golden Corral Corporation leases four Golden Corral restaurants. The
initial term of each lease is 15 years (expiring between 2007 and 2011) and the
average minimum base rent is approximately $156,900 (ranging from approximately
$88,100 to $198,500).
Foodmaker, Inc. leases seven Jack in the Box restaurants. The initial
term of each lease is between 18 and 20 years (expiring between 2009 and 2012)
and the average minimum base rent is approximately $93,300 (ranging from
approximately $62,900 to $123,500).
Flagstar Corporation leases eight Hardee's restaurants and two Denny's
restaurants. The initial term of each lease is 20 years (expiring in 2012) and
the average minimum base rent is approximately $68,200 (ranging from
approximately $43,500 to $111,800).
The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.
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Item 3. Legal Proceedings
Neither the Partnership, nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties, is a party to, or
subject to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
As of February 28, 1997, there were 3,529 holders of record of the
Units. There is no public trading market for the Units, and it is not
anticipated that a public market for the Units will develop. Limited Partners
who wish to sell their Units may offer the Units for sale pursuant to the
Partnership's distribution reinvestment plan (the "Plan"), and Limited Partners
who wish to have their distributions used to acquire additional Units (to the
extent Units are available for purchase) may do so pursuant to such Plan. The
General Partners have the right to prohibit transfers of Units. Since inception,
the price for any Unit transferred pursuant to the Plan has been $9.50 per Unit.
The price to be paid for any Unit transferred other than pursuant to the Plan is
subject to negotiation by the purchaser and the selling Limited Partner. The
Partnership will not redeem or repurchase Units.
The following table reflects, for each calendar quarter, the high, low
and average sales prices for transfers of Units during 1996 and 1995 other than
pursuant to the Plan, net of commissions (which ranged from zero to 29.57%).
<TABLE>
<CAPTION>
1996 (1) 1995 (1)
------------------------------ -----------------------------
High Low Average High Low Average
---- --- ------- ---- --- -------
<S> <C>
First Quarter $10.00 $8.10 $9.37 $ 9.50 $ 7.20 $ 8.39
Second Quarter 9.50 9.50 9.50 9.50 8.27 9.12
Third Quarter 8.15 5.74 6.61 9.50 8.40 8.71
Fourth Quarter 8.50 7.60 8.20 9.50 7.00 9.11
</TABLE>
(1) A total of 26,865 and 40,383 Units were transferred other than pursuant
to the Plan for the years ended December 31, 1996 and 1995,
respectively.
The capital contribution per Unit was $10. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.
For each of the years ended December 31, 1996 and 1995, the Partnership
declared cash distributions of $3,640,003 to the Limited Partners. During each
of the quarters ended December 31, 1996 and 1995, the Partnership declared a
special distribution to the Limited Partners of $40,000 which represented
cumulative excess operating reserves. No amounts distributed to partners for the
years ended December 31, 1996 and 1995, are required to be or have been treated
by the Partnership as a return of capital for purposes of calculating the
Limited Partners' return on their adjusted capital contributions. No
distributions have been made to the General Partners to date. As indicated in
the chart below, these distributions were declared at the close of each of the
Partnership's calendar quarters. These amounts include monthly distributions
made in arrears for the Limited Partners electing to receive such distributions
on this basis.
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Quarter Ended 1996 1995
------------- --------- ---------
March 31 $900,001 $900,001
June 30 900,001 900,001
September 30 900,001 900,001
December 31 940,000 940,000
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions, for an annual fee.
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- -------------
<S> <C>
Year Ended December 31:
Revenues (1) $ 3,871,869 $ 3,875,779 $ 4,020,289 $ 4,030,010 $ 3,314,194
Net income (2) 3,461,812 3,552,067 3,672,841 3,636,573 2,906,042
Cash distributions declared (3) 3,640,003 3,640,003 3,625,017 3,500,000 2,783,738
Net income per Unit (2)(4) .86 .88 .91 .90 .76
Cash distributions declared per
Unit (3)(4) .91 .91 .91 .88 .74
At December 31:
Total assets $36,437,560 $36,563,796 $36,722,696 $36,462,746 $35,580,048
Partners' capital 35,222,665 35,400,856 35,488,792 35,440,968 35,304,395
</TABLE>
(1) Revenues include equity in earnings of unconsolidated joint ventures
and minority interest in income of the consolidated joint venture.
(2) Net income for the year ended December 31, 1995, includes $67,214 from
a gain on sale of land and building.
(3) Distributions for each of the years ended December 31, 1996 and 1995,
include a special distribution to the Limited Partners of $40,000 which
represented cumulative excess operating reserves.
(4) Based on the weighted average number of Limited Partner Units
outstanding during each of the years ended December 31, 1996, 1995,
1994, 1993 and 1992.
The above selected financial data should be read in conjunction with
the financial statements and related notes contained in Item 8 hereof.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Partnership was organized on April 16, 1990, to acquire for cash,
either directly or through joint venture arrangements, both newly constructed
and existing restaurant Properties, as well as land upon which restaurant
Properties were to be constructed, which are leased primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are triple-net leases, with the lessee generally responsible for all
repairs and maintenance, property taxes, insurance and utilities. As of December
31, 1996, the Partnership owned 48 Properties, either directly or indirectly
through joint venture arrangements.
Liquidity and Capital Resources
The Partnership's primary source of capital for the years ended
December 31, 1996, 1995 and 1994, was cash from operations (which includes cash
received from tenants, distributions from joint ventures and interest
received, less cash paid for expenses). Cash from operations was $3,695,802,
$3,527,362 and $3,785,493 for the years ended December 31, 1996, 1995 and 1994,
respectively. The increase in cash from operations during 1996, and the decrease
in 1995, each as compared
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to the prior year, were primarily a result of changes in income and expenses as
discussed in "Results of Operations" below and changes in the Partnership's
working capital during each of the respective years.
Other sources and uses of capital included the following during the
years ended December 31, 1996, 1995 and 1994.
In July 1995, the Partnership sold a small parcel of land as a result
of an easement relating to its Property in Hendersonville, North Carolina, for
$7,200, resulting in a gain of $1,112 for financial reporting purposes. In
addition, in August 1995, the Partnership sold its Property in Denver, Colorado,
for $1,057,000 and received net sales proceeds of $1,050,186, resulting in a
gain of $66,102 for financial reporting purposes. This Property was originally
acquired by the Partnership in December 1991 and had a cost of approximately
$977,000, excluding acquisition fees and miscellaneous acquisition expenses;
therefore, the Partnership sold the Property for approximately $73,200 in excess
of its original purchase price. In September 1995, the Partnership reinvested
$928,122 in a Shoney's in Fort Myers Beach, Florida.
In October 1995, the tenant of the Partnership's Property located in
Austin, Texas, entered into a sublease agreement for a vacant parcel of land
under which the subtenant has the option to purchase such land. The subtenant
exercised the purchase option and in accordance with the terms of the sublease
agreement, the tenant assigned the purchase contract, together with the purchase
contract payment of $69,000 from the subtenant, to the Partnership. As of
February 28, 1997, the sale for the vacant parcel of land had not been
consummated and as a result, the net proceeds of $68,000 (representing the
original $69,000 received by the Partnership, less $1,000 in costs incurred in
anticipation of the sale) were recorded as a deposit at December 31, 1996.
In January 1996, the Partnership reinvested the remaining net sales
proceeds from the 1995 sale of the Property in Denver, Colorado, and the
proceeds from the granting of an easement relating to the Property in
Hendersonville, North Carolina, in a Golden Corral Property located in Clinton,
North Carolina, with affiliates of the General Partners as tenants-in-common. In
connection therewith, the Partnership and its affiliates entered into an
agreement whereby each co-venturer will share in the profits and losses of the
Property in proportion to its applicable percentage interest. As of December 31,
1996, the Partnership owned a 13.37% interest in this Property.
None of the Properties owned by the Partnership or the joint ventures
in which the Partnership owns an interest is or may be encumbered. Under its
Partnership Agreement, the Partnership is prohibited from borrowing for any
purpose; provided, however, that the General Partners or their affiliates are
entitled to reimbursement, at cost, for actual expenses incurred by the General
Partners or their affiliates on behalf of the Partnership. Affiliates of the
General Partners from time to time incur certain operating expenses on behalf of
the Partnership for which the Partnership reimburses the affiliates without
interest.
Currently, rental income from the Partnership's Properties is invested
in money market accounts or other short-term highly liquid investments pending
the Partnership's use of such funds to pay Partnership expenses or to make
distributions to partners. At December 31, 1996, the Partnership had $1,769,483
invested in such short-term investments as compared to $1,832,853 at December
31, 1995. The funds remaining at December 31, 1996, after payment of
distributions and other liabilities, will be used to meet the Partnership's
working capital and other needs.
During 1996, 1995 and 1994, affiliates of the General Partners incurred
$112,363, $100,249 and $87,584, respectively, for certain operating expenses. As
of December 31, 1996 and 1995, the Partnership owed $1,609 and $7,004,
respectively, to affiliates for such amounts and accounting and administrative
services. As of February 28, 1997, the Partnership had reimbursed the affiliates
all such amounts. Other liabilities increased to $1,148,901 at December 31,
1996, from $1,092,517 at December 31, 1995. The General Partners believe that
the Partnership has sufficient cash on hand to meet its current working capital
needs.
Based on cash from operations, and cumulative excess operating reserves
the Partnership declared distributions to the Limited Partners of $3,640,003 for
each of the years ended December 31, 1996 and 1995, and $3,625,017 for the year
ended December 31, 1994. This represents distributions of $0.91 per Unit for
each of the years ended December 31, 1996, 1995 and 1994. No amounts distributed
or to be distributed to the Limited Partners for the years ended December 31,
1996, 1995 and 1994, are required to be or have been treated by the Partnership
as a return of capital for purposes of calculating the Limited Partners' return
on their adjusted capital contributions. The Partnership intends to continue to
make distributions of cash available for distribution to the Limited Partners on
a quarterly basis.
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<PAGE>
The General Partners believe that the Properties are adequately covered
by insurance. In addition, the General Partners have obtained contingent
liability and property coverage for the Partnership. This insurance is intended
to reduce the Partnership's exposure in the unlikely event a tenant's insurance
policy lapses or is insufficient to cover a claim relating to the Property.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The General Partners believe that the leases will continue to generate cash flow
in excess of operating expenses.
Due to low operating expenses and ongoing cash flow, the General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition, because all leases of the Partnership's Properties are
on a triple-net basis, it is not anticipated that a permanent reserve for
maintenance and repairs will be established at this time. To the extent,
however, that the Partnership has insufficient funds for such purpose, the
General Partners will contribute to the Partnership an aggregate amount of up to
one percent of the offering proceeds for maintenance and repairs.
The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
Results of Operations
During 1994, the Partnership owned and leased 38 wholly owned
Properties, during 1995, the Partnership owned and leased 39 wholly owned
Properties (including one Property in Denver, Colorado, which was sold in August
1995) and during 1996, the Partnership owned and leased 38 wholly owned
Properties. In addition, during 1996, 1995 and 1994, the Partnership was a
co-venturer in three separate joint ventures that each owned and leased one
Property and one joint venture which owned and leased six Properties. During
1996, the Partnership also owned and leased one Property with affiliates as
tenants-in-common. As of December 31, 1996, the Partnership owned, either
directly or through joint venture arrangements 48 Properties which are subject
to long-term, triple-net leases. The leases of the Properties provide for
minimum base annual rental amounts (payable in monthly installments) ranging
from approximately $26,200 to $198,500. All of the leases provide for percentage
rent based on sales in excess of a specified amount. In addition, a majority of
the leases provide that, commencing in specified lease years (ranging from the
second to the sixth lease year), the annual base rent required under the terms
of the lease will increase. For further description of the Partnership's leases
and Properties, see Item 1. Business - Leases and Item 2. Properties,
respectively.
During the years ended December 31, 1996, 1995 and 1994, the
Partnership and its consolidated joint venture, Allegan Real Estate Joint
Venture, earned $3,481,139, $3,474,227 and $3,594,186, respectively, in rental
income from operating leases and earned income from direct financing leases.
Rental and earned income decreased approximately $81,500 during 1995, as
compared to 1994, as a result of the fact that in May 1995, the tenant of the
Property in Denver, Colorado, ceased operations of the restaurant business
located at the Property and the Partnership terminated the lease agreement. In
connection therewith, during the year ended December 31, 1995, the Partnership
also wrote off approximately $41,500 of accrued rental income amounts previously
recorded (due to the fact that future scheduled rent increases are recognized on
a straight-line basis over the term of the lease in accordance with generally
accepted accounting principles) relating to this Property. The Partnership sold
this Property in August 1995. The decrease in rental and earned income during
1995, as compared to 1994, was partially offset by an increase of approximately
$38,300 in rental and earned income due to the Partnership reinvesting the
majority of the sales proceeds from the sale of the Property in Denver,
Colorado, in a Shoney's Property in Fort Myers Beach, Florida, in September
1995, as described above in "Liquidity and Capital Resources." During 1996,
rental and earned income increased by approximately $83,600 as a result of the
Shoney's Property in Fort Myers Beach, Florida, being operational for a full
year.
Rental and earned income decreased approximately $53,400 during 1996,
as compared to 1995, due to the fact that in March 1996, the lease relating to
the Perkins Property in Ft. Pierce, Florida, was amended to provide for reduced
annual base rent from an effective date of October 1, 1995 through January 1,
1997. The Partnership does not anticipate that these reduced rents will have a
material effect on operations. As a result of the lease amendment, the building
portion of the lease was reclassified from a direct financing lease to an
operating lease.
During the years ended December 31, 1996, 1995 and 1994, the
Partnership also earned $45,126, $53,189 and $99,616, respectively, in
contingent rental income. Contingent rental income for the years ended December
31, 1996 and
8
<PAGE>
1995, each as compared to the previous year, decreased primarily as a result of
decreased gross sales of certain restaurant Properties that are subject to
leases requiring payment of contingent rental income.
For the years ended December 31, 1996, 1995 and 1994, the Partnership
also earned $278,371, $267,799 and $271,512, respectively, attributable to net
income earned by unconsolidated joint ventures in which the Partnership is a
co-venturer. The increase in net income earned by unconsolidated joint ventures
is primarily attributable to the Partnership investing in a Property in Clinton,
North Carolina, in January 1996, with affiliates of the General Partners as
tenants-in-common, as described above in "Liquidity and Capital Resources."
During the years ended December 31, 1996, 1995 and 1994, three lessees
(or group of affiliated lessees), of the Partnership and its consolidated joint
venture, (i) Golden Corral Corporation, (ii) Foodmaker, Inc. and (iii) Flagstar
Enterprises, Inc. and Denny's, Inc. (which are affiliated entities under common
control of Flagstar Corporation)(hereinafter referred to as Flagstar
Corporation), each contributed more than ten percent of the Partnership's total
rental income (including rental income from the Partnership's consolidated joint
venture and the Partnership's share of rental income from eight Properties owned
by unconsolidated joint ventures and one Property owned with affiliates as
tenants-in-common). As of December 31, 1996, Golden Corral Corporation was the
lessee under leases relating to four restaurants, Foodmaker, Inc. was the lessee
under leases relating to seven restaurants and Flagstar Corporation was the
lessee under leases relating to ten restaurants. It is anticipated that based on
the minimum rental payments required by the leases, these three lessees (or
groups of affiliated lessees) each will continue to contribute more than ten
percent of the Partnership's total rental income during 1997 and subsequent
years. In addition, six Restaurant Chains, Golden Corral Family Steakhouse
Restaurants ("Golden Corral"), Hardee's, Perkins, Burger King, Shoney's and Jack
in the Box, each accounted for more than ten percent of the Partnership's total
rental income during 1996 (including rental income from the Partnership's
consolidated joint venture and the Partnership's share of rental income from
eight Properties owned by unconsolidated joint ventures and one Property owned
with affiliates as tenants-in-common). In subsequent years, it is anticipated
that these six Restaurant Chains each will continue to account for more than ten
percent of the Partnership's total rental income to which the Partnership is
entitled under the terms of the leases. Any failure of these lessees or
Restaurant Chains could materially affect the Partnership's income.
Operating expenses, including depreciation and amortization expense,
were $410,057, $390,926 and $347,448 for the years ended December 31, 1996, 1995
and 1994, respectively. The increase in operating expenses during 1996 and 1995,
each as compared to the previous year, is primarily the result of an increase in
accounting and administrative expenses associated with operating the Partnership
and its Properties and an increase in insurance expense as a result of the
General Partners' obtaining contingent liability and property coverage for the
Partnership as discussed above in "Liquidity and Capital Resources." In addition
operating expenses increased during 1996, as compared to 1995, as a result of
the reclassification of the building portion of the lease relating to the
Perkins Property in Ft. Pierce, Florida, from a direct financing lease to an
operating lease during 1996, as discussed above. The increase in operating
expenses during 1996, as compared to 1995, is partially offset by a state tax
refund from the State of New Hampshire for taxes paid in 1993.
The increase in operating expenses during 1995, as compared to 1994,
was partially offset by a decrease in depreciation expense as a result of the
sale of the Property in Denver, Colorado, as discussed in "Liquidity and Capital
Resources."
As a result of the granting of an easement relating to the Property in
Hendersonville, North Carolina, and the sale of the Property in Denver,
Colorado, as described above in "Liquidity and Capital Resources", the
Partnership recognized a gain for financial reporting purposes of $67,214 during
the year ended December 31, 1995. No Properties were sold during the years ended
December 31, 1996 and 1994.
Effective January 1, 1996, the Partnership adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The statement
requires that an entity review long-lived assets and certain identifiable
intangibles, to be held and used, for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. Adoption of this standard had no material effect on the
Partnership's financial position or results of operations.
The Partnership's leases as of December 31, 1996, are triple-net leases
and contain provisions that the General Partners believe mitigate the adverse
effect of inflation. Such provisions include clauses requiring the payment of
percentage rent based on certain restaurant sales above a specified level and/or
automatic increases in base rent at specified times during the term of the
lease. Management expects that increases in restaurant sales volumes due to
inflation and real sales growth
9
<PAGE>
should result in an increase in rental income over time. Continued inflation
also may cause capital appreciation of the Partnership's Properties. Inflation
and changing prices, however, also may have an adverse impact on the sales of
the restaurants and on potential capital appreciation of the Properties.
Item 8. Financial Statements and Supplementary Data
10
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
CONTENTS
Page
----
Report of Independent Accountants 12
Financial Statements:
Balance Sheets 13
Statements of Income 14
Statements of Partners' Capital 15
Statements of Cash Flows 16
Notes to Financial Statements 18
11
<PAGE>
Report of Independent Accountants
To the Partners
CNL Income Fund X, Ltd.
We have audited the financial statements and the financial statement schedule of
CNL Income Fund X, Ltd. (a Florida limited partnership) listed in Item 14(a) of
this Form 10-K. These financial statements and financial statement schedule are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CNL Income Fund X, Ltd. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996 in conformity
with generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
Orlando, Florida
January 15, 1997
12
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
ASSETS 1996 1995
------ ----------- -----------
<S> <C>
Land and buildings on operating
leases, less accumulated
depreciation $15,224,392 $14,862,966
Net investment in direct financing
leases 14,219,805 14,947,735
Investment in joint ventures 3,449,210 3,416,156
Cash and cash equivalents 1,769,483 1,832,853
Receivables 52,470 99,304
Prepaid expenses 5,503 1,651
Organization costs less accumulated
amortization of $10,000 and $8,538 - 1,462
Accrued rental income 1,683,593 1,368,565
Other assets 33,104 33,104
----------- -----------
$36,437,560 $36,563,796
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Accounts payable $ 2,913 $ 5,503
Escrowed real estate taxes payable 45,060 30,673
Distributions payable 940,000 940,000
Due to related parties 1,609 7,004
Rents paid in advance and deposits 160,928 116,341
----------- -----------
Total liabilities 1,150,510 1,099,521
Commitments and Contingencies (Note 10)
Minority interest 64,385 63,419
Partners' capital 35,222,665 35,400,856
----------- -----------
$36,437,560 $36,563,796
=========== ===========
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
---------- ---------- -----------
<S> <C>
Revenues:
Rental income from
operating leases $1,832,781 $1,783,928 $1,903,544
Earned income from direct
financing leases 1,648,358 1,690,299 1,690,642
Contingent rental income 45,126 53,189 99,616
Interest and other income 75,896 89,630 63,446
---------- ---------- ----------
3,602,161 3,617,046 3,757,248
---------- ---------- ----------
Expenses:
General operating and
administrative 166,049 150,157 104,123
Professional services 33,692 23,563 21,444
State and other taxes 2,357 15,510 12,940
Depreciation and amortization 207,959 201,696 208,941
---------- ---------- ----------
410,057 390,926 347,448
---------- ---------- ----------
Income Before Minority Interest
in Income of Consolidated
Joint Venture, Equity in
Earnings of Unconsolidated
Joint Ventures and Gain on
Sale of Land and Building 3,192,104 3,226,120 3,409,800
Minority Interest in Income of
Consolidated Joint Venture (8,663) (9,066) (8,471)
Equity in Earnings of
Unconsolidated Joint Ventures 278,371 267,799 271,512
Gain on Sale of Land and Building - 67,214 -
---------- ---------- ---------
Net Income $3,461,812 $3,552,067 $3,672,841
========== ========== ==========
Allocation of Net Income:
General partners $ 34,618 $ 35,491 $ 36,728
Limited partners 3,427,194 3,516,576 3,636,113
---------- ---------- ----------
$3,461,812 $3,552,067 $3,672,841
========== ========== ==========
Net Income per Limited Partner
Unit $ 0.86 $ 0.88 $ 0.91
========== ========== ==========
Weighted Average Number of Limited
Partner Units Outstanding 4,000,000 4,000,000 4,000,000
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
General Partners Limited Partners
---------------- -----------------------------------------------------------------------
Accumu- Accumu-
Contri- lated Contri- Distri- lated Syndication
butions Earnings butions butions Earnings Costs Total
------- -------- ----------- ------------ ----------- ----------- -----------
<S> <C>
Balance, December 31, 1993 1,000 66,881 40,000,000 (6,458,113) 6,621,200 (4,790,000) 35,440,968
Distributions to limited
partners ($0.91 per
limited partner unit) - - - (3,625,017) - - (3,625,017)
Net income - 36,728 - - 3,636,113 3,672,841
------ -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1994 1,000 103,609 40,000,000 (10,083,130) 10,257,313 (4,790,000) 35,488,792
Distributions to limited
partners ($0.91 per
limited partner unit) - - - (3,640,003) - - (3,640,003)
Net income - 35,491 - - 3,516,576 - 3,552,067
------ -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1995 1,000 139,100 40,000,000 (13,723,133) 13,773,889 (4,790,000) 35,400,856
Distributions to limited
partners ($0.91 per
limited partner unit) - - - (3,640,003) - - (3,640,003)
Net income - 34,618 - - 3,427,194 - 3,461,812
------ -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1996 $1,000 $173,718 $40,000,000 $(17,363,136) $17,201,083 $(4,790,000) $35,222,665
====== ======== =========== ============ =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
----------- ----------- --------
<S> <C>
Increase (Decrease) in Cash and
Cash Equivalents:
Cash Flows From Operating
Activities:
Cash received from tenants $ 3,491,064 $ 3,290,242 $ 3,535,838
Distributions from uncon-
solidated joint ventures 354,648 341,527 346,892
Cash paid for expenses (211,345) (177,007) (143,980)
Interest received 61,435 72,600 46,743
----------- ----------- -----------
Net cash provided by
operating activities 3,695,802 3,527,362 3,785,493
----------- ----------- -----------
Cash Flows From Investing
Activities:
Proceeds from sale of
land and building - 1,057,386 -
Deposit received on
contract for sale of
land - 69,000 -
Additions to land and
buildings on operating
leases (978) (359,506) -
Investment in direct
financing leases (1,542) (566,097) -
Investment in joint venture (108,952) - -
----------- ----------- ----------
Net cash provided by
(used in) investing
activities (111,472) 200,783 -
----------- ----------- ----------
Cash Flows From Financing
Activities:
Distributions to limited
partners (3,640,003) (3,700,003) (3,500,017)
Distributions to holder of
minority interest (7,697) (7,998) (7,909)
----------- ----------- -----------
Net cash used in
financing activities (3,647,700) (3,708,001) (3,507,926)
----------- ----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents (63,370) 20,144 277,567
Cash and Cash Equivalents at
Beginning of Year 1,832,853 1,812,709 1,535,142
----------- ----------- -----------
Cash and Cash Equivalents at
End of Year $ 1,769,483 $ 1,832,853 $ 1,812,709
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
----------- ----------- --------
<S> <C>
Reconciliation of Net Income to
Net Cash Provided by Operating
Activities:
Net income $ 3,461,812 $ 3,552,067 $ 3,672,841
----------- ----------- -----------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 206,497 199,696 206,941
Amortization 1,462 2,000 2,000
Minority interest in income
of consolidated joint
venture 8,663 9,066 8,471
Equity in earnings of
unconsolidated joint
ventures, net of
distributions 75,898 73,630 75,470
Gain on sale of land and
building - (67,214) -
Decrease (increase) in
receivables 46,834 10,222 (22,853)
Decrease (increase) in
prepaid expenses (3,852) (664) 5,817
Decrease in net investment
in direct financing leases 160,007 141,684 122,590
Increase in accrued rental
income (315,028) (309,574) (372,348)
Increase (decrease) in
accounts payable and
accrued expenses 14,317 (1,057) 16,533
Increase (decrease) in due
to related parties (5,395) 7,004 -
Increase (decrease) in rents
paid in advance and
deposits 44,587 (89,498) 70,031
---------- ----------- -----------
Total adjustments 233,990 (24,705) 112,652
---------- ----------- -----------
Net Cash Provided by Operating
Activities $ 3,695,802 $ 3,527,362 $ 3,785,493
=========== =========== ===========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and
unpaid at December 31 $ 940,000 $ 940,000 $ 1,000,000
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1996, 1995 and 1994
1. Significant Accounting Policies:
Organization and Nature of Business - CNL Income Fund X, Ltd. (the
"Partnership") is a Florida limited partnership that was organized for
the purpose of acquiring both newly constructed and existing restaurant
properties, as well as properties upon which restaurants were to be
constructed, which are leased primarily to operators of national and
regional fast-food and family-style restaurant chains.
The general partners of the Partnership are CNL Realty
Corporation (the "Corporate General Partner"), James M.
Seneff, Jr. and Robert A. Bourne. Mr. Seneff and Mr. Bourne
are also 50 percent shareholders of the Corporate General
Partner. The general partners have responsibility for
managing the day-to-day operations of the Partnership.
Real Estate and Lease Accounting - The Partnership records the
acquisition of land and buildings at cost, including acquisition and
closing costs. Land and buildings are leased to unrelated third parties
on a triple-net basis, whereby the tenant is generally responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The leases are accounted for
using either the direct financing or the operating methods. Such
methods are described below:
Direct financing method - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset) (Note 4). Unearned income is deferred and
amortized to income over the lease terms so as to produce a
constant periodic rate of return on the Partnership's net
investment in the leases.
Operating method - Land and building leases accounted for
using the operating method are recorded at cost, revenue is
recognized as rentals are earned and depreciation is charged
to operations as incurred. Buildings are depreciated on the
straight-line method over their estimated useful lives of 30
years. When scheduled rentals vary during the lease term,
income is recognized on a straight-line basis so as to produce
a constant periodic rent over the lease term commencing on the
date the property is placed in service.
18
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
1. Significant Accounting Policies - Continued:
Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date.
When the properties are sold, the related cost and accumulated
depreciation for operating leases and the net investment for direct
financing leases, plus any accrued rental income, are removed from the
accounts and gains or losses from sales are reflected in income. The
general partners of the Partnership review properties for impairment
whenever events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable through operations. The
general partners determine whether an impairment in value has occurred
by comparing the estimated future undiscounted cash flows, including
the residual value of the property, with the carrying cost of the
individual property. If an impairment is indicated, a loss will be
recorded for the amount by which the carrying value of the asset
exceeds its fair market value.
Investment in Joint Ventures - The Partnership accounts for its 88.26%
interest in Allegan Real Estate Joint Venture using the consolidation
method. Minority interest represents the minority joint venture
partner's proportionate share of the equity in the Partnership's
consolidated joint venture. All significant intercompany accounts and
transactions have been eliminated.
The Partnership's investments in CNL Restaurant Investments III,
Williston Real Estate Joint Venture, Ashland Joint Venture and a
property in Clinton, North Carolina, held as tenants-in-common, are
accounted for using the equity method since the Partnership shares
control with affiliates which have the same general partners.
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds (some of which are
backed by government securities). Cash equivalents are stated at cost
plus accrued interest, which approximates market value.
19
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
1. Significant Accounting Policies - Continued:
Cash accounts maintained on behalf of the Partnership in demand
deposits at commercial banks and money market funds may exceed
federally insured levels; however, the Partnership has not experienced
any losses in such accounts. The Partnership limits investment of
temporary cash investments to financial institutions with high credit
standing; therefore, the Partnership believes it is not exposed to any
significant credit risk on cash and cash equivalents.
Organization Costs - Organization costs were amortized over five years
using the straight-line method.
Income Taxes - Under Section 701 of the Internal Revenue Code, all
income, expenses and tax credit items flow through to the partners for
tax purposes. Therefore, no provision for federal income taxes is
provided in the accompanying financial statements. The Partnership is
subject to certain state taxes on its income and property.
Additionally, for tax purposes, syndication costs are included in
Partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication costs are netted against
partners' capital and represent a reduction of Partnership equity and a
reduction in the basis of each partner's investment.
Use of Estimates - The general partners of the Partnership have made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
New Accounting Standard - Effective January 1, 1996, the Partnership
adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." The statement requires that an entity review
long-lived assets and certain identifiable intangibles, to be held and
used, for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
Adoption of this standard had no material effect on the Partnership's
financial position or results of operations.
20
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
2. Leases:
The Partnership leases its land and buildings to operators of national
and regional fast-food and family-style restaurants. The leases are
accounted for under the provisions of Statement of Financial Accounting
Standards No. 13, "Accounting for Leases." Twelve of the leases have
been classified as operating leases and 27 of the leases have been
classified as direct financing leases. For the leases classified as
direct financing leases, the building portions of the property leases
are accounted for as direct financing leases while the land portions of
19 of these leases are operating leases. Substantially all leases are
for 15 to 20 years and provide for minimum and contingent rentals. In
addition, the tenant pays all property taxes and assessments, fully
maintains the interior and exterior of the building and carries
insurance coverage for public liability, property damage, fire and
extended coverage. The lease options generally allow tenants to renew
the leases for two to five successive five-year periods subject to the
same terms and conditions as the initial lease. Most leases also allow
the tenant to purchase the property at fair market value after a
specified portion of the lease has elapsed.
3. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at
December 31:
1996 1995
----------- -----------
Land $ 9,926,720 $ 9,926,720
Buildings 6,196,451 5,628,528
----------- -----------
16,123,171 15,555,248
Less accumulated
depreciation (898,779) (692,282)
----------- -----------
$15,224,392 $14,862,966
=========== ===========
In July 1995, the Partnership sold a small parcel of land as a result
of an easement relating to its property in Hendersonville, North
Carolina, for $7,200, resulting in a gain of $1,112 for financial
reporting purposes. In addition, in August 1995, the Partnership sold
its property in Denver, Colorado, for $1,057,000 and received net sales
proceeds of $1,050,186, resulting in a gain of $66,102 for financial
reporting purposes. This property was originally acquired by
21
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
3. Land and Buildings on Operating Leases - Continued:
the Partnership in December 1991 and had a cost of approximately
$977,000, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold the property for
approximately $73,200 in excess of its original purchase price. In
September 1995, the Partnership reinvested $928,122 of net sales
proceeds in land and building of a Shoney's in Fort Myers Beach,
Florida.
Some leases provide for escalating guaranteed minimum rents throughout
the lease term. Income from these scheduled rent increases is
recognized on a straight-line basis over the terms of the leases. For
the years ended December 31, 1996, 1995 and 1994, the Partnership
recognized $315,029, $309,574 and $372,348, respectively, of such
rental income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 1996:
1997 $ 1,708,776
1998 1,767,098
1999 1,788,197
2000 1,801,765
2001 1,868,403
Thereafter 18,360,343
-----------
$27,294,582
===========
Since lease renewal periods are exercisable at the option of the
tenant, the above table only presents future minimum lease payments due
during the initial lease terms. In addition, this table does not
include any amounts for future contingent rentals which may be received
on the leases based on a percentage of the tenant's gross sales.
22
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
4. Net Investment in Direct Financing Leases:
The following lists the components of the net investment in direct
financing leases at December 31:
1996 1995
------------ ------------
Minimum lease payments
receivable $ 27,990,876 $ 31,556,749
Estimated residual
values 4,375,790 4,520,717
Less unearned income (18,146,861) (21,129,731)
------------ ------------
Net investment in direct
financing leases $14,219,805 $ 14,947,735
=========== ============
The following is a schedule of future minimum lease payments to be
received on the direct financing leases at December 31, 1996:
1997 $ 1,817,346
1998 1,834,117
1999 1,836,544
2000 1,838,028
2001 1,845,471
Thereafter 18,819,370
-----------
$27,990,876
===========
The above table does not include future minimum lease payments for
renewal periods or for contingent rental payments that may become due
in future periods (see Note 3).
During the year ended December 31, 1996, one of the Partnership's
leases was amended. As a result of the lease amendment, the Partnership
reclassified this lease from a direct financing lease to an operating
lease, whereby the property was recorded at its net carrying value of
$567,923. Due to the fact that the net carrying value was less than the
cost of the property, no loss was recorded for financial reporting
purposes.
23
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
5. Investment in Joint Ventures:
The Partnership has a 50 percent, a 10.51% and a 41 percent interest in
the profits and losses of CNL Restaurant Investments III, Ashland Joint
Venture and Williston Real Estate Joint Venture, respectively. The
remaining interests in these joint ventures are held by affiliates of
the Partnership which have the same general partners.
In January 1996, the Partnership acquired and leased a property in
Clinton, North Carolina, as tenants-in-common with affiliates of the
general partners. The Partnership accounts for its investment in this
property using the equity method since the Partnership shares control
with affiliates, and amounts relating to its investment are included in
investment in joint ventures. As of December 31, 1996, the Partnership
owned a 13.37% interest in this property.
CNL Restaurant Investments III owns and leases six properties to an
operator of national fast-food restaurants. Ashland Joint Venture and
Williston Real Estate Joint Venture each own and lease one property to
an operator of national fast-food or family-style restaurants. The
following presents the joint ventures' combined, condensed financial
information at December 31:
1996 1995
---------- ----------
Land and buildings on
operating leases, less
accumulated depreciation $7,822,804 $7,206,289
Net investment in direct
financing lease 658,422 655,216
Cash 1,750 6,927
Receivables 8,164 -
Prepaid expenses 21,910 22,229
Liabilities 1,094 6,597
Partners' capital 8,511,956 7,884,064
Revenues 916,897 819,032
Net income 686,789 611,174
The Partnership recognized income totalling $278,371, $267,799 and
$271,512 for the years ended December 31, 1996, 1995 and 1994,
respectively, from these joint ventures.
24
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
6. Allocations and Distributions:
Generally, all net income and net losses of the Partnership, excluding
gains and losses from the sale of properties, are allocated 99 percent
to the limited partners and one percent to the general partners.
Distributions of net cash flow are made 99 percent to the limited
partners and one percent to the general partners; provided, however,
that the one percent of net cash flow to be distributed to the general
partners is subordinated to receipt by the limited partners of an
aggregate, ten percent, cumulative, noncompounded annual return on
their adjusted capital contributions (the "10% Preferred Return").
Generally, net sales proceeds from the sale of properties, to the
extent distributed, will be distributed first to the limited partners
in an amount sufficient to provide them with their 10% Preferred
Return, plus the return of their adjusted capital contributions. The
general partners will then receive, to the extent previously
subordinated and unpaid, a one percent interest in all prior
distributions of net cash flow and a return of their capital
contributions. Any remaining sales proceeds will be distributed 95
percent to the limited partners and five percent to the general
partners. Any gain from the sale of a property is, in general,
allocated in the same manner as net sales proceeds are distributable.
Any loss from the sale of a property is, in general, allocated first,
on a pro rata basis, to partners with positive balances in their
capital accounts; and thereafter, 95 percent to the limited partners
and five percent to the general partners.
During each of the years ended December 31, 1996 and 1995, the
Partnership declared distributions to the limited partners of
$3,640,003 and during the year ended December 31, 1994, the Partnership
declared distributions to the limited partners of $3,625,017. No
distributions have been made to the general partners to date.
25
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
7. Income Taxes:
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C>
Net income for
financial reporting
purposes $3,461,812 $3,552,067 $3,672,841
Depreciation for tax
reporting purposes
in excess of
depreciation for
financial reporting
purposes (298,518) (304,027) (297,899)
Direct financing leases
recorded as operating
leases for tax
reporting purposes 160,007 141,684 122,590
Equity in earnings of unconsolidated
joint ventures for tax
reporting purposes in excess of
equity in earnings of
unconsolidated joint ventures for
financial reporting purposes 10,839 12,592 12,711
Gain on sale of land
and building for
financial reporting
purposes in excess
of gain for tax
reporting purposes - (16,395) -
Accrued rental income (315,029) (309,574) (372,348)
Rents paid in advance 45,447 (80,403) 69,898
Minority interest in
timing differences
of consolidated
joint venture 2,184 2,062 1,957
Other (7,738) 9,613 2,554
---------- ---------- ----------
Net income for federal
income tax purposes $3,059,004 $3,007,619 $3,212,304
========== ========== ==========
</TABLE>
26
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
8. Related Party Transactions:
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Group, Inc., the parent company of
CNL Investment Company and CNL Fund Advisors, Inc. The other individual
general partner, Robert A. Bourne, is the president of CNL Investment
Company and CNL Fund Advisors, Inc. CNL Income Fund Advisors, Inc. was
a wholly owned subsidiary of CNL Group, Inc. until its merger,
effective January 1, 1996, with CNL Fund Advisors, Inc. During the
years ended December 31, 1996, 1995 and 1994, CNL Investment Company,
CNL Income Fund Advisors, Inc. and CNL Fund Advisors, Inc. (hereinafter
referred to collectively as the "Affiliates") each performed certain
services for the Partnership, as described below.
During the years ended December 31, 1996, 1995 and 1994, certain
Affiliates acted as manager of the Partnership's properties pursuant to
a management agreement with the Partnership. In connection therewith,
the Partnership agreed to pay the Affiliates an annual, non-cumulative,
subordinated management fee of one percent of the sum of gross revenues
from properties wholly owned by the Partnership and the Partnership's
allocable share of gross revenues from joint ventures, but not in
excess of competitive fees for comparable services. These fees will
incurred and will be payable only after the limited partners receive
their 10% Preferred Return. Due to the fact that these fees are
non-cumulative, if the limited partners do not receive their 10%
Preferred Return in any particular year, no management fees will be due
or payable for such year. As a result of such threshold, no management
fees were incurred during the years ended December 31, 1996, 1995 and
1994.
Certain Affiliates are also entitled to receive a deferred,
subordinated real estate disposition fee, payable upon the sale of one
or more properties based on the lesser of one-half of a competitive
real estate commission or three percent of the sales price if the
Affiliates provide a substantial amount of services in connection with
the sale. However, if the net sales proceeds are reinvested in a
replacement property, no such real estate disposition fees will be
incurred until such replacement property is sold and the net sales
proceeds are distributed. In addition, the real estate disposition fee
is subordinated to receipt by the limited partners of their aggregate
10% Preferred Return, plus their adjusted capital contributions. No
deferred, subordinated real estate disposition fees have been incurred
since inception.
27
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
8. Related Party Transactions - Continued:
During the years ended December 31, 1996, 1995 and 1994, the Affiliates
provided accounting and administrative services to the Partnership on a
day-to-day basis. The Partnership incurred $94,496, $76,108 and $42,741
for the years ended December 31, 1996, 1995 and 1994, respectively, for
such services.
The due to related parties consisted of the following at December 31,
1996 and 1995, totalled $1,609 and $7,004, respectively.
9. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, or affiliated groups of lessees, each representing
more than ten percent of the Partnership's total rental and earned
income (including the Partnership's share of total rental and earned
income from unconsolidated joint ventures), for the years ended
December 31:
1996 1995 1994
-------- -------- ------
Foodmaker, Inc. $684,277 $686,417 $691,353
Flagstar Enterprises,
Inc. and Denny's,
Inc. 668,919 674,611 726,418
Golden Corral
Corporation 568,164 567,654 575,871
28
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
9. Concentration of Credit Risk - Continued:
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Partnership's total rental and earned income
(including the Partnership's share of total rental and earned income
from unconsolidated joint ventures) for at least one of the years ended
December 31:
1996 1995 1994
-------- -------- ------
Burger King $714,792 $721,870 $718,487
Jack in the Box 684,277 686,417 691,353
Golden Corral Family
Steakhouse
Restaurants 568,164 567,654 575,871
Hardees 468,037 471,507 521,316
Shoney's 439,330 354,457 448,236
Perkins 393,046 449,149 464,805
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any one of these lessees or
restaurant chains could significantly impact the results of operations
of the Partnership. However, the general partners believe that the risk
of such a default is reduced due to the essential or important nature
of these properties for the on-going operations of the lessees.
10. Commitments and Contingencies:
In October 1995, the tenant of the Partnership's property located in
Austin, Texas, entered into a sublease agreement for a vacant parcel of
land under which the subtenant has the option to purchase such land.
The subtenant exercised the purchase option and in accordance with the
terms of the sublease agreement, the tenant assigned the purchase
contract, together with the purchase contract payment of $69,000, from
the subtenant, to the Partnership. As of December 31, 1996, the sale
for the vacant parcel of land had not been consummated and as a result,
the net proceeds of $68,000 (representing the original $69,000 received
by the Partnership, less $1,000 in costs incurred in anticipation of
the sale) were recorded as a deposit at December 31, 1996. The contract
price of $69,000 exceeds the Partnership's cost attributable to the
parcel of land.
29
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Group, Inc. and their
affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 50, is a principal stockholder of CNL Group,
Inc., a diversified real estate company, and has served as its Chairman of the
Board of Directors, director and Chief Executive Officer since its formation in
1980. CNL Group, Inc. is the parent company of CNL Securities Corp., CNL
Investment Company, CNL Fund Advisors, Inc., and prior to its merger with CNL
Fund Advisors, Inc., effective January 1, 1996, CNL Income Fund Advisors, Inc.
Mr. Seneff is Chief Executive Officer, and has been a director and registered
principal of CNL Securities Corp., which served as the managing dealer in the
Partnership's offering of units, since its formation in 1979. Mr. Seneff also
has held the position of President and a director of CNL Management Company, a
registered investment advisor, since its formation in 1976, has served as Chief
Executive Officer and Chairman of the Board of CNL Investment Company, and Chief
Executive Officer and Chairman of the Board of Commercial Net Lease Realty, Inc.
since 1992, has served as the Chairman of the Board and the Chief Executive
Officer of CNL Realty Advisors, Inc. since its inception in 1991, served as
Chairman of the Board and Chief Executive Officer of CNL Income Fund Advisors,
Inc. since its inception in 1994 through December 31, 1995, has served as
Chairman of the Board and Chief Executive Officer of CNL Fund Advisors, Inc.
since its inception in 1994, and has held the position of Chief Executive
Officer and a director of CNL Institutional Advisors, Inc., a registered
investment advisor, since its inception in 1990. In addition, Mr. Seneff has
served as Chairman of the Board and Chief Executive Officer of CNL American
Properties Fund, Inc. since 1994, and has served as Chairman of the Board and
Chief Executive Officer of CNL American Realty Fund, Inc. since 1996 and of CNL
Real Estate Advisors, Inc. since January 1997. Mr. Seneff previously served on
the Florida State Commission on Ethics and is a former member and past Chairman
of the State of Florida Investment Advisory Council, which recommends to the
Florida Board of Administration investments for various Florida employee
retirement funds. The Florida Board of Administration, Florida's principal
investment advisory and money management agency, oversees the investment of more
than $40 billion of retirement funds. Since 1971, Mr. Seneff has been active in
the acquisition, development and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
joint venturer in over 100 real estate ventures involved in the financing,
acquisition, construction and rental of office buildings, apartment complexes,
restaurants, hotels and other real estate. Included in these real estate
ventures are approximately 65 privately offered real estate limited partnerships
in which Mr. Seneff, directly or through an affiliated entity, serves or has
served as a general partner. Also included are CNL Income Fund, Ltd., CNL Income
Fund II, Ltd., CNL Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income
Fund V, Ltd., CNL Income Fund VI, Ltd., CNL Income Fund VII, Ltd., CNL Income
Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL Income Fund XI, Ltd., CNL Income
Fund XII, Ltd., CNL Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL
Income Fund XV, Ltd., CNL Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd. and
CNL Income Fund XVIII, Ltd. (the "CNL Income Fund Partnerships"), public real
estate limited partnerships with investment objectives similar to those of the
Partnership, in which Mr. Seneff serves as a general partner. Mr. Seneff
received his degree in Business Administration from Florida State University in
1968.
Robert A. Bourne, age 49, is President and Treasurer of CNL Group,
Inc., President, a director and a registered principal of CNL Securities Corp.,
President and a director of CNL Investment Company, CNL Fund Advisors, Inc., and
prior to its merger with CNL Fund Advisors, Inc., effective January 1, 1996, CNL
Income Fund Advisors, Inc., and President, Chief Investment Officer and a
director of CNL Institutional Advisors, Inc., a registered investment advisor.
Mr. Bourne also has served as a director since 1992, as President from July 1992
to February 1996, and since February 1996, as Vice Chairman of the Board of
Directors, Secretary and Treasurer of Commercial Net Lease Realty, Inc. In
addition, Mr.
30
<PAGE>
Bourne has served as a director since its inception in 1991, as President from
1991 to February 1996, as Secretary from February 1996 to July 1996, and since
February 1996, as Treasurer and Vice Chairman of CNL Realty Advisors, Inc. In
addition, Mr. Bourne has served as President and a director of CNL American
Properties Fund, Inc. since 1994, and has served as President and a director of
CNL American Realty Fund, Inc. since 1996 and of CNL Real Estate Advisors, Inc.
since January 1997. Upon graduation from Florida State University in 1970, where
he received a B.A. in Accounting, with honors, Mr. Bourne worked as a certified
public accountant and, from September 1971 through December 1978, was employed
by Coopers & Lybrand, Certified Public Accountants, where he held the position
of tax manager beginning in 1975. From January 1979 until June 1982, Mr. Bourne
was a partner in the accounting firm of Cross & Bourne and from July 1982
through January 1987, he was a partner in the accounting firm of Bourne & Rose,
P.A., Certified Public Accountants. Mr. Bourne, who joined CNL Securities Corp.
in 1979, has participated as a general partner or joint venturer in over 100
real estate ventures involved in the financing, acquisition, construction and
rental of office buildings, apartment complexes, restaurants, hotels and other
real estate. Included in these real estate ventures are approximately 64
privately offered real estate limited partnerships in which Mr. Bourne, directly
or through an affiliated entity, serves or has served as a general partner. Also
included are the CNL Income Fund Partnerships, public real estate limited
partnerships with investment objectives similar to those of the Partnership, in
which Mr. Bourne serves as a general partner.
CNL Realty Corporation is a corporation organized on November 26, 1985,
under the laws of the State of Florida. Its sole directors and shareholders are
James M. Seneff, Jr. and Robert A. Bourne, the individual General Partners. CNL
Realty Corporation was organized to serve as the corporate general partner of
real estate limited partnerships, such as the Partnership, organized by one or
both of the individual General Partners. CNL Realty Corporation currently serves
as the corporate general partner of the CNL Income Fund Partnerships.
CNL Fund Advisors, Inc., provides certain management services in
connection with the Partnership and its Properties. CNL Fund Advisors, Inc. is a
corporation organized in 1995 under the laws of the State of Florida, and its
principal office is located at 400 East South Street, Suite 500, Orlando,
Florida 32801. CNL Fund Advisors, Inc. is a wholly owned subsidiary of CNL
Group, Inc., a diversified real estate company, and was organized to perform
property acquisition, property management and other services.
CNL Group, Inc., which is the parent company of CNL Fund Advisors,
Inc., is a diversified real estate corporation organized in 1980 under the laws
of the State of Florida. Other subsidiaries and affiliates of CNL Group, Inc.
include a property development and management company, two investment advisory
companies, and seven corporations organized as strategic business units. James
M. Seneff, Jr., an individual General Partner of the Partnership, is the
Chairman of the Board, Chief Executive Officer, and a director of CNL Group,
Inc. Mr. Seneff and his wife own all of the outstanding shares of CNL Group,
Inc.
The following persons serve as operating officers of CNL Group, Inc. or
its affiliates or subsidiaries in the discretion of the Boards of Directors of
those companies, but, except as specifically indicated, do not serve as members
of the Boards of Directors of those entities. The Boards of Directors have the
responsibility for creating and implementing the policies of CNL Group, Inc. and
its affiliated companies.
John T. Walker, age 38, joined CNL Group, Inc. in September 1994, as
Senior Vice President, responsible for Research and Development. He currently
serves as the Chief Operating Officer and Executive Vice President of CNL Fund
Advisors, Inc. and CNL American Properties Fund, Inc. and serves as Executive
Vice President of CNL American Realty Fund, Inc. and CNL Real Estate Advisors,
Inc. From May 1992 to May 1994, he was Executive Vice President for Finance and
Administration and Chief Financial Officer of Z Music, Inc., a cable television
network which was subsequently acquired by Gaylord Entertainment, where he was
responsible for overall financial and administrative management and planning.
From January 1990 through April 1992, Mr. Walker was Chief Financial Officer of
the First Baptist Church in Orlando, Florida. From April 1984 through December
1989, he was a partner in the accounting firm of Chastang, Ferrell & Walker,
P.A., where he was the partner in charge of audit and consulting services, and
from 1981 to 1984, Mr. Walker was a Senior Consultant/Audit Senior at Price
Waterhouse. Mr. Walker is a Cum Laude graduate of Wake Forest University with a
B.S. in Accountancy and is a certified public accountant.
Lynn E. Rose, age 48, a certified public accountant, has served as
Chief Financial Officer of CNL Group, Inc. since December 1993, has served as
Secretary of CNL Group, Inc. since 1987, and served as Controller of CNL Group,
Inc. from 1987 until December 1993. In addition, Ms. Rose has served as Chief
Financial Officer and Secretary of CNL Securities Corp. since July 1994. She
has served as Chief Operating Officer, Vice President and Secretary of CNL
Corporate Services, Inc. since November 1994. Ms. Rose also has served as Chief
Financial Officer and Secretary of CNL Institutional Advisors,
31
<PAGE>
Inc. since its inception in 1990, a director of CNL Realty Advisors, Inc. since
its inception in 1991, Secretary of CNL Realty Advisors, Inc. since its
inception in 1991 (excluding February 1996 to July 1996), Treasurer of CNL
Realty Advisors, Inc. from 1991 to February 1996, Secretary and Treasurer of
Commercial Net Lease Realty, Inc. from 1992 to February 1996, Secretary of CNL
Income Fund Advisors, Inc. since its inception in 1994 to December 1995, and a
director, Secretary and Treasurer of CNL Fund Advisors, Inc. since 1994 and has
served as a director, Secretary and Treasurer of CNL Real Estate Advisors, Inc.
since January 1997. Ms. Rose also has served as Secretary and Treasurer of CNL
American Properties Fund, Inc. since 1994, and has served as Secretary and
Treasurer of CNL American Realty Fund, Inc. since 1996. Ms. Rose also currently
serves as Secretary for approximately 50 additional corporations. Ms. Rose
oversees the management information services, administration, legal compliance,
accounting, tenant compliance, and reporting for over 250 corporations,
partnerships, and joint ventures. Prior to joining CNL, Ms. Rose was a partner
with Robert A. Bourne in the accounting firm of Bourne & Rose, P.A., Certified
Public Accountants. Ms. Rose holds a B.A. in Sociology from the University of
Central Florida and is a registered financial and operations principal of CNL
Securities Corp. She was licensed as a certified public accountant in 1979.
Jeanne A. Wall, age 38, has served as Chief Operating Officer of CNL
Investment Company and of CNL Securities Corp. since November 1994 and
previously served as Executive Vice President of CNL Investment Company since
January 1991. In 1984, Ms. Wall joined CNL Securities Corp. as its Partnership
Administrator. In 1985, Ms. Wall became Vice President of CNL Securities Corp.
and, in 1987, she became a Senior Vice President of CNL Securities Corp. In
this capacity, Ms. Wall serves as national marketing and sales director and
oversees the national marketing plan for the CNL investment programs. In
addition, Ms. Wall oversees the partnership administration and investor services
for programs offered through participating brokers. Ms. Wall also has served as
Senior Vice President of CNL Institutional Advisors, Inc., a registered
investment advisor, from 1990 to 1993, as Vice President of CNL Realty Advisors,
Inc. since its inception in 1991, as Vice President of Commercial Net Lease
Realty, Inc. since 1992, as Executive Vice President of CNL Income Fund
Advisors, Inc. from its inception in 1994 to December 1995, as Executive Vice
President of CNL Fund Advisors, Inc. since 1994, and as Executive Vice President
of CNL American Properties Fund, Inc. since 1994. In addition, Ms. Wall has
served as Executive Vice President of CNL Real Estate Advisors, Inc. since
January 1997 and as Executive Vice President of CNL American Realty Fund, Inc.
since 1996. Ms. Wall holds a B.A. in Business Administration from Linfield
College and is a registered principal of CNL Securities Corp. Ms. Wall
currently serves as a trustee on the board of the Investment Program Association
and on the Direct Participation Program committee for the National Association
of Securities Dealers (NASD).
Steven D. Shackelford, age 33, has served as Chief Financial Officer of
CNL Fund Advisors, Inc. since September 1996. Mr. Shackelford joined CNL Group,
Inc. in September 1996. He also currently serves as the Chief Financial Officer
of CNL American Properties Fund, Inc. From March 1995 to July 1996, he was a
senior manager in the national office of Price Waterhouse where he was
responsible for advising foreign clients seeking to raise capital and a public
listing in the United States. From August 1992 to March 1995, he served as a
manager in the Price Waterhouse, Paris, France office serving several
multinational clients. Mr. Shackelford was an audit staff and senior from 1986
to 1992 in the Orlando, Florida office of Price Waterhouse. Mr Shackelford
received a B.A. in Accounting, with honors, and a Masters of Business
Administration from Florida State University and is a certified public
accountant.
32
<PAGE>
Item 11. Executive Compensation
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of February 28, 1997, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
The following table sets forth, as of February 28, 1997, the beneficial
ownership interests of the General Partners in the Registrant.
<TABLE>
<CAPTION>
Title of Class Name of Partner Percent of Class
-------------- --------------- ----------------
<S> <C>
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
----
100%
====
</TABLE>
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above. There are no arrangements
which at a subsequent date may result in a change in control of the Registrant.
Item 13. Certain Relationships and Related Transactions
The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 1996, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
<TABLE>
<CAPTION>
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1996
- --------------------- ----------------------- ------------------------------
<S> <C>
Reimbursement to affiliates for Operating expenses are Operating expenses incurred
operating expenses reimbursed at the lower on behalf of the Partnership: $112,363
of cost or 90 percent of
the prevailing rate at which Accounting and administrative
comparable services could services: $94,496
have been obtained in the
same geographic area.
Affiliates of the General
Partners from time to time
incur certain operating
expenses on behalf of the
Partnership for which the
Partnership reimburses the
affiliates without interest.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1996
- --------------------- ----------------------- ------------------------------
<S> <C>
Annual, subordinated management fee One percent of the sum of $ - 0 -
to affiliates gross operating revenues
from Properties wholly owned
by the Partnership plus
the Partnership's allocable
share of gross revenues of
joint ventures in which
the Partnership is a co-venturer,
subordinated to certain minimum
returns to the Limited Partners.
The management fee will not exceed
competitive fees for comparable
services. Due to the fact that
these fees are non-cumulative, if
the Limited Partners do not receive
their 10% Preferred Return in any
particular year, no management fees
will be due or payable for such year.
Deferred, subordinated real estate A deferred, subordinated real estate $ - 0 -
disposition fee payable to disposition fee, payable upon sale of
affiliates one or more Properties, in an amount
equal to the lesser of (i) one-half of
a competitive real estate commission,
or (ii) three percent of the sales price
of such Property or Properties. Payment
of such fee shall be made only if
affiliates of the General Partners
provide a substantial amount of services
in connection with the sale of a Property
or Properties and shall be subordinated
to certain minimum returns to the Limited
Partners. However, if the net sales
proceeds are reinvested in a replacement
property, no such real estate disposition
fee will be incurred until such
replacement property is sold and the
net sales proceeds are distributed.
General Partners' deferred, A deferred, subordinated share equal to $ - 0 -
subordinated share of one percent of Partnership distributions
Partnership net cash flow of net cash flow, subordinated to certain
minimum returns to the Limited Partners.
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1996
- --------------------- ----------------------- ------------------------------
<S> <C>
General Partners' deferred, A deferred, subordinated share equal $ - 0 -
subordinated share of to five percent of Partnership
Partnership net sales proceeds distributions of such net sales proceeds,
from a sale or sales subordinated to certain minimum returns
to the Limited Partners.
35
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Independent Accountants
Balance Sheets at December 31, 1996 and 1995
Statements of Income for the years ended December 31, 1996,
1995 and 1994
Statements of Partners' Capital for the years ended December
31, 1996, 1995 and 1994
Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994
Notes to Financial Statements
2. Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1996
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1996
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or
notes thereto.
3. Exhibits
3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund X, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-35049 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund X, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-35049 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund X, Ltd. (Included as Exhibit 3.3
to Post-Effective Amendment No. 4 to Registration
Statement No. 33-35049 on Form S-11 and incorporated
herein by reference.)
10.1 Management Agreement between CNL Income Fund X, Ltd.
and CNL Investment Company (Included as Exhibit 10.1
to Form 10-K filed with the Securities and Exchange
Commission on April 7, 1992, and incorporated herein
by reference.)
10.2 Assignment of Management Agreement from CNL
Investment Company to CNL Income Fund Advisors, Inc.
(Included as Exhibit 10.2 to Form 10-K filed with the
Securities and Exchange Commission on March 30, 1995,
and incorporated herein by reference.)
10.3 Assignment of Management Agreement from CNL Income
Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 to Form 10-K filed with the
Securities and Exchange Commission on April 1, 1996,
and incorporated herein by reference)
27 Financial Data Schedule (Filed herewith.)
36
<PAGE>
(b) The Registrant filed no reports on Form 8-K during the period
October 1, 1996 through December 31, 1996.
37
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 24th day of
March, 1997.
CNL INCOME FUND X, LTD.
By: CNL REALTY CORPORATION
General Partner
/s/ Robert A. Bourne
--------------------
ROBERT A. BOURNE, President
By: ROBERT A. BOURNE
General Partner
/s/ Robert A. Bourne
--------------------
ROBERT A. BOURNE
By: JAMES M. SENEFF, JR.
General Partner
/s/ James M. Seneff, Jr.
------------------------
JAMES M. SENEFF, JR.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert A. Bourne President, Treasurer and Director March 24, 1997
- -------------------- (Principal Financial and Accounting
Robert A. Bourne Officer)
/s/ James M. Seneff, Jr. Chief Executive Officer and Director March 24, 1997
- ------------------------ (Principal Executive Officer)
James M. Seneff, Jr.
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
</TABLE>
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
------------------------------ -----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ----------- ------------ --------- --------
<S> <C>
Properties the Partnership
has Invested in Under
Operating Leases:
Burger King Restaurants:
Hendersonville, North Carolina - $ 222,632 $ - $ - $ -
Irondequoit, New York - 383,359 - - -
Denny's Restaurants:
Fremont, Ohio - 160,896 - 273,700 -
Detroit, Michigan - 285,842 - - -
Spartanburg, South Carolina - 287,959 - - -
Golden Corral Family
Steakhouse Restaurants:
Austin, Texas - 653,462 - 1,106,384 -
Austin, Texas - 711,354 - 1,124,040 -
Las Cruces, New Mexico - 580,655 920,521 - -
Hardee's Restaurants:
Pace, Florida - 174,850 - - -
Jacksonville, Florida - 326,972 - - -
Centerville, Tennessee - 130,494 - - -
Jack in the Box Restaurants:
Sacramento, California - 448,491 - - -
Desloge, Missouri - 276,701 - - -
San Antonio, Texas - 327,322 - - -
Fremont, California - 577,332 - - -
Missouri City, Texas - 348,646 - - -
Pasadena, Texas - 202,393 - - -
Long John Silver's Restaurants:
Alamogordo, New Mexico - 157,401 - - -
Las Cruces, New Mexico - 222,778 - - -
Perkins Restaurants:
Lancaster, New York - 336,872 - - -
Ft. Pierce, Florida - 487,752 - 567,923 -
Amherst, New York - 507,648 - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (c) Depreciation
------------------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
-------- ------------ -------- -------------- --------- ----------- ----------
<S> <C>
Properties the Partnership
has Invested in Under
Operating Leases:
Burger King Restaurants:
Hendersonville, North Carolina $ 222,632 (f) $ 222,632 $ - 1986 11/91 (d)
Irondequoit, New York 383,359 (f) 383,359 - 1986 11/91 (d)
Denny's Restaurants:
Fremont, Ohio 160,896 $ 273,700 434,596 29,273 1992 12/91 (g)
Detroit, Michigan 285,842 (f) 285,842 - 1992 02/92 (d)
Spartanburg, South Carolina 287,959 (f) 287,959 - 1992 03/92 (d)
Golden Corral Family
Steakhouse Restaurants:
Austin, Texas 653,462 1,106,384 1,759,846 176,819 1992 12/91 (b)
Austin, Texas 711,354 1,124,040 1,835,394 172,763 1992 12/91 (b)
Las Cruces, New Mexico 580,655 920,521 1,501,176 142,744 1992 05/92 (b)
Hardee's Restaurants:
Pace, Florida 174,850 (f) 174,850 - 1992 01/92 (d)
Jacksonville, Florida 326,972 (f) 326,972 - 1990 02/92 (d)
Centerville, Tennessee 130,494 (f) 130,494 - 1991 02/92 (d)
Jack in the Box Restaurants:
Sacramento, California 448,491 (f) 448,491 - 1991 12/91 (d)
Desloge, Missouri 276,701 (f) 276,701 - 1991 12/91 (d)
San Antonio, Texas 327,322 (f) 327,322 - 1992 02/92 (d)
Fremont, California 577,332 (f) 577,332 - 1991 03/92 (d)
Missouri City, Texas 348,646 (f) 348,646 - 1991 04/92 (d)
Pasadena, Texas 202,393 (f) 202,393 - 1991 04/92 (d)
Long John Silver's Restaurants:
Alamogordo, New Mexico 157,401 (f) 157,401 - 1977 03/92 (d)
Las Cruces, New Mexico 222,778 (f) 222,778 - 1975 03/92 (d)
Perkins Restaurants:
Lancaster, New York 336,872 (f) 336,872 - 1991 11/91 (d)
Ft. Pierce, Florida 487,752 567,923 1,055,675 18,245 1992 01/92 (h)
Amherst, New York 507,648 (f) 507,648 - 1987 02/92 (d)
</TABLE>
F-1
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
December 31, 1996
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
------------------------------ -----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ----------- ------------ --------- --------
<S> <C>
Pizza Hut Restaurants:
Bozeman, Montana - 99,879 224,614 - -
Sidney, Montana - 101,690 - - -
Livingston, Montana - 71,989 161,211 - -
Laurel, Montana - 109,937 255,060 - -
Billings, Montana - 123,879 200,328 - -
Shoney's Restaurants:
Greenville, North Carolina - 323,573 515,134 - -
North Richland Hills, Texas - 513,032 - 420,219 -
Pelham, Alabama - 410,448 - 427,317 -
Fort Myers Beach, Florida - 360,482 - - -
----------- ---------- ---------- -------
$ 9,926,720 $2,276,868 $3,919,583 $ -
=========== ========== ========== =======
Properties of Joint Venture in
Which the Partnership has a
50% Interest and has Invested
in Under Operating Leases:
Burger King Restaurants:
Greensboro, North Carolina - $ 338,800 $ 650,109 $ - $ -
Metairie, Louisiana - 429,883 342,455 - -
Lafayette, Louisiana - 350,932 773,129 - -
Nashua, New Hampshire - 514,815 838,536 - -
Pontiac, Illinois - 203,095 719,226 - -
Dover, New Hampshire - 406,259 998,023 - -
----------- ---------- ---------- -------
$ 2,243,784 $4,321,478 $ - $ -
=========== ========== ========== =======
Property of Joint Venture in
Which the Partnership has a
10.51% Interest and has Invested
in Under Operating Lease:
Burger King Restaurant:
Ashland, New Hampshire - $ 293,478 $ 997,104 $ - $ -
=========== ========== ========== =======
Property in Which the Partnership
has a 13.37% Interest as Tenants-
in-Common and has Invested in
Under Operating Lease:
Golden Corral Family
Steakhouse Restaurant:
Clinton, North Carolina - $ 138,382 $ 676,588 $ - $ -
=========== ========== ========== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (c) Depreciation
------------------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
<S> <C> -------- ------------ -------- -------------- --------- ----------- ----------
Pizza Hut Restaurants:
Bozeman, Montana 99,879 224,614 324,493 35,282 1976 03/91 (b)
Sidney, Montana 101,690 (f) 101,690 - 1985 03/91 (d)
Livingston, Montana 71,989 161,211 233,200 25,323 1979 03/91 (b)
Laurel, Montana 109,937 255,060 364,997 40,064 1985 03/91 (b)
Billings, Montana 123,879 200,328 324,207 31,467 1970 03/91 (b)
Shoney's Restaurants:
Greenville, North Carolina 323,573 515,134 838,707 88,537 1987 11/91 (b)
North Richland Hills, Texas 513,032 420,219 933,251 67,082 1992 12/91 (b)
Pelham, Alabama 410,448 427,317 837,765 71,180 1992 01/92 (b)
Fort Myers Beach, Florida 360,482 (f) 360,482 - 1991 09/95 (d)
---------- ---------- ----------- --------
$9,926,720 $6,196,451 $16,123,171 $898,779
========== ========== =========== ========
Properties of Joint Venture in
Which the Partnership has a
50% Interest and has Invested
in Under Operating Leases:
Burger King Restaurants:
Greensboro, North Carolina $ 338,800 $ 650,109 $ 988,909 $103,127 1990 03/92 (b)
Metairie, Louisiana 429,883 342,455 772,338 54,324 1990 03/92 (b)
Lafayette, Louisiana 350,932 773,129 1,124,061 122,641 1989 03/92 (b)
Nashua, New Hampshire 514,815 838,536 1,353,351 133,017 1987 03/92 (b)
Pontiac, Illinois 203,095 719,226 922,321 114,091 1988 03/92 (b)
Dover, New Hampshire 406,259 998,023 1,404,282 158,317 1987 03/92 (b)
--------- ---------- ----------- --------
$2,243,784 $4,321,478 $ 6,565,262 $685,517
========== ========== =========== ========
Property of Joint Venture in
Which the Partnership has a
10.51% Interest and has Invested
in Under Operating Lease:
Burger King Restaurant:
Ashland, New Hampshire $ 293,478 $ 997,104 $ 1,290,582 $141,325 1987 10/92 (b)
========== ========== =========== ========
Property in Which the Partnership
has a 13.37% Interest as Tenants-
in-Common and has Invested in
Under Operating Lease:
Golden Corral Family
Steakhouse Restaurant:
Clinton, North Carolina $ 138,382 $ 676,588 $ 814,970 $ 21,168 1996 01/96 (b)
========== ========== =========== ========
</TABLE>
F-2
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
December 31, 1996
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
----------------------------- -----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ----------- ------------ --------- --------
<S> <C>
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Burger King Restaurants:
Hendersonville, North Carolina - $ - $ 631,129 $ - $ -
Ashland, Ohio - 190,695 724,348 - -
Irondequoit, New York - - 612,810 1,123 -
Allegan, Michigan - 91,238 - 418,782 -
Denny's Restaurants:
Detroit, Michigan - - 752,829 - -
Spartanburg, South Carolina - - 529,410 - -
Hardee's Restaurants:
Pace, Florida - - 467,272 - -
Jacksonville, Florida - - 405,985 - -
Hohenwald, Tennessee - 49,201 376,415 - -
Ravenna, Ohio - 114,244 496,032 - -
New Bethlehem, Pennsylvania - 135,929 452,507 - -
Morristown, Tennessee - 131,289 456,925 - -
Centerville, Tennessee - - 348,032 - -
Jack in the Box Restaurants:
Desloge, Missouri - - 656,523 - -
Sacramento, California - - 600,366 - -
San Antonio, Texas - - - 206,031 -
Nampa, Idaho - 151,574 608,195 - -
Fremont, California - - 621,696 - -
Missouri City, Texas - - 638,461 - -
Pasadena, Texas - - 592,863 - -
Long John Silver's Restaurants:
Alamogordo, New Mexico - - 275,270 20,204 -
Las Cruces, New Mexico - - 318,378 57,828 -
Perkins Restaurants:
Lancaster, New York - - 865,814 - -
Amherst, New York - - 727,806 - -
Pizza Hut Restaurants:
Glasgow, Montana - 57,482 266,726 - -
Sidney, Montana - - 291,238 - -
Shoney's Restaurant:
Fort Myers Beach, Florida - - 567,640 - -
----------- ----------- ---------- -------
$ 921,652 $13,284,670 $ 703,968 $ -
=========== =========== ========== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (c) Depreciation
------------------------------------ in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
-------- ------------ ---------- ------------ --------- -------- ----------
<S> <C>
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Burger King Restaurants:
Hendersonville, North Carolina - (f) (f) - 1986 11/91 (d)
Ashland, Ohio (f) (f) (f) - 1988 11/91 (e)
Irondequoit, New York - (f) (f) - 1986 11/91 (d)
Allegan, Michigan (f) (f) (f) - 1992 04/92 (e)
Denny's Restaurants:
Detroit, Michigan - (f) (f) - 1992 02/92 (d)
Spartanburg, South Carolina - (f) (f) - 1992 03/92 (d)
Hardee's Restaurants:
Pace, Florida - (f) (f) - 1992 01/92 (d)
Jacksonville, Florida - (f) (f) - 1990 02/92 (d)
Hohenwald, Tennessee (f) (f) (f) - 1991 02/92 (e)
Ravenna, Ohio (f) (f) (f) - 1991 04/92 (e)
New Bethlehem, Pennsylvania (f) (f) (f) - 1991 04/92 (e)
Morristown, Tennessee (f) (f) (f) - 1991 04/92 (e)
Centerville, Tennessee - (f) (f) - 1991 02/92 (d)
Jack in the Box Restaurants:
Desloge, Missouri - (f) (f) - 1991 12/91 (d)
Sacramento, California - (f) (f) - 1991 12/91 (d)
San Antonio, Texas - (f) (f) - 1992 12/91 (d)
Nampa, Idaho (f) (f) (f) - 1991 12/92 (e)
Fremont, California - (f) (f) - 1991 03/92 (d)
Missouri City, Texas - (f) (f) - 1991 04/92 (d)
Pasadena, Texas - (f) (f) - 1991 04/92 (d)
Long John Silver's Restaurants:
Alamogordo, New Mexico - (f) (f) - 1977 03/92 (d)
Las Cruces, New Mexico - (f) (f) - 1975 03/92 (d)
Perkins Restaurants:
Lancaster, New York - (f) (f) - 1991 11/91 (d)
Amherst, New York - (f) (f) - 1987 02/92 (d)
Pizza Hut Restaurants:
Glasgow, Montana (f) (f) (f) - 1985 03/91 (e)
Sidney, Montana - (f) (f) - 1985 03/91 (d)
Shoney's Restaurant:
Fort Myers Beach, Florida - (f) (f) - 1991 09/95 (d)
</TABLE>
F-3
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
December 31, 1996
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
--------------------------- -----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ----------- ------------ ---------- --------
<S> <C>
Property of Joint Venture in
Which the Partnership has a
41% Interest and has Invested
in Under Direct Financing Lease:
Hardee's Restaurant:
Williston, Florida - $ 150,143 $ - $ 499,071 $ -
=========== ========== ========== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (c) Depreciation
------------------------------------ in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ------------
<S> <C>
Property of Joint Venture in
Which the Partnership has a
41% Interest and has Invested
in Under Direct Financing Lease:
Hardee's Restaurant:
Williston, Florida (f) (f) (f) - 1993 12/92 (e)
</TABLE>
F-4
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
(a) Transactions in real estate and accumulated depreciation during 1996,
1995 and 1994, are summarized as follows:
Accumulated
Cost Depreciation
------------ ------------
Properties the Partnership
has Invested in Under
Operating Leases:
Balance, December 31, 1993 $ 15,975,524 $ 349,932
Reclassified to operating
lease 273,700 -
Depreciation expense - 206,941
----------- --------
Balance, December 31, 1994 16,249,224 556,873
Acquisitions 360,482 -
Dispositions (1,054,458) (64,287)
Depreciation expense - 199,696
----------- --------
Balance, December 31, 1995 15,555,248 692,282
Reclassified to operating
lease 567,923 -
Depreciation expense - 206,497
----------- --------
Balance, December 31, 1996 $16,123,171 $898,779
=========== ========
Properties of Joint Venture in
Which the Partnership has
a 50% Interest and has
Invested in Under
Operating Leases:
Balance, December 31, 1993 $ 6,565,262 $253,368
Depreciation expense - 144,049
----------- --------
Balance, December 31, 1994 6,565,262 397,417
Depreciation expense - 144,050
----------- --------
Balance, December 31, 1995 6,565,262 541,467
Depreciation expense - 144,050
----------- --------
Balance, December 31, 1996 $ 6,565,262 $685,517
=========== ========
F-5
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1996
Accumulated
Cost Depreciation
----------- ------------
Property of Joint Venture in
Which the Partnership has
a 10.51% Interest and has
Invested in Under
Operating Lease:
Balance, December 31, 1993 $ 1,290,582 $ 41,614
Depreciation expense - 33,237
----------- --------
Balance, December 31, 1994 1,290,582 74,851
Depreciation expense - 33,237
----------- --------
Balance, December 31, 1995 1,290,582 108,088
Depreciation expense - 33,237
----------- --------
Balance, December 31, 1996 $ 1,290,582 $141,325
=========== ========
Property in Which the Partnership
has a 13.37% Interest as Tenants-
in-Common and has Invested in
Under an Operating Lease:
Balance, December 31, 1995 $ - $ -
Acquisition 814,970 -
Depreciation expense - 21,168
----------- --------
Balance, December 31, 1996 $ 814,970 $ 21,168
=========== ========
Property of Joint Venture in
Which the Partnership has
a 41% Interest:
Balance, December 31, 1992 $ 153,424 $ -
Acquisitions 495,790 -
Reclassified to net invest-
ment in direct financing
lease (649,214) -
----------- -------
Balance, December 31, 1993 $ - $ -
=========== =======
(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(c) As of December 31, 1996, the aggregate cost of the Properties owned
by the Partnership and its consolidated joint venture, and the
unconsolidated joint ventures for federal income tax purposes was
$31,048,950 and $9,270,376, respectively. All of the leases are
treated as operating leases for federal income tax purposes.
F-6
<PAGE>
CNL INCOME FUND X, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1996
(d) For financial reporting purposes, the portion of the lease relating
to the building has been recorded as a direct financing lease. The
cost of the building has been included in net investment in direct
financing leases; therefore, depreciation is not applicable.
(e) For financial reporting purposes, the lease for the land and building
has been recorded as a direct financing lease. The cost of the land
and building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(f) For financial reporting purposes, certain components of the lease
relating to land and building have been recorded as a direct
financing lease. Accordingly, costs relating to these components of
this lease are not shown.
(g) Effective January 1, 1994, the lease for this property was amended,
resulting in the reclassification of the building portion of the
lease to an operating lease. The building was recorded at net book
value as of January 1, 1994, and depreciated over its remaining
estimated life of approximately 28 years.
(h) Effective March 1, 1996, the lease for this property was amended,
resulting in the reclassification of the building portion of the
lease to an operating lease. The building was recorded at net book
value as of March 1, 1996, and depreciated over its remaining
estimated life of approximately 26 years.
F-7
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT INDEX
Exhibit Number Page
3.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund X, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-35049 on Form S-11 and incorporated herein
by reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund X, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-35049 on Form S-11 and incorporated herein by
reference.)
4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund X, Ltd. (Included as Exhibit 3.3 to Post-Effective
Amendment No. 4 to Registration Statement No. 33-35049 on Form
S-11 and incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund X, Ltd. and CNL
Investment Company (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on April 7,
1992, and incorporated herein by reference.)
10.2 Assignment of Management Agreement from CNL Investment Company
to CNL Income Fund Advisors, Inc. (Included as Exhibit 10.2 to
Form 10-K filed with the Securities and Exchange Commission on
March 30, 1995, and incorporated herein by reference.)
10.3 Assignment of Management Agreement from CNL Income Fund
Advisors, Inc. to CNL Fund Advisors, Inc. (Included as Exhibit
10.3 to Form 10-K filed with the Securities and Exchange
Commission on April 1, 1996, and incorporated herein by
reference)
27 Financial Data Schedule (Filed herewith.)
i
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet of CNL Income Fund X, Ltd. at December 31, 1996, and its
statement of income for the year then ended and is qualified in its
entirety by reference to the Form 10-K of CNL Income Fund X, Ltd. for the
year ended December 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,769,483
<SECURITIES> 0
<RECEIVABLES> 52,470
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 16,123,171
<DEPRECIATION> 898,779
<TOTAL-ASSETS> 36,437,560
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 35,222,665
<TOTAL-LIABILITY-AND-EQUITY> 36,437,560
<SALES> 0
<TOTAL-REVENUES> 3,602,161
<CGS> 0
<TOTAL-COSTS> 410,057
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,461,812
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,461,812
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,461,812
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund X, Ltd. has an
unclassified balance sheet; therefore, no values are shown above for
current assets and current liabilities.
</FN>
</TABLE>
