FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
--------------------------
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
0-21558
CNL Income Fund XII, Ltd.
(Exact name of registrant as specified in its charter)
Florida 59-3078856
- ---------------------------- -----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street, #500
Orlando, Florida 32801
- ---------------------------- ------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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<PAGE>
CONTENTS
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Part I Page
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Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 6-8
Part II
Other Information 9
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
March 31, December 31,
ASSETS 1997 1996
----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $1,222,647 and
$1,143,698 $21,003,519 $21,082,468
Net investment in direct financing
leases 13,757,366 13,789,036
Investment in joint ventures 2,500,179 2,496,749
Cash and cash equivalents 1,883,060 1,800,601
Receivables, less allowance for
doubtful accounts of $25,579 and
$23,395 187,719 202,908
Prepaid expenses 11,126 6,786
Organization costs, less accumulated
amortization of $8,965 and $8,465 1,035 1,535
Accrued rental income 2,094,129 1,963,055
----------- -----------
$41,438,133 $41,343,138
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 28,790 $ 9,303
Accrued and escrowed real
estate taxes payable 19,868 14,706
Distributions payable 956,252 956,252
Due to related parties 4,631 2,981
Rents paid in advance 137,596 69,790
----------- -----------
Total liabilities 1,147,137 1,053,032
Partners' capital 40,290,996 40,290,106
----------- -----------
$41,438,133 $41,343,138
=========== ===========
See accompanying notes to condensed financial statements.
1
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1997 1996
---------- ----------
<S> <C>
Revenues:
Rental income from operating leases $ 603,795 $ 648,513
Earned income from direct financing
leases 410,967 433,494
Contingent rental income 5,417 8,809
Interest and other income 20,797 24,305
---------- ----------
1,040,976 1,115,121
---------- ----------
Expenses:
General operating and administrative 38,722 42,964
Professional services 6,657 5,627
Management fees to related parties 9,913 10,054
Real estate taxes 1,410 -
State and other taxes 18,090 17,958
Depreciation and amortization 79,449 81,949
---------- ----------
154,241 158,552
---------- ----------
Income Before Equity in Earnings of
Joint Ventures 886,735 956,569
Equity in Earnings of Joint Ventures 70,407 20,010
---------- ----------
Net Income $ 957,142 $ 976,579
========== ==========
Allocation of Net Income:
General partners $ 9,571 $ 9,766
Limited partners 947,571 966,813
---------- ----------
$ 957,142 $ 976,579
========== ==========
Net Income Per Limited
Partner Unit $ 0.21 $ 0.21
========== ==========
Weighted Average Number
of Limited Partner
Units Outstanding 4,500,000 4,500,000
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Quarter Ended Year Ended
March 31, December 31,
1997 1996
------------- ------------
General partners:
Beginning balance $ 152,889 $ 113,356
Net income 9,571 39,533
----------- -----------
162,460 152,889
----------- -----------
Limited partners:
Beginning balance 40,137,217 40,058,715
Net income 947,571 3,903,510
Distributions ($0.21 and $0.85
per limited partner unit,
respectively) (956,252) (3,825,008)
----------- -----------
40,128,536 40,137,217
----------- -----------
Total partners' capital $40,290,996 $40,290,106
=========== ===========
See accompanying notes to condensed financial statements.
3
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended
March 31,
1997 1996
----------- ----------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 1,036,652 $ 960,631
----------- -----------
Cash Flows From Investing
Activities:
Collections on loan to tenant
of joint venture 2,059 1,863
----------- -----------
Net cash provided by
investing activities 2,059 1,863
----------- -----------
Cash Flows From Financing
Activities:
Distributions to limited
partners (956,252) (1,001,252)
----------- -----------
Net cash used in
financing activities (956,252) (1,001,252)
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents 82,459 (38,758)
Cash and Cash Equivalents at
Beginning of Quarter 1,800,601 1,716,203
----------- -----------
Cash and Cash Equivalents at End of
Quarter $ 1,883,060 $1,677,445
=========== ==========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and unpaid
at end of quarter $ 956,252 $ 956,252
=========== ===========
See accompanying notes to condensed financial statements.
4
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 1997 and 1996
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter ended March 31, 1997, may not be indicative of the results
that may be expected for the year ending December 31, 1997. Amounts as
of December 31, 1996, included in the financial statements, have been
derived from audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund XII, Ltd. (the "Partnership") for the year ended December
31, 1996.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CNL Income Fund XII, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on August 20, 1991, to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurants, 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 leases
are triple-net leases, with the lessees generally responsible for all repairs
and maintenance, property taxes, insurance and utilities. As of March 31, 1997,
the Partnership owned 48 Properties, including interests in four Properties
owned by joint ventures in which the Partnership is a co-venturer.
Liquidity and Capital Resources
The Partnership's primary source of capital for the quarters ended
March 31, 1997 and 1996, was cash from operations (which includes cash received
from tenants, distributions from joint ventures, and interest and other income
received, less cash paid for expenses). Cash from operations was $1,036,652 and
$960,631 for the quarters ended March 31, 1997 and 1996, respectively. The
increase in cash from operations for the quarter ended March 31, 1997, as
compared to the quarter ended March 31, 1996, is primarily a result of changes
in the Partnership's working capital.
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 the partners. At March 31, 1997, the Partnership had $1,883,060
invested in such short-term investments as compared to $1,800,601 at December
31, 1996. The funds remaining at March 31, 1997, after payment of distributions
and other liabilities, will be used to meet the Partnership's working capital
and other needs.
Total liabilities of the Partnership increased to $1,147,137 at March
31, 1997, from $1,053,032 at December 31, 1996, primarily as the result of an
increase in rents paid in advance during the quarter ended March 31, 1997. The
general partners believe that the Partnership has sufficient cash on hand to
meet its current working capital needs.
Based on cash from operations, the Partnership declared distributions
to the limited partners of $956,252 for each of the quarters ended March 31,
1997 and 1996. This represents distributions for each applicable quarter of
$0.21 per unit. No distributions were made to the general partners for the
quarters ended March 31, 1997 and 1996. No amounts distributed or to be
distributed to the limited partners for the quarters ended March 31, 1997 and
1996, are required to be or have been treated by
6
<PAGE>
Liquidity and Capital Resources - Continued
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.
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.
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 the quarter ended March 31, 1996, the Partnership owned and
leased 45 wholly owned Properties (including one Property in Houston, Texas,
which was sold in April 1996) and during the quarter ended March 31, 1997, the
Partnership owned and leased 44 wholly owned Properties to operators of
fast-food and family-style restaurant chains. In connection therewith, during
the quarters ended March 31, 1997 and 1996, the Partnership earned $1,014,762
and $1,082,007, respectively, in rental income from operating leases and earned
income from direct financing leases from these Properties. The decrease in
rental and earned income during the quarter ended March 31, 1997, as compared to
the quarter ended March 31, 1996, is primarily attributable to a decrease of
approximately $47,100 as a result of the sale of the Property in Houston, Texas,
in April 1996. For the quarters ended March 31, 1997 and 1996, the Partnership
also earned $5,417 and $8,809, respectively, in contingent rental income.
For the quarters ended March 31, 1997 and 1996, the Partnership owned
and leased four and three Properties, respectively, indirectly through joint
venture arrangements. In connection therewith, during the quarters ended March
31, 1997 and 1996, the Partnership earned $70,407 and $20,010, respectively,
attributable to net income earned by these joint ventures. The increase in net
income earned by joint ventures is primarily due to the fact that the
Partnership invested in Middleburg Joint Venture in May 1996.
Operating expenses, including depreciation and amortization expense,
were $154,241 and $158,552 for the quarters ended March 31, 1997 and 1996,
respectively. The decrease in operating expenses during the quarter ended March
31, 1997, as compared to the quarter ended March 31, 1996, is primarily
attributable to a decrease in accounting and administrative expenses associated
with
7
<PAGE>
Results of Operations - Continued
operating the Partnership and its Properties. In addition, depreciation expense
decreased during the quarter ended March 31, 1997, as a result of the sale of
the Property located in Houston, Texas, in April 1996.
8
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Defaults upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the
quarter ended March 31, 1997.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 9th day of May, 1997.
CNL INCOME FUND XII, LTD.
By: CNL REALTY CORPORATION
General Partner
By: /s/ James M. Seneff, Jr.
-----------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
-----------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the balance sheet of CNL Income Fund XII, Ltd. at March 31, 1997, and
its statement of income for the three months then ended and is qualified
in its entirety by reference to the Form 10-Q of CNL Income Fund XII, Ltd.
for the three months ended March 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,883,060
<SECURITIES> 0
<RECEIVABLES> 213,298
<ALLOWANCES> 25,579
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 22,226,166
<DEPRECIATION> 1,222,647
<TOTAL-ASSETS> 41,438,133
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,147,137
<TOTAL-LIABILITY-AND-EQUITY> 41,438,133
<SALES> 0
<TOTAL-REVENUES> 1,040,976
<CGS> 0
<TOTAL-COSTS> 154,241
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 957,142
<INCOME-TAX> 0
<INCOME-CONTINUING> 957,142
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 957,142
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XII, Ltd. has
an unclassified balance sheet; therefore, no values are shown above
for current assets and current liabilities.
</FN>
</TABLE>
