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, 1998
--------------------------
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
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
<PAGE>
CONTENTS
Part I Page
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 6-7
Part II
Other Information 8
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
March 31, December 31,
ASSETS 1998 1997
----------- -----------
Land and buildings on operating
leases, less accumulated
depreciation of $1,540,446 and
$1,460,887 $20,740,720 $20,820,279
Net investment in direct financing
leases 13,613,631 13,656,265
Investment in joint ventures 2,520,871 2,517,421
Cash and cash equivalents 1,876,590 1,706,415
Receivables, less allowance for
doubtful accounts of $20,868 and
$7,482 192,297 202,472
Prepaid expenses 11,274 7,216
Lease costs, less accumulated
amortization of $1,742 and $1,307 27,811 24,746
Accrued rental income 2,587,680 2,496,176
----------- -----------
$41,570,874 $41,430,990
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 5,195 $ 10,558
Escrowed real estate taxes payable 7,691 3,244
Distributions payable 956,252 956,252
Due to related parties 8,529 6,887
Rents paid in advance and deposits 173,844 36,737
----------- -----------
Total liabilities 1,151,511 1,013,678
Partners' capital 40,419,363 40,417,312
----------- -----------
$41,570,874 $41,430,990
=========== ===========
See accompanying notes to condensed financial statements.
1
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended
March 31,
1998 1997
---------- -----------
Revenues:
Rental income from operating leases $ 626,546 $ 603,795
Earned income from direct financing
leases 407,674 410,967
Contingent rental income 7,422 5,417
Interest and other income 15,252 20,797
---------- ----------
1,056,894 1,040,976
---------- ----------
Expenses:
General operating and administrative 34,465 38,722
Professional services 12,986 6,657
Bad debt expense 8,968 -
Management fees to related parties 10,580 9,913
Real estate taxes - 1,410
State and other taxes 17,248 18,090
Depreciation and amortization 79,994 79,449
---------- ----------
164,241 154,241
---------- ----------
Income Before Equity in Earnings of
Joint Ventures 892,653 886,735
Equity in Earnings of Joint Ventures 65,650 70,407
---------- ----------
Net Income $ 958,303 $ 957,142
========== ==========
Allocation of Net Income:
General partners $ 9,583 $ 9,571
Limited partners 948,720 947,571
---------- ----------
$ 958,303 $ 957,142
========== ==========
Net Income Per Limited
Partner Unit $ 0.21 $ 0.21
========== ==========
Weighted Average Number
of Limited Partner
Units Outstanding 4,500,000 4,500,000
========== ==========
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,
1998 1997
------------- -----------
General partners:
Beginning balance $ 192,411 $ 152,889
Net income 9,583 39,522
----------- -----------
201,994 192,411
----------- -----------
Limited partners:
Beginning balance 40,224,901 40,137,217
Net income 948,720 3,912,692
Distributions ($0.21 and $0.85
per limited partner unit,
respectively) (956,252) (3,825,008)
----------- -----------
40,217,369 40,224,901
----------- -----------
Total partners' capital $40,419,363 $40,417,312
=========== ===========
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,
1998 1997
----------- -----------
Increase in Cash and Cash Equivalents:
Net Cash Provided by Operating
Activities $ 1,129,927 $ 1,036,652
----------- -----------
Cash Flows From Investing
Activities:
Collections on loan to tenant
of joint venture - 2,059
Payment of lease costs (3,500) -
----------- ----------
Net cash provided by (used
in) investing activities (3,500) 2,059
----------- -----------
Cash Flows From Financing
Activities:
Distributions to limited
partners (956,252) (956,252)
----------- -----------
Net cash used in
financing activities (956,252) (956,252)
----------- -----------
Net Increase in Cash and Cash
Equivalents 170,175 82,459
Cash and Cash Equivalents at
Beginning of Quarter 1,706,415 1,800,601
----------- -----------
Cash and Cash Equivalents at End of
Quarter $ 1,876,590 $ 1,883,060
=========== ===========
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, 1998 and 1997
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, 1998, may not be indicative of the results
that may be expected for the year ending December 31, 1998. Amounts as
of December 31, 1997, 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, 1997.
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, 1998,
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, 1998 and 1997, 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 $1,129,927 and
$1,036,652 for the quarters ended March 31, 1998 and 1997, respectively. The
increase in cash from operations for the quarter ended March 31, 1998, as
compared to the quarter ended March 31, 1997, 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, 1998, the Partnership had $1,876,590
invested in such short-term investments, as compared to $1,706,415 at December
31, 1997. The increase in cash and cash equivalents for the quarter ended March
31, 1998, is primarily attributable to an increase in rents paid in advance at
March 31, 1998, as compared to December 31, 1997. The funds remaining at March
31, 1998, 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 $1,151,511 at March
31, 1998, from $1,013,678 at December 31, 1997, primarily as the result of an
increase in rents paid in advance at March 31, 1998. 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,
1998 and 1997. 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, 1998 and 1997. No amounts distributed to the limited
partners for the quarters ended March 31, 1998 and 1997, are required to be or
have been treated by the Partnership as a
6
<PAGE>
Liquidity and Capital Resources - Continued
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 quarters ended March 31, 1998 and 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, 1998 and 1997, the Partnership earned $1,034,220 and $1,014,762,
respectively, in rental income from operating leases and earned income from
direct financing leases from these Properties. The increase in rental and earned
income during the quarter ended March 31, 1998, as compared to the quarter ended
March 31, 1997, is primarily attributable to an increase of approximately
$18,800 as a result of the Partnership entering into a new lease with a new
tenant for the Property in Tempe, Arizona, for which rental payments commenced
in July 1997. For the quarters ended March 31, 1998 and 1997, the Partnership
also earned $7,422 and $5,417, respectively, in contingent rental income.
For the quarters ended March 31, 1998 and 1997, the Partnership owned
and leased four Properties indirectly through joint venture arrangements. In
connection therewith, during the quarters ended March 31, 1998 and 1997, the
Partnership earned $65,650 and $70,407, respectively, attributable to net income
earned by these joint ventures.
Operating expenses, including depreciation and amortization expense,
were $164,241 and $154,241 for the quarters ended March 31, 1998 and 1997,
respectively. The increase in operating expenses during the quarter ended March
31, 1998, as compared to the quarter ended March 31, 1997, is primarily
attributable to the fact that the Partnership recorded bad debt expense for past
due principal and interest amounts relating to the loan with the tenant of the
Property in Kingsville Joint Venture in accordance with the Partnership's
policy. The general partners are in the process of negotiating an arrangement to
collect past due amounts. The Partnership intends to continue to pursue
collection of past due amounts relating to this Property and will recognize any
such amounts as income if collected.
7
<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, 1998.
8
<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 8th day of May, 1998.
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, 1998, and its statement of
income for the three months then ended and is qualified in its entirety by
reference to the Form 10Q of CNL Income Fund XII, Ltd. for the three months
ended March 31, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,876,590
<SECURITIES> 0
<RECEIVABLES> 213,165
<ALLOWANCES> 20,868
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 22,281,166
<DEPRECIATION> 1,540,446
<TOTAL-ASSETS> 41,570,874
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 40,419,363
<TOTAL-LIABILITY-AND-EQUITY> 41,570,874
<SALES> 0
<TOTAL-REVENUES> 1,056,894
<CGS> 0
<TOTAL-COSTS> 155,273
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8,968
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 958,303
<INCOME-TAX> 0
<INCOME-CONTINUING> 958,303
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 958,303
<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>
