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 June 30, 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
0-23974
CNL Income Fund XIV, Ltd.
(Exact name of registrant as specified in its charter)
Florida 59-3143096
(State or other juris- (I.R.S. Employer
diction of incorporation Identification No.)
or organization)
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
<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 5-6
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 7-9
Part II
Other Information 10
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1997 1996
----------- -----------
<S> <C>
Land and buildings on operating
leases, less accumulated
depreciation of $1,127,123 and
$958,533 $25,683,894 $25,852,484
Net investment in direct
financing leases 9,084,571 9,125,272
Investment in joint ventures 3,154,742 3,201,156
Cash and cash equivalents 1,465,585 1,462,012
Receivables, less allowance for
doubtful accounts of $22,970 for
1996 1,532 23,477
Prepaid expenses 15,614 8,243
Organization costs, less
accumulated amortization of
$7,599 and $6,599 2,401 3,401
Accrued rental income 1,615,415 1,369,804
----------- -----------
$41,023,754 $41,045,849
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 3,212 $ 5,447
Accrued and escrowed real
estate taxes payable 10,077 12,364
Distributions payable 928,130 928,130
Due to related parties 4,247 1,651
Rents paid in advance 76,920 62,520
----------- -----------
Total liabilities 1,022,586 1,010,112
Commitment (Note 3)
Partners' capital 40,001,168 40,035,737
----------- -----------
$41,023,754 $41,045,849
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
1
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C>
Revenues:
Rental income from
operating leases $ 723,510 $ 722,724 $1,447,278 $1,466,900
Earned income from direct
financing leases 254,713 256,920 510,005 514,363
Interest and other income 16,560 13,974 30,602 27,859
---------- ---------- ---------- ----------
994,783 993,618 1,987,885 2,009,122
---------- ---------- ---------- ----------
Expenses:
General operating and
administrative 40,191 43,623 76,406 87,001
Professional services 5,796 5,338 11,584 11,090
Bad debt expense - - 14,000 -
Management fees to
related parties 9,736 9,569 19,290 19,352
Real estate taxes 1,638 1,713 5,808 3,426
State and other taxes 47 19 21,874 18,109
Depreciation and
amortization 85,033 85,022 170,055 170,044
---------- ---------- ---------- ----------
142,441 145,284 319,017 309,022
---------- ---------- ---------- ----------
Income Before Equity in
Earnings of Joint
Ventures 852,342 848,334 1,668,868 1,700,100
Equity in Earnings of
Joint Ventures 77,577 88,183 152,823 177,099
---------- ---------- ---------- ----------
Net Income $ 929,919 $ 936,517 $1,821,691 $1,877,199
========== ========== ========== ==========
Allocation of Net Income:
General partners $ 9,299 $ 9,365 $ 18,217 $ 18,772
Limited partners 920,620 927,152 1,803,474 1,858,427
---------- ---------- ---------- ----------
$ 929,919 $ 936,517 $1,821,691 $1,877,199
========== ========== ========== ==========
Net Income Per Limited
Partner Unit $ 0.20 $ 0.21 $ 0.40 $ 0.41
========== ========== ========== ==========
Weighted Average Number
of Limited Partner
Units Outstanding 4,500,000 4,500,000 4,500,000 4,500,000
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed financialstatements.
2
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, December 31,
1997 1996
---------------- -------------
<S> <C>
General partners:
Beginning balance $ 109,981 $ 70,818
Net income 18,217 39,163
----------- -----------
128,198 109,981
----------- -----------
Limited partners:
Beginning balance 39,925,756 39,761,112
Net income 1,803,474 3,877,166
Distributions ($0.41 and
$0.83 per limited partner
unit, respectively) (1,856,260) (3,712,522)
----------- -----------
39,872,970 39,925,756
----------- -----------
Total partners' capital $40,001,168 $40,035,737
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
----------- ---------
<S> <C>
Increase (Decrease) in Cash and
Cash Equivalents:
Net Cash Provided by Operating
Activities $ 1,807,883 $ 1,799,902
----------- -----------
Cash Flows from Investing
Activities:
Return of capital from joint
venture 51,950 -
----------- ----------
Net cash provided by
investing activities 51,950 -
----------- ----------
Cash Flows from Financing
Activities:
Distributions to limited
partners (1,856,260) (1,856,260)
----------- -----------
Net cash used in
financing activities (1,856,260) (1,856,260)
----------- -----------
Net Increase (Decrease) in Cash
and Cash Equivalents 3,573 (56,358)
Cash and Cash Equivalents at
Beginning of Period 1,462,012 1,475,738
----------- -----------
Cash and Cash Equivalents at
End of Period $ 1,465,585 $ 1,419,380
=========== ===========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and
unpaid at end of period $ 928,130 $ 928,130
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 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 and six months ended June 30, 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 XIV, Ltd. (the "Partnership") for the year ended December
31, 1996.
2. Investment in Joint Venture:
In January 1997, Wood-Ridge Real Estate Joint Venture reinvested
$502,598 of the remaining net sales proceeds from the sale of the two
properties in September 1996, in a Taco Bell property in Anniston,
Alabama. As of June 30, 1997, the Partnership and the other joint
venture partner had each received approximately $52,000, representing a
return of capital, for the remaining unreinvested net sales proceeds.
As of June 30, 1997, the Partnership owned a 50 percent interest in the
profits and losses of the joint venture.
5
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 1997 and 1996
2. Investment in Joint Venture - Continued:
The following presents the combined, condensed financial information
for all of the Partnership's investments in joint ventures at:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- ------------
<S> <C>
Land and buildings on
operating leases,
less accumulated
depreciation $5,551,025 $5,102,901
Net investment in direct
financing lease 366,129 367,661
Cash 4,834 818
Restricted cash - 595,426
Receivables 771 7,037
Accrued rental income 104,856 62,163
Other assets 1,115 15,390
Liabilities 10,059 33,565
Partners' capital 6,018,671 6,117,831
Revenues 353,063 690,225
Gain on sale - 261,106
Net income 289,513 887,177
</TABLE>
The Partnership recognized income totalling $152,823 and $177,099 for
the six months ended June 30, 1997 and 1996, respectively, from these
joint ventures, $77,577 and $88,183 of which was earned during the
quarters ended June 30, 1997 and 1996, respectively.
3. Commitment:
During 1996, the Partnership entered into an agreement with the tenant
of the Checkers property in Richmond, Virginia, to sell the property.
The general partners believe that the anticipated sales price exceeds
the Partnership's cost attributable to the property. As of July 31,
1997, the sale had not occurred.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CNL Income Fund XIV, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on September 25, 1992, 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. Generally,
the leases are triple-net leases, with the lessee responsible for all repairs
and maintenance, property taxes, insurance and utilities. As of June 30, 1997,
the Partnership owned 58 Properties, including interests in eight 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 six months ended
June 30, 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 $1,807,883 and
$1,799,902 for the six months ended June 30, 1997 and 1996, respectively. The
increase in cash from operations for the six months ended June 30, 1997, as
compared to the six months ended June 30, 1996, is primarily a result of changes
in the Partnership's working capital.
Other sources and uses of capital included the following during the six
months ended June 30, 1997.
In January 1997, Wood-Ridge Real Estate Joint Venture reinvested
$502,598 of the remaining net sales proceeds from the sale of the two properties
in September 1996, in a Taco Bell property in Anniston, Alabama. As of June 30,
1997, the Partnership and the other joint venture partner had each received
approximately $52,000, representing a return of capital, for the remaining
unreinvested net sales proceeds. As of June 30, 1997, the Partnership owned a 50
percent interest in the profits and losses of the joint venture.
Currently, cash reserves and rental income from the Partnership's
Properties is invested in money market accounts or other short-term, highly
liquid investments pending the use of such funds to pay Partnership expenses or
to make distributions to partners. At June 30, 1997, the Partnership had
$1,465,585 invested in such short-term investments, as compared to $1,462,012 at
December 31, 1996. The funds remaining at June 30, 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, including distributions payable,
increased to $1,022,586 at June 30, 1997, from $1,010,112 at December 31, 1996,
primarily as the result of an increase in
7
<PAGE>
Liquidity and Capital Resources - Continued
rents paid in advance during the six months ended June 30, 1997. The general
partners believe that the Partnership has sufficient cash on hand to meet its
current working capital needs.
During 1996, the Partnership entered into an agreement with the tenant
of the Checkers property in Richmond, Virginia, to sell the property. The
general partners believe that the anticipated sales price exceeds the
Partnership's cost attributable to the property. As of July 31, 1997, the sale
had not occurred.
Based on current and anticipated future cash from operations, the
Partnership declared distributions to the limited partners of $1,856,260 for
each of the six months ended June 30, 1997 and 1996, respectively ($928,130 for
each of the quarters ended June 30, 1997 and 1996). This represents
distributions for each applicable six months of $0.41 per unit ($0.21 per unit
for each applicable quarter). No distributions were made to the general partners
for the quarters and six months ended June 30, 1997 and 1996. No amounts
distributed or to be distributed to the limited partners for the six months
ended June 30, 1997 and 1996, 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 contribution. 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 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 each of the six months ended June 30, 1997 and 1996, the
Partnership owned and leased 50 wholly owned Properties to operators of
fast-food and family-style restaurant chains. In connection therewith, during
the six months ended June 30, 1997 and 1996, the Partnership earned $1,957,283
and $1,981,263, respectively, in rental income from operating leases and earned
income from direct financing leases from these Properties, $978,223 and $979,644
of which was earned during the quarters ended June 30, 1997 and 1996,
respectively. The decrease in rental and earned income for the six months ended
June 30, 1997, as compared to the six months ended June 30, 1996 was primarily
attributable to the Partnership reserving $21,000 against rental income relating
to the Property in Akron, Ohio, during the six months ended June 30, 1997 due to
the financial difficulties the former tenant was experiencing. The former tenant
ceased operations of the store in May 1997 and the Partnership ceased recording
rental income and wrote-off the allowance for doubtful accounts. The Partnership
is currently seeking either a replacement tenant or purchaser for this Property.
8
<PAGE>
Results of Operations - Continued
In addition, during the six months ended June 30, 1996, the Partnership
owned and leased four Properties indirectly through joint venture arrangements
(including two Properties in Wood-Ridge Real Estate Joint Venture, which were
sold in September 1996) and during the six months ended June 30, 1997, the
Partnership owned and leased eight Properties. In connection therewith, during
the six months ended June 30, 1997 and 1996, the Partnership earned $152,823 and
$177,099, respectively, attributable to net income earned by these joint
ventures, $77,577 and $88,183 of which was earned during the quarters ended June
30, 1997 and 1996, respectively. The decrease in net income earned by these
joint ventures is attributable to a change in the lease terms negotiated for the
replacement Properties purchased by Wood-Ridge Real Estate Joint Venture between
October 1996 and January 1997.
Operating expenses, including depreciation and amortization expense,
were $319,017 and $309,022 for the six months ended June 30, 1997 and 1996,
respectively, of which $142,441 and $145,284 were incurred for the quarters
ended June 30, 1997 and 1996, respectively. The increase in operating expenses
during the six months ended June 30, 1997, as compared to the six months ended
June 30, 1996, is primarily attributable to the fact that the Partnership
recorded bad debt expense of $14,000 relating to the Property in Akron, Ohio.
Due to the fact that the former tenant ceased operating the Property in May
1997, the general partners believe collection of this amount is doubtful. In
addition, the Partnership incurred real estate taxes relating to this Property
of approximately $5,800 and $3,400 for the six months ended June 30, 1997 and
1996, respectively. The increase in operating expenses during the six months
ended June 30, 1997, is partially offset by, and the decrease in operating
expenses during the quarter ended June 30, 1997, is partially attributable to a
decrease in accounting and administrative expenses associated with operating the
Partnership and its Properties.
9
<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 June 30, 1997.
10
<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 4th day of August, 1997.
CNL INCOME FUND XIV, 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 XIV, Ltd. at June 30, 1997, and its
statement of income for the six months then ended and is qualified in its
entirety by reference to the Form 10Q of CNL Income Fund XIV, Ltd. for the
six months ended June 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,465,585
<SECURITIES> 0
<RECEIVABLES> 1,532
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 26,811,017
<DEPRECIATION> 1,127,123
<TOTAL-ASSETS> 41,023,754
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 40,001,168
<TOTAL-LIABILITY-AND-EQUITY> 41,023,754
<SALES> 0
<TOTAL-REVENUES> 1,987,885
<CGS> 0
<TOTAL-COSTS> 305,017
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 14,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,821,691
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,821,691
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,821,691
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XIV, Ltd. has an
unclassified balance sheet; therefore, no values are shown above for
current assets and current liabilities.
</FN>
</TABLE>
