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, 2000
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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
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CNL Income Fund XIV, Ltd.
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(Exact name of registrant as specified in its charter)
Florida 59-3143096
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801-3336
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
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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 5-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
Part II
Other Information 14-15
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------------- -------------------
<S> <C>
ASSETS
Land and buildings on operating leases, less
accumulated depreciation and allowance
for loss on building $ 24,376,618 $ 24,579,081
Net investment in direct financing leases 6,723,361 6,779,642
Investment in joint ventures 4,717,418 4,502,838
Cash and cash equivalents 1,510,870 1,543,691
Restricted cash -- 383,368
Receivables, less allowance for doubtful accounts
of $17,247 and $6,703, respectively 87,251 86,811
Due from related parties -- 5,040
Prepaid expenses 27,674 17,393
Lease costs, less accumulated amortization of
$5,198 and $3,548, respectively 27,802 29,452
Accrued rental income, less allowance for doubtful
accounts of $12,622 in 2000 and 1999 2,269,729 2,145,581
------------------- -------------------
$ 39,740,723 $ 40,072,897
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 42,939 $ 137,749
Accrued and escrowed real estate taxes payable 7,959 28,520
Distributions payable 928,130 928,130
Due to related parties 156,078 76,976
Rents paid in advance and deposits 68,063 67,196
------------------- -------------------
Total liabilities 1,203,169 1,238,571
Partners' capital 38,537,554 38,834,326
------------------- -------------------
$ 39,740,723 $ 40,072,897
=================== ===================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------ ------------- -------------- --------------
Revenues:
Rental income from operating leases $ 714,458 $ 728,592 $ 1,532,148 $ 1,425,474
Earned income from direct financing leases 183,152 222,341 358,915 421,507
Contingent rental income 1,418 1,918 1,418 11,841
Interest and other income 11,439 6,960 65,909 17,480
------------ ------------- -------------- --------------
910,467 959,811 1,958,390 1,876,302
------------ ------------- -------------- --------------
Expenses:
General operating and administrative 55,688 32,840 99,802 81,183
Professional services 9,819 9,792 23,785 17,576
Management fees to related party 9,378 9,928 20,453 19,472
Real estate taxes 2,021 457 2,021 5,331
State and other taxes -- 334 32,170 30,688
Depreciation and amortization 97,334 94,346 194,771 198,272
Transaction costs 26,619 85,038 77,526 118,213
------------ ------------- -------------- --------------
200,859 232,735 450,528 470,735
------------ ------------- -------------- --------------
Income Before Equity in Earnings (Losses) of Joint
Ventures, Loss on Sale of Land and Building
and Provision for Loss on Buildings 709,608 727,076 1,507,862 1,405,567
Equity in Earnings (Losses) of Joint Ventures (22,668 ) 95,136 61,484 188,822
Loss on Sale of Land and Building -- (60,882 ) -- (60,882 )
Provision for Loss on Buildings -- (60,325 ) (9,858 ) (121,207 )
------------ ------------- -------------- --------------
Net Income $ 686,940 $ 701,005 $ 1,559,488 $ 1,412,300
============ ============= ============== ==============
Allocation of Net Income:
General partners $ 6,869 $ 7,695 $ 15,644 $ 15,163
Limited partners 680,071 693,310 1,543,844 1,397,137
------------ ------------- -------------- --------------
$ 686,940 $ 701,005 $ 1,559,488 $ 1,412,300
============ ============= ============== ==============
Net Income Per Limited Partner Unit $ 0.15 $ 0.15 $ 0.34 $ 0.31
============ ============= ============== ==============
Weighted Average Number of Limited Partner
Units Outstanding 4,500,000 4,500,000 4,500,000 4,500,000
============ ============= ============== ==============
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Six Months Ended Year Ended
June 30, December 31,
2000 1999
----------------------- ------------------------
General partners:
Beginning balance $ 209,255 $ 177,733
Net income 15,644 31,522
----------------------- ------------------------
224,899 209,255
----------------------- ------------------------
Limited partners:
Beginning balance 38,625,071 39,297,991
Net income 1,543,844 3,039,600
Distributions ($0.41 and $0.83 per
limited partner unit, respectively) (1,856,260 ) (3,712,520 )
----------------------- ------------------------
38,312,655 38,625,071
----------------------- ------------------------
Total partners' capital $ 38,537,554 $ 38,834,326
======================= ========================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2000 1999
---------------- ---------------
Increase (Decrease ) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $1,830,221 $1,746,523
---------------- ---------------
Cash Flows from Investing Activities:
Proceeds from sale of land and building -- 696,300
Investment in joint ventures (390,878 ) (44,120 )
Decrease in restricted cash 384,096 --
Payment of lease costs -- (33,000 )
---------------- ---------------
Net cash provided by (used in)investing activities
(6,782 ) 619,180
---------------- ---------------
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
(32,821 ) 509,443
Cash and Cash Equivalents at Beginning of Period 1,543,691 949,056
---------------- ---------------
Cash and Cash Equivalents at End of Period $1,510,870 $1,458,499
================ ===============
Supplemental Schedule of Non-Cash Financing
Activities:
Distributions declared and unpaid at end of
period $ 928,130 $ 928,130
================ ===============
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
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, 2000, may not be indicative
of the results that may be expected for the year ending December 31,
2000. Amounts as of December 31, 1999, 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, 1999.
Certain items in the prior year's financial statements have been
reclassified to conform to 2000 presentation. These reclassifications
had no effect on partners' capital or net income.
2. Land and Building on Operating Leases:
Land and buildings on operating leases consisted of the following at:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
--------------------- --------------------
<S> <C>
Land $ 15,289,459 $ 15,289,459
Buildings 11,319,706 11,319,706
--------------------- --------------------
26,609,165 26,609,165
Less accumulated
depreciation (2,195,478 ) (2,002,873 )
--------------------- --------------------
24,413,687 24,606,292
Less allowance for
loss on building (37,069 ) (27,211 )
--------------------- --------------------
$ 24,376,618 $ 24,579,081
===================== ====================
</TABLE>
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
2. Land and Building on Operating Leases - Continued:
At December 31, 1999, the Partnership recorded a provision for loss on
building in the amount of $27,211 for financial reporting purposes
relating to the Long John Silver's property in Laurens, South Carolina.
The tenant of this property filed for bankruptcy and discontinued the
payment of rents. During the six months ended June 30, 2000, the
Partnership increased the provision for loss on building by $9,858. The
total allowance represented the difference between the carrying value
of the property at June 30, 2000 and the estimated net realizable value
of the property.
3. Investment in Joint Ventures:
In January 2000, the Partnership used the majority of the net sales
proceeds it received from the 1999 sale of a property in Houston,
Texas, in an interest in a Baker's Square property in Niles, Illinois,
with CNL Income Fund VI, Ltd., a Florida limited partnership and an
affiliate of the general partners, as tenants-in-common. In connection
therewith, the Partnership and the affiliate 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. The
Partnership accounts for its investment in this property using the
equity method since the Partnership shares control with an affiliate.
As of June 30, 2000, the Partnership owned a 26 percent interest in
this property.
During the six months ended June 30, 2000, the lease associated with
the property owned by Melbourne Joint Venture was amended to provide
for rent reductions due to financial difficulties the tenant was
experiencing. As a result, Melbourne Joint Venture reclassified the
building portion of the asset from net investment in direct financing
lease to land and building on operating leases. In accordance with the
Statement of Financial Accounting Standards #13, "Accounting for
Leases," Melbourne Joint Venture recorded the reclassified asset at the
lower of original cost, present fair value, or present carrying amount.
No loss on the reclassification of the direct financing lease was
recorded for financial reporting purposes. During the quarter and six
months ended June 30, 2000, the joint venture, in which the Partnership
has a 50 percent interest, recorded a provision for loss on building
totaling approximately $219,100 for financial reporting purposes due to
the fact that the operator of its property vacated the property and
discontinued operations. The allowance represented the difference
between the property's net carrying value at June 30, 2000 and the
estimated net realizable value of the property.
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
3. Investment in Joint Ventures - Continued:
The following presents the combined, condensed financial information
for the joint ventures and the property held as tenants-in-common with
an affiliate at:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------------- -------------------
<S> <C>
Land and buildings on operating leases, less accumulated
depreciation and allowance for loss on building $ 10,713,219 $ 8,588,997
Net investment in direct financing leases 354,126 990,480
Cash 83,071 31,188
Receivables -- 118,630
Accrued rental income 344,141 309,013
Other assets 18,591 20,817
Liabilities 417,885 82,684
Partners' capital 11,095,263 9,976,441
Revenues 544,722 895,295
Provision for loss on building (219,053) --
Net income 182,759 739,271
</TABLE>
The Partnership recognized income totalling $61,484 and $188,822 during
the six months ended June 30, 2000 and 1999, respectively, from these
joint ventures, and recognized a loss of $22,668 and income of $95,136
during the quarters ended June 30, 2000 and 1999, respectively.
4. Related Party Transactions:
During the six months ended June 30, 2000, the Partnership acquired a
26 percent interest in a property from CNL BB Corp., an affiliate of
the general partners, for which the property had a total purchase price
of $1,223,500. The property acquired during 2000 is being held as
tenants-in-common, with CNL Income Fund VI, Ltd. ("CNL VI"), a Florida
limited partnership, an affiliate of the general partners (see Note 3).
CNL BB Corp. had purchased and temporarily held title to this property
in order to facilitate the acquisition of the property by the
Partnership and CNL VI as tenants-in-common. The total purchase price
paid by the Partnership and CNL VI represented the costs incurred by
CNL BB Corp. to acquire and carry the property, including closing
costs. In accordance with the Statement of Policy of Real Estate
programs for the North American Securities
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
4. Related Party Transactions - Continued:
Administrators Association, Inc., all income, expenses, profits and
losses generated by or associated with the property, or interests
therein, purchased from an affiliate in which the affiliate has acted
as an interim owner, are treated as belonging to the Partnership and
CNL VI, as tenants-in-common. For the six months ended June 30, 2000,
other income includes $2,103 of such amounts.
5. Termination of Merger:
On March 1, 2000, the general partners and CNL American Properties
Fund, Inc. ("APF") mutually agreed to terminate the Agreement and Plan
of Merger entered into in March 1999. The general partners are
continuing to evaluate strategic alternatives for the Partnership,
including alternatives to provide liquidity to the limited partners.
<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 land 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
generally are triple-net leases, with the lessee responsible for all repairs and
maintenance, property taxes, insurance and utilities. As of June 30, 2000, the
Partnership owned 56 Properties, which included interests in 12 Properties owned
by joint ventures in which the Partnership is a co-venturer and one Property
owned with an affiliate as tenants-in-common.
Capital Resources
The Partnership's primary source of capital for the six months ended
June 30, 2000 and 1999 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 $1,830,221 and
$1,746,523 for the six months ended June 30, 2000 and 1999, respectively. The
increase in cash from operations for the six months ended June 30, 2000, as
compared to the six months ended June 30, 1999, was primarily a result changes
in the Partnership's working capital.
Other sources and uses of capital included the following during the six
months ended June 30, 2000.
In January 2000, the Partnership reinvested the majority of the net
sales proceeds from the 1999 sale of a Property in Houston, Texas in a Property
in Niles, Illinois, as tenants-in-common with CNL Income Fund VI, Ltd. ("CNL
VI"), an affiliate of the general partners. In connection therewith, the
Partnership and the affiliate 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. The Partnership and CNL VI acquired this
Property from CNL BB Corp., an affiliate of the general partners. The affiliate
had purchased and temporarily held title to the Property in order to facilitate
the acquisition of the Property by the Partnership and CNL VI. The purchase
price paid by the Partnership represented the costs incurred by the affiliate to
acquire the Property, including closing costs. The transaction, or a portion
thereof, relating to the sale of the Property in Houston, Texas, and the
reinvestment of the net sales proceeds in the Property in Niles, Illinois, as
tenants-in-common, was structured to qualify as a like-kind exchange transaction
for federal income tax purposes. As of June 30, 2000, the Partnership owned a 26
percent interest in the Property in Niles, Illinois.
Currently, rental income from the Partnership's Properties is invested
in money market accounts or other short-term, highly liquid investments such as
demand deposit accounts at commercial banks, certificates of deposit, and money
market accounts with less than a 30-day maturity date, pending the Partnership's
use of such funds to pay Partnership expenses or to make distributions to the
partners. At June 30, 2000, the Partnership had $1,510,870 invested in such
short-term investments, as compared to $1,543,691 at December 31, 1999. The
funds remaining at June 30, 2000 after payment of distributions and other
liabilities will be used to meet the Partnership's working capital and other
needs.
Short Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
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.
Total liabilities of the Partnership, including distributions payable,
decreased to $1,203,169 at June 30, 2000, from $1,238,571 at December 31, 1999.
The general partners believe the Partnership has sufficient cash on hand to meet
its current working capital needs.
The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership, to the extent that
the general partners determine that such funds are available for distribution.
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, 2000 and 1999 ($928,130 for each of the quarters ended
June 30, 2000 and 1999). 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, 2000 and 1999. No amounts distributed to the limited partners for
the six months ended June 30, 2000 and 1999 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.
Long Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During the six months ended June 30, 1999, the Partnership owned and
leased 47 wholly owned Properties (including four Properties which were sold in
1999) and during the six months ended June 30, 2000, the Partnership owned and
leased 43 wholly owned Properties to operators of fast food and family style
restaurant chains. In connection therewith, during the six months ended June 30,
2000 and 1999, the Partnership earned $1,891,063 and $1,846,981, respectively,
in rental income from operating leases and earned income from direct financing
leases from these Properties, $897,610 and $950,933 of which was earned during
the quarter ended June 30, 2000 and 1999, respectively. The increase in rental
and earned income during the six months ended June 30, 2000, as compared to the
six months ended June 30, 1999, was partially due to the fact that during the
six months ended June 30, 2000, the Partnership collected and recognized as
income approximately $100,900 in past due rental amounts relating to Long John
Silver's, Inc., which filed for bankruptcy during 1998 and rejected the leases
relating to five Properties. As of June 30, 2000, the Partnership had entered
into new leases, each with a new tenant, for two of the five Properties, had
sold two of the Properties and had one Property that remained vacant. In August
1999, Long John Silver's Inc. assumed and affirmed its four remaining leases,
and the Partnership has continued receiving rental payments relating to these
four leases. The Partnership will not recognize any rental and earned income
from this remaining vacant Property until a replacement tenant is located, or
until the Property is sold and the proceeds from the sale are reinvested in an
additional Property.
The increase in rental and earned income during the six months ended
June 30, 2000, was partially offset by, and the decrease during the quarter
ended June 30, 2000, as compared to the quarter ended June 30, 1999, was
partially attributable to, the fact that the Partnership sold two Properties
during 1999. The proceeds from these sales were subsequently reinvested in
Duluth Joint Venture in December 1999 and in a Property held as
tenants-in-common in January 2000, as described above in "Capital Resources." In
addition, the increase during the six months ended June 30, 2000, was partially
offset by a decrease in rental and earned income due to the fact that the
Partnership established an allowance for doubtful accounts of approximately
$14,500 for past due rental amounts relating to its Property in Tempe, Arizona,
in accordance with the Partnership's policy. The general partners will continue
to pursue collection of past due rental amounts relating to this Property and
will recognize such amounts as income if collected.
During the six months ended June 30, 2000 and 1999, the Partnership
also earned $1,418 and $11,841, respectively, in contingent rental income,
$1,418 and $1,918 of which was earned during the quarters ended June 20, 2000
and 1999, respectively. The decrease in contingent rental income during the six
months ended June 30, 2000 as compared to the six months ended June 30, 1999,
was primarily attributable to a decrease in gross sales of certain restaurant
Properties, the leases of which require the payment of contingent rental income.
In addition, during the six months ended June 30, 2000 and 1999, the
Partnership earned $65,909 and $17,480, respectively, in interest and other
income, $11,439 and $6,960 of which was earned during the quarters ended June
30, 2000 and 1999, respectively. Interest and other income was higher during the
quarter and six months ended June 30, 2000 than that earned during the quarter
and six months ended June 30, 1999, primarily due to the fact that during the
quarter and six months ended June 30, 2000, the Partnership earned interest on
the net sales proceeds relating to the sale of several Properties during 1999,
pending reinvestment in additional Properties. As of June 30, 2000, these net
sales proceeds had been reinvested, as described above.
During the six months ended June 30, 1999, the Partnership owned and
leased ten Properties indirectly through joint venture arrangements. During the
six months ended June 30, 2000, the Partnership owned two additional Properties
indirectly through joint venture agreements and one Property with an affiliate
as tenants-in-common. In connection therewith, during the six months ended June
30, 2000 and 1999, the Partnership earned $61,484 and $188,822, respectively,
and recorded a loss of $22,668 and income of $95,136 during the quarters ended
June 30, 2000 and 1999, respectively. The decrease in net income earned by joint
ventures during the quarter and six months ended June 30, 2000, as compared to
the quarter and six months ended June 30, 1999, was primarily due to the fact
that the lease relating to the Property held by Melbourne Joint Venture, in
which the Partnership owns a 50 percent interest, was amended to provide for
rent reductions starting in February 2000. In June 2000, the operator of this
Property vacated the Property and discontinued operations. As a result, during
the quarter and six months ended June 30, 2000, the joint venture established an
allowance for doubtful accounts for past due rental amounts. The joint venture
will continue to pursue collection of past due rental amounts and will recognize
such amounts as income if collected. The joint venture will not recognize any
rental income relating to this Property until such time as a new lease is
executed or until the Property is sold and the proceeds from such sale are
reinvested in an additional Property. The joint venture is currently seeking a
new tenant or purchaser for this Property. In addition, the joint venture
established an allowance for loss on building for this Property of approximately
$219,100. The allowance represented the difference between the Property's net
carrying value at June 30, 2000, and the current estimated net realizable value
of the Property.
Operating expenses, including depreciation and amortization expense,
were $450,528 and $470,735 during the six months ended June 30, 2000 and 1999,
respectively, of which $200,859 and $232,735 were incurred during the quarters
ended June 30, 2000 and 1999, respectively. The decrease in operating expenses
during the quarter and six months ended June 30, 2000, as compared to the
quarter and six months ended June 30, 1999, was primarily attributable to the
fact that the Partnership incurred less transaction costs related to the general
partners retaining financial and legal advisors to assist them in evaluating and
negotiating the proposed merger with CNL American Properties Fund, Inc. ("APF")
due to the termination of the proposed merger, as described below in
"Termination of Merger". The decrease in operating expenses during the quarter
and six months ended June 30, 2000, was partially offset by an increase in
administrative expenses for servicing the Partnership and its Properties.
As a result of the sale of the Property in Stockbridge, Georgia, the
Partnership recognized a loss of $60,882 for financial reporting purposes during
the quarter ended June 30, 1999.
During the six months ended June 30, 2000, the Partnership recorded a
provision for loss on building of $9,858 for financial reporting purposes
relating to the Long John Silver's Property in Laurens, South Carolina, the
lease for which was rejected by the tenant. The allowance represented the
difference between the carrying value of the Property at June 30, 2000 and the
estimated net realizable value of the Property. In addition, during the quarter
ended June 30, 1999, the Partnership recorded a provision for loss on building
of $121,207 for financial reporting purposes relating to a Long John Silver's
Property in Shelby, North Carolina, the lease for which was rejected by the
tenant. The allowance represented the difference between the carrying value of
the Property at June 30, 1999 and the estimated realizable value of the
Property. The tenant of these Properties filed for bankruptcy during 1998 and
discontinued payment of rents under the terms of its lease agreements.
Termination of Merger
On March 1, 2000, the general partners and APF mutually agreed to
terminate the Agreement and Plan of Merger (the "Merger") entered into in March
1999. The general partners are continuing to evaluate strategic alternatives for
the Partnership, including alternatives to provide liquidity to the limited
partners.
Dismissal of Legal Action
As described in greater detail in Part II, Item 1. "Legal Proceedings"
in 1999, two groups of limited partners in several CNL Income Funds filed
purported class action suits against the general partners and APF alleging,
among other things, that the general partners had breached their fiduciary
duties in connection with the proposed merger. These actions were later
consolidated into one action. On April 25, 2000, the judge in the consolidated
action issued an order dismissing the action without prejudice, with each party
to bear its own costs and attorneys' fees.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On May 11, 1999, four limited partners in several CNL Income Funds
served a derivative and purported class action lawsuit filed April
22, 1999 against the general partners and APF in the Circuit Court
of the Ninth Judicial Circuit of Orange County, Florida, alleging
that the general partners breached their fiduciary duties and
violated provisions of certain of the CNL Income Fund partnership
agreements in connection with the proposed merger. The plaintiffs
sought unspecified damages and equitable relief. On July 8, 1999,
the plaintiffs filed an amended complaint which, in addition to
naming three additional plaintiffs, included allegations of aiding
and abetting and conspiring to breach fiduciary duties, negligence
and breach of duty of good faith against certain of the defendants
and sought additional equitable relief. As amended, the caption of
the case was Jon Hale, Mary J. Hewitt, Charles A. Hewitt, Gretchen
M. Hewitt, Bernard J. Schulte, Edward M. and Margaret Berol Trust,
and Vicky Berol v. James M. Seneff, Jr., Robert A. Bourne, CNL
Realty Corporation, and CNL American Properties Fund, Inc., Case
No. CIO-99-0003561.
On June 22, 1999, a limited partner of several CNL Income Funds
served a purported class action lawsuit filed April 29, 1999
against the general partners and APF, Ira Gaines, individually and
on behalf of a class of persons similarly situated, v. CNL
American Properties Fund, Inc., James M. Seneff, Jr., Robert A.
Bourne, CNL Realty Corporation, CNL Fund Advisors, Inc., CNL
Financial Corporation a/k/a CNL Financial Corp., CNL Financial
Services, Inc. and CNL Group, Inc., Case No. CIO-99-3796, in the
Circuit Court of the Ninth Judicial Circuit of Orange County,
Florida, alleging that the general partners breached their
fiduciary duties and that APF aided and abetted their breach of
fiduciary duties in connection with the proposed merger. The
plaintiff sought unspecified damages and equitable relief.
On September 23, 1999, Judge Lawrence Kirkwood entered an order
consolidating the two cases under the caption In re: CNL Income
Funds Litigation, Case No. 99-3561. Pursuant to this order, the
plaintiffs in these cases filed a consolidated and amended
complaint on November 8, 1999. On December 22, 1999, the general
partners and CNL Group, Inc. filed motions to dismiss and motions
to strike. On December 28, 1999, APF and CNL Fund Advisors, Inc.
filed motions to dismiss. On March 6, 2000, all of the defendants
filed a Joint Notice of Filing Form 8-K Reports and Suggestion of
Mootness.
On April 25, 2000, Judge Kirkwood issued a Stipulated Final Order
of Dismissal of Consolidated Action, dismissing the action without
prejudice, with each party to bear its own costs and attorneys'
fees.
Item 2. Changes in Securities. Inapplicable.
Item 3. Default 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
3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XIV, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-53672-01 on Form
S-11 and incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XIV, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-53672-01 on Form
S-11 and incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited
Partnership of CNL Income Fund XIV, Ltd. (Included
as Exhibit 4.2 to Form 10-K filed with the
Securities and Exchange Commission on April 13,
1994, incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund XIV,
Ltd. and CNL Investment Company (Included as Exhibit
10.1 to Form 10-K filed with the Securities and
Exchange Commission on April 13, 1994, 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.)
<PAGE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 2000.
<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 10th day of August, 2000
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)
