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
0-26216
CNL Income Fund XV, Ltd.
(Exact name of registrant as specified in its charter)
Florida 59-3198888
(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 XV, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
June 30, December 31,
ASSETS 1997 1996
----------- --------
Land and buildings on operating
leases, less accumulated
depreciation of $678,819 and
$556,038 $22,267,920 $22,390,701
Net investment in direct
financing leases 9,309,344 9,351,815
Investment in joint ventures 2,572,022 2,624,620
Cash and cash equivalents 1,581,736 1,536,163
Receivables, less allowance for
doubtful accounts of $1,458 in 1996 2,375 30,176
Prepaid expenses 13,526 7,049
Organization costs, less
accumulated amortization
of $6,549 and $5,548 3,451 4,452
Accrued rental income 1,207,362 991,702
----------- -----------
$36,957,736 $36,936,678
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 2,846 $ 3,053
Escrowed real estate taxes
payable 5,188 8,581
Distributions payable 800,000 880,000
Due to related parties 2,110 1,355
Rents paid in advance 65,667 55,191
----------- -----------
Total liabilities 875,811 948,180
Partners' capital 36,081,925 35,988,498
----------- -----------
$36,957,736 $36,936,678
=========== ===========
See accompanying notes to condensed financial statements.
1
<PAGE>
CNL INCOME FUND XV, 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 $ 631,815 $ 631,815 $1,262,533 $1,257,548
Earned income from direct
financing leases 265,213 267,594 531,048 535,740
Interest and other income 15,695 13,503 30,061 27,476
---------- ---------- ---------- ----------
912,723 912,912 1,823,642 1,820,764
---------- ---------- ---------- ----------
Expenses:
General operating and
administrative 37,987 40,960 69,791 80,608
Professional services 4,974 4,536 10,112 9,713
Management fees to
related parties 8,741 8,772 17,465 17,474
State and other taxes 6,049 11,877 26,009 30,924
Depreciation and
amortization 62,080 62,068 124,149 124,093
---------- ---------- ---------- ----------
119,831 128,213 247,526 262,812
---------- ---------- ---------- ----------
Income Before Equity in
Earnings of Joint
Ventures 792,892 784,699 1,576,116 1,557,952
Equity in Earnings of
Joint Ventures 59,675 73,165 117,311 144,539
---------- ---------- ---------- ----------
Net Income $ 852,567 $ 857,864 $1,693,427 $1,702,491
========== ========== ========== ==========
Allocation of Net Income:
General partners $ 8,525 $ 8,579 $ 16,934 $ 17,025
Limited partners 844,042 849,285 1,676,493 1,685,466
---------- ---------- ---------- ----------
$ 852,567 $ 857,864 $1,693,427 $1,702,491
========== ========== ========== ==========
Net Income Per Limited
Partner Unit $ 0.21 $ 0.21 $ 0.42 $ 0.42
========== ========== ========== ==========
Weighted Average Number
of Limited Partner
Units Outstanding 4,000,000 4,000,000 4,000,000 4,000,000
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed financial statements
2
<PAGE>
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Quarter Ended Year Ended
June 30, December 31,
1997 1996
------------- -----------
<S> <C>
General partners:
Beginning balance $ 83,062 $ 47,211
Net income 16,934 35,851
----------- -----------
99,996 83,062
----------- -----------
Limited partners:
Beginning balance 35,905,436 35,636,228
Net income 1,676,493 3,549,208
Distributions ($0.40 and
$0.82 per limited partner
unit, respectively) (1,600,000) (3,280,000)
----------- -----------
35,981,929 35,905,436
----------- -----------
Total partners' capital $36,081,925 $35,988,498
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements
3
<PAGE>
CNL INCOME FUND XV, 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 $ 1,673,623 $ 1,687,927
----------- -----------
Cash Flows from Investing
Activities:
Investment in joint venture - (145,526)
Return of capital from
joint venture 51,950 -
----------- ----------
Net cash provided by
(used in) investing
activities 51,950 (145,526)
----------- -----------
Cash Flows from Financing
Activities:
Distributions to limited
partners (1,680,000) (1,600,000)
----------- -----------
Net cash used in financing
activities (1,680,000) (1,600,000)
----------- -----------
Net Increase (Decrease) in Cash
and Cash Equivalents 45,573 (57,599)
Cash and Cash Equivalents at
Beginning of Period 1,536,163 1,431,420
----------- -----------
Cash and Cash Equivalents at
End of Period $ 1,581,736 $ 1,373,821
=========== ===========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and
unpaid at end of period $ 800,000 $ 800,000
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
CNL INCOME FUND XV, 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 XV, Ltd. (the "Partnership") for the year ended December
31, 1996.
2. Investment in Joint Ventures:
In January 1997, Wood-Ridge Real Estate Joint Venture reinvested
$502,598 of the remaining net sales proceeds from the sale of 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 XV, 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 Ventures - Continued:
The following presents the combined, condensed financial information
for all of the Partnership's investments in joint ventures at:
June 30, December 31,
1997 1996
Land and buildings on
operating leases,
less accumulated
depreciation $5,622,483 $5,178,396
Cash 4,638 781
Restricted cash - 595,426
Accrued rental income 42,869 11,971
Receivables - 15,200
Other assets - 15,263
Prepaid expenses 1,050 -
Liabilities 9,848 33,238
Partners' capital 5,661,192 5,783,799
Revenues 319,144 643,646
Gain on sale of land
and buildings - 261,106
Net income 252,943 837,850
The Partnership recognized income totalling $117,311 and $144,539 for
the six months ended June 30, 1997 and 1996, respectively, from these
joint ventures, $59,675 and $73,165 of which was earned for the
quarters ended June 30, 1997 and 1996, respectively.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CNL Income Fund XV, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on September 2, 1993, 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 lessee responsible for all repairs and
maintenance, property taxes, insurance and utilities. As of June 30, 1997, the
Partnership owned 49 Properties, including interests in six Properties owned by
a joint venture in which the Partnership is a co-venturer and one Property owned
with affiliates as tenants-in-common.
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 $1,673,623 and
$1,687,927 for the six months ended June 30, 1997 and 1996, respectively. The
decrease 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 income and expenses as discussed in "Results of Operations" below and 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 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 are 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 June 30, 1997,
the Partnership had $1,581,736 invested in such short-term investments, as
compared to $1,536,163 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.
7
<PAGE>
Liquidity and Capital Resources - Continued
Total liabilities of the Partnership, including distributions payable,
decreased to $875,811 at June 30, 1997, from $948,180 at December 31, 1996,
primarily as a result of the Partnership's accruing a special distribution
payable to the limited partners of $80,000 at December 31, 1996, which was paid
in January 1997. The general partners believe that the Partnership has
sufficient cash on hand to meet its current working capital needs.
Based primarily on cash from operations, the Partnership declared
distributions to the limited partners of $1,600,000 for each of the six months
ended June 30, 1997 and 1996 ($800,000 for each of the quarters ended June 30,
1997 and 1996). This represents distributions of $0.40 per unit for each
applicable six months ($0.20 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
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 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 42 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 $1,793,581
and $1,793,288, respectively, in rental income from operating leases and earned
income from direct financing leases from these Properties, $897,028 and $899,409
of which was earned during the quarters ended June 30, 1997 and 1996,
respectively.
During the six months ended June 30, 1996, the Partnership owned and
leased two Properties indirectly, through a joint venture arrangement in
Wood-Ridge Real Estate Joint Venture, which were sold in September 1996. In
addition, during the six months ended June 30, 1996, the Partnership owned one
Property indirectly with affiliates of the general partners as
tenants-in-common. During the six months ended June 30, 1997, the Partnership
owned and
8
<PAGE>
Results of Operations - Continued
leased six Properties indirectly through the joint venture arrangement and one
Property as tenants-in-common with affiliates of the general partner. In
connection therewith, during the six months ended June 30, 1997 and 1996, the
Partnership earned $117,311 and $144,539, respectively, attributable to net
income earned by these joint ventures, $59,675 and $73,165 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 $247,526 and $262,812 for the six months ended June 30, 1997 and 1996,
respectively, of which $119,831 and $128,213 were incurred for the quarters
ended June 30, 1997 and 1996, respectively. The decrease in operating expenses
during the quarter and six months ended June 30, 1997, as compared to the
quarter and six months ended June 30, 1996, 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 6th day of August, 1997.
CNL INCOME FUND XV, 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 XV, 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 XV, 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> 1,581,736
<SECURITIES> 0
<RECEIVABLES> 2,375
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 22,946,739
<DEPRECIATION> 678,819
<TOTAL-ASSETS> 36,957,736
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 36,081,925
<TOTAL-LIABILITY-AND-EQUITY> 36,957,736
<SALES> 0
<TOTAL-REVENUES> 1,823,642
<CGS> 0
<TOTAL-COSTS> 247,526
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,693,427
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,693,427
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,693,427
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XV, LTD has an unclassified
balance sheet, therefore, no values are shown above for current assets and
current liabilities.
</FN>
</TABLE>
