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 September 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
September 30, December 31,
ASSETS 1997 1996
------------- -----------
Land and buildings on operating
leases, less accumulated
depreciation of $740,210 and
$556,038 $22,206,529 $22,390,701
Net investment in direct
financing leases 9,287,156 9,351,815
Investment in joint ventures 2,565,712 2,624,620
Cash and cash equivalents 1,658,726 1,536,163
Receivables, less allowance for
doubtful accounts of $1,458 in 1996 - 30,176
Prepaid expenses 11,720 7,049
Organization costs, less
accumulated amortization
of $7,049 and $5,548 2,951 4,452
Accrued rental income 1,315,071 991,702
----------- -----------
$37,047,865 $36,936,678
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 2,554 $ 3,053
Escrowed real estate taxes
payable 3,664 8,581
Distributions payable 800,000 880,000
Due to related parties 9,276 1,355
Rents paid in advance 85,614 55,191
----------- -----------
Total liabilities 901,108 948,180
Partners' capital 36,146,757 35,988,498
----------- -----------
$37,047,865 $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 Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C>
Revenues:
Rental income from
operating leases $ 631,816 $ 631,816 $1,894,349 $1,889,364
Earned income from direct
financing leases 264,571 267,026 795,619 802,766
Interest and other income 15,534 17,798 45,595 45,274
---------- ---------- ---------- ----------
911,921 916,640 2,735,563 2,737,404
---------- ---------- ---------- ----------
Expenses:
General operating and
administrative 31,490 38,536 101,281 119,144
Professional services 5,077 5,470 15,189 15,183
Management fees to
related parties 8,847 8,772 26,312 26,246
State and other taxes - - 26,009 30,924
Depreciation and
amortization 62,099 62,070 186,248 186,163
---------- ---------- ---------- ----------
107,513 114,848 355,039 377,660
---------- ---------- ---------- ----------
Income Before Equity in
Earnings of Joint
Ventures 804,408 801,792 2,380,524 2,359,744
Equity in Earnings of
Joint Ventures 60,424 210,454 177,735 354,993
---------- ---------- ---------- ----------
Net Income $ 864,832 $1,012,246 $2,558,259 $2,714,737
========== ========== ========== ==========
Allocation of Net Income:
General partners $ 8,649 $ 10,122 $ 25,583 $ 27,147
Limited partners 856,183 1,002,124 2,532,676 2,687,590
---------- ---------- ---------- ----------
$ 864,832 $1,012,246 $2,558,259 $2,714,737
========== ========== ========== ==========
Net Income Per Limited
Partner Unit $ 0.21 $ 0.25 $ 0.63 $ 0.67
========== ========== ========== ==========
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
Nine Months Ended Year Ended
September 30, December 31,
1997 1996
----------------- ------------
General partners:
Beginning balance $ 83,062 $ 47,211
Net income 25,583 35,851
----------- -----------
108,645 83,062
----------- -----------
Limited partners:
Beginning balance 35,905,436 35,636,228
Net income 2,532,676 3,549,208
Distributions ($0.60 and
$0.82 per limited partner
unit, respectively) (2,400,000) (3,280,000)
----------- -----------
36,038,112 35,905,436
----------- -----------
Total partners' capital $36,146,757 $35,988,498
=========== ===========
See accompanying notes to condensed financial statements.
3
<PAGE>
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
1997 1996
----------- -----------
Increase (Decrease) in Cash and
Cash Equivalents:
Net Cash Provided by Operating
Activities $ 2,550,613 $ 2,580,751
----------- -----------
Cash Flows from Investing
Activities:
Investment in joint venture - (145,526)
Return of capital from
joint venture 51,950 23,087
----------- -----------
Net cash provided by
(used in) investing
activities 51,950 (122,439)
----------- -----------
Cash Flows from Financing
Activities:
Distributions to limited
partners (2,480,000) (2,400,000)
----------- -----------
Net cash used in financing
activities (2,480,000) (2,400,000)
----------- -----------
Net Increase in Cash and Cash
Equivalents 122,563 58,312
Cash and Cash Equivalents at
Beginning of Period 1,536,163 1,431,420
----------- -----------
Cash and Cash Equivalents at
End of Period $ 1,658,726 $ 1,489,732
=========== ===========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and
unpaid at end of period $ 800,000 $ 800,000
=========== ===========
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 Nine Months Ended September 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 nine months ended September 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 September 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 September 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 Nine Months Ended September 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:
September 30, December 31,
1997 1996
Land and buildings on
operating leases,
less accumulated
depreciation $5,593,102 $5,178,396
Cash 20,191 781
Restricted cash - 595,426
Accrued rental income 58,435 11,971
Receivables - 15,200
Other assets 1,016 15,263
Liabilities 27,508 33,238
Partners' capital 5,645,236 5,783,799
Revenues 481,876 643,646
Gain on sale of land
and buildings - 261,106
Net income 385,042 837,850
The Partnership recognized income totalling $177,735 and $354,993 for
the nine months ended September 30, 1997 and 1996, respectively, from
these joint ventures, $60,424 and $210,454 of which was earned for the
quarters ended September 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 September 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 nine months ended
September 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
$2,550,613 and $2,580,751 for the nine months ended September 30, 1997 and 1996,
respectively. The decrease in cash from operations for the nine months ended
September 30, 1997, as compared to the nine months ended September 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
nine months ended September 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 September
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 September 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 September 30,
1997, the Partnership had $1,658,726 invested in such short-term investments, as
compared to $1,536,163 at December 31, 1996. The funds remaining at September
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 $901,108 at September 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 decrease from the payment of the special distribution in
January 1997 was partially offset by an increase in rents paid in advance. 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 $2,400,000 for each of the nine months
ended September 30, 1997 and 1996 ($800,000 for each of the quarters ended
September 30, 1997 and 1996). This represents distributions of $0.60 per unit
for each applicable nine months ($0.20 per unit for each applicable quarter). No
distributions were made to the general partners for the quarters and nine months
ended September 30, 1997 and 1996. No amounts distributed or to be distributed
to the limited partners for the nine months ended September 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 nine months ended September 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 nine months ended September 30, 1997 and 1996, the Partnership earned
$2,689,968 and $2,692,130, respectively, in rental income from operating leases
and earned income from direct financing leases from these Properties, $896,387
and $898,842 of which was earned during the quarters ended September 30, 1997
and 1996, respectively.
8
<PAGE>
Results of Operations - Continued
During the nine months ended September 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 nine months ended September 30, 1996, the Partnership owned
one Property indirectly with affiliates of the general partners as
tenants-in-common. During the nine months ended September 30, 1997, the
Partnership owned and 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 nine months ended September 30,
1997 and 1996, the Partnership earned $177,735 and $354,993, respectively,
attributable to net income earned by these joint ventures, $60,424 and $210,454
of which was earned during the quarters ended September 30, 1997 and 1996,
respectively. The decrease in net income earned by joint ventures is primarily
attributable to the fact that in September 1996, Wood-Ridge Real Estate Joint
Venture, in which the Partnership owns a 50 percent interest, recognized a gain
of approximately $280,800 for financial reporting purposes as a result of the
sale of its two Properties in September 1996. Wood-Ridge Real Estate Joint
Venture reinvested the net sales proceeds from the sales of the two Properties
in five replacement Properties in October 1996, and acquired one additional
replacement Property in January 1997.
Operating expenses, including depreciation and amortization expense,
were $355,039 and $377,660 for the nine months ended September 30, 1997 and
1996, respectively, of which $107,513 and $114,848 were incurred for the
quarters ended September 30, 1997 and 1996, respectively. The decrease in
operating expenses during the quarter and nine months ended September 30, 1997,
as compared to the quarter and nine months ended September 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 September 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 10th day of November, 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 September 30, 1997, and its statement of
income for the nine months then ended and is qualified in its entirety by
reference to the Form 10Q of CNL Income Fund XV, Ltd. for the nine months ended
September 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,658,726
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 22,946,739
<DEPRECIATION> 740,210
<TOTAL-ASSETS> 37,047,865
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 36,146,757
<TOTAL-LIABILITY-AND-EQUITY> 37,047,865
<SALES> 0
<TOTAL-REVENUES> 2,735,563
<CGS> 0
<TOTAL-COSTS> 355,039
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,558,259
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,558,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,558,259
<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>
