FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
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
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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
March 31, December 31,
ASSETS 1997 1996
----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $617,428 and
$556,038 $22,329,311 $22,390,701
Net investment in direct
financing leases 9,330,891 9,351,815
Investment in joint ventures 2,574,609 2,624,620
Cash and cash equivalents 1,578,498 1,536,163
Receivables, less allowance for
doubtful accounts of $1,458 in 1996 478 30,176
Prepaid expenses 9,341 7,049
Organization costs, less
accumulated amortization
of $6,049 and $5,548 3,951 4,452
Accrued rental income 1,099,556 991,702
----------- -----------
$36,926,635 $36,936,678
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 22,582 $ 3,053
Escrowed real estate taxes
payable 4,776 8,581
Distributions payable 800,000 880,000
Due to related parties 3,254 1,355
Rents paid in advance 66,665 55,191
----------- -----------
Total liabilities 897,277 948,180
Partners' capital 36,029,358 35,988,498
----------- -----------
$36,926,635 $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
Quarter Ended
March 31,
1997 1996
---------- ----------
Revenues:
Rental income from operating leases $ 630,718 $ 625,733
Earned income from direct financing
leases 265,835 268,146
Interest and other income 14,366 13,973
---------- ----------
910,919 907,852
---------- ----------
Expenses:
General operating and administrative 31,804 39,648
Professional services 5,138 5,177
Management fees to related parties 8,724 8,702
State and other taxes 19,960 19,047
Depreciation and amortization 62,069 62,025
---------- ----------
127,695 134,599
---------- ----------
Income Before Equity in Earnings of
Joint Ventures 783,224 773,253
Equity in Earnings of Joint Ventures 57,636 71,374
---------- ----------
Net Income $ 840,860 $ 844,627
========== ==========
Allocation of Net Income:
General partners $ 8,409 $ 8,446
Limited partners 832,451 836,181
---------- ----------
$ 840,860 $ 844,627
========== ==========
Net Income Per Limited Partner Unit $ 0.21 $ 0.21
========== ==========
Weighted Average Number of Limited
Partner Units Outstanding 4,000,000 4,000,000
========== ==========
See accompanying notes to condensed financial statements
2
<PAGE>
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Quarter Ended Year Ended
March 31, December 31,
1997 1996
------------- ------------
General partners:
Beginning balance $ 83,062 $ 47,211
Net income 8,409 35,851
----------- -----------
91,471 83,062
----------- -----------
Limited partners:
Beginning balance 35,905,436 35,636,228
Net income 832,451 3,549,208
Distributions ($0.20 and
$0.82 per limited partner
unit, respectively) (800,000) (3,280,000)
----------- -----------
35,937,887 35,905,436
----------- -----------
Total partners' capital $36,029,358 $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
Quarter Ended
March 31,
1997 1996
---------- ----------
Increase (Decrease) in Cash and
Cash Equivalents:
Net Cash Provided by Operating
Activities $ 868,261 $ 892,021
---------- ----------
Cash Flows from Investing Activities:
Investment in joint venture - (142,843)
Return of capital from
joint venture 54,074 -
---------- ----------
Net cash provided by (used in)
investing activities 54,074 (142,843)
---------- ----------
Cash Flows from Financing Activities:
Distributions to limited
partners (880,000) (800,000)
---------- ----------
Net cash used in financing
activities (880,000) (800,000)
---------- ----------
Net Increase (Decrease) in Cash
and Cash Equivalents 42,335 (50,822)
Cash and Cash Equivalents at
Beginning of Quarter 1,536,163 1,431,420
---------- ----------
Cash and Cash Equivalents at
End of Quarter $1,578,498 $1,380,598
========== ==========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and
unpaid at end of quarter $ 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 Ended March 31, 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 ended March 31, 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 the two
properties in September 1996, in a Taco Bell property in Anniston,
Alabama. In March 1997, the Partnership and the other joint venture
partner each received approximately $54,100, representing a return of
capital, for the remaining unreinvested net sales proceeds. As of March
31, 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 Ended March 31, 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:
March 31, December 31,
1997 1996
---------- ------------
Land and buildings on
operating leases,
less accumulated
depreciation $5,651,864 $5,178,396
Cash 32,975 781
Restricted cash - 595,426
Accrued rental income 27,303 11,971
Receivables 122 15,200
Other assets - 15,263
Prepaid expenses 31 -
Liabilities 37,905 33,238
Partners' capital 5,674,390 5,783,799
Revenues 156,591 643,646
Gain on sale of land
and buildings - 261,106
Net income 122,565 837,850
The Partnership recognized income totalling $57,636 and $71,374 for the
quarters ended March 31, 1997 and 1996, respectively, from these joint
ventures.
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 March 31, 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 quarters ended
March 31, 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 $868,261 and
$892,021 for the quarters ended March 31, 1997 and 1996, respectively. The
decrease in cash from operations for the quarter ended March 31, 1997, as
compared to the quarter ended March 31, 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
quarter ended March 31, 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. In March 1997,
the Partnership and the other joint venture partner each received approximately
$54,100, representing a return of capital, for the remaining unreinvested net
sales proceeds. As of March 31, 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 March 31,
1997, the Partnership had $1,578,498 invested in such short-term investments, as
compared to $1,536,163 at December 31, 1996. The funds remaining at March 31,
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 $897,277 at March 31, 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 in total liabilities was partially offset by an
increase in rents paid in advance and accrued state taxes during the quarter
ended March 31, 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 $800,000 for each of the quarters ended
March 31, 1997 and 1996. This represents distributions of $0.20 per unit for
each of the quarters ended March 31, 1997 and 1996. No distributions were made
to the general partners for the quarters ended March 31, 1997 and 1996. No
amounts distributed or to be distributed to the limited partners for the
quarters ended March 31, 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 quarters ended March 31, 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 quarters ended March 31, 1997 and 1996, the Partnership earned $896,553 and
$893,879, respectively, in rental income from operating leases and earned income
from direct financing leases from these Properties.
During the quarter ended March 31, 1996, the Partnership owned and
leased two Properties indirectly through joint venture arrangements in
Wood-Ridge Real Estate Joint Venture, which were sold in September 1996. In
addition, during the quarter ended March 31, 1996, the Partnership owned one
Property indirectly with affiliates of the general partners as
tenants-in-common. During the quarter ended March 31, 1997, the Partnership
owned and leased seven Properties indirectly through joint venture arrangements
and
8
<PAGE>
Results of Operations - Continued
one Property as tenants-in-common with affiliates of the general partner. In
connection therewith, during the quarters ended March 31, 1997 and 1996, the
Partnership earned $57,636 and $71,374, respectively, attributable to net income
earned by these joint ventures. 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 $127,695 and $134,599 for the quarters ended March 31, 1997 and 1996,
respectively. The decrease in operating expenses during the quarter ended March
31, 1997, as compared to the quarter ended March 31, 1996, is primarily
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 March 31, 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 9th day of May, 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 March 31, 1997, and
its statement of income for the three months then ended and is qualified
in its entirety by reference to the Form 10-Q of CNL Income Fund XV, Ltd.
for the three months ended March 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,578,498
<SECURITIES> 0
<RECEIVABLES> 478
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 22,946,739
<DEPRECIATION> 617,428
<TOTAL-ASSETS> 36,926,635
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 36,029,358
<TOTAL-LIABILITY-AND-EQUITY> 36,926,635
<SALES> 0
<TOTAL-REVENUES> 910,919
<CGS> 0
<TOTAL-COSTS> 127,695
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 840,860
<INCOME-TAX> 0
<INCOME-CONTINUING> 840,860
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 840,860
<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>
