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, 1998
-------------------------------------------------------
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
0-22485
----------------------------
CNL Income Fund XVII, Ltd.
----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-3295393
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
400 E. South Street
Orlando, Florida 32801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 650-1000
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 4-5
Notes to Condensed Financial Statements 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 8-12
Part II
Other Information 13
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
----------------- ------------------
<S> <C>
ASSETS
Land and buildings on operating leases, less
accumulated depreciation of $818,692
and $553,968 $20,741,467 $21,328,869
Net investment in direct financing leases 2,988,761 3,056,783
Investment in joint ventures 1,448,628 1,328,067
Cash and cash equivalents 1,462,427 1,238,799
Receivables, less allowance for doubtful
accounts of $14,333 in 1997 22,200 613
Prepaid expenses 7,219 20
Organization costs, less accumulated
amortization of $5,809 and $4,309 4,191 5,691
Accrued rental income 573,632 357,246
Other assets 119,765 104,391
----------------- -----------------
$27,368,290 $27,420,479
================= =================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 2,868 $ 2,922
Accrued construction costs payable -- 38,834
Accrued real estate taxes payable 20,645 --
Distributions payable 600,000 600,000
Due to related parties 3,362 2,875
Rents paid in advance 41,300 55,762
Deferred rental income 52,021 64,690
----------------- -----------------
Total liabilities 720,196 765,083
Minority interest 429,452 419,193
Partners' capital 26,218,642 26,236,203
----------------- -----------------
$27,368,290 $27,420,479
================= =================
</TABLE>
See accompanying notes to financial statements.
1
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------------ ------------- -------------- --------------
<S> <C>
Revenues:
Rental income from operating
leases $ 604,073 $ 620,623 $ 1,832,554 $ 1,726,684
Earned income from direct
financing leases 93,834 94,807 282,256 224,912
Interest and other income 11,128 8,372 36,667 58,641
------------ ------------ -------------- --------------
709,035 723,802 2,151,477 2,010,237
------------ ------------ -------------- --------------
Expenses:
General operating and
administrative 29,293 26,636 86,909 101,337
Professional services 4,393 6,530 15,022 16,595
Real estate taxes 20,645 -- 20,645 --
Management fees to related parties 6,604 6,655 19,966 18,844
State and other taxes 7 -- 11,811 6,442
Depreciation and amortization 96,125 100,107 273,084 288,145
------------ ------------ -------------- --------------
157,067 139,928 427,437 431,363
------------ ------------ -------------- --------------
Income Before Minority Interest in
Income of Consolidated Joint
Venture and Equity in Earnings of
Unconsolidated Joint Ventures 551,968 583,874 1,724,040 1,578,874
Minority Interest in Income of
Consolidated Joint Venture (15,703 ) (15,697 ) (46,922 ) (26,129 )
Equity in Earnings of Unconsolidated
Joint Ventures 35,536 26,437 105,321 71,795
------------ ------------ -------------- --------------
Net Income $ 571,801 $ 594,614 $ 1,782,439 $ 1,624,540
============ ============ ============== ==============
Allocation of Net Income:
General partners $ (282) $ (54) $ (176) $ (630)
Limited partners 572,083 594,668 1,782,615 1,625,170
------------ ------------ -------------- --------------
$ 571,801 $ 594,614 $ 1,782,439 $ 1,624,540
============ ============ ============== ==============
Net Income Per Limited Partner Unit $ 0.19 $ 0.20 $ 0.59 $ 0.54
============ ============ ============== ==============
Weighted Average Number of Limited
Partner Units Outstanding 3,000,000 3,000,000 3,000,000 3,000,000
============ ============ ============== ==============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
CNL INCOME FUND XVII LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1998 1997
---------------------------- ------------------
<S> <C>
General partners:
Beginning balance $ (551) $ 288
Net income (176 ) (839 )
---------------- ---------------
(727 ) (551 )
---------------- ---------------
Limited partners:
Beginning balance 26,236,754 26,319,858
Net income 1,782,615 2,204,396
Distributions ($0.60 and
$0.76 per limited partner
unit, respectively) (1,800,000 ) (2,287,500 )
---------------- ---------------
26,219,369 26,236,754
---------------- ---------------
Total partners' capital $26,218,642 $26,236,203
================ ===============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
--------------- ---------------
<S> <C>
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating Activities $ 1,881,998 $ 1,912,554
---------------- ---------------
Cash Flows from Investing Activities:
Additions to land and buildings on
operating leases 306,100 (1,978,420 )
Investment in direct financing leases -- (1,130,497 )
Investment in joint ventures (127,807 ) (1,050,402 )
---------------- ---------------
Net cash provided by (used in)
investing activities 178,293 (4,159,319 )
---------------- ---------------
Cash Flows from Financing Activities:
Reimbursement of acquisition costs
paid by related parties on behalf
of the Partnership -- (25,434 )
Contributions from minority interest -- 278,170
Distributions to limited partners (1,800,000 ) (1,577,584 )
Distribution to holder of minority interest (36,663 ) (29,184 )
---------------- ---------------
Net cash used in financing activities (1,836,663 ) (1,354,032 )
---------------- ---------------
Net Increase (Decrease) in Cash and Cash
Equivalents 223,628 (3,600,797 )
Cash and Cash Equivalents at Beginning
of Period 1,238,799 4,716,719
---------------- ---------------
Cash and Cash Equivalents at End of
Period $ 1,462,427 $ 1,115,922
================ ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
--------------- ----------------
<S> <C>
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Related parties paid certain
acquisition costs on behalf of
the Partnership as follows: $ -- $ 11,253
=============== ===============
Land and building under operating
lease exchanged for land and
building under operating lease $ 899,654 $ --
=============== ===============
Distributions declared and unpaid at
end of period $ 600,000 $ 600,000
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine months Ended September 30, 1998 and 1997
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, 1998, may not be
indicative of the results that may be expected for the year ending
December 31, 1998. Amounts as of December 31, 1997, 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 XVII, Ltd. (the "Partnership") for the year ended December
31, 1997.
The Partnership accounts for its 80 percent interest in the accounts of
CNL/GC El Cajon Joint Venture using the consolidation method. Minority
interest represents the minority joint venture partner's proportionate
share of the equity in the Partnership's consolidated joint venture.
All significant intercompany accounts and transactions have been
eliminated.
Certain items in the prior year's financial statements have been
reclassified to conform to 1998 presentation. These reclassifications
had no effect on partners' capital or net income.
In May 1998, the Financial Accounting Standards Board reached a
consensus in EITF 98-9, entitled "Accounting for Contingent Rent in the
Interim Financial Periods." Adoption of this consensus did not have a
material effect on the Partnership's financial position or results of
operations.
6
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine months Ended September 30, 1998 and 1997
2. Land and Buildings on Operating Leases:
In June 1998, the tenant of the property in Troy, Ohio, exercised its
option under the terms of its lease agreement to substitute the
existing property for a replacement property. In conjunction therewith,
the Partnership exchanged the property in Troy, Ohio, with a property
in Inglewood, California. The lease for the property in Troy, Ohio, was
amended to allow the property in Inglewood, California to continue
under the terms of the original lease. All closing costs were paid by
the tenant. The Partnership accounted for this as a nonmonetary
exchange of similar assets and recorded the acquisition of the property
in Inglewood, California, at the net book value of the property in
Troy, Ohio. No gain or loss was recognized due to this being accounted
for as a nonmonetary exchange of similar assets.
3. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, or affiliated groups of lessees, each representing
more than ten percent of the Partnership's total rental and earned
income (including the Partnership's share of total rental and earned
income from joint ventures and properties held as tenants-in-common),
for at least one of the nine month periods ended September 30:
<TABLE>
<CAPTION>
1998 1997
------------- --------------
<S> <C>
Golden Corral Corporation $339,073 $349,449
National Restaurant Enterprises, Inc. 328,582 208,212
DenAmerica Corp. 323,884 319,740
Foodmaker, Inc. 262,135 240,487
San Diego Food Holdings, Inc. 237,131 133,858
</TABLE>
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any one of these lessees
could significantly impact the results of operations of the
Partnership. However, the general partners believe that the risk of
such a default is reduced due to the essential or important nature of
these properties for the ongoing operations of the lessees.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund XVII, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on February 10, 1995, to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurant properties, as well as land upon which restaurants are to be
constructed, to be leased primarily to operators of national and regional
fast-food, family-style and casual dining restaurant chains (collectively, the
"Properties"). The leases are triple-net leases, with the lessee generally
responsible for all repairs and maintenance, property taxes, insurance and
utilities. As of September 30, 1998, the Partnership owned 28 Properties, which
includes three Properties owned by joint ventures in which the Partnership is a
co-venturer and three Properties owned with affiliates as tenants-in-common.
Liquidity and Capital Resources
The Partnership's primary source of capital is 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 $1,881,998 and $1,912,554 for the nine months ended September 30,
1998 and 1997, respectively. The decrease in cash from operations for the nine
months ended September 30, 1998, as compared to the nine months ended September
30, 1997, is primarily a result of changes in the Partnership's working capital.
Other sources and uses of capital included the following during the
nine months ended September 30, 1998.
In September 1997, the Partnership entered into a joint venture
arrangement, CNL Kingston Joint Venture, with an affiliate of the Partnership
which has the same general partners, to construct and hold one restaurant
Property. As of September 30, 1998, the Partnership had contributed $311,048 to
the joint venture. Construction of the restaurant was completed in January 1998,
and as of September 30, 1998, the Partnership owned a 60.06% interest in the
profits and losses of the joint venture.
In addition, during the nine months ended September 30, 1998, the
Partnership received $306,100 from the developer of the Properties in Aiken,
South Carolina and Weatherford, Texas. This represents a reimbursement from the
developer upon final reconciliation of total construction costs, to the total
construction costs funded by the Partnership in accordance with the development
agreement.
Currently, rental income from the Partnership's Properties is 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 partners. At September 30, 1998, the Partnership had $1,462,427
invested in such short-term investments, as compared to $1,238,799 at December
31, 1997. The funds remaining at September 30, 1998, after the payment of
distributions and other liabilities, will be used to meet the Partnership's
working capital and other needs.
8
<PAGE>
Liquidity and Capital Resources - Continued
Total liabilities of the Partnership, including distributions payable,
decreased to $720,196 at September 30, 1998, from $765,083 at December 31, 1997.
The general partners believe that the Partnership has sufficient cash on hand to
meet its current working capital needs.
Based on cash from operations, the Partnership declared distributions
to the limited partners of $1,800,000 and $1,687,500 for the nine months ended
September 30, 1998 and 1997, respectively ($600,000 for each of the quarters
ended September 30, 1998 and 1997). This represents distributions of $0.60 and
$0.56 per unit for the nine months ended September 30, 1998 and 1997,
respectively ($0.20 per unit for each of the quarters ended September 30, 1998
and 1997). No distributions were made to the general partners for the quarters
and nine months ended September 30, 1998 and 1997. No amounts distributed to the
limited partners for the nine months ended September 30, 1998 and 1997, 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 general partners have been informed by CNL American Properties
Fund, Inc. ("APF"), an affiliate of the general partners, that it intends to
significantly increase its asset base by proposing to acquire affiliates of the
general partners which have similar restaurant property portfolios, including
the Partnership. APF is a real estate investment trust whose primary business is
the ownership of restaurant properties leased on a long-term, "triple-net" basis
to operators of national and regional restaurant chains. Accordingly, the
general partners anticipate that APF will make an offer to acquire the
Partnership in exchange for securities of APF. The general partners have
recently retained financial and legal advisors to assist them in evaluating and
negotiating any offer that may be proposed by APF. However, at this time, APF
has made no such offer. In the event that an offer is made, the general partners
will evaluate it and if the general partners believe that the offer is worth
pursuing, the general partners will promptly inform the limited partners. Any
agreement to sell the Partnership would be subject to the approval of the
limited partners in accordance with the terms of the partnership agreement.
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.
Results of Operations
During the nine months ended September 30, 1998 and 1997, the
Partnership and its consolidated joint venture, CNL/GC El Cajon Joint Venture,
owned and leased 23 wholly owned Properties, to operators of fast-food and
family-style restaurant chains. In connection therewith, during the nine months
ended September 30, 1998 and 1997, the Partnership earned $2,114,810 and
$1,951,596, respectively, in rental income from operating leases and earned
income from
9
<PAGE>
Results of Operations - Continued
direct financing leases from these Properties, $697,907 and $715,430 of which
was earned during the quarters ended September 30, 1998 and 1997, respectively.
The increase in rental and earned income during the nine months ended September
30, 1998, as compared to the nine months ended September 30, 1997, is primarily
attributable to the fact that two Properties were operational for only a partial
nine months ended September 30, 1997, as compared to a full nine months ended
September 30, 1998, due to acquisitions by the Partnership during 1997.
The decrease in rental and earned income during the quarter ended
September 30, 1998, as compared to the quarter ended September 30, 1997, is
primarily attributable to a decrease in rental income due to the fact that
during 1998, the Partnership reduced the monthly base rental income due from the
tenants of the Properties in Aiken, South Carolina and Weatherford, Texas, as a
result of receiving reimbursements of construction costs from the developer, as
described above in "Liquidity and Capital Resources."
In October 1998, the tenant of three Boston Market Properties filed for
bankruptcy. If the leases are eventually rejected, the Partnership anticipates
that rental income relating to these Properties will terminate until a new
tenant for these Properties is located or until the Properties are sold and the
proceeds from such sales are reinvested in additional Properties. However, the
general partners do not anticipate that any decrease in rental income due to
lost revenues relating to these Properties will have a material effect on the
Partnership's financial position or results of operations.
In addition, during the nine months ended September 30, 1998 and 1997,
the Partnership also owned and leased three Properties with affiliates as
tenants-in-common and two Properties indirectly through joint venture
arrangements. In connection therewith, during the quarters and nine months ended
September 30, 1998 and 1997, the Partnership earned $105,321 and $71,795,
respectively, attributable to net income earned by these joint ventures, $35,536
and $26,437 of which were earned during the quarters ended September 30, 1998
and 1997, respectively. The increase in net income earned by these joint
ventures is primarily due to the fact that the Properties owned by the joint
ventures and the Properties held as tenants-in-common with affiliates of the
general partners, were operational for the full quarter and nine months ended
September 30, 1998, as compared to a partial quarter and nine months ended
September 30, 1997.
During at least one of the nine months ended September 30, 1998 and
1997, five lessees of the Partnership, Golden Corral Corporation, National
Restaurant Enterprises, Inc., DenAmerica Corp., Foodmaker, Inc., and San Diego
Food Holdings, Inc. each contributed more than ten percent of the Partnership's
total rental and earned income (including the Partnership's share of total
rental and earned income from joint ventures and properties held as
tenants-in-common). As of September 30, 1998, Golden Corral Corporation, and
National Restaurant Enterprises, Inc., were each lessees under leases relating
to three restaurants, DenAmerica Corporation and Foodmaker, Inc., were each
lessees under leases relating to four restaurants and San Diego Holdings, Inc.
was the lessee under a lease relating to one restaurant. It is anticipated that,
based on the minimum rental payments required by the leases, these tenants will
each continue to contribute more than ten percent of the Partnership's total
rental income during the
10
<PAGE>
Results of Operations - Continued
remainder of 1998 and subsequent years. Any failure of these lessees could
materially affect the Partnership's income.
Operating expenses, including depreciation and amortization expense,
were $427,437 and $431,363 for the nine months ended September 30, 1998 and
1997, respectively, of which $157,067 and $139,928 were incurred for the
quarters ended September 30, 1998 and 1997, respectively. The decrease in
operating expenses during the nine months ended September 30, 1998, as compared
to the nine months ended September 30, 1997, is primarily attributable to a
decrease in administrative expenses, which includes services related to
accounting; financial, tax and regulatory compliance and reporting; lease and
loan compliance; limited partner distributions and reporting; and investor
relations. In addition, operating expenses also decreased for the nine month
period ended September 30, 1998, due to a decrease in depreciation expense as a
result of the reimbursement from the developer of construction costs relating to
the Properties in Aiken, South Carolina and Weatherford, Texas, as described
above in "Liquidity and Capital Resources."
The decrease in operating expenses during the nine months ended
September 30, 1998, as compared to the nine months ended September 30, 1997, was
partially offset by, and the increase during the quarter ended September 30,
1998, as compared to the quarter ended September 30, 1997, was partially
attributable to, the fact that the Partnership accrued insurance and real estate
taxes as a result of the tenant of three Boston Market Properties filing for
bankruptcy, as described above. If the tenant decides to reject the leases, the
Partnership will continue to incur certain expenses, such as real estate taxes,
insurance and maintenance until a new tenant or buyer for these Properties is
located.
In May 1998, the Financial Accounting Standards Board reached a
consensus in EITF 98-9, entitled "Accounting for Contingent Rent in the Interim
Financial Periods." Adoption of this consensus did not have a material effect on
the Partnership's financial position or results of operations.
The Year 2000 problem is the result of information technology systems
and embedded systems (products which are made with microprocessor (computer)
chips such as HVAC systems, physical security systems and elevators) using a
two-digit format, as opposed to four digits, to indicate the year. Such
information technology and embedded systems may be unable to properly recognize
and process date-sensitive information beginning January 1, 2000.
The Partnership does not have any information technology systems.
Affiliates of the general partners provide all services requiring the use of
information technology systems pursuant to a management agreement with the
Partnership. The maintenance of embedded systems, if any, at the Partnership's
properties is the responsibility of the tenants of the properties in accordance
with the terms of the Partnership's leases. The general partners and affiliates
have established a team dedicated to reviewing the internal information
technology systems used in the operation of the Partnership, and the information
technology and embedded systems and the Year 2000 compliance plans of the
Partnership's tenants, significant suppliers, financial institutions and
transfer agent.
11
<PAGE>
Results of Operations - Continued
The information technology infrastructure of the affiliates of the
general partners consists of a network of personal computers and servers that
were obtained from major suppliers. The affiliates utilize various
administrative and financial software applications on that infrastructure to
perform the business functions of the Partnership. The inability of the general
partners and affiliates to identify and timely correct material Year 2000
deficiencies in the software and/or infrastructure could result in an
interruption in, or failure of, certain of the Partnership's business activities
or operations. Accordingly, the general partners and affiliates have requested
and are evaluating documentation from the suppliers of the affiliates regarding
the Year 2000 compliance of their products that are used in the business
activities or operations of the Partnership. The costs expected to be incurred
by the general partners and affiliates to become Year 2000 compliant will be
incurred by the general partners and affiliates; therefore, these costs will
have no impact on the Partnership's financial position or results of operations.
The Partnership has material third party relationships with its
tenants, financial institutions and transfer agent. The Partnership depends on
its tenants for rents and cash flows, its financial institutions for
availability of cash and its transfer agent to maintain and track investor
information. If any of these third parties are unable to meet their obligations
to the Partnership because of the Year 2000 deficiencies, such a failure may
have a material impact on the Partnership. Accordingly, the general partners
have requested and are evaluating documentation from the Partnership's tenants,
financial institutions, and transfer agent relating to their Year 2000
compliance plans. At this time, the general partners have not yet received
sufficient certifications to be assured that the tenants, financial
institutions, and transfer agent have fully considered and mitigated any
potential material impact of the Year 2000 deficiencies. Therefore, the general
partners do not, at this time, know of the potential costs to the Partnership of
any adverse impact or effect of any Year 2000 deficiencies by these third
parties.
The general partners currently expect that all year 2000 compliance
testing and any necessary remedial measures on the information technology
systems used in the business activities and operations of the Partnership will
be completed prior to June 30, 1999. Based on the progress the general partners
and affiliates have made in identifying and addressing the Partnership's Year
2000 issues and the plan and timeline to complete the compliance program, the
general partners do not foresee significant risks associated with the
Partnership's Year 2000 compliance at this time. Because the general partners
and affiliates are still evaluating the status of the systems used in business
activities and operations of the Partnership and the systems of the third
parties with which the Partnership conducts its business, the general partners
have not yet developed a comprehensive contingency plan and are unable to
identify "the most reasonably likely worst case scenario" at this time. As the
general partners identify significant risks related to the Partnership's Year
2000 compliance or if the Partnership's Year 2000 compliance program's progress
deviates substantially from the anticipated timeline, the general partners will
develop appropriate contingency plans.
12
<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, 1998.
13
<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, 1998.
CNL INCOME FUND XVII, 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 XVII, Ltd. at September 30, 1998, and its statement of
income for the nine months then ended and is qualified in its entirety by
reference to the Form 10-Q of CNL Income Fund XVII, Ltd. for the nine months
ended September 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,462,427
<SECURITIES> 0
<RECEIVABLES> 22,200
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 21,560,159
<DEPRECIATION> 818,692
<TOTAL-ASSETS> 27,368,290
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,218,642
<TOTAL-LIABILITY-AND-EQUITY> 27,368,290
<SALES> 0
<TOTAL-REVENUES> 2,151,477
<CGS> 0
<TOTAL-COSTS> 427,437
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,782,439
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,782,439
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,782,439
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XVII, Ltd. has an
unclassified balance sheet; therefore, no values are shown above for current
assets and current liabilities.
</FN>
</TABLE>
