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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, 2003
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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
0-19141
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CNL Income Fund V, Ltd.
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2922869
- -------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801
- -------------------------------- -------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
-------------------------------
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 _____
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act):Yes___ No X
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 5-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11
Item 4. Controls and Procedures 11
Part II
Other Information 12-13
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
September 30, December 31,
2003 2002
------------------ -------------------
ASSETS
Real estate properties with operating leases, net $ 5,702,015 $ 5,825,135
Net investment in direct financing leases 1,170,388 1,196,659
Real estate held for sale 484,676 568,699
Investment in joint ventures 1,926,867 1,933,290
Cash and cash equivalents 262,778 456,266
Receivables, less allowance for doubtful accounts
of $47,951 and $8,040, respectively 9,370 25,233
Accrued rental income 370,818 358,503
Other assets 9,869 5,262
------------------ -------------------
$ 9,936,781 $ 10,369,047
================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 9,773 $ 10,324
Real estate taxes payable 8,252 6,935
Distributions payable 281,571 351,233
Due to related parties 206,367 207,291
Rents paid in advance and deposits 12,807 16,126
------------------ -------------------
Total liabilities 518,770 591,909
Commitment (Note 5)
Partners' capital 9,418,011 9,777,138
------------------ -------------------
$ 9,936,781 $ 10,369,047
================== ===================
See accompanying notes to condensed financial statements.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
------------- ------------- -------------- ---------------
Revenues:
Rental income from operating leases $ 194,604 $ 204,184 $ 605,746 $ 627,991
Earned income from direct financing leases 32,144 33,019 97,109 99,666
Contingent rental income 13,394 16,105 47,695 33,011
Interest and other income 1,004 1,486 2,007 9,879
------------- ------------- -------------- ---------------
241,146 254,794 752,557 770,547
------------- ------------- -------------- ---------------
Expenses:
General operating and administrative 41,481 41,558 135,650 151,418
Property related 4,673 3,834 5,682 24,094
State and other taxes 200 -- 4,948 9,805
Depreciation 41,040 41,043 123,120 123,130
Provision for write-down of assets 72,734 -- 72,734 --
------------- ------------- -------------- ---------------
160,128 86,435 342,134 308,447
------------- ------------- -------------- ---------------
Income Before Gain on Sale of Assets and Equity in
Earnings of Joint Ventures 81,018 168,359 410,423 462,100
Gain on Sale of Assets -- -- -- 571,759
Equity in Earnings of Joint Ventures 49,162 50,763 148,159 147,998
------------- ------------- -------------- ---------------
Income from Continuing Operations 130,180 219,122 558,582 1,181,857
------------- ------------- -------------- ---------------
Discontinued Operations:
Income (Loss) from discontinued operations (4,656 ) 19,563 (3,335 ) 34,194
Gain on disposal of discontinued operations -- -- -- 193,496
------------- ------------- -------------- ---------------
(4,656 ) 19,563 (3,335 ) 227,690
------------- ------------- -------------- ---------------
Net Income $ 125,524 $ 238,685 $ 555,247 $ 1,409,547
============= ============= ============== ===============
Income (Loss) Per Limited Partner Unit
Continuing Operations $ 2.60 $ 4.38 $ 11.17 $ 23.64
Discontinued Operations (0.09 ) 0.39 (0.07 ) 4.55
------------- ------------- -------------- ---------------
$ 2.51 $ 4.77 $ 11.10 $ 28.19
============= ============= ============== ===============
Weighted Average Number of Limited Partner
Units Outstanding 50,000 50,000 50,000 50,000
============= ============= ============== ===============
See accompanying notes to condensed financial statements.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Nine Months Ended Year Ended
September 30, December 31,
2003 2002
--------------------- -----------------
General partners:
Beginning balance $ 514,026 $ 514,026
Net income -- --
--------------------- -----------------
514,026 514,026
--------------------- -----------------
Limited partners:
Beginning balance 9,263,112 11,218,233
Net income 555,247 1,622,451
Distributions ($18.29 and $71.55 per
limited partner unit, respectively) (914,374 ) (3,577,572 )
--------------------- -----------------
8,903,985 9,263,112
--------------------- -----------------
Total partners' capital $ 9,418,011 $ 9,777,138
===================== =================
See accompanying notes to condensed financial statements.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
2003 2002
---------------- ---------------
Net Cash Provided by Operating Activities $ 790,548 $ 793,251
---------------- ---------------
Cash Flows from Investing Activities:
Proceeds from sale of assets -- 2,749,808
---------------- ---------------
Net cash provided by investing activities -- 2,749,808
---------------- ---------------
Cash Flows from Financing Activities:
Distributions to limited partners (984,036 ) (3,305,365 )
---------------- ---------------
Net cash used in financing activities (984,036 ) (3,305,365 )
---------------- ---------------
Net Increase (Decrease) in Cash and Cash Equivalents (193,488 ) 237,694
Cash and Cash Equivalents at Beginning of Period 456,266 313,783
---------------- ---------------
Cash and Cash Equivalents at End of Period $ 262,778 $ 551,477
================ ===============
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Deferred real estate disposition fees incurred
and unpaid at end of period $ -- $ 83,430
================ ===============
Distributions declared and unpaid at end of
period $ 281,571 $ 351,233
================ ===============
See accompanying notes to condensed financial statements.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2003 and 2002
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 the general partners, necessary for a fair
statement of the results for the interim periods presented. Operating
results for the quarter and nine months ended September 30, 2003, may
not be indicative of the results that may be expected for the year
ending December 31, 2003. Amounts as of December 31, 2002, 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 V, Ltd. (the "Partnership") for the year ended December 31,
2002.
In January 2003, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation of
Variable Interest Entities" to expand upon and strengthen existing
accounting guidance that addresses when a company should include the
assets, liabilities and activities of another entity in its financial
statements. To improve financial reporting by companies involved with
variable interest entities (more commonly referred to as
special-purpose entities or off-balance sheet structures), FIN 46
requires that a variable interest entity be consolidated by a company
if that company is subject to a majority risk of loss from the variable
interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. Prior to FIN 46, a company generally
included another entity in its consolidated financial statements only
if it controlled the entity through voting interests. The consolidation
requirements of FIN 46 apply immediately to variable interest entities
created after January 31, 2003, and to older entities, in the first
fiscal year or interim period ending after December 15, 2003. The
general partners believe adoption of this standard may result in either
consolidation or additional disclosure requirements of the
Partnership's unconsolidated joint ventures, which are currently
accounted for under the equity method. However, such consolidation is
not expected to significantly impact the Partnership's results of
operations.
In May 2003, the FASB issued FASB Statement No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities
and Equity" ("FAS 150"). FAS 150 establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. FAS 150 will require
issuers to classify certain financial instruments as liabilities (or
assets in some circumstances) that previously were classified as
equity. One requirement of FAS 150 is that minority interests for
majority owned finite lived entities be classified as a liability and
recorded at fair market value. FAS 150 initially applied immediately to
all financial instruments entered into or modified after May 31, 2003,
and otherwise was effective at the beginning of the first interim
period beginning after June 15, 2003. Effective October 29, 2003, the
FASB deferred implementation of FAS 150 as it applies to minority
interests of finite lived Partnerships. The deferral of these
provisions is expected to remain in effect while these interests are
addressed in either Phase II of the FASB's Liabilities and Equity
project or Phase II of the FASB's Business Combinations project;
therefore, no specific timing for the implementation of these
provisions has been stated. The implementation of the currently
effective aspects of FAS 150 did not have an impact on the
Partnership's results of operations.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2003 and 2002
2. Reclassification
Certain items in the prior year's financial statements have been
reclassified to conform to 2003 presentation. These reclassifications
had no effect on total partners' capital or net income.
3. Real Estate Properties with Operating Leases
As of September 30, 2003, the Partnership identified for sale excess
land in Connorsville, Indiana which was not needed for the operation of
its restaurant. As a result, the Partnership reclassified the parcel of
land from real estate properties with operating leases to real estate
held for sale. The reclassified asset was recorded at the lower of its
carrying amount or fair value, less cost to sell and as a result, the
Partnership recorded a provision for write-down of assets of
approximately $72,700 during the quarter and nine months ended
September 30, 2003.
4. Discontinued Operations
During 2002, the Partnership identified and sold one property that was
classified as Discontinued Operations in the accompanying financial
statements. As of September 30, 2003, the Partnership had identified
for sale the property in Livingston, Texas. The property was
reclassified from real estate properties with operating leases to real
estate held for sale. The reclassified asset was recorded at the lower
of its carrying amount or fair value, less cost to sell.
The operating results of discontinued operations are as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
------------ ------------- ----------- ---------------
Rental revenues $ 693 $ 32,349 $ 23,737 $ 62,543
Expenses (5,349 ) (12,786 ) (21,945 ) (28,349 )
Provision for write-down of assets -- -- (5,127 ) --
------------ ------------- ----------- ---------------
Income (loss) from discontinued
operations $ (4,656 ) $ 19,563 $ (3,335 ) $ 34,194
============ ============= =========== ===============
5. Concentration of Credit Risk
The following schedule presents total rental revenues from individual
lessees each representing more than 10% of the Partnership's total
rental revenues (including the Partnership's share of total rental
revenues from unconsolidated joint ventures and the properties held as
tenants-in-common with affiliates of the general partners) for each of
the nine months ended September 30:
2003 2002
--------------- -------------
Slaymaker Group, Inc. $ 133,675 $ 135,008
IHOP Properties, Inc. 104,591 104,591
Golden Corral Corporation 99,113 99,113
Captain D's Realty, LLC 93,410 N/A
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2003 and 2002
5. Concentration of Credit Risk - Continued
In addition, the following schedule presents total rental revenues from
individual restaurant chains, each representing more than 10% of the
Partnership's total rental revenues (including the Partnership's share
of total rental revenues from unconsolidated joint ventures and the
properties held as tenants-in-common with affiliates of the general
partners) for each of the nine months ended September 30:
2003 2002
------------- -------------
Tony Roma's $ 133,675 $ 135,008
Golden Corral Family Steakhouse
Restaurants 118,909 149,473
IHOP 104,591 104,591
Arby's 95,731 98,412
Captain D's 93,410 N/A
The information denoted by N/A indicates that for each period
presented, the tenant or restaurant chain did not represent more than
10% of the Partnership's total rental revenues.
Although the Partnership's properties have some geographic diversity in
the United States and the Partnership's lessees operate a variety of
restaurant concepts, default by any one of these lessees or restaurant
chains will significantly impact the results of operations of the
Partnership if the Partnership is not able to re-lease the properties
in a timely manner.
6. Commitment
In August 2003, the Partnership entered into two separate contracts
with third parties to sell the property in Livingston, Texas and a
parcel of land in Connorsville, Indiana.
7. Subsequent Events
In October 2003, Chevy's, Inc., the tenant of the property in
Vancouver, Washington which the Partnership owns as tenants-in-common
with affiliates of the general partners, filed for Chapter 11
bankruptcy protection. The Partnership owns a 27.78% interest in this
property. As of November 7, 2003, Chevy's, Inc. had neither rejected
nor affirmed the lease related to this property.
In November 2003, the Partnership sold the parcel of land in
Connorsville, Indiana for $150,000 and received net sales proceeds of
approximately $97,000. Because the Partnership recorded a provision for
write-down of assets for this property in September 2003, no gain or
loss was recognized in November 2003 relating to this sale.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund V, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on August 17, 1988, to acquire for cash, either
directly or through joint venture and tenancy in common arrangements, both newly
constructed and existing restaurants, as well as land upon which restaurants
were to be constructed, which are leased primarily to operators of national and
regional fast-food and family-style restaurant chains (collectively, the
"Properties"). The leases generally are triple-net leases, with the lessees
responsible for all repairs and maintenance, property taxes, insurance and
utilities. As of September 30, 2002 and 2003, the Partnership owned 12
Properties directly and four Properties indirectly through joint venture or
tenancy in common arrangements.
Capital Resources
Cash from operating activities was $790,548 and $793,251 for the nine
months ended September 30, 2003 and 2002, respectively. At September 30, 2003,
the Partnership had $262,778 in cash and cash equivalents as compared to
$456,266 at December 31, 2002. At September 30, 2003, these funds were held in
demand deposit accounts at a commercial bank. The funds remaining at September
30, 2003 will be used toward the payment of distributions and other liabilities.
In October 2003, Chevy's, Inc., the tenant of the Property in
Vancouver, Washington which the Partnership owns as tenants-in-common with
affiliates of the general partners, filed for Chapter 11 bankruptcy protection.
The Partnership owns a 27.78% interest in this Property. As of November 7, 2003,
Chevy's, Inc. had neither rejected nor affirmed the lease related to this
Property. The lost revenues that would result if the lease were rejected, will
have an adverse effect on the equity in earnings of joint ventures of the
Partnership if the tenancy in common is not able to re-lease or sell the
Property in a timely manner.
In August 2003, the Partnership entered into a contract to sell excess
land in Connorsville, Indiana which was not needed for the operation of its
restaurant. In November 2003, the Partnership sold the parcel of land and
received net sales proceeds of approximately $97,000. Because the Partnership
recorded a provision for write-down of assets for this Property in September
2003, no gain or loss was recognized in November 2003 relating to this sale. The
Partnership intends to use the proceeds received from the sale to pay
Partnership liabilities, including distributions to the Limited Partners.
Short-Term Liquidity
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 Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
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.
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 funds are available for distribution. Based
on current and anticipated future cash from operations, and for the nine months
ended September 30, 2002, net sales proceeds from the sale of several
Properties, the Partnership declared distributions to the limited partners of
$914,374 and $3,226,340 for the nine months ended September 30, 2003 and 2002,
respectively, ($281,571 and $351,233 for the quarters ended September 30, 2003
and 2002, respectively). This represents distributions of $18.29 and $64.53 per
unit for the nine months ended September 30, 2003 and 2002, respectively, ($5.63
and $7.02 per unit for the quarters ended September 30, 2003 and 2002,
respectively). The distribution for the nine months ended September 30, 2002
included $2,150,000 in a special distribution, as a result of the distribution
of net sales proceeds from the 2002 sale of several Properties. This special
distribution during the nine months ended September 30, 2002 was effectively a
return of a portion of the limited partners' investment, although in accordance
with the partnership agreement, $979,322 was applied toward the limited
partners' 10% Preferred Return and the balance of $1,170,678 was treated as a
return of capital for purposes of calculating the limited partners' 10%
Preferred Return. As a result of the return of capital, the amount of the
limited partners' invested capital contributions (which generally is the limited
partners' capital contributions, less distributions from the sale of Properties
that are considered to be a return of capital) was decreased; therefore, the
amount of the limited partners' invested capital contributions on which the 10%
Preferred Return is calculated was lowered accordingly. As a result of the sales
of the Properties in previous years, the Partnership's total revenues have
declined and are expected to remain reduced in subsequent periods, while the
majority of the Partnership's operating expenses have remained fixed and are
expected to remain fixed. Due to the above mentioned sales of Properties, and to
current and anticipated cash from operations, distributions of net cash flow
were adjusted during the nine months ended September 30, 2003 and 2002. No
distributions were made to the general partners for the quarters and nine months
ended September 30, 2003 and 2002. The Partnership intends to continue to make
distributions of cash available for distribution to the limited partners on a
quarterly basis.
Total liabilities were $518,770 at September 30, 2003, as compared to
$591,909 at December 31, 2002. The decrease was primarily attributable to a
decrease in distributions payable. Total liabilities at September 30, 2003, to
the extent they exceed cash and cash equivalents at September 30, 2003, will be
paid from future cash from operations and in the event the general partners
elect to make additional contributions, from general partners' contributions.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
Total rental revenues were $702,855 during the nine months ended
September 30, 2003, as compared to $727,657 during the same period of 2002,
$226,748 and $237,203 of which were earned during the third quarter of 2003 and
2002, respectively. The decrease in rental revenues during the quarter and nine
months ended September 30, 2003, as compared to the same period of 2002, was
primarily the result of a lease amendment related to the Property in
Connorsville, Indiana. The general partners do not believe that the amendment
will have a material adverse effect on the results of operations of the
Partnership. The decrease in rental revenues during the quarter and nine months
ended September 30, 2003 was also partially attributable to the sale of a
Property during the nine months ended September 30, 2002.
The Partnership also earned $47,695 in contingent rental income during
the nine months ended September 30, 2003, as compared to $33,011 during the same
period of 2002, $13,394 and $16,105 of which were earned during the third
quarters of 2003 and 2002, respectively. The increase in contingent rental
income during the nine months ended September 30, 2003, as compared to the same
period of 2002, was partially due to an increase in reported gross sales by
certain restaurant Properties, the leases of which require the payment of
contingent rent.
The Partnership also earned $148,159 attributable to net income earned
by joint ventures during the nine months ended September 30, 2003, as compared
to $147,998 during the same period of 2002, $49,162 and $50,763 of which were
earned during the quarters ended September 30, 2003 and 2002, respectively. Net
income earned by joint ventures during the nine months ended September 30, 2003,
as compared to the same period of 2002, remained constant as there was no change
in the leased Property portfolio owned by the joint ventures and tenancies in
common.
During the nine months ended September 30, 2003, four lessees of the
Partnership, Slaymaker Group, Inc., IHOP Properties, Inc., Golden Corral
Corporation, and Captain D's Realty, LLC each contributed more than 10% of the
Partnership's total rental revenues (including the Partnership's share of rental
revenues from Properties owned by joint ventures and Properties owned with
affiliates of the general partners as tenants-in-common). It is anticipated that
based on the minimum rental payments required by the leases, these four lessees
will continue to contribute more than 10% of the Partnership's total rental
revenues. In addition, during the nine months ended September 30, 2003, five
restaurant chains, Tony Roma's, Golden Corral Family Steakhouse Restaurants,
IHOP, Arby's and Captain D's each accounted for more than 10% of the
Partnership's total rental revenues (including the Partnership's share of rental
revenues from the Properties owned by joint ventures and Properties owned with
affiliates as tenants-in-common). It is anticipated that these five restaurant
chains will each continue to account for more than 10% of the total rental
revenues to which the Partnership is entitled under the terms of the leases. Any
failure of these lessees or restaurant chains will materially affect the
Partnership's operating results if the Partnership is not able to re-lease the
Properties in a timely manner.
Operating expenses, including depreciation expense and provision for
write-down of assets, were $342,134 during the nine months ended September 30,
2003, as compared to $308,447 during the same period of 2002, $160,128 and
$86,435 of which were incurred during the quarters ended September 30, 2003 and
2002, respectively. The increase in operating expenses during the quarter and
nine months ended September 30, 2003, as compared to the same periods of 2002
was a result of the Partnership recording a provision for write-down of assets
of approximately $72,700 related to the parcel of land in Connorsville, Indiana,
in anticipation of its sale. The increase during the nine months ended September
30,2003 was partially offset by a decrease in costs incurred for administrative
expenses for servicing the Partnership and its Properties. In addition, during
the nine months ended September 30, 2002, the Partnership incurred expenses such
as legal fees and repairs and maintenance related to the Property in West
Lebanon, New Hampshire, which was sold during 2002.
During the year ended December 31, 2002, the Partnership identified and
sold one Property that was classified as Discontinued Operations in the
accompanying financial statements. During the nine months ended September 30,
2003, the Partnership identified an additional Property for sale. The
Partnership recognized net rental income (rental revenues less Property related
expenses and provision for write-down of assets) of $34,194 during the nine
months ended September 30, 2002, in connection with these Properties. In June
2002, the Partnership sold its Property in Lawrenceville, Georgia to the tenant
and recognized a gain on disposal of discontinued operations of $193,496. The
Partnership recognized net rental income of $19,563 during the quarter ended
September 30, 2002 and net rental losses of $4,656 and $3,335 during the quarter
and nine months ended September 30, 2003, respectively, relating to the Property
in Livingston, Texas. The net rental loss during the nine months ended September
30, 2003 was a result of the Partnership recording a provision for write-down of
assets of approximately $5,100. The provision represented the difference between
the carrying value of the Property and its estimated fair value. As of November
13, 2003, the Property in Livingston, Texas had not yet been sold.
As a result of the sale of the Properties in West Lebanon, New
Hampshire and Bountiful, Utah, during the nine months ended September 30, 2002,
the Partnership recognized gains of $571,759. These Properties were identified
for sale as of December 31, 2001. Because these Properties were identified for
sale prior to the January 2002 implementation of Statement of Financial
Accounting Standards No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets", the results of operations relating to these Properties were
included as Income from Continuing Operations in the accompanying financial
statements.
In January 2003, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation of Variable
Interest Entities" to expand upon and strengthen existing accounting guidance
that addresses when a company should include the assets, liabilities and
activities of another entity in its financial statements. To improve financial
reporting by companies involved with variable interest entities (more commonly
referred to as special-purpose entities or off-balance sheet structures), FIN 46
requires that a variable interest entity be consolidated by a company if that
company is subject to a majority risk of loss from the variable interest
entity's activities or entitled to receive a majority of the entity's residual
returns or both. Prior to FIN 46, a company generally included another entity in
its consolidated financial statements only if it controlled the entity through
voting interests. The consolidation requirements of FIN 46 apply immediately to
variable interest entities created after January 31, 2003, and to older
entities, in the first fiscal year or interim period ending after December 15,
2003. The general partners believe adoption of this standard may result in
either consolidation or additional disclosure requirements of the Partnership's
unconsolidated joint ventures, which are currently accounted for under the
equity method. However, such consolidation is not expected to significantly
impact the Partnership's results of operations.
In May 2003, the FASB issued FASB Statement No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity" ("FAS 150"). FAS 150 establishes standards for how an issuer classifies
and measures certain financial instruments with characteristics of both
liabilities and equity. FAS 150 will require issuers to classify certain
financial instruments as liabilities (or assets in some circumstances) that
previously were classified as equity. One requirement of FAS 150 is that
minority interests for majority owned finite lived entities be classified as a
liability and recorded at fair market value. FAS 150 initially applied
immediately to all financial instruments entered into or modified after May 31,
2003, and otherwise was effective at the beginning of the first interim period
beginning after June 15, 2003. Effective October 29, 2003, the FASB deferred
implementation of FAS 150 as it applies to minority interests of finite lived
Partnerships. The deferral of these provisions is expected to remain in effect
while these interests are addressed in either Phase II of the FASB's Liabilities
and Equity project or Phase II of the FASB's Business Combinations project;
therefore, no specific timing for the implementation of these provisions has
been stated. The implementation of the currently effective aspects of FAS 150
did not have an impact on the Partnership's results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
The general partners maintain a set of disclosure controls and
procedures designed to ensure that information required to be disclosed in the
Partnership's filings under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms. The principal executive
and financial officers of the corporate general partner have evaluated the
Partnership's disclosure controls and procedures as of the end of the period
covered by this Quarterly Report on Form 10-Q and have determined that such
disclosure controls and procedures are effective.
There was no change in internal control over financial reporting that
occurred during the most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, internal control over financial
reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
------------------
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 Amended and Restated Affidavit and Certificate of Limited
Partnership of CNL Income Fund V, Ltd. (Included as
Exhibit 3.1 to Form 10-K filed with the Securities and
Exchange Commission on March 31, 1994, and incorporated
herein by reference.)
4.1 Amended and Restated Affidavit and Certificate of Limited
Partnership of CNL Income Fund V, Ltd. (Included as
Exhibit 3.1 to Form 10-K filed with the Securities and
Exchange Commission on March 31, 1994, and incorporated
herein by reference.)
4.2 Amended and Restated Certificate and Agreement of Limited
Partnership of CNL Income Fund V, Ltd. (Included as
Exhibit 4.2 to Form 10-K filed with the Securities and
Exchange Commission on March 31, 1994, and incorporated
herein by reference.)
10.1 Management Agreement (Included as Exhibit 10.1 to Form
10-K filed with the Securities and Exchange Commission on
March 31, 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.)
10.4 Assignment of Management Agreement from CNL Fund
Advisors, Inc. to CNL APF Partners, LP. (Included as
Exhibit 10.4 to Form 10-Q filed with the Securities and
Exchange Commission on August 9, 2001, and incorporated
herein by reference.)
10.5 Assignment of Management Agreement from CNL APF Partners,
LP to CNL Restaurants XVIII, Inc. (Included as Exhibit
10.5 to Form 10-Q filed with the Securities and Exchange
Commission on August 13, 2002, and incorporated herein by
reference.)
31.1 Certification of Chief Executive Officer of Corporate
General Partner Pursuant to Rule 13a-14 as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. (Filed herewith.)
31.2 Certification of Chief Financial Officer of Corporate
General Partner Pursuant to Rule 13a-14 as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. (Filed herewith.)
32.1 Certification of Chief Executive Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. (Filed herewith.)
32.2 Certification of Chief Financial Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. (Filed herewith.)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 2003.
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 13th day of November, 2003.
CNL INCOME FUND V, 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)
EXHIBIT INDEX
Exhibit Number
(c) Exhibits
3.1 Amended and Restated Affidavit and Certificate of Limited
Partnership of CNL Income Fund V, Ltd. (Included as Exhibit
3.1 to Form 10-K filed with the Securities and Exchange
Commission on March 31, 1994, and incorporated herein by
reference.)
4.1 Amended and Restated Affidavit and Certificate of Limited
Partnership of CNL Income Fund V, Ltd. (Included as Exhibit
3.1 to Form 10-K filed with the Securities and Exchange
Commission on March 31, 1994, and incorporated herein by
reference.)
4.2 Amended and Restated Certificate and Agreement of Limited
Partnership of CNL Income Fund V, Ltd. (Included as Exhibit
4.2 to Form 10-K filed with the Securities and Exchange
Commission on March 31, 1994, and incorporated herein by
reference.)
10.1 Management Agreement (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on March
31, 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.)
10.4 Assignment of Management Agreement from CNL Fund Advisors,
Inc. to CNL APF Partners, LP. (Included as Exhibit 10.4 to
Form 10-Q filed with the Securities and Exchange Commission
on August 9, 2001, and incorporated herein by reference.)
10.5 Assignment of Management Agreement from CNL APF Partners, LP
to CNL Restaurants XVIII, Inc. (Included as Exhibit 10.5 to
Form 10-Q filed with the Securities and Exchange Commission
on August 13, 2002, and incorporated herein by reference.)
31.1 Certification of Chief Executive Officer of Corporate
General Partner Pursuant to Rule 13a-14 as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)
31.2 Certification of Chief Financial Officer of Corporate
General Partner Pursuant to Rule 13a-14 as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)
32.1 Certification of Chief Executive Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. (Filed herewith.)
32.2 Certification of Chief Financial Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. (Filed herewith.)
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2