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, 2004
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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
0-21558
---------------------------------------
CNL Income Fund XII, Ltd.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-3078856
- --------------------------------- --------------------------------
(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 5-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 10
Item 4. Controls and Procedures 10
Part II
Other Information 11-12
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
September 30, December 31,
2004 2003
------------------ -------------------
ASSETS
Real estate properties with operating leases, net $ 23,042,358 $ 23,236,071
Net investment in direct financing leases 4,341,176 4,443,493
Real estate held for sale 3,772,370 6,191,911
Investment in joint ventures 1,735,795 1,749,787
Cash and cash equivalents 5,193,751 2,084,914
Certificates of deposit 554,301 550,991
Receivables, less allowance for doubtful accounts
of $176,678 and $170,957, respectively 2,840 9,454
Accrued rental income, less allowance for doubtful
accounts of $8,334 and $9,061, respectively 2,083,008 2,063,718
Other assets 54,720 47,580
------------------ -------------------
$ 40,780,319 $ 40,377,919
================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 73,778 $ 25,794
Real estate taxes payable 28,241 16,504
Distributions payable 956,252 956,252
Due to related parties 36,164 19,503
Rents paid in advance and deposits 240,669 241,936
------------------ -------------------
Total liabilities 1,335,104 1,259,989
Minority interests 1,201,126 1,217,270
Commitment (Note 3)
Partners' capital 38,244,089 37,900,660
------------------ -------------------
$ 40,780,319 $ 40,377,919
================== ===================
See accompanying notes to condensed financial statements.
1
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
------------- ---------------- -------------- ----------------
Revenues:
Rental income from operating leases $ 747,425 $ 765,711 $ 2,224,349 $ 2,233,428
Earned income from direct financing leases 124,863 132,107 391,762 395,651
Contingent rental income 4,069 2,612 19,733 18,634
Interest and other income 1,162 1,743 32,649 11,827
------------- ---------------- -------------- ----------------
877,519 902,173 2,668,493 2,659,540
------------- ---------------- -------------- ----------------
Expenses:
General operating and administrative 118,901 62,220 336,136 215,404
Property related 1,295 14,936 9,124 17,867
Management fees to related parties 10,398 11,591 31,654 33,619
State and other taxes -- 9 54,905 43,004
Depreciation and amortization 132,632 134,185 396,874 399,246
------------- ---------------- -------------- ----------------
263,226 222,941 828,693 709,140
------------- ---------------- -------------- ----------------
Income before minority interests and equity in
earnings of unconsolidated joint ventures 614,293 679,232 1,839,800 1,950,400
Minority interests (27,815) (27,891) (83,299) (84,415)
Equity in earnings of unconsolidated joint
ventures 37,251 40,708 112,760 124,910
------------- ---------------- -------------- ----------------
Income from continuing operations 623,729 692,049 1,869,261 1,990,895
------------- ---------------- -------------- ----------------
Discontinued operations:
Income from discontinued operations 97,773 76,478 373,975 381,477
Gain on disposal of discontinued operations -- -- 968,949 --
------------- ---------------- -------------- ----------------
97,773 76,478 1,342,924 381,477
------------- ---------------- -------------- ----------------
Net income $ 721,502 $ 768,527 $ 3,212,185 $ 2,372,372
============= ================ ============== ================
Income per limited partner unit:
Continuing operations $ 0.14 $ 0.15 $ 0.42 $ 0.44
Discontinued operations 0.02 0.02 0.29 0.09
------------- ---------------- -------------- ----------------
$ 0.16 $ 0.17 $ 0.71 $ 0.53
============= ================ ============== ================
Weighted average number of limited
partner units outstanding 4,500,000 4,500,000 4,500,000 4,500,000
============= ================ ============== ================
See accompanying notes to condensed financial statements.
2
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Nine Months Ended Year Ended
September 30, December 31,
2004 2003
--------------------- ------------------
General partners:
Beginning balance $ 259,109 $ 259,109
Net income -- --
--------------------- ------------------
259,109 259,109
--------------------- ------------------
Limited partners:
Beginning balance 37,641,551 38,228,265
Net income 3,212,185 3,238,294
Distributions ($0.64 and $0.85 per
limited partner unit, respectively) (2,868,756) (3,825,008)
--------------------- ------------------
37,984,980 37,641,551
--------------------- ------------------
Total partners' capital $ 38,244,089 $ 37,900,660
===================== ==================
See accompanying notes to condensed financial statements.
3
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
2004 2003
---------------- -----------------
Net cash provided by operating activities $ 2,919,652 $ 3,130,806
---------------- -----------------
Cash flows from investing activities:
Proceeds from sale of assets 3,357,384 --
Additions to real estate properties with operating leases (200,000) --
---------------- -----------------
Net cash from investing activities 3,157,384 --
---------------- -----------------
Cash flows from financing activities:
Distributions to limited partners (2,868,756) (2,981,256)
Distributions to holders of minority interests (99,443) (99,969)
---------------- -----------------
Net cash used in financing activities (2,968,199) (3,081,225)
---------------- -----------------
Net increase in cash and cash equivalents 3,108,837 49,581
Cash and cash equivalents at beginning of period 2,084,914 1,274,469
---------------- -----------------
Cash and cash equivalents at end of period $ 5,193,751 $ 1,324,050
================ =================
Supplemental schedule of non-cash financing activities:
Distributions declared and unpaid at end of
period $ 956,252 $ 956,252
================ =================
See accompanying notes to condensed financial statements.
4
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2004 and 2003
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, 2004, may
not be indicative of the results that may be expected for the year
ending December 31, 2004. Amounts as of December 31, 2003, 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 XII, Ltd. (the "Partnership") for the year ended December
31, 2003.
The Partnership accounts for its 59.05% interest in Williston Real
Estate Joint Venture, its 55% interest in Bossier City Joint Venture
and its 80% interest in CNL VIII, X, XII Kokomo Joint Venture using the
consolidation method. Minority interests represent the minority joint
venture partners' proportionate share of the equity in the consolidated
joint ventures. All significant intercompany accounts and transactions
have been eliminated.
In December 2003, the Financial Accounting Standards Board issued a
revision to FASB Interpretation No. 46 (originally issued in January
2003) ("FIN 46R"), "Consolidation of Variable Interest Entities"
requiring existing unconsolidated variable interest entities to be
consolidated by their primary beneficiaries. The primary beneficiary of
a variable interest entity is the party that absorbs a majority of the
entity's expected losses, receives a majority of its expected residual
returns, or both, as a result of holding variable interests, which are
the ownership, contractual, or other pecuniary interests in an entity
that change with changes in the fair value of the entity's net assets
excluding variable interests. Prior to FIN 46R, a company generally
included another entity in its financial statements only if it
controlled the entity through voting interests. Application of FIN 46R
is required in financial statements of public entities that have
interests in variable interest entities for periods ending after March
15, 2004. The Partnership adopted FIN 46R during the quarter ended
March 31, 2004, which resulted in the consolidation of previously
unconsolidated joint ventures, which had been accounted for under the
equity method. FIN 46R does not require, but does permit restatement of
previously issued financial statements. The Partnership has restated
prior year's financial statements to maintain comparability between the
periods presented. Such consolidation resulted in certain assets and
minority interests, and revenues and expenses, of these entities being
reported on a gross basis in the Partnership's financial statements;
however, these restatements had no effect on partners' capital or net
income.
2. Discontinued Operations
During 2003, the Partnership identified for sale three properties that
were classified as discontinued operations in the accompanying
financial statements. The Partnership sold the property in Tempe,
Arizona in December 2003. During the nine months ended September 30,
2004, the Partnership identified seven additional properties for sale
and reclassified the assets to real estate held for sale. Because the
current carrying amount of these assets is less than their fair value
less cost to sell, no provision for write-down of assets was recorded.
In March 2004, the Partnership sold the properties in Toccoa, Georgia;
Blue Springs, Missouri; and Fultondale, Alabama to separate third
parties and received aggregate net sales proceeds of approximately
$3,357,400, resulting in a gain on disposal of discontinued operations
of approximately $968,900.
5
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2004 and 2003
2. Discontinued Operations - Continued
The operating results of these ten properties reflected as discontinued
operations are as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
--------------- ------------- ------------- ------------
Rental revenues $ 107,113 $ 169,300 $ 398,317 $ 516,380
Expenses (9,340) (35,116) (24,342) (77,197)
Provision for write-down of
assets -- (57,706) -- (57,706)
--------------- ------------- ------------- ------------
Income from discontinued
operations $ 97,773 $ 76,478 $ 373,975 $ 381,477
=============== ============= ============= ============
3. Commitment
In September 2004, the Partnership entered into an agreement with a
third party to sell the property in Simpsonville, South Carolina.
4. Merger Transaction
On August 9, 2004, the Partnership entered into a definitive Agreement
and Plan of Merger pursuant to which the Partnership will be merged
with a subsidiary of U.S. Restaurant Properties, Inc. (NYSE: USV). The
merger is one of multiple concurrent transactions pursuant to which 17
other affiliated limited partnerships also will be merged with a
subsidiary of U.S. Restaurant Properties, Inc. and in which CNL
Restaurant Properties, Inc., an affiliate, also will be merged with
U.S. Restaurant Properties, Inc. CNL Restaurant Properties, Inc.
currently provides property management and other services to the
Partnership. The merger of the Partnership (and each of the 17 other
affiliated mergers) is subject to certain conditions including approval
by a majority of the limited partners, consummation of a minimum number
of limited partnership mergers representing at least 75.0% in value (as
measured by the value of the merger consideration) of all limited
partnerships, consummation of the merger between U.S. Restaurant
Properties, Inc. and CNL Restaurant Properties, Inc., approval of the
shareholders of U.S. Restaurant Properties, Inc., and availability of
financing. The transaction is expected to be consummated in the first
quarter of 2005.
Under the terms of the merger agreement, if the transaction is
approved, the limited partners will receive total consideration of
approximately $45.35 million, consisting of approximately $37.92
million in cash and approximately $7.43 million in U.S. Restaurant
Properties, Inc. Series A Convertible Preferred Stock that is listed on
the New York Stock Exchange. The general partners will receive total
consideration of approximately $191,000 consisting of approximately
$160,000 in cash and approximately $31,000 in preferred stock.
5. Subsequent Event
In October 2004, the Partnership sold the property in Columbia,
Mississippi for $652,000 and received net sales proceeds of
approximately $646,600 resulting in a gain of approximately $161,900
which will be recognized in the fourth quarter of 2004.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund XII, Ltd. (the "Partnership," which may be referred to
as "we," "us," or "our") is a Florida limited partnership that was organized on
August 20, 1991, to acquire for cash, either directly or through joint venture
and tenancy in common 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 generally
triple-net leases, with the lessees responsible for all repairs and maintenance,
property taxes, insurance and utilities. As of September 30, 2003, we directly
owned 41 Properties and owned seven Properties indirectly through joint venture
or tenancy in common arrangements. As of September 30, 2004, we directly owned
37 Properties and owned seven Properties indirectly through joint venture or
tenancy in common arrangements.
Merger Transactions
The general partners believe their primary objective is to maintain
current operations with restaurant operators as successfully as possible, while
evaluating strategic alternatives, including alternatives that may provide
liquidity to the limited partners. Real estate markets are strong throughout
much of the nation, and the performance of restaurants has generally improved
after several challenging years. As a result, the general partners believe that
this is an attractive period for a strategic event to monetize the interests of
the limited partners.
In furtherance of this, on August 9, 2004, we entered into a definitive
Agreement and Plan of Merger pursuant to which we will be merged with a
subsidiary of U.S. Restaurant Properties, Inc. (NYSE: USV). The merger is one of
multiple concurrent transactions pursuant to which 17 other affiliated limited
partnerships also will be merged with a subsidiary of U.S. Restaurant
Properties, Inc. and in which CNL Restaurant Properties, Inc., an affiliate,
also will be merged with U.S. Restaurant Properties, Inc. Our merger (and each
of the 17 other affiliated mergers) is subject to certain conditions including
approval by a majority of the limited partners, consummation of a minimum number
of limited partnership mergers representing at least 75.0% in value (as measured
by the value of the merger consideration) of all limited partnerships,
consummation of the merger between U.S. Restaurant Properties, Inc. and CNL
Restaurant Properties, Inc., approval of the shareholders of U.S. Restaurant
Properties, Inc., and availability of financing. U.S. Restaurant Properties,
Inc. is a real estate investment trust (REIT) that focuses primarily on
acquiring, owning and leasing restaurant properties. The transaction is expected
to be consummated in the first quarter of 2005.
Under the terms of the merger agreement, if the transaction is
approved, our limited partners will receive total consideration of approximately
$45.35 million, consisting of approximately $37.92 million in cash and
approximately $7.43 million in U.S. Restaurant Properties, Inc. Series A
Convertible Preferred Stock that is listed on the New York Stock Exchange. The
general partners will receive total consideration of approximately $191,000
consisting of approximately $160,000 in cash and approximately $31,000 in
preferred stock.
We received an opinion from Wachovia Capital Markets, LLC that as of
August 9, 2004 the merger consideration to be received by the holders of our
general and limited partnership interests is fair, from a financial point of
view, to such holders.
As reflected above, the contemplated transactions are complex, and
contingent upon certain conditions. The restaurant marketplace, the real estate
industry, and the equities markets, all individually or taken as a whole, could
impact the economics of this transaction. As a result, there is no assurance
that we will be successful in completing the contemplated transaction.
Capital Resources
For the nine months ended September 30, 2004 and 2003, net cash
provided by operating activities was $2,919,652 and $3,130,806, respectively.
7
During the nine months ended September 30, 2004, we sold the Properties
in Toccoa, Georgia, Blue Springs, Missouri and Fultondale, Alabama to separate
third parties and received aggregate net sales proceeds of approximately
$3,357,400 resulting in an aggregate gain on disposal of discontinued operations
of approximately $968,900. The general partners may reinvest the net sales
proceeds in additional Properties or use the sales proceeds to pay liabilities.
In addition, during the nine months ended September 30, 2004, we
amended the lease for the Property in Tempe, Arizona and as a result, funded
$200,000 of renovation costs. We are not obligated to fund any additional
amounts in the future related to this lease amendment.
At September 30, 2004, we had $5,193,751 in cash and cash equivalents,
as compared to $2,084,914 at December 31, 2003. At September 30, 2004, these
funds were held in demand deposit accounts at a commercial bank. The increase in
cash and cash equivalents at September 30, 2004 was a result of holding net
sales proceeds from the sales described above. The funds remaining at September
30, 2004, after payment of distributions and other liabilities, may be used to
invest in additional Properties and to meet our working capital needs.
In March 2004, we entered into an agreement with a third party to sell
the Property in Columbia, Mississippi. In October 2004, we sold the Property and
received net sales proceeds of approximately $646,600 resulting in a gain on
disposal of discontinued operations of approximately $161,900, which will be
recognized in the fourth quarter of 2004. We may reinvest the net sales proceeds
in an additional Property and use the sales proceeds to meet our working capital
needs.
Short-Term Liquidity
Our investment strategy of acquiring Properties for cash and leasing
them under triple-net leases to operators who meet specified financial standards
minimizes our operating expenses. The general partners believe that the leases
will continue to generate cash flow in excess of operating expenses.
Our short-term liquidity requirements consist primarily of our
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
our operations.
We generally distribute cash from operations remaining after the
payment of operating expenses to the extent that the general partners determine
that such funds are available for distribution. Based on current and anticipated
future cash from operations, we declared distributions to the limited partners
of $2,868,756 for each of the nine months ended September 30, 2004 and 2003
($956,252 for each applicable quarter). This represents distributions for each
of the six months of $0.64 per unit ($0.21 per unit for each applicable
quarter). No distributions were made to the general partners for the quarters
and nine months ended September 30, 2004 and 2003. No amounts distributed to the
limited partners for the nine months ended September 30, 2004 and 2003 are
required to be or have been treated as a return of capital for purposes of
calculating the limited partners' return on their adjusted capital
contributions. We intend to continue to make distributions of cash to the
limited partners on a quarterly basis.
Total liabilities, including distributions payable, were $1,335,104 at
September 30, 2004, as compared to $1,259,989 at December 31, 2003. The increase
was due to an increase in accounts payable and accrued expenses, real estate
taxes payable and amounts due to related parties. The general partners believe
that we have sufficient cash on hand to meet our current working capital needs.
Contractual Obligations, Contingent Liabilities, and Commitments
In March 2004, we entered into an agreement with a third party to sell
the Property in Columbia, Mississippi. We sold this Property in October 2004. In
September 2004, we entered into an agreement with a third party to sell the
Property in Simpsonville, South Carolina. As of November 5, 2004, we had not
sold this Property.
8
Long-Term Liquidity
We have no long-term debt or other long-term liquidity requirements.
Results of Operations
Rental revenues from continuing operations were $2,616,111 during the
nine months ended September 30, 2004, as compared to $2,629,079 during the same
period of 2003, $872,288 and $897,818 of which were earned during the third
quarter of 2004 and 2003, respectively. Rental revenues from continuing
operations were higher during the quarter and nine months ended September 30,
2003 in part because we collected and recognized as income rent deferrals from
prior years relating to the Property in Tucson, Arizona.
We earned $112,760 attributable to net income earned by unconsolidated
joint ventures during the nine months ended September 30, 2004, as compared to
$124,910 during the same period of 2003, $37,251 and $40,708 of which were
earned during the quarters ended September 30, 2004 and 2003, respectively. The
decrease during the quarter and nine months ended September 30, 2004 was
primarily due to the January 2004 expiration of the lease of the Property in
Kingsville, Texas, owned by Kingsville Real Estate Joint Venture, in which we
have a 31.13% interest. The lost revenues resulting from the lease expiration
will continue to have an adverse effect on the equity in earnings of
unconsolidated joint ventures if the joint venture is not able to re-lease the
Property in a timely manner.
We earned $32,649 in interest and other income during the nine months
ended September 30, 2004, as compared to $11,827 during the same period of 2003,
$1,162 and $1,743 of which were earned during the third quarters of 2004 and
2003, respectively. Interest and other income were higher during the nine months
ended September 2004 because we received reimbursement of property expenditures
that were incurred in previous years relating to a vacant Property. The former
tenant reimbursed these amounts as a result of its 1998 bankruptcy proceedings.
Operating expenses, including depreciation and amortization expense,
were $828,693 during the nine months ended September 30, 2004, as compared to
$709,140 during the same period of 2003, $263,226 and $222,941 of which were
incurred during the quarters ended September 30, 2004 and 2003, respectively.
The increase in operating expenses during the quarter and nine months ended
September 30, 2004, was partially due to incurring additional general operating
and administrative expenses, including, primarily, legal fees incurred in
connection with the merger transaction described above. The increase in
operating expenses during the nine months ended September 30, 2004 was also
partially attributable to an increase in state tax expense relating to a state
in which we conduct business.
We recognized income from discontinued operations (rental revenues less
property related expenses and provision for write-down of assets) of $76,478 and
$381,477 during the quarter and nine months ended September 30, 2003, relating
to the Properties in Tempe, Arizona; Toccoa, Georgia; Blue Springs, Missouri;
Fultondale, Alabama; Black Mountain, North Carolina; Columbia, Mississippi;
Crossville, Tennessee; Pensacola, Florida, Simpsonville, South Carolina and
Columbus, Georgia. We recorded a provision for write-down of assets of
approximately $57,700 during the quarter and nine months ended September 30,
2003 related to the Property in Tempe, Arizona. We sold this Property in
December 2003. We recognized income from discontinued operations of $97,773 and
$373,975 during the quarter and nine months ended September 30, 2004. We sold
the Toccoa, Georgia; Blue Springs, Missouri; and Fultondale, Alabama Properties
in March 2004 and recorded an aggregate gain on disposal of discontinued
operations of approximately $968,900. In October 2004, we sold the Property in
Columbia, Mississippi, as described above. As of November 5, 2004, the
Partnership had not sold the Properties in Black Mountain, North Carolina;
Crossville, Tennessee; Pensacola, Florida; Simpsonville, South Carolina and
Columbus, Georgia.
9
In December 2003, the Financial Accounting Standards Board issued a
revision to FASB Interpretation No. 46 (originally issued in January 2003) ("FIN
46R"), "Consolidation of Variable Interest Entities" requiring existing
unconsolidated variable interest entities to be consolidated by their primary
beneficiaries. The primary beneficiary of a variable interest entity is the
party that absorbs a majority of the entity's expected losses, receives a
majority of its expected residual returns, or both, as a result of holding
variable interests, which are the ownership, contractual, or other pecuniary
interests in an entity that change with changes in the fair value of the
entity's net assets excluding variable interests. Prior to FIN 46R, a company
generally included another entity in its financial statements only if it
controlled the entity through voting interests. Application of FIN 46R is
required in financial statements of public entities that have interests in
variable interest entities for periods ending after March 15, 2004. We adopted
FIN 46R during the quarter ended March 31, 2004, which resulted in the
consolidation of previously unconsolidated joint ventures, Williston Real Estate
Joint Venture, Bossier City Joint Venture, and CNL VIII, X, XII Kokomo Joint
Venture, which had been accounted for under the equity method. FIN 46R does not
require, but does permit restatement of previously issued financial statements.
We restated prior year's financial statements to maintain comparability between
the periods presented. Such consolidation resulted in certain assets and
minority interests, and revenues and expenses, of the entities being reported on
a gross basis in our financial statements; however, these restatements had no
effect on partners' capital or net income.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Inapplicable.
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 our
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 our 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.
10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
------------------
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
------------------------------------------------------------
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
2.1 Agreement and Plan of Merger among U.S. Restaurant
Properties, Inc., Ivanhoe Acquisition XII, LLC, and CNL
Income Fund XII, Ltd., dated as of August 9, 2004.
(Included as Exhibit 99.2 to Form 8-K filed with the
Securities and Exchange Commission on August 9, 2004,
and incorporated herein by reference.)
3.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XII, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-43278-01 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XII, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-43278-01 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership of
CNL Income Fund XII, Ltd. (Included as Exhibit 4.2 to
Form 10-K filed with the Securities and Exchange
Commission on April 15, 1993, and incorporated herein by
reference.)
10.1 Management Agreement between CNL Income Fund XII, Ltd.
and CNL Investment Company. (Included as Exhibit 10.1 to
Form 10-K filed with the Securities and Exchange
Commission on April 15, 1993, 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 31, 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 13, 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.)
11
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.)
12
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 2004.
CNL INCOME FUND XII, 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
Exhibits
2.1 Agreement and Plan of Merger among U.S. Restaurant
Properties, Inc., Ivanhoe Acquisition XII, LLC, and CNL
Income Fund XII, Ltd., dated as of August 9, 2004.
(Included as Exhibit 99.2 to Form 8-K filed with the
Securities and Exchange Commission on August 9, 2004,
and incorporated herein by reference.)
3.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XII, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-43278-01 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XII, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-43278-01 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership of
CNL Income Fund XII, Ltd. (Included as Exhibit 4.2 to
Form 10-K filed with the Securities and Exchange
Commission on April 15, 1993, and incorporated herein by
reference.)
10.1 Management Agreement between CNL Income Fund XII, Ltd.
and CNL Investment Company. (Included as Exhibit 10.1 to
Form 10-K filed with the Securities and Exchange
Commission on April 15, 1993, 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 31, 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 13, 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