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Table of Contents
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
(Mark One)
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2002
 
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 0-25731
 
 
WELLS REAL ESTATE FUND XI, L.P.
(Exact name of registrant as specified in its charter)
 
Georgia
  
58-2250094
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification Number)
 
6200 The Corners Pkwy., Norcross, Georgia
  
30092
(Address of principal executive offices)
  
(Zip Code)
 
Registrant’s telephone number, including area code (770) 449-7800
 
(Former name, former address, and former fiscal year, if changed since last report)
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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  ¨
 

Table of Contents
FORM 10-Q
 
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
 
INDEX
 
          
Page No.
PART I.     FINANCIAL INFORMATION
      
          
3
Item 1.
         
            
        
4
            
        
5
            
        
6
            
        
7
            
        
8
            
Item 2.
       
12
            
PART II.     OTHER INFORMATION
    
15
            
    
16
            
      
            
      

2

Table of Contents
PART I.     FINANCIAL INFORMATION
 
Effective July 3, 2002, Wells Real Estate Fund XI (the “Partnership”) engaged Ernst & Young LLP (“Ernst & Young”) as its principal accountants to audit the Partnership’s financial statements. In accordance with the relief granted to former auditing clients of Arthur Andersen LLP in SEC Release No. 34-45589, Ernst & Young completed its review of the unaudited financial statements of the Partnership for the quarter ended March 31, 2002 pursuant to Rule 10-01(d) of Regulation S-X within the 60-day period allowed pursuant to the SEC Release, and no material modifications to the previously reported financial information were required.
 

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Table of Contents
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
 
BALANCE SHEETS
 
    
(unaudited)
June 30,
2002
   
December 31,
2001
ASSETS:
              
Investments in joint ventures (Note 2)
   
$
13,068,529
   
$
13,276,778
Cash and cash equivalents
   
 
12,983
   
 
17,542
Due from affiliates
   
 
345,157
   
 
348,632
Accounts receivable
   
 
9,326
   
 
1,278
    
  
Total assets
   
$
13,435,995
   
$
13,664,230
    
  
LIABILITIES AND PARTNERS’ CAPITAL:
              
Liabilities:
              
Due to affiliates
   
$
35,000
   
$
15,000
Partnership distributions payable
   
 
322,705
   
 
328,151
    
  
Total liabilities
   
 
357,705
   
 
343,151
    
  
Partners’ capital:
              
Limited partners:
              
Class A—1,358,756 units and 1,346,256 units outstanding as of June 30, 2002 and December 31, 2001, respectively
   
 
12,106,369
   
 
12,070,817
Class B—294,524 units and 307,024 units outstanding as of June 30, 2002 and December 31, 2001, respectively
   
 
971,921
   
 
1,230,262
    
  
Total partners’ capital
   
 
13,078,290
   
 
13,301,079
    
  
Total liabilities and partners’ capital
   
$
13,435,995
   
$
13,644,230
    
  
 
 
 
The accompanying notes are an integral part of these balance sheets.

4

Table of Contents
 
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
 
STATEMENTS OF INCOME
 
    
(unaudited)
Three Months Ended
     
(unaudited)
Six Months Ended
  
    
June 30,
2002
     
June 30,
2001
     
June 30,
2002
     
June 30,
2001
  
               
REVENUES:
                                    
Equity in income of joint ventures (Note 2)
   
$
243,725
 
   
$
239,787
 
   
$
466,253
 
   
$
476,007
 
Interest income
   
 
0
 
   
 
0
 
   
 
628
 
   
 
1,635
 
    
  
  
  
    
 
243,725
 
   
 
239,787
 
   
 
466,881
 
   
 
477,642
 
    
  
  
  
EXPENSES:
                                    
Partnership administration
   
 
19,850
 
   
 
19,833
 
   
 
33,338
 
   
 
29,728
 
Legal and accounting
   
 
3,335
 
   
 
4,080
 
   
 
11,621
 
   
 
13,860
 
Computer costs
   
 
1,634
 
   
 
4,307
 
   
 
3,457
 
   
 
5,508
 
    
  
  
  
    
 
24,819
 
   
 
28,220
 
   
 
48,416
 
   
 
49,096
 
    
  
  
  
NET INCOME
   
$
218,906
 
   
$
211,567
 
   
$
418,465
 
   
$
428,546
 
    
  
  
  
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS
   
$
351,250
 
   
$
334,218
 
   
$
673,528
 
   
$
673,851
 
    
  
  
  
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS
   
$
(132,344
)
   
$
(122,651
)
   
$
(255,063
)
   
$
(245,305
)
    
  
  
  
NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT
   
$
0.26
 
   
$
0.25
 
   
$
0.50
 
   
$
0.50
 
    
  
  
  
NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT
   
$
(0.45
)
   
$
(0.39
)
   
$
(0.84
)
   
$
(0.79
)
    
  
  
  
CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT
   
$
0.24
 
   
$
0.24
 
   
$
0.48
 
   
$
0.49
 
    
  
  
  
 
The accompanying notes are an integral part of these statements.

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Table of Contents
 
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
 
STATEMENTS OF PARTNERS’ CAPITAL
 
FOR THE YEAR ENDED DECEMBER 31, 2001
 
AND THE SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED)
 
    
Limited Partners
     
Total
Partners’
Capital
  
    
Class A
     
Class B
     
    
Units
   
Amounts
     
Units
     
Amounts
     
BALANCE, December 31, 2000
   
1,341,356
   
$
11,993,987
 
   
311,924
 
   
$
1,745,547
 
   
$
13,739,534
 
Net income (loss)
   
0
   
 
1,361,828
 
   
0
 
   
 
(491,478
)
   
 
870,350
 
Partnership distributions
   
0
   
 
(1,308,805
)
   
0
 
   
 
0
 
   
 
(1,308,805
)
Class B conversions
   
4,900
   
 
23,807
 
   
(4,900
)
   
 
(23,807
)
   
 
0
 
    
  
  
  
  
BALANCE, December 31, 2001
   
1,346,256
   
 
12,070,817
 
   
307,024
 
   
 
1,230,262
 
   
 
13,301,079
 
Net income (loss)
   
0
   
 
673,528
 
   
0
 
   
 
(255,063
)
   
 
418,465
 
Partnership distributions
   
0
   
 
(641,254
)
   
0
 
   
 
0
 
   
 
(641,254
)
Class B conversions
   
12,500
   
 
3,278
 
   
(12,500
)
   
 
(3,278
)
   
 
0
 
    
  
  
  
  
BALANCE, June 30, 2002 (unaudited)
   
1,358,756
   
$
12,106,369
 
   
294,524
 
   
$
971,921
 
   
$
13,078,290
 
    
  
  
  
  
 
The accompanying notes are an integral part of these statements.

6

Table of Contents
 
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
 
STATEMENTS OF CASH FLOWS
 
    
(unaudited)
Six Months Ended
  
    
June 30,
2002
     
June 30,
2001
  
CASH FLOWS FROM OPERATING ACTIVITIES:
                  
Net income
   
$
418,465
 
   
$
428,546
 
Adjustments to reconcile net income to net cash used in operating activities:
                  
Equity in earnings of joint venture
   
 
(466,253
)
   
 
(476,007
)
Changes in assets and liabilities:
                  
Prepaid expenses and other assets
   
 
0
 
   
 
(12,621
)
Accounts receivable
   
 
(8,048
)
   
 
(486
)
Due to affiliates
   
 
20,000
 
   
 
0
 
    
  
Net cash used in operating activities
   
 
(35,836
)
   
 
(60,568
)
    
  
CASH FLOWS FROM INVESTING ACTIVITIES:
                  
Distributions received from joint ventures
   
 
677,977
 
   
 
679,799
 
    
  
CASH FLOWS FROM FINANCING ACTIVITIES:
                  
Distributions to partners
   
 
(646,700
)
   
 
(653,918
)
    
  
NET DECREASE IN CASH AND CASH EQUIVALENTS
   
 
(4,559
)
   
 
(34,687
)
CASH AND CASH EQUIVALENTS, beginning of year
   
 
17,542
 
   
 
77,460
 
    
  
CASH AND CASH EQUIVALENTS, end of period
   
$
12,983
 
   
$
42,773
 
    
  
 
The accompanying notes are an integral part of these statements.

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Table of Contents
 
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
 
CONDENSED NOTES TO FINANCIAL STATEMENTS
June 30, 2002