<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund, Ltd. at September 30, 1995, 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, Ltd. for the nine months ended
September 30, 1995.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 280,990
<SECURITIES> 0
<RECEIVABLES> 139,695
<ALLOWANCES> 116,184
<INVENTORY> 0
<CURRENT-ASSETS> 309,385
<PP&E> 10,199,928
<DEPRECIATION> 1,849,144
<TOTAL-ASSETS> 9,731,760
<CURRENT-LIABILITIES> 430,377
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 9,301,383
<TOTAL-LIABILITY-AND-EQUITY> 9,731,760
<SALES> 0
<TOTAL-REVENUES> 880,861
<CGS> 0
<TOTAL-COSTS> 242,854
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 720,312
<INCOME-TAX> 0
<INCOME-CONTINUING> 720,312
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 720,312
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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, 1995
-----------------------------------
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
0-15666
----------------------
CNL Income Fund, Ltd.
----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2666264
---------------------------- ----------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street, #500
Orlando, Florida 32801
---------------------------- ----------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--------- ---------
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
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 6-9
Part II
Other Information 10
<TABLE>
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<CAPTION>
September 30, December 31,
ASSETS 1995 1994
------------- ------------
<S> <C> <C>
Land and buildings on operating
leases, less accumulated
depreciation of $1,849,144
and $1,693,371 $ 8,350,784 $ 8,506,557
Investment in and due from joint
ventures 1,013,503 1,023,559
Cash and cash equivalents 280,990 1,253,629
Receivables, less allowance for
doubtful accounts of $116,184
and $99,744 23,511 12,729
Prepaid expenses 4,884 2,563
Lease costs, less accumulated
amortization of $16,250 and
$14,375 33,750 35,625
Accrued rental income 24,338 22,752
----------- -----------
$ 9,731,760 $10,857,414
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 1,525 $ 3,398
Accrued and escrowed real estate
taxes payable 14,158 9,512
Distributions payable 316,221 1,215,906
Due to related parties 76,591 66,750
Rents paid in advance and deposits 21,882 32,115
----------- -----------
Total liabilities 430,377 1,327,681
Partners' capital 9,301,383 9,529,733
----------- -----------
$ 9,731,760 $10,857,414
=========== ===========
<FN>
See accompanying notes to condensed financial statements.
</FN>
</TABLE>
<TABLE>
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income from operating
leases $283,351 $304,973 $845,054 $896,448
Contingent rental income 24,235 37,156 24,602 37,522
Interest and other income 3,452 2,842 11,205 10,409
-------- -------- -------- --------
311,038 344,971 880,861 944,379
-------- -------- -------- --------
Expenses:
General operating and
administrative 22,267 13,096 57,905 48,664
Professional services 2,690 5,318 11,209 18,530
Bad debt expense - 4,260 - 4,260
Real estate taxes 2,979 4,449 10,736 11,367
State taxes - - 5,356 4,342
Depreciation and amortization 52,549 56,241 157,648 168,741
-------- -------- -------- --------
80,485 83,364 242,854 255,904
-------- -------- -------- --------
Income Before Equity in
Earnings of Joint Ventures 230,553 261,607 638,007 688,475
Equity in Earnings of Joint
Ventures 27,610 27,736 82,305 82,736
-------- -------- -------- --------
Net Income $258,163 $289,343 $720,312 $771,211
======== ======== ======== ========
Allocation of Net Income:
General partners $ 2,582 $ 2,893 $ 7,203 $ 7,712
Limited partners 255,581 286,450 713,109 763,499
-------- -------- -------- --------
$258,163 $289,343 $720,312 $771,211
======== ======== ======== ========
Net Income Per Limited
Partner Unit $ 8.52 $ 9.55 $ 23.77 $ 25.45
======== ======== ======== ========
Weighted Average Number
of Limited Partner Units
Outstanding 30,000 30,000 30,000 30,000
======== ======== ======== ========
<FN>
See accompanying notes to condensed financial statements.
</FN>
</TABLE>
<TABLE>
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1995 1994
----------------- ------------
<S> <C> <C>
General partners:
Beginning balance $ 289,920 $ 158,587
Contributions - 120,000
Net income 7,203 11,333
----------- -----------
297,123 289,920
----------- -----------
Limited partners:
Beginning balance 9,239,813 10,321,693
Net income 713,109 1,197,243
Distributions (948,662) (2,279,123)
----------- -----------
9,004,260 9,239,813
----------- -----------
Total partners' capital $ 9,301,383 $ 9,529,733
=========== ===========
<FN>
See accompanying notes to condensed financial statements.
</FN>
</TABLE>
<TABLE>
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended
September 30,
1995 1994
----------- -----------
<S> <C> <C>
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 875,708 $ 951,098
----------- -----------
Cash Flows from Financing
Activities:
Contributions from general
partner - 120,000
Distributions to limited
partners (1,848,347) (1,063,218)
----------- -----------
Net cash used in financing
activities (1,848,347) (943,218)
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents (972,639) 7,880
Cash and Cash Equivalents at Beginning
of Period 1,253,629 253,561
----------- -----------
Cash and Cash Equivalents at End of
Period $ 280,990 $ 261,441
=========== ===========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and unpaid
at end of period $ 316,221 $ 354,406
=========== ===========
<FN>
See accompanying notes to condensed financial statements.
</FN>
</TABLE>
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 1995 and 1994
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, 1995, may not be indicative of the results that
may be expected for the year ending December 31, 1995. Amounts as of
December 31, 1994, 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, Ltd. (the "Partnership") for the year ended December 31,
1994.
Certain items in the prior year's financial statements have been
reclassified to conform to the 1995 presentation. These reclassifications
had no effect on partners' capital or net income.
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The
Statement, which is effective for fiscal years beginning after December
15, 1995, requires that an entity review long-lived assets and certain
identifiable intangibles to be held and used for impairment whenever
events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. The Partnership plans to adopt this
standard in 1996 and does not expect compliance with such standard to have
a material effect, if any, on the Partnership's financial position or
results of operations.
2. Subsequent Event:
----------------
Effective October 1, 1995, CNL Income Fund Advisors, Inc. assigned its
rights in the management agreement with the Partnership to an affiliate of
the general partners, CNL Fund Advisors, Inc. All of the terms and
conditions of the management agreement remain unchanged.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CNL Income Fund, Ltd. (the "Partnership") is a Florida limited partnership
that was organized on November 26, 1985, to acquire for cash, either directly or
through joint venture 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
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, 1995, the
Partnership owned 18 Properties, including interests in three Properties owned
by joint ventures in which the Partnership is a co-venturer.
Liquidity and Capital Resources
- - -------------------------------
The Partnership's primary source of capital for the nine months ended
September 30, 1995 and 1994, was cash from operations (which includes cash
received from tenants, distributions from joint ventures, and interest and other
income received, less cash paid for expenses). Cash from operations was
$875,708 and $951,098 for the nine months ended September 30, 1995 and 1994,
respectively. The decrease in cash from operations for the nine months ended
September 30, 1995, is primarily a result of changes in income and expenses as
discussed in "Results of Operations" below, and as a result of changes in the
Partnership's working capital.
The general partners have the right, but not the obligation, to make
capital contributions if they deem it appropriate in connection with the
operations of the Partnership, in which event such contributions will be
returned to the general partners from distributions of net sales proceeds at
the same time that their initial capital contributions of $1,000 are returned.
During the nine months ended September 30, 1994, the Partnership also received
$120,000 in capital contributions from the corporate general partner. No such
contributions were received during the nine months ended September 30, 1995.
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 the partners. At September 30, 1995, the Partnership had
$280,990 invested in such short-term investments as compared to $1,253,629 at
December 31, 1994. The decrease in funds invested in short-term investments at
September 30, 1995, is primarily a result of the fact that, in January 1995, the
Partnership distributed $861,500 of net sales proceeds, representing a return of
capital to the limited partners, relating to the sale of the Property in
Fairfield, California, in October 1994. The funds remaining at September 30,
1995, will be used towards the payment of distributions for the quarter ended
September 30, 1995, and other liabilities.
Total liabilities of the Partnership, including distributions payable,
decreased to $430,377 at September 30, 1995, from $1,327,681 at December 31,
1994, primarily as a result of the Partnership's payment of distributions
resulting from the sale of its Property in Fairfield, California, as described
above, which had been accrued at December 31, 1994. Liabilities at September
30, 1995, to the extent they exceed cash and cash equivalents at September 30,
1995, will be paid from future cash from operations, or, in the event the
general partners elect to make additional capital contributions, from future
general partner capital contributions.
Based on current and anticipated future cash from operations, the
Partnership declared distributions to limited partners of $948,662 and
$1,063,218 for the nine months ended September 30, 1995 and 1994, respectively
($316,221 and $354,406 for the quarters ended September 30, 1995 and 1994,
respectively). This represents distributions of $31.62 and $35.44 per unit for
the nine months ended September 30, 1995 and 1994, respectively ($10.54 and
$11.81 for the quarters ended September 30, 1995 and 1994, respectively). No
distributions were made to the general partners for the quarters and nine months
ended September 30, 1995 and 1994. The distribution for the quarter ended
December 31, 1994, which was distributed in January 1995, included $861,500 as a
result of the distribution of net sales proceeds from the sale of the Property
in Fairfield, California, as described above. This amount was treated as a
return of capital for purposes of calculating the limited partners' ten percent
preferred return. As a result of this 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 a Property
that are considered to be a return of capital) was decreased; therefore, the
amount of the limited partners' invested capital contributions on which the ten
percent preferred return is calculated was lowered accordingly. No amounts
distributed to the limited partners for the nine months ended September 30, 1995
and 1994, except for $861,500 as described above, 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'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.
Results of Operations
- - ---------------------
During the nine months ended September 30, 1994, the Partnership owned and
leased 16 wholly owned Properties, and during the nine months ended September
30, 1995, the Partnership owned and leased 15 wholly owned Properties, to
operators of fast-food and family-style restaurant chains. In connection
therewith, during the nine months ended September 30, 1995 and 1994, the
Partnership earned $845,054 and $896,448, respectively, in rental income from
these Properties, $283,351 and $304,973 of which was earned during the quarters
ended September 30, 1995 and 1994, respectively. Rental income for the quarter
and nine months ended September 30, 1995, as compared to the quarter and nine
months ended September 30, 1994, decreased approximately $26,900 and $80,800,
respectively, as a result of the sale of the Property in Fairfield, California,
in October 1994. Rental income also decreased during the quarter and nine
months ended September 30, 1995, by approximately $12,600 and $37,700, respec-
tively, as a result of the Partnership's reducing base rent for the Property
in Mesquite, Texas, in anticipation of a lease amendment to provide for lower
initial base rent with scheduled rent increases. The decrease in rental income
during the quarter and nine months ended September 30, 1995, as compared to the
quarter and nine months ended September 30, 1994, was partially offset by an
increase as a result of the fact that the Partnership established an allowance
for doubtful accounts of approximately $17,600 and $70,500 during the quarter
and nine months ended September 30, 1994, respectively, compared to $5,000 for
the nine months ended September 30, 1995, for rent receivable amounts relating
to the Property in Mesquite, Texas. The general partners anticipate entering
into an agreement with the tenant of this Property to collect past due amounts
and will recognize such amounts as income if collected.
During the nine months ended September 30, 1995 and 1994, the Partnership
also earned $24,602 and $37,522, respectively, in contingent rental income,
$24,235 and $37,156 of which was earned during the quarters ended September 30,
1995 and 1994, respectively. The decrease in contingent rental income during
the quarter and nine months ended September 30, 1995, is primarily attributable
to the sale of the Property in Fairfield, California, in October 1994.
In addition, for the nine months ended September 30, 1995 and 1994, the
Partnership owned and leased three Properties indirectly through joint venture
arrangements. In connection therewith, during the nine months ended September
30, 1995 and 1994, the Partnership earned $82,305 and $82,736, respectively,
attributable to net income earned by these joint ventures, $27,610 and $27,736
of which was earned during the quarters ended September 30, 1995 and 1994,
respectively.
During the nine months ended September 30, 1995, two of the Partnership's
lessees, Golden Corral Corporation and Wendy's International, Inc., each
contributed more than ten percent of the Partnership's total rental income
(including the Partnership's share of the rental income from three Properties
owned by joint ventures in which the Partnership is a co-venturer). Golden
Corral Corporation is the lessee under leases relating to five restaurants and
Wendy's International, Inc. is the lessee under leases relating to three
restaurants. It is anticipated that Golden Corral Corporation and Wendy's
International, Inc. each will continue to contribute ten percent or more of the
Partnership's total rental income during the remainder of 1995 and subsequent
years. Any failure of these lessees could materially affect the Partnership's
income.
Operating expenses, including depreciation and amortization expense, were
$242,854 and $255,904 for the nine months ended September 30, 1995 and 1994,
respectively, of which $80,485 and $83,364 were incurred for the quarters ended
September 30, 1995 and 1994, respectively. The decrease in operating expenses
during the quarter and nine months ended September 30, 1995, as compared to the
quarter and nine months ended September 30, 1994, is primarily attributable to a
decrease in depreciation and amortization expense as the result of the sale of
the Property in Fairfield, California, in October 1994.
The decrease in operating expenses during the quarter and nine months
ended September 30, 1995, was partially offset by an increase in (i) accounting
and administrative expenses and (ii) insurance expense as a result of the
general partners' obtaining contingent liability and property coverage for the
Partnership. This insurance policy is intended to reduce the Partnership's
exposure in the unlikely event a tenant's insurance police lapses or is
insufficient to cover a claim relating to the Property.
Operating expenses for the quarters and nine months ended September 30,
1995 and 1994, include amounts incurred for real estate tax expenses relating to
the Property in Angleton, Texas. In accordance with the lease agreement, the
Partnership is responsible for one-half of the real estate taxes relating to
this Property. In addition, during the quarters and nine months ended September
30, 1995 and 1994, the Partnership accrued real estate taxes relating to the
Property in Mesquite, Texas. Payment of real estate taxes relating to this
Property remains the responsibility of the tenant; however, because of the
financial difficulties this tenant is experiencing, the general partners believe
the tenant's ability to pay these expenses is doubtful. The Partnership intends
to pursue collection from this tenant of any such amounts paid by the
Partnership and will recognize such amounts as income if collected.
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, 1995.
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, 1995.
CNL INCOME FUND, LTD.
By: CNL REALTY CORPORATION
General Partner
By: /s/ James M. Seneff, Jr.
-------------------------
JAMES M. SENEFF, JR.
President and Principal
Executive Officer
By: /s/ Robert A. Bourne
-------------------------
ROBERT A. BOURNE
Treasurer and Principal
Financial Officer
