<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund, Ltd. at March 31, 1997, and its statement of income
for the three months then ended and is qualified in its entirety by reference to
the Form 10-Q of CNL Income Fund, Ltd. for the three months ended March 31,
1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 297,419
<SECURITIES> 0
<RECEIVABLES> 10,787
<ALLOWANCES> 1,850
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 10,199,928
<DEPRECIATION> 2,160,700
<TOTAL-ASSETS> 9,386,675
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,938,480
<TOTAL-LIABILITY-AND-EQUITY> 9,386,675
<SALES> 0
<TOTAL-REVENUES> 264,855
<CGS> 0
<TOTAL-COSTS> 81,645
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 209,524
<INCOME-TAX> 0
<INCOME-CONTINUING> 209,524
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 209,524
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund, Ltd. has an unclassified
balance sheet; therefore, no values are shown above for current assets and
current liabilities.
</FN>
</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 March 31, 1997
----------------------------------
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 6-8
Part II
Other Information 9
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
March 31, December 31,
ASSETS 1997 1996
---------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $2,160,700
and $2,108,774 $8,039,228 $8,091,154
Investment in and due from joint
ventures 983,794 990,307
Cash and cash equivalents 297,419 159,379
Receivables, less allowance for
doubtful accounts of $1,850 and
$1,413 8,937 180,248
Prepaid expenses 2,697 4,465
Lease costs, less accumulated
amortization of $20,000 and
$19,375 30,000 30,625
Accrued rental income 24,600 23,599
---------- ----------
$9,386,675 $9,479,777
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 2,993 $ 2,131
Accrued and escrowed real estate
taxes payable 2,888 525
Distributions payable 316,221 316,221
Due to related parties 83,808 95,012
Rents paid in advance and deposits 42,285 20,711
---------- ----------
Total liabilities 448,195 434,600
Partners' capital 8,938,480 9,045,177
---------- ----------
$9,386,675 $9,479,777
========== ==========
See accompanying notes to condensed financial statements.
1
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended
March 31,
1997 1996
-------- --------
Revenues:
Rental income from operating leases $259,805 $274,126
Interest and other income 5,050 2,797
-------- --------
264,855 276,923
-------- --------
Expenses:
General operating and administrative 21,215 26,554
Professional services 3,353 4,760
Real estate taxes 1,102 1,132
State and other taxes 3,424 5,148
Depreciation and amortization 52,551 52,551
-------- --------
81,645 90,145
-------- --------
Income Before Equity in
Earnings of Joint Ventures 183,210 186,778
Equity in Earnings of Joint Ventures 26,314 26,909
-------- --------
Net Income $209,524 $213,687
======== ========
Allocation of Net Income:
General partners $ 2,095 $ 2,137
Limited partners 207,429 211,550
-------- --------
$209,524 $213,687
======== ========
Net Income Per Limited Partner Unit $ 6.91 $ 7.05
======== ========
Weighted Average Number of Limited
Partner Units Outstanding 30,000 30,000
======== ========
See accompanying notes to condensed financial statements.
2
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Quarter Ended Year Ended
March 31, December 31,
1997 1996
------------- ------------
General partners:
Beginning balance $ 310,182 $ 299,541
Net income 2,095 10,641
----------- -----------
312,277 310,182
----------- -----------
Limited partners:
Beginning balance 8,734,995 8,927,411
Net income 207,429 1,072,468
Distributions ($10.54
and $42.16 per limited
partner unit, respectively) (316,221) (1,264,884)
----------- -----------
8,626,203 8,734,995
----------- -----------
Total partners' capital $ 8,938,480 $ 9,045,177
=========== ===========
See accompanying notes to condensed financial statements.
3
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended
March 31,
1997 1996
--------- ---------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 454,261 $ 291,280
--------- ---------
Cash Flows from Financing Activities:
Proceeds from loan from corporate
general partner 81,000 -
Repayment of loan from corporate
general partner (81,000) -
Distributions to limited partners (316,221) (316,221)
--------- ---------
Net cash used in financing
activities (316,221) (316,221)
--------- ---------
Net Increase (Decrease) in Cash and Cash
Equivalents 138,040 (24,941)
Cash and Cash Equivalents at Beginning
of Quarter 159,379 271,575
--------- ---------
Cash and Cash Equivalents at End of
Quarter $ 297,419 $ 246,634
========= =========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and unpaid
at end of quarter $ 316,221 $ 316,221
========= =========
See accompanying notes to condensed financial statements.
4
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 1997 and 1996
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 ended March 31, 1997, may not be indicative of the results
that may be expected for the year ending December 31, 1997. Amounts as
of December 31, 1996, 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,
1996.
Certain items in the prior years' financial statements have been
reclassified to conform to 1997 presentation. These reclassifications
had no effect on partners' capital or net income.
5
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 restaurant properties, 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
March 31, 1997, 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 quarters ended March
31, 1997 and 1996, 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 $454,261 and
$291,280 for the quarters ended March 31, 1997 and 1996, respectively. The
increase in cash from operations for the quarter ended March 31, 1997, is
primarily a result of changes in the Partnership's working capital.
Other sources and uses of capital included the following during the
quarters ended March 31, 1997 and 1996.
In January 1997, the Partnership entered into a promissory note with the
corporate general partner for a loan in the amount of $81,000 in connection
with the operations of the Partnership. The loan was uncollateralized, non-
interest bearing and due on demand. As of March 31, 1997, the Partnership had
repaid the loan in full to the corporate general partner.
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 March 31, 1997, the Partnership had
$297,419 invested in such short-term investments, as compared to $159,379 at
December 31, 1996. The funds remaining at March 31, 1997, after payment of
distributions and other liabilities, will be used to meet the Partnership's
working capital and other needs.
Total liabilities of the Partnership, including distributions payable,
increased to $448,195 at March 31, 1997, from $434,600 at December 31, 1996.
Liabilities at March 31, 1997, to the extent they exceed cash and cash
equivalents at March 31, 1997, will be paid from future cash from operations
and in the event the general partners elect to make additional capital
contributions or loans to the Partnership, from future general partner capital
contributions or loans.
6
Liquidity and Capital Resources - Continued
Based on current and anticipated future cash from operations, and to a
lesser extent, the loan received from the corporate general partner described
above, the Partnership declared distributions to limited partners of $316,221
for each of the quarters ended March 31, 1997 and 1996. This represents
distributions of $10.54 per unit for each of the quarters ended March 31, 1997
and 1996. No distributions were made to the general partners for the quarters
ended March 31, 1997 and 1996. No amounts distributed to the limited partners
for the quarters ended March 31, 1997 and 1996, are required to be or have
been treated by the Partnership as a return of capital for purposes of
calculating the limited partners' return on their adjusted capital
contributions. The Partnership intends to continue to make distributions of
cash available for distribution to the limited partners on a quarterly basis.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The general partners believe that the leases will continue to generate cash
flow in excess of operating expenses.
The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection
with the operations of the Partnership.
Results of Operations
During the quarters ended March 31, 1997 and 1996, the Partnership owned
and leased 15 wholly owned Properties to operators of fast-food and family-
style restaurant chains. In connection therewith, during the quarters ended
March 31, 1997 and 1996, the Partnership earned $259,805 and $268,164,
respectively, in rental income from these Properties. The decrease in rental
income during the quarter ended March 31, 1997, as compared to March 31, 1996,
is partially attributable to the fact that the Partnership received
approximately $51,300 during the quarter ended March 31, 1997, as compared to
$57,000 during the quarter ended March 31, 1996, from the former tenant of
three Properties. The rental payments from this former tenant represented the
difference between (i) the original leases entered into between the
Partnership and the former tenant and (ii) the current leases on the
Properties between the Partnership and the new tenants (two of which were re-
leased to the corporate franchisor). Effective February 1, 1996, the
Partnership ceased receiving any additional rental amounts from this former
tenant; therefore, rental income during 1997 and in future years will decrease
accordingly.
Rental income also decreased by approximately $2,200 during the quarter
ended March 31, 1997, as a result of the fact that the lease relating to the
Wendy's Property in Oklahoma City, Oklahoma, was amended, effective January 1,
1997, to provide for lower base rental income and a change in the percentage
rent calculation.
7
Results of Operations - Continued
In addition, for the quarters ended March 31, 1997 and 1996, the
Partnership owned and leased three Properties indirectly through joint venture
arrangements. In connection therewith, during the quarters ended March 31,
1997 and 1996, the Partnership earned $26,314 and $26,909, respectively,
attributable to net income earned by these joint ventures.
Operating expenses, including depreciation and amortization expense,
were $81,645 and $90,145 for the quarters ended March 31, 1997 and 1996,
respectively. The decrease in operating expenses during the quarter ended
March 31, 1997, as compared to the quarter ended March 31, 1996, is primarily
attributable to a decrease in accounting and administrative expenses
associated with operating the Partnership and its Properties and a decrease in
professional services as a result of not incurring the cost of the 1996
appraisal updates obtained to prepare an annual statement of unit valuation to
qualified plans in accordance with the Partnership's partnership agreement
during the quarter ended March 31, 1997. Instead, these costs were incurred
during the quarter ended December 31, 1996.
8
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
March 31, 1997.
9
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 9th day of May, 1997.
CNL INCOME FUND, 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)
