<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund IV, Ltd. at June 30, 1996, and its statement of income
for the six months then ended and is qualified in its entirety by reference to
the Form 10-Q of CNL Income Fund IV, Ltd. for the six months ended June 30,
1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 506,577
<SECURITIES> 0
<RECEIVABLES> 177,985
<ALLOWANCES> 130,925
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 21,989,843
<DEPRECIATION> 3,267,888
<TOTAL-ASSETS> 23,791,199
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 22,992,264
<TOTAL-LIABILITY-AND-EQUITY> 23,791,199
<SALES> 0
<TOTAL-REVENUES> 1,295,054
<CGS> 0
<TOTAL-COSTS> 364,725
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,061,800
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,061,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,061,800
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund IV, Ltd. has an unclassi-
fied 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 June 30, 1996
-----------------------------------
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
0-17549
----------------------
CNL Income Fund IV, Ltd.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2854435
- ---------------------------- -------------------------------
(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 5-6
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 7-10
Part II
Other Information 11
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
June 30, December 31,
ASSETS 1996 1995
----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $3,267,888
and $3,045,149 $18,721,955 $18,944,694
Net investment in direct
financing leases 1,319,442 1,334,489
Investment in joint ventures 2,878,384 2,374,684
Cash and cash equivalents 506,577 485,864
Restricted cash - 518,150
Receivables, less allowance for
doubtful accounts of $130,925
and $166,866 47,060 94,870
Prepaid expenses 12,321 9,733
Lease costs, less accumulated
amortization of $14,213 and
$13,291 9,731 10,653
Accrued rental income 295,729 284,692
----------- -----------
$23,791,199 $24,057,829
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 7,737 $ 12,672
Accrued and escrowed real estate
taxes payable 29,276 21,956
Distributions payable 690,000 690,000
Due to related parties 58,442 27,166
Rents paid in advance and deposits 13,480 17,871
----------- -----------
Total liabilities 798,935 769,665
Partners' capital 22,992,264 23,288,164
----------- -----------
$23,791,199 $24,057,829
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
-------- -------- ---------- ----------
Revenues:
Rental income from
operating leases $580,375 $593,945 $1,160,451 $1,187,891
Earned income from
direct financing leases 33,605 34,347 67,402 68,867
Contingent rental income 19,409 20,673 42,130 44,065
Interest and other income 6,861 6,785 25,071 14,424
-------- -------- ---------- ----------
640,250 655,750 1,295,054 1,315,247
-------- -------- ---------- ----------
Expenses:
General operating and
administrative 44,183 35,371 86,993 60,527
Professional services 4,670 11,751 14,417 16,413
Real estate taxes 7,288 8,163 17,960 15,090
State and other taxes 5,142 377 21,694 19,006
Depreciation and amorti-
zation 111,443 114,852 223,661 229,705
-------- -------- ---------- ----------
172,726 170,514 364,725 340,741
-------- -------- ---------- ----------
Income Before Equity in
Earnings of Joint Ventures 467,524 485,236 930,329 974,506
Equity in Earnings of Joint
Ventures 69,346 60,028 131,471 119,756
-------- -------- ---------- ----------
Net Income $536,870 $545,264 $1,061,800 $1,094,262
======== ======== ========== ==========
Allocation of Net Income:
General partners $ 5,369 $ 5,453 $ 10,618 $ 10,943
Limited partners 531,501 539,811 1,051,182 1,083,319
-------- -------- ---------- ----------
$536,870 $545,264 $1,061,800 $1,094,262
======== ======== ========== ==========
Net Income Per Limited
Partner Unit $ 8.86 $ 9.00 $ 17.52 $ 18.06
======== ======== ========== ==========
Weighted Average Number
of Limited Partner Units
Outstanding 60,000 60,000 60,000 60,000
======== ======== ========== ==========
See accompanying notes to condensed financial statements.
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Six Months Ended Year Ended
June 30, December 31,
1996 1995
------------------ ------------
General partners:
Beginning balance $ 402,138 $ 380,548
Contribution 22,300 -
Net income 10,618 21,590
----------- -----------
435,056 402,138
----------- -----------
Limited partners:
Beginning balance 22,886,026 23,457,277
Net income 1,051,182 2,188,749
Distributions ($23.00 and
$46.00 per limited
partner unit, respectively) (1,380,000) (2,760,000)
----------- -----------
22,557,208 22,886,026
----------- -----------
Total partners' capital $22,992,264 $23,288,164
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1996 1995
----------- -----------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 1,380,932 $ 1,368,958
----------- -----------
Cash Flows from Investing Activities:
Additions to land and buildings on
operating leases - (1,628)
Investment in Joint Venture (520,000) -
Decrease in restricted cash 518,150 -
Payment of lease costs (669) -
----------- -----------
Net cash used in investing
activities (2,519) (1,628)
----------- -----------
Cash Flows from Financing Activities:
Reimbursement of acquisition costs paid
by related party on behalf of the
Partnership - (1,175)
Contributions from general partner 22,300 -
Distributions to limited partners (1,380,000) (1,380,000)
----------- -----------
Net cash used in financing
activities (1,357,700) (1,381,175)
----------- -----------
Net Increase (Decrease) in Cash
and Cash Equivalents 20,713 (13,845)
Cash and Cash Equivalents at Beginning
of Period 485,864 579,574
----------- -----------
Cash and Cash Equivalents at End of
Period $ 506,577 $ 565,729
=========== ===========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and unpaid
at end of period $ 690,000 $ 690,000
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 1996 and 1995
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 six months ended June 30, 1996, may not be indicative of
the results that may be expected for the year ending December 31, 1996.
Amounts as of December 31, 1995, 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 the Form 10-K of
CNL Income Fund IV, Ltd. (the "Partnership")for the year ended December
31, 1995.
Effective January 1, 1996, the Partnership adopted 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 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. Adoption of this standard had no
material effect on the Partnership's financial position or results of
operations.
2. Investment in Joint Ventures:
----------------------------
In January 1996, the Partnership acquired an approximate 54 percent
interest in a Golden Corral property in Clinton, North Carolina, as
tenants-in-common with affiliates of the general partners. The
Partnership accounts for its investment in this property using the
equity method since the Partnership shares control with affiliates, and
amounts relating to its investment are included in investment in joint
ventures.
The following presents the combined, condensed financial information for
all of the Partnership's investments in joint ventures at:
June 30, December 31,
1996 1995
---------- ------------
Land and buildings on
operating leases, less
accumulated depreciation $3,605,454 $2,829,115
Net investment in direct
financing leases 867,398 874,650
Cash 164,949 7,697
Receivables 22,389 34,683
Prepaid expenses 392 1,324
Accrued rental income 154,343 139,301
Other assets 32,501 35,501
Liabilities 6,251 18,890
Partners' capital 4,841,175 3,903,381
Revenues 246,765 434,150
Net income 195,400 357,511
The Partnership recognized income totalling $131,471 and $119,756 for
the six months ended June 30, 1996 and 1995, respectively, from these
Joint Ventures, $69,346 and $60,028 of which was earned during the
quarters ended June 30, 1996 and 1995, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CNL Income Fund IV, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on November 18, 1987, 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 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 June 30, 1996, the Partnership owned 41 Properties,
including interests in five Properties owned by joint ventures in which the
Partnership is a co-venturer and one Property owned with affiliates as
tenants-in-common.
Liquidity and Capital Resources
- -------------------------------
The Partnership's primary source of capital for the six months ended
June 30, 1996 and 1995, 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 $1,380,932
and $1,368,958 for the six months ended June 30, 1996 and 1995, respectively.
The increase in cash from operations for the six months ended June 30, 1996,
as compared to the six months ended June 30, 1995, is primarily a result of
changes in the Partnership's working capital.
Other sources and uses of capital included the following during the six
months ended June 30, 1996 and 1995.
In January 1996, the Partnership reinvested the net sales proceeds it
received from the sale, in December 1995, of the Property in Hastings,
Michigan, along with additional funds, in a Golden Corral Property located in
Clinton, North Carolina, with affiliates of the general partners as tenants-
in-common. In connection therewith, the Partnership and its affiliates
entered into an agreement whereby each co-venturer will share in the profits
and losses of the Property in proportion to its applicable percentage
interest. The Partnership owns an approximate 54 percent interest in this
Property.
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. In April 1996, the Partnership
received $22,300 in contributions from the corporate general partner in
connection with the operations of the Partnership.
Currently, rental income from the Partnership's Properties is invested
in money market accounts and 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 June 30, 1996, the Partnership had
$506,577 invested in such short-term investments as compared to $485,864 at
December 31, 1995. The funds remaining at June 30, 1996, will be used
towards the payment of distributions and other liabilities.
Total liabilities of the Partnership, including distributions payable,
increased to $798,935 at June 30, 1996, from $769,665 at December 31, 1995,
primarily as a result of an increase in amounts payable to related parties.
Total liabilities at June 30, 1996, to the extent they exceed cash and cash
equivalents at June 30, 1996, will be paid from future cash from operations,
and, in the event the general partners elect to make additional contributions,
from future general partner contributions.
Based on current cash from operations, and to a lesser extent,
additional capital contributions from the corporate general partner received
in April 1996 described above, the Partnership declared distributions to
limited partners of $1,380,000 for each of the six months ended June 30, 1996
and 1995 ($690,000 for each of the quarters ended June 30, 1996 and 1995).
This represents distributions for each applicable six months of $23.00 per
unit ($11.50 per unit for each applicable quarter). No distributions were
made to the general partners for the quarters and six months ended June 30,
1996 and 1995. No amounts distributed or to be distributed to the limited
partners for the six months ended June 30, 1996 and 1995, 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 generally 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 six months ended June 30, 1995, the Partnership owned and
leased 36 wholly owned Properties (including one Property in Hastings,
Michigan, which was sold in December 1995), and during the six months ended
June 30, 1996 the Partnership owned and leased 35 wholly owned Properties to
operators generally of fast-food and family-style restaurant chains. In
connection therewith, during the six months ended June 30, 1996 and 1995, the
Partnership earned $1,227,853 and $1,256,758, respectively, in rental income
from operating leases and earned income from direct financing leases from
these Properties, $613,980 and $628,292 of which was earned during the
quarters ended June 30, 1996 and 1995, respectively. The decrease in rental
and earned income is primarily attributable to a decrease of approximately
$13,100 and $26,200 during the quarter and six months ended June 30, 1996,
respectively, as a result of the sale of the Property in Hastings, Michigan,
in December 1995.
During the six months ended June 30, 1996 and 1995, the Partnership also
earned $42,130 and $44,065, respectively, in contingent rental income, $19,409
and $20,673 of which was earned during the quarters ended June 30, 1996 and
1995, respectively.
During the six months ended June 30, 1996 and 1995, the Partnership also
owned and leased five Properties indirectly through joint venture
arrangements, and for the six months ended June 30, 1996, owned and leased one
Property as tenants-in-common with affiliates of the general partners. In
connection therewith, during the six months ended June 30, 1996 and 1995, the
Partnership earned $131,471 and $119,756, respectively, attributable to the
net income earned by these joint ventures, $69,346 and $60,028 of which was
earned during the quarters ended June 30, 1996 and 1995, respectively. The
increase in net income earned by these joint ventures is primarily
attributable to the fact that in January 1996, the Partnership reinvested the
net sales proceeds it received from the sale, in December 1995, of the
Property in Hastings, Michigan, along with additional funds, in a Golden
Corral Property in Clinton, North Carolina, with affiliates as tenants-in-
common.
Interest and other income was $25,071 and $14,424 for the six months
ended June 30, 1996, and 1995, respectively, of which $6,861 and $6,785 was
earned for the quarters ended June 30, 1996 and 1995, respectively. The
increase in interest and other income during the six months ended June 30,
1996, is primarily the result of the Partnership earning more late fees on
past due rental amounts during the six months ended June 30, 1996.
Operating expenses, including depreciation and amortization expense,
were $364,725 and $340,741 for the six months ended June 30, 1996 and 1995,
respectively, of which $172,726 and $170,514 were incurred for the quarters
ended June 30, 1996 and 1995, respectively. The increase in operating
expenses during the quarter and six months ended June 30, 1996, is primarily
the result of an increase in accounting and administrative expenses associated
with operating the Partnership and its Properties and insurance expense as a
result of the general partners obtaining contingent liability and property
coverage for the Partnership, effective May 1995. This insurance policy is
intended to reduce the Partnership's exposure in the unlikely event a tenant's
insurance policy lapses or is insufficient to cover a claim relating to the
Property.
As a result of the former tenant of the Property in Leesburg, Florida,
defaulting under the terms of its lease in September 1994, the Partnership
expects to continue to incur certain expenses, such as real estate taxes,
insurance and maintenance until a replacement tenant is located. The
Partnership is currently seeking a replacement tenant for this Property.
The increase in operating expenses during the quarter and six months
ended June 30, 1996, was partially offset by a decrease in depreciation
expense as a result of the sale of the Property in Hastings, Michigan, in
December 1995.
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
June 30, 1996.
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 August, 1996.
CNL INCOME FUND IV, 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)<PAGE>
