<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund IV, Ltd. at March 31, 1996, 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 IV, Ltd. for the three months ended March 31,
1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 468,747
<SECURITIES> 0
<RECEIVABLES> 216,061
<ALLOWANCES> 152,567
<INVENTORY> 0
<CURRENT-ASSETS> 536,392
<PP&E> 21,989,843
<DEPRECIATION> 3,156,518
<TOTAL-ASSETS> 23,895,575
<CURRENT-LIABILITIES> 772,481
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,123,094
<TOTAL-LIABILITY-AND-EQUITY> 23,895,575
<SALES> 0
<TOTAL-REVENUES> 654,804
<CGS> 0
<TOTAL-COSTS> 191,999
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 524,930
<INCOME-TAX> 0
<INCOME-CONTINUING> 524,930
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 524,930
<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 March 31, 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
March 31, December 31,
ASSETS 1996 1995
----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $3,156,518
and $3,045,149 $18,833,325 $18,944,694
Net investment in direct
financing leases 1,327,062 1,334,489
Investment in joint ventures 2,898,782 2,374,684
Cash and cash equivalents 468,747 485,864
Restricted cash - 518,150
Receivables, less allowance for
doubtful accounts of $152,567
and $166,866 63,494 94,870
Prepaid expenses 4,151 9,733
Lease costs, less accumulated
amortization of $14,140 and
$13,291 9,804 10,653
Accrued rental income 290,210 284,692
----------- -----------
$23,895,575 $24,057,829
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 8,898 $ 12,672
Accrued and escrowed real estate
taxes payable 18,661 21,956
Distributions payable 690,000 690,000
Due to related parties 44,217 27,166
Rents paid in advance and deposits 10,705 17,871
----------- -----------
Total liabilities 772,481 769,665
Partners' capital 23,123,094 23,288,164
----------- -----------
$23,895,575 $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
March 31,
1996 1995
-------- --------
Revenues:
Rental income from operating leases $580,076 $593,946
Earned income from direct financing
lease 33,797 34,520
Contingent rental income 22,721 23,392
Interest and other income 18,210 7,639
-------- --------
654,804 659,497
-------- --------
Expenses:
General operating and administrative 42,810 25,156
Professional services 9,747 4,662
Real estate taxes 10,672 6,927
State and other taxes 16,552 18,629
Depreciation and amortization 112,218 114,853
-------- --------
191,999 170,227
-------- --------
Income Before Equity in Earnings of
Joint Ventures 462,805 489,270
Equity in Earnings of
Joint Ventures 62,125 59,728
-------- --------
Net Income $524,930 $548,998
======== ========
Allocation of Net Income:
General partners $ 5,249 $ 5,490
Limited partners 519,681 543,508
-------- --------
$524,930 $548,998
======== ========
Net Income Per Limited Partner Unit $ 8.66 $ 9.06
======== ========
Weighted Average Number of Limited
Partner Units Outstanding 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
Quarter Ended Year Ended
March 31, December 31,
1996 1995
------------- ------------
General partners:
Beginning balance $ 402,138 $ 380,548
Net income 5,249 21,590
----------- -----------
407,387 402,138
----------- -----------
Limited partners:
Beginning balance 22,886,026 23,457,277
Net income 519,681 2,188,749
Distributions ($11.50 and
$46.00 per limited
partner unit, respectively) (690,000) (2,760,000)
----------- -----------
22,715,707 22,886,026
----------- -----------
Total partners' capital $23,123,094 $23,288,164
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended
March 31,
1996 1995
--------- ---------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 674,733 $ 675,564
--------- ---------
Cash Flows from Investing
Activities:
Additions to land and build-
ings on operating leases - (1,628)
Investment in joint venture (520,000) -
Decrease in restricted cash 518,150 -
--------- ---------
Net cash used in investing
activities (1,850) (1,628)
--------- ---------
Cash Flows from Financing
Activities:
Reimbursement of acquisition
costs paid by related party
on behalf of the Partnership - (1,175)
Distributions to limited
partners (690,000) (690,000)
--------- ---------
Net cash used in financing
activities (690,000) (691,175)
--------- ---------
Net Decrease in Cash and Cash
Equivalents (17,117) (17,239)
Cash and Cash Equivalents at Beginning
of Quarter 485,864 579,574
--------- ---------
Cash and Cash Equivalents at End of
Quarter $ 468,747 $ 562,335
========= =========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and unpaid
at end of quarter $ 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 Ended March 31, 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 ended March 31, 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:
March 31, December 31,
1996 1995
--------- ------------
Land and building on
operating leases, less
accumulated depreciation $3,778,369 $2,829,115
Net investment in direct
financing leases 871,082 874,650
Cash 21,452 7,697
Receivables 40,705 34,683
Prepaid expenses 1,395 1,324
Accrued rental income 146,672 139,301
Other assets 34,001 35,501
Liabilities 16,488 18,890
Partners' capital 4,877,188 3,903,381
Revenues 118,835 434,150
Net income 92,602 357,511
The Partnership recognized income totalling $62,125 and $59,728 for the
quarters ended March 31, 1996 and 1995, respectively, from these joint
ventures.
3. Subsequent Event:
----------------
In April 1996, the Partnership received $22,300 in capital contributions
from the corporate general partner in connection with the operations of
the Partnership.
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 March 31, 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 quarters ended March
31, 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 $674,733 and
$675,564 for the quarters ended March 31, 1996 and 1995, respectively.
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 March 31, 1996, the Partnership had
$468,747 invested in such short-term investments as compared to $485,864 at
December 31, 1995. The funds remaining at March 31, 1996, will be used
towards the payment of distributions and other liabilities.
Total liabilities of the Partnership, including distributions payable,
increased to $772,481 at March 31, 1996, from $769,665 at December 31, 1995.
Total liabilities at March 31, 1996, to the extent they exceed cash and cash
equivalents at March 31, 1996, will be paid from future cash from operations,
from general partner capital contributions of $22,300 received in April 1996,
and, in the event the general partners elect to make additional contributions,
from future general partner contributions.
Based on current and anticipated future 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 $690,000 for each of the quarters ended
March 31, 1996 and 1995. This represents distributions for each applicable
quarter of $11.50 per unit. No distributions were made to the general
partners for the quarters ended March 31, 1996 and 1995. No amounts
distributed or to be distributed to the limited partners for the quarters
ended March 31, 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 quarter ended March 31, 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 quarter ended March
31, 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 quarters ended March 31, 1996 and 1995, the
Partnership earned $613,873 and $628,466, respectively, in rental income from
operating leases and earned income from direct financing leases from these
Properties. The decrease in rental and earned income during the quarter ended
March 31, 1996, as compared to the quarter ended March 31, 1995, is primarily
attributable to a decrease of approximately $13,900 as a result of the sale of
the Property in Hastings, Michigan, in December 1995.
During the quarters ended March 31, 1996 and 1995, the Partnership also
earned $22,721 and $23,392, respectively, in contingent rental income.
During the quarters ended March 31, 1996 and 1995, the Partnership also
owned and leased five Properties indirectly through joint venture
arrangements, and for the quarter ended March 31, 1996, owned and leased one
Property as tenants-in-common with affiliates of the general partners. In
connection therewith, during the quarters ended March 31, 1996 and 1995, the
Partnership earned $62,125 and $59,728, respectively, attributable to the net
income earned by these joint ventures. The increase in net income earned by
these joint ventures during the quarter ended March 31, 1996, as compared to
the quarter ended March 31, 1995, 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 during the quarter ended March 31, 1996,
increased to $18,210, as compared to $7,639 for the quarter ended March 31,
1995, primarily as the result of the Partnership earning more late fees on
past due rental amounts during the quarter ended March 31, 1996.
Operating expenses, including depreciation and amortization expense,
were $191,999 and $170,227 for the quarters ended March 31, 1996 and 1995,
respectively. The increase in operating expenses during the quarter ended
March 31, 1996, as compared to the quarter ended March 31, 1995, is primarily
the result of an increase in (i) accounting and administrative expenses
associated with operating the Partnership and its Properties and (ii)
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. Operating expenses also increased due to
the fact that during the quarter ended March 31, 1996, the Partnership
incurred professional services as a result of appraisal updates obtained to
prepare an annual statement of unit valuation to qualified plans in accordance
with the Partnership's partnership agreement. During 1995, these professional
services were incurred during the quarter ended June 30, 1995.
Operating expenses also increased during the quarter ended March 31,
1996, as compared to the quarter ended March 31, 1995, due to the Partnership
paying approximately $6,300 for real estate taxes that are the responsibility
of one of the tenants of the Property in Maywood, Illinois, due to a shortage
of amounts collected from the tenant for the payment of their proportionate
share of real estate taxes. The Partnership expensed this amount as real
estate tax expense and established an allowance for doubtful accounts due to
the uncertainty of the collection of such amount. The Partnership intends to
pursue collection of this amount and will record such amount as income if
collected.
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.
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, 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 10th day of May, 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)
