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, 2000
-------------------------------
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
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CNL Income Fund IV, Ltd.
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(Exact name of registrant as specified in its charter)
Florida 59-2854435
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801-3336
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
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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 _____
<PAGE>
CONTENTS
Page
Part I.
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 5-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-12
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 12
Part II.
Other Information 13-15
<PAGE>
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------------- -------------------
<S> <C>
ASSETS
Land and buildings on operating leases, less
accumulated depreciation and allowance for loss on land
and building $ 14,014,986 $ 15,080,971
Net investment in direct financing leases 1,166,821 1,189,488
Investment in joint ventures 3,282,440 3,332,012
Cash and cash equivalents 1,782,300 725,493
Receivables, less allowance for doubtful accounts
of $212,069 and $215,029, respectively 56,237 141,675
Prepaid expenses 12,943 15,383
Lease costs, less accumulated amortization of
$22,155 and $26,113, respectively 1,789 29,031
Accrued rental income 242,807 314,266
------------------- -------------------
$ 20,560,323 $ 20,828,319
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 28,112 $ 91,074
Accrued and escrowed real estate taxes payable 85,964 63,585
Distributions payable 600,000 600,000
Due to related parties 317,663 241,509
Rents paid in advance and deposits 42,558 64,792
------------------- -------------------
Total liabilities 1,074,297 1,060,960
Partners' capital 19,486,02 19,767,359
------------------- -------------------
$ 20,560,323 $ 20,828,319
=================== ===================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------ ------------ -------------- --------------
Revenues:
Rental income from operating leases $ 498,982 $ 496,860 $1,028,579 $ 993,393
Adjustments to accrued rental income (51,520 ) -- (51,520 ) --
Earned income from direct financing leases 29,747 30,864 59,783 61,990
Contingent rental income 4,419 26,131 13,502 34,374
Interest and other income 5,098 7,051 30,997 16,969
------------ ------------ -------------- --------------
486,726 560,906 1,081,341 1,106,726
------------ ------------ -------------- --------------
Expenses:
General operating and administrative 54,652 31,152 95,863 71,590
Bad debt expense -- -- 13,955 --
Professional services 8,031 11,364 23,638 21,364
Real estate taxes 19,062 8,576 24,141 13,855
State and other taxes 327 -- 17,749 15,395
Depreciation and amortization 127,411 102,473 229,984 205,004
Transaction costs 26,525 71,148 61,442 104,166
------------ ------------ -------------- --------------
236,008 224,713 466,772 431,374
------------ ------------ -------------- --------------
Income Before Equity in Earnings of Joint
Ventures, Gain on Sale of Land and
Building and Provision for Loss on Land
and Building 250,718 336,193 614,569 675,352
Equity in Earnings of Joint Ventures 72,251 72,942 139,130 146,616
Gain on Sale of Land and Building 552,580 -- 552,580 --
Provision for Loss on Land and Building (387,612 ) -- (387,612 ) --
------------ ------------ -------------- --------------
Net Income $ 487,937 $ 409,135 $ 918,667 $ 821,968
============ ============ ============== ==============
Allocation of Net Income:
General partners $ (8,216 ) $ 4,091 $ (3,909 ) $ 8,220
Limited partners 496,153 405,044 922,576 813,748
------------ ------------ -------------- --------------
$ 487,937 $ 409,135 $ 918,667 $ 821,968
============ ============ ============== ==============
Net Income Per Limited Partner Unit $ 8.27 $ 6.75 $ 15.38 $ 13.56
============ ============ ============== ==============
Weighted Average Number of Limited Partner
Units Outstanding 60,000 60,000 60,000 60,000
============ ============ ============== ==============
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Six Months Ended Year Ended
June 30, December 31,
2000 1999
----------------------- -----------------------
General partners:
Beginning balance $ 787,351 $ 769,078
Net income (3,909 ) 18,273
----------------------- -----------------------
783,442 787,351
----------------------- -----------------------
Limited partners:
Beginning balance 18,980,008 19,570,922
Net income 922,576 1,809,086
Distributions ($20 and $40 per limited
partner unit, respectively) (1,200,000 ) (2,400,000 )
----------------------- -----------------------
18,702,584 18,980,008
----------------------- -----------------------
Total partners' capital $ 19,486,026 $ 19,767,359
======================= =======================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2000 1999
--------------- ----------------
Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $1,167,482 $1,127,102
--------------- ----------------
Cash Flows from Investing Activities:
Proceeds from sale of land and buildings 1,089,325 --
Investment in joint venture -- (533,200 )
Decrease in restricted cash -- 533,598
Payment of lease costs -- (15,600 )
--------------- ----------------
Net cash provided by (used in) investing
activities 1,089,325 (15,202 )
--------------- ----------------
Cash Flows from Financing Activities:
Distributions to limited partners (1,200,000 ) (1,200,000 )
--------------- ----------------
Net cash used in financing activities (1,200,000 ) (1,200,000 )
--------------- ----------------
Net Increase (Decrease) in Cash and Cash Equivalents 1,056,807 (88,100 )
Cash and Cash Equivalents at Beginning of Period 725,493 739,382
--------------- ----------------
Cash and Cash Equivalents at End of Period $1,782,300 $ 651,282
=============== ================
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Deferred real estate disposition fees incurred
and unpaid at end of period $ 32,850 $ --
=============== ================
Distributions declared and unpaid at end
of period $ 600,000 $ 600,000
=============== ================
See accompanying notes to condensed financial statements.
<PAGE>
</TABLE>
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
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, 2000, may not be indicative
of the results that may be expected for the year ending December 31,
2000. Amounts as of December 31, 1999, 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 IV, Ltd. (the "Partnership") for the year ended December
31, 1999.
2. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------------- -------------------
<S> <C>
Land $ 7,051,698 $ 7,244,512
Buildings 11,523,764 11,986,556
------------------- -------------------
18,575,462 19,231,068
Less accumulated depreciation (4,172,864 ) (4,150,097 )
------------------- -------------------
14,402,598 15,080,971
Less allowance for loss on land and
building (387,612 ) --
------------------- -------------------
$ 14,014,986 $ 15,080,971
=================== ===================
</TABLE>
<PAGE>
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
2. Land and Buildings on Operating Leases - Continued:
In June 2000, the Partnership sold its property in Detroit, Michigan to
the tenant for $1,095,000 and received net sales proceeds of
$1,089,325, resulting in a gain of $552,580 for financial reporting
purposes. This property was originally acquired by the Partnership in
October 1988 and had a cost of approximately $614,500, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold the property for approximately $474,800 in excess of
its original purchase price. In connection with the sale, the
Partnership incurred a deferred, subordinated, real estate disposition
fee of $32,850 (see Note 3).
In addition, at June 30, 2000, the Partnership recorded a provision for
loss on land and building of $387,612 relating to the property in Palm
Bay, Florida. The tenant of this property vacated the property and
discontinued the payment of rent. The allowance represents the
difference between the carrying value of the property at June 30, 2000,
and the estimated net realizable value of the property.
3. Related Party Transactions:
An affiliate of the Partnership is entitled to receive a deferred,
subordinated real estate disposition fee, payable upon the sale of one
or more properties based on the lesser of one-half of a competitive
real estate commission or three percent of the sales price if the
affiliate provides a substantial amount of services in connection with
the sale. However, if the net sales proceeds are reinvested in a
replacement property, no such real estate disposition fees will be
incurred until such replacement property is sold and the net sales
proceeds are distributed. The payment of the real estate disposition
fee is subordinated to receipt by the limited partners of their
aggregate 10% preferred return, plus their adjusted capital
contributions. For the quarter and six months ended June 30, 2000, the
Partnership incurred $32,850 as a deferred, subordinated, real estate
disposition fee as a result of the sale of a property (see Note 2). No
deferred, subordinated, real estate disposition fees were incurred for
the quarter and six months ended June 30, 1999.
4. Termination of Merger
On March 1, 2000, the general partners and CNL American Properties
Fund, Inc. ("APF") mutually agreed to terminate the Agreement and Plan
of Merger entered into in March 1999. The general partners are
continuing to evaluate strategic alternatives for the Partnership,
including alternatives to provide liquidity to the limited partners.
<PAGE>
CNL INCOME FUND IV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
5. Subsequent Events:
In July 2000, the Partnership sold its properties in Temple Terrace and
Punta Gorda, Florida, to an unrelated third party for a total of
approximately $2,353,600, resulting in a gain of approximately $582,100
for financial reporting purposes.
<PAGE>
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,
2000, the Partnership owned 37 Properties, which included interests in six
Properties owned by joint ventures in which the Partnership is a co-venturer and
two Properties owned with affiliates as tenants-in-common.
Capital Resources
The Partnership's primary source of capital for the six months ended
June 30, 2000 and 1999 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 $1,167,482 and
$1,127,102 for the six months ended June 30, 2000 and 1999, respectively. The
increase in cash from operations for the six months ended June 30, 2000 was
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, 2000.
In June 2000, the Partnership sold its Property in Detroit, Michigan,
to the tenant for $1,095,000 and received net sales proceeds of $1,089,325,
resulting in a gain of $552,580 for financial reporting purposes. This Property
was originally acquired by the Partnership in October 1988 and had a cost of
approximately $614,500, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold this Property for approximately
$474,800 in excess of its original purchase price. In connection with the sale,
the Partnership incurred a deferred, real estate disposition fee of $32,850. The
Partnership intends to distribute the majority of the net sales proceeds to the
limited partners.
In July 2000, the Partnership sold its Properties in Temple Terrace and
Punta Gorda, Florida to an unrelated third party for a total of approximately
$2,353,600, resulting in a gain of approximately $582,100 for financial
reporting purposes. The Partnership intends to use the majority of the net sales
proceeds to distribute to the limited partners.
Currently, rental income from the Partnership's Properties is invested
in money market accounts or other short-term, highly liquid investments, such as
demand deposit accounts at commercial banks and certificates of deposit with
less than a 30-day maturity date, pending the Partnership's use of such funds to
pay Partnership expenses or to make distributions to the partners. At June 30,
2000, the Partnership had $1,782,300 invested in such short-term investments, as
compared to $725,493 at December 31, 1999. The increase in cash and cash
equivalents was primarily due to the receipt of net sales proceeds from the sale
of the Partnership's Property in Detroit, Michigan, as described above. The
funds remaining at June 30, 2000, after payment of distributions and other
liabilities will be distributed to the limited partners.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
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.
Total liabilities of the Partnership, including distributions payable,
increased to $1,074,297 at June 30, 2000 from $1,060,960 at December 31, 1999.
The general partners believe that the Partnership has sufficient cash on hand to
meet its working capital needs.
The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership, to the extent that
the general partners determine that such funds are available for distribution.
Based on current and anticipated future cash from operations, the Partnership
declared distributions to limited partners of $1,200,000 for each of the six
months ended June 30, 2000 and 1999 ($600,000 for each of the quarters ended
June 30, 2000 and 1999). This represents distributions for each of the six
months ended June 30, 2000 and 1999 of $20.00 per unit ($10.00 per unit for each
applicable quarter). No distributions were made to the general partners for the
quarters and six months ended June 30, 2000 and 1999. No amounts distributed to
the limited partners for the six months ended June 30, 2000 and 1999 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.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During the six months ended June 30, 2000 and 1999, the Partnership
owned and leased 30 wholly owned Properties (which included one Property sold in
June 2000) generally to operators of fast-food and family-style restaurant
chains. In connection therewith, during the six months ended June 30, 2000 and
1999, the Partnership earned $1,036,842 and $1,055,383, respectively, in rental
income from operating leases (net of adjustments to accrued rental income) and
earned income from direct financing leases, $477,209 and $527,724 of which was
earned during the quarters ended June 30, 2000 and 1999, respectively. The
decrease in rental and earned income for the quarter and six months ended June
30, 2000 was partially due to the fact that in 1998 the tenant of the Property
in Richmond, Virginia filed for bankruptcy and, during the quarter and six
months ended June 30, 2000, rejected the lease relating to this Property, which
was the only Property leased by this tenant. As a result, the tenant
discontinued making rental payments on the rejected lease. In conjunction with
the rejected lease, during the quarter and six months ended June 30, 2000, the
Partnership reversed approximately $38,700 of accrued rental income. The accrued
rental income was the accumulated amount of non-cash accounting adjustments
previously recorded in order to recognize future scheduled rent increases as
income evenly over the term of the lease. The Partnership will not recognize any
rental and earned income from this vacant Property until a new tenant for this
Property is located or until the Property is sold and the proceeds from such
sale are reinvested in an additional Property. The general partners are
currently seeking either a new tenant or purchaser for the vacant Property whose
lease was rejected. The lost revenues resulting from the rejected and vacant
Property could have an adverse effect on the results of operations of the
Partnership if the Partnership is not able to re-lease the Property in a timely
manner.
The decrease in rental and earned income during the quarter and six
months ended June 30, 2000 was also due to the fact that the Partnership
established an allowance for doubtful accounts of $19,500 and $39,000,
respectively, for the quarter and six months ended June 30, 2000 for past due
rental amounts relating to the Property in Topeka, Kansas. The tenant of this
Property vacated the Property in December 1999 and discontinued making rental
payments. The Partnership is currently seeking either a replacement tenant or
purchaser for this Property. The general partners will continue to pursue
collection of past due rental amounts relating to this Property and will
recognize such amounts as income if collected.
The decrease in rental and earned income during the quarter and six
months ended June 30, 2000 was also attributable to the fact that in May 2000,
the tenant of the Property in Palm Bay, Florida vacated the Property and
discontinued making rental payments. As a result, during the quarter and six
months ended June 30, 2000, the Partnership established an allowance for
doubtful accounts in the amount of $4,757 for past due rental amounts relating
to this Property. In addition, during the quarter and six months ended June 30,
2000, the Partnership reversed approximately $12,830 of accrued rental income.
The accrued rental income was the accumulated amount of non-cash accounting
adjustments previously recorded in order to recognize future scheduled rent
increases as income evenly over the term of the lease. The general partners will
continue to pursue collection of past due rental amounts relating to this
Property and will recognize such amounts as income if collected. The Partnership
is currently seeking either a replacement tenant or purchaser for this Property.
The decrease in rental and earned income during the six months ended June 30,
2000, was partially offset by the fact that during the six months ended June 30,
2000, the Partnership collected and recognized as income approximately $76,000
in past due rental amounts from the guarantor of the former tenant of the
Property in Palm Bay, Florida, as compared to approximately $8,000 collected
during the six months ended June 30, 1999.
The decrease in rental and earned income during the quarter and six
months ended June 30, 2000, was partially offset by an increase of approximately
$33,600 and $11,400, respectively, during the quarter and six months ended June
30, 2000 due to the fact that the Partnership collected and recognized as income
past due rental amounts for which the Partnership had previously established an
allowance for doubtful accounts relating to its Properties in Dundee, Michigan
and Marion, Ohio.
During the six months ended June 30, 2000 and 1999, the Partnership
also earned $13,502 and $34,374, respectively, in contingent rental income,
$4,419 and $26,131 of which was earned during the quarters ended June 20, 2000
and 1999, respectively. The decrease in contingent rental income during the
quarter and six months ended June 30, 2000 was primarily attributable to a
decrease in gross sales of certain restaurant properties, the leases of which
require the payment of contingent rental income.
During the six months ended June 30, 2000 and 1999, the Partnership
owned and leased six Properties through joint venture arrangements and two
Properties as tenants-in-common with affiliates of the general partners. In
connection therewith, during the six months ended June 30, 2000 and 1999, the
Partnership earned $139,130 and $146,616, respectively, $72,251 and $72,942 of
which was earned during the quarters ended June 30, 2000 and 1999, respectively.
Net income earned by joint ventures during the six months ended June 30, 2000,
was less than that earned during the six months ended June 30, 1999, due to the
fact that during the six months ended June 30, 2000, Auburn Joint Venture
adjusted estimated contingent rental amounts accrued at December 31, 1999, to
actual amounts received.
Operating expenses, including depreciation and amortization, were
$466,772 and $431,374 for the six months ended June 30, 2000 and 1999,
respectively, of which $236,008 and $224,713 were incurred during the quarters
ended June 30, 2000 and 1999, respectively. The increase in operating expenses
during the quarter and six months ended June 30, 2000, as compared to the
quarter and six months ended June 30, 1999, was partially attributable to an
increase in administrative expenses for servicing the Partnership and its
Properties and real estate tax expense relating to the Property in Topeka,
Kansas, for which the tenant defaulted under the terms of its lease agreement,
as described above. The increase in operating expenses was also due to an
increase in amortization expense due to the expensing the balance of unamortized
lease costs relating to the Partnership's Property in Palm Bay, Florida, for
which the tenant defaulted under the terms of its lease agreement, as described
above. The Partnership has incurred and expects to incur operating expenses,
such as repairs and maintenance, insurance and real estate taxes relating to
these two Properties until they are sold or re-leased to new tenants. The
general partners are currently seeking new tenants or purchasers for these
Properties.
The increase in operating expenses during the six months ended June 30,
2000 was also partially due to the fact that during the six months ended June
30, 2000, the Partnership recorded bad debt expense relating to past due rental
amounts for the Property in Topeka, Kansas. The tenant vacated this Property and
discontinued operations in December 1999. The general partners will continue to
pursue collection of past due rental amounts relating to this Property and will
recognize such amounts as income if collected. The general partners are
currently seeking either a new tenant or purchaser for this Property.
The increase in operating expenses during the quarter and six months
ended June 30, 2000, was partially offset by the fact that the Partnership
incurred less transaction costs during the quarter and six months ended June 30,
2000, relating to the general partners retaining financial and legal advisors to
assist them in evaluating and negotiating the proposed merger with CNL American
Properties Fund, Inc. ("APF") due to the termination of the proposed merger, as
described in "Termination of Merger" below.
As a result of the sale of the Property in Detroit, Michigan, as
described above in "Capital Resources," the Partnership recognized a gain of
$552,580 for financial reporting purposes during the quarter and six months
ended June 30, 2000. No Properties were sold during the quarter and six months
ended June 30, 1999.
During the quarter and six months ended June 30, 2000, the Partnership
recorded a provision for loss on land and building of $387,612 for financial
reporting purposes relating to the Property in Palm Bay, Florida. The tenant of
this Property vacated the Property and discontinued payment of rents. The
allowance represented the difference between the carrying value of the Property
at June 30, 2000, and the estimated net realizable value of the Property. No
such allowance was recorded during the quarter and six months ended June 30,
1999.
Termination of Merger
On March 1, 2000, the general partners and APF mutually agreed to
terminate the Agreement and Plan of Merger (the "Merger") entered into in March
1999. The general partners are continuing to evaluate strategic alternatives for
the Partnership, including alternatives to provide liquidity to the limited
partners.
Dismissal of Legal Action
As described in greater detail in Part II, Item 1. "Legal Proceedings",
in 1999, two groups of limited partners in several CNL Income Funds filed
purported class action suits against the general partners and APF alleging,
among other things, that the general partners had breached their fiduciary
duties in connection with the proposed Merger. These actions were later
consolidated into one action. On April 25, 2000, the judge in the consolidated
action issued an order dismissing the action without prejudice, with each party
to bear its own costs and attorneys' fees.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On May 11, 1999, four limited partners in several CNL Income Funds
served a derivative and purported class action lawsuit filed April
22, 1999 against the general partners and APF in the Circuit Court
of the Ninth Judicial Circuit of Orange County, Florida, alleging
that the general partners breached their fiduciary duties and
violated provisions of certain of the CNL Income Fund partnership
agreements in connection with the proposed merger. The plaintiffs
sought unspecified damages and equitable relief. On July 8, 1999,
the plaintiffs filed an amended complaint which, in addition to
naming three additional plaintiffs, included allegations of aiding
and abetting and conspiring to breach fiduciary duties, negligence
and breach of duty of good faith against certain of the defendants
and sought additional equitable relief. As amended, the caption of
the case was Jon Hale, Mary J. Hewitt, Charles A. Hewitt, Gretchen
M. Hewitt, Bernard J. Schulte, Edward M. and Margaret Berol Trust,
and Vicky Berol v. James M. Seneff, Jr., Robert A. Bourne, CNL
Realty Corporation, and CNL American Properties Fund, Inc., Case
No. CIO-99-0003561.
On June 22, 1999, a limited partner of several CNL Income Funds
served a purported class action lawsuit filed April 29, 1999
against the general partners and APF, Ira Gaines, individually and
on behalf of a class of persons similarly situated, v. CNL
American Properties Fund, Inc., James M. Seneff, Jr., Robert A.
Bourne, CNL Realty Corporation, CNL Fund Advisors, Inc., CNL
Financial Corporation a/k/a CNL Financial Corp., CNL Financial
Services, Inc. and CNL Group, Inc., Case NO. CIO-99-3796, in the
Circuit Court of the Ninth Judicial Circuit of Orange County,
Florida, alleging that the general partners breached their
fiduciary duties and that APF aided and abetted their breach of
fiduciary duties in connection with the proposed merger. The
plaintiff sought unspecified damages and equitable relief.
On September 23, 1999, Judge Lawrence Kirkwood entered an order
consolidating the two cases under the caption In re: CNL Income
Funds Litigation, Case No. 99-3561. Pursuant to this order, the
plaintiffs in these cases filed a consolidated and amended
complaint on November 8, 1999. On December 22, 1999, the general
partners and CNL Group, Inc. filed motions to dismiss and motions
to strike. On December 28, 1999, APF and CNL Fund Advisors, Inc.
filed motions to dismiss. On March 6, 2000, all of the defendants
filed a Joint Notice of Filing Form 8-K Reports and Suggestion of
Mootness.
On April 25, 2000, Judge Kirkwood issued a Stipulated Final Order
of Dismissal of Consolidated Action, dismissing the action without
prejudice, with each party to bear its own costs and attorneys'
fees.
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
3.1 Certificate of Limited Partnership of CNL Income Fund
IV, Ltd. (Included as Exhibit 3.1 in Amendment No. 1
to Registration Statement No. 33-20249 on Form S-11
and incorporated herein by reference.)
3.2 Amended and Restated Agreement and Certificate of
Limited Partnership of CNL Income Fund IV, Ltd.
(Included as Exhibit 3.2 to Form 10-K filed with the
Securities and Exchange Commission on March 31, 1994,
and incorporated herein by reference.)
4.1 Certificate of Limited Partnership of CNL Income Fund
IV, Ltd. (Included as Exhibit 3.1 in Amendment No. 1
to Registration Statement No. 33-20249 on Form S-11
and incorporated herein by reference.)
4.2 Amended and Restated Agreement and Certificate of
Limited Partnership of CNL Income Fund IV, Ltd.
(Included as Exhibit 3.2 to Form 10-K filed with the
Securities and Exchange Commission on March 31, 1994,
and incorporated herein by reference.)
10.1 Property Management Agreement (Included as Exhibit
10.1 to Form 10-K filed with the Securities and
Exchange Commission on March 31, 1994, and
incorporated herein by reference.)
10.2 Assignment of Property Management Agreement from CNL
Investment Company to CNL Income Fund Advisors, Inc.
(Included as Exhibit 10.2 to Form 10-K filed with the
Securities and Exchange Commission on March 30, 1995,
and incorporated herein by reference.)
10.3 Assignment of Property Management Agreement from CNL
Income Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 to Form 10-K filed with the
Securities and Exchange Commission on April 1, 1996,
and incorporated herein by reference.)
27 Financial Data Schedule (Filed herewith.)
<PAGE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 2000.
<PAGE>
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 8th day of August, 2000.
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)
