<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund VI, 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 VI, 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> DEC-31-1997
<CASH> 1,013,234
<SECURITIES> 0
<RECEIVABLES> 238,396
<ALLOWANCES> 146,249
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 25,383,152
<DEPRECIATION> 3,284,040
<TOTAL-ASSETS> 30,081,421
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,056,940
<TOTAL-LIABILITY-AND-EQUITY> 30,081,421
<SALES> 0
<TOTAL-REVENUES> 818,694
<CGS> 0
<TOTAL-COSTS> 171,192
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 800,073
<INCOME-TAX> 0
<INCOME-CONTINUING> 800,073
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 800,073
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund VI, 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
0-19144
CNL Income Fund VI, Ltd.
(Exact name of registrant as specified in its charter)
Florida 59-2922954
(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 5-7
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 8-11
Part II
Other Information 12
CNL INCOME FUND VI, 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 $3,284,040
and $3,165,150 $22,099,112 $21,105,355
Net investment in direct
financing leases 4,640,687 4,659,024
Investment in joint ventures 1,122,219 997,016
Cash and cash equivalents 1,013,234 1,127,930
Restricted cash - 977,756
Receivables, less allowance for
doubtful accounts of $146,249
and $115,892 92,147 174,983
Prepaid expenses 2,961 1,163
Lease costs, less accumulated
amortization of $4,164 and
$3,691 13,536 14,009
Accrued rental income, less
allowance for doubtful
accounts of $9,697 in 1997
and 1996 1,070,794 1,045,319
Other assets 26,731 26,731
----------- -----------
$30,081,421 $30,129,286
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 25,262 $ 18,161
Accrued and escrowed real estate
taxes payable 5,633 11,338
Due to related parties 7,688 2,633
Distributions payable 787,500 857,500
Rents paid in advance 37,438 30,705
----------- -----------
Total liabilities 863,521 920,337
Minority interest 160,960 164,582
Partners' capital 29,056,940 29,044,367
----------- -----------
$30,081,421 $30,129,286
=========== ===========
See accompanying notes to condensed financial statements.
1
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended
March 31,
1997 1996
-------- --------
Revenues:
Rental income from operating leases $639,561 $694,047
Earned income from direct financing
leases 144,914 142,601
Contingent rental income 18,936 6,329
Interest and other income 15,283 12,102
-------- --------
818,694 855,079
-------- --------
Expenses:
General operating and administrative 34,705 44,233
Professional services 5,978 11,069
Real estate taxes 2,532 -
State and other taxes 8,614 8,014
Depreciation and amortization 119,363 121,131
-------- --------
171,192 184,447
-------- --------
Income Before Minority Interest in Loss
(Income) of Consolidated Joint Venture
and Equity in Earnings of Unconsolidated
Joint Ventures 647,502 670,632
Minority Interest in Loss (Income) of
Consolidated Joint Venture 3,843 (5,604)
Equity in Earnings of Unconsolidated Joint
Ventures 148,728 22,605
-------- --------
Net Income $800,073 $687,633
======== ========
Allocation of Net Income:
General partners $ 8,001 $ 6,876
Limited partners 792,072 680,757
-------- --------
$800,073 $687,633
======== ========
Net Income Per Limited Partner Unit $ 11.32 $ 9.73
======== ========
Weighted Average Number of Limited
Partner Units Outstanding 70,000 70,000
======== ========
See accompanying notes to condensed financial statements.
2
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Quarter Ended Year Ended
March 31, December 31,
1997 1996
------------- ------------
General partners:
Beginning balance $ 204,010 $ 175,673
Net income 8,001 28,337
----------- -----------
212,011 204,010
----------- -----------
Limited partners:
Beginning balance 28,840,357 29,285,093
Net income 792,072 2,775,264
Distributions ($11.25 and
$46.00 per limited partner
unit, respectively) (787,500) (3,220,000)
----------- -----------
28,844,929 28,840,357
----------- -----------
Total partners' capital $29,056,940 $29,044,367
=========== ===========
See accompanying notes to condensed financial statements.
3
CNL INCOME FUND VI, 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 $ 878,213 $ 820,725
----------- -----------
Cash Flows from Investing
Activities:
Additions to land and buildings
on operating leases (1,112,647) -
Investment in joint venture - (173,650)
Collections on mortgage note
receivable - 3,033
Decrease in restricted cash 977,017 -
----------- -----------
Net cash used in investing
activities (135,630) (170,617)
----------- -----------
Cash Flows from Financing
Activities:
Distributions to limited
partners (857,500) (787,500)
Distributions to holder of
minority interest 221 (641)
----------- -----------
Net cash used in financing
activities (857,279) (788,141)
----------- -----------
Net Decrease in Cash and Cash
Equivalents (114,696) (138,033)
Cash and Cash Equivalents at Beginning
of Quarter 1,127,930 1,120,999
----------- -----------
Cash and Cash Equivalents at End of
Quarter $ 1,013,234 $ 982,966
=========== ===========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and unpaid
at end of quarter $ 787,500 $ 787,500
=========== ===========
See accompanying notes to condensed financial statements.
4
CNL INCOME FUND VI, 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 VI, Ltd. (the "Partnership") for the year ended December 31,
1996.
The Partnership accounts for its 66 percent interest in the accounts of
Caro Joint Venture using the consolidation method. Minority interest
represents the minority joint venture partner's proportionate share of
the equity in the Partnership's consolidated joint venture. All
significant intercompany accounts and transactions have been eliminated.
2. Land and Buildings:
In February 1997, the Partnership reinvested the net sales proceeds from
the sale of the Property in Dallas, Texas, in December 1996, along with
additional funds, in a Bertucci's Property in Marietta, Georgia, for a
total cost of approximately $1,112,600.
3. Investment in Joint Ventures:
In January 1997, Show Low Joint Venture, in which the Partnership owns a
36 percent interest, sold its property to the tenant for $970,000,
resulting in a gain to the joint venture of approximately $360,000 for
financial reporting purposes. The property was originally contributed
to Show Low Joint Venture in July 1990 and had a total cost of
approximately $663,500, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the joint venture sold the property for
approximately $306,500 in excess of its original purchase price.
5
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1996 and 1995
3. Investment in Joint Ventures - Continued:
The following presents the combined, condensed financial information for
all of the Partnership's investments in joint ventures at:
March 31, December 31,
1997 1996
---------- ------------
Land and buildings on
operating leases, less
accumulated depreciation $2,895,357 $3,463,093
Net investment in direct
financing leases 399,648 401,650
Cash 17,765 11,177
Restricted cash 973,032 -
Receivables 4,246 21,826
Accrued rental income 181,514 191,594
Other assets 367 44,380
Liabilities 18,741 10,221
Partners' capital 4,453,188 4,123,499
Revenues 104,934 528,092
Gain on sale 360,002 -
Net income 443,837 436,981
The Partnership recognized income totalling $148,728 and $22,605 for the
quarters ended March 31, 1997 and 1996, respectively, from these joint
ventures.
4. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual restaurant chains, each representing more than ten percent of
the Partnership's total rental and earned income (including the
Partnership's share of total rental and earned income from joint
ventures and the properties held as tenants-in-common with affiliates),
for at least one of the quarters ended March 31:
1997 1996
-------- --------
Golden Corral Family
Steakhouse Restaurants $167,318 $169,934
Burger King 127,708 113,899
Denny's 91,206 92,437
Hardee's 80,076 103,029
6
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1996 and 1995
4. Concentration of Credit Risk - Continued:
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any one of these lessees or
restaurant chains could significantly impact the results of operations
of the Partnership. However, the general partners believe that the risk
of such a default is reduced due to the essential or important nature of
these properties for the on-going operations of the lessees.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CNL Income Fund VI, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on August 17, 1988, 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 selected national
and regional fast-food and family-style restaurant chains (collectively, the
"Properties"). The leases are triple-net leases, with the lessees generally
responsible for all repairs and maintenance, property taxes, insurance and
utilities. As of March 31, 1997, the Partnership owned 42 Properties,
including three Properties owned by joint ventures in which the Partnership is
a co-venturer and two Properties owned with affiliates as tenants-in-common.
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 $878,213 and
$820,725 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 income and expenses, as discussed below in
"Results of Operations" and changes in the Partnership's working capital.
Other sources and uses of capital included the following during the
quarter ended March 31, 1997.
In January 1997, Show Low Joint Venture, in which the Partnership owns a
36 percent interest, sold its Property to the tenant for $970,000, resulting
in a gain to the joint venture of approximately $360,000 for financial
reporting purposes. The Property was originally contributed to Show Low Joint
Venture in July 1990 and had a total cost of approximately $663,500, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the joint
venture sold the Property for approximately $306,500 in excess of its original
purchase price. The general partners believe that the transaction, or a
portion thereof, relating to the sale of the Property in Show Low Joint
Venture, and the reinvestment of the proceeds will qualify as a like-kind
exchange transaction for federal income tax purposes.
In February 1997, the Partnership reinvested the net sales proceeds from
the sale of the Property in Dallas, Texas, in December 1996, along with
additional funds, in a Bertucci's Property in Marietta, Georgia, for a total
cost of approximately $1,112,600.
8
Liquidity and Capital Resources - Continued
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
$1,013,234 invested in such short-term investments as compared to $1,127,930
at December 31, 1996. The decrease in cash and cash equivalents during the
quarter ended March 31, 1997, is primarily the result of the Partnership
investing approximately $134,900 in a Bertucci's Property, as described above.
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,
decreased to $863,521 at March 31, 1997, from $920,337 at December 31, 1996,
primarily as the result of the Partnership's accruing a special distribution
payable to the limited partners of $70,000 at December 31, 1996, which was
paid in January 1997. The general partners believe the Partnership has
sufficient cash on hand to meet the Partnership's current working capital
needs.
Based primarily on cash from operations, the Partnership declared
distributions to the limited partners of $787,500 for each of the quarters
ended March 31, 1997 and 1996. This represents distributions for each
applicable quarter of $11.25 per unit. No distributions were made to the
general partners for the quarters ended March 31, 1997 and 1996. No amounts
distributed or to be 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 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 and
its consolidated joint venture, Caro Joint Venture, owned and leased 38 wholly
owned Properties (including one Property in Dallas, Texas, which was sold in
December 1996) to operators of fast-food and family-style restaurant
chains. In connection
9
Results of Operations - Continued
therewith, the Partnership and Caro Joint Venture earned $784,475 and
$836,648, during the quarters ended March 31, 1997 and 1996, respectively, in
rental income from operating leases and earned income from direct financing
leases from these Properties. Rental and earned income decreased
approximately $27,500 during the quarter ended March 31, 1997, as compared to
the quarter ended March 31, 1996, as a result of the sale of the Property in
Dallas, Texas, in December 1996. The decrease in rental income was partially
offset by an increase of approximately $12,700 during the quarter ended March
31, 1997, due to the reinvestment of the net sales proceeds in a Property in
Marietta, Georgia, in February 1997.
The decrease in rental income is also attributable to the fact that the
Partnership's consolidated joint venture established an allowance for doubtful
accounts for rental amounts totalling approximately $29,300, due to financial
difficulties the tenant is experiencing. The Partnership's consolidated joint
venture will continue to pursue collection of such amounts and any amounts
collected will be recorded as income.
For the quarters ended March 31, 1997 and 1996, the Partnership also
earned $18,936 and $6,329, respectively, in contingent rental income. The
increase in contingent rental income during the quarter ended March 31, 1997,
is primarily attributable to an increase in gross sales of certain restaurant
Properties requiring the payment of contingent rental income.
For the quarters ended March 31, 1997 and 1996, the Partnership owned
and leased three Properties indirectly through joint venture arrangements
(including one Property in Show Low Joint Venture, which was sold in January
1997) and two Properties as tenants-in-common with affiliates of the general
partners. In connection therewith, during the quarters ended March 31, 1997
and 1996, the Partnership earned $148,728 and $22,605, respectively,
attributable to net income earned by these joint ventures. The increase in
net income earned by joint ventures is primarily attributable to the fact that
in January 1997, Show Low Joint Venture, in which the Partnership owns a 36
percent interest, recognized a gain of approximately $360,000 for financial
reporting purposes as a result of the sale of its Property in January 1997, as
described above in "Liquidity and Capital Resources." Due to the fact that
the joint venture intends on reinvesting the sales proceeds in an additional
Property in 1997, the Partnership does not anticipate that the sale of the
Property will have a material adverse effect on operations.
During the quarter ended March 31, 1997, three restaurant chains, Burger
King, Denny's, and Golden Corral Family Steakhouse Restaurants, each accounted
for more than ten percent of the Partnership's total rental income during the
quarter ended March 31, 1997 (including the Partnership's share of rental
income from three Properties owned by a joint venture and two Properties
10
Results of Operations - Continued
owned with affiliates as tenants-in-common). During the remainder of 1997 and
subsequent years, it is anticipated that these three restaurant chains each
will continue to account for more than ten percent of the total rental income
to which the Partnership is entitled under the terms of the leases. Any
failure of these restaurant chains could materially affect the Partnership's
income.
Operating expenses, including depreciation and amortization expense,
were $171,192 and $184,447 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 the Partnership 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 agreement
during the quarter ended December 31, 1996. The Partnership incurred the cost
of the 1995 appraisal updates during the quarter ended March 31, 1996.
11
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.
12
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 12th day of May, 1997.
CNL INCOME FUND VI, 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)
