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, 1998
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
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
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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 5-9
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 10-15
Part II
Other Information 16
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
March 31, December 31,
ASSETS 1998 1997
----------- -----------
Land and buildings on operating
leases, less accumulated
depreciation of $3,244,566
and $3,327,334 $19,298,767 $20,785,684
Net investment in direct
financing leases 4,471,925 4,708,841
Investment in joint ventures 2,382,213 1,130,139
Cash and cash equivalents 1,695,158 1,614,759
Restricted cash 1,240,838 709,227
Receivables, less allowance for
doubtful accounts of $361,710
and $363,410 64,049 157,989
Prepaid expenses 3,525 4,235
Lease costs, less accumulated
amortization of $6,053 and
$5,581 11,647 12,119
Accrued rental income, less
allowance for doubtful
accounts of $9,697 in 1998
and 1997 865,092 843,345
Other assets 26,731 26,731
----------- -----------
$30,059,945 $29,993,069
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 11,647 $ 14,138
Accrued construction costs payable - 125,000
Accrued and escrowed real estate
taxes payable 17,646 38,025
Due to related parties 16,751 32,019
Distributions payable 787,500 787,500
Rents paid in advance 35,184 57,663
----------- -----------
Total liabilities 868,728 1,054,345
Minority interest 147,555 144,475
Partners' capital 29,043,662 28,794,249
----------- -----------
$30,059,945 $29,993,069
=========== ===========
See accompanying notes to condensed financial statements.
1
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CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended
March 31,
1998 1997
---------- ----------
Revenues:
Rental income from operating leases $ 632,051 $ 639,561
Earned income from direct financing
leases 124,209 144,914
Contingent rental income 32,390 18,936
Interest and other income 36,676 15,283
---------- ----------
825,326 818,694
---------- ----------
Expenses:
General operating and administrative 45,465 34,705
Professional services 5,870 5,978
Real estate taxes - 2,532
State and other taxes 9,905 8,614
Depreciation and amortization 115,910 119,363
---------- ----------
177,150 171,192
---------- ----------
Income Before Minority Interest in Loss
(Income) of Consolidated Joint
Venture, Equity in Earnings of
Unconsolidated Joint Ventures and
Gain on Sale of Land and Buildings 648,176 647,502
Minority Interest in Loss (Income) of
Consolidated Joint Venture (12,881) 3,843
Equity in Earnings of Unconsolidated
Joint Ventures 56,496 148,728
Gain on Sale of Land and Buildings 345,122 -
---------- ---------
Net Income $1,036,913 $ 800,073
========== ==========
Allocation of Net Income:
General partners $ 8,488 $ 8,001
Limited partners 1,028,425 792,072
---------- ----------
$1,036,913 $ 800,073
========== ==========
Net Income Per Limited Partner Unit $ 14.69 $ 11.32
========== ==========
Weighted Average Number of Limited
Partner Units Outstanding 70,000 70,000
========== ==========
See accompanying notes to condensed financial statements.
2
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CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Quarter Ended Year Ended
March 31, December 31,
1998 1997
------------- -----------
General partners:
Beginning balance $ 229,363 $ 204,010
Net income 8,488 25,353
----------- -----------
237,851 229,363
----------- -----------
Limited partners:
Beginning balance 28,564,886 28,840,357
Net income 1,028,425 2,874,529
Distributions ($11.25 and
$45.00 per limited partner
unit, respectively) (787,500) (3,150,000)
----------- -----------
28,805,811 28,564,886
----------- -----------
Total partners' capital $29,043,662 $28,794,249
=========== ===========
See accompanying notes to condensed financial statements.
3
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CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended
March 31,
1998 1997
----------- -------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 861,169 $ 878,213
----------- -----------
Cash Flows from Investing
Activities:
Proceeds from sale of land
and buildings 1,932,253 -
Additions to land and build-
ings on operating leases (125,000) (1,112,647)
Investment in joint ventures (1,253,755) -
Decrease (Increase) in
restricted cash (536,967) 977,017
----------- -----------
Net cash provided by
(used in) investing
activities 16,531 (135,630)
----------- -----------
Cash Flows from Financing
Activities:
Distributions to limited
partners (787,500) (857,500)
Distributions to holder
of minority interest (9,801) 221
----------- -----------
Net cash used in
financing activities (797,301) (857,279)
----------- -----------
Net Increase (Decrease) in Cash
and Cash Equivalents 80,399 (114,696)
Cash and Cash Equivalents at
Beginning of Quarter 1,614,759 1,127,930
----------- -----------
Cash and Cash Equivalents at
End of Quarter $ 1,695,158 $ 1,013,234
=========== ===========
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
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CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 1998 and 1997
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, 1998, may not be indicative of the results
that may be expected for the year ending December 31, 1998. Amounts as
of December 31, 1997, 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, 1997.
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 January 1998, the Partnership sold its property in Deland, Florida,
to the tenant, for $1,250,000 and received net sales proceeds of
$1,234,122, resulting in a gain of $345,122 for financial reporting
purposes. This property was originally acquired by the Partnership in
October 1989 and had a cost of approximately $1,000,000, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold the property for approximately $234,100 in excess of
its original purchase price.
In February 1998, the Partnership sold its property in Melbourne,
Florida, for $590,000 and received net sales proceeds of $552,910. Due
to the fact that during 1997, the Partnership recorded an allowance for
loss of $158,239 for this property, no gain or loss was recognized for
financial reporting purposes in February 1998, relating to the sale.
5
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CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1998 and 1997
2. Land and Buildings - Continued:
In February 1998, the Partnership sold its property in Liverpool, New
York, for $157,500 and received net sales proceeds of $145,221. Due to
the fact that in prior years the Partnership recorded an allowance for
loss of $181,970 for this property, no gain or loss was recognized for
financial reporting purposes in February 1998, relating to the sale.
3. Net Investment in Direct Financing Leases:
In February 1998, the Partnership sold its property in Melbourne,
Florida, for which the building portion had been classified as a direct
financing lease. In connection therewith, the gross investment (minimum
lease payments receivable and estimated residual values) and unearned
income relating to this property were removed from the accounts (Note
2).
4. Investment in Joint Ventures:
In January 1998, the Partnership acquired a 34.74% interest and a 46.2%
interest in a property in Overland Park, Kansas, and a property in
Memphis, Tennessee, respectively, as tenants-in-common with affiliates
of the general partners. The Partnership accounts for its investments
in these properties using the equity method since the Partnership
shares control with affiliates, and amounts relating to its investments
are included in investment in joint ventures.
Auburn Joint Venture, Show Low Joint Venture, Asheville Joint Venture,
and the Partnership and affiliates as tenants-in-common in four
separate tenancy-in-common arrangements, each own and lease one
property to an operator of national fast-
6
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1998 and 1997
4. Investment in Joint Ventures - Continued:
food and family-style restaurants. The following presents the combined,
condensed financial information for the joint ventures and the four
properties held as tenants-in-common with affiliates at:
March 31, December 31,
1998 1997
Land and buildings on
operating leases, less
accumulated depreciation $6,045,698 $4,568,842
Net investment in direct
financing leases 2,516,529 911,559
Cash 18,444 7,991
Receivables 11,112 22,230
Accrued rental income 182,725 160,197
Other assets 396 414
Liabilities 19,221 7,557
Partners' capital 8,755,683 5,663,676
Revenues 238,798 471,627
Gain on sale of land
and building - 488,372
Net income 206,148 889,883
The Partnership recognized income totalling $56,496 and $148,728 for
the quarters ended March 31, 1998 and 1997, respectively, from these
joint ventures.
5. Restricted Cash:
As of March 31, 1998, the net sales proceeds of $1,234,617 from the
sale of the property in Deland, Florida, plus accrued interest of
$6,221, were being held in an interest-bearing escrow account pending
the release of funds by the escrow agent to acquire an additional
property on behalf of the Partnership.
7
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1998 and 1997
6. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, 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 four properties held as tenants-in-common with
affiliates), for at least one of the quarters ended March 31:
1998 1997
-------- ------
Golden Corral Corporation $169,905 $167,318
Mid-America Corporation 109,880 109,880
IHOP Properties, Inc. 107,698 -
Restaurant Management
Services, Inc. 100,683 140,860
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 four properties held as tenants-in-common with
affiliates), for at least one of the quarters ended March 31:
1998 1997
-------- ------
Golden Corral Family
Steakhouse Restaurants $169,905 $167,318
Burger King 113,955 127,708
IHOP 107,698 -
Denny's 52,949 91,206
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.
8
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1998 and 1997
7. Subsequent Event:
In April 1998, the Partnership entered into a joint venture
arrangement, Melbourne Joint Venture, with an affiliate of the
Partnership which has the same general partners, to construct and hold
one restaurant property, at a total cost of $1,052,552. The Partnership
and its co-venture partner each have agreed to contribute approximately
$526,276. The Partnership and its co-venture partner each expect to
have a 50 percent interest in the profits and losses of the joint
venture.
9
<PAGE>
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, 1998, the Partnership owned 39 Properties, including
four Properties owned by joint ventures in which the Partnership is a
co-venturer and four 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, 1998 and 1997, 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 $861,169 and
$878,213 for the quarters ended March 31, 1998 and 1997, respectively. The
decrease in cash from operations for the quarter ended March 31, 1998, is
primarily a result of changes in income and expenses, as described 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, 1998.
In July 1997, the Partnership entered into a new lease for the Property
in Greensburg, Indiana, with a new tenant to operate the Property as an Arby's
restaurant. In connection therewith, the Partnership paid $125,000 in renovation
costs, which had been incurred and accrued as construction costs payable at
December 31, 1997.
In January 1998, the Partnership used the net sales proceeds from the
1997 sale of several Properties to acquire a Property in Overland Park, Kansas,
and a Property in Memphis, Tennessee, as tenants-in-common with affiliates of
the general partners. In connection therewith, the Partnership and the
affiliates entered into separate agreements whereby each co-venturer will share
in the profits and losses of each Property in proportion to its applicable
percentage interest. As of March 31, 1998, the Partnership owned a 34.74% and
46.2% interest in the Properties in Overland Park, Kansas, and Memphis,
Tennessee, respectively.
10
<PAGE>
Liquidity and Capital Resources - Continued
In January 1998, the Partnership sold its Property in Deland, Florida,
to the tenant, for $1,250,000 and received net sales proceeds of $1,234,122,
resulting in a gain of $345,122 for financial reporting purposes. This Property
was originally acquired by the Partnership in October 1989 and had a cost of
approximately $1,000,000, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the Property for
approximately $234,100 in excess of its original purchase price. As of March 31,
1998, the net sales proceeds of $1,234,617 plus accrued interest of $6,221 were
being held in an interest-bearing escrow account pending the release of funds by
the escrow agent to acquire an additional Property. The general partners believe
that the transaction, or a portion thereof, relating to the sale of the Property
in Deland, Florida, and the reinvestment of the proceeds will be structured to
qualify as a like-kind exchange transaction for federal income tax purposes.
In February 1998, the Partnership sold its Property in Melbourne,
Florida, for $590,000 and received net sales proceeds of $552,910. Due to the
fact that during 1997, the Partnership recorded an allowance for loss of
$158,239 for this Property, no gain or loss was recognized for financial
reporting purposes in February 1998, relating to the sale. In addition, in
February 1998, the Partnership sold its Property in Liverpool, New York, for
$157,500 and received net sales proceeds of $145,221. Due to the fact that in
prior years the Partnership recorded an allowance for loss of $181,970 for this
Property, no gain or loss was recognized for financial reporting purposes in
February 1998, relating to the sale. The Partnership intends to reinvest the net
sales proceeds from the sale of both Properties in additional Properties.
In April 1998, the Partnership entered into a joint venture
arrangement, Melbourne Joint Venture, with an affiliate of the Partnership which
has the same general partners, to construct and hold one restaurant Property, at
a total cost of $1,052,552. The Partnership and its co-venture partner each have
agreed to contribute approximately $526,276. The Partnership and its co-venture
partner each expect to have a 50 percent interest in the profits and losses of
the joint venture.
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, 1998, the Partnership had $1,695,158
invested in such short-term investments as compared to $1,614,759 at December
31, 1997. The funds remaining at March 31, 1998, after payment of distributions
and other liabilities, will be used to meet the Partnership's working capital
and other needs and to acquire additional Properties.
11
<PAGE>
Liquidity and Capital Resources - Continued
Total liabilities of the Partnership, including distributions payable,
decreased to $868,728 at March 31, 1998, from $1,054,345 at December 31, 1997,
primarily as the result of a decrease in construction costs payable as a result
of the payment during the quarter ended March 31, 1998 of construction costs
accrued at December 31, 1997, relating to the Partnership's Property in
Greensburg, Indiana, as described above. The decrease in liabilities was also
partially due to a decrease in rents paid in advance at March 31, 1998, as
compared to December 31, 1997. The general partners believe the Partnership has
sufficient cash on hand to meet the Partnership's current working capital needs.
Based on cash from operations, the Partnership declared distributions
to the limited partners of $787,500 for each of the quarters ended March 31,
1998 and 1997. 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, 1998 and 1997. No amounts distributed to the limited
partners for the quarters ended March 31, 1998 and 1997, 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 quarter ended March 31, 1997, the Partnership and its
consolidated joint venture, Caro Joint Venture, owned and leased 37 wholly owned
Properties, and during the quarter ended March 31, 1998, the Partnership and
Caro Joint Venture owned and leased 35 wholly owned Properties (including two
Properties, one in each of Melbourne, Florida and Liverpool, New York, which
were sold in February 1998 and one Property in Deland, Florida, which was sold
in January 1998) to operators of fast-food and family-style restaurant chains.
In connection therewith, the Partnership and Caro Joint Venture earned $756,260
and $784,475 during the quarters ended March 31, 1998 and 1997, respectively, in
rental income from operating leases and earned income from direct financing
leases from these Properties. Rental and earned income decreased during the
quarter ended March 31, 1998, as compared to the quarter ended March 31, 1997,
primarily as a result of the sales during 1997 of
12
<PAGE>
Results of Operations - Continued
the Properties in Whitehall, Michigan; Naples, Florida; Plattsmouth, Nebraska
and Venice, Florida and the sales during 1998 of the Properties in Deland and
Melbourne, Florida. During the quarter ended March 31, 1998, the decrease in
rental income was partially offset by an increase, due to the reinvestment of
the net sales proceeds from the 1996 sale of the Property in Dallas, Texas, in a
Property in Marietta, Georgia, in February 1997 and the reinvestment of the net
sales proceeds from the 1997 sales of the Properties in Venice and Naples,
Florida in two Properties, one in each of Elgin, Illinois and Manassas,
Virginia, in 1997.
For the quarters ended March 31, 1998 and 1997, the Partnership also
earned $32,390 and $18,936, respectively, in contingent rental income. The
increase in contingent rental income during the quarter ended March 31, 1998, is
primarily attributable to an increase in gross sales of certain restaurant
Properties, the leases of which require the payment of contingent rent.
During the quarters ended March 31, 1998 and 1997, the Partnership
earned $36,676 and $15,283, respectively, in interest and other income. The
increase in interest and other income during the quarter ended March 31, 1998,
was partially attributable to interest earned on the net sales proceeds relating
to the sale of the Properties in Deland and Melbourne, Florida, and Liverpool,
New York, pending the reinvestment of the net sales proceeds in additional
Properties. The increase was also partially attributable to the fact that the
Partnership's consolidated joint venture recognized approximately $13,300 in
other income, due to the fact that the tenant of the Property in Caro, Michigan,
paid past due real estate taxes relating to the Property and the joint venture
reversed such amounts during 1998 that it had previously accrued as payable
during 1997.
For the quarter ended March 31, 1997, 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 an affiliate of the general partners. For
the quarter ended March 31, 1998, the Partnership owned and leased three
Properties indirectly through joint venture arrangements and four Properties as
tenants-in-common with affiliates of the general partners. In connection
therewith, during the quarters ended March 31, 1998 and 1997, the Partnership
earned $56,496 and $148,728, respectively, attributable to net income earned by
these joint ventures. The decrease in net income earned by joint ventures during
the quarter ended March 31, 1998, as compared to the quarter ended March 31,
1997, 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. Show Low Joint Venture reinvested the
majority of the net sales proceeds in a replacement Property in June 1997. The
decrease in net income earned by joint ventures during the quarter ended March
31, 1998,
13
<PAGE>
Results of Operations - Continued
as compared to the quarter ended March 31, 1997, is partially offset by the fact
that in December 1997, the Partnership reinvested the net sales proceeds it
received from the 1997 sale of the Property in Yuma, Arizona in a Property in
Vancouver, Washington, with affiliates of the general partners as
tenants-in-common. In addition, the decrease in net income earned by joint
ventures during the quarter ended March 31, 1998, as compared to the quarter
ended March 31, 1997, is partially offset by the fact that in January 1998, the
Partnership reinvested the net sales proceeds it received from the 1997 sales of
the Properties in Whitehall, Michigan and Plattsmouth, Nebraska, in Properties
in Overland Park, Kansas and Memphis, Tennessee, with affiliates of the general
partners as tenants-in-common.
During at least one of the quarters ended March 31, 1998 and 1997, four
of the Partnership's lessees, Golden Corral Corporation, Restaurant Management
Services, Inc., Mid-America Corporation and IHOP Properties, Inc., each
contributed more than ten percent of the Partnership's total rental income
(including rental income from the Partnership's consolidated joint venture and
the Partnership's share of the rental income from the three Properties owned by
unconsolidated joint ventures in which the Partnership is a co-venturer and four
Properties owned with affiliates as tenants-in-common). As of March 31, 1998,
Golden Corral Corporation was the lessee under leases relating to five
restaurants, Restaurant Management Services, Inc. was the lessee under leases
relating to seven restaurants, Mid-America Corporation was the lessee under
leases relating to four restaurants and IHOP Properties, Inc. was the lessee
under leases relating to four restaurants. It is anticipated that, based on the
minimum annual rental payments required by the leases, these four lessees each
will continue to contribute more than ten percent of the Partnership's total
rental income during the remainder of 1998 and subsequent years. In addition,
four Restaurant Chains, Golden Corral, Denny's, IHOP and Burger King, each
accounted for more than ten percent of the Partnership's total rental income
during at least one of the quarters ended March 31, 1998 and 1997 (including the
Partnership's consolidated joint venture and the Partnership's share of the
rental income from the Properties owned by unconsolidated joint ventures in
which the Partnership is a co-venturer and Properties owned with affiliates as
tenants-in-common). During the remainder of 1998 and in subsequent years, it is
anticipated that Golden Corral, IHOP and Burger King each will continue to
account for more than ten percent of the Partnership's total rental income to
which the Partnership is entitled under the terms of the leases. Any failure of
these lessees or Restaurant Chains could materially affect the Partnership's
income.
Operating expenses, including depreciation and amortization expense,
were $177,150 and $171,192 for the quarters ended March 31, 1998 and 1997,
respectively. The increase in operating expenses during the quarter ended March
31, 1998, as compared to the quarter ended March 31, 1997, is primarily
attributable to an increase in accounting and administrative expenses associated
with
14
<PAGE>
Results of Operations - Continued
operating the Partnership and its Properties. The increase in operating expenses
was partially offset by a decrease in depreciation expense due to the sale of
several Properties during 1997 and the sale of the Properties in Deland and
Melbourne, Florida, and Liverpool, New York during 1998.
As a result of the sale of the Property in Deland, Florida, as
described above in "Liquidity and Capital Resources," the Partnership recognized
a gain of $345,122 during the quarter ended March 31, 1998, for financial
reporting purposes. No Properties were sold during the quarter ended March 31,
1997.
15
<PAGE>
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, 1998.
16
<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 12th day of May, 1998.
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)
<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, 1998, and its statement of income
for the three months then ended and is qualified in its entirety by reference to
the Form 10Q of CNL Income Fund VI, Ltd. for the three months ended March 31,
1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,935,996<F2>
<SECURITIES> 0
<RECEIVABLES> 425,759
<ALLOWANCES> 361,710
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 22,543,333
<DEPRECIATION> 3,244,566
<TOTAL-ASSETS> 30,059,945
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,043,662
<TOTAL-LIABILITY-AND-EQUITY> 30,059,945
<SALES> 0
<TOTAL-REVENUES> 825,326
<CGS> 0
<TOTAL-COSTS> 177,150
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,036,913
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,036,913
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,036,913
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F2>Cash balance includes $1,240,838 in restricted cash.
<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>
