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
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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
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CNL Income Fund VI, Ltd.
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(Exact name of registrant as specified in its charter)
Florida 59-2922954
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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 _________
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CONTENTS
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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
Part II.
Other Information 13-14
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CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
June 30, December 31,
2000 1999
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ASSETS
Land and buildings on operating leases, less
accumulated depreciation of $3,446,102 and
$3,257,666, respectively $ 14,881,369 $ 15,069,805
Net investment in direct financing leases 3,829,412 3,864,455
Investment in joint ventures 9,293,840 8,377,455
Cash and cash equivalents 1,007,585 2,125,493
Receivables, less allowance for doubtful accounts
of $199,113 and $240,497, respectively 52,807 134,477
Due from related parties 2,203 19,111
Prepaid expenses 22,268 2,847
Lease costs, less accumulated amortization of
$9,655 and $8,831, respectively 8,045 8,869
Accrued rental income, less allowance for doubtful
accounts of $47,718 in 2000 and 1999 543,088 491,616
Other assets 26,731 26,731
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$ 29,667,348 $ 30,120,859
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 41,178 $ 131,093
Escrowed real estate taxes payable 7,146 11,572
Due to related parties 123,188 65,220
Distributions payable 787,500 787,500
Rents paid in advance and deposits 20,977 16,000
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Total liabilities 979,989 1,011,385
Minority interest 139,267 153,870
Partners' capital 28,548,092 28,955,604
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$ 29,667,348 $ 30,120,859
=================== ===================
See accompanying notes to condensed financial statements
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CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
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Quarter Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------ ------------- ------------ ------------
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Revenues:
Rental income from operating leases $ 498,209 $592,699 $1,001,769 $1,193,436
Earned income from direct financing leases 103,901 124,461 214,388 236,541
Contingent rental income 14,883 7,307 41,939 16,482
Interest and other income 3,248 23,796 38,549 39,252
------------ ------------- ------------ ------------
620,241 748,263 1,296,645 1,485,711
------------ ------------- ------------ ------------
Expenses:
General operating and administrative 47,623 37,328 96,119 78,111
Professional services 6,798 14,132 20,952 18,842
State and other taxes 3,081 247 18,185 9,713
Depreciation and amortization 94,630 108,393 189,260 222,646
Transaction costs 26,741 77,695 65,664 110,820
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178,873 237,795 390,180 440,132
------------ ------------- ------------ ------------
Income Before Minority Interest in Income of
Consolidated Joint Venture, Equity in Earnings of
Unconsolidated Joint Ventures and Gain on Sale of
Land and Buildings 441,368 510,468 906,465 1,045,579
Minority Interest in Income of Consolidated Joint
Venture (7,119 ) (9,662 ) (13,865 ) (12,162 )
Equity in Earnings of Unconsolidated Joint Ventures 72,324 123,447 274,888 247,222
Gain on Sale of Land and Buildings -- 848,303 -- 848,303
------------ ------------- ------------ ------------
Net Income $ 506,573 $1,472,556 $1,167,488 $2,128,942
============ ============= ============ ============
Allocation of Net Income:
General partners $ 5,066 $ 13,529 $ 11,675 $ 20,093
Limited partners 501,507 1,459,027 1,155,813 2,108,849
------------ ------------- ------------ ------------
$ 506,573 $1,472,556 $1,167,488 $2,128,942
============ ============= ============ ============
Net Income Per Limited Partner Unit $ 7.16 $ 20.84 $ 16.51 $ 30.13
============ ============= ============ ============
Weighted Average Number of Limited Partner
Units Outstanding 70,000 70,000 70,000 70,000
============ ============= ============ ============
See accompanying notes to condensed financial statements
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CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
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Six Months Ended Year Ended
June 30, December 31,
2000 1999
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General partners:
Beginning balance $ 291,598 $ 257,690
Net income 11,675 33,908
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303,273 291,598
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Limited partners:
Beginning balance 28,664,006 28,337,440
Net income 1,155,813 3,476,566
Distributions ($22.50 and $45.00 per
limited partner unit, respectively) (1,575,000 ) (3,150,000 )
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28,244,819 28,664,006
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Total partners' capital $ 28,548,092 $ 28,955,604
======================= ===================
See accompanying notes to condensed financial statements
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CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
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Six Months Ended
June 30,
2000 1999
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Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $1,598,060 $1,663,032
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Cash Flows from Investing Activities:
Proceeds from sale of land and buildings -- 4,318,145
Investment in joint ventures (1,112,500 ) (44,121 )
Increase in restricted cash -- (4,318,145 )
Payment of lease costs -- (3,300 )
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Net cash used in investing activities (1,112,500 ) (47,421 )
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Cash Flows from Financing Activities:
Distributions to limited partners (1,575,000 ) (1,645,000 )
Distributions to holder of minority interest (28,468 ) (17,005 )
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Net cash used in financing activities (1,603,468 ) (1,662,005 )
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Net Decrease in Cash and Cash Equivalents (1,117,908 ) (46,394 )
Cash and Cash Equivalents at Beginning of Period 2,125,493 1,170,686
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Cash and Cash Equivalents at End of Period $1,007,585 $1,124,292
=============== ===============
Supplemental Schedule of Non-Cash Financing
Activities:
Distributions declared and unpaid at end of
period $ 787,500 $ 787,500
=============== ===============
See Accompanying notes to condensed financial statements
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CNL INCOME FUND VI, 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 VI, Ltd. (the "Partnership") for the year ended December
31, 1999.
The Partnership accounts for its approximate 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.
Certain items in the prior year's financial statements have been
reclassified to conform to 2000 presentation. These reclassifications
had no effect on partners' capital or net income.
2. Investment in Joint Ventures:
In January 2000, the Partnership used the net sales proceeds received
from the 1999 sale of a property in Sevierville, Tennessee, to acquire
an interest in a Baker's Square property in Niles, Illinois, with CNL
Income Fund XIV, Ltd., a Florida limited partnership and an affiliate
of the general partners, as tenants-in-common. The Partnership acquired
this interest from CNL BB Corp., an affiliate of the general partners
(see Note 3). In connection therewith, the Partnership and CNL Income
Fund XIV, Ltd. 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 accounts for its
interest in this property using the equity method since the Partnership
shares control with an affiliate. As of June 30, 2000, the Partnership
owned a 74 percent interest in this property.
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
2. Investment in Joint Ventures - Continued:
During the six months ended June 30, 2000, the lease associated with
the property owned by Melbourne Joint Venture was amended to provide
for rent reductions due to financial difficulties the tenant was
experiencing. As a result, Melbourne Joint Venture reclassified the
building portion of the asset from net investment in direct financing
lease to land and building on operating leases. In accordance with the
Statement of Financial Accounting Standards #13, "Accounting for
Leases," Melbourne Joint Venture recorded the reclassified asset at the
lower of original cost, present fair value, or present carrying amount.
No loss on the reclassification of the direct financing lease was
recorded for financial reporting purposes. During the quarter and six
months ended June 30, 2000, the joint venture, in which the Partnership
has a 50 percent interest, recorded a provision for loss on building
totaling approximately $219,100 for financial reporting purposes, due
to the fact that the operator of this property vacated the property and
ceased operations. The allowance represented the difference between the
property's net carrying value at June 30, 2000 and the current estimate
of net realizable value of the property.
Auburn Joint Venture, Show Low Joint Venture, Asheville Joint Venture,
Melbourne Joint Venture, Warren Joint Venture, and the Partnership and
affiliates as tenants-in-common in nine separate tenancy in common
arrangements, each own and lease one property to an operator of
national fast-food and family-style restaurants. The following presents
the combined, condensed financial information for the joint ventures
and the properties held as tenants-in-common with affiliates at:
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June 30, December 31,
2000 1999
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Land and buildings on operating leases, less
accumulated depreciation and allowance for
loss on building $14,302,750 $ 12,510,374
Net investment in direct financing leases 3,289,789 3,938,686
Cash 37,198 83,127
Receivables 9,753 103,745
Accrued rental income 413,484 350,510
Other assets 1,356 2,320
Liabilities 40,571 93,231
Partners' capital 18,013,759 16,895,531
Revenues 919,345 1,435,647
Provision for loss on building (219,053 ) --
Net income 531,956 1,258,086
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CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
2. Investment in Joint Ventures - Continued:
The Partnership recognized income totaling $274,888 and $247,222 during
the six months ended June 30, 2000 and 1999, respectively, from these
joint ventures, of which, $72,324 and $123,447 was earned during the
quarters ended June 30, 2000 and 1999, respectively.
3. Related Party Transactions:
During the six months ended June 30, 2000, the Partnership and CNL
Income Fund XIV, Ltd., as tenants-in-common, acquired an interest in a
Baker's Square property from CNL BB Corp., an affiliate of the general
partners, for a purchase price of $1,112,500. CNL Income Fund XIV,
Ltd., is a Florida limited partnership and an affiliate of the general
partners. CNL BB Corp. had purchased and temporarily held title to this
property in order to facilitate the acquisition of the property by the
Partnership. The purchase price paid by the Partnership represents the
costs incurred by CNL BB Corp. to acquire and carry the property,
including closing costs. In accordance with the Statement of Policy of
Real Estate Programs for the North American Securities Administrators
Association, Inc., all income, expenses, profits and losses generated
by or associated with the property, were treated as belonging to the
Partnership. For the six months ended June 30, 2000, other income of
the tenants-in-common includes $2,103 of such amounts.
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.
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 generally 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 42 Properties, which
included interests in six Properties owned by joint ventures in which the
Partnership is a co-venturer and nine 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 $1,598,060 and
$1,663,032 for the six months ended June 30, 2000 and 1999, respectively. The
decrease in cash from operations for the six months ended June 30, 2000 was
primarily a result of changes in income and expenses as described in "Results of
Operations" below and 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 January 2000, the Partnership invested a majority of the net sales
proceeds from the sale of the Property in Sevierville, Tennessee, in a Property
in Niles, Illinois, with CNL Income Fund XIV, Ltd., a Florida limited
partnership and affiliate of the general partners, as tenants-in-common. In
connection therewith, the Partnership and the affiliate 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 Property was
acquired from an affiliate of the general partners. The affiliate had purchased
and temporarily held title to the Property in order to facilitate the
acquisition of the Property by the Partnership. The purchase price paid by the
Partnership represented the costs incurred by the affiliate to acquire the
Property, including closing costs.
Currently, rental income from the Partnership's Properties and any net
sales proceeds from the sale of 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,
invest in additional Properties, or to make distributions to the partners. At
June 30, 2000, the Partnership had $1,007,585 invested in such short-term
investments as compared to $2,125,493 at December 31, 1999. The decrease in cash
and cash equivalents was primarily due to the fact that during the six months
ended June 30, 2000, the Partnership invested in a Property with CNL Income Fund
XIV, Ltd., as tenants-in-common, as described above. The funds remaining at June
30, 2000 after payment of distributions and other liabilities, will be used to
meet the Partnership's working capital and other needs.
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,
decreased to $979,989 at June 30, 2000, from $1,011,385 at December 31, 1999,
primarily as the result of a decrease in accounts payable at June 30, 2000, as
compared to December 31, 1999. The decrease in liabilities was partially offset
by an increase in due to related parties at June 30, 2000, as compared to
December 31, 1999. The general partners believe the Partnership has sufficient
cash on hand to meet the Partnership's current 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 cash from operations, the Partnership declared distributions to the
limited partners of $1,575,000 for each of the six months ended June 30, 2000
and 1999 ($787,500 for each of the quarters ended June 30, 2000 and 1999). This
represents distributions for each applicable six months of $22.50 per unit
($11.25 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 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, 1999, the Partnership and its
consolidated joint venture, Caro Joint Venture, owned and leased 32 wholly owned
Properties (which included four Properties sold during 1999). In addition,
during the six months ended June 30, 2000, the Partnership and Caro Joint
Venture owned and leased 28 wholly owned Properties to operators of fast-food
and family-style restaurant chains. In connection therewith, the Partnership and
Caro Joint Venture earned $1,216,157 and $1,429,977 during the six months ended
June 30, 2000 and 1999, respectively, in rental income from operating leases and
earned income from direct financing leases from these Properties, $602,110 and
$717,160 of which was earned during the quarters ended June 30, 2000 and 1999,
respectively. Rental and earned income decreased during the quarter and six
months ended June 30, 2000, as compared to the quarter and six months ended June
30, 1999, primarily as a result of the 1999 sales of four Burger King
Properties. Rental and earned income are expected to remain at reduced amounts
while equity in earnings of joint ventures is expected to remain at increased
amounts, as described below, due to the fact that the Partnership reinvested
these net sales proceeds in joint ventures or in Properties with affiliates of
the general partners, as tenants-in-common.
In addition, rental and earned income for the quarter and six months
ended June 30, 2000 was lower due to the fact that during the quarter and six
months ended June 30, 1999, the Partnership collected and recognized as income
approximately $9,400 and $18,900, respectively, in past due rental amounts owed
by the former tenant of the Property located in Melbourne, Florida, for which
the Partnership had previously established an allowance for doubtful accounts.
The former tenant vacated this Property in October 1997 and the Partnership sold
this Property in February 1998.
During the six months ended June 30, 2000 and 1999, the Partnership
also earned $41,939 and $16,482, respectively, in contingent rental income,
$14,883 and $7,307 of which was earned during the quarters ended June 30, 2000
and 1999, respectively. The increase in contingent rental income during the six
months ended June 30, 2000, was primarily attributable to the fact that during
the six months ended June 30, 2000, the Partnership collected and recognized as
income past due contingent rental amounts for which the Partnership had
previously established an allowance for doubtful accounts relating to the
Partnership's Property in Orlando, Florida.
During the six months ended June 30, 2000 and 1999, the Partnership
earned $38,549 and $39,252, respectively, in interest and other income, $3,248
and $23,796 of which was earned during the quarters ended June 30, 2000 and
1999, respectively. Interest and other income was higher during the quarter and
six months ended June 30, 1999, primarily due to the fact that during the
quarter and six months ended June 30, 1999, the Partnership earned interest on
the net sales proceeds relating to the 1999 sale of four of the Partnership's
Burger King Properties pending the reinvestment of the net sales proceeds in
additional Properties.
During the six months ended June 30, 1999, the Partnership owned and
leased five Properties indirectly through joint venture arrangements and five
Properties as tenants-in-common with affiliates of the general partners. In
addition, during the six months ended June 30, 2000, the Partnership owned and
leased four additional 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 $274,888 and $247,222, respectively,
$72,324 and $123,447 of which was earned during the quarters ended June 30, 2000
and 1999, respectively. The increase in net income earned by joint ventures
during the six months ended June 30, 2000, was primarily due to, and the
decrease in net income earned by joint ventures during the quarter ended June
30, 2000, was partially offset by, the fact that in 1999, the Partnership
reinvested the net sales proceeds it received from the 1999 sales of four Burger
King Properties in four Properties with affiliates of the general partners as
tenants-in-common. The increase in net income earned by joint ventures for the
six months ended June 30, 2000, was partially offset by, and the decrease in net
income earned by joint ventures for the quarter ended June 30, 2000, was
primarily due to, the fact that during the six months ended June 30, 2000, the
lease relating to the Property owned by Melbourne Joint Venture, in which the
Partnership owns a 50 percent interest, was amended to provide for rent
reductions starting in February 2000. In June 2000, the operator of this
Property vacated the Property and discontinued operations. As a result, during
the quarter and six months ended June 30, 2000, the joint venture established an
allowance for doubtful accounts for past due rental amounts. The joint venture
will continue to pursue collection of past due rental amounts and will recognize
such amounts as income if collected. The joint venture will not recognize any
rental income relating to this Property until such time as the joint venture
executes a new lease or until the Property is sold and the proceeds from such
sale are reinvested in an additional Property. The joint venture is currently
seeking a new tenant or purchaser for this Property. In addition, the joint
venture established an allowance for loss on building for this Property of
approximately $219,100. The allowance represented the difference between the
Property's net carrying value at June 30, 2000, and the current estimated net
realizable value of the Property.
Operating expenses, including depreciation and amortization expense,
were $390,180 and $440,132 for the six months ended June 30, 2000 and 1999,
respectively, of which $178,873 and $237,795 were incurred during the quarters
ended June 30, 2000 and 1999, respectively. The decrease in operating expenses
during the quarter and six months ended June 30, 2000 was primarily attributable
to 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 below in
"Termination of Merger". In addition, the decrease in operating expenses during
the quarter and six months ended June 30, 2000 was partially due to a decrease
in depreciation expense due to the sales of four Burger King Properties in June
1999. The decrease in operating expenses during the quarter and six months ended
June 30, 2000 was partially offset by an increase in administrative expenses for
servicing the Partnership and its Properties.
As a result of the sales of four of the Partnership's Properties in
June 1999, the Partnership recognized a gain of $848,303 during the quarter and
six months ended June 30, 1999. No Properties were sold during the quarter and
six months ended June 30, 2000.
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.
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 VI, Ltd.
(Included as Exhibit 3.3 to Registration Statement No. 33-23892 on Form S-11 and
incorporated herein by reference.)
4.1 Certificate of Limited Partnership of CNL Income Fund VI, Ltd.
(Included as Exhibit 4.2 to Registration Statement No. 33-23892 on Form S-11 and
incorporated herein by reference.)
4.2 Agreement and Certificate of Limited Partnership of CNL Income Fund VI,
Ltd. (Included as Exhibit 4.2 to Form 10-K filed with the Securities and
Exchange Commission on April 1, 1996, and incorporated herein by reference.)
10.1 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 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 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.)
(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 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)
