UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2002
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 001-15581
CNL AMERICAN PROPERTIES FUND, INC.
(Exact name of registrant as specified in its charter)
Florida 59-323911
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
450 South Orange Avenue
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 540-2000
Securities registered pursuant to Section
12 (b) of the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to section
12(g) of the Act:
Common Stock, $0.01 par value per share
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Indicate by checkmark if the registrant is an accelerated filer (as
defined in Exchange Act Rules 12b2). Yes X No___
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant has made three offerings of Shares of common stock
(the "Shares") on Form S-11 under the Securities Act of 1933, as amended. The
number of Shares held by non-affiliates as of March 14, 2003 was 38,469,559.
Since no established market for such Shares exists, there is no market value for
such Shares. Each Share was originally sold at $20 per Share.
The number of Shares of common stock outstanding as of March 14, 2003
was 45,248,670.
DOCUMENTS INCORPORATED BY REFERENCE:
Registrant incorporates by reference portions of the CNL American Properties
Fund, Inc. Definitive Proxy Statement for the 2003 Annual Meeting of
Stockholders (Items 10, 11, 12 and 13 of Part III) to be filed no later than
April 30, 2003.
PART I
Item 1. Business
CNL American Properties Fund, Inc., a Maryland corporation (the
"Company"), is a self-advised real estate investment trust ("REIT"). The Company
operates as a holding company for two primary subsidiary operating companies,
CNL Restaurant Properties, Inc. and CNL Franchise Network Corp. Please see Note
14 of the Company's Consolidated Financial Statements appearing in Item 8 of
this report for certain financial information about these two business segments.
The Company was founded in 1994 and at December 31, 2002, has financial
interests in approximately 1,050 properties diversified among more than 125
restaurant concepts in 47 states. The Company's total real estate holdings
subject to lease includes over 650 properties, of which approximately 145
properties are classified as held for sale. At December 31, 2002, the servicing
portfolio of net lease properties and mortgages includes approximately 2,300
units, of which over 1,200 are serviced on behalf of third parties.
In June 2000 the Company divided its operations into two business
segments, real estate and specialty finance, in order to distinguish between its
real estate segment, an entity with a strong capital base and stable cash flows,
and a specialty finance growth business partnered with a large financial
institution to provide an additional source of earnings and liquidity.
o The real estate segment, operated principally through the Company's
wholly owned subsidiary CNL Restaurant Properties, Inc. ("CNL-RP")
and its subsidiaries, is charged with overseeing and maximizing value
on a portfolio of primarily long-term triple-net lease properties.
Those responsibilities include portfolio management, property
management and dispositions. In addition, CNL-RP manages
approximately $550 million in affiliate portfolios and earns
management fees related thereto.
o The specialty finance segment, operated through the Company's
wholly-owned subsidiary CNL Franchise Network Corp ("CNL-FNC")
partnered with Bank of America, CNL Franchise Network, LP ("CNL-FN")
and its subsidiaries, delivers financial solutions in the forms of
financing, servicing, advisory and other services to national and
larger regional restaurant operators primarily by acquiring
restaurant real estate properties, which have been subject to a
triple-net lease, utilizing short-term debt and selling such
properties at a profit.
In June 2000, the Company formed CNL-FN and contributed certain assets
and operations in exchange for an 84.39 percent interest. Bank of America
contributed its franchise finance originations group in exchange for a 9.18
percent non-voting redeemable interest in the Partnership. Bank of America also
served as lender at the time of alliance on a $500 million warehouse credit
facility and a $43.75 million subordinated debt facility (the "Subordinated Note
Payable"). Bank of America's interest in the Partnership on a fully diluted
basis after a conversion of the fully committed Subordinated Note Payable is
22.28 percent. The strategic alliance with Bank of America reduced the Company's
reliance on public markets to raise capital by broadening the Company's
financial products and offerings and enhancing the Company's securitization
platform.
The Company also issued a 6.43 percent limited partnership interest in
CNL-FN to CNL Financial Group, Inc., an affiliate of a director of the Company,
in exchange for the operations of CNL Advisory Services, Inc. ("CAS"). CAS
specializes in providing merger, acquisition and other advisory services to
restaurant operators and expands the Company's services to the sector.
Effective January 1, 2001, CNL-FNC elected to be treated as a taxable
REIT subsidiary ("TRS") pursuant to the provisions of the REIT Modernization
Act. As a TRS, CNL-FNC engages in activities that would previously have caused
income to the Company from CNL-FN to be disqualified from being eligible REIT
income under the federal income tax rules. Now CNL-FN earnings are subject to
tax, but management can control the timing of distributions to the Company.
CNL-FNC originates triple-net lease properties for sale to third parties and, in
some cases, securitization. CNL-FNC also performs net lease and loan servicing
on behalf of third parties. Also, certain activities of CNL-RP are conducted in
a subsidiary that has made a similar TRS election.
When the Company was created in 1994, the intent was to provide
stockholders liquidity by December 31, 2005 through either listing on a national
exchange, merging with another public company or liquidating its assets. The
Company's officers and directors continue to monitor the public markets for
opportunities and the Company's board does not intend to liquidate the Company.
To comply with certain tax guidelines governing the significance of taxable REIT
subsidiaries, the Company may pursue other alternatives relative to CNL-FNC that
would provide stockholder liquidity for all or a portion of the Company's
investment.
Leases
As of December 31, 2002, the Company's real estate segment, CNL-RP,
owns, either directly or indirectly through joint venture arrangements, 584
properties, which are generally subject to long-term, triple-net leases.
Although there are variations in the specific terms of the leases, the following
summarizes the general structure of the Company's leases. The leases of the
properties provide for initial terms generally ranging from 13 to 25 years and
expire between 2006 and 2024. The leases are on a triple-net basis which means
the lessee is responsible for all repairs and maintenance, property taxes,
insurance and utilities. The leases provide for minimum base annual rental
payments (payable in monthly installments) ranging from approximately $31,000 to
$369,000. The majority of the leases also provide that, commencing in specified
lease years (generally the sixth lease year), the annual base rent required
under the terms of the lease will increase. In addition, certain leases provide
for percentage rent based on sales in excess of a specified amount.
Generally, the leases provide for two to five five-year or ten-year
renewal options. Lessees of 465 of the 584 properties also have been granted
options to purchase the property at the property's then fair market value after
a specified portion of the lease term has elapsed. Fair market value will be
determined through an appraisal by an independent appraisal firm. The option
purchase price may equal the Company's original cost to purchase the property
plus a specified percentage from the date of the lease or a specified percentage
of the Company's purchase price, if that amount is greater than the property's
fair market value at the time the purchase option is exercised. The leases also
generally provide that, in the event the Company wishes to sell the property
subject to that lease, the Company first must offer the lessee the right to
purchase the property on the same terms and conditions, and for the same price,
as any offer which the Company has received for the sale of the property.
Major Tenants
During 2002, no single lessee, borrower (or affiliated groups of
lessees or borrowers) or restaurant chain contributed more than ten percent of
the Company's revenues relating to its properties, loans and secured equipment
leases. In the event that certain lessees, borrowers or restaurant chains
contribute more than ten percent of the Company's rental, earned and interest
income in future years, any failure of such lessees, borrowers or restaurant
chains could materially affect the Company's income. Additionally, as of
December 31, 2002, no single lessee or borrower, or group of affiliated lessees
or borrowers, leased properties or was the borrower under loans with an
aggregate carrying value in excess of 20 percent of total assets of the Company.
Real Estate Held for Sale
The Company sells certain real estate properties to private investors
as an alternative to either retaining the properties as a long-term investment
or offering to sell net lease cash flows in the securitization marketplace. As
of December 31, 2002 and 200l, the Company had a total of $144.5 million and
$251.4 million of real estate assets classified as Real Estate Held for Sale.
For the years ended December 31, 2002 and 2001, gross proceeds from real estate
sales were $335.3 million and $105.6 million, respectively, and cost of sales
were $310.0 million and $97.6 million, respectively. The accounting for these
properties differs from that of similar properties without this designation as
the Company does not record depreciation or accrued rent on these properties.
The properties held for sale are contemplated being sold within the next year.
From time to time, certain properties classified as long-term
investments may be subsequently re-designated to held for sale classification.
The company has re-designated 83 properties with a net book value of $80.6
million during 2002.
Mortgage Loans Held for Sale
Mortgage loans held for sale are wholly or partially collateralized by
first mortgages on the land and/or buildings of franchised restaurant businesses
and consist of fixed-rate loans at December 31, 2002. The variable rate loans
held by the Company as of December 31, 2001 were either collected or
reclassified to mortgage, equipment and other notes receivable during 2002. The
loans carry a weighted average interest rate of 8.05 percent. The mortgage loans
are due in monthly installments with maturity dates ranging from 2003 to 2021.
The fixed-rate mortgage loans generally prohibit prepayment for certain periods
or include prepayment penalties.
Mortgage, Equipment and Other Notes Receivable
Mortgage, equipment and other notes receivable are wholly or partially
collateralized by first mortgages on the land and/or buildings, the equipment or
other assets of franchised restaurant businesses. The loans are due in monthly
installments with maturity dates ranging from 2003 to 2022.
Available Information
The Company makes available free of charge on or through its Internet
website (http://www.cnlonline.com) the Company's Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable,
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") as
soon as reasonably practicable after the Company electronically files such
material with, or furnishes it to, the SEC.
Competition
The fast-food, family-style and casual dining restaurant business is
characterized by intense competition. The operators of the restaurants located
on the Company's properties compete with independently owned restaurants,
restaurants which are part of local or regional chains and restaurants in other
well-known national chains, including those offering different types of food and
service.
Local competition may enhance a restaurant's success rather than
detract from it. Many successful fast-food, family-style and casual dining
restaurants are located in "eating islands", areas within which a variety of
restaurants operate. This variety allows diners an opportunity to diversify
their eating habits, giving them an incentive to return in the future. As a
result, fast food, family style and casual dining restaurants frequently
experience better operating results when there are other restaurants in the
area.
The Company competes with other persons and entities in locating
suitable properties to acquire and in locating purchasers for properties held
for sale. The Company also competes with other financing sources such as banks,
mortgage lenders and sale/leaseback companies for suitable tenants for its
properties and borrowers for its mortgage loans.
The recessionary economy and historically low interest rates at which
mortgage financing can be obtained contributed to a decline in net lease volume
in 2002 while the low interest rates made debt financing more attractive.
Management believes that the Company's volume levels may increase in the future
due to the projected rebound in the economy as well as the opportunities
afforded by the continued consolidation in the financing arena and the Company's
ability to provide an array of financial products. Competition in the financing
arena continues to be significant despite the exit of numerous competitors.
Remaining competitors provide meaningful competition.
Employees
As of December 31, 2002, the Company had 135 associates.
Item 2. Properties
As of December 31, 2002, the Company's real estate segment, CNL-RP,
owned, either directly or indirectly through joint venture arrangements, 584
properties, located in 40 states. Reference is made to the Schedule of Real
Estate and Accumulated Depreciation filed with this report for a listing of the
properties and their respective costs.
As of December 31, 2002, the Company owned 505 of the 584 properties in
fee simple and ten properties through joint venture arrangements. As of December
31, 2002, 40 properties consisted of land only.
As of December 31, 2002, 39 properties consisted of building only. The
Company does not own the underlying land. In connection with the acquisition of
each of these properties, the Company entered into either a tri-party agreement
with the tenant and the owner of the land or an assignment of interest in the
ground lease with the landlord, as described in Item 1. Business-Leases.
As of December 31, 2002, the Company had pledged 377 properties as
collateral related to Bonds Payable.
Description of Properties
Land. The Company's property lot sizes range from approximately 6,000
to 199,000 square feet depending upon building size and local demographic
factors. Land owned is zoned for commercial use which, prior to acquisition,
were reviewed for traffic patterns and volume.
The following table lists the properties owned as of December 31, 2002
by state. More detailed information regarding the location of the properties is
contained in the Schedule of Real Estate and Accumulated Depreciation filed with
this report.
Total Number of
State Restaurant Properties
Alabama 16
Arizona 13
California 30
Colorado 13
Connecticut 1
Delaware 1
Florida 81
Georgia 22
Idaho 3
Illinois 24
Indiana 9
Iowa 7
Kansas 6
Kentucky 7
Louisiana 11
Maryland 5
Michigan 13
Minnesota 8
Mississippi 7
Missouri 29
Nebraska 3
Nevada 3
New Hampshire 2
New Jersey 6
New Mexico 3
New York 4
North Carolina 22
Ohio 49
Oklahoma 8
Oregon 7
Pennsylvania 10
Rhode Island 1
South Carolina 10
Tennessee 31
Texas 72
Utah 4
Virginia 17
Washington 13
West Virginia 10
Wisconsin 3
------
TOTAL PROPERTIES 584
======
Buildings. The buildings generally are rectangular and are constructed
from various combinations of stucco, steel, wood, brick and tile. Building sizes
range from approximately 1,000 to 12,700 square feet. Generally, buildings on
properties owned are freestanding and are surrounded by paved parking areas.
Buildings are suitable for conversion to various uses, although modifications
may be required prior to use for other than restaurant operations. Depreciation
expense is computed for buildings and improvements using the straight-line
method using a depreciable life of 39 years for federal income tax purposes. As
of December 31, 2002, the aggregate depreciated cost basis of the properties
owned (including properties owned through joint ventures) for federal income tax
purposes was $657 million.
The following table lists the properties owned as of December 31, 2002
by restaurant chain.
Restaurant Chain Number of Properties
Jack in the Box 55
International House of Pancakes 46
Golden Corral 44
Pizza Hut 44
Arby's 35
Bennigan's 26
Chevy's Fresh Mex 25
Burger King 24
Ruby Tuesday 18
Steak & Ale 18
Baker's Square 17
Denny's 17
Applebee's 15
Boston Market 14
Darryl's 13
Other 173
-----
TOTAL: 584
=====
Management considers the properties to be well maintained and
sufficient for the Company's operations and believes they are adequately covered
by insurance. In addition, the Company has obtained contingent liability and
property coverage. This insurance is intended to reduce the Company's exposure
in the unlikely event a tenant's insurance policy lapses or is insufficient to
cover a claim relating to the property.
Leases. The Company leases the properties to operators of selected
national and regional fast-food restaurant chains. The leases are generally on a
long-term "triple-net" basis, meaning that the tenant is responsible for
repairs, maintenance, property taxes, utilities and insurance. Generally, a
lessee is required, under the terms of its lease agreement, to make capital
expenditures to refurbish restaurant buildings, premises, signs and equipment so
as to comply with the lessee's obligations, if applicable, under the franchise
agreement to reflect the current commercial image of its restaurant chain. These
capital expenditures are required to be paid by the lessee during the term of
the lease. The terms of the leases of the properties owned by the Company are
described in Item 1. Business - Leases.
The following is a schedule of the average rent per property for the
years ended December 31:
2002 2001 2000 1999 1998
-------------- -------------- --------------- -------------- --------------
Rental Revenues (1) $ 74,504,692 $84,775,244 $91,520,103 $61,907,812 $33,129,661
Properties (2) 552 644 725 642 408
Average Rent Per Property $ 134,972 $ 131,639 $ 126,235 $ 96,430 $ 81,200
Occupancy 95% 92% 95% 97% 99%
(1) Rental income includes the Company's share of rental income from the
properties owned through joint venture arrangements. Rental revenues have
been adjusted, as applicable, for any amounts for which the Company has
established an allowance for doubtful accounts. Rental revenues for all
periods presented include rental revenues relating to discontinued
operations for properties that were either disposed of or that were
classified as held for sale during the year ended December 31, 2002.
(2) Excludes properties that were vacant at December 31 and that did not
generate rental revenues during the year.
The following table lists properties as of December 31, 2002 by tenant
and includes average age of buildings, annualized total rental revenue and
percent of total revenue. To calculate annualized total rental revenue, the
monthly rental revenue for each restaurant property owned and leased at December
31, 2002 was multiplied by 12 to present annualized rental revenues for a 12
month period. Contingent rental income was excluded in the calculation of
annualized total rental revenue.
Total Number
of Average Age Annualized Percent of
Restaurant of Buildings Total Rental Total Rental
Properties (years) Revenue (2) Revenue
Tenant (1)
- ------ -------------- -------------- ------------- --------------
S&A Properties Corporation 38 20.9 $ 6,556,557 9.39%
Golden Corral Corporation 38 4.2 6,072,500 8.70%
IHOP Properties, Inc. 46 5.4 5,426,195 7.78%
Rio Bravo Acquisitions, Inc. 15 3.0 3,670,320 5.26%
Jack in the Box, Inc. 26 4.2 3,224,498 4.62%
Jack in the Box Eastern Division, L.P. 30 4.1 3,125,223 4.48%
Vicorp Restaurant, Inc. 18 20.7 2,418,886 3.47%
Boston Market Corp. 13 5.8 1,530,207 2.19%
Pollo Operations, Inc. 10 7.9 1,446,120 2.07%
Other 318 7.7 36,318,897 52.04%
----- ------------- ------------
Total 552 $69,789,403 100.00%
----- ------------- ------------
(1) Excludes properties that were vacant at December 31, 2002 and that did not
generate rental revenues during the year.
(2) The Company has straight-lined the contractual increases in rental income
over the life of each of the leases in order to calculate rental revenue in
accordance with generally accepted accounting principles.
The following table shows the aggregate number of leases which expire
each calendar year through the year 2017, as well as the number of leases which
expire after December 31, 2017. The table does not reflect the exercise of any
of the renewal options provided to the tenant under the terms of such leases.
Base Rent
--------------------------------------------
Year Number (1) Amount (2) Percent
---- ------------------ ------------------ -------------------
2003 -- -- --
2004 1 100,935 0.14%
2005 4 476,238 0.68%
2006 4 443,494 0.64%
2007 1 109,811 0.16%
2008 1 117,297 0.17%
2009 1 84,059 0.12%
2010 13 1,347,592 1.93%
2011 17 2,254,208 3.23%
2012 30 4,550,816 6.53%
2013 29 3,724,619 5.34%
2014 87 13,951,686 20.02%
2015 36 4,681,435 6.72%
2016 65 4,466,951 6.41%
2017 53 6,395,683 9.18%
Thereafter 206 26,991,497 38.73%
--------- --------------- ----------
Total 548 $69,696,321 100.00%
========= =============== ==========
(1) Excludes properties for which the leases have been terminated and excludes
properties leased on a month to month basis.
(2) The Company has straight-lined the contractual increases in rental income
over the life of each of the leases in order to calculate rental revenue in
accordance with generally accepted accounting principles.
Item 3. Legal Proceedings
As of December 31, 2002, neither the Company nor any of its properties
was a party to or the subject of any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
As of March 5, 2003, there were 32,398 stockholders of record of common
stock. There is no public trading market for the Company Shares, and even though
the Company intends to list the Company Shares on the New York Stock Exchange or
other national securities exchange or over-the-counter market no later than
December 31, 2005, there is no assurance that listing will occur. If listing
occurs, there is no assurance that a public market for the Company Shares will
develop. In October 1998, the Board of Directors elected to implement the
Company's redemption plan. Under the redemption plan, the Company elected to
redeem Company Shares, subject to certain conditions and limitations. During
1999, the Company terminated the redemption plan. As of December 31, 2002, the
estimated fair value per share is $17.18. (For Florida intangible tax purposes,
this is the equivalent of the Just Value per share.) The Company obtained this
valuation from a third party firm, which based its valuation on an analysis of
comparable publicly traded real estate investment trusts and a discounted cash
flow analysis. Because the Company Shares are not publicly traded, investors are
cautioned that the estimated fair value of the shares may not be realized upon
sale of the shares.
Stockholders of the Company sold and purchased shares of common stock
subject to negotiation by the purchaser and the selling stockholder. The
following table reflects, for each calendar quarter, the high, low and average
sales prices for transfers of shares of common stock during 2002 and 2001, other
than pursuant to the plan, net of commissions.
2002 (1) 2001 (1)
--------------------------------------- ---------------------------------------
High Low Average High Low Average
---------- ---------- ---------- ---------- ---------- ----------
First Quarter $20.00 $11.20 $14.15 $20.00 $11.88 $13.93
Second Quarter 19.00 12.94 14.54 20.00 10.00 13.73
Third Quarter 19.00 11.88 15.00 17.92 12.65 13.50
Fourth Quarter 19.00 7.00 12.87 19.40 10.62 13.91
(1) A total of 239,692 and 240,240 shares were transferred for the years ended
December 31, 2002 and 2001, respectively.
The Company expects to make distributions to the stockholders pursuant
to the provisions of the Articles of Incorporation. For the years ended December
31, 2002 and 2001, the Company declared cash distributions of $68.0 million and
$66.5 million, respectively, to stockholders. For federal income tax purposes, 0
percent and 20 percent of distributions paid in 2002 and 2001, respectively,
were considered to be ordinary income and 100 percent and 79 percent,
respectively, were considered to be a return of capital.
The following table presents total distributions and distributions per
Company Share:
(In Thousands, except for per share data)
First Second Third Fourth Year
---------- ---------- -------- ------ ------
2002 Quarter
Total distributions
declared $16,803 $16,803 $17,134 $17,251 $67,991
Distributions per
Share 0.38 0.38 0.38 0.38 1.52
2001 Quarter
Total distributions
declared $16,582 $16,582 $16,582 $16,720 $66,466
Distributions per
Share 0.38 0.38 0.38 0.38 1.52
In March 2003, the Company declared distributions to stockholders of
$17.251 million ($0.38124 per Share) payable in March 2003.
The Company intends to continue to declare distributions of cash to the
stockholders.
Equity Compensation Plan Information
Number of securities
Number of securities remaining available for
to be issued upon future issuance under
exercise of Weighted-average equity compensation
outstanding options, exercise price of plans excluding
warrants and rights outstanding options, securities reflected in
Plan Category (a) warrants and rights column (a)
-------------------------- ----------------------- ------------------------ ------------------------
Equity compensation
plans approved by
security holders -- (1) $ 4,500,000 (2)
Equity compensation
plans not approved
by security holders (3) (3) (3)
----------------------- ------------------------
Total -- $ 4,500,000
======================= ========================
(1) During 1999, the stockholders approved a performance incentive plan (the
"Plan") which became effective as of February 23, 1999. As of December
31, 2002, the Company has not granted any awards under the Plan.
(2) The Plan authorizes the issuance of up to 4,500,000 shares of the
Company's common stock upon the exercise of stock options (both incentive
and nonqualified), stock appreciation rights and the award of restricted
stock ("Stock Award") provided that the aggregate number of shares of
Common Stock that may be issued pursuant to Options, stock appreciation
rights ("SARs"), and Stock Awards granted under the Plan increases
automatically to 9,000,000 shares and 12,000,000 shares, respectively,
when the Company has issued and outstanding 150,000,000 shares and
200,000,000 shares, respectively, of common stock. The Plan terminates on
February 23, 2009. Key employees, officers, directors and persons
performing consulting or advisory services for the Company or its
affiliates, as defined in the Plan, who are designated by the committee
administering the Plan, are eligible to receive awards under the Plan.
Awards may be made in the form of stock options, stock awards, SARs,
Phantom Stock Awards, Performance Awards and Leveraged Stock Purchase
Awards as defined further in the Plan. As of December 31, 2002, the
Company had not made any awards related to the Plan.
(3) As of December 31, 2002, the Company does not maintain any equity
compensation plans not approved by security holders.
Item 6. Selected Financial Data
(In Thousands, except for share and per share data)
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
2002 2001 2000 1999 1998
-------------- --------------- -------------- --------------- ----------------
Continuing Operations:
Revenues (1) $ 324,299 $ 256,835 $ 109,497 $ 68,847 $ 38,545
============== =============== ============== =============== ================
Earnings/(loss) from
continuing operations, net (1) $ 26,415 $ (14,370 ) $ (1,679 ) $ (52,228 ) $ 31,109
Discontinued Operations:
Earnings/(loss) and gains from
discontinued operations,
net (1) 9,175 (6,241 ) 4,606 2,391 1,043
-------------- --------------- -------------- --------------- ----------------
Earnings/(loss) before
cumulative
effect of accounting change 35,590 (20,611 ) 2,927 (49,837 ) 32,152
Cumulative effect of accounting
change -- (3,841 ) -- -- --
-------------- --------------- -------------- --------------- ----------------
Net income/(loss) $ 35,590 $ (24,452 ) $ 2,927 $ (49,837 ) $ 32,152
============== =============== ============== =============== ================
Earnings/(loss) per share (1) (2):
Continuing operations (1) $ 0.59 $ (0.33 ) $ (0.04 ) $ (1.32 ) $ 1.17
Discontinued operations (1)
0.21 (0.14 ) 0.11 0.06 0.04
Cumulative effect of
accounting change -- (0.09 ) -- -- --
-------------- --------------- -------------- --------------- ----------------
Net income/(loss) per share $ .80 $ (0.56 ) $ 0.07 $ (1.26 ) $ 1.21
============== =============== ============== =============== ================
Funds from operations (3) $ 59,896 $ 22,374 $ 20,825 $ 37,586 $ 37,191
============== =============== ============== =============== ================
Cash distributions declared $ 67,991 $ 66,466 $ 66,329 $ 60,079 $ 39,449
============== =============== ============== =============== ================
Cash distributions declared
per share (2) $ 1.52 $ 1.52 $ 1.52 $ 1.52 $ 1.52
============== =============== ============== =============== ================
Weighted average shares
outstanding:
Basic 44,620,235 43,589,985 43,495,919 39,402,941 26,648,219
============== =============== ============== =============== ================
Diluted 44,620,235 43,589,985 43,495,919 39,402,941 26,648,219
============== =============== ============== =============== ================
At December 31:
Total assets $ 1,384,058 $ 1,559,114 $ 1,599,503 $ 1,138,193 $ 680,352
============== =============== ============== =============== ================
Long-term obligations $ 468,258 $ 484,815 $ 312,484 $ -- $ --
============== =============== ============== =============== ================
Total stockholders'equity(4) $ 494,151 $ 526,182 $ 607,738 $ 672,214 $ 660,810
============== =============== ============== =============== ================
For a discussion of material events affecting the comparability of the
information reflected in the selected financial data, refer to the section
captioned "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Item 7.
(1) The results of operations relating to properties that were either
disposed of or that were classified as held for sale during the year
ended December 31, 2002 are reported as discontinued operations for all
periods presented.
(2) All Share and per Share amounts have been restated herein to reflect
the one-for-two reverse stock split.
(3) Funds from operations ("FFO"), based on the revised definition adopted
by the Board of Governors of the National Association of Real Estate
Investment Trusts ("NAREIT") and as used herein, except for the add
back of the advisor acquisition expense of $76.3 million during 1999,
means net income/(loss) determined in accordance with Generally
Accepted Accounting Principles ("GAAP"), excluding gains or losses from
sales of real estate assets, plus depreciation of real estate assets,
plus impairment provisions for real estate assets, plus amortization of
direct financing leases and after adjustments for unconsolidated
partnerships and joint ventures, plus the advisor acquisition expense,
plus extraordinary charges. Funds from operations are generally
considered by industry analysts to be the most appropriate measure of
performance. FFO (i) does not represent cash generated from operating
activities determined in accordance with GAAP (which, unlike FFO,
generally reflects all cash effects of transactions and other events
that enter into the determination of net earnings), (ii) is not
necessarily indicative of cash flow available to fund cash needs and
(iii) should not be considered as an alternative to net earnings
determined in accordance with GAAP as an indication of the Company's
operating performance, or to cash flow from operating activities
determined in accordance with GAAP as a measure of either liquidity or
the Company's ability to make distributions. Accordingly, the Company
believes that in order to facilitate a clear understanding of the
consolidated historical operating results of the Company, FFO should be
considered in conjunction with the Company's net earnings and cash
flows as reported in the accompanying consolidated financial statements
and notes thereto. However, the Company's measure of FFO may not be
comparable to similarly titled measures of other REITS because these
REITS may not apply the definition of FFO in the same manner as the
Company.
(4) Includes subscriptions received of $0, $0, $0, $210,736 and
$385,523,966 net of stock issuance costs of $1,493,437, $1,493,437,
$1,493,436, $1,662,749 and $38,415,512 for the years ended December 31,
2002, 2001, 2000, 1999 and 1998, respectively, and net of $50,891 and
$639,528 of common stock shares retired for the years ended December
31, 1999 and 1998, respectively. Stock issuance costs consist of
selling commissions, marketing support and due diligence expense
reimbursement fees, soliciting dealer servicing fees and organizational
and offering expenses.
The following is a reconciliation of net earnings to FFO:
(In Thousands)
2002 2001 2000 1999 1998
------------- ------------- -------------- ------------- -------------
Net income/(loss) $ 35,590 $ (24,452 ) $ 2,927 $ (49,837 ) $ 32,152
Loss/(gain) on sale of property
Continuing operations 181 1,142 722 782 --
Discontinued operations (3,294 ) -- -- -- --
Depreciation
Continuing operations 11,235 12,138 12,242 7,878 3,647
Discontinued operations 970 1,276 104 792 395
Impairment provisions
Continuing operations 7,959 15,744 2,214 -- --
Discontinued operations 5,377 10,274 362 -- --
Capital lease principal component
Continuing operations 1,520 1,739 2,083 1,137 533
Discontinued operations 332 645 159 492 457
Amortization of joint venture costs 26 27 12 9 7
Advisor acquisition expense -- -- -- 76,333 --
Cumulative effect of accounting
change -- 3,841 -- -- --
------------- ------------- -------------- ------------- -------------
FFO (*) $ 59,896 $ 22,374 $ 20,825 $ 37,586 $ 37,191
============= ============= ============== ============= =============
(*) - The Company restated FFO for the years ended December 31, 2001, 2000
and 1999 to conform to 2002 presentation that conforms to the NAREIT
definition of FFO, except for the add back by the Company of the advisor
acquisition expense of $76.3 million during 1999.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following information, including, without limitation, the Quantitative and
Qualitative Disclosures About Market Risk that are not historical facts, may be
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements generally are characterized by the use of terms such as "believe,"
"expect" and "may." Although the Company believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, the Company's actual results could differ materially from those set
forth in the forward-looking statements. Factors that might cause such a
difference include: changes in general economic conditions, changes in real
estate conditions, availability of capital from borrowings under the Company's
credit facilities, the availability of other debt and equity financing
alternatives, changes in interest rates under the Company's current credit
facilities and under any additional variable rate debt arrangements that the
company may enter into in the future, the ability of the Company to refinance
amounts outstanding under its credit facilities at maturity on terms favorable
to the Company, the ability of the Company to locate suitable tenants for its
restaurant properties and borrowers for its mortgage loans, the ability of
tenants and borrowers to make payments under their respective leases, secured
equipment leases or mortgage loans, the ability of the Company to re-lease
properties that are currently vacant or that become vacant and the ability of
the Company to securitize or sell mortgage loans or net lease properties on a
favorable and timely basis. Given these uncertainties, readers are cautioned not
to place undue reliance on such statements.
Organization and Business
CNL American Properties Fund, Inc. ("CNL-APF" or the "Company") is the nation's
largest self-advised real estate investment trust ("REIT") focused on the
restaurant industry. The Company operates as a holding company for two primary
subsidiary operating companies, CNL Restaurant Properties, Inc. and CNL
Franchise Network Corp. The Company was founded in 1994 and at December 31,
2002, has financial interests in approximately 1,050 properties diversified
among more than 125 restaurant concepts in 47 states. The Company's total real
estate holdings subject to lease includes over 650 properties, of which
approximately 145 properties are classified as held for sale. At December 31,
2002, the servicing portfolio of net lease properties and mortgages includes
approximately 2,300 units, of which over 1,200 are serviced on behalf of third
parties.
In June 2000 the Company divided its operations into two business segments, real
estate and specialty finance, in order to distinguish between its real estate
segment, an entity with a strong capital base and stable cash flows, and a
specialty finance growth business partnered with a large financial institution
to provide an additional source of earnings and liquidity.
o The real estate segment, operated principally through the Company's
wholly owned subsidiary CNL Restaurant Properties, Inc. ("CNL-RP")
and its subsidiaries, is charged with overseeing and maximizing value
on a portfolio of primarily long-term triple-net lease properties.
Those responsibilities include portfolio management, property
management and dispositions. In addition, CNL-RP manages
approximately $550 million in affiliate portfolios and earns
management fees related thereto.
o The specialty finance segment, operated through the Company's
wholly-owned subsidiary CNL Franchise Network Corp ("CNL-FNC")
partnered with Bank of America, CNL Franchise Network, LP ("CNL-FN")
and its subsidiaries, delivers financial solutions in the forms of
financing, servicing, advisory and other services to national and
larger regional restaurant operators primarily by acquiring
restaurant real estate properties, which have been subject to a
triple-net lease, utilizing short-term debt and selling such
properties at a profit.
Effective January 1, 2001, CNL-FNC elected to be treated as a taxable REIT
subsidiary ("TRS") pursuant to the provisions of the REIT Modernization Act. As
a TRS, CNL-FNC engages in activities that would previously have caused income to
the Company from CNL-FN to be disqualified from being eligible REIT income under
the federal income tax rules. Now CNL-FN earnings are subject to tax, but
management can control the timing of distributions to the Company. CNL-FNC
originates triple-net lease properties for sale to third parties and, in some
cases, securitization. CNL-FNC also performs net lease and loan servicing on
behalf of third parties. Also, certain activities of CNL-RP are conducted in a
subsidiary that has made a similar TRS election.
When the Company was created in 1994, the intent was to provide stockholders
liquidity by December 31, 2005 through either listing on a national exchange,
merging with another public company or liquidating its assets. The Company's
officers and directors continue to monitor the public markets for opportunities
and the Company's board does not intend to liquidate the Company. To comply with
certain tax guidelines governing the significance of taxable REIT subsidiaries,
the Company may pursue other alternatives relative to CNL-FNC that would provide
stockholder liquidity for all or a portion of the Company's investment.
Liquidity and Capital Resources
The Company is a self advised real estate investment trust that reflects the
earnings of its two primary segment subsidiaries, CNL-RP and CNL-FNC. CNL-FNC
has not paid any distributions to the Company since it was formed in 2000. The
Company elected to reinvest the $12.6 million in earnings of the specialty
finance business during 2002. CNL-APF has continued to declare and pay
distributions to its stockholders that are primarily funded by distributions
from CNL-RP. The remainder of the distribution was funded by sales of its common
stock to the Company's Chairman through a private company affiliate, CNL
Financial Group, Inc. ("CNL Financial Group"), and loans from CNL Financial
Group that the Company expects to convert into its common stock.
The Company is pursuing a strategy built around CNL-RP's strong capital base and
stable cash flows coupled with CNL-FNC's specialty finance growth business. The
Company's ability to internally fund capital needs is limited since it must
distribute at least 90 percent of its net taxable income (excluding net capital
gains) to stockholders to qualify as a REIT. In 2002 the Company distributed
$68.0 million, or $1.52 per share, to its stockholders. These distributions
constituted a return of capital for tax purposes and were generally not taxable
to the shareholders, but did reflect the tax deductions associated with
impairments and loan loss reserves recorded by CNL-RP in 2001. Taxable income in
2002 did not include any of CNL-FNC's $12.6 million in earnings. Taxable income
in 2002 also reflects differences in non-cash charges including depreciation and
amortization.
In order to ensure that the Company maintains its historical level of
distributions to its stockholders, the Company's Chairman, through CNL Financial
Group, received 1,173,354 shares of the Company's stock in exchange for $20.1
million in cash, including the conversion of amounts previously treated as
advances. Also, the Chairman advanced to the Company $4.2 million in December
2002. The Company's Chairman was under no obligation to do so. Should the
Company's Chairman determine not to purchase additional shares or loan
additional funds to the Company, and the Company does not generate adequate cash
flow from other sources, the Company may have to reduce its distribution rate.
The Company's management expects to continue meeting short-term and long-term
liquidity requirements through distributions from CNL-RP, issuance of debt and
sales of stock comparable to the current period. In lieu of a distribution to
CNL-APF, the holding company, CNL-FNC has reinvested its earnings in ongoing
operations. Management expects distributions from CNL-FNC to begin within the
next two years.
As a result, the Company may sell additional shares of its common stock or
borrow additional funds in order to satisfy future distribution requirements.
The Company's Chairman is under no obligation to purchase additional shares of
the Company's common stock or loan additional funds to the Company in order to
guarantee that the Company maintains its historical distribution level to
stockholders.
Selling additional shares of the Company's stock may dilute a shareholder's
investment, affecting its future value. However, selling stock to enable CNL-FN
to reinvest earnings may be accretive to the extent that the value of the
specialty finance segment increases. The Company was created in 1994 with a
requirement to provide stockholder liquidity by December 31, 2005 by either
listing on a national exchange, merging with another public company or
liquidating its assets. In connection with maintaining its historical
distribution level, the Company may sell additional shares of its common stock
to CNL Financial Group or to additional third party purchasers. Such sales may
reduce the value a shareholder receives for his or her investment upon a future
liquidity event.
o Specialty Finance Segment (CNL Franchise Network Corporation)
CNL-FN originates triple-net leases and loans, temporarily financing those
assets with warehouse credit facilities and periodically selling, refinancing or
securitizing those assets. CNL-FN generates income by earning a spread on assets
with a return greater than its cost of borrowings, and by selling assets at
gains. A triple-net lease is a long-term lease with periodic rent increases that
requires the tenant to pay expenses on the property insulating the Company from
making significant cash outflows for maintenance, repair, real estate taxes or
insurance. In a securitization the Company sells or transfers a pool of loans or
properties with triple-net leases to a special purpose entity which, in turn,
issues to investors securities backed by an interest in the revenue originating
from the loans or triple-net leases. These transactions serve to recycle and
diversify capital.
CNL-FN has the following borrowing sources as of December 31, 2002, with the
stated total capacity and average interest rate based on the interest rates
charged for the most recent twelve months:
In Thousands
Amount Used Capacity Maturity Average Rate
----------------- -------------- -------------- ----------------
Note payable (medium term financing) $ 203,207 $ 203,207 June 2007 3.62%
Mortgage warehouse facilities ** 145,758 385,000 Annual 4.07%
Subordinated note payable 43,750 43,750 June 2007 8.50%
Series 2001-4 bonds payable* 43,137 43,137 2009 - 2013 8.90%
Mirror liquidity facility - 10,000 Oct 2003 3.44%
----------------- --------------
$ 435,852 $ 685,094
================= ==============
* includes $4,696 in bonds held by CNL-RP eliminated upon consolidation
in Company financial statements
** capacity does not include $125 million available upon request
The Company and Bank of America entered into an alliance in June 2000 to provide
a broad product offering primarily focused on origination of triple-net leases,
securitized debt and portfolio loan financing. In forming the alliance the
Company invested certain assets and operations into CNL-FN and Bank of America
provided CNL-FN with a $43.75 million subordinated debt facility (the
"Subordinated Debt Facility") and a warehouse credit facility (the "Warehouse
Credit Facility") with an initial capacity of $500 million.
The securitization market experienced considerable volatility in late 2000 as a
result of rising delinquencies in securitized loan pools, falling treasury
rates, macroeconomic uncertainties and sluggish restaurant sales. Investors
demanded higher interest rates on the securities issued in securitizations while
ratings agencies downgraded the quality of the loans underlying the securities.
While many of the Company's competitors experienced downgrades or ratings
actions on bonds previously issued, the Company's prior loan or lease
securitizations to date have not been subject to any such ratings action.
In response to the market conditions, management directed its focus during 2001
to use private market sales channels to either refinance or sell existing
mortgage loans, and halted the origination of new loans. In October 2001, the
Company renegotiated certain terms of its relationship with Bank of America with
the parties agreeing to:
o Provisions requiring the removal of $187 million of loans held as
collateral on the Bank of America Warehouse Credit Facility within a
required timeframe with such removal tied to a $15 million guaranty by
CNL-RP.
o Provisions further requiring the successful attainment of an earnings
and liquidity target within a required timeframe with such attainment
tied to an additional $15 million guaranty by CNL-RP.
o The extension of a $10 million unsecured credit facility to CNL-RP with
CNL-RP then entering into a $10 million mirror credit facility with
CNL-FN. CNL-FN utilizes this mirror facility for working capital as
necessary to fund its equity in new properties substantially financed on
the mortgage warehouse facilities and to meet margin calls on the
mortgage warehouse facilities.
In June 2002, as a partial resolution to the requirement to remove or sell loans
held as collateral for Bank of America's Warehouse Credit Facility, the Company
entered into a five-year term $207 million financing collateralized with $225
million in mortgage loans re-designated to reflect the Company's intention to
hold them to maturity. This five-year term financing carries a variable interest
rate tied to the weighted average rate of commercial paper plus 1.25 percent
with a portion of such interest fixed through the initiation of a hedge
transaction. Also, Bank of America agreed to finance the remaining loans until
November 2003. The Company used a portion of the proceeds from this financing to
pay down the mortgage warehouse facilities. Management is pleased with the
favorable results from this refinancing because:
o The loan removal guaranty by CNL-RP was substantially reduced, to $2
million, but it remains tied to the removal of the $25 million
restaurant loans remaining from the original removal obligation
negotiated in October 2001.
o The transaction provides CNL-FN ongoing earnings on the excess of
interest income over interest expense, and management believes it
allows more time for the franchise asset-backed markets to stabilize.
o The guaranty by CNL-RP tied to the attainment of targeted earnings and
liquidity was substantially reduced.
CNL-FN management is pleased to report that the full guaranty tied to earnings
and liquidity has since been successfully removed, leaving only $2 million in
guaranty by CNL-RP for the removal of loans by CNL-FN.
The uncertainty in the franchise asset-backed securitization market led
management to focus the originations effort toward new long-term, triple-net
leases on real estate. In 2001, CNL-FN introduced its program to sell investment
properties to third parties (the "Investment Property Sales" program). These
leased properties can be sold and may qualify the buyer for special tax
treatment under Section 1031 of the Internal Revenue Code (a "Section 1031
Exchange"). Generally, Section 1031 Exchanges allow an investor who realizes a
gain from selling appreciated real estate to defer paying taxes on such gain by
reinvesting the sales proceeds in like-kind real estate. In addition to the
Investment Property Sales program, the Company formed a partnership with a third
party client to engage in a similar Investment Property Sales program. CNL-FN
has sold $288 million of real estate properties in this program generating gains
to the Company of $23.4 million throughout 2002 compared with sales of $108
million and gains of $9.1 million during 2001. Management expects continued
strong demand for this product but continues to investigate other sales channels
in which to market net lease assets and to monitor the securitization market for
potential re-entry in the future.
During the year ended December 31, 2002, CNL-FNC derived its primary cash flows
from lease and interest income earned in excess of interest expense paid ("net
spread"), net gains from the Investment Property Sales program and servicing
revenues. Significant cash outflows consist of operating expenses and capital
enhancements in the loan portfolio (excess of investment over related
borrowings). CNL-FN has taken steps to reduce its credit capacity in its
warehouse credit facilities. CNL-FN had a warehouse credit capacity of $385
million at December 31, 2002 with an additional $125 million available upon
request. Management has and may continue to decrease the mortgage warehouse
facility capacity from its present level in order to economize on its cost,
provided that there continue to be costs associated with excess capacity. CNL-FN
may also be subject to margin calls on its warehouse credit facilities. Bank of
America and the other third party lender monitor asset securitization market
assumptions, assumptions on the Company's derivatives and delinquency
assumptions and based on changes in market conditions, may require a margin call
to reduce the level of warehouse financing. During the year ended December 31,
2002, CNL-FN paid approximately $17 million in net margin calls on its warehouse
credit facilities. Over the course of 2001, CNL-FN had fully drawn its
subordinated note payable. At December 31, 2002 CNL-FN has no amounts
outstanding on the $10 million mirror credit facility that matures in October
2003.
In May 2001, CNL-FN issued Asset Backed Bonds, Series 2001-4. The proceeds of
$42.1 million were applied to pay down short-term debt. The Company applied 62
mortgage loans as collateral for the bonds which had a carrying value of
approximately $57.9 million as of December 31, 2002. The offering resulted in an
initial weighted average life of approximately 7.8 years and a rate of interest
of approximately 8.90 percent per annum. The bond indenture requires monthly
principal and interest payments received from borrowers to be applied to the
bonds. The bond indenture also provides for an optional redemption of the bonds
at their remaining principal balance when the remaining amounts due under the
loans that serve as collateral for the bonds are less than 15 percent of the
aggregate amounts due under the loans at the time of issuance.
Management is contemplating strong demand for net lease financing in 2003 and
continues to view the triple-net lease financing product as its core offering to
restaurant operators, but continues to monitor the potential reemergence of a
mortgage loan product through developments on the securitization front. CNL-FN's
warehouse facilities provide advances for up to 97 percent of the real estate
purchase value. The Company is reinvesting its operating profits to fund the
amounts not advanced by the mortgage warehouse facilities.
For the year ended December 31, 2002, CNL-FN originated $204 million in net
leases as compared with $182 million in the same period last year. Included in
this current year volume is a significant portfolio of $117 million in
properties. CNL-FN acquired this portfolio by purchasing all of the limited and
general partnership interests of CNL Net Lease Investors, L.P., an affiliate of
the Company's Chairman of the Board and Vice Chairman of the Board, that until
the acquisition, was a client of CNL-RP's property management group. Without the
volume created by this transaction, origination volume would be substantially
down from the levels experienced in 2001. The decrease reflects a slowdown in
demand for net lease financing given available low interest rate mortgage
financing and aggressive lease rates offered by CNL-FN's competitors. Management
believes that net lease originations are important to CNL-FN as they provide
inventory necessary to execute the Investment Property Sales program and CNL-FN
typically profits from the leases while holding them. Management has responded
to this slowdown by adjusting net lease rates, identifying larger transactions
like the portfolio acquisition of $117 million in properties and by identifying
new areas to reduce costs. At December 31, 2002, CNL-FN was involved in numerous
opportunities for continued net lease originations with $42 million approved for
funding and $9 million with executed commitment letters. Management believes
that competitors will slow originations as they experience capital constraints,
and that restaurant operators will use net lease financing as other lower-cost
alternatives diminish.
In September 2002, the Warehouse Credit Facility was used to finance the CNL Net
Lease Investors, LP portfolio acquisition at an advance rate (the rate at which
purchases are financed) of 97 percent of the real estate purchase value. In
negotiating this transaction, CNL-FN agreed with the lender to apply the full
amount of proceeds from subsequent sales of properties contained in this
portfolio to the financing of the remaining portfolio in order to achieve an
average advance rate of 93 percent. As a result of strong sales in the fourth
quarter, CNL-FN has achieved the reduced advance rate, effectively lowering its
debt, and no longer is bound by this provision.
At December 31, 2002, CNL-FN had approximately $77 million in capital supporting
its loan and lease portfolio. CNL-FN management maintains regular contact with
its mortgage warehouse facility lenders and believes that the relatively
low-cost, high-advance rate financing they provide has been integral to CNL-FN's
success. As is typical of revolving debt facilities, these facilities carry a
364-day maturity and CNL-FN is vulnerable to any changes in the terms of these
facilities, such as the special terms relating to the CNL Net Lease Investors,
LP portfolio that increased CNL-FN capital invested in real estate. The
warehouse facilities currently advance an average of 90.7 percent of the
original real estate value. Management believes that the advance rates could
continue to decline in 2003. A five percent decrease in advance rates, for
example, would create a $7 million cash requirement for CNL-FN, based on the
outstanding net lease and loan volume in the warehouse credit facilities at
December 31, 2002. While management expects its mortgage warehouse facilities to
renew, any non-renewal would create an immediate need to find alternate
borrowing sources.
Additional liquidity risks within the Company's specialty finance segment
include the possible occurrence of economic events that could have a negative
impact on the franchise asset-backed securitization market and affect the
quality or perception of the loans or leases underlying CNL-FN's securitization
transactions. The Company conducted its previous securitizations using
bankruptcy remote entities. These entities exist independent from the Company
and their assets are not available to satisfy the claims of creditors of the
Company, any subsidiary or its affiliates. To date, the ratings on the loans
underlying the securities issued in these transactions have been affirmed unlike
the ratings of many competitors' pools which have been downgraded. Upon the
occurrence of a significant amount of delinquencies and/or defaults, one or more
of the three rating agencies may choose to place a specific transaction on
ratings watch or even downgrade one or more classes of securities to a lower
rating. Should the loans underlying the securities default, and the securities
undergo a negative ratings action, CNL-FN could experience material adverse
consequences impacting its ability to continue earning income as servicer and
its ability to engage in future profitable securitization transactions. To
potentially avoid those consequences, CNL-FN could choose to contribute capital
to serve as additional collateral supporting one or more of the bankruptcy
remote entities used to facilitate a securitization. CNL-FN was involved in the
following securitizations, the assets and liabilities of which are not
consolidated in the Company financial statements:
(In Thousands)
Mortgage loans in Bonds outstanding
pool at par at face value
-------------------- ---------------------
Loans and debt supporting 1998-1 Certificates issued by CNL
Funding 1998-1, LP $ 210,044 $ 208,020
Loans and debt supporting 1999-1 Certificates issued by CNL
Funding 1999-1, LP $ 239,500 $ 239,500
-------------------- ---------------------
$ 449,544 $ 447,520
==================== =====================
Note: Certain bonds in both the 1998-1 and 1999-1 pools are owned by
CNL-RP and CNL-FN and appear as investments in the consolidated
financial statements of the Company.
Liquidity risk also exists from the possibility of borrower delinquencies on the
mortgage loans held for sale or held to maturity. In the event of a borrower
delinquency, the Company could suffer not only shortfalls on scheduled payments
but also margin calls by the lenders that provide the warehouse facilities and
the five-year note, subjecting the Company to unanticipated cash outflows. The
Company is obligated under the provisions of it mortgage warehouse facilities
and its five-year refinancing to pay down certain debt associated with borrower
delinquencies or defaults within a required time frame. Most properties acquired
on the mortgage warehouse facilities are required to be sold within a certain
time frame. Any delinquency, default or delay in the resale of properties
financed through one of these facilities would generally result in an immediate
pay-down of the related debt and may restrict the Company's ability to find
alternative financing. The Company's debt, excluding bonds payable, generally
provides for cross-default triggers. A default of a mortgage warehouse facility,
for example from a failure to make a margin call, could result in many of the
Company's borrowings becoming immediately due and payable.
CNL-FN has developed a successful Investment Property Sales program, in part
because some buyers of CNL-FN's properties are motivated to defer the taxation
of gains on other properties they have sold. In recent years, the taxation of
capital gains has become an issue spurring extensive political debate. Proposed
legislation regularly surfaces that would eliminate the taxation of capital
gains. This potential change could be either negative or positive to the
Company. Any such proposal, even if ultimately unsuccessful, could cause buyers
of CNL-FN properties to delay sales of their own investment properties that, in
turn, would delay their purchase of CNL-FN properties. A successful proposal
could limit the opportunities to continue the existing CNL-FN Investment
Property Sales program. However it is also possible that unfettered by a capital
gains tax and the constraints of a Section 1031 Exchange, more investors will
seek out investment properties for the merits of the investment itself. While
difficult to assess the balance between positives and negatives, it is clear
that an elimination of the capital gains tax could impact CNL-FN.
Net lease properties acquired in anticipation of sales through the Investment
Property Sales program can typically be leased to tenants at a rate that exceeds
the rate a Section 1031 Exchange or other buyer is willing to accept. An
increase in general levels of interest rates could result in buyers requiring a
higher yield that would reduce the gain on CNL-FN's sale of existing properties.
Neither the rate of return on CNL-FN's leased properties nor the rate of return
required by a buyer correlate directly with prevailing interest rates. CNL-FN is
therefore at risk that any interest rate increases causing buyers to demand
higher yields may not be matched with higher yields from tenants. This risk
could cause CNL-FN to experience lower average gains on the future sales of
Investment Property Sales properties.
In summary, the Company's specialty finance segment expects to meet its
liquidity requirements in 2003 with a combination of cash from operating
activities, including cash from its Investment Property Sales program and
borrowings on its warehouse credit facilities or its mirror credit facility.
CNL-FN renews its warehouse credit facilities annually and to date has been
successful in doing so at substantially comparable terms. CNL-FN's longer-term
liquidity requirements (beyond one year) are expected to be met through
successful renewal of its warehouse credit facilities and the mirror credit
facility, successful execution of the Company's Investment Property Sales
program, portfolio debt origination fees, asset securitizations, and augmented
by operating cash flows provided by servicing and advisory services. In
addition, CNL-FN may seek to obtain additional debt or equity financing. Any
decision to successfully pursue additional debt or equity capital will depend on
a number of factors, such as compliance with the terms of existing credit
agreements, the Company's financial performance, industry or market trends and
the general availability of attractive financing transactions. However, there
can be no assurance that future expansion will be successful due to competitive,
regulatory, market, economic and other factors.
o Real Estate Segment (CNL Restaurant Properties, Inc.)
CNL-RP operates as a real estate company and its cash flows primarily consist of
rental income from tenants on restaurant properties owned, interest income on
mortgage loans, dispositions of properties and income from holding interests in
prior loan securitizations. CNL-RP's cash outflows are predominantly interest
expense, operating expenses, reinvestment of disposition proceeds and
distributions to CNL-APF. Borrowing resources at December 31, 2002 for CNL-RP
include:
(In Thousands)
Amount Used Capacity Maturity Average Rate
-------------- -------------- -------------- ----------------
Revolver $ 14,000 $ 30,000 Oct 2003 3.92%
Series 2000-A bonds payable 261,369 261,369 2009 - 2017 7.94%
Series 2001 bonds payable 124,698 124,698 Oct 2006 2.28%
-------------- --------------
$ 400,067 $ 416,067
=========== ===========
CNL-RP provides a guaranty of $2 million of CNL-FN's mortgage warehouse facility
debt and also provides a guaranty of CNL-FN's five year term financing.
CNL-RP's short-term debt during 2002 included the secured note payable entered
into in October 1999 (the "Secured Credit Facility") and the $30 million
revolving line of credit (the "Revolver") entered into in October 2001.
o The Secured Credit Facility matured on February 18, 2003 and throughout
2002 CNL-RP management elected to sell certain performing and
non-performing properties to pay down the note rather than seek a
source for refinancing. Throughout 2002, $50 million in proceeds were
generated from these sales allowing for the repayment of the entire $49
million outstanding at the beginning of 2002. These properties became
designated as discontinued operations, as described in greater detail
below. Management does not currently intend to similarly divest of real
estate in 2003. In any year however, in the ordinary course of
resolving tenant vacancies or defaults, CNL-RP may sell the affected
properties and reinvest the proceeds in quality, performing properties.
o The Company utilizes the Revolver from time to time to manage the
timing of inflows and outflows of cash from operating activities. The
Company's Revolver is a two-year facility, maturing in October 2003,
and includes a one-year renewal option. At December 31, 2002, the
Revolver had an outstanding balance of $14 million.
CNL-RP also had medium-term and long-term bond financing. Rental income received
on the 377 properties pledged as collateral on medium and long-term financing is
used to make scheduled reductions in bond principal and interest.
o In August 2000, CNL-RP issued $281 million in long-term bonds, Series
2000-A, bearing an initial weighted average fixed interest rate of
7.925 percent and maturing substantially between 2009 and 2017.
o In October 2001, CNL-RP issued $131 million in medium-term bonds,
Series 2001, bearing an interest rate of LIBOR plus 48 basis points and
maturing in 2006.
Liquidity risks within the real estate business include the potential that a
tenant's financial condition could deteriorate, rendering it unable to make its
rent payments and thereby reducing CNL-RP's income and cash flows. Generally,
CNL-RP uses a triple-net lease to lease its properties to its tenants. The
triple-net lease is a long-term lease with periodic rent increases and requires
the tenant to pay expenses on the property. The lease somewhat insulates CNL-RP
from significant cash outflows for maintenance, repair, real estate taxes or
insurance. However, if the tenant experiences financial problems, rental
payments could be interrupted and in the event of tenant bankruptcy the Company
may be required to fund certain expenses in order to retain control or take
possession of the property. This could expose the Company to successor
liabilities and further affect liquidity. Such events may adversely affect the
Company's revenue and operating cash flow.
Management is aware of multi-unit tenants that are experiencing financial
difficulties. In the event the financial difficulties continue, the Company's
collection of rental payments could be interrupted. At present these tenants
continue to pay rent substantially in accordance with lease terms and there are
no material delinquencies. However, the Company continues to monitor each
tenant's situation carefully and will take appropriate action to place the
Company in a position to maximize the value of its investment. Management has
estimated the loss or impairment on the related properties and included such
charge in earnings through December 31, 2002.
The Company has experienced tenant bankruptcies and may commit further resources
in seeking resolution to these properties including funding restaurant
businesses directly or on behalf of successor tenants. For example, where the
value of the leased real estate is linked to the financial performance of the
tenant, CNL-RP may allocate capital to invest in turnaround opportunities.
Certain net lease properties are pledged as collateral for the Series 2000-A and
Series 2001 triple-net lease mortgage bonds payable. In the event of a tenant
default relating to any such pledged properties, the Company may elect to
substitute properties into these securitized pools from properties it owns not
otherwise pledged as collateral. In the event that the Company has no such
suitable substitute property, the adverse performance of the pool might inhibit
the Company's future capital raising efforts, including the ability to refinance
the Series 2001 bonds maturing in 2006.
CNL-RP management believes the combination of availability on its line of credit
and the projected disposition volume in 2003 will permit it to meet its
short-term liquidity objectives. Long-term liquidity requirements will be met
through a combination of selectively disposing assets and reinvesting the
proceeds in higher-yielding investments and cash from operating activities.
Off-Balance Sheet Transactions
The Company holds a retained interest in $450 million in loans transferred to
unconsolidated trusts that provide the collateral for long-term bonds. While the
Company is not contractually obligated to guarantee the repayment of the bonds
in the event borrower repayments of principal and interest are not adequate to
repay the bondholders, the Company may elect to contribute funds into these
unconsolidated entities to supplement cash flows and maintain attractive ratings
on these pools.
Contractual Obligations, Contingent Liabilities and Commitments
The following table presents the Company's contractual cash obligations and
related payment periods as of December 31, 2002:
Payments due by period (In Millions)
Less
than one 2 to 3 4 to 5
Contractual cash obligations: year years years Thereafter Total
- -------------------------------------------- ---------- --------- ---------- ------------ ----------
Borrowings (1) $ 182.4 $ 54.6 $ 365.5 $ 228.7 $ 831.2
Leased office space (2) 1.1 2.2 2.4 9.3 15.0
---------- --------- ---------- ------------ ----------
Total contractual cash obligations $ 183.5 $ 56.8 $ 367.9 $ 238.0 $ 846.2
========== ========= ========== ============ ==========
The following table presents the Company's commitments, contingencies and
guarantees and related expiration periods as of December 31, 2002:
Estimated payments due by period (In Millions)
----------------------------------------------
Commitments, contingencies and Less than 2 to 3 4 to 5
guarantees one year years years Thereafter Total
- ----------------------------------------- ---------- ----------- ----------- ------------- ---------
Guaranty of unsecured promissory
note (2) $ -- $ 1.3 $ -- $ -- $ 1.3
Debt repayments acceleration
resulting from CNL-FN
distributions (3) 1.0 2.0 2.0 (5.0 ) --
Purchase commitments 9.0 -- -- -- 9.0
---------- ----------- ----------- ------------- ---------
Total commitments, contingencies and
guarantees $ 10.0 $ 3.3 $ 2.0 $ (5.0 ) $ 10.3
========== =========== =========== ============= =========
(1) Contractual obligations relative to Company borrowings are described in
the foregoing discussion of Liquidity and Capital Resources for the
applicable segment. The maturities on outstanding indebtedness assumes
that loan repayments are made on the mortgage warehouse facilities in
accordance with the contractual obligation and that bonds payable
amortize in accordance with estimated payment amounts. In the event the
mortgage warehouse lenders continue to renew the facilities as
expected, then over $145 million of the 2003 amounts would likely
mature in a later year.
(2) In May 2002, the Company purchased a combined five percent partnership
interest in CNL Plaza, Ltd. and CNL Plaza Venture, Ltd. (the "Plaza")
for $0.2 million. Affiliates of James M. Seneff, Jr., an officer and
director of the Company own the remaining partnership interests. The
Company has severally guaranteed 8.33 percent or $1.3 million of a
$15.5 million unsecured promissory note on behalf of the Plaza. The
guaranty continues through the loan maturity in November 2004. Since
November 1999, the Company has leased its office space from CNL Plaza,
Ltd., an affiliate of a member of the Company's board of directors. The
Company's lease expires in 2014 and provides for scheduled rent
increases over the term of the lease. Rental and other expenses in
connection with the lease for the years ended December 31, 2002, 2001
and 2000 totaled $1.5 million, $1.2 million and $1.0 million,
respectively.
(3) Certain provisions of the subordinated notes payable requires that
distributions from CNL-FN to its partners be approved and tied to a
reduction in debt. As a result distributions to the Company may create
a comparable reduction in this debt. For purposes of the foregoing
table, CNL-FN is assumed to distribute amounts that would require a
debt reduction of $1 million per year. Actual distributions, if any,
from CNL-FN will vary.
Interest Rate Risk
The Company generally invests in assets with a fixed return by financing them
with variable rate debt. Floating interest rates on variable rate debt expose
the Company to interest rate risk. As December 31, 2002, the Company's variable
rate debt includes the following:
o $14 million on its Revolver;
o $146 million on its mortgage warehouse facilities;
o $203 million on the June 2002 five-year financing; and
o $125 million outstanding on the Series 2001 bonds.
Generally, the Company uses derivative financial instruments (primarily interest
rate swap contracts) to hedge against fluctuations in interest rates from the
time it originates and holds fixed-rate mortgage loans until the time it sells
them. Additionally, the Company uses interest rate swaps to hedge against
fluctuations in interest rates on its floating rate debt. Under interest rate
swaps, the Company agrees with other parties to exchange, at specified
intervals, the difference between fixed-rate and floating-rate interest amounts
calculated by reference to an agreed upon notional principal amount. The Company
will terminate certain of these contracts and both the gain or loss on the sale
of the loans and the additional gain or loss on the termination of the interest
rate swap contracts will be measured and recognized in the consolidated
statement of operations.
The Company also invests in certain financial instruments that are subject to
various forms of market risk such as interest rate fluctuations, credit risk and
prepayment risk. Management believes that the value of its mortgage loans held
for sale and investments could potentially change as a result of fluctuating
interest rates, credit risk, market sentiment and other external forces, which
could materially adversely affect the Company's liquidity and capital resources.
Management estimates that a one-percentage point increase in long-term interest
rates as of December 31, 2002 would have resulted in a decrease in the fair
value of its fixed-rate loans held for sale of $0.4 million. This decline in
fair value would have been offset by an increase in the fair value of certain
interest rate swap positions of $1.4 million. In addition, a one-percentage
point increase in short-term interest rates for the year ended December 31, 2002
would have resulted in additional interest costs of approximately $4.2 million.
This sensitivity analysis contains certain simplifying assumptions (for example,
it does not consider the impact of changes in prepayment risk or credit spread
risk). Therefore, although it gives an indication of the Company's exposure to
interest rate change, it is not intended to predict future results and the
Company's actual results will likely vary.
Management believes inflation has not significantly affected the Company's
earnings because the inflation rate has remained moderate. Additionally, the
Company's earnings primarily reflect long-term investments with fixed rents or
interest rates. The Company mainly finances these investments with a combination
of equity, senior notes and borrowings under the revolving lines of credit or
warehouse facilities. During inflationary periods, which generally are
accompanied by rising interest rates, the Company's ability to grow may be
adversely affected because the yield on new investments may increase at a slower
rate than new borrowing costs. However, sustained low inflation could lead to
net lease pricing pressure as tenant's request decreasing rates for longer
maturities.
Critical Accounting Policies
The Company accounts for many asset categories that require management to
exercise extensive judgment and make estimates. Listed below are the more
significant accounting policies that require management judgment and estimates
or are otherwise significant to the results of operations:
o The Company records the acquisition of land, buildings and equipment at
cost, including acquisition, closing and construction period interest
costs. Land and buildings are leased to restaurant operators generally
on a triple-net basis, which means that the tenant is responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The property and secured
equipment leases held for investment are accounted for using either the
direct financing or the operating method unless the Company has
classified these properties pursuant to their intent to sell.
Management estimates residual values and collectable rents in
determining whether a lease is accounted for as either direct financing
or operating.
o The Company's real estate accounting differs for assets held by its two
operating segments based upon managements intention with respect to
such asset's disposition.
o Real estate held within the real estate segment is generally
acquired with an intention to hold long-term. It is depreciated
over its estimated useful life and rent is recorded giving
consideration to contractual rent increases over the life of the
lease. Some real estate held by this segment may be designated so
as to reflect management's intention to dispose of the asset. In
such case all operating income and expense, including
depreciation and accrued rent associated with future contractual
increases, is reflected as a component of discontinued operations
for all periods presented, even for periods prior to management
having stated its intention to sell.
o Real estate held within the specialty finance segment is
generally acquired with an intention to sell within one year. It
is therefore not depreciated, and future contractual rent
increases do not impact earnings. Because of a transition rule,
the specialty finance properties are accounted for differently
depending on acquisition date. All such properties acquired after
December 31, 2001 are treated as discontinued operations, and
operating income and expense is reflected as a component of
discontinued operations.
o "Mortgage loans held for sale" are loans originated that the Company
intends to sell or securitize. They are recorded at fair market value
which is estimated using quoted prices, the present value of the
expected cash flows and the estimated impact of any defaults, and may
therefore be recorded at an amount greater than cost. The Company
utilizes derivative instruments to partially offset the effect of
fluctuating interest rates on the value of its mortgage loans held for
sale. As long as the Company qualifies for hedge accounting treatment,
valuation adjustments relating to these loans, including increases
above cost, and any gains or losses on related hedge instruments are
reflected in the statement of operations.
o "Mortgage notes receivable" differ from "mortgage loans held for sale"
primarily because of management's intention to hold the mortgage to its
maturity. These financial assets are recorded at the lower of cost or
market. Certain assets have been reclassified from "mortgage loans held
for sale" into the "mortgage notes receivable" category when, in lieu
of selling the mortgages, the Company elects to refinance such
mortgages using longer-term debt. In the case of such reclassified
mortgages, the Company records these at the value on the refinance
date. The value at such date may differ from the par value of the loan
with any such difference being amortized to earnings over the remaining
life of the mortgage loans as a yield adjustment.
o Certain loans originated by the Company were sold to independent trusts
that, in turn, issued securities to investors backed by these assets.
The Company retains the servicing rights and participates in certain
cash flows from the trusts. The present value of expected excess of net
cash flows, after payment of principal and interest to bond or other
certificate holders, over the estimated cost of servicing is recorded
at the time of sale as a retained interest. Retained interests in
securitized assets are included in other investments. Accounting for
the retained interests requires that the Company estimate values using
market trends and historical experience, expected prepayments and
defaults. This information is considered, along with prevailing
discount rates and the terms of the bonds and certificates, to arrive
at an initial value and to periodically review the value for gains or
losses. Permanent impairments, representing the excess of carrying
value over estimated current fair value, are recorded as an expense.
o Management reviews its properties and loans for impairment or potential
loss as events or circumstances indicate that the carrying amount of
the assets may not be recoverable. Management compares the estimated
future undiscounted cash flows, including the residual value of the
property or collateral, with the carrying cost of the individual asset.
If impairment is indicated, the assets are adjusted to the estimated
fair value.
o The Company has also entered into certain derivative contracts in order
to hedge its exposure to fluctuations in interest rates on variable
rate debt qualifying for treatment as cash flow hedges. As long as
certain criteria for hedge accounting are met the changes in fair value
of these contracts is reflected in other comprehensive income (loss)
and as a component of stockholders' equity. If the requirements are not
met changes in the fair value of these contracts are reflected in
earnings.
Results from Operations
The Company focused predominantly on its core real estate operations until June
2000, the date of its strategic alliance with a bank, after which it began
differentiating its specialty finance segment from its other operations. Segment
results prior to June 2000 are not available. Segment earnings are reflected in
the following table:
Net income/(loss) by segment in millions For the year ended December 31,
2002 2001 2000
----------------- ----------------- ----------------
Real estate segment $ 23.1 $ (22.8) $ 11.9
Specialty finance segment 12.6 0.4 (16.7)
Other holding company results, results for
periods prior to segment reporting and
consolidating eliminations (0.1) (2.1) 7.7
----------------- ----------------- ----------------
Net income/(loss) $ 35.6 $ (24.5) $ 2.9
================= ================= ================
o The real estate business segment posted earnings in 2002 compared to a
loss in 2001 that resulted when $28.2 million in loan reserves and
$16.6 million in real estate impairments were recorded in connection
with certain borrower and tenant delinquencies. In 2000, the segment
reported earnings after real estate impairments of $2.1 million.
Exclusive of these charges in each year, the improved performance of
the real estate segment during the comparative years reflects the 2002
initiative to sell vacant and under-performing properties and use the
proceeds to reduce debt. The sales resulted in a net gain of $3.3
million and generated sales proceeds that were applied to reduce the
business segment's overall debt by $44.7 million.
o The specialty finance business segment has expanded its Investment
Property Sales program selling $288 million of real estate properties
generating gains to the Company of $23.4 million throughout 2002
compared with sales of $108 million and gains of $9.1 million during
2001 or an improvement of $14.3 million between these years. This
program did not exist in 2000, when CNL-FN was impacted by a $6.9
million charge related to loan valuation changes and by $5.3 million in
losses and reserves in investments in loan pools.
o The holding Company results in 2000 reflect results primarily from
prior to the date management began tracking results by segment.
Revenues
For the year ended December 31,
Total revenues by segment in millions 2002 2002 2000
----------- ------------- -------------
Real estate segment $ 92.5 $ 92.3 $ 44.9
Specialty finance segment 233.6 168.3 14.9
Other holding company results, results for periods prior
to segment reporting and consolidating eliminations (1.8) (3.8) 49.7
----------- ------------- -------------
Total revenues $ 324.3 $ 256.8 $ 109.5
=========== ============= =============
Revenues are discussed based on the individual segment results:
For the year ended December 31,
Real estate segment revenues by line item in millions 2002 2001 2000
----------- -------------- -------------
Rental income from operating leases $ 62.9 $ 64.1 $ 28.9
Earned income from direct financing 12.1 12.9 6.0
Interest income from mortgage equipment and other
notes receivable 4.2 4.3 3.7
Investment and interest income 4.8 5.0 3.6
Other income 8.5 6.0 2.7
----------- -------------- -------------
Total segment revenues $ 92.5 $ 92.3 $ 44.9
=========== ============== =============
During 2002, CNL-RP divested of certain vacant and other real estate properties
and used the proceeds to decrease the business segment's debt. However, the
rental revenue from these properties has been classified as a component of
discontinued operations for all periods presented and is not included in the
segment revenues in the table above. The increase in revenues for 2001 compared
with 2000 is attributed to having more properties under lease and the segment
tracking beginning mid-year.
The revenues of the specialty finance segment are more variable than those of
the real estate segment. The following table provides additional information
relating to the revenues of this segment:
For the year ended December 31,
Specialty finance segment revenues by line item in millions 2002 2001 2000
------------ ------------- -------------
Sale of real estate $ 189.4 $ 105.6 $ --
Rental income from operating leases 8.1 13.7 1.7
Earned income from direct financing leases -- 0.6 0.3
Interest income from mortgage equipment and other
notes receivable 31.5 38.7 14.6
Investment and interest income 1.4 1.6 2.0
Net decrease in value of mortgage loans held for
sale, net of related hedge (5.4) (5.1) (6.9)
Gain on sale of mortgage loans -- 4.1 --
Other income 8.6 9.1 3.2
------------ ------------- -------------
Total segment revenues $ 233.6 $ 168.3 $ 14.9
============ ============= =============
CNL-FNC revenues are significantly impacted by the method of accounting for its
sales of real estate. Its sales are recorded pursuant to new guidance described
more fully below, including transition rules that cause certain sales to be
recorded in revenues and others to be treated as discontinued operations. This
program was not started until 2001. The following information assembles select
financial information, presented in accordance with generally accepted
accounting principles, so as to improve comparability between periods of this
segment's Investment Property Sales program sales, excluding sales conducted in
a joint venture program:
Specialty finance segment Investment Property
Sales program sales (excludes sales in For the year ended December 31,
joint venture program) in millions 2002 2001 2000
------------ ------------- -----------
Sale of real estate, as reported $ 189.4 $ 105.6 $ --
Cost of real estate sold, as reported (175.2) (97.6) --
Gain on disposal discontinued operations, net as
reported 7.8 -- --
------------ ------------- -----------
Total gains from Investment Property Sales program
sales (excluding sales in joint venture program) $ 22.0 $ 8.0 $ --
============ ============= ===========
Other matters impacting the comparability of the various components of the
CNL-FNC revenues between the three years presented include:
o The segment did not begin operations until June 2000.
o Rental income from operating leases is shown to be decreasing after
2001, but rental revenues associated with properties acquired after
December 31, 2001 are recorded as a component of income from
discontinued operations.
o Interest income from mortgage loans has decreased after 2001 as a
result of the significant number of loans sold throughout 2001. The
Company has not originated new mortgage loans since May of 2001,
focusing instead on the opportunity to refer potential borrowers to
Bank of America. This segment acquired a large number of loans in
October 2000.
o Investment and interest income associated with retained interests in
the off balance sheet loan pools has decreased across the three years
presented as a result of certain pool defaults and prepayments.
o Despite a hedging strategy designed to address market volatility in the
value of loans held for sale, in both 2002 and 2001 the loan valuation
increases associated with decreases in interest rates were more than
offset by estimated potential default losses and valuation decreases in
hedge contracts. In 2000, prior to the adoption of new accounting
standards, hedge contract value changes were not reflected in earnings,
but estimated potential defaults were recorded.
o The sale of mortgage loans in 2001 led to the $4.1 million in gains;
there were no such sales in either 2000 or 2002.
o Other income reflects growth associated with the advisory service and
consulting operations, servicing revenues and fees from loans and other
referrals to Bank of America, however referral fees have decreased from
2001 to 2002 as a result of a modification of certain terms of the
alliance agreement.
Expenses
Cost of real estate sold is associated solely with the Investment Property Sales
program of the specialty finance segment and in 2002 relates to properties on
hand at the beginning of the year that have since been sold. Costs associated
with properties acquired after 2001 are required to be included as a component
of the gain on disposal of discontinued operations. A table and related
discussion of the comparative three-year results from this program is reported
above under the discussion of related revenues.
General operating and administrative For the year ended December 31,
expenses by segment in millions 2002 2001 2000
------------- ------------ -----------
Real estate segment $ 12.3 $ 9.0 $ 6.1
Specialty finance segment 23.1 22.6 11.3
Other holding company results, results for periods
prior to segment reporting and consolidating
eliminations (1.0) (1.2) 7.5
------------- ------------ -----------
Total general operating and administrative
expenses $ 34.4 $ 30.4 $ 24.9
============= ============ ===========
o Despite cost savings in several CNL-RP general and administrative
categories similar to CNL-FN, certain costs relating to delinquencies
have increased.
o While reflecting a strong improvement in revenues and earnings, CNL-FN
has been able to maintain fairly constant levels of general and
administrative expenses across the three years presented since segment
measurement began during 2000.
Interest expense by segment in millions For the year ended December 31,
2002 2001 2000
----------------- ---------------- ----------------
Real estate segment $ 30.5 $ 36.7 $ 18.6
Specialty finance segment 28.8 32.4 12.8
Other holding company results and
consolidating eliminations (0.5) (0.7) 15.5
----------------- ---------------- ----------------
Total interest expense $ 58.8 $ 68.4 $ 46.9
================= ================ ================
o CNL-RP has decreased its level of debt throughout most of 2002 through
the sales of real estate. The segment is realizing a decrease of 17
percent in interest expense from 2001 to 2002 because of the decreased
debt and because it repaid a portion of the Secured Credit Facility
with proceeds from the sale of its Series 2001 Bonds issued in October
2001, which carry a lower rate of interest. The real estate segment had
increased its debt levels prior to 2002.
o CNL-FN has reduced its interest-bearing debt, in particular as a result
of sales of $288 million in Investment Property Sales properties
throughout 2002 while acquiring only $204 million in new properties.
Conversely, throughout 2001 CNL-FN increased its level of properties
financed. Interest expense associated with properties acquired after
December 31, 2001 are recorded as a component of income from
discontinued operations. The weighted average interest charged by the
mortgage warehouse facilities has decreased from 7.67 percent and 5.13
percent in 2000 and 2001, respectively to 4.07 percent in 2002.
The Company has decreased the length of time necessary to re-lease a defaulted
tenant's property. However the overall number of defaulted tenant properties
increased as a result of several significant tenant bankruptcies during the past
eighteen months leading to $3.5 million in property expenses during the year
ended December 31, 2002 compared with $2.1 million and $2.4 million in the years
ended December 31, 2001 and 2000, respectively. Some expenses formerly presented
in this category associated with properties treated as discontinued operations
are incorporated in the income or loss from discontinued operations for all
years presented.
Expense categories such as state taxes and depreciation and amortization
expenses have reflected and will continue to reflect, the level of assets
invested in leased properties. Certain of these expenses have been reflected as
a component of discontinued operations. The category for depreciation and
amortization expenses has also included amortization on intangible assets, such
as goodwill. During 2001 and 2000, the Company amortized $3.1 million and $2.7
million in goodwill, respectively. In July 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 142
"Goodwill and Other Intangible Assets" ("FAS 142"). FAS 142 requires the use of
a non-amortization approach to account for purchased goodwill and certain
intangibles. Under a non-amortization approach, goodwill and certain intangibles
will not be amortized, but instead are reviewed for impairment and written down
and charged to results of operations only in the periods in which the recorded
value of goodwill and certain intangibles is more than its fair value. The
Company's adoption of this accounting standard has eliminated its amortization
of goodwill commencing January 1, 2002; however, impairment reviews may result
in future periodic write-downs. During the year ended December 31, 2002, no
write-downs were considered necessary.
The Company recorded $10.3 million in 2000 related to the integration of debt,
net lease and other financial products with Bank of America as a partner and
related to a proposed merger transaction intended to be followed by a listing of
company shares. No transaction costs have been incurred in either 2002 or 2001.
The Company recorded a loss on investment in securities of $0.1 million and $5.3
million for the years ended 2001 and 2000, respectively, resulting from:
o impairments and expenses associated with a residual interest investment
in both years; and
o losses of $3.1 million specific only to 2000 relating to the
liquidation of a securitization trust.
The Company recorded a loss of $8.1 million in 2001 upon the termination of
certain hedges initially treated as "cash flow" hedges. Most of this loss
resulted when CNL-FN focused on its Investment Property Sales program in lieu of
its focus on securitizations. This change in focus was the result of changes in
market conditions. No comparable loss relates to either 2002 or 2001.
The Company recorded a provision for loan losses of $3.1 million, $28.2 million
and $1.8 million in 2002, 2001 and 2000, respectively. The provision in 2001 was
the result of the bankruptcy of a significant borrower.
The Company has recorded impairment provisions of $8.6 million, $16.9 million,
and $2.2 million for years ended December 31, 2002, 2001 and 2000, respectively
excluding impairments on properties treated as discontinued operations as
described below. Impairment provisions are recorded when circumstances indicate
that future expected cash flows do not recover the carrying cost of the
individual properties. The amount in 2001 was associated with three significant
tenant bankruptcies that have been resolved in 2002. The 2002 amounts relate to
tenants that are experiencing financial difficulties that could lead to defaults
and ultimately to losses on the underlying real estate.
Effective January 1, 2002 the Company accounts for certain of its revenues and
expenses as originating from discontinued operations pursuant to Statement of
Financial Accounting Standard No. 144 "Accounting for the Impairment or Disposal
of Long-Lived Assets" ("FAS 144"). FAS 144 requires that sales of real estate,
or the designation of a real estate asset as held for sale, be treated as
discontinued operations. Any gain or loss from such disposition, and any income
or expenses associated with these real estate assets, are included in the income
statement as discontinued operations. CNL-FN's Investment Property Sales
program, a vital piece of its ongoing operating strategy and a contributor of
over $32 million in gains beginning in 2001 is nonetheless deemed to fall under
the new guidance. Therefore, gains from properties sold under the Investment
Property Sales program, unless acquired before January 1, 2002, are included as
discontinued operations; income and expenses associated with Investment Property
Sales program assets designated as held for sale after December 31, 2001 are
also included in discontinued operations. In addition, CNL-RP has designated
certain real estate assets since December 31, 2001 as held for sale and has
included income and expenses associated with the assets as well as the gain or
loss from any dispositions of these assets as discontinued operations for all
periods presented. The table below illustrates the difference in treatment of
discontinued operations by segment:
Discontinued operations by segment in For the year ended December 31,
millions 2002 2001 2000
----------------- ----------------- ----------------
Real estate segment discontinued operations:
Operating income $ (5.1) $ (6.2) $ 4.6
Gains or losses 3.3 --
Specialty finance segment discontinued
operations:
Operating income 3.2 -- --
Gains or losses 7.8 -- --
----------------- ----------------- ----------------
Total discontinued operations $ 9.2 $ (6.2) $ 4.6
================= ================= ================
The Company adopted Statement of Financial Accounting Standards No. 133 ("FAS
133"), as amended, on January 1, 2001, which requires all derivative instruments
to be recorded on the balance sheet at fair value. Effective January 1, 2001,
the Company recorded a cumulative effect adjustment loss of $21.2 million to
recognize at fair value all derivative instruments that are designated as
fair-value hedging instruments. The Company recorded an offsetting cumulative
effect adjustment gain of $17.4 million to recognize the difference
(attributable to the hedged risks) between the carrying values and fair values
of related hedged assets or liabilities. The adoption of FAS 133 thereby
resulted in a $3.8 million charge against Company earnings in 2001.
In April 2002, the FASB issued Statement of Financial Accounting Standards No.
145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections." This statement rescinds FASB
Statement No. 4, "Reporting Gains and Losses from Extinguishment of Debt," and
an amendment of that Statement, FASB Statement No. 64, "Extinguishments of Debt
Made to Satisfy Sinking-Fund Requirements." This statement also rescinds FASB
Statement No. 44, "Accounting for Intangible Assets of Motor Carriers," and
amends FASB Statement No. 13, "Accounting for Leases," to eliminate an
inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. This statement also
amends other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. The provisions of this statement related to the rescission of
Statement 4 are applicable in fiscal years beginning after May 15, 2002. The
provisions of this statement related to Statement 13 are effective for
transactions occurring after May 15, 2002. All other provisions of this
statement are effective for financial statements issued on or after May 15,
2002. The provisions of this statement, to the extent already applicable, did
not have a significant impact on the financial position or results of operations
of the Company. Provisions applicable to future reporting periods are not
expected to have a significant impact on the financial position or results of
operations of the Company.
In July 2002, the FASB issued Statement of Financial Accounting Standards No.
146, "Accounting for Costs Associated with Exit or Disposal Activities." The
statement requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. Examples of costs covered by the statement include lease
termination costs and certain employee severance costs that are associated with
a restructuring, discontinued operation, plant closing, or other exit or
disposal activity. The statement is to be applied prospectively to exit or
disposal activities initiated after December 31, 2002. The adoption of this
statement is not expected to have a significant impact on the financial position
or results of operations of the Company.
In November 2002, FASB issued FASB Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others". FIN 45 clarifies the
requirements relating to a guarantor's accounting for, and disclosure of, the
issuance of certain types of guarantees. FIN 45 requires that upon issuance of a
guarantee, the guarantor must recognize a liability for the fair value of the
obligation it assumes under that guarantee. FIN 45's provisions for initial
recognition and measurement are to be applied on a prospective basis to
guarantees issued or modified after December 31, 2002. The Company's previous
accounting for guarantees issued prior to January 1, 2003 are not required to be
revised or restated to reflect the effect of the recognition and measurement
provisions of FIN 45.
In January 2003, FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities" to expand upon and strengthen
existing accounting guidance that addresses when a company should include the
assets, liabilities and activities of another entity in its financial
statements. To improve financial reporting by companies involved with variable
interest entities (more commonly referred to as special-purpose entities or
off-balance sheet structures), FIN 46 requires that a variable interest entity
be considered by a company if that company is subject to a majority risk of loss
from the variable interest entity's activities or entitled to receive a majority
of the entity's residual returns or both. Prior to FIN 46, a company generally
included another entity in its consolidated financial statements only if it
controlled the entity through voting interests. Consolidation of variable
interests entities will provide more complete information about the resources,
obligations, risks and opportunities of the consolidated company. The
consolidation requirements of FIN 46 apply immediately to variable interest
entities created after January 31, 2003, and to older entities in the first
fiscal year or interim period beginning after June 15, 2003. Management believes
that adoption of this standard will not change the accounting for its bankruptcy
remote securitization entities. Management believes adoption of this standard
may result in either consolidation or additional disclosure requirements with
respect to the Company's unconsolidated subsidiaries, however, such
consolidation is not expected to significantly impact the Company's financial
position or results of operations.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
This information is described above in Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Item 8. Financial Statements and Supplementary Data
Report of Independent Certified Public Accountants
To the Board of Directors and Stockholders of
CNL American Properties Fund, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and comprehensive
income/(loss), and of cash flows present fairly, in all material respects, the
financial position of CNL American Properties Fund, Inc. and its subsidiaries at
December 31, 2002 and 2001, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2002 in
conformity with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement schedules listed
in the index appearing under item 15(a)(2) present fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedules are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1 to the consolidated financial statements, on January 1,
2001 the Company changed its method of accounting for derivative financial
instruments and on January 1, 2002 the Company adopted Financial Accounting
Standards No. 142 "Goodwill and other Intangible Assets" and No. 144 "Accounting
for the Impairment or Disposal of Long-Lived Assets."
/s/ PricewaterhouseCoopers LLP
Orlando, Florida
February 5, 2003
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands except for per share data)
December 31,
2002 2001
---------------- ----------------
ASSETS
Real estate investment properties $ 580,520 $ 589,119
Net investment in direct financing leases 112,441 121,712
Real estate held for sale 144,487 251,439
Mortgage loans held for sale 48,327 315,835
Mortgage, equipment and other notes receivable 334,467 103,962
Other investments 32,163 32,797
Cash and cash equivalents 15,531 20,858
Restricted cash 4,574 10,931
Receivables, less allowance for doubtful accounts
of $1,182 and $4,315, respectively 3,281 4,990
Accrued rental income 22,332 17,938
Goodwill 56,260 56,260
Other assets 29,675 33,273
------------------ ------------------
$ 1,384,058 $ 1,559,114
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolver $ 14,000 $ 10,000
Note payable 203,207 48,731
Mortgage warehouse facilities 145,758 430,169
Subordinated note payable 43,750 43,750
Bonds payable 424,508 441,065
Due to related parties 5,124 5,201
Other payables 35,138 35,505
------------------ ------------------
Total liabilities 871,485 1,014,421
------------------ ------------------
Minority interests, including redeemable partnership interest 18,422 18,511
------------------ ------------------
Commitments and contingencies (Note 15)
Stockholders' equity:
Preferred stock, without par value. Authorized
and unissued 3,000,000 shares -- --
Excess shares, $0.01 par value per share.
Authorized and unissued 78,000,000 shares -- --
Common stock, $0.01 par value per share. Authorized
62,500,000 shares, issued 45,285,972 and 44,112,943
shares, respectively, outstanding 45,248,670 and
44,075,641 shares, respectively 452 441
Capital in excess of par value 816,745 798,154
Accumulated other comprehensive (loss)/income (16,862 ) 1,370
Accumulated distributions in excess of net earnings (306,184 ) (273,783 )
------------------ ------------------
Total stockholders' equity 494,151 526,182
------------------ ------------------
$ 1,384,058 $ 1,559,114
================== ==================
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except for per share data)
Year Ended December 31,
2002 2001 2000
-------------- ------------- -------------
Revenues:
Sale of real estate $ 189,426 $ 105,645 $ --
Rental income from operating leases 71,029 76,592 64,596
Earned income from direct financing leases 12,102 12,930 14,034
Interest income from mortgage, equipment and other
notes receivables 35,539 42,855 21,589
Investment and interest income 5,344 5,845 8,205
Net decrease in value of mortgage loans
held for sale, net of related hedge (5,368 ) (5,070 ) (6,855 )
Gain on sale of mortgage loans -- 4,120 --
Other income 16,227 13,918 7,928
--------------- --------------- --------------
324,299 256,835 109,497
--------------- --------------- --------------
Expenses:
Cost of real estate sold 175,185 97,587 --
General operating and administrative 34,352 30,387 24,939
Interest expense 58,780 68,371 46,944
Property expenses 3,462 2,128 2,418
State and other taxes 74 964 1,193
Depreciation and amortization 13,733 18,213 16,401
Transaction costs -- -- 10,315
Loss on investment in securities -- 122 5,348
Loss on termination of cash flow hedges -- 8,060 --
Provision for loss on loans 3,099 28,200 1,804
Impairment provisions 8,639 16,900 2,214
--------------- -------------- --------------
297,324 270,932 111,576
--------------- --------------- --------------
Earnings/(loss) before minority interest in (income)/loss
of consolidated joint ventures, equity in earnings of
unconsolidated joint ventures and loss
on sales of assets 26,975 (14,097 ) (2,079 )
Minority interest in income/(loss) of
consolidated joint ventures (1,134 ) (242 ) 1,024
Equity in earnings of unconsolidated joint ventures 921 1,106 97
Loss on sales of assets (347 ) (1,137 ) (721 )
--------------- --------------- --------------
Earnings/(loss) from continuing operations, net 26,415 (14,370 ) (1,679 )
--------------- --------------- --------------
Discontinued operations
Earnings/(loss) from discontinued operations, net (1,893 ) (6,241 ) 4,606
Gain on disposal of discontinued operations, net 11,068 -- --
--------------- --------------- --------------
9,175 (6,241 ) 4,606
--------------- --------------- --------------
Earnings/(loss) before cumulative effect of accounting
change 35,590 (20,611 ) 2,927
--------------- --------------- --------------
Cumulative effect of accounting change -- (3,841 ) --
--------------- --------------- --------------
Net income/(loss) $ 35,590 $ (24,452 ) $ 2,927
=============== =============== ==============
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except for per share data)
Year Ended December 31,
2002 2001 2000
--------------- --------------- --------------
Earnings/(loss) per share of common stock (basic and diluted):
From continuing operations $ 0.59 $ (0.33 ) $ (0.04 )
From discontinued operations 0.21 (0.14 ) 0.11
--------------- --------------- --------------
Before cumulative effect of accounting change 0.80 (0.47 ) 0.07
Cumulative effect of accounting change -- (0.09 ) --
--------------- --------------- --------------
Net income/(loss) $ 0.80 $ (0.56 ) $ 0.07
=============== =============== ==============
Weighted average number of shares
of common stock outstanding 44,620,235 43,589,985 43,495,919
=============== =============== ==============
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME/(LOSS)
Years Ended December 31, 2002, 2001 and 2000
(In Thousands except for share data and per share data)
Accumulated Accumulated
distributions other Compre-
Common stock Capital in in excess compre- hensive
-----------------------
Number Par excess of of net hensive Income/
of Shares value par value earnings Income/(loss) Total (loss)
----------- ---------- -------------- ------------- ------------- ------------- ----------
Balance at December 31, 1999 43,495,919 $ 435 $ 791,419 $ (119,463) $ (177) $ 672,214
Stock issuance costs -- -- (1,493 ) -- -- (1,493 )
Net income -- -- -- 2,927 -- 2,927 2,927
Other comprehensive income,
market revaluation on
available for sale
securities -- -- -- -- 419 419 419
----------
Total comprehensive income -- -- -- -- -- -- $ 3,346
==========
Distributions declared and
paid ($1.52 per share) -- -- -- (66,329 ) -- (66,329 )
----------- ---------- -------------- ------------- ------------- -------------
Balance at December 31, 2000 43,495,919 $ 435 $ 789,926 $ (182,865 ) $ 242 $ 607,738 $
Shares issued 579,722 6 9,722 -- -- 9,728
Stock issuance costs -- -- (1,494 ) -- -- (1,494 )
Net loss -- -- -- (24,452 ) -- (24,452 ) (24,452)
Other comprehensive income,
market revaluation on
available for sale
securities -- -- -- -- 839 839 839
Cumulative effect adjustment
to recognize fair value
of cash flow hedges -- -- -- -- (5,172 ) (5,172 ) (5,172)
Reclassification of cash
flow hedge losses to
statement of operations -- -- -- -- 8,060 8,060 8,060
Current period adjustment to
recognize change in fair
value of cash flow hedges -- -- -- -- (2,599 ) (2,599 ) (2,599)
----------
Total comprehensive loss -- -- -- -- -- -- $ (23,324)
==========
Distributions declared and
paid ($1.52 per share) -- -- -- (66,466 ) -- (66,466 )
----------- ---------- -------------- ------------- ------------- -------------
Balance at December 31, 2001 44,075,641 $ 441 $ 798,154 $ (273,783 ) $ 1,370 $ 526,182
=========== ========== ============== ============= ============= =============
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'EQUITY AND COMPREHENSIVE INCOME/(LOSS)
Years Ended December 31, 2002, 2001 and 2000
(In Thousands except for share data and per share data)
Accumulated Accumulated
distributions other Compre-
Common stock Capital in in excess compre- hensive
-----------------------
Number Par excess of of net hensive Income/
of Shares value par value earnings Income/(loss) Total (loss)
----------- ---------- -------------- ------------- ------------- ------------- ----------
Balance at December 31, 2001 44,075,641 $ 441 $ 798,154 $ (273,783 ) $ 1,370 $ 526,182 $
Shares issued 1,173,354 11 20,088 -- -- 20,099
Retirement of common stock (325 ) -- (4 ) -- -- (4 )
Stock issuance costs -- -- (1,493 ) -- -- (1,493 )
Net income -- -- -- 35,590 -- 35,590 35,590
Other comprehensive loss,
market revaluation on
available for sale
securities -- -- -- -- (775 ) (775 ) (775)
Current period adjustment to
recognize change in fair
value of cash flow hedges,
net of tax -- -- -- -- (17,457 ) (17,457 ) (17,457)
----------
Total comprehensive income -- -- -- -- -- -- $ 17,358
==========
Distributions declared and
paid ($1.52 per share) -- -- -- (67,991 ) -- (67,991 )
----------- ---------- -------------- ------------- ------------- -------------
Balance at December 31, 2002 45,248,670 $ 452 $ 816,745 $ (306,184 ) $ (16,862 ) $ 494,151
=========== ========== ============== ============= ============= =============
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Ended December 31,
2002 2001 2000
-------------- ------------- -------------
Cash flows from operating activities:
Net income/(loss) $ 35,590 $ (24,452 ) $ 2,927
--------------- -------------- --------------
Adjustments to reconcile net income/(loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 13,733 18,213 16,401
Cumulative effect of accounting change -- 3,841 --
Impairment provisions 8,639 16,900 2,214
Provision for loss on loans 3,099 28,200 1,804
Loss on sales of assets 347 1,137 721
Loss on investment in securities -- 122 5,348
Gain on sale of mortgage loans -- (4,120) --
Decrease/(increase) in real estate held for sale 40,037 (37,507) --
Net decrease in value of mortgage loans held for sale,
net of related hedge 5,368 5,070 6,855
Equity in earnings of joint venture, net of distributions 555 (397) 7
Proceeds from sale of loans -- 105,975 --
Investment in mortgage loans held for sale (14,440) (116,995) (205,584)
Collection on mortgage loans held for sale 36,281 37,267 6,981
Changes in other operating assets and liabilities (17,716) 14,948 6,363
--------------- --------------- ---------------
Total adjustments 75,903 72,654 (158,890)
--------------- --------------- ---------------
Net cash provided by (used in) operating activities 111,493 48,202 (155,963)
--------------- --------------- ---------------
Cash flows from investing activities:
Additions to real estate investment properties (7,212 ) (26,052 ) (160,901 )
Investment in direct financing leases -- -- (15,369 )
Proceeds from sale of assets 67,085 12,659 15,869
Proceeds from sale or maturities of securities -- 982 7,721
Investment in mortgage, equipment and other notes receivable (6,607 ) (11,458 ) (11,131 )
Collection on mortgage, equipment and other notes receivable 14,968 9,325 8,335
Investment in joint venture (665 ) (10 ) --
Purchase of other investments -- -- (2,832 )
Decrease/(increase) in restricted cash 6,357 (9,055 ) (1,876 )
Increase in intangibles and other assets -- -- (378 )
--------------- --------------- --------------
Net cash provided by (used in) investing activities 73,926 (23,609 ) (160,562 )
--------------- --------------- --------------
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(In Thousands)
Year Ended December 31,
2002 2001 2000
--------------- --------------- ---------------
Cash flows from financing activities:
Proceeds from borrowings on credit facility, note
payable and subordinated note payable $ 249,334 $ 63,949 $ 397,538
Payment on credit facility, note payable and
subordinated note payable (90,858 ) (159,590 ) (586,425 )
Proceeds from borrowings on mortgage warehouse facilities 189,901 325,264 301,227
Payments on mortgage warehouse facilities (474,312 ) (358,860 ) (7,719 )
Contribution from minority interest of
consolidated joint venture -- -- 40
Proceeds from sale of shares 9,750 3,692 --
Retirement of shares of common stock (4 ) -- --
Distributions to minority interest (243 ) (234 ) (147 )
Distributions to stockholders (67,991 ) (66,466 ) (66,329 )
Loan from stockholder 11,750 8,708 --
Payment of stock issuance costs (1,493 ) (1,493 ) (1,493 )
Issuance of bonds -- 177,223 280,906
Payment on bonds (16,557 ) (10,066 ) (2,422 )
Payment of loan costs and bond issuance costs (23 ) (9,634 ) (20,891 )
--------------- -------------- --------------
Net cash provided by (used in)financing activities (190,746 ) (27,507 ) 294,285
--------------- -------------- --------------
Net decrease in cash and cash equivalents (5,327 ) (2,914 ) (22,240 )
Cash and cash equivalents at beginning of year 20,858 23,772 46,012
--------------- -------------- --------------
Cash and cash equivalents at end of year 15,531 20,858 23,772
=============== ============== ==============
Supplemental disclosures of cash flow information:
Interest paid $ 56,915 $ 64,608 $ 39,023
=============== ============== ==============
Interest capitalized $ 142 $ 390 $ 2,253
=============== ============== ==============
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2002, 2001 and 2000
1. Significant Accounting Policies:
-------------------------------
Organization - CNL American Properties Fund, Inc. is a
self-administered real estate investment trust ("REIT") that offers
financial, development, advisory and other real estate services to
operators of select national and regional fast food, family-style and
casual dining restaurant chains. The term "Company" includes, unless
the context otherwise requires, CNL American Properties Fund, Inc. and
its majority owned and controlled subsidiaries. These subsidiaries
include CNL-APF Partners, LP and CNL Franchise Network, LP.
On June 1, 2000, the Company formed CNL Franchise Network, LP
("CNL-FN") and transferred certain assets and operations to it in
exchange for a combined general and limited partnership interest of
84.39 percent. A limited partnership interest of 9.18 percent was
issued to Bank of America in exchange for its franchise finance
business unit. In addition, a limited partnership interest of 6.43
percent was issued to CNL Financial Group, Inc., an affiliate of a
director of the Company, in exchange for its merger, acquisition and
advisory services business. The excess of the purchase price over the
fair value of the net tangible assets acquired from the new partners
was recorded as goodwill. This partnership and the related Strategic
Alliance Agreement with Bank of America expanded the Company's
financial products and services. The bank's interest is redeemable at
their option under certain conditions after a specified date for a cash
payment of $14.3 million.
Principles of Consolidation - The consolidated financial statements of
the Company include its majority owned and controlled affiliates. All
significant intercompany balances and transactions among consolidated
affiliates have been eliminated. The equity method of accounting is
applied to those investments in joint ventures that are not subject to
control by the Company due to the significance of rights held by other
parties.
Use of Estimates - Preparation of the financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions relating to the reporting
of assets and liabilities and the disclosure of contingent assets and
liabilities. Significant estimates included provisions for impairment
of real estate and loans, valuation of loans held for sale and
valuation of other investments. Actual results could differ from those
estimates.
Real Estate and Lease Accounting - The Company records its properties
comprised of land, buildings and equipment at cost. Management reviews
its properties for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not
be recoverable through operations or sale. Management determines
whether impairment in value has occurred by comparing the estimated
future undiscounted cash flows, including the residual value of the
property, with the carrying cost of the individual property. If
impairment is indicated, the assets are adjusted to estimated fair
value.
Properties leased to restaurant operators are generally on a triple-net
basis, which means the tenant is responsible for all operating expenses
relating to the property, including property taxes, insurance,
maintenance and repairs. The leases are accounted for using either the
direct financing or the operating method.
Direct financing method - The leases accounted for using the
direct financing method are recorded at the net investment
that, at the inception of the lease, generally represents the
cost of the asset. Unearned income is deferred and amortized
to income over the lease terms so as to produce a constant
periodic rate of return on net investment in the leases.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2002, 2001 and 2000
1. Significant Accounting Policies - Continued:
-------------------------------------------
Operating method - Land, building and secured equipment leases
are accounted for using the operating method. Revenue is
recognized as rentals are earned and depreciation is charged
to operations on a straight-line basis over the life of the
related assets. Rental income is recognized on a straight-line
basis over the lease term. Buildings and equipment are
depreciated on the straight-line method over their estimated
useful lives of 30 and seven years, respectively.
Properties acquired that the Company intends to sell or securitize
within one year of acquisition are recorded at cost. Rental income is
recognized without regard to potential future rent increases and the
asset is not depreciated. Revenue from sale of real estate is
recognized at the time of closing when collectibility of the sales
price is reasonably assured and the earnings process is substantially
complete.
Loans - The Company has originated loans to restaurant operators that
are generally secured by real estate or equipment. The Company accounts
for loans depending on the following classification:
Mortgage loans held for sale - Loans originated that the
Company intends to sell or securitize generally within one
year of origination are recorded at fair market value. Quoted
prices for similar loans and the present value of the expected
cash flows net of the estimated impact of any defaults are
used to determine fair value.
Mortgage, equipment and other notes receivable - Loans
originated that are expected to be held until maturity are
recorded at the lower of cost or market value and are reduced
for any estimated future loss. Whenever it appears that future
collection on specific notes appears doubtful, a valuation
allowance is established. The allowance represents the
difference between the carrying amount and the amount
management expects to receive. Increases and decreases in the
allowance due to changes in the measurement of the impaired
loans are included in the provision for loss on loans. Loans
continue to be classified as impaired unless they are brought
fully current and the collection of scheduled interest and
principal is considered probable. When a loan or portion of a
loan, including an impaired loan, is determined to be
uncollectible, the portion deemed uncollectible is charged
against the allowance and subsequent recoveries, if any, are
credited to the allowance. Accrual of interest is discontinued
when management believes, after considering economic and
business conditions and collection efforts, that the
borrowers' financial condition is such that collection of
interest is doubtful. Subsequent interest is recorded as
income.
Securitizations - Certain loans are originated and sold to entities
that, in turn, issue securities to investors backed by these assets.
The Company retains the servicing rights and participates in cash flows
from the retained equity positions and lower rated securities. The
present value of the expected cash flows for each retained security,
after payment of principal and interest to third-party bond or
certificate holders, over the estimated cost of servicing is recorded
at the time of sale as a retained interest. Retained interests in
securitized assets are included in other investments. Accounting for
the retained interests requires that the Company estimate their value
using market trends and historical experience, expected prepayments and
defaults. This information is considered, along with prevailing
discount rates and the terms of the bonds and certificates, to arrive
at current fair value amounts and determine whether a permanent
impairment in value has occurred.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2002, 2001 and 2000
1. Significant Accounting Policies - Continued:
-------------------------------------------
Restricted Cash - Restricted cash relates to cash received in
connection with assets held as collateral for certain debt and is
subject to certain restrictions until released by the trustee.
Cash and Cash Equivalents - The Company considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. These amounts may exceed federally insured levels,
however, the Company has not experienced any losses in such accounts.
Derivative Financial Instruments - The Company utilizes derivative
instruments to partially offset the effect of fluctuating interest
rates on the value of its mortgage loans held for sale and the cash
flows associated with a portion of its variable-rate debt. The Company
adopted Statement of Financial Accounting Standards No. 133 ("FAS
133"), as amended, on January 1, 2001, which requires all derivative
instruments to be recorded on the balance sheet at fair value. Changes
in the value of derivatives associated with hedge transactions are
recorded either in current earnings or in other comprehensive income
depending on the type.
Fair-value hedge transactions - When the Company hedges
changes in the fair value of an asset or liability, the
effective changes in the value of the derivative instrument
are generally offset in the income statement by changes in the
value of the hedged item.
Cash-flow hedge transactions - When the Company hedges
variability of cash flows related to a variable-rate asset or
liability or a forecasted transaction, effective changes in
the value of the derivative instrument are reported in other
comprehensive income and subsequently recognized in operations
in the periods in which earnings are impacted by the
variability of the cash flows of the hedged item or forecasted
transaction.
The ineffective portion of all hedges are reflected in earnings.
Effective January 1, 2001, the Company recorded a cumulative effect
adjustment loss of $21.2 million to recognize the value of all
derivative instruments that were designated as fair-value hedging
instruments and an offsetting cumulative effect adjustment of $17.4
million to recognize the excess of the fair values of related hedged
assets over the carrying value. In addition, effective January 1, 2001
a cumulative effect adjustment through stockholders' equity of $5.2
million was recorded to recognize at fair value all derivative
instruments that were designated as cash-flow hedging instruments.
During 2001, the Company determined that a forecasted debt issuance
would not occur and also terminated a cash flow hedge upon repayment of
the related debt. The termination of the hedges and the hedge
accounting for the related derivative instruments resulted in an $8.1
million charge to the statement of operations.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2002, 2001 and 2000
1. Significant Accounting Policies - Continued:
-------------------------------------------
Loan Costs - Loan costs incurred in connection with debt have been
capitalized and are being amortized over the term of the related debt
using the effective interest method. Loan costs are included in
intangibles and other assets in the financial statements. As of
December 31, 2002 and 2001, the Company had capitalized loan costs of
$25.2 million and $32.2 million, respectively and recorded accumulated
amortization of $7.0 million and $13.0 million, respectively. The
balances at December 31, 2002 exclude loans costs and related
accumulated amortization that were fully amortized and removed from the
balance sheet as of December 31, 2002.
Equity Compensation Plan - During 1999, the stockholders approved a
performance incentive plan (the "Plan"), which became effective as of
February 23, 1999. The Plan authorized the issuance of up to 4,500,000
shares of the Company's common stock upon the exercise of stock options
(both incentive and nonqualified), stock appreciation rights and the
award of restricted stock ("Stock Award") provided that the aggregate
number of shares of Common Stock that may be issued pursuant to
Options, stock appreciation rights ("SARs"), and Stock Awards granted
under the Plan would increase automatically to 9,000,000 shares and
12,000,000 shares respectively, when the Company had issued and
outstanding 150,000,000 shares and 200,000,000 shares, respectively, of
common stock. The Plan terminates on February 23, 2009. Key employees,
officers, directors and persons performing consulting or advisory
services for the Company or its affiliates, as defined in the Plan, who
are designated by the committee administering the Plan, are eligible to
receive awards under the Plan. Awards may be made in the form of stock
options, stock awards, SARs, Phantom Stock Awards, Performance Awards
and Leveraged Stock Purchase Awards as defined further in the Plan. As
of December 31, 2002, the Company had not made any awards related to
the Plan.
Income Taxes - The Company has made an election to be taxed as a REIT
for federal income tax purposes. The Company generally will not be
subject to federal corporate income taxes on amounts distributed to
stockholders, providing it distributes at least 90 percent of its
taxable income and meets certain other requirements for qualifying as a
REIT. Earnings and profits, which determine the taxability of dividends
to stockholders, differ from reported net income as a result of
differing treatment of items for financial reporting versus tax
purposes, such as different lives and methods used to depreciate
investment properties. Notwithstanding qualification as a REIT for tax
purposes, the Company is subject to certain state taxes on its income
and property.
Effective January 1, 2001, the Company's subsidiary, CNL Franchise
Network Corp. ("CNL-FNC"), elected to be treated as a taxable REIT
subsidiary ("TRS") pursuant to the provisions of the REIT Modernization
Act. As a TRS, its operating Partnership, CNL-FN, is able to engage in
activities resulting in income that previously would have been
disqualified from being eligible REIT income under the federal income
tax regulations. Certain activities reside within CNL-FNC that are
therefore subject to federal income taxes. Also, effective January 1,
2001, a subsidiary of CNL Restaurant Properties, Inc. (CNL-RP), elected
to be treated as a TRS. Operations commenced during 2002 and are
subject to federal income taxes.
Earnings Per Share - Basic earnings per share are calculated based upon
net earnings (income available to common stockholders) divided by the
weighted average number of shares of common stock outstanding during
the reporting period. The Company's subsidiary, CNL-FN, has entered
into a subordinated note payable with a conversion feature that allows
one of the partners to convert the note into additional ownership of
the subsidiary. For the years ended December 31, 2002 and 2001, the
impact of this conversion feature was not dilutive.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2002, 2001 and 2000
1. Significant Accounting Policies - Continued:
-------------------------------------------
Consolidated Statement of Cash Flows - Supplemental Disclosure - In
June 2002, the Company redesignated approximately $225 million from
mortgage loans held for sale to held for investment. The loans serve as
collateral for a new five year borrowing facility.
During the year ended December 31, 2002, a tenant and borrower of the
Company assigned loans in the amount of $7.5 million to an affiliate.
The Company agreed to the assignment in exchange for an interest in a
participating loan from the affiliate (see Note 12).
During the year ended December 31, 2002, the Company foreclosed on four
loans held for sale from a borrower and accepted the underlying
collateral as settlement for the mortgage loans. The collateral
received had a net realizable value of $3.7 million and consisted of
real estate and other restaurant assets.
During the years ended December 31, 2002 and 2001, the Company
converted $10.3 million and $6.0 million, respectively, of outstanding
loans plus accrued interest under the loans into 604,177 shares and
359,722 shares, respectively, of Company stock (see Note 12).
From time to time, certain properties classified as long-term
investments may be identified as held for sale and subsequently
re-designated to held for sale classification. The Company identified
83 such properties with a net book value of $80.6 million during 2002
as held for sale.
In May 2001, the Company reclassified $60.9 million from mortgage loans
held for sale to investments in mortgage, equipment and other notes
receivable.
During the year ended December 31, 2000, the Company formed CNL
Franchise Network, LP ("CNL-FN"). CNL-FN issued partnership interests
to Bank of America and CNL Financial Group, Inc. in exchange for the
following:
Bank of America contributed $14.3 million for the operations
of its franchise finance business which was recorded as
goodwill.
CNL Financial Group, Inc. contributed its merger, acquisition
and advisory services group consisting of the following:
(In Thousands)
Cash $ 40
Receivables 25
Due from related parties 409
Other assets 363
Goodwill 2,725
---------------
Total assets 3,562
---------------
Accounts payable and accrued expenses 123
Due to related parties 40
Other payables 199
---------------
Total liabilities 362
---------------
Net equity $ 3,200
===============
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2002, 2001 and 2000
1. Significant Accounting Policies - Continued:
-------------------------------------------
In October 2000, a trust liquidated and distributed $170.3 million in
mortgage loans and $139.5 million in related mortgage warehouse debt
facilities to satisfy the Company's investment.
Other New Accounting Standards - Effective January 1, 2002, the Company
adopted Statement of Financial Accounting Standards No. 144 "Accounting
for the Impairment or Disposal of Long-Lived Assets" ("FAS 144"). This
statement requires that a long-lived asset be tested for recoverability
whenever events or changes in circumstances indicate that its carrying
amount may not be recoverable. The carrying amount of a long-lived
asset is not recoverable if it exceeds the sum of the undiscounted cash
flows expected to result from the use and eventual disposition of the
asset. The assessment is based on the carrying amount of the asset at
the date it is tested for recoverability. An impairment loss is
recognized when the carrying amount of a long-lived asset exceeds its
fair value. If an impairment is recognized, the adjusted carrying
amount of a long-lived asset is its new cost basis. The statement also
requires that the results of operations of a component of an entity
that either has been disposed of or is classified as held for sale be
reported as a discontinued operation, for components designated on or
after the effective date.
In July 2001, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" ("FAS 142"). FAS 142 requires the use of a
nonamortization approach to account for purchased goodwill and certain
intangibles. Under a nonamortization approach, goodwill and certain
intangibles will not be amortized into results of operations, but
instead are reviewed for impairment and written down and charged to
results of operations only in the periods in which the recorded value
is more than its fair value. The Company adopted the provisions of this
statement on January 1, 2002. The Company's goodwill relates to its
specialty finance segment. The adoption of this accounting standard had
the impact of reducing the Company's amortization of goodwill and
intangibles commencing January 1, 2002. The Company reviewed the
goodwill for impairment and is currently unaware of any impairment in
its recorded value.
In April 2002, the FASB issued Statement of Financial Accounting
Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections." ("FAS
145"). This statement rescinds FASB Statement No. 4, "Reporting Gains
and Losses from Extinguishment of Debt," and an amendment of that
Statement, FASB Statement No. 64, "Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements." This statement also rescinds FASB
Statement No. 44, "Accounting for Intangible Assets of Motor Carriers."
This statement amends FASB Statement No. 13, "Accounting for Leases,"
to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain
lease modifications that have economic effects that are similar to
sale-leaseback transactions. This statement also amends other existing
authoritative pronouncements to make various technical corrections,
clarify meanings, or describe their applicability under changed
conditions. The provisions of this statement related to the rescission
of Statement 4 are applicable in fiscal years beginning after May 15,
2002. The provisions of this statement related to Statement 13 are
effective for transactions occurring after May 15, 2002. All other
provisions of this statement are effective for financial statements
issued on or after May 15, 2002. The provisions of this statement, to
the extent already applicable, did not have a significant impact on the
financial position or results of operations of the Company. Provisions
applicable to future reporting periods are not expected to have a
significant impact on the financial position or results of operations
of the Company.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
1. Significant Accounting Policies - Continued:
-------------------------------------------
In July 2002, the FASB issued Statement of Financial Accounting
Standards No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities" ("FAS 146"). The statement requires companies to
recognize costs associated with exit or disposal activities when they
are incurred rather than at the date of a commitment to an exit or
disposal plan. Examples of costs covered by the statement include lease
termination costs and certain employee severance costs that are
associated with a restructuring, discontinued operation, plant closing,
or other exit or disposal activity. The statement is to be applied
prospectively to exit or disposal activities initiated after December
31, 2002. The adoption of this statement is not expected to have a
significant impact on the financial position or results of operations
of the Company.
In November 2002, FASB issued FASB Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others". FIN 45
clarifies the requirements relating to a guarantor's accounting for,
and disclosure of, the issuance of certain types of guarantees. FIN 45
requires that upon issuance of a guarantee, the guarantor must
recognize a liability for the fair value of the obligation it assumes
under that guarantee. FIN 45's provisions for initial recognition and
measurement are to be applied on a prospective basis to guarantees
issued or modified after December 31, 2002. The Company's previous
accounting for guarantees issued prior to January 1, 2003 are not
required to be revised or restated to reflect the effect of the
recognition and measurement provisions of FIN 45.
In January 2003, FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities" to expand upon and
strengthen existing accounting guidance that addresses when a company
should include the assets, liabilities and activities of another entity
in its financial statements. To improve financial reporting by
companies involved with variable interest entities (more commonly
referred to as special-purpose entities or off-balance sheet
structures), FIN 46 requires that a variable interest entity be
considered by a company if that company is subject to a majority risk
of loss from the variable interest entity's activities or entitled to
receive a majority of the entity's residual returns or both. Prior to
FIN 46, a company generally included another entity in its consolidated
financial statements only if it controlled the entity through voting
interests. Consolidation of variable interests entities will provide
more complete information about the resources, obligations, risks and
opportunities of the consolidated company. The consolidation
requirements of FIN 46 apply immediately to variable interest entities
created after January 31, 2003, and to older entities in the first
fiscal year or interim period beginning after June 15, 2003. Management
believes that adoption of this standard will not change the accounting
for its bankruptcy remote securitization entities. Management believes
that adoption of this standard may result in either consolidation or
additional disclosure requirements with respect to the Company's
unconsolidated subsidiaries, however, such consolidation is not
expected to significantly impact the Company's financial position or
results of operations.
Reclassification - Certain items in the prior years' financial
statements have been reclassified to conform to the 2002 presentation.
These reclassifications had no effect on stockholders' equity or net
income.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
2. Real Estate Investment Properties:
---------------------------------
Real estate investment properties consist of the following at December
31:
(In Thousands)
2002 2001
------------------ -----------------
Land $ 298,038 $ 295,653
Buildings 324,462 322,963
Equipment 2,556 2,143
------------------ -----------------
625,056 620,759
Less accumulated depreciation (44,536 ) (33,356 )
------------------ -----------------
580,520 587,403
Construction in progress -- 1,716
------------------ -----------------
$ 580,520 $ 589,119
================== =================
During 2002, 2001, and 2000 the Company sold several properties and
equipment that were subject to operating leases and received net
proceeds of $0.9 million, $11.2 million and $12.2 million,
respectively, and recorded net losses of $0.3 million, $1.1 million and
$0.7 million, respectively.
In 2002, 2001, and 2000 the Company recorded provisions for impairment
of $7.7 million, $14.5 million and $1.2 million, respectively. The
tenants of these properties experienced financial difficulties and/or
ceased payment of rents under the terms of their lease agreements. The
provisions represent the amount necessary to reduce the carrying value
to the estimated net realizable values of the properties based on
discounted cash flows of sale or re-lease terms.
During the years ended December 31, 2002, 2001, and 2000 tenants paid
directly to real estate taxing authorities $9.0 million, $10.8 million
and $10.5 million, respectively, in real estate taxes in accordance
with the terms of their triple-net leases with the Company.
Substantially all property leases have initial terms of 13 to 25 years
(most expiring between 2006 and 2024) and provide for scheduled rent
increases, and in some cases, contingent rent. The leases generally
allow the tenant to purchase the property at the greater of the
Company's purchase price plus a specified percentage or fair market
value at specified times. Fixed and determinable lease revenues are
recognized on a straight-line basis over the terms of the leases. For
the years ended December 31, 2002, 2001 and 2000, the Company
recognized $6.5 million, $6.9 million and $9.4 million, respectively,
of such accrued rental income.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
2. Real Estate Investment Properties - Continued:
---------------------------------------------
Future minimum contractual lease payments to be received under
noncancellable operating leases at December 31, 2002 are as follows:
(In Thousands)
--------------------
2003 $ 57,915
2004 59,878
2005 61,087
2006 61,118
2007 61,739
Thereafter 560,950
--------------------
$ 862,687
====================
3. Net Investment in Direct Financing Leases:
-----------------------------------------
The components of net investment in direct financing leases consisted
of the following at December 31:
(In Thousands)
2002 2001
------------------ ------------------
Minimum lease payments
receivable $ 219,352 $ 246,618
Estimated residual values 27,288 28,403
Interest receivable from
secured equipment leases 15 26
Less unearned income (134,214 ) (153,335 )
------------------ ------------------
Net investment in direct financing
leases $ 112,441 $ 121,712
================== ==================
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 2002:
(In Thousands)
------------------
2003 $ 13,686
2004 13,824
2005 13,745
2006 13,656
2007 13,509
Thereafter 150,932
------------------
$ 219,352
==================
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
3. Net Investment in Direct Financing Leases - Continued:
-----------------------------------------------------
The Company's real estate segment recorded provisions for losses on
direct financing leases totaling $0.9 million, $2.4 million, and $1.0
million respectively, during the years ended December 31, 2002, 2001,
and 2000, respectively. The tenants of these properties experienced
financial difficulties and ceased payment of rents under the terms of
their lease agreements. The provisions represent the amount necessary
to reduce the carrying values of the direct financing leases to their
estimated net realizable values based on discounted cash flows of sale
or re-lease terms.
4. Real Estate Held for Sale:
--------------------------
Real estate held for sale consisted of the following at December 31:
(In Thousands)
2002 2001
--------- ---------
Land and buildings $144,487 $ 251,439
========= =========
The Company's specialty finance subsidiary CNL-FNC actively acquires
real estate assets subject to leases with the intent to sell or
securitize them. Assets acquired after December 31, 2001 are subject to
FAS 144, and the operating results and gains or losses are recorded as
discontinued operations.
The Company's real estate investment subsidiary, CNL-RP, will divest
properties from time to time when such action is strategic to its
longer-term goals. When CNL-RP establishes its intent to sell a
property, all operating results and the ultimate gain or loss are
treated as discontinued operations for all periods presented. These
statements reflect certain reclassifications of rental related income,
interest expense and other categories so as to conform with the
requirements of FAS 144.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
4. Real Estate Held for Sale - Continued:
-------------------------------------
The operating results of the discontinued operations were as follows
for the years ended December 31:
(In Thousands)
2002 2001 2000
--------------- --------------- ----------------
Rental income $ 7,991 $ 7,979 $ 7,135
Interest expense (2,252 ) (1,877 ) (1,877 )
Impairment provisions (5,377 ) (10,274 ) (362 )
Other expenses (2,255 ) (2,069 ) (290 )
--------------- --------------- ----------------
Earnings/(loss) before gain on disposal of
discontinued operations, net (1,893 ) (6,241 ) 4,606
--------------- --------------- ----------------
Sales of real estate 145,871 -- --
Cost of real estate sold (134,803 ) -- --
--------------- --------------- ----------------
Gain on disposal of discontinued
operations, net 11,068 -- --
--------------- --------------- ----------------
Earnings/(loss)from discontinued
operations, net $ 9,175 $ (6,241 ) $ 4,606
=============== =============== ================
5. Mortgage Loans Held for Sale:
----------------------------
Mortgage loans held for sale are wholly or partially collateralized by
first mortgages on land and/or buildings of franchised restaurant
businesses and consist of approximately $54.3 million in fixed-rate
loans at December 31, 2002. The loans carry a weighted average interest
rate of 8.05 percent. The mortgage loans are due in monthly
installments with maturity dates ranging from 2004 to 2021. The
mortgage loans generally prohibit prepayment for certain periods or
include prepayment penalties.
Mortgage loans held for sale consist of the following at December 31:
(In Thousands)
2002 2001
--------------- ---------------
Outstanding principal $ 54,280 $ 306,887
Accrued interest income 981 2,059
Deferred financing income (330) (1,640)
Valuation adjustment (6,604) 8,529
--------------- ---------------
$ 48,327 $ 315,835
=============== ===============
The valuation adjustment at December 31, 2002 includes a decline in
value associated with borrower delinquencies.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
6. Mortgage, Equipment and Other Notes Receivable:
----------------------------------------------
Mortgage, equipment and other notes receivable consist of the following
at December 31:
(In Thousands)
2002 2001
-------------- --------------
Outstanding principal $ 340,833 $ 133,007
Accrued interest income 2,966 694
Deferred financing income (1,676 ) (893 )
Unamortized deferred costs 709 785
Allowance for uncollectible notes (8,365 ) (29,631 )
-------------- --------------
$ 334,467 $ 103,962
============== ==============
Approximately $318 million and $87.5 million of the outstanding
principal balance as of December 31, 2002 and 2001, respectively, is
secured by mortgages. The remaining principal is secured by franchised
restaurant equipment and other collateral. As of December 31, 2002 and
2001, approximately $14 million and $40 million in notes receivable
were considered impaired and approximately $5 million and $38.5 million
were on non-accrual status with regard to recognition of interest. The
Company recognized $.75 million and $1.0 million of interest income as
of December 31, 2002 and 2001, respectively, on impaired loans.
Changes in the allowance for loan losses for 2002 and 2001 are
summarized as follows:
(In Thousands)
2002 2001
-------------- ------------
Balance at beginning of year $ 29,631 $ 3,108
Provision for loan losses 3,099 28,200
Loans charged off (24,365 ) (1,677 )
-------------- ------------
Balance at end of year $ 8,365 $ 29,631
============== ============
Management believes the net carrying value of the notes approximates
fair value based on current rates at which similar loans would be made
to borrowers with similar credit and for similar maturities.
7. Other Investments:
-----------------
The Company holds the following franchise loan investments arising from
securitization transactions which were either purchased from affiliates
(the 1998 Series) or retained in connection with a transaction executed
by the Company (the 1999 Series). The carrying amounts of these
investments, including accrued interest, consist of the following at
December 31:
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
7. Other Investments - Continued:
-----------------------------
(In Thousands)
2002 2001
--------- ---------
1998-1 Fixed Rate Certificates $ 9,605 $ 9,605
1998-1 Floating Rate Certificates 6,582 6,582
1998-1 Interest Only Certificate 346 386
1998-1 Residual Interest 4,358 4,952
1999-1 Fixed Rate Certificates 11,272 11,272
--------- --------
$ 32,163 $ 32,797
========= ========
The 1998-1 and 1999-1 Fixed Rate Certificates bear interest at pass
through rates of 8.40 percent and 8.5 percent, respectively. As of
December 31, 2002 and 2001 the pass through rate on the 1998 Floating
Rate Certificates were 3.67 percent and 4.16 percent, respectively.
The key assumptions used in calculating the value of these investments
at the time of securitization are based on normal market assumptions as
follows:
o five percent prepayment penalty computed after taking into
consideration the period of time covered by a yield maintenance
and lockout prepayment penalties;
o a cumulative default ratio (CDR) of zero;
o prevailing market discount rates at the time of securitization
generally ranging from 8.36 percent to 65.1 percent; and
o weighted average lives ranging from 5.17 to 16.81 years on the
certificated traunches.
Subsequently, the values of the retained securities are measured using
updated prepayment and CDR assumptions with adjustments to prevailing
market discount rates based on consultations with investment bankers.
If the resulting change in fair value is considered to be permanent in
nature, the carrying value of the investment is adjusted through
earnings.
During the year ended December 31, 2001 the Company wrote off the
outstanding balance of its 1999-1 residual interest of $2.3 million
based on its determination that a permanent impairment in value had
occurred as a result of certain borrower delinquencies. In October of
2000 the Company recorded a loss of approximately $3.1 million on the
liquidation of a residual interest in a securitization trust.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
7. Other Investment - Continued:
----------------------------
The following table shows the effects on an individual key assumption
affecting the fair value of the retained interests under two negative
scenarios. Prepayment assumptions, after consideration of yield
maintenance and lockout, would not have a further material impact on
these scenarios.
1998-1 1999-1
Certificates Certificates
($ in millions) ($ in millions)
----------------- -----------------
Fair value of retained interests $20.8 $11.1
Weighted-average life (in years) of
certificated traunches. 11.6 16.2
Residual cash flows discount rate (annual):
Impact on fair value of 100 bp adverse change $(0.6) $(0.7)
Impact on fair value of 200 bp adverse change $(1.2) $(1.3)
Expected Credit Losses (annual rate):
Impact on fair value of 2 percent adverse change $(2.8) $(1.4)
Impact on fair value of 3 percent adverse change $(4.1) $(2.0)
These sensitivities are hypothetical and should be used with caution.
Changes in fair value based on a percentage variation in assumptions
generally cannot be extrapolated because the relationship of the change
in assumption to the change in fair value may not be linear. Also, the
effect of a variation in a particular assumption on their fair value of
the retained interest is calculated without changing any other
assumption; in reality, changes in one factor may result in changes in
another (for example, increases in market interest rates may result in
lower prepayments and increased credit losses), which might magnify or
counteract the sensitivities.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
7. Other Investment - Continued:
----------------------------
The following table represents the securitized portfolio and all
managed loans as of December 31:
Principal Amount > 60 Days
Total Principal Amount Past Due
(In Thousands) (In Thousands)
----------------------------- ------------------------------
2002 2001 2002 2001
------------- ------------- ------------- ---------------
Mortgage loans $ 818,551 $ 870,805 $ 35,226 $ 38,757
Equipment and other loans 26,106 44,993 1,713 31,164
------------- ------------- ------------- ---------------
Total loans managed or securitized 844,657 915,798 36,939 69,921
Less:
Loans securitized (449,544) (475,904) (11,557 ) (10,139 )
Loans held for sale or securitization (54,280) (306,887) (10,271 ) (18,617 )
------------- ------------- ------------- ---------------
Loans held in portfolio (Note 6) $ 340,833 $ 133,007 $ 15,111 $ 41,165
============= ============= ============= ===============
The Company had net charge-offs during the years ended December 31,
2002 and 2001 of $24.9 million and $3.4 million, respectively.
The following table summarizes cash flows received from and paid to
securitization trusts for the years ended December 31:
(In Thousands)
2002 2001
----------------- -----------------
Servicing fees received $ 1,625 $ 1,730
Other cash flows received on retained interests $ 5,272 $ 6,978
Servicing advances $ (6,253 ) $ (5,746 )
Collection of servicing advances $ 6,907 $ 3,796
8. Goodwill:
--------
Goodwill represents the excess of the purchase price and related costs
over the fair value assigned to the net assets and liabilities of
acquired operations. On September 1, 1999, the Company acquired CNL
Fund Advisors, Inc. (the "Advisor"), CNL Financial Corporation and CNL
Financial Services, Inc. ("CNL Restaurant Financial Services Group") by
issuing 6.15 million shares. Prior to the acquisition, the Advisor and
CNL Restaurant Financial Services Group had been affiliated with the
Company. The acquisitions were accounted for under the purchase method
of accounting. The Company expensed the $76.3 million excess of the
purchase price of the Advisor over the fair value of the net acquired
assets. The Company recognized $45.7 million as goodwill, representing
the excess purchase price of CNL Restaurant Financial Services Group.
In June 2000, the Company recorded goodwill related to Bank of
America's franchise originations group and CNL Financial Group, Inc.'s
advisory services operations that were acquired as part of the
formation of CNL-FN as more fully described in Note 1. The Company
evaluated its goodwill balance of $56.3 million and did not record any
amortization expense or any impairments to goodwill during the year
ended December 31, 2002.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
8. Goodwill - Continued:
--------------------
The following table summarizes the effect of adopting FAS 142 during
2002 on reported earnings before cumulative effect of accounting change
and on net earnings:
(In Thousands)
2002 2001 2000
------------- ------------ -------------
Reported earnings/(loss) before cumulative
effect of accounting change $ 35,590 $(20,611 ) $ 2,927
Add back: Goodwill amortization -- 3,142 2,748
------------- ------------ -------------
Adjusted earnings/(loss) before cumulative
effect of accounting change $ 35,590 $(17,469 ) $ 5,675
============= ============ =============
Reported net income/(loss) $ 35,590 $(24,452 ) $ 2,927
Add back: Goodwill amortization -- 3,142 2,748
------------- ------------ -------------
Adjusted net income/(loss) $ 35,590 $(21,310 ) $ 5,675
============= ============ =============
The following table summarizes the effect of adopting FAS 142 during
2002 on earnings/(loss) per share of common stock (basic and diluted):
2002 2001 2000
------------- ------------ -------------
Reported earnings/(loss) before cumulative
effect of accounting change $ 0.80 $ (0.47) $ 0.07
Add back: Goodwill amortization -- 0.07 0.06
------------- ------------ -------------
Adjusted earnings/(loss) before cumulative
effect of accounting change $ 0.80 $ (0.40) $ 0.13
============= ============ =============
Reported net income/(loss) $ 0.80 $ (0.56) $ 0.07
Add back: Goodwill amortization -- 0.07 0.06
------------- ------------ -------------
Adjusted net income/(loss) $ 0.80 $ (0.49) $ 0.13
============= ============ =============
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
9. Borrowings:
----------
Borrowings consist of the following at December 31:
2002 2001
----------------------------- -------------------------------
Amount Average Amount Average
(In Thousands) Rate (In Thousands) Rate
----------------------------- -------------------------------
Revolver $ 14,000 3.92% $ 10,000 6.55%
Note payable 203,207 3.62% 48,731 6.98%
Mortgage warehouse facilities 145,758 4.07% 430,169 5.13%
Subordinated note payable 43,750 8.50% 43,750 8.50%
Series 2000-A bonds payable 261,369 7.94% 270,392 7.93%
Series 2001-4 bonds payable 38,441 8.90% 40,311 8.90%
Series 2001 bonds payable 124,698 2.28% 130,362 2.82%
---------------- -----------------
$ 831,223 $ 973,715
================ =================
Borrowing resources at December 31, 2002 include:
(In Thousands)
---------------------------------
Balance
Outstanding Capacity Maturity
-------------- ------------- ----------------
Liquidity facility $ -- $ 10,000 October 2003
Revolver 14,000 30,000 October 2003
Note payable 203,207 203,207 June 2007
Mortgage warehouse facilities 145,758 385,000 Annual
Subordinated note payable 43,750 43,750 June 2007
Series 2000-A bonds payable 261,369 261,369 2009-2017
Series 2001-4 bonds payable 38,441 38,441 2009-2013
Series 2001 bonds payable 124,698 124,698 October 2006
-------------- -------------
$ 831,223 $1,096,465
============== =============
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
9. Borrowings - Continued:
----------------------
CNL-RP entered into a note payable (the "Note Payable") in 1999 in the
amount of $147.0 million. During 2001 and 2000, CNL-RP applied proceeds
received from the issuance of bonds to pay down the note. Borrowings
under the note bore interest at the rate of the lender's commercial
paper plus 56 basis points per annum. During 2002, CNL-RP used net
sales proceeds from the sales of properties and paid off the entire
outstanding principal balance relating to the Note Payable. In June
2002, the Company entered into a loan and security agreement with Nieuw
Amsterdam Receivables Corporation with an initial borrowing amount of
$207 million that bears interest at a rate of weighted average
commercial paper plus 1.25 percent per annum (the "Note Payable").
Collateral for the Note Payable consists of 181 mortgage loans that had
a carrying value of $236.1 million at December 31, 2002. The Company
used the proceeds from the new facility to refinance a pool of
franchise loans formerly held on its other mortgage warehouse
facilities. The loan agreement has an initial term of five years with a
renewal provision based on the Company's request and the lender's
consent.
Collateral and covenants:
The Revolver bears interest at a rate of LIBOR plus 225 basis points
per annum and includes financial covenants that provide for the
maintenance of certain financial ratios. The Company was in compliance
with all covenants as of December 31, 2002.
CNL-FN maintains mortgage warehouse facilities which have a total
borrowing capacity of $385.0 million at December 31, 2002 and bear
interest at a weighted average rate of 4.07 percent. In October 2001,
the Company entered into a guaranty related to removal or disposition
of approximately $187.0 million of mortgage loans by October 2002 and
CNL-RP provided a $15 million guaranty related to the removal or
disposition. In June 2002, the bank agreed to reduce the total amount
of loans to be removed from the mortgage warehouse facilities to $162
million. As of December 31, 2002, the Company had successfully
refinanced the $162 million in loans, the guaranty had been reduced to
$2 million and the bank had agreed to finance the remaining loans until
November 2003.
In June 2000, CNL-FN entered into a $43.75 million senior subordinated
note payable with Bank of America that bears interest at a rate of 8.50
percent per annum. The principal balance together with unpaid interest
is due in full in 2007. In October 2001, the Company agreed to a $15
million guaranty by CNL-RP for a portion of the subordinated note. As a
result of the removal of certain loans from the mortgage warehouse
facility in June of 2002 and the achievement of certain earnings
targets, the guaranty was removed in October of 2002. The subordinated
note payable has a conversion feature to allow Bank of America,
subsequent to a specified conversion date, to have the outstanding note
converted into 13.1 percent of additional limited partnership interests
in CFN LP. As of December 31, 2002, Bank of America had not exercised
its conversion option.
The Company is obligated under the provisions of its mortgage warehouse
facilities and its Note Payable to pay down certain debt associated
with borrower delinquencies or defaults within a required time frame.
Most properties acquired on the mortgage warehouse facilities are
required to be sold within a certain time frame. Any delinquency,
default or delay in the resale of properties financed through one of
these facilities would generally result in an immediate pay-down of the
related debt.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
9. Borrowings - Continued:
----------------------
Collateral for the Series 2000-A bonds consist of 258 commercial real
estate properties operated as restaurants leased to tenants, with a
carrying value of $341.3 million at December 31, 2002. The Series
2000-A bonds bear interest at a weighted average fixed rate of 7.94
percent per annum. The bond indenture provides for an optional
redemption at their remaining principal balance when remaining rents
due under the leases that serve as collateral are less than ten percent
of the aggregate initial rents due under the leases.
Collateral for the Series 2001-4 bonds consists of 62 mortgage loans
that had a carrying value of approximately $57.9 million as of December
31, 2002. The Series 2001-4 bonds bear interest at a rate of 8.90
percent per annum. The bond indenture requires monthly principal and
interest payments received from borrowers to be applied to the bonds.
The bond indenture also provides for an optional redemption of the
bonds at their remaining principal balance when the remaining amounts
due under the loans that serve as collateral for the bonds are less
than ten percent of the aggregate amounts due under the loans at the
time of issuance.
Collateral for the Series 2001 bonds consist of 119 commercial real
estate properties operated as restaurant units which have a carrying
value of approximately $187.4 million as of December 31, 2002. The
bonds are scheduled to amortize over a 15-year period, but mature over
five years. The 2001 bonds bear interest at a rate of LIBOR plus 48
basis points per annum. The Company entered into an interest rate cap
agreement with a strike rate of 4.5 percent to protect against future
increases in LIBOR.
The following schedule of maturities on outstanding indebtedness does
not reflect the annual extensions on the warehouse facilities but
assumes that bonds payable amortize in accordance with estimated
payment amounts:
(In Thousands)
--------------------
2003 $ 182,353
2004 25,654
2005 28,962
2006 134,474
2007 231,039
Thereafter 228,741
--------------------
$ 831,223
====================
In the event the mortgage warehouse lenders grant extensions,
outstanding indebtedness of approximately $36.4 million and $109.4
million currently reflected as due in March and in November 2003,
respectively, will be renewed and extended to March and November 2004,
respectively. As of February 5, 2003, management of the Company had not
completed the negotiations for the renewal of the mortgage warehouse
facility maturing on March 25, 2003. Management of the Company believes
that the mortgage warehouse lender will grant a one year extension to
the Company.
Management believes that net carrying value of the debt approximates
fair value based on current rates at which similar loans would be made
to the Company at similar credit levels and similar maturities.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
10. Income Tax:
-----------
The Company elected to be taxed as a REIT under the Internal Revenue
Code. To qualify as a REIT, the Company must meet a number of
organizational and operational requirements, including a current
requirement that it distribute at least 90 percent of its taxable
income to its stockholders. As a REIT the Company generally will not be
subject to corporate level federal income tax on net income it
distributes to its stockholders, except taxes applicable to its taxable
REIT subsidiaries ("TRSs") as described below. This benefit allows
earnings from a REIT to be subject to federal taxation at the
stockholder level, and avoids the typical double taxation applicable to
most corporations. If the Company fails to qualify as a REIT in any
taxable year, it will be subject to federal income taxes at regular
corporate rates (including any alternative minimum tax) and may not be
able to qualify as a REIT for four subsequent tax years. Even if the
Company qualifies for taxation as a REIT, the Company may be subject to
state and local taxes on its income and property, and to federal income
and excise taxes on its undistributed taxable income.
The Company has continued to maintain a stable level of stockholder
distributions despite reserves for real estate impairments and loan
losses that were recorded in each of the three years presented, with
the most significant amounts recorded in 2001. These losses in some
cases also qualified for an income tax deduction, although generally a
deduction is only allowed when a loss is actually realized upon the
sale of the related asset. Some of the reserves established in 2001,
for example, led to tax deductions in 2002.
Further, earnings that result from operations within a REIT's TRS are
not included in the REIT's taxable income until the TRS actually makes
a distribution to the REIT. The earnings of CNL-FNC in 2002 of $12.6
million for example do not increase the REIT's 2002 taxable income
because CNL-FNC has not made a distribution of its earnings.
These real estate impairment and loan losses, when considered along
with the fact that CNL-FNC has not distributed its earnings, contribute
to declining levels of REIT taxable income over the periods presented.
REIT taxable income also reflects differences in non-cash charges,
including depreciation and amortization. The stockholder distributions
in the three years presented therefore consists of return of capital in
addition to ordinary income as follows:
2002 2001 2000
---------------------- ---------------------- ----------------------
Amount Rate Amount Rate Amount Rate
---------- --------- ---------- --------- ---------- ---------
Ordinary income $ -- -- $0.318 20.9% $0.606 39.7%
Return of capital 1.525 100.0% 1.207 79.1% 0.919 60.3%
---------- --------- ---------- --------- ---------- ---------
$1.525 100.0% $1.525 100.0% $1.525 100.0%
========== ========= ========== ========= ========== =========
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
10. Income Tax - Continued:
----------------------
Stockholder distributions that are characterized as return of capital
are generally non-taxable to the stockholder and the amount reduces the
stockholder's basis in Company stock. Since distributions commenced in
1995 a portion of each year's distribution has been characterized as a
return of capital. To illustrate, a stockholder's tax basis in a share
of stock purchased in 1995 would have been reduced by approximately
$4.42 in aggregate amounts of return of capital through December 31,
2002. Each stockholder must maintain records of the purchase price,
distributions received, and the applicable tax treatment of such
distributions in order to determine the gain or loss upon sale of
Company stock.
For income tax purposes the Company has two taxable REIT subsidiaries
(TRSs) in which activities of the specialty finance segment and select
activities of the real estate segment are conducted. Prior to January
1, 2001, Company subsidiaries were not subject to federal income tax.
Loan valuation adjustments, loss reserves, loan fees, and depreciation,
among other items, are treated differently for tax than for financial
reporting purposes. In the aggregate, the Company's TRSs have an excess
of available future deductible items over future taxable items and as
such may more fully benefit from these items when the related
subsidiaries produce a greater level of taxable income. The
subsidiaries involved do not have sufficient historical earnings on
which to expect a full potential future benefit of these future
deductions. Therefore the Company has recorded an allowance against a
portion of the deferred tax asset associated with the future deductible
items.
The consolidated provision for federal income taxes differs from the
amount computed by applying the statutory federal income tax rate to
the earnings of the CNL-FNC segment and the earnings of the real estate
sector TRS as follows:
2002 2001
----------------------------- ------------------------------
Amount Amount
(In Thousands) Rate (In Thousands) Rate
----------------- -------- ----------------- ---------
Expected tax at US statutory rate $ 4,012 34% $ 136 34 %
Adjustments:
Goodwill amortization -- -- 902 226
Unconsolidated affiliates 1,560 13 (1,228) (308)
Other 74 1 -- --
Change in valuation allowances (5,646) (48) 190 48
----------------- -------- ----------------- ---------
Provision for income taxes $ -- -- % $ -- -- %
================= ======== ================= =========
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
10. Income Tax - Continued:
----------------------
The components of the net deferred tax asset effective for periods
after December 31, 2000 are as follows:
(In Thousands)
2002 2001
------------- ---------------
Deferred tax asset:
Cash flow hedge related difference $ 5,789 $ --
Loan valuation and related hedge differences 1,899 5,808
Loan origination fees 619 590
Real estate loss reserves 300 85
Reserve for investment losses 736 736
Net operating losses 250 270
Other (19) 214
------------- ---------------
Total 9,574 7,703
Valuation allowance (7,846) (7,703)
------------- ---------------
Net recorded deferred tax asset $ 1,728 $ --
============= ===============
The income tax provision consists of the following components:
(In Thousands)
2002 2001*
------------- ---------------
Current:
Federal $ 1,487 $ --
State 241 --
------------- ---------------
1,728 --
------------- ---------------
Deferred:
Federal (1,487) --
State (241) --
------------- ---------------
(1,728) --
------------- ---------------
Total Provision $ -- $ --
============= ===============
* The TRS returns filed for the year ended December 31, 2001 reflected
a net operating loss therefore no current taxes were payable at
December 31, 2001 and for reasons stated above, there was no tax
benefit recorded for the loss or other future deductible items.
11. Distributions:
-------------
For the years ended December 31, 2002, 2001 and 2000, approximately 0
percent, 21 percent and 40 percent, respectively, of the distributions
received by stockholders were considered to be ordinary income and
approximately 100 percent, 79 percent and 60 percent, respectively,
were considered a return of capital for federal income tax purposes.
The Company has continued to declare and pay distributions to its
stockholders that are primarily funded by distributions from CNL-RP.
The Company elected to reinvest the earnings of the specialty finance
segment during 2002. The remainder of the distributions were funded by
sales of its common stock to the Company's Chairman through a private
company affiliate, CNL Financial Group, Inc. ("CNL Financial Group"),
and loans from CNL Financial Group that the Company expects to convert
into its common stock.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
12. Related Party Transactions:
--------------------------
The following table and disclosures that follow summarize the related
party transactions with affiliated entities for the years ended
December 31:
(In Thousands)
---------------------------------------------
Amounts received (paid): 2002 2001 2000
-------------- --------------- --------------
Services purchased from affiliates (1) $ (3,954) $ (4,564) $ (4,492)
Rental and other expenses to affiliates for $ (1,479) $ (1,237) $ (986)
office space (2)
Servicing fees from affiliates (3) $ 2,255 $ 2,173 $ 1,560
Interest income from an affiliated joint
venture (4) $ 998 $ 2,024 $ 150
Sale of properties to an affiliate (5) $ 25,857 $ 13,430 $ --
Sale of equipment leases to an affiliate (6) $ -- $ 1,100 $ --
(1) Services purchased from affiliates include human resources, tax
planning and compliance, computer systems support, investor
relations and other services.
(2) In May 2002, the Company purchased a combined five percent
partnership interest in CNL Plaza, Ltd. and CNL Plaza Venture,
Ltd. (the "Plaza") for $0.2 million. Affiliates of James M.
Seneff, Jr., an officer and director of the Company own the
remaining partnership interests. The Company has severally
guaranteed 8.33 percent or $1.3 million of a $15.5 million
unsecured promissory note on behalf of the Plaza. The guaranty
continues through the loan maturity in November 2004. The Company
received distributions of $0.1 million during the year ended
December 31, 2002 from the Plaza. Since November 1999, the
Company has leased its office space from CNL Plaza, Ltd., an
affiliate of a member of the Company's board of directors. The
Company's lease expires in 2014 and provides for scheduled rent
increases over the term of the lease. Rental and other expenses
for the years ended December 31, 2002, 2001 and 2000 include
accrued rental expense (the additional rent expense resulting
from the straight-lining of scheduled rent increases over the
term of the lease) and executory costs. Future commitments due
under the office space operating lease are as follows:
(In Thousands)
-------------------
2003 $ 1,074
2004 1,106
2005 1,139
2006 1,173
2007 1,209
Thereafter 9,257
-------------------
$ 14,958
===================
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
12. Related Party Transactions - Continued:
--------------------------------------
(3) Property management and other administrative services provided to
affiliates investing in restaurant net lease properties and
loans.
(4) Interest income ranging from 9.1 to 10.0 percent received from
loans made to an affiliated unconsolidated joint venture. The
outstanding loan balance at December 31, 2002, 2001 and 2000 was
$11.1 million, $16.7 million and $6.9 million, respectively.
(5) Proceeds received from affiliates from the sale of 22 properties
and 11 properties during 2002 and 2001, respectively, for which
the Company recorded losses of $0.9 million and gains of $0.1
million, respectively.
(6) Proceeds received from an affiliate for the purchase of
collection rights of the current and future cash flows of three
equipment leases, for which no gain or loss was recognized.
During the year ended December 31, 2001 CNL Financial Group, Inc.
(CFG), an affiliate, advanced $6.0 million to the Company in the form
of a demand balloon promissory note. The loan bore interest at a rate
of LIBOR plus 2.5 percent. During the year ended December 31, 2001, the
Company converted the outstanding principal balance plus accrued
interest under the advances into 359,722 shares of Company stock.
During 2001, the Company also issued 220,000 shares to CFG in exchange
for $3.7 million paid to the Company in cash. As of December 31, 2001,
CFG had advanced an additional $2.7 million under the same terms as the
previous advances. During 2002, CFG advanced an additional $7.5 million
to the Company under the same terms of the previous advances. In June
2002, the Company converted the $10.3 million of outstanding principal
plus accrued interest under the advances, into 604,177 shares of stock.
During September 2002 the Company also issued 569,177 additional shares
to CFG in exchange for $9.75 million paid to the Company in cash. As of
December 31, 2002, CFG had advanced an additional $4.25 million to the
Company under the same terms of the previous advances.
During the year ended December 31, 2002 CNL-FN acquired a portfolio of
109 real estate properties, which have been classified as held for
sale, for approximately $117 million by acquiring all of the limited
partner and general partners interests in CNL Net Lease Investors, LP,
("NLI"). Eight of the properties acquired were vacant and the remaining
101 properties were leased to restaurant operators under triple-net
leases, meaning that the tenant is responsible for costs such as
repairs, maintenance, property taxes, utilities and insurance. The
Chairman of the Board and Vice Chairman of the Board of Directors of
the Company, through an affiliate, owned the .01 percent general
partner interest in NLI prior to the acquisition by CNL-FN and agreed
to waive their rights to benefit from the transaction.
During the year ended December 31, 2002, a tenant and borrower of the
Company assigned loans in the amount of $7.5 million to Restaurants
Acquisitions I, LLC, an affiliate of the Company. The Company agreed to
the assignment and advanced an additional $3.6 million to the affiliate
in exchange for an $11.1 million participating note. The note bears
interest at a rate of ten percent per annum and matures on May 1, 2014.
The participating note entitles the Company to receive a percentage of
all cash flows generated by the borrower on a quarterly basis until the
note matures. The Company earned $0.7 million in interest income from
the affiliate during 2002.
During the year ended December 31, 2001, an affiliate advanced
approximately $5.8 million to Phoenix Restaurant Group, Inc. and its
subsidiaries (collectively referred to as "PRG"), a tenant and borrower
of the Company. PRG used these proceeds to pay outstanding obligations,
including obligations to the Company.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
13. Concentration of Credit Risk:
----------------------------
No individual lessee or borrower (or affiliated groups of lessees or
borrowers) or restaurant chains represented more than ten percent of
the Company's revenues relating to its properties, loans and secured
equipment leases during the years ended December 31, 2002, 2001 or
2000.
Although the Company's properties are geographically diverse throughout
the United States and lessees and borrowers operate a variety of
restaurant concepts, 17 restaurant chains constitute 74 percent of the
Company's properties. Failure of any one of these restaurant chains or
any significant lessees or borrowers could significantly impact results
of operations if the Company is not able to timely protect its
interest.
14. Segment Information:
-------------------
In June 1, 2000, the Company created separate legal entities to operate
and measure two distinct lines of business. These entities are CNL-RP
and CNL-FNC. CNL-RP is the parent company of CNL-APF Partners LP which
is a real estate company that oversees real estate, mortgage and
equipment loans generally until maturity. CNL-FNC is the parent of CNL
Franchise Network, LP which is a specialty finance company focused on
delivering financial solutions in the forms of financing, servicing,
advisory and other services to restaurant operators. CNL-FNC delivers
these solutions primarily by acquiring restaurant real estate
properties which have been subject to a triple-net lease, utilizing
short-term debt and selling such properties at a profit generally
within one year.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
14. Segment Information - Continued:
-------------------------------
The following tables summarize the results for the years 2002, 2001 and
2000 for CNL-RP and CNL-FNC. Consolidating eliminations and other
results of the parent of CNL-RP and CNL-FNC are reflected in the
"other" column.
Year Ended December 31, 2002
(In Thousands)
--------------------------------------------------------------
Consolidated
CNL-RP CNL-FNC Other Totals
------------ ------------ -------------- -----------------
Revenues $ 92,505 $ 233,605 $ (1,811 ) $ 324,299
------------ ------------ -------------- -----------------
Cost of real estate sold -- 175,185 -- 175,185
General operating and administrative 12,254 23,083 (985 ) 34,352
Interest expense 30,546 28,792 (558 ) 58,780
Property expenses, state and other
taxes 3,221 315 -- 3,536
Depreciation and amortization 12,611 1,243 (121 ) 13,733
Provision for loss on loans -- 3,099 -- 3,099
Impairment provisions 7,959 680 -- 8,639
Loss on sale of assets 330 17 -- 347
Minority interest and equity in
Earnings 582 (369 ) -- 213
------------ ------------ -------------- -----------------
67,503 232,045 (1,664 ) 297,884
------------ ------------ -------------- -----------------
Discontinued operations:
Earnings/(loss) from discontinued
operations, net (5,126 ) 3,233 -- (1,893 )
Gain on disposal of discontinued
operations, net 3,294 7,774 -- 11,068
------------ ------------ -------------- -----------------
(1,832 ) 11,007 -- 9,175
------------ ------------ -------------- -----------------
Net income/(loss) $ 23,170 $ 12,567 $ (147 ) $ 35,590
============ ============ ============== =================
Assets at December 31, 2002 $ 833,350 $ 554,721 $ (4,013 ) $ 1,384,058
============ ============ ============== =================
Investments accounted for under
the equity method at
December 31, 2002 $ 1,156 $ 440 $ -- $ 1,596
============ ============ ============== =================
Additions to long-lived assets:
Real estate $ 7,212 $ -- $ -- $ 7,212
============ ============ ============== =================
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
14. Segment Information - Continued:
Year Ended December 31, 2001
(In Thousands)
-------------------------------------------------------------
Consolidated
CNL-RP CNL-FNC Other Totals
------------ ------------ -------------- ----------------
Revenues $ 92,339 $ 168,317 $ (3,821 ) $ 256,835
------------ ------------ -------------- ----------------
Cost of real estate sold -- 97,587 -- 97,587
General operating and
administrative 8,991 22,595 (1,199 ) 30,387
Interest expense 36,652 32,446 (727 ) 68,371
Property expenses, state and other
taxes 2,702 176 214 3,092
Depreciation and amortization 12,850 5,438 (75 ) 18,213
Loss on investment in securities -- 122 -- 122
Loss on termination of cash flow
hedge 1,643 6,417 -- 8,060
Provision for loss on loans 28,200 -- -- 28,200
Impairment provisions 16,632 268 -- 16,900
Loss on sale of assets 1,116 21 -- 1,137
Minority interest and equity in
earnings 132 (996 ) -- (864 )
Cumulative effect of accounting
change -- 3,841 -- 3,841
------------ ------------ -------------- ----------------
108,918 167,915 (1,787 ) 275,046
------------ ------------ -------------- ----------------
Discontinued operations:
Loss from discontinued
operations, net (6,241 ) -- -- (6,241 )
------------ ------------ -------------- ----------------
Net income/(loss) $ (22,820 ) $ 402 $ (2,034 ) $ (24,452 )
============ ============ ============== ================
Assets at December 31, 2001 $ 920,421 $ 642,641 $ (3,948 ) $ 1,559,114
============ ============ ============== ================
Investments accounted for under
the equity method at
December 31, 2001 $ 1,058 $ 751 $ -- $ 1,809
============ ============ ============== ================
Additions to long-lived assets:
Real estate $ 3,769 $ 22,283 $ -- $ 26,052
============ ============ ============== ================
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
14. Segment Information - Continued:
-------------------------------
Year Ended December 31, 2000
(In Thousands)
----------------------------------------------------------------------
Consolidated
CNL-RP (a) CNL-FNC (a) Other (b) Totals
--------------- ---------------- ---------------- ----------------
Revenues $ 44,900 $ 14,884 $ 49,713 $ 109,497
--------------- ---------------- ---------------- ---------------
General operating and
administrative 6,127 11,297 7,515 24,939
Interest expense 18,626 12,789 15,529 46,944
Property expenses, state and
other taxes 2,882 -- 729 3,611
Depreciation and amortization 5,529 2,570 8,302 16,401
Transaction costs 7,094 701 2,520 10,315
Loss on investment in
securities -- 5,348 -- 5,348
Provision for loss on loans -- -- 1,804 1,804
Impairment provisions 2,147 -- 67 2,214
Loss on sale of assets 498 -- 223 721
Minority interest and equity in
earnings (5,324 ) (1,171 ) 5,374 (1,121 )
--------------- ---------------- ---------------- ---------------
37,579 31,534 42,063 111,176
--------------- ---------------- ---------------- ---------------
Discontinued operations:
Earnings from discontinued
operations, net 4,606 -- -- 4,606
--------------- ---------------- ---------------- ---------------
Net income/(loss) $ 11,927 $ (16,650 ) $ 7,650 $ 2,927
=============== ================ ================ ===============
Assets at December 31, 2000 $ 991,236 $ 606,522 $ 1,745 $ 1,599,503
=============== ================ ================ ===============
Investments accounted for
under the equity method at
December 31, 2000 $ 1,067 $ -- $ -- $ 1,067
=============== ================ ================ ===============
Additions to long-lived assets:
Real estate $ 15,792 $ 109,897 $ 50,581 $ 176,270
=============== ================ ================ ===============
(a) Represents the period from June 1, 2000 (the date that the
separate segments were created) through December 31, 2000.
(b) Represents the period from January 1, 2000 through May 31, 2000,
prior to the formation of the separate segments. This column also
reflects consolidating eliminations and other results of the
parent of CNL-RP and CNL-FNC for the period from June 1, 2000
through December 31, 2000.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
15. Commitments and Contingencies:
-----------------------------
In the ordinary course of business, the Company has outstanding
commitments to qualified borrowers and tenants. These commitments,
including development agreements, if accepted by the potential
borrowers, obligate the Company to provide funding. At December 31,
2002, the Company had committed to fund $9 million to qualified
tenants.
16. Selected Quarterly Financial Data:
---------------------------------
The following table presents selected unaudited quarterly financial
data for each fiscal quarter during the years ended December 31, 2002
and 2001:
(In Thousands except for per share data)
2002 Quarter First Second Third Fourth Year
--------------------------------- ---------- ------------ ---------- ---------- -----------
Continuing operations:
Revenues (1) $70,233 $ 136,133 $63,049 $ 54,884 $ 324,299
========== ============ ========== ========== ===========
Earnings/(loss) from
continuing operations,
net (1) $7,075 $ 14,346 $ 8,198 $(3,204 ) $ 26,415
Discontinued operations:
Earnings/(loss) and gains
from discontinued
operations, net (1) (643 ) 696 3,045 6,077 9,175
---------- ------------ ---------- ---------- -----------
Net Income $6,432 $ 15,042 $11,243 $ 2,873 $ 35,590
========== ============ ========== ========== ===========
Earnings/(loss) per share:
Continuing operations (1) $ 0.16 $ 0.32 $ 0.18 $ (0.07 ) $ 0.59
========== ============ ========== ========== ===========
Discontinued operations (1) $ (0.01 ) $ 0.02 $ 0.07 $ 0.13 $ 0.21
========== ============ ========== ========== ===========
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2002, 2001 and 2000
16. Selected Quarterly Financial Data - Continued:
---------------------------------------------
(In Thousands except for per share data)
2001 Quarter First Second Third Fourth Year
--------------------------------- ---------- ---------- ---------- ----------- -------------
Continuing operations:
Revenues (1) $ 43,800 $ 39,086 $38,006 $ 135,943 $ 256,835
========== ========== ========== =========== =============
Earnings/(loss) from
continuing operations,
net (1) $ 9,751 $ 4,339 $ (25,941 ) $ (2,519 ) $ (14,370 )
Discontinued operations:
Earnings/(loss) from
discontinued
operations, net (1) 2,264 856 (1,703 ) (7,658 ) (6,241 )
---------- ---------- ---------- ----------- -------------
Earnings/(loss) before
cumulative effect of
accounting change 12,015 5,195 (27,644 ) (10,177) (20,611 )
Cumulative effect of
accounting change (3,841 ) -- -- -- (3,841 )
---------- ---------- ---------- ----------- -------------
Net income/(loss) $ 8,174 $ 5,195 $(27,644 ) $ (10,177 ) $ (24,452 )
========== ========== ========== =========== =============
Earnings/(loss) per share:
Continuing operations (1) $ 0.22 $ 0.10 $ (0.59 ) $ (0.06 ) (0.33 )
========== ========== ========== =========== =============
Discontinued operations (1) $ 0.05 $ 0.02 $ (0.04 ) $ (0.17 ) $ (0.14 )
========== ========== ========== =========== =============
Cumulative effect of
accounting change $ (0.09 ) $ -- $ -- $ -- $ (0.09 )
========== ========== ========== =========== =============
(1) The results of operations relating to properties that were either
disposed of or that were classified as held for sale during the
year ended December 31, 2002 are reported as discontinued
operations.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission no
later than April 30, 2003.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission no
later than April 30, 2003.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission no
later than April 30, 2003.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission no
later than April 30, 2003.
Item 14. Controls and Procedures
The Company maintains a set of disclosure controls and procedures
designed to ensure that information required to be disclosed in the Company's
filings under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms. The principal executive and financial
officers of the Company have evaluated the Company's disclosure controls and
procedures within 90 days prior to the filing of this Annual Report on Form 10-K
and have determined that such disclosure controls and procedures are effective.
Subsequent to the date of the above evaluation, there have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report.
1. Consolidated Financial Statements
Report of Independent Certified Public Accountants.
Consolidated Balance Sheets at December 31, 2002 and 2001.
Consolidated Statements of Operations for the years ended
December 31, 2002, 2001 and 2000.
Consolidated Statements of Stockholders' Equity and
Comprehensive Income/(Loss) for the years ended December 31,
2002, 2001 and 2000.
Consolidated Statements of Cash Flows for the years ended
December 31, 2002, 2001 and 2000.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts for the years
ended December 31, 2002, 2001 and 2000.
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 2002.
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 2002.
Schedule IV - Mortgage Loans on Real Estate at December 31,
2002.
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or
notes thereto.
3. Exhibits
2.1 Agreement and Plan of Merger, by and among the
Registrant, CFA Acquisition Corp., CNL Fund Advisors,
Inc. and CNL Group, Inc., dated March 11, 1999
(included as Exhibit 10.38 to the Registrant's
Registration Statement No. 333-74329 on Form S-4 (the
"Form S-4") as originally filed and incorporated
herein by reference).
2.2 Agreement and Plan of Merger, by and among the
Registrant, CFC Acquisition Corp., CFS Acquisition
Corp., CNL Financial Corp., CNL Financial Services,
Inc., CNL Group, Inc., Five Arrows Realty Securities
L.L.C., Robert A. Bourne, Curtis B. McWilliams and
Brian Fluck, dated March 11, 1999 (included as
Exhibit 10.39 to the Form S-4 as originally filed and
incorporated herein by reference).
3.1 CNL American Properties Fund, Inc. Amended and
Restated Articles of Incorporation, as amended
(included as Exhibit 3.1 to the Registrant's Form
10-Q for the quarter ended June 30, 1999 and
incorporated herein by reference).
3.2 CNL American Properties Fund, Inc. Amended and
Restated Bylaws (included as Exhibit 3.2 to the
Registrant's Registration Statement No. 333-37657 on
Form S-11 and incorporated herein by reference).
3.3 CNL American Properties Fund, Inc. Second Amended and
Restated Articles of Incorporation (included as
Exhibit 3.3 to the Registrant's Form 10-Q for the
quarter ended June 30, 2000 and incorporated herein
by reference).
3.4 Articles of Amendment to Second Amended and Restated
Articles of Incorporation of CNL American Properties
Fund, Inc. (included as Exhibit 3.4 to the
Registrant's Form 10-Q for the quarter ended June 30,
2002 and incorporated herein by reference).
4.1 Form of Stock Certificate (included as Exhibit 4.5 to
the Registrant's Registration Statement No. 33-78790
on Form S-11 and incorporated herein by reference).
10.1 Form of Indemnification Agreement dated as of April
18, 1995, between the Registrant and each of James M.
Seneff, Jr., Robert A. Bourne, G. Richard Hostetter,
J. Joseph Kruse, Richard C. Huseman, John T. Walker,
Jeanne A. Wall, Lynn E. Rose and Edgar J. McDougall,
dated as of January 27, 1997, between the Registrant
and Steven D. Shackelford, dated as of February 18,
1998, between the Registrant and Curtis B.
McWilliams, and dated as of September 1, 1999,
between the Registrant and each of Howard J. Singer,
John L. Farren, Timothy J. Neville, Michael I. Wood
and Barry L. Goff (included as Exhibit 10.9 to the
Registrant's Registration Statement No. 333-15411 on
Form S-11 and incorporated herein by reference).
10.2 Amended and Restated Agreement of Limited Partnership
of CNL APF Partners, LP (included as Exhibit 10.50 to
Amendment No. 2 to the Form S-4 and incorporated
herein by reference).
10.3 Amended and Restated Credit Agreement by and among
CNL APF Partners, LP, Registrant, First Union
National Bank, First Union Capital Markets Group,
Banc of America Securities LLC, NationsBank, N.A.,
The Chase Manhattan Bank and other financial
institutions, dated June 9, 1999 (included as Exhibit
10.51 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference).
10.4 First Amendment to Amended and Restated Credit
Agreement dated as of December 31, 1999 between CNL
APF Partners, LP and First Union National Bank, as
Agent (included as Exhibit 10.4 to the Registrant's
Form 10-K for the year ended December 31, 1999 and
incorporated herein by reference).
10.5 Franchise Receivable Funding and servicing Agreement
dated as of October 14, 1999 between CNL APF
Partners, LP and Neptune Funding Corporation
(included as Exhibit 10.5 to the Registrant's Form
10-K for the year ended December 31, 1999 and
incorporated herein by reference).
10.6 Interim Wholesale Mortgage Warehouse and Security
Agreement dated as of September 18, 1998, and Amended
Agreement dated as of August 30, 1999 between CNL APF
Partners, LP and Prudential Securities Credit
Corporation (included as Exhibit 10.6 to the
Registrant's Form 10-K for the year ended December
31, 1999 and incorporated herein by reference).
10.7 1999 Performance Incentive Plan (included as Exhibit
10.1 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference).
10.8 Registration Rights Agreement by and among the
Registrant, Robert A. Bourne, Curtis B. McWilliams,
John T. Walker, Howard Singer, Steven D. Shackelford
and CNL Group, Inc., dated as of March 11, 1999
(included as Exhibit 10.40 to Amendment No. 1 to the
Form S-4 and incorporated herein by reference).
10.9 Registration Rights Agreement by and among the
Registrant, Five Arrows Realty Securities L.L.C.,
James M. Seneff, Jr., Robert A. Bourne, Curtis B.
McWilliams and CNL Group, Inc., dated as of March 11,
1999 (included as Exhibit 10.41 to Amendment No. 1 to
the Form S-4 and incorporated herein by reference).
10.10 Employment Agreement by and between Curtis B.
McWilliams and the Registrant, dated September 15,
1999 (included as Exhibit 10.42 to Amendment No. 2 to
the Form S-4 and incorporated herein by reference).
10.11 Employment Agreement by and between Steven D.
Shackelford and the Registrant, dated September 15,
1999 (included as Exhibit 10.43 to Amendment No. 2 to
the Form S-4 and incorporated herein by reference).
10.12 Employment Agreement by and between John T. Walker
and the Registrant, dated September 15, 1999
(included as Exhibit 10.44 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.13 Employment Agreement by and between Howard J. Singer
and the Registrant, dated September 15, 1999
(included as Exhibit 10.45 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.14 Employment Agreement by and between Barry L. Goff and
the Registrant, dated September 15, 1999 (included as
Exhibit 10.46 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.15 Employment Agreement by and between Robert W. Chapin
and the Registrant, dated September 15, 1999
(included as Exhibit 10.47 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.16 Employment Agreement by and between Timothy J.
Neville and the Registrant, dated September 15, 1999
(included as Exhibit 10.48 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.17 Holdback Agreement by and among the Registrant and
Stockholders, dated August 31, 1999 (included as
Exhibit 10.56 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.18 Amended and Restated Credit and Reimbursement
Agreement by and among CNL APF Partners, LP, CNL APF
LP Corp., CNL APF GP Corp., Bank of America, N.A. and
Bank of America Securities LLC, dated as of June 15,
2000 (included as Exhibit 10.18 to the Registrant's
Form 10-Q for the quarter ended June 30, 2000 and
incorporated herein by reference).
10.19 Employment Agreement by and between Michael Wood and
the Registrant, dated August 31, 1999 (included as
Exhibit 10.19 to the Registrant's Form 10-Q for the
quarter ended March 31, 2001 and incorporated herein
by reference).
10.20 Employment Agreement by and between Brent Heaton and
the Registrant, dated September 29, 1999 (included as
Exhibit 10.20 to the Registrant's Form 10-Q for the
quarter ended March 31, 2001 and incorporated herein
by reference).
10.21 Addendum to Employment Agreement dated as of November
1, 1999, between the Registrant and Curtis McWilliams
(included as Exhibit 10.21 to the Registrant's Form
10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference). The following
persons have signed a substantially identical
Addendum relating to their respective employment
agreements; Steve Shackelford (dated November 1,
1999), John Walker (dated November 3, 1999), Barry
Goff (dated November 1, 1999), and Brent Heaton
(dated November 3, 1999).
10.22 Addendum to Employment Agreement dated as of November
1, 1999, between the Registrant and Robert Chapin
(included as Exhibit 10.22 to the Registrant's Form
10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference). The following
persons have signed a substantially identical
Addendum relating to their respective employment
agreements: Howard Singer (dated November 1, 1999),
Michael Wood (dated November 8, 1999) and Timothy
Neville (dated November 24, 1999).
10.23 Second Addendum to Employment Agreement dated as of
June 16, 2000, between the Registrant and Curtis
McWilliams (included as Exhibit 10.23 to the
Registrant's Form 10-Q for the quarter ended March
31, 2001 and incorporated herein by reference). The
following persons have signed a substantially
identical Second Addendum relating to their
respective employment agreements: Howard Singer
(dated June 19, 2000), Robert Chapin (dated June 20,
2000) and Brent Heaton (dated October 30, 2000).
10.24 Second Addendum to Employment Agreement dated as of
August 20, 2000, between the Registrant and Barry
Goff (included as Exhibit 10.24 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference).
10.25 Second Addendum to Employment Agreement dated as of
September 1, 2000, between the Registrant and Steve
Shackelford (included as Exhibit 10.25 to the
Registrant's Form 10-Q for the quarter ended March
31, 2001 and incorporated herein by reference).
10.26 Second Addendum to Employment Agreement dated as of
2000, between the Registrant and Timothy Neville
(included as Exhibit 10.26 to the Registrant's Form
10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference).
10.27 Second Addendum to Employment Agreement dated as of
October 24, 2000, between the Registrant and Michael
Wood (included as Exhibit 10.27 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference).
10.28 Second Addendum to Employment Agreement dated as of
October 25, 2000, between the Registrant and John
Walker (included as Exhibit 10.28 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference).
10.29 Amended and Restated Master Purchase Agreement dated
as of October 11, 2001, among Bank of America, N.A.,
CNL Financial VII, LP and CNL Franchise Network,
(included as Exhibit 10.29 to the Registrant's Form
10-K for the year ended December 31, 2001 and
incorporated herein by reference).
10.30 Third Amended and Restated Side Letter dated as of
October 11, 2001, among Bank of America, N.A., CNL
Financial VII, LP and CNL Franchise Network, LP
(included as Exhibit 10.30 to the Registrant's Form
10-K for the year ended December 31, 2001 and
incorporated herein by reference).
10.31 Loan and Security Agreement dated as of June 14, 2002
between CNL Financial IX, LP and Nieuw Amsterdam
Receivables Corporation (included as Exhibit 10.31 to
the Registrant's Form 10-Q for the quarter ended June
30, 2002 and incorporated herein by reference).
21 Subsidiaries of the Registrant (filed herewith).
99.1 Certification of Co-Chief Executive Officer Pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
99.2 Certification of Co-Chief Executive Officer Pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
99.3 Certification of Chief Financial Officer Pursuant to
18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
(b) The Registrant filed no reports on Form 8-K during the period
October 1, 2002 through December 31, 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 14th day of
March, 2003.
CNL AMERICAN PROPERTIES FUND, INC.
By:
/s/ JAMES M. SENEFF, JR.
---------------------------------
James M. Seneff, Jr.
co-Chief Executive Officer
/s/ CURTIS B. McWILLIAMS
---------------------------------
Curtis B. McWilliams
co-Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ JAMES M. SENEFF, JR. Director, Chairman of the Board and March 14, 2003
- ---------------------------------------------
James M. Seneff, Jr. co-Chief Executive Officer
(Principal Executive Officer)
/s/ CURTIS B. McWILLIAMS co-Chief Executive Officer March 14, 2003
- ---------------------------------------------
Curtis B. McWilliams (Principal Executive Officer)
/s/ STEVEN D. SHACKELFORD Executive Vice President, March 14, 2003
- ---------------------------------------------
Steven D. Shackelford Chief Administrative Officer,
Chief Financial Officer,
Secretary and Treasurer
/s/ ROBERT A. BOURNE Director March 14, 2003
- ---------------------------------------------
Robert A. Bourne
/s/ G. RICHARD HOSTETTER Director March 14, 2003
- ---------------------------------------------
G. Richard Hostetter
/s/ J. JOSEPH KRUSE Director March 14, 2003
- ---------------------------------------------
J. Joseph Kruse
/s/ RICHARD C. HUSEMAN Director March 14, 2003
- ---------------------------------------------
Richard C. Huseman
CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James M. Seneff, Jr., the Co-Chief Executive Officer of CNL American
Properties Fund, Inc. certify that:
1. I have reviewed this annual report on Form 10-K of CNL American
Properties Fund, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
a. Designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;
b. Evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this annual report
(the "Evaluation Date"); and
c. Presented in this annual report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a. All significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b. Any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: March 14, 2003
/s/ James M. Seneff, Jr.
- ---------------------------
James M. Seneff, Jr.
Co-Chief Executive Officer
CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Curtis B. McWilliams, the Co-Chief Executive Officer of CNL American
Properties Fund, Inc. certify that:
1. I have reviewed this annual report on Form 10-K of CNL American
Properties Fund, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
a. Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during
the period in which this annual report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this annual report (the "Evaluation
Date"); and
c. Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a. All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b. Any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: March 14, 2003
/s/ Curtis B. McWilliams
Curtis B. McWilliams
Co-Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Steven D. Shackelford, Chief Financial Officer of CNL American
Properties Fund, Inc. certify that:
1. I have reviewed this annual report on Form 10-K of CNL American
Properties Fund, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
a. Designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;
b. Evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this annual report (the
"Evaluation Date"); and
c. Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a. All significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b. Any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 14, 2003
/s/ Steven D. Shackelford
Steven D. Shackelford
Executive Vice President, Chief Administrative Officer,
Chief Financial Officer, Secretary and Treasurer
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2002, 2001 and 2000
Additions Deductions
----------------------------- ------------------------------
Balance at Charged to Charged to Deemed Balance
Beginning Costs and Other Uncollec- at End
Year Description of Year Expenses Accounts tible Collected of Year
- --------- ----------------- ------------- ------------- -------------- ------------- ------------- ---------------
2000 Allowance for
doubtful
accounts (a) $5,189,216 $1,678,144 $ 5,414,580 (b) $ 543,173 (c) $1,069,187 $ 10,669,580
============= ============= ============== ============= ============= ===============
2001 Allowance for
doubtful
accounts (a) $10,669,580 $ 452,276 $ 1,371,314 (b) $2,557,461 (c) $4,119,549 $ 5,816,160
============= ============= ============== ============= ============= ===============
2002 Allowance for
doubtful
accounts (a) $5,816,160 $ 627,288 $ 2,767,324 (b) $4,407,755 (c) $1,205,821 $ 3,597,196
============= ============= ============== ============= ============= ===============
(a) Deducted from receivables and accrued rental income on the balance sheet.
(b) Reduction of rental, earned and other income.
(c) Amounts written off as uncollectible.
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2002
Costs Capitalized
Initial Cost Subsequent to Acquisition
--------------------- -------------------
Impair- Encum- Buildings and Improve- Carrying
ment brances Land Improvements ments Costs
---- -------- ----- ------------ ------ ------
Properties the Company
has invested in Under
Operating Leases:
Applebee's Restaurants:
Antioch, Tennessee - (i) 609,696 770,331 - -
Clarksville, Tennessee - (i) 556,070 983,010 - -
Columbia, Tennessee - (i) 625,868 936,068 - -
Cookeville, Tennessee - (i) 489,867 1,003,630 - -
Hendersonville, Tennessee - (i) 549,651 966,628 - -
Hermitage, Tennessee - (i) 735,272 827,474 - -
Hopkinsville, Kentucky - (i) 390,058 943,019 - -
Lebanon, Tennessee - (i) 568,168 925,046 - -
Madison, Tennessee - (i) 740,165 835,996 - -
Montclair, California - - 874,094 - 880,494 -
Moscow, Idaho - - 537,410 1,193,850 - -
Rockford, Illinois - (i) 603,828 - - -
Salem, Oregon - - 778,321 - 1,153,535 -
Arby's Restaurants:
Allen, Texas - (i) 508,994 - - -
Arab, Alabama - (i) 230,720 455,946 - -
Atlanta, Georgia - (i) 648,459 - 655,353 -
Auburndale, Florida - (i) 326,788 391,270 - -
Avon, Indiana - (i) 338,486 497,282 - -
Bartow, Florida - (i) 226,428 414,175 - -
Brooksville, Florida - (i) 266,606 421,780 - -
Brooksville, Florida - (i) 248,277 368,959 - -
Canton, Georgia - (i) 586,476 - 606,850 -
Columbus, Ohio - (i) 441,770 - 594,458 -
Columbus, Ohio - (i) 483,868 - 576,483 -
Douglasville, Georgia - (i) 708,710 - 546,363 -
Flower Mound, Texas - (i) 434,130 - 618,352 -
Grand Rapids, Michigan - (i) 312,670 - - -
Greensboro, North Carolina - (i) 363,478 404,650 - -
Greenville, North Carolina - (i) 277,986 490,143 - -
Hudson, Florida - (i) 270,539 488,818 - -
Indianapolis, Indiana - (i) 439,935 - 677,335 -
Jonesville, North Carolina - (i) 228,364 539,764 - -
Kernersville, North Carolina - (i) 273,325 413,077 - -
Kinston, North Carolina - (i) 268,545 485,160 - -
Lakeland, Florida - (i) 235,996 452,008 - -
Lexington, North Carolina - (i) 320,924 463,347 - -
Myrtle Beach, South Carolina - (i) 421,481 - 633,406 -
New Port Richey, Florida - (i) 242,777 398,029 - -
Orange Park, Florida - (i) 463,047 - 592,539 -
Plant City, Florida - (i) 196,251 443,976 - -
Redford , Michigan - (i) 412,516 - 673,289 -
Tampa, Florida - (i) 322,412 371,694 - -
The Colony, Texas - (i) 504,327 - - -
Vancouver, Washington - (i) 733,180 - 665,895 -
Walker, Michigan - (i) 498,403 - 701,467 -
Whitehall, Ohio - (i) 522,786 - 289,350 -
Bakers Square Restaurants:
Alsip, Illinois - (i) 449,010 728,259 - -
Burbank, Illinois - (i) 679,830 1,041,258 - -
Cherry Valley, Illinois - (i) 419,238 848,874 - -
Coon Rapids, Minnesota - (i) 543,966 1,131,838 - -
Deerfield, Illinois - (i) 573,069 468,307 - -
Downers Grove, Illinois - (i) 537,805 778,410 - -
Homewood, Illinois - (i) 601,418 760,181 - -
LaGrange, Illinois - (i) 591,206 770,392 - -
Lansing, Illinois - (i) 647,562 869,687 - -
Mankato, Minnesota - (i) 488,663 1,141,844 - -
Matteson, Illinois - (i) 664,403 852,845 - -
Merrillville, Indiana - (i) 567,083 1,176,715 - -
Palatine, Illinois - (i) 686,927 674,672 - -
Palos Heights, Illinois - (i) 375,257 734,314 - -
Saint Charles, Illinois - (i) 614,512 630,952 - -
Westmont, Illinois - (i) 518,276 591,047 - -
Willowbrook, Illinois - (i) 586,045 718,306 - -
Bandana's Bar-B-Q Restaurants:
Arnold, Missouri (j) (i) 373,239 - 873,481 -
Collinsville, Illinois (j) (i) 346,699 829,363 - -
Columbia, Missouri (j) (i) 501,566 - 920,312 -
Crystal City, Missouri (j) - 273,460 903,170 - -
Fenton, Missouri (j) - 624,303 - 1,027,724 -
Bennigan's Restaurants:
Arvada, Colorado - (i) 714,194 1,302,733 - -
Bedford, Texas - (i) 768,333 - - -
Canton, Ohio - (i) 1,433,543 - 835,463 -
Clearwater, Florida - (i) 900,038 - - -
Colorado Springs, Colorado - (i) 794,255 - - -
Copley, Ohio - (i) 1,433,543 - 835,463 -
Englewood, Colorado - (i) 665,141 - - -
Englewood, New Jersey - (i) 1,460,179 901,042 - -
Florham Park, New Jersey - (i) 1,077,645 - - -
Glenview, Illinois - (i) 1,019,248 - 1,789,742 -
Grapevine, Texas - (i) 1,038,598 - 1,523,346 -
Houston, Texas - (i) 908,502 - - -
Jacksonville, Florida - (i) 832,557 - - -
Jacksonville, Florida - (i) 779,387 - - -
Lone Tree, Colorado - (i) 1,075,230 - 1,502,305 -
Mount Laurel, New Jersey - (i) 1,305,939 1,030,685 - -
North Richland Hills, Texas - (i) 886,048 - - -
Ocala, Florida - (i) 693,453 - 1,072,916 -
Oklahoma City, Oklahoma - - 756,750 - - -
Orlando, Florida - (i) 1,585,461 874,143 - -
Pensacola, Florida - (i) 692,093 - - -
Saint Louis Park, Minnesota - (i) 885,111 - - -
Tampa, Florida - - 741,286 - - -
Woodridge, Illinois - (i) 789,680 - - -
Black Angus Restaurants:
Dublin, California - (i) 1,023,054 - 1,275,135 -
Orem, Utah - (i) 799,092 - 1,233,091 -
Black-eyed Pea Restaurants:
Fort Worth, Texas (j) - 679,384 - 1,028,766 -
Glendale, Arizona (j) - 744,764 - 1,082,896 -
Grapevine, Texas (j) - 411,977 - 1,804,357 -
Hillsboro, Texas - - 404,881 - - -
Boston Market Restaurants:
Atlanta, Georgia - (i) 774,448 - 507,587 -
Cary, North Carolina - - 532,814 801,222 - -
Chandler, Arizona - - 440,026 475,931 - -
Columbus, Ohio - (i) 353,608 606,470 - -
Gambrills, Maryland - (i) 667,992 - 661,776 -
Glendale, Arizona - (i) 566,562 403,730 - -
Indianapolis, Indiana - (i) 885,567 - 648,755 -
Lake Worth, Florida - - 570,003 900,291 - -
Lansing, Michigan - (i) 515,827 - 572,706 -
Newport News, Virginia (j) - 473,596 586,377 - -
Riverdale, Maryland - (i) 526,092 - 504,483 -
Scottsdale, Arizona - - 521,918 410,245 - -
Waldorf, Maryland - (i) 651,867 - 775,634 -
Warwick, Rhode Island - (i) 234,685 589,367 - -
Burger King Restaurants:
Burbank, Illinois - (i) 543,095 - 552,491 -
Chadbourn, North Carolina - - 217,079 - 858,549 -
Chattanooga, Tennessee - (i) 680,192 - 526,711 -
Chattanooga, Tennessee - (i) 769,842 - 376,964 -
Chicago, Illinois - (i) 917,717 - 713,170 -
Clinton, North Carolina - - 349,582 - - -
Cut Off, Louisiana - - 323,106 1,219,165 - -
Highland, Indiana - (i) 650,112 - 600,335 -
Kent, Ohio - (i) 233,468 689,696 - -
Lacey, Washington - - 308,272 - - -
Lake Charles, Louisiana - - 360,438 1,062,531 - -
Lynnwood, Washington (j) - 448,745 626,866 - -
Manchester, New Hampshire - - 775,925 458,838 - -
Natchez, Mississippi - - 273,353 718,493 - -
Oak Lawn, Illinois - (i) 1,211,346 - 741,406 -
Ooltewah, Tennessee - (i) 546,261 - 658,946 -
Opelousas, Louisiana - - 625,123 958,670 - -
Portland, Oregon - - 500,000 - - -
Shelton, Washington - - 424,416 822,399 - -
Spanaway, Washington - - 416,548 762,244 - -
Warren, Michigan - - 375,952 820,967 - -
Wilmington, North Carolina - - 348,663 - 701,825 -
Chevy's Fresh Mex Restaurants:
Altamonte Springs, Florida - (i) 1,259,828 1,623,073 - -
Annapolis, Maryland - - 1,372,280 - - -
Arapahoe, Colorado - (i) 986,426 1,680,312 - -
Atlanta, Georgia (j) (i) 1,463,644 1,874,198 - -
Auburn Hills, Michigan (j) (i) 1,122,087 2,017,496 - -
Beaverton, Oregon - (i) 938,162 1,681,670 - -
Bloomington, Minnesota - (i) 869,178 1,309,759 - -
Brandon, Florida (j) (i) 844,185 1,425,740 - -
Clearwater, Florida (j) (i) 984,259 1,103,690 - -
Greenbelt, Maryland - (i) 945,234 1,475,339 - -
Independence, Missouri (j) (i) 1,239,264 1,490,392 - -
Jacksonville, Florida (j) (i) 1,725,325 1,574,207 - -
Kissimmee, Florida - (i) 570,815 1,536,290 - -
Lake Mary, Florida - (i) 88,077 2,019,028 - -
Lake Oswego, Oregon - (i) 963,047 1,505,671 - -
Las Vegas, Nevada - (i) 1,156,847 1,188,272 - -
Merriam, Kansas (j) (i) 1,032,271 1,074,834 - -
Naperville, Illinois - (i) 960,779 1,365,563 - -
Nashville, Tennessee - (i) 956,799 2,692,320 - -
Olathe, Kansas (j) (i) 470,047 1,541,280 - -
Orlando, Florida (j) (i) 1,495,716 1,674,517 - -
Tampa, Florida - (i) 869,408 1,548,972 - -
Tampa, Florida (j) (i) 878,358 1,449,034 - -
Taylor, Michigan - (i) 844,918 1,712,340 - -
Chick-Fil-A Restaurant:
Rockwall, Texas - (i) 528,118 - 340,297 -
Chipotle Mexican Grill Restaurant:
Upland, California - (i) 788,248 - 209,449 -
Culpepper Restaurant:
Bridgeton, Missouri (j) - - 595,741 - -
Darryl's Restaurants:
Mobile, Alabama - - 495,195 937,060 - -
Montgomery, Alabama (j) - 346,380 869,587 - -
Orlando, Florida - - 1,485,631 772,853 - -
Pensacola, Florida - - 389,394 676,711 - -
Raleigh, North Carolina (j) - 1,131,164 719,865 - -
Raleigh, North Carolina (j) - 840,525 465,154 - -
Richmond, Virginia (j) - 311,196 606,403 - -
Richmond, Virginia - - 618,125 - - -
Winston-Salem, North Carolina (j) - 436,867 757,874 - -
Del Taco Restaurant:
Mesa, Arizona - (i) 642,483 - 581,759 -
Denny's Restaurants:
Duncan, South Carolina - (i) 219,702 - - -
Greensboro, North Carolina - (i) 361,025 572,098 - -
Greenville, South Carolina - (i) 457,851 454,566 - -
Houston, Texas - (i) 392,818 664,851 - -
Kansas City, Missouri - - 400,847 - 901,367 -
Landrum, South Carolina - (i) 155,398 - - -
Lee's Summit, Missouri (j) - 539,650 - 670,448 -
Merriam, Kansas (j) - 644,889 - 991,991 -
Mooresville, North Carolina - (i) 307,292 - - -
North Kansas City, Missouri (j) - 450,010 - 760,630 -
Pasadena, Texas - - 466,555 - 506,094 -
Sedalia, Missouri (j) - 318,979 - 1,013,110 -
Shawnee, Oklahoma (j) - 528,090 - 625,653 -
Tampa, Florida (j) - 397,302 665,948 - -
Topeka, Kansas - (i) 414,731 - - -
Winter Springs, Florida - (i) 555,232 - - -
Einstein Brothers' Bagels Restaurants:
Dearborn, Michigan - - 464,957 - 178,078 -
Springfield, Virginia - - 633,691 - - -
Fazoli's Restaurant:
Southaven, Mississippi - (i) 485,013 586,758 - -
Golden Corral Family Steakhouse Restaura
Bellevue, Nebraska - - 440,812 - 1,039,283 -
Brunswick, Georgia - - 456,629 - 1,170,630 -
Carlsbad, New Mexico - - 384,221 - 643,854 -
Cleburne, Texas - - 359,455 - 653,853 -
Clovis, New Mexico - - 426,349 805,517 - -
Columbia, Missouri - (i) 848,133 - 1,008,678 -
Columbus, Ohio - - 1,031,098 - 1,092,939 -
Cookeville, Tennessee - - 806,377 - 1,086,502 -
Corpus Christi, Texas - - 576,548 - 934,918 -
Corsicana, Texas - - 349,227 - 699,756 -
Council Bluffs, Iowa - - 546,078 - 993,149 -
Davenport, Iowa - - 601,296 1,344,016 - -
Dover, Delaware - - 1,043,108 - 977,508 -
Dubuque, Iowa - - 564,242 - 1,056,315 -
Duncan, Oklahoma - - 161,390 - 1,028,945 -
Edmond, Oklahoma - - 569,664 - 1,017,781 -
Enid, Oklahoma - - 364,536 - 865,147 -
Evansville, Indiana - - 601,394 - 1,194,533 -
Evansville, Indiana - (i) 587,601 - 1,393,436 -
Flowood, Mississippi - (i) 595,717 - 1,094,345 -
Fort Dodge, Iowa - - 320,880 - 1,155,880 -
Fort Walton Beach, Florida - - 590,538 - 1,176,436 -
Fort Wayne, Indiana - - 743,544 - 1,276,290 -
Henderson, Kentucky - - 377,108 - 1,116,904 -
Jacksonville, Florida - (i) 615,554 - 1,184,073 -
Jacksonville, Florida - - 541,264 - 1,173,738 -
Jacksonville, Florida - (i) 684,351 - 1,258,835 -
Kansas City, Missouri - - 409,153 - 943,712 -
Lufkin, Texas - - 479,197 - 954,051 -
Moberly, Missouri - - 374,230 - 838,342 -
Mobile, Alabama - (i) 428,841 - 1,031,457 -
Muskogee, Oklahoma - (i) 395,839 - 887,540 -
Omaha, Nebraska - - 570,004 - 1,271,666 -
Orlando, Florida - - 67,157 - - -
Palatka, Florida - - 322,433 - 987,385 -
Pensacola, Florida - (i) 657,606 - 1,347,285 -
Port Richey, Florida - - 626,999 - 1,130,692 -
Rock Hill, South Carolina - (i) 718,003 - 1,202,177 -
Tampa, Florida - - 825,650 - 1,161,192 -
Texarkana, Texas - (i) 665,172 - 1,080,114 -
Tulsa , Oklahoma - (i) 705,094 - 1,305,383 -
Winchester, Kentucky - (i) 303,633 - 970,489 -
Ground Round Restaurants:
Allentown, Pennsylvania - (i) 405,631 884,954 - -
Cincinnati, Ohio - (i) 282,099 534,632 - -
Dubuque, Iowa - (i) 693,733 810,458 - -
Ewing Township, New Jersey - (i) 371,254 685,847 - -
Janesville, Wisconsin - (i) 451,235 548,178 - -
Kalamazoo, Michigan - (i) 287,331 712,081 - -
Parma, Ohio - (i) 388,699 793,475 - -
Reading, Pennsylvania - (i) 728,574 793,410 - -
Waterloo, Iowa - (i) 436,471 659,089 - -
Wauwatosa, Wisconsin - (i) 627,680 804,399 - -
Guthrie's Restaurant:
Hoover, Alabama - (i) 493,536 619,786 - -
Hardee's Restaurants:
Johnson City, Tennessee - - 215,567 - - -
Mobile, Alabama - - 336,696 - - -
Petal, Mississippi (j) (i) 324,298 420,017 - -
Rock Hill, South Carolina - - 256,050 476,149 - -
West Point, Mississippi - (i) 173,386 - - -
Houlihan's Restaurants:
Bethel Park, Pennsylvania - - 846,183 595,601 - -
Langhorne, Pennsylvania (j) - 817,039 648,765 - -
Plymouth Meeting, Pennsylvania - - 1,181,460 908,880 - -
International House Of Pancakes Restaura
Auburn, Washington - (i) 632,811 1,135,312 - -
Castle Rock, Colorado - (i) 540,896 - 1,196,239 -
Clarksville, Tennessee - (i) 375,987 964,430 - -
Corpus Christi, Texas - (i) 567,462 - - -
Fort Worth, Texas - (i) 501,388 746,474 - -
Fort Worth, Texas - (i) 565,639 923,669 - -
Greeley, Colorado - (i) 416,279 - 867,972 -
Greenville, South Carolina - (i) 476,847 961,606 - -
Hollywood, California - (i) 1,407,002 - - -
Homewood, Alabama - (i) 545,112 1,029,900 - -
Houston, Texas - (i) 645,365 790,258 - -
Kansas City, Missouri - (i) 512,481 831,202 - -
Killeen, Texas - (i) 380,687 775,713 - -
Lake Jackson, Texas - (i) 460,167 744,128 - -
Leesburg, Virginia - (i) 665,015 580,798 - -
Leon Valley, Texas - (i) 593,624 918,024 - -
Loveland, Colorado - (i) 488,259 - - -
Murfreesboro, Tennessee - (i) 647,414 871,268 - -
Phoenix, Arizona - (i) 668,112 941,796 - -
Port Arthur, Texas - (i) 382,950 957,912 - -
Poughkeepsie, New York - (i) 504,533 806,624 - -
Pueblo, Colorado - (i) 387,562 891,943 - -
Roseville, Michigan - (i) 282,868 843,648 - -
Southaven, Mississippi - (i) 579,175 1,176,434 - -
Stockbridge, Georgia - (i) 765,743 652,671 - -
Victoria, Texas - (i) 319,237 - - -
J. Gilbert's Restaurant:
McLean, Virginia - - 944,585 689,363 - -
Jack in the Box Restaurants:
Allen, Texas - (i) 711,642 - 726,339 -
Avondale, Arizona - (i) 605,063 - 623,222 -
Bacliff, Texas - (i) 419,488 - 697,861 -
Carson, California - (i) 457,821 - 708,581 -
Chandler, Arizona - (i) 481,456 - 636,588 -
Chandler, Arizona - (i) 604,724 - 600,686 -
Channelview, Texas - - 361,238 - 711,595 -
Corinth, Texas - (i) 396,864 - 576,370 -
Dallas, Texas - (i) 369,886 - 467,819 -
Enumclaw, Washington - (i) 124,468 - 773,506 -
Florissant, Missouri - (i) 389,265 - 779,211 -
Folsom, California - (i) 635,343 - 652,472 -
Fort Worth, Texas - (i) 482,309 716,199 - -
Fresno, California - (i) 286,850 - 606,547 -
Georgetown, Texas - (i) 499,875 - 866,353 -
Granbury, Texas - (i) 404,270 - 831,716 -
Gun Barrel City, Texas - (i) 284,046 - 549,495 -
Hillsboro, Oregon - (i) 699,776 - 864,724 -
Hollister, California - (i) 537,223 - 592,536 -
Houston, Texas - (i) 545,485 - 527,020 -
Houston, Texas - (i) 375,776 - 643,445 -
Houston, Texas - (i) 403,002 - 610,815 -
Houston, Texas - (i) 370,342 - 548,107 -
Houston, Texas - (i) 420,521 - 543,338 -
Humble, Texas - (i) 437,667 - 591,877 -
Hutchins, Texas - (i) 272,937 - 653,792 -
Irvine, California - (i) 899,898 - 733,701 -
Kent, Washington - (i) 737,038 - 553,688 -
Las Vegas, Nevada - (i) 730,674 - 547,445 -
Los Angeles, California - (i) 740,616 - 678,189 -
Los Angeles, California - (i) 911,754 - 531,018 -
Los Angeles, California - (i) 853,821 - 602,301 -
Lufkin, Texas - (i) 418,351 - 651,064 -
Lufkin, Texas - (i) 363,967 - 776,605 -
Moscow, Idaho - (i) 217,851 - 751,664 -
Nacogdoches, Texas - (i) 383,591 - 643,055 -
Ontario, California - (i) 771,241 - 793,229 -
Orange, Texas - (i) 387,533 - 787,843 -
Oxnard, California - (i) 681,663 - 642,924 -
Palmdale, California - (i) 631,275 - 567,912 -
Peoria, Arizona - (i) 496,689 - 721,614 -
Pflugerville, Texas - (i) 717,246 - 657,685 -
Saint Louis, Missouri - (i) 474,296 - 727,491 -
Salem, Oregon - (i) 501,168 - 699,067 -
San Antonio, Texas - (i) 274,362 - 781,797 -
San Antonio, Texas - (i) 311,466 - 700,979 -
Spring, Texas - (i) 475,748 - 719,239 -
Tacoma, Washington - (i) 495,529 - 759,800 -
Tigard, Oregon - (i) 353,396 - 904,688 -
Tyler, Texas - (i) 289,257 - 699,525 -
Waxahachie, Texas - (i) 477,580 - 538,255 -
Weatherford, Texas - (i) 464,986 - 785,149 -
West Sacramento, California - (i) 523,089 - 617,131 -
Woodland, California - (i) 358,130 - 668,383 -
Jack in the Box/Arco Gas Station-Conveni
Benicia, California - (i) 745,752 1,551,697 - -
Coachella, California - (i) 370,963 1,406,532 - -
Joe's Crab Shack Restaurant:
Lilburn, Georgia - (i) 1,089,268 931,637 - -
Jose Pepper's Restaurant:
Blue Springs, Missouri (j) - 251,187 - 737,672 -
KFC Restaurants:
Baton Rouge, Louisiana - - 181,290 463,414 - -
New Orleans, Louisiana - (i) 158,829 - 491,957 -
New Orleans, Louisiana - (i) 310,574 - 532,557 -
New Orleans, Louisiana - (i) 205,795 - 564,058 -
New Orleans, Louisiana - (i) 315,037 - 541,553 -
Putnam, Connecticut - - 301,723 - - -
Krystal Restaurants:
Brandon, Mississippi - (i) 340,115 687,423 - -
Chattanooga, Tennessee - (i) 445,493 594,649 - -
Greenville, Alabama - (i) 190,146 614,193 - -
Montgomery, Alabama - (i) 311,103 506,943 - -
Scottsboro, Alabama - (i) 255,500 561,315 - -
Leeann Chin Chinese Cuisine Restaurants:
Chanhassen, Minnesota - (i) 376,929 639,875 - -
Golden Valley, Minnesota - (i) 665,422 - 481,311 -
Little Lake Bryan Land:
Orlando, Florida - - 6,288,001 - - -
Orlando, Florida - - 360,878 - - -
McDonalds:
Palm Bay, Florida - - 615,498 - - -
Pizza Hut Restaurants:
Adrian, Michigan - - 242,239 - - -
Beaver, West Virginia - - 212,053 - - -
Beckley, West Virginia - - 209,432 - - -
Bedford, Ohio - - 174,721 - - -
Bluefield, West Virginia - - 120,449 - - -
Bolivar, Ohio - - 190,009 410,096 - -
Bowling Green, Ohio - - 200,442 - - -
Bowling Green, Ohio - - 135,831 191,595 - -
Carrollton, Ohio - - 187,082 533,487 - -
Cleveland, Ohio - - 226,163 - - -
Cleveland, Ohio - - 116,849 - - -
Cleveland, Ohio - - 126,494 - - -
Cooper City, Florida - (i) 267,703 128,483 - -
Cross Lanes, West Virginia - - 215,881 - - -
Defiance, Ohio - - 242,239 - - -
East Cleveland, Ohio - - 194,012 - - -
Euclid, Ohio - - 202,050 - - -
Huntington, West Virginia - - 212,093 - - -
Hurricane, West Virginia - - 180,803 - - -
Lambertville, Michigan - - 99,166 - - -
Marathon, Florida - (i) 161,249 234,940 - -
Marietta, Ohio - - 169,454 - - -
Mayfield Heights, Ohio - - 202,552 - - -
Middleburg Heights, Ohio - - 216,518 - - -
Millersburg, Ohio - - 213,090 635,104 - -
Milton, West Virginia - - 99,815 - - -
Monroe, Michigan - - 152,215 - - -
New Philadelphia, Ohio - - 223,981 442,758 - -
New Philadelphia, Ohio - - 149,206 - 388,321 -
North Olmsted, Ohio - - 259,922 - - -
Norwalk, Ohio - - 261,529 - - -
Rocky River, Ohio - - 142,570 - - -
Ronceverte, West Virginia - - 99,733 - - -
Sandusky, Ohio - - 259,922 - - -
Seven Hills, Ohio - - 239,023 - - -
Steubenville, Ohio - - 228,199 475,421 - -
Strongsville, Ohio - - 186,476 - - -
Toledo, Ohio - - 197,227 - - -
Toledo, Ohio - - 208,480 - - -
Toledo, Ohio - - 176,170 - - -
Toledo, Ohio - - 128,604 - - -
Uhrichsville, Ohio - - 279,779 562,521 - -
Weirton, West Virginia (j) - - 178,187 - -
Wellsburg, West Virginia - - 167,170 168,363 - -
Pollo Tropical Restaurants:
Coral Springs, Florida - (i) 852,746 1,108,491 - -
Davie, Florida - (i) 712,865 873,395 - -
Fort Lauderdale, Florida - (i) 397,878 923,975 - -
Lake Worth, Florida - (i) 435,465 915,232 - -
Miami, Florida - (i) 654,766 1,195,901 - -
Miami, Florida - (i) 911,013 1,011,766 - -
Miami, Florida - (i) 1,244,893 918,257 - -
North Miami, Florida - (i) 918,258 764,150 - -
Ponderosa Restuarants:
Appleton, Wisconsin - - 181,153 561,582 - -
Blue Springs, Missouri - (i) 691,797 - 1,136,902 -
Eureka, Missouri - - 379,675 604,449 - -
Indiana, Pennsylvania - - 714,789 - 1,317,317 -
Johnstown, Pennsylvania - (i) 599,391 - 1,159,989 -
Kissimmee, Florida - - 637,984 824,276 - -
Massena, New York - - 129,816 659,340 - -
Middletown, New York - - 214,177 853,505 - -
Oneonta, New York - - 366,941 524,341 - -
Popeye's Famous Fried Chicken Restaurant
Thomasville, Georgia - (i) 113,780 407,429 - -
Valdosta, Georgia - (i) 158,880 378,057 - -
Randy's Steak and Seafood Restaurant:
Murfreesboro, Tennessee - - 514,900 - 936,376 -
Red Robin Restaurant:
Columbus, Ohio - - 721,887 - - -
Rio Bravo Fresh Mexican Cantina Restaura
Morrow, Georgia (j) (i) 934,922 1,842,623 - -
Roadhouse Grill Restaurants:
Brandon, Florida - (i) 914,103 - 691,171 -
Centerville, Ohio (j) - 1,227,973 - 761,806 -
Clearwater, Florida - (i) 1,370,391 - 946,608 -
Columbus, Ohio (j) - 894,077 - 1,038,617 -
Fairfield, Ohio - (i) 1,151,865 - 910,321 -
Grove City, Ohio - - 649,962 - 978,307 -
Jacksonville, Florida - (i) 394,026 - 1,442,752 -
Jacksonville, Florida - - 1,313,730 - 887,733 -
Pensacola, Florida (j) (i) 927,463 - 691,228 -
Pineville, North Carolina - - 1,207,143 - 1,091,507 -
Rock Hill, South Carolina (j) - 608,698 - 903,887 -
Roswell, Georgia (j) - 908,635 - 1,084,536 -
Union Township, Ohio - - 703,734 - 1,053,632 -
Rubio's Baja Grill Restaurant:
Taylorsville, Utah - (i) 889,562 - 487,475 -
Ruby Tuesday's Restaurants:
Bartow, Florida - (i) 416,311 - 963,488 -
Champlin, Minnesota - (i) 505,639 - - -
Colorado Springs, Colorado - (i) 696,078 - 1,005,509 -
Coral Springs, Florida - (i) 715,220 - 1,012,777 -
Dillon, Colorado - (i) 556,515 - 1,132,988 -
Draper, Utah - (i) 518,832 - - -
Independence, Missouri - - 980,703 - - -
Kansas City, Missouri - - 633,404 - - -
Lakeland, Florida - (i) 574,441 742,781 - -
Lakewood, Washington - (i) 430,741 - - -
London, Kentucky - (i) 354,415 - - -
Orange City, Florida - (i) 719,563 - - -
Somerset, Kentucky - (i) 545,612 - 868,606 -
Vero Beach, Florida - (i) 536,564 - 1,267,552 -
Ruth's Chris Steak House Restaurants:
King of Prussia, Pennsylvania - (i) 965,223 549,565 - -
Tampa, Florida - (i) 1,076,442 1,062,751 - -
Ryan's Family Steak House Restaurant:
Spring Hill, Florida - (i) 591,371 - 1,175,273 -
Saint Louis Bread Company Restaurant:
Florissant, Missouri - (i) 705,522 - 626,845 -
Shoney's Restaurant
Cocoa Beach, Florida (j) - 1,200,000 - - -
Debary, Florida (j) - 900,000 - - -
Sonny's Real Pit Bar-B-Q Restaurants:
Athens, Georgia - (i) 628,688 962,524 - -
Conyers, Georgia - - 371,021 593,171 - -
Doraville, Georgia - (i) 585,461 812,822 - -
Marietta, Georgia - (i) 527,572 870,710 - -
Norcross, Georgia - (i) 734,105 961,287 - -
Smyrna, Georgia - (i) 634,379 643,323 - -
Thomasville, Georgia - (i) 263,022 - - -
Venice, Florida - - 498,746 - - -
Sprint PCS Retail Store:
Saint Joseph, Missouri (j) - 378,786 - 388,489 -
Steak & Ale Restaurants:
Altamonte Springs, Florida - (i) 1,006,396 690,731 - -
Birmingham, Alabama - - 715,432 - - -
College Park, Georgia - (i) 802,361 - - -
Conroe, Texas - (i) 590,733 - - -
Greenville, South Carolina - (i) 670,594 - - -
Houston, Texas - (i) 964,354 - - -
Houston, Texas - (i) 776,694 - - -
Huntsville, Alabama - (i) 641,125 - - -
Jacksonville, Florida - - 670,491 - - -
Maitland, Florida - (i) 684,164 - - -
Memphis, Tennessee - (i) 810,316 798,412 - -
Mesquite, Texas - (i) 592,342 - - -
Miami, Florida - (i) 594,142 - - -
Middletown, New Jersey - (i) 933,759 763,368 - -
Norcross, Georgia - (i) 740,132 - - -
Orlando, Florida - (i) 922,679 725,256 - -
Pensacola, Florida - (i) 354,419 - - -
Tulsa, Oklahoma - (i) 433,713 - - -
Super Smokers BBQ Restaurant:
Saint Peters, Missouri - - 376,905 692,124 - -
Taco Bell Restaurants:
Colonial Heights, Virginia - (i) 447,458 383,785 - -
Hayes, Virginia - (i) 299,870 - - -
Livingston, Tennessee - (i) 212,438 - - -
Richmond, Virginia - (i) 402,947 - - -
Richmond, Virginia - (i) 404,578 451,129 - -
Richmond, Virginia - (i) 474,588 478,974 - -
Saint Louis, Missouri - (i) 349,637 - - -
Saint Louis, Missouri - (i) 308,915 351,160 - -
Wentzville, Missouri - (i) 339,250 490,895 - -
Williamsburg, Virginia - (i) 343,906 - - -
Taco Bell/Pizza Hut Restaurants:
Arlington, Texas - - 276,949 - 550,355 -
Dallas, Texas - (i) 335,174 694,862 - -
Dallas, Texas - - 355,763 - 496,898 -
Texas Roadhouse Restaurants:
Ammon, Idaho - (i) 505,551 - 806,059 -
Arvada, Colorado - (i) 538,204 - 1,149,066 -
Aurora, Colorado - (i) 656,917 - 1,208,688 -
Cedar Rapids, Iowa - (i) 582,062 - 1,085,290 -
College Station, Texas - (i) 520,037 - 1,074,176 -
Concord, North Carolina - (i) 664,266 - 987,133 -
Dickson City, Pennsylvania - (i) 596,439 - 1,078,721 -
Gastonia, North Carolina - (i) 235,195 - 1,115,831 -
Hickory, North Carolina - (i) 560,423 - 1,032,294 -
Shively, Kentucky - (i) 713,534 995,529 - -
TGI Friday's Restaurants:
Goodyear, Arizona - (i) 967,242 - 1,726,827 -
Henderson, Nevada - (i) 1,385,425 - - -
Independence, Missouri - (i) 856,278 - - -
Leawood, Kansas - (i) 2,459,048 - - -
Mesa, Arizona - (i) 914,342 - - -
Shawnee, Kansas - (i) 884,743 - - -
Temecula, California - (i) 1,239,565 - - -
Union City, California - (i) 1,213,121 - - -
Tiffany's Restaurant:
Woodson Terrace, Missouri (j) - 744,126 - 1,221,749 -
Tin Alley Grill Restaurants:
Crystal, Minnesota - (i) 370,667 431,642 - -
Gloucester, New Jersey - (i) 422,489 528,849 - -
TropiGrill Restaurants:
Altamonte Springs, Florida - (i) 548,886 700,855 - -
Orlando, Florida - (i) 618,372 631,369 - -
Village Inn Restaurant:
Omaha, Nebraska - (i) 511,811 756,304 - -
Wendy's Old Fashioned Hamburgers Restaur
Atascadero, California - (i) 485,625 - 705,993 -
Camarillo, California - (i) 640,066 - 688,918 -
Knoxville, Tennessee - (i) 358,027 - 444,622 -
Knoxville, Tennessee - (i) 555,813 - 442,025 -
Paso Robles, California - (i) 489,097 - 735,631 -
Westlake Village, California - (i) 841,374 - 699,082 -
-----------------------------------------------
TOTAL: 298,631,152 171,511,335 168,893,741 -
===============================================
Property of Joint Venture in Which
the Company has a 59.22% Interest
and has Invested in Under
an Operating Lease:
Bennigan's Restaurant:
Orlando, Florida - - 708,297 - 1,008,108 -
===============================================
Properties the Company
has invested in Under
Direct Financing Leases:
Applebee's Restaurants:
Freeport, Illinois - (i) 197,631 1,008,908 - -
Rockford, Illinois - (i) - 1,096,139 - -
Tullahoma, Tennessee - (i) 324,362 1,009,364 - -
Arby's Restaurants:
Allen, Texas - (i) - - 609,272 -
Grand Rapids, Michigan - (i) - 938,296 - -
Huntsville, Alabama - - - - 595,801 -
Newark, Ohio - - - - 339,772 -
The Colony, Texas - (i) - - 593,454 -
Bennigan's Restaurants:
Bedford, Texas - (i) - 954,774 - -
Clearwater, Florida - (i) - 1,043,049 - -
Colorado Springs, Colorado - (i) - 902,872 - -
Englewood, Colorado - (i) - 1,131,082 - -
Florham Park, New Jersey - (i) - 1,092,401 - -
Houston, Texas - (i) - 985,394 - -
Jacksonville, Florida - (i) - 1,061,339 - -
Jacksonville, Florida - (i) - 819,356 - -
North Richland Hills, Texas - (i) - 983,252 - -
Oklahoma City, Oklahoma - - - 1,015,084 - -
Pensacola, Florida - (i) - 980,438 - -
Saint Louis Park, Minnesota - (i) - 1,280,033 - -
Tampa, Florida - - - 1,324,729 - -
Winston-Salem, North Carolina - (i) 247,828 992,551 - -
Woodridge, Illinois - (i) - 991,688 - -
Black-eyed Pea Restaurants:
Dallas, Texas - - - 685,977 - -
Fort Worth, Texas - - - 655,014 - -
Hendersonville, Tennessee - - - 735,005 - -
Hillsboro, Texas - - - - 716,364 -
Burger King Restaurants:
Clinton, North Carolina - - - - 696,507 -
Lacey, Washington - - - 840,711 - -
Olympia, Washington - - - 920,058 - -
Port Angeles, Washington - - - 696,026 - -
Chevys Fresh Mex Restaurant:
Annapolis, Maryland - - - - 1,540,332 -
Clay Pit
Addison, Texas - - - 568,390 - -
Darryl's Restaurants:
Richmond, Virginia - - - 775,617 - -
Akron, Ohio - (i) 137,424 938,202 - -
Duncan, South Carolina - (i) - 826,770 - -
Landrum, South Carolina - (i) - 492,869 - -
Mooresville, North Carolina - (i) - 736,649 - -
Topeka, Kansas - (i) - 700,166 - -
Winter Springs, Florida - (i) - - 886,915 -
Fresh Choice
Dallas, Texas - - - 381,971 - -
Hardee's Restaurants:
Johnson City, Tennessee - - - 618,318 - -
Mobile, Alabama - - - 540,173 - -
West Point, Mississippi - (i) - 569,388 - -
International House Of Pancakes Restaura
Alexandria, Virginia - (i) - 852,645 - -
Anderson, South Carolina - (i) - 957,414 - -
Blue Bell, Pennsylvania - (i) - 829,834 - -
Chesapeake, Virginia - (i) - 1,059,499 - -
Christiansburg, Virginia - (i) - 918,143 - -
Corpus Christi, Texas - (i) - 864,457 - -
Crestwood, Illinois - (i) - 935,262 - -
Flagstaff, Arizona - (i) 293,762 1,121,276 - -
Fredericksburg, Virginia - (i) - 972,595 - -
Hickory, North Carolina - (i) - 1,202,183 - -
Hollywood, California - (i) - 994,845 - -
Houston, Texas - (i) - 1,017,365 - -
Houston, Texas - (i) - 764,708 - -
Loveland, Colorado - (i) - 963,597 - -
Maryville, Tennessee - (i) 243,825 963,231 - -
Montgomery, Alabama - (i) - 843,378 - -
Pittsburg, California - (i) - 1,014,264 - -
Plano, Texas - (i) - 982,443 - -
Salem, New Hampshire - (i) - 779,153 - -
San Antonio, Texas - (i) - 1,081,335 - -
Tuscaloosa, Alabama - (i) - 930,720 - -
Victoria, Texas - (i) - 814,015 - -
Virginia Beach, Virginia - (i) - 1,013,830 - -
Warner Robins, Georgia - (i) - 833,493 - -
KFC Restaurants:
Baton Rouge, Louisiana - - 84,809 609,399 - -
Port Allen, Louisiana - (i) - 952,737 - -
Putnam, Connecticut - - - 530,846 - -
NI's International Buffet Restaurant:
Eastlake, Ohio - - 256,332 1,473,307 - -
Popeye's Famous Fried Chicken Restaurant
Starke, Florida - (i) 208,910 427,067 - -
Red Robin Restaurant:
Columbus, Ohio - - - - 1,397,822 -
Ruby Tuesday's Restaurants:
Champlin, Minnesota - (i) - - 1,151,835 -
Draper, Utah - (i) - - 1,036,077 -
Independence, Missouri - - - - 554,092 -
Kansas City, Missouri - - - - 1,115,425 -
Lakewood, Washington - (i) - - 1,127,476 -
London, Kentucky - (i) - - 845,249 -
Louisville, Kentucky - (i) - - 1,051,574 -
Orange City, Florida - (i) - - 1,047,180 -
Puyallup, Washington - - - - 934,118 -
Saint George, Utah - - - - 895,583 -
Sebring, Florida - (i) 230,901 - 775,843 -
Sonny's Real Pit Bar-B-Q Restaurants:
Thomasville, Georgia - (i) - - 988,618 -
Venice, Florida - - - 1,004,407 - -
Steak & Ale Restaurants:
Birmingham, Alabama - - - 681,623 - -
College Park, Georgia - (i) - 909,525 - -
Conroe, Texas - (i) - 1,032,606 - -
Greenville, South Carolina - (i) - 1,180,342 - -
Houston, Texas - (i) - 978,733 - -
Houston, Texas - (i) - 1,092,606 - -
Huntsville, Alabama - (i) - 810,041 - -
Jacksonville, Florida - - - 879,060 - -
Maitland, Florida - (i) - 791,599 - -
Mesquite, Texas - (i) - 908,017 - -
Miami, Florida - (i) - 1,176,774 - -
Norcross, Georgia - (i) - 966,814 - -
Pensacola, Florida - (i) - 826,191 - -
Tulsa, Oklahoma - (i) - 1,067,543 - -
Taco Bell Restaurants:
Hayes, Virginia - (i) - 443,302 - -
Livingston, Tennessee - (i) - - 436,198 -
Richmond, Virginia - (i) - 575,079 - -
Saint Louis, Missouri - (i) - 471,686 - -
Williamsburg, Virginia - (i) - 438,410 - -
Texas Roadhouse Restaurant:
Fayetteville, North Carolina - - - 944,114 - -
TGI Friday's Restaurants:
Henderson, Nevada - (i) - - 1,973,551 -
Independence, Missouri - (i) - - 1,664,913 -
Leawood, Kansas - (i) - - 1,430,005 -
Mesa, Arizona - (i) - - 1,440,217 -
Shawnee, Kansas - (i) - - 1,748,685 -
Temecula, California - (i) - - 1,476,765 -
Union City, California - (i) - - 1,984,765 -
TGI Friday's/Redfish Looziana Roadhouse
San Diego, California - (i) 2,399,895 - 3,646,084 -
Wendy's Old Fashioned Hamburgers Restaur
Carmel Mountain, California - (i) - 594,856 - -
Knoxville, Tennessee - (i) - - 463,995 -
San Diego, California - (i) - - 590,058 -
Santa Maria, California - (i) - - 699,815 -
Sevierville, Tennessee - (i) - - 531,726 -
Seymour, Tennessee - (i) - - 472,670 -
-----------------------------------------------
TOTAL: 4,625,679 75,768,422 37,458,757 -
===============================================
-----------------------------------------------
Total 303,965,128 247,279,757 207,360,606 -
===============================================
Gross Amount at Which Life on Which
Carried at Close of Period Depreciation in
--------------------------------- Date Latest Income
Building and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---- ------------ ----- ------------ --------- -------- --------
609,696 770,331 1,380,027 111,804 1991 8/98 (c)
556,070 983,010 1,539,080 142,671 1995 8/98 (c)
625,868 936,068 1,561,936 135,858 1996 8/98 (c)
489,867 1,003,630 1,493,497 145,664 1993 8/98 (c)
549,651 966,628 1,516,279 140,294 1994 8/98 (c)
735,272 827,474 1,562,746 120,097 1992 8/98 (c)
390,058 943,019 1,333,077 136,867 1997 8/98 (c)
568,168 925,046 1,493,214 134,258 1998 8/98 (c)
740,165 835,996 1,576,161 121,334 1995 8/98 (c)
874,094 880,494 1,754,588 123,157 1997 12/96 (c)
537,410 1,193,850 1,731,260 18553 1999 8/99 (c)
603,828 (e) 603,828 (f) 1996 1/99 (f)
778,321 1,153,535 1,931,856 123,827 1999 10/99 (c)
508,994 (e) 508,994 (f) 1999 12/99 (f)
230,720 455,946 686,666 68,500 1988 5/98 (c)
648,459 655,353 1,303,812 69,314 1998 8/98 (c)
326,788 391,270 718,058 51,481 1995 1/99 (c)
338,486 497,282 835,768 104,913 1996 9/96 (c)
226,428 414,175 640,603 33,364 1995 1/99 (c)
266,606 421,780 688,386 33,977 1994 1/99 (c)
248,277 368,959 617,235 29,722 1984 1/99 (c)
586,476 606,850 1,193,326 81,855 1998 12/98 (c)
441,770 594,458 1,036,228 62,873 1998 7/98 (c)
483,868 576,483 1,060,351 77,658 1999 12/98 (c)
708,710 546,363 1,255,074 53,426 1999 12/99 (c)
434,130 618,352 1,052,482 60,100 2000 1/00 (c)
312,670 (e) 312,670 (f) 1995 8/95 (f)
363,478 404,650 768,128 73,008 1990 8/97 (c)
277,986 490,143 768,128 88,433 1995 8/97 (c)
270,539 488,818 759,357 39,377 1993 1/99 (c)
439,935 677,335 1,117,269 71,515 2000 12/99 (c)
228,364 539,764 768,128 97,385 1995 8/97 (c)
273,325 413,077 686,402 74,528 1994 8/97 (c)
268,545 485,160 753,705 87,534 1995 8/97 (c)
235,996 452,008 688,004 36,412 1990 1/99 (c)
320,924 463,347 784,271 84,883 1992 7/97 (c)
421,481 633,406 1,054,887 70,966 1999 7/99 (c)
242,777 398,029 640,806 32,064 1992 1/99 (c)
463,047 592,539 1,055,586 64,330 1998 5/98 (c)
196,251 443,976 640,226 36,998 1991 1/99 (c)
412,516 673,289 1,085,805 86,288 1998 1/99 (c)
322,412 371,694 694,106 48,906 1992 1/99 (c)
504,327 (e) 504,327 (f) 1999 12/99 (f)
733,180 665,895 1,399,075 84,149 1999 3/99 (c)
498,403 701,467 1,199,871 75,992 1999 9/99 (c)
522,786 289,350 812,136 39,400 1998 12/98 (c)
449,010 728,259 1,177,269 75,126 1978 10/99 (c)
679,830 1,041,258 1,721,088 107,414 1987 10/99 (c)
419,238 848,874 1,268,112 87,568 1979 10/99 (c)
543,966 1,131,838 1,675,804 116,758 1991 10/99 (c)
573,069 468,307 1,041,376 48,310 1980 10/99 (c)
537,805 778,410 1,316,215 62,705 1978 10/99 (c)
601,418 760,181 1,361,599 61,237 1978 10/99 (c)
591,206 770,392 1,361,599 62,059 1977 10/99 (c)
647,562 869,687 1,517,248 89,715 1977 10/99 (c)
488,663 1,141,844 1,630,506 117,791 1992 10/99 (c)
664,403 852,845 1,517,248 87,978 1970 10/99 (c)
567,083 1,176,715 1,743,798 121,388 1978 10/99 (c)
686,927 674,672 1,361,599 54,349 1999 10/99 (c)
375,257 734,314 1,109,571 75,751 1977 10/99 (c)
614,512 630,952 1,245,464 65,088 1977 10/99 (c)
518,276 591,047 1,109,323 60,971 1980 10/99 (c)
586,045 718,306 1,304,351 74,099 1977 10/99 (c)
373,239 873,481 1,246,720 93,055 1999 6/99 (c)
346,699 829,363 1,176,062 100,215 1987 3/99 (c)
501,566 920,312 1,421,878 56,661 1985 1/99 (c)
273,460 903,170 1,176,630 92,947 1999 8/99 (c)
624,303 1,027,724 1,652,027 126,389 1986 3/99 (c)
714,194 1,302,733 2,016,927 249,516 1997 4/97 (c)
768,333 (e) 768,333 (f) 1986 6/98 (f)
1,433,543 835,463 2,269,006 69,622 2000 5/00 (c)
900,038 (e) 900,038 (f) 1979 6/98 (f)
794,255 (e) 794,255 (f) 1979 6/98 (f)
1,433,543 835,463 2,269,006 69,622 2000 5/00 (c)
665,141 (e) 665,141 (f) 1984 6/98 (f)
1,460,179 901,042 2,361,220 136,452 1982 6/98 (c)
1,077,645 (e) 1,077,645 (f) 1983 6/98 (f)
1,019,248 1,789,742 2,808,991 129,259 2000 11/00 (c)
1,038,598 1,523,346 2,561,944 156,284 1999 11/99 (c)
908,502 (e) 908,502 (f) 1979 6/98 (f)
832,557 (e) 832,557 (f) 1981 6/98 (f)
779,387 (e) 779,387 (f) 1983 6/98 (f)
1,075,230 1,502,305 2,577,535 129,347 1999 6/00 (c)
1,305,939 1,030,685 2,336,624 156,085 1982 6/98 (c)
886,048 (e) 886,048 (f) 1979 6/98 (f)
693,453 1,072,916 1,766,369 116,233 1998 12/98 (c)
756,750 (e) 756,750 (f) 1986 6/98 (f)
1,585,461 874,143 2,459,604 132,379 1978 6/98 (c)
692,093 (e) 692,093 (f) 1983 6/98 (f)
885,111 (e) 885,111 (f) 1976 6/98 (f)
741,286 (e) 741,286 (f) 1980 6/98 (f)
789,680 (e) 789,680 (f) 1987 12/98 (f)
1,023,054 1,275,135 2,298,188 138,140 1999 9/99 (c)
799,092 1,233,091 2,032,183 132,282 1999 10/99 (c)
679,384 1,028,766 1,708,150 108,281 1999 11/99 (c)
744,764 1,082,896 1,827,660 133,341 1998 4/99 (c)
411,977 1,804,357 2,216,334 140,870 1999 9/99 (c)
404,881 (e) 404,881 (f) 1996 10/97 (f)
774,448 507,587 1,282,034 97,283 1997 4/97 (c)
532,814 801,222 1,334,035 11,269 1995 9/02 (c)
440,026 475,931 915,957 6,827 1995 9/02 (c)
353,608 606,470 960,078 98,461 1997 5/98 (c)
667,992 661,776 1,329,768 119,482 1997 8/97 (c)
566,562 403,730 970,292 66,874 1997 4/98 (c)
885,567 648,755 1,534,322 115,329 1997 9/97 (c)
570,003 900,291 1,470,294 12,608 1995 9/02 (c)
515,827 572,706 1,088,532 100,218 1997 10/97 (c)
473,596 586,377 1,059,974 107,497 1997 7/97 (c)
526,092 504,483 1,030,575 88,280 1997 10/97 (c)
521,918 410,245 932,163 5,884 1996 9/02 (c)
651,867 775,634 1,427,501 142,193 1997 7/97 (c)
234,685 589,367 824,052 97,476 1994 4/98 (c)
543,095 552,491 1,095,586 56,852 1996 8/96 (c)
217,079 858,549 1,075,628 97,975 1999 4/99 (c)
680,192 526,711 1,206,903 54,200 1997 5/97 (c)
769,842 376,964 1,146,806 38,790 1997 5/97 (c)
917,717 713,170 1,630,887 73,387 1996 2/97 (c)
349,582 (e) 349,582 (f) 1999 2/00 (f)
323,106 1,219,165 1,542,270 154,177 1991 3/99 (c)
650,112 600,335 1,250,447 137,879 1996 8/96 (c)
233,468 689,696 923,164 135,931 1970 12/96 (c)
308,272 (e) 308,272 (f) 1993 1/99 (f)
360,438 1,062,531 1,422,969 134,369 1988 3/99 (c)
448,745 626,866 1,075,610 80,223 1988 1/99 (c)
775,925 458,838 1,234,763 58,025 1971 3/99 (c)
273,353 718,493 991,846 90,862 1973 3/99 (c)
1,211,346 741,406 1,952,753 76,292 1996 9/96 (c)
546,261 658,946 1,205,207 67,807 1997 7/97 (c)
625,123 958,670 1,583,793 121,234 1974 3/99 (c)
500,000 - 500,000 (d) 2001 10/01 (d)
424,416 822,399 1,246,814 105,247 1995 1/99 (c)
416,548 762,244 1,178,792 48,502 1998 2/01 (c)
375,952 820,967 1,196,919 103,820 1987 3/99 (c)
348,663 701,825 1,050,488 81,202 1999 4/99 (c)
1,259,828 1,623,073 2,882,901 201,217 1999 4/99 (c)
1,372,280 (e) 1,372,280 (f) 1999 12/99 (f)
986,426 1,680,312 2,666,738 284,706 1994 12/97 (c)
1,463,644 1,874,198 3,337,842 232,349 1999 4/99 (c)
1,122,087 2,017,496 3,139,583 250,114 1999 4/99 (c)
938,162 1,681,670 2,619,832 284,718 1995 12/97 (c)
869,178 1,309,759 2,178,937 162,374 1999 4/99 (c)
844,185 1,425,740 2,269,926 176,753 1999 4/99 (c)
984,259 1,103,690 2,087,949 136,827 1999 4/99 (c)
945,234 1,475,339 2,420,573 249,785 1994 12/97 (c)
1,239,264 1,490,392 2,729,656 184,768 1999 4/99 (c)
1,725,325 1,574,207 3,299,532 195,159 1999 4/99 (c)
570,815 1,536,290 2,107,105 190,458 1999 4/99 (c)
88,077 2,019,028 2,107,105 250,304 1999 4/99 (c)
963,047 1,505,671 2,468,718 254,920 1995 12/97 (c)
1,156,847 1,188,272 2,345,119 155,461 1997 12/98 (c)
1,032,271 1,074,834 2,107,105 133,250 1999 4/99 (c)
960,779 1,365,563 2,326,342 212,410 1990 5/98 (c)
956,799 2,692,320 3,649,119 333,774 1999 4/99 (c)
470,047 1,541,280 2,011,327 191,076 1999 4/99 (c)
1,495,716 1,674,517 3,170,232 207,594 1999 4/99 (c)
869,408 1,548,972 2,418,380 192,030 1999 4/99 (c)
878,358 1,449,034 2,327,392 179,641 1999 4/99 (c)
844,918 1,712,340 2,557,257 212,283 1999 4/99 (c)
528,118 340,297 868,415 73,131 1996 10/96 (c)
788,248 209,449 997,697 45,379 1996 7/96 (c)
- 595,741 595,741 41,430 1989 3/99 (c)
495,195 937,060 1,432,255 18,833 1983 6/97 (c)
346,380 869,587 1,215,967 34,266 1984 6/97 (c)
1,485,631 772,853 2,258,484 144,815 1983 6/97 (c)
389,394 676,711 1,066,105 26,683 1983 6/97 (c)
1,131,164 719,865 1,851,029 127,970 1972 6/97 (c)
840,525 465,154 1,305,679 48,821 1980 6/97 (c)
311,196 606,403 917,599 23,911 1982 6/97 (c)
618,125 (e) 618,125 (f) 1982 6/97 (f)
436,867 757,874 1,194,740 29,883 1978 6/97 (c)
642,483 581,759 1,224,242 61,693 1999 10/99 (c)
219,702 (e) 219,702 (f) 1992 3/99 (f)
361,025 572,098 933,123 72,348 1992 3/99 (c)
457,851 454,566 912,417 57,485 1985 3/99 (c)
392,818 664,851 1,057,669 84,078 1985 3/99 (c)
400,847 901,367 1,302,214 95,010 1997 6/99 (c)
155,398 (e) 155,398 (f) 1992 3/99 (f)
539,650 670,448 1,210,098 76,890 1979 5/99 (c)
644,889 991,991 1,636,880 119,643 1981 5/99 (c)
307,292 (e) 307,292 (f) 1992 3/99 (f)
450,010 760,630 1,210,640 91,552 1979 5/99 (c)
466,555 506,094 972,649 123,707 1981 9/95 (c)
318,979 1,013,110 1,332,089 122,822 1999 5/99 (c)
528,090 625,653 1,153,743 152,932 1987 9/95 (c)
397,302 665,948 1,063,250 15,368 1997 8/97 (c)
414,731 (e) 414,731 (f) 1989 3/99 (f)
555,232 (e) 555,232 (f) 1994 3/99 (f)
464,957 178,078 643,035 32,646 1997 7/97 (c)
633,691 - 633,691 (d) 1997 7/97 (d)
485,013 586,758 1,071,771 21,620 1999 2/99 (c)
440,812 1,039,283 1,480,095 128,843 1999 4/99 (c)
456,629 1,170,630 1,627,259 166,801 1998 9/98 (c)
384,221 643,854 1,028,074 157,381 1995 9/95 (c)
359,455 653,853 1,013,308 158,008 1995 10/95 (c)
426,349 805,517 1,231,866 119,853 1997 7/98 (c)
848,133 1,008,678 1,856,811 134,271 1999 1/99 (c)
1,031,098 1,092,939 2,124,037 261,081 1995 11/95 (c)
806,377 1,086,502 1,892,879 124,779 1999 7/99 (c)
576,548 934,918 1,511,466 166,200 1997 9/97 (c)
349,227 699,756 1,048,983 172,989 1995 8/95 (c)
546,078 993,149 1,539,227 146,205 1998 8/98 (c)
601,296 1,344,016 1,945,312 166,253 1998 4/99 (c)
1,043,108 977,508 2,020,616 230,792 1995 12/95 (c)
564,242 1,056,315 1,620,557 155,504 1998 8/98 (c)
161,390 1,028,945 1,190,335 174,341 1997 11/97 (c)
569,664 1,017,781 1,587,445 152,658 1998 7/98 (c)
364,536 865,147 1,229,683 148,990 1997 11/97 (c)
601,394 1,194,533 1,795,926 126,224 1999 7/99 (c)
587,601 1,393,436 1,981,038 147,370 1999 12/99 (c)
595,717 1,094,345 1,690,062 109,733 1999 12/99 (c)
320,880 1,155,880 1,476,760 152,149 1999 1/99 (c)
590,538 1,176,436 1,766,974 196,062 1997 1/98 (c)
743,544 1,276,290 2,019,835 132,587 1999 12/99 (c)
377,108 1,116,904 1,494,012 134,948 1999 4/99 (c)
615,554 1,184,073 1,799,628 210,492 1997 9/97 (c)
541,264 1,173,738 1,715,002 208,655 1997 9/97 (c)
684,351 1,258,835 1,943,186 131,507 1999 12/99 (c)
409,153 943,712 1,352,865 165,141 1997 10/97 (c)
479,197 954,051 1,433,248 193,452 1997 1/97 (c)
374,230 838,342 1,212,572 158,346 1997 5/97 (c)
428,841 1,031,457 1,460,298 174,766 1997 12/97 (c)
395,839 887,540 1,283,379 140,519 1997 4/98 (c)
570,004 1,271,666 1,841,669 166,301 1998 12/98 (c)
67,157 - 67,157 (d) 2001 5/00 (d)
322,433 987,385 1,309,818 168,558 1997 12/97 (c)
657,606 1,347,285 2,004,890 177,378 1999 3/99 (c)
626,999 1,130,692 1,757,691 240,121 1996 9/96 (c)
718,003 1,202,177 1,920,181 129,827 1999 10/99 (c)
825,650 1,161,192 1,986,842 266,995 1995 2/96 (c)
665,172 1,080,114 1,745,285 91,272 2000 7/00 (c)
705,094 1,305,383 2,010,477 141,794 1999 9/99 (c)
303,633 970,489 1,274,123 180,611 1997 6/97 (c)
405,631 884,954 1,290,585 154,745 1983 10/97 (c)
282,099 534,632 816,731 93,487 1981 10/97 (c)
693,733 810,458 1,504,190 141,719 1982 10/97 (c)
371,254 685,847 1,057,101 118,024 1979 11/97 (c)
451,235 548,178 999,412 95,856 1982 10/97 (c)
287,331 712,081 999,412 124,516 1980 10/97 (c)
388,699 793,475 1,182,173 138,749 1977 10/97 (c)
728,574 793,410 1,521,984 138,738 1982 10/97 (c)
436,471 659,089 1,095,560 115,250 1982 10/97 (c)
627,680 804,399 1,432,079 140,659 1977 10/97 (c)
493,536 619,786 1,113,322 110,179 1997 9/97 (c)
215,567 (e) 215,567 (f) 1993 3/99 (f)
336,696 (e) 336,696 (f) 1993 3/99 (f)
324,298 420,017 744,315 53,116 1993 3/99 (c)
256,050 476,149 732,198 60,214 1993 3/99 (c)
173,386 (e) 173,38 (f) 1993 3/99 (f)
846,183 595,601 1,441,783 110,843 1972 6/97 (c)
817,039 648,765 1,465,804 115,331 1976 6/97 (c)
1,181,460 908,880 2,090,340 169,145 1974 6/97 (c)
632,811 1,135,312 1,768,123 135,831 1997 4/99 (c)
540,896 1,196,239 1,737,135 123,293 1999 10/99 (c)
375,987 964,430 1,340,417 129,824 1997 12/98 (c)
567,462 (e) 567,462 (f) 1997 8/99 (f)
501,388 746,474 1,247,862 111,757 1997 9/98 (c)
565,639 923,669 1,489,308 113,666 1998 4/99 (c)
416,279 867,972 1,284,251 117,077 1998 12/98 (c)
476,847 961,606 1,438,453 125,806 1998 12/98 (c)
1,407,002 (e) 1,407,002 (f) 1996 6/97 (f)
545,112 1,029,900 1,575,012 138,637 1996 12/98 (c)
645,365 790,258 1,435,624 83,582 1996 7/97 (c)
512,481 831,202 1,343,683 118,285 1998 9/98 (c)
380,687 775,713 1,156,399 110,389 1997 9/98 (c)
460,167 744,128 1,204,295 78,703 1997 8/97 (c)
665,015 580,798 1,245,813 109,626 1994 5/97 (c)
593,624 918,024 1,511,648 120,189 1997 12/98 (c)
488,259 (e) 488,259 (f) 1997 8/97 (f)
647,414 871,268 1,518,683 116,885 1998 12/98 (c)
668,112 941,796 1,609,907 115,897 1998 4/99 (c)
382,950 957,912 1,340,862 125,323 1997 12/98 (c)
504,533 806,624 1,311,157 119,649 1996 7/98 (c)
387,562 891,943 1,279,505 120,148 1997 12/98 (c)
282,868 843,648 1,126,517 113,180 1997 12/98 (c)
579,175 1,176,434 1,755,609 153,912 1997 12/98 (c)
765,743 652,671 1,418,413 69,030 1997 7/97 (c)
319,237 (e) 319,237 (f) 1997 8/97 (f)
944,585 689,363 1,633,948 128,292 1971 6/97 (c)
711,642 726,339 1,437,981 92,384 1999 3/99 (c)
605,063 623,222 1,228,286 65,915 1998 8/98 (c)
419,488 697,861 1,117,349 125,910 1997 8/97 (c)
457,821 708,581 1,166,402 73,290 1999 10/99 (c)
481,456 636,588 1,118,043 88,648 1998 9/98 (c)
604,724 600,686 1,205,411 73,582 1999 4/99 (c)
361,238 711,595 1,072,833 126,500 1997 9/97 (c)
396,864 576,370 973,234 60,542 1997 9/97 (c)
369,886 467,819 837,706 49,479 1997 3/97 (c)
124,468 773,506 897,973 141,703 1997 7/97 (c)
389,265 779,211 1,168,476 127,597 1997 2/98 (c)
635,343 652,472 1,287,815 67,100 1997 9/97 (c)
482,309 716,199 1,198,508 77,953 1999 8/99 (c)
286,850 606,547 893,397 109,432 1997 8/97 (c)
499,875 866,353 1,366,228 89,078 1999 12/99 (c)
404,270 831,716 1,235,986 81,681 1999 12/99 (c)
284,046 549,495 833,541 58,118 1998 5/98 (c)
699,776 864,724 1,564,500 90,967 1999 9/99 (c)
537,223 592,536 1,129,759 113,490 1997 4/97 (c)
545,485 527,020 1,072,504 120,039 1996 3/96 (c)
375,776 643,445 1,019,221 135,750 1996 9/96 (c)
403,002 610,815 1,013,817 128,945 1996 9/96 (c)
370,342 548,107 918,449 103,456 1997 5/97 (c)
420,521 543,338 963,859 101,049 1997 6/97 (c)
437,667 591,877 1,029,544 124,947 1996 9/96 (c)
272,937 653,792 926,729 69,149 1998 4/98 (c)
899,898 733,701 1,633,599 91,227 1999 4/99 (c)
737,038 553,688 1,290,725 58,561 1997 4/97 (c)
730,674 547,445 1,278,120 57,901 1997 4/97 (c)
740,616 678,189 1,418,805 114,822 1997 9/97 (c)
911,754 531,018 1,442,772 54,610 1997 5/97 (c)
853,821 602,301 1,456,122 61,941 1998 5/98 (c)
418,351 651,064 1,069,415 90,663 1998 9/98 (c)
363,967 776,605 1,140,572 99,984 1999 2/99 (c)
217,851 751,664 969,515 143,968 1992 4/97 (c)
383,591 643,055 1,026,645 67,683 1998 5/98 (c)
771,241 793,229 1,564,471 99,063 1999 4/99 (c)
387,533 787,843 1,175,376 97,959 1999 4/99 (c)
681,663 642,924 1,324,587 117,783 1997 7/97 (c)
631,275 567,912 1,199,187 107,194 1997 5/97 (c)
496,689 721,614 1,218,303 89,526 1999 4/99 (c)
717,246 657,685 1,374,931 69,560 1998 6/98 (c)
474,296 727,491 1,201,787 74,815 1998 9/98 (c)
501,168 699,067 1,200,235 73,790 1999 6/99 (c)
274,362 781,797 1,056,159 99,438 1999 3/99 (c)
311,466 700,979 1,012,445 86,966 1999 4/99 (c)
475,748 719,239 1,194,987 75,985 1999 9/99 (c)
495,529 759,800 1,255,329 93,709 1999 4/99 (c)
353,396 904,688 1,258,084 121,678 1999 12/98 (c)
289,257 699,525 988,782 85,317 1999 5/99 (c)
477,580 538,255 1,015,835 56,929 1998 4/98 (c)
464,986 785,149 1,250,136 96,465 1999 3/99 (c)
523,089 617,131 1,140,221 109,627 1997 9/97 (c)
358,130 668,383 1,026,513 116,878 1997 10/97 (c)
745,752 1,551,697 2,297,449 146,549 1999 1/00 (c)
370,963 1,406,532 1,777,495 135,770 1999 2/00 (c)
1,089,268 931,637 2,020,905 115,497 1999 4/99 (c)
251,187 737,672 988,859 87,348 1982 6/99 (c)
181,290 463,414 644,705 18,996 2000 8/00 (c)
158,829 491,957 650,785 47,669 1991 5/99 (c)
310,574 532,557 843,132 51,240 1992 5/99 (c)
205,795 564,058 769,853 54,666 1995 5/99 (c)
315,037 541,553 856,591 52,113 1991 5/99 (c)
301,723 (e) 301,723 (f) 1997 7/97 (f)
340,115 687,423 1,027,537 72,561 2000 12/99 (c)
445,493 594,649 1,040,141 72,734 1994 3/99 (c)
190,146 614,193 804,339 52,889 2000 5/00 (c)
311,103 506,943 818,045 53,511 2000 12/99 (c)
255,500 561,315 816,815 54,572 1999 12/99 (c)
376,929 639,875 1,016,804 152,773 1995 11/95 (c)
665,422 481,311 1,146,733 101,544 1996 9/96 (c)
6,288,001 - 6,288,001 (f) 2001 9/98 (f)
360,878 - 360,878 (f) 2001 9/98 (f)
615,498 - 615,498 - 1986 9/02 (c)
242,239 - 242,239 (d) 1989 1/96 (d)
212,053 - 212,053 (d) 1986 5/96 (d)
209,432 - 209,432 (d) 1978 5/96 (d)
174,721 - 174,721 (d) 1975 1/96 (d)
120,449 - 120,449 (d) 1986 5/96 (d)
190,009 410,096 600,105 40,390 1996 3/97 (c)
200,442 - 200,442 (d) 1985 1/96 (d)
135,831 191,595 327,426 18,871 1992 2/97 (c)
187,082 533,487 720,569 52,543 1990 3/97 (c)
226,163 - 226,163 (d) 1987 1/96 (d)
116,849 - 116,849 (d) 1978 1/96 (d)
126,494 - 126,494 (d) 1986 1/96 (d)
267,703 128,483 396,187 9,636 1998 10/00 (c)
215,881 - 215,881 (d) 1990 5/96 (d)
242,239 - 242,239 (d) 1977 1/96 (d)
194,012 - 194,012 (d) 1986 1/96 (d)
202,050 - 202,050 (d) 1983 1/96 (d)
212,093 - 212,093 (d) 1978 5/96 (d)
180,803 - 180,803 (d) 1978 5/96 (d)
99,166 - 99,166 (d) 1994 1/96 (d)
161,249 234,940 396,188 17,620 1980 10/00 (c)
169,454 - 169,454 (d) 1986 5/96 (d)
202,552 - 202,552 (d) 1980 4/96 (d)
216,518 - 216,518 (d) 1975 1/96 (d)
213,090 635,104 848,194 62,552 1989 3/97 (c)
99,815 - 99,815 (d) 1986 5/96 (d)
152,215 - 152,215 (d) 1994 1/96 (d)
223,981 442,758 666,739 43,607 1983 3/97 (c)
149,206 388,321 537,527 38,246 1975 3/97 (c)
259,922 - 259,922 (d) 1976 1/96 (d)
261,529 - 261,529 (d) 1993 1/96 (d)
142,570 - 142,570 (d) 1977 1/96 (d)
99,733 - 99,733 (d) 1991 5/96 (d)
259,922 - 259,922 (d) 1978 1/96 (d)
239,023 - 239,023 (d) 1983 1/96 (d)
228,199 475,421 703,620 46,824 1983 3/97 (c)
186,476 - 186,476 (d) 1976 4/96 (d)
197,227 - 197,227 (d) 1978 1/96 (d)
208,480 - 208,480 (d) 1975 1/96 (d)
176,170 - 176,170 (d) 1985 1/96 (d)
128,604 - 128,604 (d) 1988 4/96 (d)
279,779 562,521 842,300 55,403 1983 3/97 (c)
- 178,187 178,187 34,873 1979 3/97 (c)
167,170 168,363 335,533 32,950 1980 3/97 (c)
852,746 1,108,491 1,961,237 154,058 1994 9/98 (c)
712,865 873,395 1,586,260 121,385 1993 9/98 (c)
397,878 923,975 1,321,852 128,414 1996 9/98 (c)
435,465 915,232 1,350,697 127,199 1994 9/98 (c)
654,766 1,195,901 1,850,667 170,402 1994 9/98 (c)
911,013 1,011,766 1,922,779 144,165 1993 9/98 (c)
1,244,893 918,257 2,163,149 123,189 1994 12/98 (c)
918,258 764,150 1,682,408 108,883 1995 9/98 (c)
181,153 561,582 742,735 60,159 1980 10/99 (c)
691,797 1,136,902 1,828,699 169,263 1997 4/98 (c)
379,675 604,449 984,124 64,750 1999 10/99 (c)
714,789 1,317,317 2,032,106 117,095 2000 5/00 (c)
599,391 1,159,989 1,759,380 158,797 1998 11/98 (c)
637,984 824,276 1,462,260 88,299 1980 10/99 (c)
129,816 659,340 789,156 70,631 1988 10/99 (c)
214,177 853,505 1,067,682 91,430 1979 10/99 (c)
366,941 524,341 891,282 56,169 1999 10/99 (c)
113,780 407,429 521,209 56,625 1998 9/98 (c)
158,880 378,057 536,937 54,111 1998 9/98 (c)
514,900 936,376 1,451,276 70,419 1995 8/97 (c)
721,887 (e) 721,887 (f) 1999 1/00 (f)
934,922 1,842,623 2,777,545 228,435 1999 4/99 (c)
914,103 691,171 1,605,274 86,875 1999 2/99 (c)
1,227,973 761,806 1,989,779 63,484 2000 3/00 (c)
1,370,391 946,608 2,317,000 113,953 1999 4/99 (c)
894,077 1,038,617 1,932,694 78,602 1999 11/99 (c)
1,151,865 910,321 2,062,187 98,265 1999 10/99 (c)
649,962 978,307 1,628,269 104,978 1999 10/99 (c)
394,026 1,442,752 1,836,779 195,397 1998 12/98 (c)
1,313,730 887,733 2,201,463 86,292 1999 2/00 (c)
927,463 691,228 1,618,691 63,778 1978 2/99 (c)
1,207,143 1,091,507 2,298,651 107,973 1999 1/00 (c)
608,698 903,887 1,512,584 75,324 1998 7/00 (c)
908,635 1,084,536 1,993,171 78,328 2000 11/00 (c)
703,734 1,053,632 1,757,366 70,242 2000 4/00 (c)
889,562 487,475 1,377,037 90,720 1997 6/97 (c)
416,311 963,488 1,379,799 101,540 1999 11/99 (c)
505,639 (e) 505,639 (f) 1999 3/00 (f)
696,078 1,005,509 1,701,587 112,285 1999 7/99 (c)
715,220 1,012,777 1,727,997 117,579 1999 7/99 (c)
556,515 1,132,988 1,689,503 118,775 1999 11/99 (c)
518,832 (e) 518,832 (f) 1999 5/99 (f)
980,703 (e) 980,703 (f) 1999 3/99 (f)
633,404 (e) 633,404 (f) 1999 2/00 (f)
574,441 742,781 1,317,222 102,022 1998 11/98 (c)
430,741 (e) 430,741 (f) 1999 1/00 (f)
354,415 (e) 354,415 (f) 1997 11/97 (f)
719,563 (e) 719,563 (f) 1999 4/99 (f)
545,612 868,606 1,414,218 130,175 1998 7/98 (c)
536,564 1,267,552 1,804,116 119,713 1999 1/00 (c)
965,223 549,565 1,514,788 102,276 1977 6/97 (c)
1,076,442 1,062,751 2,139,194 199,136 1996 6/97 (c)
591,371 1,175,273 1,766,643 236,542 1996 1/97 (c)
705,522 626,845 1,332,367 127,105 1996 12/96 (c)
1,200,000 - 1,200,000 - 1992 2/02 (c)
900,000 - 900,000 - 1991 2/02 (c)
628,688 962,524 1,591,211 146,928 1981 6/98 (c)
371,021 593,171 964,191 90,547 1994 6/98 (c)
585,461 812,822 1,398,282 124,076 1990 6/98 (c)
527,572 870,710 1,398,282 132,913 1988 6/98 (c)
734,105 961,287 1,695,392 146,739 1986 6/98 (c)
634,379 643,323 1,277,701 98,202 1981 6/98 (c)
263,022 (e) 263,022 (f) 1999 12/99 (f)
498,746 (e) 498,746 (f) 1978 7/99 (f)
378,786 388,489 767,275 78,774 1996 9/96 (c)
1,006,396 690,731 1,697,127 104,603 1979 6/98 (c)
715,432 (e) 715,432 (f) 1993 6/98 (f)
802,361 (e) 802,361 (f) 1973 6/98 (f)
590,733 (e) 590,733 (f) 1993 6/98 (f)
670,594 (e) 670,594 (f) 1976 6/98 (f)
964,354 (e) 964,354 (f) 1973 6/98 (f)
776,694 (e) 776,694 (f) 1972 6/98 (f)
641,125 (e) 641,125 (f) 1974 6/98 (f)
670,491 (e) 670,491 (f) 1977 6/98 (f)
684,164 (e) 684,164 (f) 1969 6/98 (f)
810,316 798,412 1,608,728 107,476 1979 12/98 (c)
592,342 (e) 592,342 (f) 1988 6/98 (f)
594,142 (e) 594,142 (f) 1974 6/98 (f)
933,759 763,368 1,697,127 115,603 1985 6/98 (c)
740,132 (e) 740,132 (f) 1984 12/98 (f)
922,679 725,256 1,647,936 109,832 1978 6/98 (c)
354,419 (e) 354,419 (f) 1978 6/98 (f)
433,713 (e) 433,713 (f) 1969 6/98 (f)
376,905 692,124 1,069,028 84,063 1981 3/99 (c)
447,458 383,785 831,243 48,204 1994 2/99 (c)
299,870 (e) 299,870 (f) 1994 2/99 (f)
212,438 (e) 212,438 (f) 1998 10/98 (f)
402,947 (e) 402,947 (f) 1994 2/99 (f)
404,578 451,129 855,707 56,662 1994 2/99 (c)
474,588 478,974 953,562 60,160 1994 2/99 (c)
349,637 (e) 349,637 (f) 1991 10/98 (f)
308,915 351,160 660,075 49,162 1991 10/98 (c)
339,250 490,895 830,145 11,684 2000 5/00 (c)
343,906 (e) 343,906 (f) 1994 2/99 (f)
276,949 550,355 827,305 44,927 2000 8/00 (c)
335,174 694,862 1,030,036 77,852 1997 7/99 (c)
355,763 496,898 852,661 44,169 2000 4/00 (c)
505,551 806,059 1,311,610 83,855 1999 12/99 (c)
538,204 1,149,066 1,687,270 86,883 2000 9/00 (c)
656,917 1,208,688 1,865,605 113,344 1999 3/00 (c)
582,062 1,085,290 1,667,352 99,818 2000 5/00 (c)
520,037 1,074,176 1,594,213 89,515 2000 6/00 (c)
664,266 987,133 1,651,400 85,067 2000 5/00 (c)
596,439 1,078,721 1,675,160 45,267 2000 11/00 (c)
235,195 1,115,831 1,351,026 113,523 1999 12/99 (c)
560,423 1,032,294 1,592,717 108,698 1999 9/99 (c)
713,534 995,529 1,709,064 104,281 1998 11/99 (c)
967,242 1,726,827 2,694,069 165,453 1999 2/00 (c)
1,385,425 (e) 1,385,425 (f) 1999 10/99 (f)
856,278 (e) 856,278 (f) 1999 3/99 (f)
2,459,048 (e) 2,459,048 (f) 2000 6/00 (f)
914,342 (e) 914,342 (f) 1997 5/98 (f)
884,743 (e) 884,743 (f) 1999 3/00 (f)
1,239,565 (e) 1,239,565 (f) 1999 12/99 (f)
1,213,121 (e) 1,213,121 13,552 1999 4/00 (c)
744,126 1,221,749 1,965,875 101,812 1994 5/99 (c)
370,667 431,642 802,309 75,478 1981 10/97 (c)
422,489 528,849 951,338 92,476 1981 10/97 (c)
548,886 700,855 1,249,741 97,405 1994 9/98 (c)
618,372 631,369 1,249,741 87,748 1994 9/98 (c)
511,811 756,304 1,268,115 78,019 1989 10/99 (c)
485,625 705,993 1,191,618 57,958 2000 7/00 (c)
640,066 688,918 1,328,984 149,171 1996 7/96 (c)
358,027 444,622 802,649 96,275 1996 5/96 (c)
555,813 442,025 997,838 64,155 1998 8/98 (c)
489,097 735,631 1,224,728 77,516 1999 9/99 (c)
841,374 699,082 1,540,456 108,740 1998 5/98 (c)
- ---------------------------------------------------------
298,631,152 340,405,076 639,036,228 43,688,187
=========================================================
708,297 1,008,108 1,716,405 139,294 1998 11/98 (c)
=========================================================
(e) (e) (e) (g) 1996 2/99 (g)
(e) (e) (e) (f) 1996 1/99 (f)
(e) (e) (e) (g) 1995 8/98 (g)
(e) (e) (e) (f) 1999 12/99 (f)
(e) (e) (e) (f) 1995 8/95 (f)
(h) (e) (e) (f) 1978 12/99 (f)
(h) (e) (e) (f) 1999 12/99 (f)
(e) (e) (e) (f) 1999 12/99 (f)
(e) (e) (e) (f) 1986 6/98 (f)
(e) (e) (e) (f) 1979 6/98 (f)
(e) (e) (e) (f) 1979 6/98 (f)
(e) (e) (e) (f) 1984 6/98 (f)
(e) (e) (e) (f) 1983 6/98 (f)
(e) (e) (e) (f) 1979 6/98 (f)
(e) (e) (e) (f) 1981 6/98 (f)
(e) (e) (e) (f) 1983 6/98 (f)
(e) (e) (e) (f) 1979 6/98 (f)
(e) (e) (e) (f) 1986 6/98 (f)
(e) (e) (e) (f) 1983 6/98 (f)
(e) (e) (e) (f) 1976 6/98 (f)
(e) (e) (e) (f) 1980 6/98 (f)
(e) (e) (e) (g) 1982 6/98 (g)
(e) (e) (e) (f) 1987 12/98 (f)
(h) (e) (e) (f) 1994 8/99 (f)
(h) (e) (e) (f) 1991 3/97 (f)
(h) (e) (e) (f) 1974 8/97 (f)
(e) (e) (e) (f) 1996 10/97 (f)
(e) (e) (e) (f) 1999 2/00 (f)
(e) (e) (e) (f) 1993 1/99 (f)
(h) (e) (e) (f) 1996 1/99 (f)
(h) (e) (e) (f) 1985 1/99 (f)
(e) (e) (e) (f) 1999 12/99 (f)
(h) (e) (e) (f) 1991 10/97 (f)
(e) (e) (e) (f) 1982 6/97 (f)
(e) (e) (e) (g) 1992 3/99 (g)
(e) (e) (e) (f) 1992 3/99 (f)
(e) (e) (e) (f) 1992 3/99 (f)
(e) (e) (e) (f) 1992 3/99 (f)
(e) (e) (e) (f) 1989 3/99 (f)
(e) (e) (e) (f) 1994 3/99 (f)
(h) (e) (e) (f) 1996 3/97 (f)
(e) (e) (e) (f) 1993 3/99 (f)
(e) (e) (e) (f) 1993 3/99 (f)
(e) (e) (e) (f) 1993 3/99 (f)
(h) (e) (e) (f) 1972 5/99 (f)
(h) (e) (e) (f) 1997 10/98 (f)
(h) (e) (e) (f) 1997 10/99 (f)
(h) (e) (e) (f) 1998 12/99 (f)
(h) (e) (e) (f) 1998 1/00 (f)
(h) (e) (e) (f) 1997 8/99 (f)
(h) (e) (e) (f) 1996 11/98 (f)
(e) (e) (e) (g) 1997 5/99 (g)
(h) (e) (e) (f) 1997 9/99 (f)
(h) (e) (e) (f) 1997 3/99 (f)
(e) (e) (e) (f) 1996 6/97 (f)
(h) (e) (e) (f) 1997 7/99 (f)
(h) (e) (e) (f) 1998 1/00 (f)
(e) (e) (e) (f) 1997 8/97 (f)
(e) (e) (e) (g) 1997 12/98 (g)
(h) (e) (e) (f) 1998 11/99 (f)
(h) (e) (e) (f) 1998 4/99 (f)
(h) (e) (e) (f) 1997 9/99 (f)
(h) (e) (e) (f) 1997 4/99 (f)
(h) (e) (e) (f) 1997 6/99 (f)
(h) (e) (e) (f) 1998 8/99 (f)
(e) (e) (e) (f) 1997 8/97 (f)
(h) (e) (e) (f) 1997 4/99 (f)
(h) (e) (e) (f) 1997 8/99 (f)
(e) (e) (e) (g) 1987 6/99 (i)
(e) (e) (e) (f) 1996 5/99 (f)
(e) (e) (e) (f) 1997 7/97 (f)
(e) (e) (e) (g) 1996 12/96 (g)
(e) (e) (e) (g) 1997 9/97 (g)
(e) (e) (e) (f) 1999 1/00 (f)
(e) (e) (e) (f) 1999 3/00 (f)
(e) (e) (e) (f) 1999 5/99 (f)
(e) (e) (e) (f) 1999 3/99 (f)
(e) (e) (e) (f) 1999 2/00 (f)
(e) (e) (e) (f) 1999 1/00 (f)
(e) (e) (e) (f) 1997 11/97 (f)
(h) (e) (e) (f) 1999 10/99 (f)
(e) (e) (e) (f) 1999 4/99 (f)
(h) (e) (e) (f) 1999 6/99 (f)
(h) (e) (e) (f) 1999 9/99 (f)
(e) (e) (e) (g) 1999 7/99 (g)
(e) (e) (e) (f) 1999 12/99 (f)
(e) (e) (e) (f) 1978 7/99 (f)
(e) (e) (e) (f) 1993 6/98 (f)
(e) (e) (e) (f) 1973 6/98 (f)
(e) (e) (e) (f) 1993 6/98 (f)
(e) (e) (e) (f) 1976 6/98 (f)
(e) (e) (e) (f) 1973 6/98 (f)
(e) (e) (e) (f) 1972 6/98 (f)
(e) (e) (e) (f) 1974 6/98 (f)
(e) (e) (e) (f) 1977 6/98 (f)
(e) (e) (e) (f) 1969 6/98 (f)
(e) (e) (e) (f) 1988 6/98 (f)
(e) (e) (e) (f) 1974 6/98 (f)
(e) (e) (e) (f) 1984 12/98 (f)
(e) (e) (e) (f) 1978 6/98 (f)
(e) (e) (e) (f) 1969 6/98 (f)
(e) (e) (e) (f) 1994 2/99 (f)
(e) (e) (e) (f) 1998 10/98 (f)
(e) (e) (e) (f) 1994 2/99 (f)
(e) (e) (e) (f) 1991 10/98 (f)
(e) (e) (e) (f) 1994 2/99 (f)
(h) (e) (e) (f) 1998 2/99 (f)
(e) (e) (e) (f) 1999 10/99 (f)
(e) (e) (e) (f) 1999 3/99 (f)
(e) (e) (e) (f) 2000 6/00 (f)
(e) (e) (e) (f) 1997 5/98 (f)
(e) (e) (e) (f) 1999 3/00 (f)
(e) (e) (e) (f) 1999 12/99 (f)
(e) (e) (e) (f) 1999 4/00 (f)
(e) (e) (e) (g) 1998 3/99 (g)
(h) (e) (e) (f) 1997 10/98 (f)
(h) (e) (e) (f) 1998 9/98 (f)
(h) (e) (e) (f) 1996 12/96 (f)
(h) (e) (e) (f) 2000 4/00 (f)
(h) (e) (e) (f) 1996 6/96 (f)
(h) (e) (e) (f) 1998 10/98 (f)
- -
=
- ---------------------------------------------------------
299,339,449 341,413,184 640,752,633 43,827,481
=========================================================
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2002
(a) Transactions in real estate and accumulated depreciation during 2002,
2001 and 2000 are summarized below. The balances in 2001, 2000 and 1999
have been adjusted to reflect the reclassification of properties
accounted for as discontinued operations.
Cost Accumulated
(b)(j) Depreciation
----------------- ----------------
Properties the Company has Invested
in Under Operating Leases:
Balance, December 31, 1999 $ 600,074,313 $ 9,775,814
Acquisitions 61,797,816 --
Dispositions (20,170,059 ) (963,447 )
Depreciation expense (c) -- 12,242,000
----------------- ----------------
Balance, December 31, 2000 641,702,070 21,054,367
Acquisitions 1,678,792 --
Dispositions (12,663,443 ) (642,041 )
Depreciation expense (c) -- 12,138,000
----------------- ----------------
Balance, December 31, 2001 630,717,419 32,550,326
Acquisitions 7,089,952 --
Dispositions (2,425,640 ) (97,139 )
Reclassifications from direct financing
leases 3,654,497 --
Depreciation expense (c) -- 11,235,000
----------------- ----------------
Balance December 31, 2002 $ 639,036,228 $ 43,688,187
================= ================
Property of Joint Venture in Which the Company has a 59.22%
Interest and has Invested in Under an Operating Lease:
Balance, December 31, 1999 $ 1,716,405 $ 38,483
Depreciation expense -- 33,604
----------------- ----------------
Balance, December 31, 2000 1,716,405 72,087
Depreciation expense -- 33,603
----------------- ----------------
Balance, December 31, 2001 1,716,405 105,690
Depreciation Expense -- 33,604
----------------- ----------------
Balance, December 31, 2002 $ 1,716,405 $ 139,294
================= ================
(b) As of December 31, 2002, 2001 and 2000, the aggregate cost of the
properties owned by the Company and its subsidiaries for federal income
tax purposes was $657.3 million, $745.3 million and $870.9 million,
respectively. Substantially, all of the leases are treated as operating
leases for federal income tax purposes.
(c) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2002
(d) The building portion of this property is owned by the tenant;
therefore, depreciation is not applicable.
(e) For financial reporting purposes, certain components of the lease
relating to land and/or building have been recorded as a direct
financing lease. Accordingly, costs relating to these components of
this lease are not shown.
(f) For financial reporting purposes, the portion of this lease relating to
the building has been recorded as direct financing lease. The cost of
the building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(g) For financial reporting purposes, the lease for the land and building
has been recorded as direct financing lease. The cost of the land and
building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(h) The Company owns the building only relating to this property. This
property is subject to a ground lease between the tenant and an
unaffiliated third party. In connection therewith, the Company entered
into either a tri-party agreement with the tenant and the owner of the
land or an assignment of interest in the ground lease with the landlord
of the land. The tri-party agreement or assignment of interest each
provide that the tenant is responsible for all obligations under the
ground lease and provide certain rights to the Company to help protect
its interest in the building in the event of a default by the tenant
under the terms of the ground lease.
(i) The property is encumbered at December 31, 2002.
(j) For financial reporting purposes, the undepreciated cost of the
following properties was written down to its net realizable value due
to an anticipated impairment in value. The Company recognized the
impairments by recording an allowance for loss on land, building or
investment in direct financing lease in the amounts listed below for
each property as of December 31, 2002. The impairments at December 31,
2002 represent the difference between the properties' carrying values
and the property manager's estimate of the net realizable value of the
properties based upon anticipated sales prices to interested third
parties. The cost of the properties presented on this schedule is the
gross amount at which the properties were carried at December 31, 2002,
excluding the allowances for loss.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2002
(j) (continued)
The following are a list of properties and the related impairment at
December 31, 2002:
Total
-----------------
Denny's - Shawnee , OK $ 326,661
Boston Market - St. Joseph , MO 143,132
Denny's - Tampa , FL 287,043
Pizza Hut - Weirton , WV 108,163
Darryl's - Richmond , VA 193,688
Houlihan's - Langhorne , PA 616,693
Darryl's - Winston-Salem , NC 564,857
Darryl's - Raleigh , NC 641,056
Boston Market - Newport News , VA 202,476
Darryl's - Montgomery , AL 436,392
Darryl's - Huntsville , AL 13,230
Darryl's - Raleigh , NC 172,363
Darryl's - Nashville , TN 35,935
Roadhouse Grill - Pensacola , FL 804,913
Black-eyed Pea - Glendale , AZ 380,415
Black-eyed Pea - Grapevine , TX 873,196
Black-eyed Pea - Fort Worth , TX 312,735
Big Boy - Woodson Terrace , MO 190,000
Big Boy - Fenton , MO 150,000
Big Boy - Columbia , MO 133,333
Big Boy - Collinsville , IL 150,000
Big Boy - Sedalia , MO 189,914
Big Boy - Bridgeton , MO 150,000
Big Boy - N. Kansas City , MO 190,000
Big Boy - Lee's Summit , MO 189,769
Big Boy - Blue Springs , MO 160,588
Big Boy - Merriam , KS 183,425
Hardee's - Petal , MS 98,457
Big Boy - Crystal City , MO 133,333
Big Boy - Arnold , MO 190,000
Chevys Fresh Mex - Brandon , FL 159,755
Chevys Fresh Mex - Olathe , KS 276,466
Rio Bravo Fresh Mex - Morrow , GA 475,017
Chevys Fresh Mex - Auburn Hills , MI 748,387
Chevys Fresh Mex - Tampa , FL 324,884
Chevys Fresh Mex - Taylor , MI 315,551
Chevys Fresh Mex - Clearwater , FL 87,746
Chevys Fresh Mex - Orlando , FL 141,790
Chevys - Independence , MO 502,672
Rio Bravo Fresh Mex - Atlanta , GA 784,297
Chevys Fresh Mex - Merriam , KS 790,061
Rio Bravo Fresh Mex - Jacksonville , FL 393,374
Roadhouse Grill - Centerville , OH 795,340
Roadhouse Grill - Rock Hill , SC 522,390
Roadhouse Grill - Columbus , OH 588,712
Roadhouse Grill - Roswell, GA 1,005,994
Shoney's-Cocoa Beach, FL 375,500
Shoney's-Debary, FL 27,000
-----------------
$ 16,536,703
=================
CNL AMERICAN PROPERTIES FUND, INC.
SCHEDULE IV - Mortgage Loans on Real Estate
December 31, 2002
Interest Final Periodic Prior Face Amount
Description Rate Maturity Date Payment Term Liens of Mortgages
29 loans held for sale with original amounts
ranging from $330,000 to $17,924,000 6.51% to 10.58% 02/01/2003 to 01/01/2021 N/A N/A N/A
265 loans as mortgage notes receivable with
original amounts ranging from $69,000
to $8,475,000 3.09 % to 11.37% 05/01/2003 to 03/01/2022 N/A N/A N/A
Principal Amount of Loans
Carrying Amount Subject to Delinquent
of Mortgages Principal or Interest
$ 48,326,541 $ 33,235,376
$314,122,172 $ 22,993,717
- -------------- ------------
$362,448,713 $ 56,229,093
=============== ============
2002 2001 2000 1999
Balance at beginning of period 403,700,839 419,903,472 63,466,474 19,631,693
New mortgage loans 14,492,417 86,630,251 370,029,447 46,738,038
Accrued interest 1,066,391 (833,527) 2,906,089 346,101
Collection of principal (37,344,708) (116,950,540) (7,946,989) (2,466,072)
Deferred financing income 205,417 (439,759) (2,227,842) (11,336)
Unamortized loan costs (146,601) 311,300 (376,164) 91,007
Valuation loan costs (15,838,755) 15,823,041 (6,854,932) (551,011)
Provision for uncollectible mortgage notes (3,686,287) (743,399) 907,389 (311,946)
-------------------------------------------------------------------
Balance at end of period 362,448,713 403,700,839 419,903,472 63,466,474
===================================================================
EXHIBITS
EXHIBIT INDEX
Exhibit Number
2.1 Agreement and Plan of Merger, by and among the
Registrant, CFA Acquisition Corp., CNL Fund Advisors,
Inc. and CNL Group, Inc., dated March 11, 1999
(included as Exhibit 10.38 to the Registrant's
Registration Statement No. 333-74329 on Form S-4 (the
"Form S-4") as originally filed and incorporated
herein by reference).
2.2 Agreement and Plan of Merger, by and among the
Registrant, CFC Acquisition Corp., CFS Acquisition
Corp., CNL Financial Corp., CNL Financial Services,
Inc., CNL Group, Inc., Five Arrows Realty Securities
L.L.C., Robert A. Bourne, Curtis B. McWilliams and
Brian Fluck, dated March 11, 1999 (included as
Exhibit 10.39 to the Form S-4 as originally filed and
incorporated herein by reference).
3.1 CNL American Properties Fund, Inc. Amended and
Restated Articles of Incorporation, as amended
(included as Exhibit 3.1 to the Registrant's Form
10-Q for the quarter ended June 30, 1999 and
incorporated herein by reference).
3.2 CNL American Properties Fund, Inc. Amended and
Restated Bylaws (included as Exhibit 3.2 to the
Registrant's Registration Statement No. 333-37657 on
Form S-11 and incorporated herein by reference).
3.3 CNL American Properties Fund, Inc. Second Amended and
Restated Articles of Incorporation (included as
Exhibit 3.3 to the Registrant's Form 10-Q for the
quarter ended June 30, 2000 and incorporated herein
by reference).
3.4 Articles of Amendment to Second Amended and Restated
Articles of Incorporation of CNL American Properties
Fund, Inc. (included as Exhibit 3.4 to the
Registrant's Form 10-Q for the quarter ended June 30,
2002 and incorporated herein by reference).
4.1 Form of Stock Certificate (included as Exhibit 4.5 to
the Registrant's Registration Statement No. 33-78790
on Form S-11 and incorporated herein by reference).
10.1 Form of Indemnification Agreement dated as of April
18, 1995, between the Registrant and each of James M.
Seneff, Jr., Robert A. Bourne, G. Richard Hostetter,
J. Joseph Kruse, Richard C. Huseman, John T. Walker,
Jeanne A. Wall, Lynn E. Rose and Edgar J. McDougall,
dated as of January 27, 1997, between the Registrant
and Steven D. Shackelford, dated as of February 18,
1998, between the Registrant and Curtis B.
McWilliams, and dated as of September 1, 1999,
between the Registrant and each of Howard J. Singer,
John L. Farren, Timothy J. Neville, Michael I. Wood
and Barry L. Goff (included as Exhibit 10.9 to the
Registrant's Registration Statement No. 333-15411 on
Form S-11 and incorporated herein by reference).
10.2 Amended and Restated Agreement of Limited Partnership
of CNL APF Partners, LP (included as Exhibit 10.50 to
Amendment No. 2 to the Form S-4 and incorporated
herein by reference).
10.3 Amended and Restated Credit Agreement by and among
CNL APF Partners, LP, Registrant, First Union
National Bank, First Union Capital Markets Group,
Banc of America Securities LLC, NationsBank, N.A.,
The Chase Manhattan Bank and other financial
institutions, dated June 9, 1999 (included as Exhibit
10.51 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference).
10.4 First Amendment to Amended and Restated Credit
Agreement dated as of December 31, 1999 between CNL
APF Partners, LP and First Union National Bank, as
Agent (included as Exhibit 10.4 to the Registrant's
Form 10-K for the year ended December 31, 1999 and
incorporated herein by reference).
10.5 Franchise Receivable Funding and servicing Agreement
dated as of October 14, 1999 between CNL APF
Partners, LP and Neptune Funding Corporation
(included as Exhibit 10.5 to the Registrant's Form
10-K for the year ended December 31, 1999 and
incorporated herein by reference).
10.6 Interim Wholesale Mortgage Warehouse and Security
Agreement dated as of September 18, 1998, and Amended
Agreement dated as of August 30, 1999 between CNL APF
Partners, LP and Prudential Securities Credit
Corporation (included as Exhibit 10.6 to the
Registrant's Form 10-K for the year ended December
31, 1999 and incorporated herein by reference).
10.7 1999 Performance Incentive Plan (included as Exhibit
10.1 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference).
10.8 Registration Rights Agreement by and among the
Registrant, Robert A. Bourne, Curtis B. McWilliams,
John T. Walker, Howard Singer, Steven D. Shackelford
and CNL Group, Inc., dated as of March 11, 1999
(included as Exhibit 10.40 to Amendment No. 1 to the
Form S-4 and incorporated herein by reference).
10.9 Registration Rights Agreement by and among the
Registrant, Five Arrows Realty Securities L.L.C.,
James M. Seneff, Jr., Robert A. Bourne, Curtis B.
McWilliams and CNL Group, Inc., dated as of March 11,
1999 (included as Exhibit 10.41 to Amendment No. 1 to
the Form S-4 and incorporated herein by reference).
10.10 Employment Agreement by and between Curtis B.
McWilliams and the Registrant, dated September 15,
1999 (included as Exhibit 10.42 to Amendment No. 2 to
the Form S-4 and incorporated herein by reference).
10.11 Employment Agreement by and between Steven D.
Shackelford and the Registrant, dated September 15,
1999 (included as Exhibit 10.43 to Amendment No. 2 to
the Form S-4 and incorporated herein by reference).
10.12 Employment Agreement by and between John T. Walker
and the Registrant, dated September 15, 1999
(included as Exhibit 10.44 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.13 Employment Agreement by and between Howard J. Singer
and the Registrant, dated September 15, 1999
(included as Exhibit 10.45 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.14 Employment Agreement by and between Barry L. Goff and
the Registrant, dated September 15, 1999 (included as
Exhibit 10.46 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.15 Employment Agreement by and between Robert W. Chapin
and the Registrant, dated September 15, 1999
(included as Exhibit 10.47 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.16 Employment Agreement by and between Timothy J.
Neville and the Registrant, dated September 15, 1999
(included as Exhibit 10.48 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.17 Holdback Agreement by and among the Registrant and
Stockholders, dated August 31, 1999 (included as
Exhibit 10.56 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.18 Amended and Restated Credit and Reimbursement
Agreement by and among CNL APF Partners, LP, CNL APF
LP Corp., CNL APF GP Corp., Bank of America, N.A. and
Bank of America Securities LLC, dated as of June 15,
2000 (included as Exhibit 10.18 to the Registrant's
Form 10-Q for the quarter ended June 30, 2000 and
incorporated herein by reference).
10.19 Employment Agreement by and between Michael Wood and
the Registrant, dated August 31, 1999 (included as
Exhibit 10.19 to the Registrant's Form 10-Q for the
quarter ended March 31, 2001 and incorporated herein
by reference).
10.20 Employment Agreement by and between Brent Heaton and
the Registrant, dated September 29, 1999 (included as
Exhibit 10.20 to the Registrant's Form 10-Q for the
quarter ended March 31, 2001 and incorporated herein
by reference).
10.21 Addendum to Employment Agreement dated as of November
1, 1999, between the Registrant and Curtis McWilliams
(included as Exhibit 10.21 to the Registrant's Form
10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference). The following
persons have signed a substantially identical
Addendum relating to their respective employment
agreements; Steve Shackelford (dated November 1,
1999), John Walker (dated November 3, 1999), Barry
Goff (dated November 1, 1999), and Brent Heaton
(dated November 3, 1999).
10.22 Addendum to Employment Agreement dated as of November
1, 1999, between the Registrant and Robert Chapin
(included as Exhibit 10.22 to the Registrant's Form
10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference). The following
persons have signed a substantially identical
Addendum relating to their respective employment
agreements: Howard Singer (dated November 1, 1999),
Michael Wood (dated November 8, 1999) and Timothy
Neville (dated November 24, 1999).
10.23 Second Addendum to Employment Agreement dated as of
June 16, 2000, between the Registrant and Curtis
McWilliams (included as Exhibit 10.23 to the
Registrant's Form 10-Q for the quarter ended March
31, 2001 and incorporated herein by reference). The
following persons have signed a substantially
identical Second Addendum relating to their
respective employment agreements: Howard Singer
(dated June 19, 2000), Robert Chapin (dated June 20,
2000) and Brent Heaton (dated October 30, 2000).
10.24 Second Addendum to Employment Agreement dated as of
August 20, 2000, between the Registrant and Barry
Goff (included as Exhibit 10.24 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference).
10.25 Second Addendum to Employment Agreement dated as of
September 1, 2000, between the Registrant and Steve
Shackelford (included as Exhibit 10.25 to the
Registrant's Form 10-Q for the quarter ended March
31, 2001 and incorporated herein by reference).
10.26 Second Addendum to Employment Agreement dated as of
2000, between the Registrant and Timothy Neville
(included as Exhibit 10.26 to the Registrant's Form
10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference).
10.27 Second Addendum to Employment Agreement dated as of
October 24, 2000, between the Registrant and Michael
Wood (included as Exhibit 10.27 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference).
10.28 Second Addendum to Employment Agreement dated as of
October 25, 2000, between the Registrant and John
Walker (included as Exhibit 10.28 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001 and
incorporated herein by reference).
10.29 Amended and Restated Master Purchase Agreement dated
as of October 11, 2001, among Bank of America, N.A.,
CNL Financial VII, LP and CNL Franchise Network,
(included as Exhibit 10.29 to the Registrant's Form
10-K for the year ended December 31, 2001 and
incorporated herein by reference).
10.30 Third Amended and Restated Side Letter dated as of
October 11, 2001, among Bank of America, N.A., CNL
Financial VII, LP and CNL Franchise Network, LP
(included as Exhibit 10.30 to the Registrant's Form
10-K for the year ended December 31, 2001 and
incorporated herein by reference).
10.31 Loan and Security Agreement dated as of June 14, 2002
between CNL Financial IX, LP and Nieuw Amsterdam
Receivables Corporation (included as Exhibit 10.31 to
the Registrant's Form 10-Q for the quarter ended June
30, 2002 and incorporated herein by reference).
21 Subsidiaries of the Registrant (filed herewith).
99.1 Certification of Co-Chief Executive Officer Pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
99.2 Certification of Co-Chief Executive Officer Pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
99.3 Certification of Chief Financial Officer Pursuant to
18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRAINT
EXHIBIT 99.1
CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER
EXHIBIT 99.2
CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER
EXHIBIT 99.3
CERTIFICATION OF CHIEF FINANCIAL OFFICER