8-K 1 form8k-irs.txt CNL RESTAURANT PROPERTIES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 9, 2004 CNL RESTAURANT PROPERTIES, INC. (Exact name of registrant as specified in its charter) Maryland 001-15581 59-3239115 (State or Other Jurisdiction (I.R.S. Employer of Incorporation) (Commission File Number) Identification No.) 450 South Orange Avenue, Orlando, Florida 32801 (Address, including zip code, of Principal Executive Offices) Registrant's telephone number, including area code (407) 540-2000 (Former Name or Former Address, if Changed Since Last Report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below): ____ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ____ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ____ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ____ Pre-commencement communications pursuant to Ruler 13e-4(c) under the Exchange Act (17 CFR 240/13e-4(c)) Item 8.01. Other Events. Recently, the Company concluded that certain loans, which when made by the Company in 1998 satisfied the real estate investment trust ("REIT") qualification requirements then applicable, might fail to meet subsequent REIT qualification requirements. To eliminate any uncertainty, the Company sought assurance from the Internal Revenue Service ("IRS") that the loans would not cause the Company to fail to qualify as a REIT. We are pleased to report that on December 9, 2004 the IRS granted the assurance requested by the Company. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: December 14, 2004 CNL RESTAURANT PROPERTIES, INC. By: /s/ CURTIS B. McWILLIAMS --------------------------------- Curtis B. McWilliams Chief Executive Officer /s/ STEVEN D. SHACKELFORD --------------------------------- Steven D. Shackelford Chief Financial Officer

(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, 2003 2002 2001 2000 1999 ---------------- -------------- -------------- --------------- ---------------- Continuing Operations: Revenues (1) $ 113,634 $ 335,163 $ 273,252 $ 113,091 $ 65,073 ================ ============== ============== =============== ================ Earnings/(loss) from continuing operations, net (1) $ 8,903 $ 26,816 $ (13,912 ) $ (5,250 ) $ (55,669 ) Discontinued Operations: Earnings/(loss) and gains from discontinued operations, net (1) 33,537 8,774 (6,699 ) 8,177 5,832 ---------------- -------------- -------------- --------------- ---------------- Earnings/(loss) before cumulative effect of accounting change 42,440 35,590 (20,611) 2,927 (49,837 ) Cumulative effect of accounting change -- -- (3,841) -- -- ---------------- -------------- -------------- --------------- ---------------- Net income/(loss) $ 42,440 $ 35,590 $ (24,452 ) $ 2,927 $ (49,837 ) ================ ============== ============== =============== ================ Earnings/(loss) per share (1): Continuing operations (1) $ 0.20 $ 0.60 $ (0.32 ) $ (0.12 ) $ (1.41 ) Discontinued operations (1) 0.74 0.20 (0.15 ) 0.19 0.15 Cumulative effect of accounting change -- -- (0.09 ) -- -- ---------------- -------------- -------------- --------------- ---------------- Net income/(loss) per share $ 0.94 $ 0.80 $ (0.56 ) $ 0.07 $ (1.26 ) ================ ============== ============== =============== ================ Funds from operations (2) $ 49,504 $ 44,710 $ (6,029 ) $ 16,007 $ 35,956 ================ ============== ============== =============== ================ Cash distributions declared $ 69,002 $ 67,991 $ 66,466 $ 66,329 $ 60,079 ================ ============== ============== =============== ================ Cash distributions declared per share $ 1.52 $ 1.52 $ 1.52 $ 1.52 $ 1.52 ================ ============== ============== =============== ================ Weighted average shares outstanding: Basic 45,248,670 44,620,235 43,589,985 43,495,919 39,402,941 ================ ============== ============== =============== ================ Diluted 45,248,670 44,620,235 43,589,985 43,495,919 39,402,941 ================ ============== ============== =============== ================ At December 31: Total assets $ 1,298,116 $ 1,383,450 $ 1,560,117 $ 1,605,944 $ 1,138,193 ================ ============== ============== =============== ================ Long-term obligations $ 656,321 $ 671,465 $ 484,815 $ 398,100 $ 140,504 ================ ============== ============== =============== ================ Total stockholders' equity (3) $ 479,886 $ 494,151 $ 526,182 $ 607,738 $ 672,214 ================ ============== ============== =============== ================

(In Thousands) 2003 2002 2001 2000 1999 ------------- ------------- -------------- ------------- -------------- Net income/(loss) $ 42,440 $ 35,590 $ (24,452 ) $ 2,927 $ (49,837 ) Depreciation Continuing operations 9,803 10,258 11,228 10,315 7,138 Discontinued operations 859 1,947 2,186 2,032 1,532 Loss/(Gain) on sale of property Continuing operations 5 181 1,141 721 781 Discontinued operations (3,633 ) (3,295 ) -- -- -- Amortization of joint venture costs 30 29 27 12 9 Advisor acquisition expense -- -- -- -- 76,333 Cumulative effect of accounting change -- -- 3,841 -- -- ------------- ------------- -------------- ------------- -------------- FFO (*) $ 49,504 $ 44,710 $ (6,029 ) $ 16,007 $ 35,956 ============= ============= ============== ============= ==============

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) $ 146.0 $ 175.5 $ 68.9 $ 361.4 $ 751.8 Leased office space (2) 1.1 2.4 2.4 8.0 13.9 ---------- --------- ---------- ------------ ---------- Total contractual cash obligations $ 147.1 $ 177.9 $ 71.3 $ 369.4 $ 765.7 ========== ========= ========== ============ ==========

Estimated payments due by period (In millions) Less Commitments, contingencies than one 2 to 3 4 to 5 and guarantees year years years Thereafter Total ---------------------------------------- ---------- ----------- ----------- ------------ --------- Guaranty of unsecured promissory note (2) $ 1.3 $ -- $ -- $ -- $ 1.3 Purchase commitments 82.0 -- -- -- 82.0 ---------- ----------- ----------- ------------ --------- Total commitments, contingencies and guarantees $ 83.3 $ -- $ -- $ -- $83.3 ========== =========== =========== ============ =========

(In thousands) 2003 2002 2001 ------------- ------------- -------------- Proceeds from Investment Property Sales program sales $ 193,850 $ 287,622 $ 128,480 ============= ============= ============== Purchases of properties to be sold under the Investment Property Sales program $ 168,965 $ 263,019 $ 118,372 ============= ============= ==============

(In thousands) 2003 2002 2001 ------------- -------------- ------------- Revenues: Sale of real estate $ 193,850 $ 287,622 $ 128,480 Rental income 9,983 13,165 16,212 Other revenue items 32,020 35,116 46,271 ----------- -------------- ------------- 235,853 335,903 190,963 ----------- -------------- ------------- Expenses: Cost of real estate sold 168,965 263,019 118,372 Interest expense 25,920 29,608 32,176 Depreciation and amortization 1,216 1,243 5,519 Other expenses 31,220 29,466 30,653 ----------- -------------- ------------- 227,321 323,336 186,720 ----------- -------------- ------------- Income tax benefit 6,346 -- -- Cumulative effect of accounting change -- -- (3,841 ) ----------- -------------- ------------- Net income $ 14,878 $ 12,567 $ 402 =========== ============== =============

In thousands Amount used Capacity Maturity Interest rate (4) ----------------- ------------- --------------- ------------------- Note payable (medium term financing) (1) $ 181,955 $ 181,955 Jun 2007 2.53% Mortgage warehouse facilities (1)(2) 93,513 260,000 Annual 2.53% Subordinated note payable 43,750 43,750 June 2007 8.50% Series 2001-4 bonds payable (3) 38,921 38,921 2009 - 2013 8.90% ----------------- ------------- $ 358,139 $ 524,626 ================= =============

December 31, 2003 ----------------------------------------- (In Thousands) Mortgage loans in Bonds outstanding pool at par at face value (1) ------------------- -------------------- Loans and debt supporting 1998-1 Certificates issued by CNL Funding 1998-1, LP $ 192,801 $ 191,144 Loans and debt supporting 1999-1 Certificates issued by CNL Funding 1999-1, LP $ 229,044 $ 229,044 ------------------- -------------------- $ 421,845 $ 420,188 =================== ====================

(In thousands) Amount Used Capacity Maturity Interest Rate (1) -------------- -------------- --------------- ------------------ Revolver $ 2,000 $ 30,000 Oct 2004 3.62% Note payable (2) 605 5,000 2005 4.40% Series 2000-A bonds payable 252,477 252,477 2009-2017 7.94% Series 2001 bonds payable 118,690 118,690 Oct 2006 1.70% Series 2003 bonds payable 24,906 24,906 2005-2010 5.67% -------------- -------------- $ 398,678 $ 431,073 ============== ==============

Estimated Value (Liability) (in thousands) Notional Cap Strike at Amount (In Price or Trade Maturity December Type of Hedge Thousands) Swap Rate Date Date 31, 2003 ----------------------------- -------------- ------------- ---------- ---------- ----------- Pay Fixed Rate - Receive Floating Rate Swap $ 144,418 6.590% 6/14/02 3/15/22 $ (10,772 ) Interest Rate Cap 132,000 4.500% 9/28/01 12/25/06 730 Interest Rate Cap 30,000 3.500% 12/17/03 2/1/11 953

(In Millions) % of % of % of Net income/(loss) by segment 2003 Total 2002 Total 2001 Total ---------- -------- ----------- ---------- --------- ------- Real estate segment $ 27.7 65% $ 23.2 65% $ (22.8 ) (93% ) Specialty finance segment 14.9 35 12.6 35 0.4 2 Other holding company results, results for periods prior to segment reporting and consolidating eliminations (0.2) -- (0.2 ) -- (2.1 ) (9 ) ---------- -------- ----------- ---------- --------- ------- Net income/(loss) $ 42.4 100% $ 35.6 100% $ (24.5 ) (100% ) ========== ======== =========== ========== ========= =======

For the year ended December 31, Total revenues by segment (in % of % of % of millions) 2003 Total 2002 Total 2001 Total -------- ------ -------- ------- -------- ------ Real estate segment $ 84.5 75% $ 87.6 26% $ 87.5 32% Specialty finance segment* 32.3 28 250.8 75 190.1 70 Other holding company results, results for periods prior to segment reporting and consolidating eliminations (3.2) (3) (3.2) (1) (4.4) (2) -------- ------ -------- ------- -------- ------ Total revenues* $ 113.6 100% $335.2 100% $ 273.2 100% ======== ====== ======== ======= ======== ======

For the year ended December 31, Real estate segment revenues by % of % of % of line item (in millions) 2003 Total 2002 Total 2001 Total -------- ------- --------- ------- ------- ------ Rental income from operating leases and earned income from direct financing leases $71.4 85% $ 71.1 81% $ 72.1 82% Interest income from mortgage equipment and other notes receivable 4.2 5 4.2 5 4.3 5 Investment and interest income 4.5 5 4.8 5 5.1 6 Other income 4.4 5 7.5 9 6.0 7 -------- ------- --------- ------- ------- ------ Total segment revenues $ 84.5 100% $ 87.6 100% $ 87.5 100% ======== ======= ========= ======= ======= ======

For the year ended December 31, Specialty finance segment revenues by line item (in % of % of % of millions) 2003 Total 2002 Total 2001 Total -------- ------- --------- ------- ------- ------ Sale of real estate $ -- --% $ 209.5 84% $ 128.5 68% Rental income from operating leases and earned income from direct financing leases -- -- 7.7 3 15.4 8 Interest income from mortgage equipment and other notes receivable 25.6 79 30.4 12 36.6 19 Investment and interest income 0.8 2 1.4 -- 1.5 1 Net decrease in value of mortgage loans held for sale, net of related hedge (1.9) (5) (5.4) (2) (5.1) (3) Gain on sale of mortgage loans -- -- 4.1 2 Other income 7.8 24 7.2 3 9.1 5 -------- ------- --------- ------- ------- ------ $ 32.3 100% $ 250.8 100% $ 190.1 100% ======== ======= ========= ======= ======= ======

Specialty finance segment Investment Property Sales For the year ended December 31, Program sales (in millions) 2003 2002 2001 ------------ ------------- ----------- Sale of real estate, as reported $ -- $ 209.5 $ 128.5 Cost of real estate sold, as reported -- (193.2) (118.4) Gain on disposal of discontinued operations, net as reported 24.9 8.3 -- ------------ ------------- ----------- Total gains from Investment Property Sales Program sales $ 24.9 $ 24.6 $ 10.1 ============ ============= ===========

For the year ended December 31, General operating and admini- strative expenses by segment (in % of % of % of millions) 2003 Total 2002 Total 2001 Total -------- ------ -------- ------- ------ -------- Real estate segment $ 9.0 36% $ 11.8 42% $ 8.8 30% Specialty finance segment 18.6 74 19.0 67 22.6 76 Other holding company results, results for periods prior to segment reporting and consolidating eliminations (2.4) (10) (2.4) (9) (1.8) (6) -------- ------ -------- ------- -------- ------ Total general operating and administrative expenses $ 25.2 100% $ 28.4 100% $ 29.6 100% ======== ====== ======== ======= ======== ======

For the year ended December 31, Interest expense by segment (in % of % of % of millions) 2003 Total 2002 Total 2001 Total -------- ------ -------- ------- ------ ------ Real estate segment $ 27.5 54% $ 30.6 52% $ 36.9 54% Specialty finance segment 23.7 47 28.5 49 31.8 47 Other holding company results and consolidating eliminations (0.6) (1) (0.7) (1) (0.8) (1) -------- ------ -------- ------- -------- ------ Total interest expense $ 50.6 100% $ 58.4 100% $ 67.9 100% ======== ====== ======== ======= ======== ======

For the year ended December 31, Impairments and provisions on % of % of % of assets (in millions) 2003 Total 2002 Total 2001 Total -------- ------ -------- ------- -------- ------ Real estate segment $ 4.4 33% $ 4.5 47% $ 40.2 99% Specialty finance segment 8.8 67 5.1 53 0.5 1 -------- ------ -------- ------- -------- ------ $ 13.2 100% $ 9.6 100% $ 40.7 100% ======== ====== ======== ======= ======== ======

Income from discontinued operations by segment (in millions) 2003 2002 2001 ------------- ------------ ----------- Real estate segment discontinued operations: Operating loss $ (7.0 ) $ (6.0 ) $ (7.1 ) Gains on disposal 3.7 3.3 -- Specialty finance segment discontinued operations: Operating income 5.9 3.2 0.4 Gains on disposal 24.6 8.3 -- Income tax benefit 6.3 -- -- ------------- ------------ ----------- Total income (loss) from discontinued operations $ 33.5 $ 8.8 $ (6.7 ) ============= ============ ===========

December 31, 2003 2002 ---------------- ---------------- ASSETS Real estate investment properties $ 542,972 $ 553,730 Net investment in direct financing leases 103,662 110,926 Real estate and restaurant assets held for sale 131,210 185,718 Mortgage loans held for sale 1,490 37,407 Mortgage, equipment and other notes receivable, net of allowance of $13,964 and $12,062, respectively 320,900 334,499 Other investments 29,671 32,163 Cash and cash equivalents 36,955 16,579 Restricted cash 12,462 4,574 Receivables, less allowance for doubtful accounts of $872 and $1,182, respectively 3,382 3,214 Accrued rental income 25,935 21,920 Goodwill 56,260 56,260 Other assets 33,217 26,460 ------------------ ------------------ $ 1,298,116 $ 1,383,450 ================== ================== LIABILITIES AND STOCKHOLDERS' EQUITY Revolver $ 2,000 $ 14,000 Note payable 182,560 203,207 Mortgage warehouse facilities 93,513 145,758 Subordinated note payable 43,750 43,750 Bonds payable 430,011 424,508 Due to related parties 25,038 5,702 Other payables 34,096 33,512 ------------------ ------------------ Total liabilities 810,968 870,437 ------------------ ------------------ Minority interests, including redeemable partnership interest 7,262 18,862 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 45,286,297 and 45,286,297 shares, respectively, outstanding 45,248,670 and 45,248,670 shares, respectively 452 452 Capital in excess of par value 826,627 816,745 Accumulated other comprehensive loss (14,447 ) (16,862 ) Accumulated distributions in excess of net earnings (332,746 ) (306,184 ) ------------------ ------------------ Total stockholders' equity 479,886 494,151 ------------------ ------------------ $ 1,298,116 $ 1,383,450 ================== ==================

Year Ended December 31, 2003 2002 2001 -------------- ------------- ------------- Revenues: Sale of real estate $ -- $ 209,498 $ 128,480 Rental income from operating leases 60,590 66,936 73,401 Earned income from direct financing leases 10,890 11,892 12,387 Interest income from mortgage, equipment and other notes receivables 29,807 34,552 40,831 Investment and interest income 4,586 5,347 5,845 Other income 9,614 12,306 13,259 Net decrease in value of mortgage loans held for sale, net of related hedge (1,853 ) (5,368 ) (5,070 ) Gain on sale of mortgage loans -- -- 4,120 --------------- --------------- -------------- 113,634 335,163 273,253 --------------- --------------- -------------- Expenses: Cost of real estate sold -- 193,179 118,372 General operating and administrative 25,208 28,433 29,592 Interest expense 50,576 58,401 67,892 Property expenses 801 3,115 1,900 State and other taxes 209 88 931 Depreciation and amortization 12,326 12,878 17,461 Loss on termination of cash flow hedges 502 -- 8,060 Impairments and provisions on assets 13,147 9,598 40,667 --------------- -------------- --------------- 102,769 305,692 284,875 --------------- --------------- -------------- Earnings/(loss) from continuing operations before minority interest in income of consolidated joint ventures, equity in earings of unconsolidated joint ventures and loss on sale of assets 10,865 29,471 (11,622 ) Minority interest in income of consolidated joint ventures (1,913 ) (2,409 ) (1,250 ) Equity in earnings of unconsolidated joint ventures 108 101 98 Loss on sale of assets (157 ) (347 ) (1,138 ) --------------- --------------- -------------- Earnings/(loss) from continuing operations, net 8,903 26,816 (13,912 ) Earnings/(loss) from discontinued operations, net of income tax benefit 33,537 8,774 (6,699 ) --------------- --------------- -------------- Earnings/(loss) before cumulative effect of accounting change 42,440 35,590 (20,611 ) --------------- --------------- -------------- Cumulative effect of accounting change -- -- (3,841 ) --------------- --------------- -------------- Net income/(loss) $ 42,440 $ 35,590 $ (24,452 ) =============== =============== ==============

Year Ended December 31, 2003 2002 2001 --------------- --------------- -------------- Earnings/(loss) per share of common stock (basic and diluted): From continuing operations $ 0.20 $ 0.60 $ (0.32 ) From discontinued operations 0.74 0.20 (0.15 ) --------------- --------------- -------------- Before cumulative effect of accounting change 0.94 0.80 (0.47 ) Cumulative effect of accounting change -- -- (0.09 ) --------------- --------------- -------------- Net income/(loss) $ 0.94 $ 0.80 $ (0.56 ) =============== =============== ============== Weighted average number of shares of common stock outstanding 45,248,670 44,620,235 43,589,985 =============== =============== ==============

Accumulated Accumulated Common stock distributions other Compre- ----------------------- 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, 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, net of tax -- -- -- -- (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 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 =========== ========== ============== ============= ============= ===========

Year Ended December 31, 2003 2002 2001 -------------- ------------- ------------- Cash flows from operating activities: Net income/(loss) $ 42,440 $ 35,590 $ (24,452) Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Depreciation and amortization 13,466 14,826 19,646 Impairments and provisions on assets 22,405 19,165 55,595 (Gain)/loss on sales of assets (3,475 ) (2,947 ) 1,137 Gain on sale of mortgage loans -- -- (4,120 ) Income tax benefit (6,346 ) -- -- Cumulative effect of accounting change -- -- 3,841 Net decrease in value of mortgage loans held for sale, net of related hedge 1,853 5,368 5,070 Proceeds from sale of loans -- -- 105,975 Investment in mortgage loans held for sale (112 ) (226 ) (94,520 ) Collection on mortgage loans held for sale 7,635 16,356 24,604 Changes in inventories of real estate held for sale 29,618 45,471 (46,704 ) Changes in other operating assets and liabilities 888 (22,016 ) 2,662 -------------- -------------- -------------- Net cash provided by operating activities 108,372 111,587 48,734 -------------- -------------- -------------- Cash flows from investing activities: Additions to real estate investment properties -- (7,212 ) (26,052 ) Proceeds from sale of assets 25,312 67,085 12,659 Decrease/(increase) in restricted cash (7,888 ) 6,357 (9,055 ) Investment in joint venture -- (150 ) (10 ) Investment in mortgage, equipment and other notes receivable -- (6,607 ) (11,458 ) Collection on mortgage, equipment and other notes receivable 29,075 15,481 9,325 Proceeds from sale or maturities of securities 19 -- 982 -------------- -------------- -------------- Net cash provided by (used in) investing activities 46,518 74,954 (23,609 ) -------------- -------------- --------------

Year Ended December 31, 2003 2002 2001 --------------- --------------- --------------- Cash flows from financing activities: Payment of stock issuance costs $ (1,493 ) $ (1,493 ) $ (1,493 ) Proceeds from borrowings on credit facility, note payable and subordingated note payable 34,104 249,334 63,949 Payment on credit facility, note payable and subordinated note payable (66,751 ) (90,874 ) (159,666 ) Proceeds from borrowings on mortgage warehouse facilities 124,127 189,901 325,264 Payments on mortgage warehouse facilities (176,372 ) (474,312 ) (358,860 ) Issuance of bonds 24,906 -- 177,223 Retirement of bonds payable (19,403 ) (16,436 ) (10,066 ) Payment of loan costs and bond issuance costs (2,231 ) (27 ) (9,634 ) Proceeds from sale of shares -- 9,750 3,692 Loan from stockholder 18,710 11,750 8,708 Retirement of shares of common stock -- (4 ) -- Distributions to minority interest (1,867 ) (1,484 ) (234 ) Distributions to stockholders (68,244 ) (67,991 ) (66,466 ) --------------- -------------- -------------- Net cash used in financing activities (134,514 ) (191,886 ) (27,583 ) --------------- -------------- -------------- Net increase (decrease) in cash and cash equivalents 20,376 (5,345 ) (2,458 ) Cash and cash equivalents at beginning of year 16,579 21,924 24,382 --------------- -------------- -------------- Cash and cash equivalents at end of year $ 36,955 $ 16,579 $ 21,924 =============== ============== ============== Supplemental disclosures of cash flow information: Interest paid $ 48,114 $ 52,704 $ 58,417 =============== ============== ============== Interest capitalized $ 95 $ 113 $ 568 =============== ============== ============== Income taxes paid $ 4,019 $ 193 $ 34 =============== ============== ============== Supplemental disclosures of non-cash investing and financing activities: Mortgage notes accepted in exchange for sale of properties $ 1,394 $ -- $ -- =============== ============== ============== Financing of computer software acquisition $ 1,788 $ -- $ -- =============== ============== ============== Distributions declared and unpaid at December 31 $ 758 $ -- $ -- =============== ============== ============== Conversion of related party advances into shares of common stock $ -- $ 10,350 $ -- =============== ============== ============== Redemption of minority interest in lieu of payment on accounts receivable $ 317 $ -- $ -- =============== ============== ============== Acquisition of minority interest $ 11,375 $ -- $ -- =============== ============== ==============

(In thousands) 2003 2002 ------------------ ----------------- Land $ 281,400 $ 282,222 Buildings 311,197 308,586 Equipment 1,673 2,031 ------------------ ----------------- 594,270 592,839 Less accumulated depreciation (52,468 ) (41,898 ) ------------------ ----------------- 541,802 550,941 Construction in progress 1,170 2,789 ------------------ ----------------- $ 542,972 $ 553,730 ================== =================

(In thousands) 2003 2002 ------------ ------------- Minimum lease payments receivable $ 194,191 $ 217,448 Estimated residual values 25,779 26,674 Interest receivable from secured equipment leases 6 15 Less unearned income (116,314 ) (133,211 ) ------------ ------------- Net investment in direct financing leases $ 103,662 $ 110,926 ============ =============

(In thousands) 2003 2002 2001 ------------ ----------- ------------ Rental income $ 12,401 $ 13,048 $ 13,646 Food and beverage income 13,728 2,428 -- Interest expense (2,267 ) (2,348 ) (2,248 ) Other property related expense (1,887 ) (3,530 ) (3,169 ) Impairment provisions (9,258 ) (9,567 ) (14,928 ) Food and beverage expenses (13,856 ) (2,836 ) -- ------------ ----------- ------------ Loss from discontinued operations (1,139 ) (2,805 ) (6,699 ) ------------ ----------- ------------ Sales of real estate 226,250 148,875 -- Cost of real estate sold (197,920 ) (137,296 ) -- ------------ ----------- ------------ Gain on disposal of discontinued operations 28,330 11,579 -- ------------ ----------- ------------ Income tax benefit 6,346 -- -- ------------ ----------- ------------ Earnings/(loss) from discontinued operations, net $ 33,537 $ 8,774 $ (6,699 ) ============ =========== ============

(In thousands) 2003 2002 ------------- ------------- Outstanding principal $ 4,531 $ 45,462 Accrued interest income 45 890 Deferred financing income (22 ) (90 ) Valuation adjustment (3,064 ) (8,855 ) ------------- ------------- $ 1,490 $ 37,407 ============= =============

(In thousands) 2003 2002 -------------- ------------- Outstanding principal $ 332,924 $ 343,832 Accrued interest income 3,377 3,696 Deferred financing income (1,530 ) (1,926 ) Unamortized deferred costs 93 959 Allowance for uncollectible notes (13,964 ) (12,062 ) -------------- ------------- $ 320,900 $ 334,499 ============== =============

(In thousands) 2003 2002 -------------- ------------ Balance at beginning of year $ 12,062 $ 32,752 Provision for loan losses 5,463 3,099 Recoveries on loans previously charged off (944 ) -- Interest income reserves 964 600 Loans charged off (3,581 ) (24,389 ) -------------- ------------ Balance at end of year $ 13,964 $ 12,062 ============== ============

(In Thousands) 2003 2002 ------------- -------------- 1998-1 Fixed Rate Certificates $ 9,605 $ 9,605 1998-1 Floating Rate Certificates 6,582 6,582 1998-1 Interest Only Certificate 249 346 1998-1 Residual Interest 1,980 4,358 1999-1 Fixed Rate Certificates 11,255 11,272 ------------- -------------- $ 29,671 $ 32,163 ============= ==============

1998-1 1999-1 Certificates Certificates ($ in millions) ($ in millions) ----------------- ----------------- Fair value of retained certificates $ 18.4 $ 11.3 Residual cash flows discount rate (annual): Impact on fair value of 100 bp adverse change $(0.54) $(0.61) Impact on fair value of 200 bp adverse change $(1.05) $(1.20) Expected Credit Losses (annual rate): Impact on fair value of 2 percent adverse change $ 0.12 $ 0.45 Impact on fair value of 3 percent adverse change $ 0.10 $(0.92)

Principal Amount > 60 Days Total Principal Amount Past Due (In thousands) (In thousands) --------------------------- -------------------------- 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Mortgage loans $ 735,517 $ 809,756 $ 16,011 $ 35,226 Equipment and other loans 23,783 29,082 199 1,713 ------------ ------------ ------------ ------------ Total loans managed or securitized 759,300 838,838 16,210 36,939 Less: Loans securitized (421,845) (449,544) (3,599 ) (11,557 ) Loans held for sale or securitization (4,531) (45,462) (1,969 ) (10,271 ) ------------ ------------ ------------ ------------ Loans held in portfolio (Note 6) $ 332,924 $ 343,832 $ 10,642 $ 15,111 ============ ============ ============ ============

(In thousands) 2003 2002 2001 ------------ ----------- ------------ Servicing fees received $ 1,597 $ 1,625 $ 1,730 Other cash flows received on retained interests $ 4,332 $ 5,272 $ 6,978 Servicing advances paid $ (4,128 ) $ (6,253 ) $ 5,746 ) Collection of servicing advances $ 3,603 $ 5,115 $ 3,796

(In thousands) 2003 2002 2001 ----------- ----------- ------------ Reported earnings/(loss) before cumulative effect of accounting change $42,440 $35,590 $ (20,611) Add back: Goodwill amortization -- -- 3,142 ----------- ----------- ------------ Adjusted earnings/(loss) before cumulative effect of accounting change $42,440 $35,590 $ (17,469) =========== =========== ============ Reported net income/(loss) $42,440 $35,590 $ (24,452) Add back: Goodwill amortization -- -- 3,142 ----------- ----------- ------------ Adjusted net income/(loss) $42,440 $35,590 $ (21,310) =========== =========== ============

2003 2002 2001 ----------------- ---------- ------------ Reported earnings/(loss) before cumulative effect of accounting change $ 0.94 $ 0.80 $ (0.47) Add back: Goodwill amortization -- -- 0.07 ----------------- ---------- ------------ Adjusted earnings/(loss) before cumulative effect of accounting change $ 0.94 $ 0.80 $ (0.40) ================= ========== ============ Reported net income/(loss) $ 0.94 $ 0.80 $ (0.56) Add back: Goodwill amortization -- -- 0.07 ----------------- ---------- ------------ Adjusted net income/(loss) $ 0.94 $ 0.80 $ (0.49) ================= ========== ============

2003 2002 ------------------------------- ---------------------------- Amount Average Amount Average (In thousands) Rate (In thousands) Rate ------------------------------- ---------------------------- Revolver $ 2,000 3.62% $ 14,000 3.92% Note payable 182,560 6.13% 203,207 5.99% Mortgage warehouse facilities 93,513 3.41% 145,758 4.07% Subordinated note payable 43,750 8.50% 43,750 8.50% Series 2000-A bonds payable 252,477 7.94% 261,369 7.94% Series 2001-4 bonds payable 33,938 8.90% 38,441 8.90% Series 2001 bonds payable 118,690 1.70% 124,698 2.28% Series 2003 bonds payable 24,906 5.67% -- -- ----------------- ---------------- $ 751,834 $ 831,223 ================= ================

(In thousands) --------------------------------- Expected Balance Maturity Outstanding Capacity Retirement Date --------------- ------------- ---------------- Revolver $ 2,000 $ 30,000 October 2004 Note payable 182,560 186,955 (1) Mortgage warehouse facilities 93,513 260,000 Annual Subordinated note payable 43,750 43,750 June 2007 Series 2000-A bonds payable 252,477 252,477 2009-2017 Series 2001-4 bonds payable 33,938 33,938 2009-2013 Series 2001 bonds payable 118,690 118,690 October 2006 Series 2003 bonds payable 24,906 24,906 2005-2010 --------------- ------------- $ 751,834 $ 950,716 =============== =============

(In thousands) 2003 2002 2001 ------------ ------------- ------------- Expected tax at U.S. statutory rate $ 2,761 $ 9,180 $ (5,351 ) REIT income not subject to U.S. income tax (10,288 ) (9,004 ) 5,949 Goodwill amortization -- -- 902 Change in valuation allowance 7,527 (176 ) (1,500 ) ------------ ------------- ------------ Provision for income taxes $ -- $ -- $ -- ------------ ------------- ------------

(In thousands) 2003 2002 ---------- ----------- Deferred tax asset: Cash flow hedge related difference $ 4,039 $ 5,789 Loan valuation and related hedge differences (155) 1,899 Loan origination fees 646 619 Real estate loss reserves 1,303 300 Reserve for investment losses 1,200 736 Net operating losses 1,092 250 Other 449 (19) ---------- ----------- Total 8,574 9,574 Valuation allowance (842) (7,846) ---------- ----------- Net recorded deferred tax asset $ 7,732 $ 1,728 ========== ===========

(In thousands) 2003 2002 2001 ------------ ----------- ------------- Current: Federal $ 2,678 $ 1,487 $ -- State 458 241 -- ------------ ----------- ------------- 3,136 1,728 -- ------------ ----------- ------------- Deferred: Federal (8,466 ) (1,487 ) -- State (1,016 ) (241 ) -- ------------ ----------- ------------- (9,482 ) (1,728 ) -- ------------ ----------- ------------- Total provision/(benefit) $ (6,346 ) $ -- $ -- ============ =========== =============

(In thousands) 2003 2002 2001 ------------ ----------- ------------ Continuing operations $ -- $ -- $ -- Discontinued operations (6,346) -- -- ------------ ----------- ------------ Total income tax benefit $ (6,346) $ -- $ -- ============ =========== ============

(In thousands) --------------------------------------- Amounts received (paid): 2003 2002 2001 ------------ ------------ ------------ Services purchased from affiliates (1) $ (3,094) $ (3,954) $ (4,564) Rental and other expenses to affiliates for office space (2) $ (1,445) $ (1,479) $ (1,237) Servicing fees from affiliates (3) $ 4,612 $ 5,938 $ 6,771 Referral fees from the Bank $ 1,109 $ 734 $ 1,580 Sale of properties to an affiliate (4) $ -- $ 25,857 $ 13,430 Sale of equipment leases to an affiliate (5) $ -- $ -- $ 1,100

Year Ended December 31, 2003 (In thousands) CNL- CNL-Capital Consolidated Investments Corp. Other Totals ------------- -------------- ------------- --------------- Revenues $ 84,560 $ 32,254 $ (3,180 ) $ 113,634 ------------- -------------- ------------- --------------- General operating and administrative 8,980 18,645 (2,417 ) 25,208 Interest expense 27,481 23,653 (558 ) 50,576 Property expenses, state and other taxes 1,013 (3 ) -- 1,010 Depreciation and amortization 11,392 934 -- 12,326 Loss on termination of cash flow hedges -- 502 -- 502 Impairments and provisions on assets 4,391 8,756 -- 13,147 Minority interest net of equity in earnings 114 1,691 -- 1,805 Loss on sale of assets 148 9 -- 157 ------------- -------------- ------------- --------------- 53,519 54,187 (2,975 ) 104,731 ------------- -------------- ------------- --------------- Discontinued operations: Earnings/(loss) from discontinued operations, net of income tax benefit (3,274 ) 36,811 -- 33,537 ------------- -------------- ------------- --------------- Net income $ 27,767 $ 14,878 $ (205 ) $ 42,440 ============= ============== ============= =============== Assets at December 31, 2003 $ 811,203 $ 491,923 $ (5,010 ) $ 1,298,116 ============= ============== ============= =============== Investments accounted for under the equity method at December 31, 2003 $ 1,038 $ -- $ -- $ 1,038 ============= ============== ============= ===============

Year Ended December 31, 2002 (In thousands) CNL- CNL-Capital Consolidated Investments Corp. Other Totals -------------- -------------- ----------- --------------- Revenues $ 87,600 $ 250,784 $ (3,221 ) $ 335,163 -------------- -------------- ----------- --------------- Cost of real estate sold -- 193,179 -- 193,179 General operating and administrative 11,764 19,064 (2,395 ) 28,433 Interest expense 30,590 28,490 (679 ) 58,401 Property expenses, state and other taxes 2,813 390 -- 3,203 Depreciation and amortization 11,635 1,243 -- 12,878 Impairments and provisions on assets 4,448 5,150 -- 9,598 Minority interest net of equity in earnings 128 2,180 -- 2,308 Loss on sale of assets 330 17 -- 347 -------------- -------------- ----------- --------------- 61,708 249,713 (3,074 ) 308,347 -------------- -------------- ----------- --------------- Discontinued operations: Earnings/(loss) from discontinued operations, net of income tax benefit (2,722 ) 11,496 -- 8,774 -------------- -------------- ----------- --------------- Net income $ 23,170 $ 12,567 $ (147 ) $ 35,590 ============== ============== =========== =============== Assets at December 31, 2002 $ 831,491 $ 555,971 $ (4,012 ) $ 1,383,450 ============== ============== =========== =============== Investments accounted for under the equity method at December 31, 2002 $ 1,121 $ -- $ -- $ 1,121 ============== ============== =========== ===============

Year Ended December 31, 2001 (In thousands) CNL- CNL-Capital Consolidated Investments Corp. Other Totals ------------- --------------- ----------- --------------- Revenues $ 87,481 $ 190,123 $ (4,351 ) $ 273,253 ------------- --------------- ----------- --------------- Cost of real estate sold -- 118,372 -- 118,372 General operating and administrative 8,757 22,564 (1,729 ) 29,592 Interest expense 36,907 31,787 (802 ) 67,892 Property expenses, state and other taxes 2,474 143 214 2,831 Depreciation and amortization 11,942 5,519 -- 17,461 Loss on termination of cash flow hedges 1,643 6,417 -- 8,060 Impairments and provisions on assets 40,179 488 -- 40,667 Minority interest and equity in earnings 132 1,020 -- 1,152 Loss on sale of assets 1,116 22 -- 1,138 Cumulative effect of accounting change -- 3,841 -- 3,841 ------------- --------------- ----------- --------------- 103,150 190,173 (2,317 ) 291,006 ------------- --------------- ----------- --------------- Discontinued operations: Earnings/(loss) from discontinued operations, net of income tax benefit (7,151 ) 452 -- (6,699 ) ------------- --------------- ----------- --------------- Net income/(loss) $ (22,820 ) $ 402 $ (2,034 ) $ (24,452 ) ============= =============== =========== =============== Assets at December 31, 2001 $ 920,911 $ 643,154 $ (3,948 ) $ 1,560,117 ============= =============== =========== =============== Investments accounted for under the equity method at December 31, 2001 $ 1,058 $ -- $ -- $ 1,058 ============= =============== =========== ===============

(In thousands except for share data) 2003 Quarter First Second Third Fourth Year --------------------------------- ----------- ---------- ---------- ----------- ----------- Continuing operations: Revenues (1) $ 27,075 $ 28,230 $29,745 $28,584 $ 113,634 =========== ========== ========== =========== =========== Earnings from continuing operations, net (1) $ 750 $ 1,820 $ 6,245 $ 88 $ 8,903 Discontinued operations: Earnings and gains from discontinued operations, net (1) 7,269 8,770 6,803 10,695 33,537 ----------- ---------- ---------- ----------- ----------- Net Income $ 8,019 $ 10,590 $13,048 $10,783 $ 42,440 =========== ========== ========== =========== =========== Earnings per share: Continuing operations (1) $ 0.01 $ 0.04 $ 0.14 $ 0.01 $ 0.20 =========== ========== ========== =========== =========== Discontinued operations (1) $ 0.17 $ 0.19 $ 0.15 $ 0.23 $ 0.74 =========== ========== ========== =========== ===========

(In thousands except for share data) 2002 Quarter First Second Third Fourth Year --------------------------------- ---------- ----------- ---------- ---------- ------------ Continuing operations: Revenues (1) $69,217 $ 137,257 $80,420 $48,269 $ 335,163 ========== =========== ========== ========== ============ Earnings/(loss) from continuing operations, net (1) $ 6,034 $ 13,804 $ 7,845 $ (867) $ 26,816 Discontinued operations: Earnings and gains from discontinued operations, net (1) 398 1,238 3,398 3,740 8,774 ---------- ----------- ---------- ---------- ------------ Net Income $6,432 $ 15,042 $11,243 $ 2,873 $ 35,590 ========== =========== ========== ========== ============ Earnings/(loss) per share: Continuing operations (1) $ 0.14 $ 0.31 $ 0.17 $ (0.02) $ 0.60 ========== =========== ========== ========== ============ Discontinued operations (1) $ 0.01 $ 0.03 $ 0.08 $ 0.08 $ 0.20 ========== =========== ========== ========== ============

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