UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended September 30, 1995 Commission file number 0-14510 CEDAR INCOME FUND, LTD. (Exact name of registrant as specified in its charter) Iowa 42-1241468 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4333 Edgewood Road N.E., Cedar 52499 Rapids, IA (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (319) 398-8975 N/A (Former name, address and fiscal year, if changed since last report) 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 for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares of common stock outstanding at November 13, 1995 was 2,245,411. PART I FINANCIAL INFORMATION Item 1. Financial Statements. CEDAR INCOME FUND, Ltd. Balance Sheets (unaudited) September 30 December 31, 1995 1994 1994 ASSETS Real estate Land 4,126,044 4,126,044 4,126,044 Buildings and improvements 14,200,539 14,200,539 14,200,539 Total real estate 18,326,583 18,326,583 18,326,583 Less accumulated depreciation (3,209,210) (2,772,856) (2,881,997) Total net real estate 15,117,373 15,553,727 15,444,586 Mortgage loan receivable 584,849 592,745 590,834 Total real estate and mortgage participation 15,702,222 16,146,472 16,035,420 Cash and cash equivalents 754,957 438,504 447,015 Rent and other receivables 86,503 95,212 62,543 Interest receivable 4,021 5,708 6,103 Prepaid expenses 34,722 45,620 53,583 Deferred lease commissions 134,353 184,753 171,264 Taxes held in escrow 50,933 48,243 10,304 TOTAL ASSETS 16,767,711 16,964,512 16,786,232 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Mortgage loan payable 1,449,643 1,468,473 1,463,929 Accounts payable and accrued expenses 206,553 206,200 86,059 Due to affiliates 34,588 51,236 29,062 Security deposits 67,870 66,999 68,127 Advance rents 30,270 52,311 48,884 TOTAL LIABILITIES 1,788,924 1,845,219 1,696,061 Shareholders' equity Common stock, $1 par value, 5,020,000 shares authorized 2,245,411 2,245,411 2,245,411 Additional paid-in capital 12,733,376 12,873,882 12,844,760 TOTAL SHAREHOLDERS' EQUITY 14,978,787 15,119,293 15,090,171 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 16,767,711 16,964,512 16,786,232
CEDAR INCOME FUND, Ltd. Statements of Operations (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 REVENUE Rents 607,355 600,079 1,807,266 1,739,566 Interest 22,125 17,641 63,363 48,908 Total revenue 629,480 617,720 1,870,629 1,788,474 EXPENSES Property expenses: Real estate taxes 63,857 61,111 179,760 193,384 Wages and salaries 5,320 10,814 15,179 32,597 Repairs and maintenance 59,743 98,140 257,506 243,484 Utilities 43,644 41,638 99,894 97,986 Management fee 30,367 30,005 90,362 86,979 Insurance 5,093 2,571 12,407 11,742 Other 22,205 25,705 67,700 67,566 Total property expenses, excluding depreciation 230,229 269,984 722,808 733,738 depreciation Depreciation 109,062 109,140 327,213 327,421 Total property expenses 339,291 379,124 1,050,021 1,061,159 Interest 34,969 35,404 105,242 106,516 Administrative fees 24,912 24,735 74,542 74,099 Directors' fees and expenses 10,044 12,359 32,524 38,073 Other administrative 14,554 12,390 46,061 44,493 Total expenses 423,770 464,012 1,308,390 1,324,340 Net earnings 205,710 153,708 562,239 464,134 Net earnings per share .09 .07 .25 .21 Dividends to shareholders 224,541 224,541 673,623 673,623 Dividends to shareholders per share .10 .10 .30 .30 Average number of shares outstanding 2,245,411 2,245,411 2,245,411 2,245,411
CEDAR INCOME FUND, Ltd. Statements of Cash Flows (unaudited) Nine Months Ended September 30, 1995 1994 Cash flows from operating activities: Rents collected 1,750,592 1,695,715 Interest received 65,445 48,037 Payments for operating expenses (723,422) (744,723) Interest paid (102,492) (103,766) Net cash provided by operating activities 990,123 895,263 Cash flows from investing activities: Principal portion of scheduled mortgage loan collections 5,985 5,499 Security deposits collected, net (257) 2,670 Net cash provided by investing activities 5,728 8,169 Cash flows from financing activities: Principal portion of scheduled mortgage loan payments (14,286) (13,013) Dividends paid to shareholders (673,623) (673,623) Net cash used by financing activities (687,909) (686,636) Net increase in cash and cash equivalents. 307,942 216,796 Cash and cash equivalents at beginning of period 447,015 221,708 Cash and cash equivalents at end of period 754,957 438,504 Reconciliation of net earnings to net cash provided by operating activities: Net earnings 562,239 464,134 Add (deduct) reconciling adjustments: Depreciation 327,213 327,421 Amortization 2,750 2,750 Increase in rent and other receivables (64,589) (70,770) Decrease (increase) in interest receivable 2,082 (871) Decrease in prepaid expenses 16,111 12,485 Decrease in deferred lease commissions 36,911 2,702 Increase in operating accounts payable, accrued expenses and due to affiliates 126,020 147,306 Increase (decrease) in advance rents (18,614) 10,106 Net cash provided by operating activities 990,123 895,263
NOTES TO FINANCIAL STATEMENTS Note 1: Interim financial statements are prepared in accordance with generally accepted accounting principles and include all adjustments of a normal recurring nature necessary for a fair presentation of the financial position and quarterly results. Interim reports should be read in conjuction with the audited financial statements and related notes included in the 1994 Annual Report. Note 2: Shareholders' equity, December 31, 1994 15,090,171 Net earnings 562,239 Dividends to shareholders (673,623) Shareholders' equity, September 30, 1995 14,978,787
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. We are pleased to present the third quarter report for Cedar Income Fund, Ltd. Net earnings for the three months ended September 30, 1995 were $205,710 ($.09 per share) compared to $153,708 ($.07 per share) for the same period in 1994, representing a 34% increase. Net earnings for the nine months ended September 30, 1995 were $562,239 ($.25 per share) compared to $464,134 ($.21 per share) for the same period in 1994, representing a 21% increase. Funds from operations (earning from operations plus depreciation) were $889,452 for the nine months ended September 30, 1995 compared to $791,555 for the same period in 1994. The increases in net earnings and funds from operations were primarily the result of higher revenues. Rental income for the nine months ended September 30, 1995 increased to $1,807,266 from $1,739,566 during the same period in 1994, a gain of 4%. Rents increased at Southpoint Parkway Center in Jacksonville, Florida and Broadbent Business Park in Salt Lake City, Utah due primarily to higher rental rates. As of September 30, 1995, the Company's real estate portfolio had an overall occupancy rate of 98%. Interest income for the nine months ended September 30, 1995 increased $14,455 over the same period in 1994 due to increased funds available for investment and higher interest rates on investable funds. Total property expenses, excluding depreciation, decreased from $733,738 for the first nine months of 1994 to $722,808 for the same period in 1995, representing 42% and 40% of rental income, respectively. Property expenses declined due primarily to lower real estate taxes resulting from a partial refund of 1994 taxes on Germantown Square Shopping Center in Louisville, Kentucky. Wages and salaries were also reduced due to a reduction in property management personnel at Broadbent. Hewlett Packard Corporation did not renew its lease for 20,400 square feet of space at Corporate Center East when it expired on September 30, 1995, but has exercised an option to extend the current lease until November 30, 1995. This lease represented 11% of the Company's revenue for the nine months ended September 30, 1995. The Company has begun marketing efforts to secure one or more replacement tenants for this space. The Company's capital resources consist of its current equity in real estate investments (current value less mortgage indebtedness) and a mortgage loan receivable. The Company maintains its real estate in good condition and provides adequate insurance coverage. The Company's liquidity at September 30, 1995, is represented by cash and cash equivalents of $754,957, a mortgage loan participation of $584,849, and cash flow from operating activities. This liquidity is considered sufficient to meet current obligations. On October 25, 1995, the Board of Directors declared a dividend of $.10 per share payable November 20, 1995 to shareholders of record on November 7, 1995. The Board of Directors will continue to consider leasing activity, operating results and financial condition of the Company in determining future dividends. SIGNATURE 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 thereunto duly authorized. CEDAR INCOME FUND, LTD. /s/ Alan F. Fletcher Alan F. Fletcher Vice President and Treasurer (principal financial officer) /s/ Edward J. Kittleson Edward J. Kittleson Controller (principal accounting officer) Dated: November 13, 1995