United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1996
or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition period from ______ to ______
Commission File Number: 0-11058
BURGER KING LIMITED PARTNERSHIP I
Exact Name of Registrant as Specified in its Charter
New York 13-3110947
State or Other Jurisdiction I.R.S. Employer
of Incorporation or Organization Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285-2900
Address of Principal Executive Offices Zip Code
(212) 526-3237
Registrant's Telephone Number, Including Area Code
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 ____
Balance Sheets At September 30, At December 31,
1996 1995
Assets
Real estate, at cost:
Land $ 1,113,406 $ 1,113,406
Buildings 2,210,836 2,210,836
Fixtures and equipment 485,306 485,306
3,809,548 3,809,548
Less accumulated depreciation (2,044,686) (1,961,780)
1,764,862 1,847,768
Cash and cash equivalents 1,022,200 973,641
Rent receivable 95,179 65,023
Total Assets $ 2,882,241 $ 2,886,432
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 127,915 $ 138,118
Due to affiliates 2,025 1,300
Distributions payable 272,200 180,645
Total Liabilities 402,140 320,063
Partners' Capital (Deficit):
General Partner (85,255) (85,088)
Limited Partners (15,000 interests outstanding) 2,565,356 2,651,457
Total Partners' Capital 2,480,101 2,566,369
Total Liabilities and Partners' Capital $ 2,882,241 $ 2,886,432
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1996
General Limited
Partner Partners Total
Balance at December 31, 1995 $ (85,088) $ 2,651,457 $ 2,566,369
Net income 30,593 498,352 528,945
Distributions to partners (30,760) (584,453) (615,213)
Balance at September 30, 1996 $ (85,255) $ 2,565,356 $ 2,480,101
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Income
Rental income $ 246,309 $ 258,075 $ 771,660 $ 775,155
Interest income 16,906 13,843 38,064 61,458
Miscellaneous income 240 555 870 1,530
Total Income 263,455 272,473 810,594 838,143
Expenses
Depreciation 27,635 27,635 82,906 90,687
Ground lease rent 28,229 28,229 84,686 84,686
Management fee 21,808 22,985 68,697 69,048
General and administrative 19,278 70,392 45,360 126,714
Total Expenses 96,950 149,241 281,649 371,135
Income from operations 166,505 123,232 528,945 467,008
Other Income
Gain on sales of properties --- --- --- 1,253,015
Net Income $ 166,505 $ 123,232 $ 528,945 $1,720,023
Net Income Allocated:
To the General Partner $ 9,707 $ 7,544 $ 30,593 $ 40,415
To the Limited Partners 156,798 115,688 498,352 1,679,608
$ 166,505 $ 123,232 $ 528,945 $1,720,023
Per limited partnership interest
(15,000 outstanding) $10.45 $7.71 $33.22 $111.97
Statements of Cash Flows
For the nine months ended September 30, 1996 1995
Cash Flows From Operating Activities
Net income $528,945 $1,720,023
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 82,906 90,687
Gain on sales of properties --- (1,253,015)
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Settlement escrow --- 95,260
Rent receivable (30,156) 24,281
Accounts payable and accrued expenses (10,203) (90,705)
Due to affiliates 725 851
Net cash provided by operating activities 572,217 587,382
Cash Flows From Investing Activities
Proceeds from sale of properties --- 1,804,526
Net cash provided by investing activities --- 1,804,526
Cash Flows From Financing Activities
Cash distributions to partners (523,658) (4,535,646)
Net cash used for financing activities (523,658) (4,535,646)
Net increase (decrease) in cash and cash equivalents 48,559 (2,143,738)
Cash and cash equivalents, beginning of period 973,641 3,128,790
Cash and cash equivalents, end of period $1,022,200 $ 985,052
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction with Burger
King Limited Partnership I's (the "Partnership") 1995 annual audited financial
statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of September 30, 1996, the results of operations for the three- and
nine-month periods ended September 30, 1996 and 1995, the statement of
partners' capital (deficit) for the nine-month period ended September 30, 1996
and the statements of cash flows for the nine-month periods ended September 30,
1996 and 1995. Results of operations for the three- and nine-month periods
ended September 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
The following significant event has occurred subsequent to fiscal year 1995,
which requires disclosure in this interim report per Regulation S-X, Rule
10-01, Paragraph (a)(5).
On October 1, 1996, the Partnership completed the sale of a property located in
Wichita, Kansas to the franchisee operating such property. BK I Realty Inc.,
the general partner of the Partnership (the "General Partner"), intends to
distribute the net proceeds from this sale to the partners of the Partnership
in the first quarter of 1997. The gain resulting from the sale will be
recorded by the Partnership during the fourth quarter of 1996.
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
At September 30, 1996, the Partnership had a cash and cash equivalents balance
of $1,022,200, compared to $973,641 at December 31, 1995. The increase is due
to cash flow from operations during the first nine months of 1996 exceeding
cash distributions paid for the fourth quarter of 1995 and the first and second
quarters of 1996. The Partnership's cash balance at September 30, 1996
consisted primarily of the Partnership's working capital, cash flow from
operations for the third quarter of 1996, and a reserve established to fund
potential environmental remediation costs with respect to one of the
Partnership's properties located in Greenfield, Wisconsin (the "Greenfield
Property").
On October 1, 1996, the Partnership sold a property located in Wichita, Kansas
to the franchisee operating such property. The General Partner intends to
distribute the net proceeds from this sale to the partners of the Partnership
in the first quarter of 1997 pursuant to the terms of the partnership agreement
dated December 14, 1981 (the "Partnership Agreement"). The gain resulting from
the sale will be recorded by the Partnership during the fourth quarter of 1996.
As a result of the sale, the Partnership currently has nine remaining
restaurant properties (hereinafter referred to individually as a "Property"
and, collectively, as the "Properties").
On September 23, 1994, the Partnership notified the Wisconsin Department of
Natural Resources (the "WDNR") that petroleum and chlorinated compounds were
discovered at the Greenfield Property. The WDNR has indicated that under
Wisconsin state law, the Partnership is responsible for remediating the site.
On May 26, 1995, the Partnership proposed site-specific clean-up standards for
the Greenfield Property to the WDNR, whose response has taken longer than
originally anticipated. The Partnership remains in contact with the WDNR in an
effort to obtain approval for site- specific clean-up standards in order to
establish a remediation plan for the Greenfield Property. Once the remediation
issue is resolved and costs associated with an approved remediation plan have
been determined, the General Partner should be in a better position to attempt
to sell the remaining Properties. Upon such sale, the General Partner intends
to distribute the net sales proceeds in accordance with the terms of the
Partnership Agreement.
In accordance with the terms of the Partnership Agreement, the Partnership has
set aside $300,000 of cash flow from operations to fund potential environment
remediation costs in connection with the Greenfield Property. The General
Partner believes that the cost of the environmental remediation should be
recovered from the proceeds from the eventual sale of the Greenfield Property.
Until all of the Properties are sold, the Partnership will continue to operate
the Properties, and it is intended that cash flow from operations will be
distributed to the partners of the Partnership in accordance with the terms of
the Partnership Agreement.
Rent receivable increased from $65,023 at December 31, 1995 to $95,179 at
September 30, 1996. The increase is primarily attributable to higher
percentage rent earned by the Partnership during the third quarter of 1996 as
compared to the fourth quarter of 1995.
Accounts payable and accrued expenses decreased from $138,118 at December 31,
1995 to $127,915 at September 30, 1996. The decrease is primarily attributable
to the payment of the Partnership's 1995 annual audit and tax fees.
Distributions payable at September 30, 1996 were $272,200, of which $247,592
was paid on October 31, 1996. The unpaid portion of $24,608 represents an
amount equal to 4% of the quarterly distributions of net cash flow from
operations which is required to be retained pursuant to the terms of the
Partnership Agreement. Net cash flow from operations is distributed on the
basis of 95% to the limited partners of the Partnership (the "Limited
Partners") and 1% to the General Partner with the remaining 4% being retained
by the Partnership as a contingent reserve (the "Contingent Reserve"). The
Limited Partners are entitled to receive a priority return equal to 12.5% per
annum on their remaining invested capital, as defined in the Partnership
Agreement. To the extent the Limited Partners do not receive an annual return
of 12.5%, the Contingent Reserve is distributed to the Limited Partners with
the remainder, if any, distributed to the General Partner.
Results of Operations
The Partnership generated net income of $166,505 and $528,945 for the three-
and nine-month periods ended September 30, 1996, respectively, compared to
$123,232 and $1,720,023 for the corresponding periods in 1995. The increase in
net income for the three-month period is primarily attributable to a decrease
in general and administrative expenses. The decrease in net income for the
nine-month period is primarily due to a gain on sales of three Properties
recognized by the Partnership during the first quarter of 1995 totaling
$1,253,015. Excluding the gain on sales of Properties, the Partnership
generated net income totaling $467,008 during the first nine months of 1995.
Rental income for the three- and nine-month periods ended September 30, 1996
totaled $246,309 and $771,660, respectively, largely unchanged from $258,075
and $775,155 for the corresponding periods in 1995.
Interest income for the three- and nine-month periods ended September 30, 1996
totaled $16,906 and $38,064, respectively, compared to $13,843 and $61,458 for
the corresponding periods in 1995. The increase for the three-month period is
primarily attributable to the timing of the accrual of interest income earned
on the Partnership's cash accounts. The decrease in interest income for the
nine-month period is primarily attributable to a decrease in the cash invested
by the Partnership during the first nine months of 1996. During the first and
second quarters of 1995, the Partnership received interest income on the net
proceeds from the sales of four Properties in December 1994 and three
Properties in March 1995. These proceeds were subsequently distributed to the
partners on January 30, 1995 and April 28, 1995, respectively.
Depreciation expense for the three- and nine-month periods ended September 30,
1996 totaled $27,635 and $82,906, respectively, compared to $27,635 and $90,687
for the corresponding periods in 1995. The decrease in depreciation expense
for the nine-month period is due to the sale of three Properties in March 1995.
General and administrative expenses totaled $19,278 and $45,360 for the three-
and nine-month periods ended September 30, 1996, respectively, compared to
$70,392 and $126,714 for the corresponding periods in 1995. The decreases in
general and administrative expenses are primarily attributable to a decrease in
environmental consulting costs and other professional fees incurred by the
Partnership in connection with the Greenfield Property.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended September 30, 1996
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, thereunto duly authorized.
BURGER KING LIMITED PARTNERSHIP I
BY: BK I REALTY INC.
General Partner
Date: November 13, 1996 BY: /s/ Rocco F. Andriola
Rocco F. Andriola
President, Director and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Sept-30-1996
<CASH> 1,022,200
<SECURITIES> 0
<RECEIVABLES> 95,179
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,117,379
<PP&E> 3,809,548
<DEPRECIATION> 2,044,686
<TOTAL-ASSETS> 2,882,241
<CURRENT-LIABILITIES> 402,140
<BONDS> 0
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0
0
<OTHER-SE> 2,480,101
<TOTAL-LIABILITY-AND-EQUITY> 2,882,241
<SALES> 0
<TOTAL-REVENUES> 810,594
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 281,649
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 528,945
<INCOME-TAX> 0
<INCOME-CONTINUING> 528,945
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 528,945
<EPS-PRIMARY> 33.22
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