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, 1997
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 Identification No.
of Incorporation or Organization
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,
1997 1996
Assets
Real estate held for sale $ 1,497,736 $ 1,497,736
Cash and cash equivalents 858,898 1,478,513
Rent and other receivable 70,556 76,042
Total Assets $ 2,427,190 $ 3,052,291
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 54,844 $ 36,025
Due to Burger King Corporation _ 14,152
Distributions payable 196,633 812,096
Total Liabilities 251,477 862,273
Partners' Capital (Deficit):
General Partner (89,538) (88,823)
Limited Partners
(15,000 units outstanding) 2,265,251 2,278,841
Total Partners' Capital 2,175,713 2,190,018
Total Liabilities and Partners' Capital $ 2,427,190 $ 3,052,291
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1997
General Limited
Partner Partners Total
Balance at December 31, 1996 $ (88,823) $ 2,278,841 $2,190,018
Net income 23,800 452,198 475,998
Distributions to partners (24,515) (465,788) (490,303)
Balance at September 30, 1997 $ (89,538) $ 2,265,251 $2,175,713
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
Income
Rental income $ 209,597 $ 246,309 $ 683,516 $ 771,660
Interest income 11,594 16,906 35,701 38,064
Miscellaneous income 345 240 1,526 870
Total Income 221,536 263,455 720,743 810,594
Expenses
Ground lease rent 28,229 28,229 84,686 84,686
Management fee 18,136 21,808 59,882 68,697
Depreciation _ 27,635 _ 82,906
General and administrative 28,169 19,278 100,177 45,360
Total Expenses 74,534 96,950 244,745 281,649
Income from operations 147,002 166,505 475,998 528,945
Net Income $ 147,002 $ 166,505 $ 475,998 $ 528,945
Net Income Allocated:
To the General Partner $ 7,350 $ 9,707 $ 23,800 $ 30,593
To the Limited Partners 139,652 156,798 452,198 498,352
$ 147,002 $ 166,505 $ 475,998 $ 528,945
Per limited partnership interest
(15,000 outstanding) $9.31 $10.45 $30.15 $33.22
Statements of Cash Flows
For the nine months ended September 30, 1997 1996
Cash Flows From Operating Activities
Net income $ 475,998 $ 528,945
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation _ 82,906
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Rent and other receivable 5,486 (30,156)
Accounts payable and accrued expenses 18,819 (10,203)
Due to Burger King Corporation (14,152) 725
Net cash provided by operating activities 486,151 572,217
Cash Flows From Financing Activities
Cash distributions to partners (1,105,766) (523,658)
Net cash used for financing activities (1,105,766) (523,658)
Net increase (decrease) in cash and cash equivalents (619,615) 48,559
Cash and cash equivalents, beginning of period 1,478,513 973,641
Cash and cash equivalents, end of period $ 858,898 $ 1,022,200
Notes to the Financial Statements
The interim unaudited financial statements should be read in
conjunction with Burger King Limited Partnership I's (the
"Partnership") 1996 annual audited financial statements within
Form 10-K.
The interim unaudited financial statements include all normal and
recurring adjustments which are, in the opinion of management,
necessary to present a fair statement of financial position as of
September 30, 1997 and the results of operations for the three-
and nine-month periods ended September 30, 1997 and 1996 and cash
flows for the nine-month periods ended September 30, 1997 and
1996 and the statement of partners' capital (deficit) for the
nine-month period ended September 30, 1997. Results of
operations for the period are not necessarily indicative of the
results to be expected for the full year.
The following significant event has occurred subsequent to fiscal
year 1996 which requires disclosure in this interim report per
Regulation S-X, Rule 10-01, Paragraph (a)(5):
The Partnership has entered into a non-binding letter of intent
("LOI") with a third party for the sale of the Partnership's
remaining nine properties (the "Properties") for a purchase price
of $6,400,000. Any sale of the Properties to this potential
buyer is subject to, among other things, the potential buyer's
review and inspection of the Properties and the execution of a
definitive contract of sale. Accordingly, there can be no
assurance that the Properties will be sold to this potential
buyer or, if sold to it, that the actual purchase price will not
be renegotiated.
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At September 30, 1997, the Partnership had a cash and cash
equivalents balance of $858,898, compared to $1,478,513 at
December 31, 1996. The decrease is primarily attributable to the
distribution made on January 30, 1997 of the net proceeds
received from the sale of a restaurant property located in
Wichita, Kansas, which were previously included in the
Partnership's cash balance at December 31, 1996. The
Partnership's cash balance at September 30, 1997 consisted
primarily of the Partnership's working capital, cash flow from
operations for the third quarter of 1997 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"). At September
30, 1997, the Partnership owned nine restaurant properties
(hereinafter referred to individually as a "Property" and,
collectively, as the "Properties").
As reported in the Partnership's Quarterly Report on Form 10-Q for the
Three Months Ended June 30, 1997, BK I Realty Inc., the general
partner of the Partnership (the "General Partner"), has engaged the
services of Jones Lang Wootton, a nationally recognized real estate
broker, to assist in marketing the Partnership's remaining nine
Properties for sale. During the third quarter of 1997, the
Partnership received competitive bids from a number of third-parties.
Following an evaluation of these bids, the Partnership entered into a
non-binding letter of intent ("LOI") with a third party for the sale
of the Properties for a purchase price of $6,400,000. Any sale of the
Properties to this potential buyer is subject to, among other things,
the potential buyer's review and inspection of the Properties and the
execution of a definitive contract of sale. Accordingly, there can be
no assurance that the Properties will be sold to this potential buyer
or, if sold to it, that the actual purchase price will not be
renegotiated.
Any proposed sale is also subject to the satisfaction of certain
conditions, including the right of Limited Partners to reject the
proposed sale. Pursuant to the terms of the Partnership Agreement, a
majority in interest of the Limited Partners have the right to
disapprove of the sale of all or substantially all of the
Partnership's assets. In anticipation of a sale, a proxy will be
mailed to the Limited Partners notifying them of their right to
disapprove any proposed sale.
Once the sale of the Properties is completed, the net sales
proceeds will be distributed in accordance with the terms of the
Partnership Agreement and the Partnership will be dissolved.
While the General Partner is hopeful that a sale of the remaining
Properties can be completed during 1997, there can be no
assurance that such efforts will be successful within this time
frame. As a result of the Partnership's efforts to market the
Properties for sale, the Properties have been reclassified on the
Partnership's balance sheet as real estate held for sale.
The General Partner believes that the potential environmental
remediation costs associated with the Greenfield Property will
not exceed $300,000 and, therefore, in accordance with the
Partnership Agreement, such amount has been set aside from the
Partnership's cash flow from operations to fund these costs. The
Partnership had previously proposed site-specific clean-up
standards for the Greenfield Property to the Wisconsin Department
of Natural Resources ("WDNR"). If the proposed site-specific
standards are approved by the WDNR prior to the sale of the
Greenfield Property, it is expected that any of such reserves
spent on the environmental remediation should be recovered from
the proceeds of the eventual sale of the Greenfield Property.
Therefore, any remediation costs incurred prior to a sale of the
Greenfield Property will be capitalized and included in the
carrying value of the Greenfield Property. Alternatively, if the
sale occurs prior to the receipt of such approval, it is likely
that any buyer will attribute a discount to the value of the
Greenfield Property in determining an acceptable purchase price.
The General Partner believes that the Partnership will have
sufficient assets with which to pay any potential remediation
costs on the Greenfield Property. In the unlikely event that the
Partnership does not have sufficient assets with which to pay
such costs, the General Partner is unaware of any Federal or
State of Wisconsin environmental law imposing any personal
liability on the limited partners of the Partnership (the
"Unitholders") for their pro-rata share of the Partnership's
remediation costs. Therefore, except as otherwise provided for
in the Partnership Agreement, Unitholders may be liable for
Partnership obligations only to the extent of their respective
capital contributions.
Distributions payable at September 30, 1997 were $196,633, of
which $177,021 was paid on November 4, 1997. The unpaid portion
of $19,612 represents an amount equal to 4% of the quarterly
distributions of net cash flow from operations. Pursuant to the
terms of the Partnership Agreement, net cash flow from operations
is distributed on the basis of 95% to the Unitholders and 1% to
the General Partner with the remaining 4% being retained by the
Partnership as a contingent reserve (the "Contingent Reserve").
Unitholders are entitled to receive an annual return equal to
12.5% of their remaining invested capital. To the extent
Unitholders do not receive an annual return of 12.5%, the
Contingent Reserve is distributed to the Unitholders with the
remainder, if any, distributed to the General Partner.
Including the 1997 third quarter distribution of net cash flow
from operations which was paid to Unitholders on November 4, 1997
in the amount of $11.68 per Unit, Unitholders have received total
cash distributions of $2,350.76 per original $1,000 Unit since
the inception of the Partnership. This total includes
distributions of net cash flow from operations in the amount of
$1,641.33 per Unit and distributions of net proceeds from the
sales of Properties in the amount of $709.37 per Unit.
Distributions of net sales proceeds represent returns of capital
which have reduced the size of each Unit from $1,000 to $290.63.
Results of Operations
The Partnership generated net income of $147,002 and $475,998 for
the three- and nine-month periods ended September 30, 1997,
respectively, compared to $166,505 and $528,945 for the
corresponding periods in 1996. The decrease in net income for
both of the 1997 periods is primarily attributable to a decrease
in rental income and an increase in general and administrative
expenses. The decreases were partially offset by a lower
depreciation expense.
Rental income for the three- and nine-month periods ended
September 30, 1997 totaled $209,597 and $683,516, respectively,
compared to $246,309 and $771,660 for the corresponding periods
in 1996. The decreases for both periods are primarily
attributable to the decrease in sales at the Properties during
the 1997 period which was primarily the result of the sale of a
property located in Wichita, Kansas in the fourth quarter of
1996.
Interest income for the three- and nine-month periods ended
September 30, 1997 totaled $11,594 and $35,701, respectively,
compared to $16,906 and $38,064 for the corresponding periods in
1996. The decrease in interest income for both periods is
primarily attributable to a lower cash balance invested by the
Partnership during the third quarter of 1997.
No depreciation expense was recorded for the three- or nine-month
periods ended September 30, 1997, compared to $27,635 and $82,906
for the corresponding periods in 1996. Effective December 31,
1996, the Partnership ceased recording depreciation expense as a
result of the classification of the Properties as real estate
held for sale in accordance with Statement of Financial
Accounting Standards No. 121.
General and administrative expenses totaled $28,169 and $100,177
for the three- and nine-month periods ended September 30, 1997,
respectively, compared to $19,278 and $45,360 for the
corresponding periods in 1996. During the 1997 periods, certain
expenses incurred by an unaffiliated third-party service provider
in servicing the Partnership, which were voluntarily absorbed by
affiliates of the General Partner in prior periods, were
reimbursed to the General Partner and its affiliates.
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, 1997.
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 11, 1997 BY: /s/Kenneth F. Boyle
Kenneth F. Boyle
President, Director and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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