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 June 30, 1995
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: 0-11059
BURGER KING LIMITED PARTNERSHIP II
(Exact name of registrant as specified in its charter)
New York 13-3133321
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
Attention: Andre Anderson
3 World Financial Center, 29th Floor, New York, NY 10285
(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
June 30, December 31,
Assets 1995 1994
Real estate at cost:
Land $ 3,576,544 $ 3,576,544
Buildings 5,211,966 5,431,714
Fixtures and equipment 2,567,076 2,675,310
11,355,586 11,683,568
Less - accumulated depreciation (5,672,644) (5,762,960)
5,682,942 5,920,608
Cash 743,055 680,377
Rent receivable 164,510 121,417
Total Assets $ 6,590,507 $ 6,722,402
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 23,079 $ 44,073
Due to affiliates 1,600 1,397
Distributions payable 643,057 580,378
Total Liabilities 667,736 625,848
Partners' Capital (Deficit):
General Partner (52,096) (54,272)
Limited Partners (15,000 units outstanding) 5,974,867 6,150,826
Total Partners' Capital 5,922,771 6,096,554
Total Liabilities and Partners' Capital $ 6,590,507 $ 6,722,402
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1995
Limited General
Partners Partner Total
Balance at December 31, 1994 $ 6,150,826 $ (54,272) $ 6,096,554
Net income 879,082 51,317 930,399
Distributions (1,055,041) (49,141) (1,104,182)
Balance at June 30, 1995 $ 5,974,867 $ (52,096) $ 5,922,771
Statements of Operations
Three months ended Six months ended
June 30, June 30,
Income 1995 1994 1995 1994
Rental income $ 722,645 $ 635,870 $ 1,353,809 $ 1,246,031
Interest income 7,499 4,414 15,034 8,222
Other income 650 455 945 975
Total Income 730,794 640,739 1,369,788 1,255,228
Expenses
Depreciation 67,897 67,897 135,793 135,793
Ground lease rent 92,398 91,682 184,796 181,454
Management fee 63,315 54,418 116,891 106,457
General and administrative 35,345 16,351 51,727 34,578
Total Expenses 258,955 230,348 489,207 458,282
Income from operations 471,839 410,391 880,581 796,946
Other Income
Gain on sale of property 49,818 -- 49,818 --
Net Income $ 521,657 $ 410,391 $ 930,399 $ 796,946
Net Income Allocated:
To the General Partner $ 27,485 $ 23,914 $ 51,317 $ 46,637
To the Limited Partners 494,172 386,477 879,082 750,309
$ 521,657 $ 410,391 $ 930,399 $ 796,946
Per limited partnership
interest
(15,000 outstanding) $ 32.94 $ 25.77 $ 58.61 $ 50.02
Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 930,399 $ 796,946
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 135,793 135,793
Gain on sale of property (49,818) --
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Rent receivable (43,093) 21,603
Accounts payable and accrued expenses (20,994) (16,636)
Due to affiliates 203 (1,696)
Net cash provided by operating activities 952,490 936,010
Cash Flows from Investing Activities:
Proceeds from sale of property 151,691 --
Net cash provided by investing activities 151,691 --
Cash Flows from Financing Activities:
Cash distributions paid (1,041,503) (961,781)
Net cash used for financing activities (1,041,503) (961,781)
Net increase (decrease) in cash 62,678 (25,771)
Cash at beginning of period 680,377 626,860
Cash at end of period $ 743,055 $ 601,089
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
Burger King Limited Partnership II's (the "Partnership") annual 1994 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 June 30, 1995 and the results of operations for the three and
six months ended June 30, 1995 and 1994, cash flows for the six months ended
June 30, 1995 and 1994, and the statement of partners' capital (deficit) for
the six months ended June 30, 1995. Results of operations for the periods are
not necessarily indicative of the results to be expected for the full year.
The following significant events have occurred subsequent to fiscal year 1994,
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
A. During the second quarter of 1995, the Partnership sold one property as
follows:
Date Adjusted Net Gain
of Selling Book on
Store Sale Price* Value Sale
Ferguson, MO 6/30/95 $ 151,691 $ 101,873 $ 49,818
*Purchase price of the property less estimated legal costs related to
the sale of the property.
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
At June 30, 1995, the Partnership had cash of $743,055, compared to $680,377 at
December 31, 1994. The $62,678 increase in cash is the result of cash flow
generated from operations and proceeds from property sales exceeding
distributions to the Partners. Cash consists of the Partnership's working
capital and undistributed cash flow from operations.
In preparation for the sale of the Partnership's remaining 28 restaurant
properties (collectively, the "Properties"), the General Partner has been
negotiating with Burger King Corporation ("BKC") to purchase a property located
in Ferguson, Missouri (the "Ferguson Property"), which was declared
economically abandoned by BKC in 1991. In accordance with the Property
Management Agreement (the "Agreement"), if a Property is declared economically
abandoned, BKC is required to pay the Property's minimum base rent until it is
sold. In addition, the Partnership is entitled to all sales proceeds once the
Property is sold and BKC is required to supplement proceeds to the extent such
proceeds are less than the minimum owner-lessor price set forth in the
Agreement. Although prospective third-party buyers attributed little or no
value to the Property, BKC purchased the Ferguson Property on June 30, 1995 for
the owner-lessor price of $151,691.
The Partnership's Marietta, Georgia property was also declared economically
abandoned by BKC on January 29, 1994. BKC allowed the franchisee to continue
operating this property while it was marketed for sale. On May 15, 1995, BKC
executed a sales agreement with a third-party buyer with respect to this
Property for a sales price of $445,000. The sale is expected to close in
either the third or fourth quarter of 1995.
The General Partner is aggressively marketing the Properties for sale.
However, there can be no assurance that the General Partner will be successful
in selling any or all of the Properties during 1995. Until the Partnership
completes the sale of all of the Properties, those Properties which remain
unsold will continue to operate, and it is intended that cash flow from
operations will be distributed to the partners in accordance with the terms of
the Partnership Agreement.
Rent receivable at June 30, 1995 and December 31, 1994 was $164,510 and
$121,417, respectively. The increase in rent receivable is attributable to an
increase in percentage rents earned during the first half of 1995 as compared
to the fourth quarter of 1994.
Distributions payable at June 30, 1995 were $643,057, which consisted of
$151,691 of net proceeds from the sale of the Ferguson Property and $491,366 of
cash flow from operations for the second quarter of 1995. On August 1, 1995,
the Partnership paid a cash distribution to the partners in the amount of
$603,743. The unpaid portion of $39,314 primarily represents an amount equal
to 4% of the quarterly distribution 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 95% to 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"). To the extent the limited
partners do not receive an annual return of 12.5% of their remaining invested
capital, the Contingent Reserve shall be distributed to the limited partners
with the remainder, if any, distributed to the General Partner.
Accounts payable and accrued expenses decreased to $23,079 at June 30, 1995
from $44,073 at December 31, 1994, primarily as a result of differences in the
timing of the payment of audit and tax fees.
Results of Operations
For the three and six months ended June 30, 1995, the Partnership generated net
income of $521,657 and $930,399, respectively, compared to $410,391 and
$796,946, respectively, for the corresponding periods in 1994. The increases
are primarily attributable to the gain recognized on the sale of the Ferguson
Property of $49,818, and an increase in percentage rental income as a result of
improved restaurant performance. Higher interest income also contributed to
the increase in net income over the prior periods due to a larger invested cash
balance and an increase in the average interest rate earned during 1995.
General and administrative expenses for the three and six months ended June 30,
1995 were $35,345 and $51,727, respectively, compared to $16,351 and $34,578,
respectively, for the corresponding periods in 1994. The increases in both
periods are primarily attributable to environmental consulting costs incurred
during the second quarter of 1995 in preparation for the sale of the
Properties.
PART II OTHER INFORMATION
Items 1-4 Not applicable
Item 5 Other information.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended June 30, 1995.
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 II
BY: BK II PROPERTIES INC.
General Partner
Date: August 11, 1995
BY: /s/Rocco Andriola
-----------------
Name: Rocco Andriola
Title: Director, President and
Chief Financial Officer
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
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