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: 0-11059
BURGER KING LIMITED PARTNERSHIP II
Exact Name of Registrant as Specified in its Charter
New York 13-3133321
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 held for sale $ --- $ 5,617,793
Cash and cash equivalents 1,453,754 653,171
Rent receivable and other assets 9,000 232,047
Total Assets $ 1,462,754 $ 6,503,011
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 255,568 $ 271,548
Due to Burger King Corporation 684,924 ---
Due to affiliates 2,868 1,300
Distributions payable 519,394 553,173
Total Liabilities 1,462,754 826,021
Partners' Capital (Deficit):
General Partner --- (61,128)
Limited Partners (15,000 interests outstanding) --- 5,738,118
Total Partners' Capital --- 5,676,990
Total Liabilities and Partners' Capital $ 1,462,754 $ 6,503,011
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1996
General Limited
Partner Partners Total
Balance at December 31, 1995 $ (61,128) $ 5,738,118 $ 5,676,990
Net income 772,284 11,180,250 11,952,534
Distributions to partners (711,156) (16,918,368) (17,629,524)
Balance at September 30, 1996 $ --- $ --- $ ---
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Income
Rental income $ --- $ 702,034 $ 1,007,541 $2,055,843
Interest income 102,967 9,147 247,276 24,181
Miscellaneous income 120 575 1,580 1,520
Total Income 103,087 711,756 1,256,397 2,081,544
Expenses
Depreciation --- 65,149 --- 200,942
Ground lease rent --- 86,244 133,417 271,040
Management fee --- 61,579 82,441 178,470
General and administrative (97,202) 26,555 87,855 78,282
Total Expenses (97,202) 239,527 303,713 728,734
Income from operations 200,289 472,229 952,684 1,352,810
Other Income
Gain on sales of properties --- --- 10,999,850 49,818
Net Income $ 200,289 $ 472,229 $11,952,534 $1,402,628
Net Income Allocated:
To the General Partner $ (4,967) $ 26,869 $ 772,284 $ 78,186
To the Limited Partners 205,256 445,360 11,180,250 1,324,442
$ 200,289 $ 472,229 $11,952,534 $1,402,628
Per limited partnership interest
(15,000 outstanding) $13.68 $29.69 $745.35 $88.30
Statements of Cash Flows
For the nine months ended September 30, 1996 1995
Cash Flows From Operating Activities
Net income $11,952,534 $1,402,628
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation --- 200,942
Gain on sales of properties (10,999,850) (49,818)
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Rent receivable and other assets 223,047 (56,652)
Accounts payable and accrued expenses (136,562) (491)
Due to affiliates 1,568 403
Due to Burger King Corporation 141,583 ---
Net cash provided by operating activities 1,182,320 1,497,012
Cash Flows From Investing Activities
Proceeds from sales of properties 17,281,566 151,691
Net cash provided by investing activities 17,281,566 151,691
Cash Flows From Financing Activities
Cash distributions to partners (17,663,303) (1,645,548)
Net cash used for financing activities (17,663,303) (1,645,548)
Net increase in cash and cash equivalents 800,583 3,155
Cash and cash equivalents, beginning of period 653,171 680,377
Cash and cash equivalents, end of period $ 1,453,754 $ 683,532
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction with Burger
King Limited Partnership II's (the "Partnership") 1995 annual audited financial
statements within Form 10-K.
These 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 events have occurred subsequent to fiscal year 1995
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
The Partnership agreed, subject to the satisfaction of certain conditions, to
sell the Partnership's remaining 29 restaurant properties (the "Properties")
to U.S. Restaurant Properties Operating L.P., a Delaware limited partnership
(the "Buyer"), pursuant to an Agreement of Purchase and Sale, dated as of
October 11, 1995, as amended by the First Amendment to Agreement of Purchase
and Sale dated as of January 9, 1996 and the Second Amendment to Agreement of
Purchase and Sale dated as of May 1, 1996 (as amended, the "Purchase
Agreement"). Pursuant to the terms of the Purchase Agreement, the Buyer
agreed to acquire the Properties for consideration in the amount of
$17,325,000 in cash (the "Purchase Price"), subject to adjustments and
prorations for base and percentage rents as well as certain other charges
payable in respect of the Properties and adjustments in respect of certain
closing costs (the "Sale").
In connection with the Sale and in accordance with the terms of the Agreement
of Limited Partnership dated as of August 23, 1982 (the "Partnership
Agreement"), a proxy statement (the "Proxy") was mailed to limited partners
of the Partnership (the "Unitholders") on March 25, 1996, describing the
terms of the Sale and presenting Unitholders with the opportunity to call a
meeting to consider whether to disapprove the Sale. In order to effect a
disapproval of the Sale, Unitholders holding 10% or more in interest of the
outstanding limited partnership interests (the "Units") were required to
submit written requests by April 30, 1996 to call for a meeting of the
Unitholders to consider whether to disapprove the Sale. The Partnership did
not receive written requests aggregating an amount equal to or in excess of
the required 10% in interest of the outstanding Units required to call a
meeting of Unitholders to disapprove the Sale. As a result, no meeting was
convened and BK II Properties Inc., the general partner of the Partnership
(the "General Partner"), completed the Sale on May 10, 1996.
On July 31, 1996, the Partnership paid a cash distribution to the Unitholders
in the amount of $1,084.48 per Unit, of which $1,069.17 represented net
proceeds from the Sale and $15.31 represented cash flow from operations for
the second quarter of 1996. After establishing sufficient reserves to pay
the Partnership's remaining general and administrative expenses and other
liabilities, the General Partner currently anticipates that the Partnership
should have additional cash available to fund a final liquidating
distribution to Unitholders. The General Partner intends to pay the
Unitholders this final distribution, in the amount of approximately $20 per
Unit, in the fourth quarter of 1996. The General Partner is currently in the
process of winding-up the affairs of the Partnership which is expected to be
dissolved by the end 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 cash and cash equivalents of
$1,453,754, compared to $653,171 at December 31, 1995. This increase is
primarily attributable to additional funds which were retained by the
Partnership to pay its remaining liabilities and additional expenses through
the liquidation of the Partnership. At September 30, 1996, the balances of the
Partnership's real estate held for sale and rent receivable and other assets
accounts were $0 and $9,000, respectively, compared to $5,617,793 and $232,047,
respectively, at December 31, 1995. These amounts decreased as a result of the
Sale.
The Partnership agreed, subject to the satisfaction of certain conditions, to
sell the Partnership's remaining 29 Properties to the Buyer, pursuant to the
Purchase Agreement. Pursuant to the terms of the Purchase Agreement, the Buyer
agreed to acquire the Properties for a Purchase Price of $17,325,000 in cash,
subject to adjustments and prorations for base and percentage rents as well as
certain other charges payable in respect of the Properties and adjustments in
respect of certain closing costs. On May 10, 1996, the Sale was completed. On
July 31, 1996, the Partnership paid a cash distribution to the Unitholders in
the amount of $1,084.48 per Unit, of which $1,069.17 represented net proceeds
from the Sale and $15.31 represented cash flow from operations for the second
quarter of 1996. After establishing sufficient reserves to pay the
Partnership's remaining general and administrative expenses and other
liabilities, the General Partner currently anticipates that the Partnership
should have additional cash available to fund a final liquidating distribution
to Unitholders. The General Partner intends to pay to Unitholders this final
distribution, in the amount of approximately $20 per Unit, in the fourth
quarter of 1996. The General Partner is currently in the process of winding-up
the affairs of the Partnership which is expected to be dissolved by the end of
1996.
Due to Burger King Corporation ("BKC") increased from $0 at December 31, 1995
to $684,924 at September 30, 1996. The balance at September 30, 1996 includes
$141,583 in rent which was erroneously paid to the Partnership by BKC during
the second and third quarters of 1996. In order to correct the error, such
funds were returned to BKC in October 1996. The remaining balance of $543,341
is an additional management fee due to BKC as a result of the Sale. In
accordance with the Partnership's property management agreements, BKC is
entitled to receive 10% of the net proceeds from the sale of the Properties
after Unitholders achieve payout as defined in the Partnership Agreement.
Results of Operations
For the three- and nine-month periods ended September 30, 1996, the Partnership
generated net income of $200,289 and $11,952,534, respectively, compared to
$472,229 and $1,402,628, respectively, for the corresponding periods in 1995.
The decrease for the three-month period is primarily attributable to the Sale
which was completed on May 10, 1996. The increase in net income for the
nine-month period is attributable to the gain recognized by the Partnership on
the Sale. The Sale is also the primary reason for the decrease in rental
income for the three- and nine-month periods ended September 30, 1996, when
compared to the corresponding periods in 1995.
Interest income for the three- and nine-month periods ended September 30, 1996
was $102,967 and $247,276, respectively, compared to $9,147 and $24,181,
respectively, for the corresponding periods in 1995. The increases are
primarily attributable to an overall increase in the Partnership's invested
cash balance during the 1996 periods as a result of net proceeds received from
the Sale.
Total expenses for the three- and nine-month periods ended September 30, 1996
were $(97,202) and $303,713, respectively, compared to $239,527 and $728,734,
respectively, for the corresponding periods in 1995. The decreases in total
expenses were primarily attributable to decreases in depreciation expense,
ground lease rent and management fees. No depreciation was recorded by the
Partnership during 1996 as a result of the Sale. The decreases in ground lease
rent and management fees paid by the Partnership were also attributable to the
Sale. This was partially offset by an increase in general and administrative
expenses primarily due to costs associated with the preparation of the Proxy.
Total expenses for the three-month period ended September 30, 1996 of $(97,202)
represents the reversal of an over-accrual of legal fees which were previously
accrued by the Partnership in connection with the Proxy.
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 II
BY: BK II PROPERTIES 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> 1,453,754
<SECURITIES> 0
<RECEIVABLES> 9,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,462,754
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,462,754
<CURRENT-LIABILITIES> 1,462,754
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,462,754
<SALES> 0
<TOTAL-REVENUES> 1,256,397
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 303,713
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 952,684
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 10,999,850
<CHANGES> 0
<NET-INCOME> 11,952,534
<EPS-PRIMARY> 745.35
<EPS-DILUTED> 0
</TABLE>
