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, 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 June 30, At December 31,
1996 1995
Assets
Real estate held for sale $ --- $ 5,617,793
Cash and cash equivalents 18,113,020 653,171
Rent receivable and other assets --- 232,047
Total Assets $18,113,020 $ 6,503,011
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 365,276 $ 271,548
Due to Burger King Corporation 625,198 ---
Due to affiliates 5,000 1,300
Distributions payable 16,952,850 553,173
Total liabilities 17,948,324 826,021
Partners' Capital (Deficit):
General Partner 27,241 (61,128)
Limited Partners (15,000 interests outstanding) 137,455 5,738,118
Total Partners' capital 164,696 5,676,990
Total Liabilities and Partners' Capital $18,113,020 $ 6,503,011
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1996
Limited General
Partners Partner Total
Balance at December 31, 1995 $ 5,738,118 $(61,128) $ 5,676,990
Net income 10,974,994 777,251 11,752,245
Distributions to Partners (16,575,657) (688,882) (17,264,539)
Balance at June 30, 1996 $ 137,455 $ 27,241 $ 164,696
Statements of Operations
Three months Six months
ended June 30, ended June 30,
1996 1995 1996 1995
Income
Rental income $329,647 $722,645 $1,007,541 $1,353,809
Interest income 136,876 7,499 144,309 15,034
Other income 210 650 1,460 945
Total income 466,733 730,794 1,153,310 1,369,788
Expenses
Depreciation --- 67,897 --- 135,793
Ground lease rent 40,125 92,398 133,417 184,796
Management fee 23,981 63,315 82,441 116,891
General and administrative 158,748 35,345 185,057 51,727
Total expenses 222,854 258,955 400,915 489,207
Income from operations 243,879 471,839 752,395 880,581
Other Income
Gain on sales of properties 10,999,850 49,818 10,999,850 49,818
Net Income $11,243,729 $521,657 $11,752,245 $930,399
Net Income Allocated:
To the General Partners $ 751,825 $ 27,485 $ 777,251 $ 51,317
To the Limited Partners 10,491,904 494,172 10,974,994 879,082
$11,243,729 $521,657 $11,752,245 $930,399
Per limited partnership interest
(15,000 outstanding) $699.46 $32.94 $731.67 $58.61
Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net income $11,752,245 $ 930,399
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation --- 135,793
Gain on sales (10,999,850) (49,818)
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Rent receivable and other assets 232,047 (43,093)
Accounts payable and accrued expenses (21,742) (20,994)
Due to Burger King Corporation 81,857 ---
Due to affiliates 3,700 203
Net cash provided by operating activities 1,048,257 952,490
Cash Flows From Investing Activities
Proceeds from sale of properties 17,276,454 151,691
Net cash provided by investing activities 17,276,454 151,691
Cash Flows From Financing Activities
Cash distributions to partners (864,862) (1,041,503)
Net cash used for financing activities (864,862) (1,041,503)
Net increase in cash 17,459,849 62,678
Cash and cash equivalents, beginning of period 653,171 680,377
Cash and cash equivalents, end of period $18,113,020 $ 743,055
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.
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, 1996, the results of operations for the three- and
six-month periods ended June 30, 1996 and 1995, the statement of partners'
capital (deficit) for the six-month period ended June 30, 1996 and the
statements of cash flows for the six-month periods ended June 30, 1996 and
1995. 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 1995
which requires 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. As a result of the Sale, the General Partner is
in the process of winding-up the affairs of the Partnership which should 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 June 30, 1996, the Partnership had cash and cash equivalents of $18,113,020,
compared to $653,171 at December 31, 1995. The $17,459,849 increase is
primarily attributable to the proceeds received from the sale of the
Partnership's 29 remaining Properties in May 1996, as discussed in the Notes to
the Financial Statements. The cash balance at June 30, 1996 consists of
proceeds from the Sale and, to a lesser extent, the Partnership's working
capital and undistributed cash flow from operations. As a result of the Sale,
the balances of the Partnership's real estate held for sale and rent receivable
and other assets accounts were $0 at June 30, 1996, compared to $5,617,793 and
$232,047, respectively, at December 31, 1995.
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. As a result of the Sale, the General Partner is in the
process of winding-up the affairs of the Partnership which should be dissolved
by the end of 1996. The Partnership has set aside certain funds which are
believed to be sufficient to pay the Partnership's general and administrative
expenses and other liabilities through liquidation. Any cash remaining after
payment of these items will subsequently be distributed to the partners of the
Partnership. Except for the possible distribution of these excess funds, there
will be no additional distributions to the Unitholders.
Accounts payable and accrued expenses totaled $365,276 at June 30, 1996,
compared to $271,548 at December 31, 1995. The increase is primarily
attributable to legal and other professional fees incurred by the Partnership
in connection with the Sale.
Due to Burger King Corporation ("BKC") increased from $0 at December 31, 1995
to $625,198 at June 30, 1996. The balance at June 30, 1996 includes $81,857 in
rent which was erroneously paid to the Partnership during the second quarter of
1996. Such funds will be returned to BKC. The remaining balance of $543,341
primarily reflects BKC's share of the net proceeds from the Sale. In accordance
with the Partnership's management agreements with BKC, BKC is entitled to
receive an amount equal to 10% of the net proceeds of the sale of the
Properties after Unitholders achieve payout as defined in the Partnership
Agreement.
Results of Operations
For the three- and six-month periods ended June 30, 1996, the Partnership
generated net income of $11,243,729 and $11,752,245, respectively, compared to
$521,657 and $930,399 for the corresponding periods in 1995. The increases in
net income for both periods are attributable to the gain recognized by the
Partnership on the Sale.
Rental income for the three- and six-month periods ended June 30, 1996 totaled
$329,647 and $1,007,541, respectively, compared to $722,645 and $1,353,809 for
the corresponding periods in 1995. The decreases for both periods are primarily
attributable to the Sale, which resulted in almost two less months of rental
income in the second quarter of 1996.
Total expenses for the three- and six-month periods ended June 30, 1996 were
$222,854 and $400,915, respectively, compared to $258,955 and $489,207 for the
corresponding periods in 1995. The decreases in total expenses for both
periods were primarily attributable to decreases in depreciation expense,
ground lease rent and management fees. No depreciation was recorded by the
Partnership during the six-month period ended June 30, 1996 since the
Properties were classified as real estate held for sale. The decrease in
ground lease rent and management fees paid by the Partnership was primarily
attributable to the Sale, which resulted in almost two less months of ground
lease rents and management fees paid by the Partnership in the second quarter
of 1996. The decrease in total expenses was partially offset by an increase in
general and administrative expenses primarily due to costs associated with
preparation of the March 1996 proxy solicitation to Unitholders and
professional fees relating to the Sale.
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 June 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: August 13, 1996 BY: /s/ Rocco F. Andriola
Name: Rocco F. Andriola
President, Director and
Chief Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
<CASH> 18,113,020
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,113,020
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,113,020
<CURRENT-LIABILITIES> 17,948,324
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 164,696
<TOTAL-LIABILITY-AND-EQUITY> 18,113,020
<SALES> 0
<TOTAL-REVENUES> 12,153,160
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 400,915
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,752,245
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,752,245
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,752,245
<EPS-PRIMARY> 731.67
<EPS-DILUTED> 0
</TABLE>
