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, 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: 2-88051
BURGER KING LIMITED PARTNERSHIP III
(Exact name of registrant as specified in its charter)
New York 13-3178415
(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
September 30, December 31,
Assets 1995 1994
Real estate at cost:
Land $ 2,981,088 $ 2,981,088
Buildings 5,552,773 5,552,773
Fixtures and equipment 2,744,188 2,744,188
11,278,049 11,278,049
Less accumulated depreciation (5,633,408) (5,425,179)
5,644,641 5,852,870
Cash 519,583 500,420
Rent receivable 53,878 34,238
Due from affiliates 12,589 12,889
Due from Burger King Corporation 48,039 176,963
Total Assets $ 6,278,730 $ 6,577,380
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 32,006 $ 41,160
Distributions payable 421,338 400,420
Total Liabilities 453,344 441,580
Partners' Capital (Deficit):
General Partner (22,185) (17,076)
Limited Partners (15,000 units outstanding) 5,847,571 6,152,876
Total Partners' Capital 5,825,386 6,135,800
Total Liabilities and
Partners' Capital $ 6,278,730 $ 6,577,380
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1995
Limited General
Partners Partner Total
Balance at December 31, 1994 $ 6,152,876 $ (17,076) $ 6,135,800
Net income 942,137 60,546 1,002,683
Distributions (1,247,442) (65,655) (1,313,097)
Balance at September 30, 1995 $ 5,847,571 $ (22,185) $ 5,825,386
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
Income 1995 1994 1995 1994
Rental income $ 565,175 $ 532,985 $ 1,632,611 $ 1,529,940
Interest income 8,256 3,806 19,753 11,279
Other income 580 655 1,600 3,311
Total Income 574,011 537,446 1,653,964 1,544,530
Expenses
Depreciation 69,410 69,410 208,229 208,229
Ground lease rent 70,365 64,396 209,181 193,188
Management fee 58,678 53,433 163,831 148,773
General and administrative 17,817 40,157 70,040 74,199
Total Expenses 216,270 227,396 651,281 624,389
Net Income $ 357,741 $ 310,050 $ 1,002,683 $ 920,141
Net Income Allocated:
To the General Partner $ 21,358 $ 18,973 $ 60,546 $ 56,419
To the Limited Partners 336,383 291,077 942,137 863,722
$ 357,741 $ 310,050 $ 1,002,683 $ 920,141
Per limited partnership
unit (15,000 outstanding) $ 22.43 $ 19.40 $ 62.81 $ 57.58
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 1,002,683 $ 920,141
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 208,229 208,229
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Rent receivable (19,640) (18,274)
Due from affiliates 300 (794)
Due from Burger King Corporation 128,924 173,860
Accounts payable and accrued expenses (9,154) (12,976)
Net cash provided by operating activities 1,311,342 1,270,186
Cash Flows from Financing Activities:
Cash distributions paid (1,292,179) (1,262,444)
Net cash used for financing activities (1,292,179) (1,262,444)
Net increase in cash 19,163 7,742
Cash at beginning of period 500,420 470,856
Cash at end of period $ 519,583 $ 478,598
Notes to the Financial Statements
These unaudited interim financial statements should be read in conjunction with
Burger King Limited Partnership III's (the "Partnership") 1994 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, 1995 and the results of operations for the three
and nine-month periods ended September 30, 1995 and 1994, the statement of
changes in partners' capital (deficit) for the nine-month period ended
September 30, 1995 and the statements of cash flows for the nine-month periods
ended September 30, 1995 and 1994. Results of operations for the period are not
necessarily indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1994, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Partnership's cash balance consists of working capital and undistributed
cash flow from operations. At September 30, 1995, the cash balance was
$519,583, compared to $500,420 at December 31, 1994. The increase in cash is
primarily due to cash flow from operations in excess of cash distributions paid
during the first nine months of 1995. Cash flow generated from operations is
distributed quarterly to the partners. At September 30, 1995, the Partnership
had distributions payable of $421,338, which were subsequently distributed to
the partners on November 3, 1995.
Due from Burger King Corporation ("BKC") decreased from $176,963 at December
31, 1994 to $48,039 at September 30, 1995. The decrease is primarily
attributable to payments received from BKC as a refund of a portion of the
Partnership's annual management fees. In accordance with the terms of the
management agreement between BKC and the Partnership, BKC is required to return
all or a portion of the annual management fee paid by the Partnership if rents
from the restaurant properties (the "Properties") do not provide an annual
return of 15.5% on the Partnership's initial investment. During the year ended
December 31, 1994, management fees paid to BKC totalled $198,427, and the
Partnership received a refund from BKC of $128,924.
Accounts payable and accrued expenses decreased from $41,160 at December 31,
1994 to $32,006 at September 30, 1995. The decrease is primarily attributable
to the timing of the payment of audit and tax fees.
The Partnership is currently evaluating market conditions to determine when the
Partnership's remaining 24 Properties should be marketed for sale. Until the
Partnership's remaining Properties are sold, the Partnership will continue to
operate, and it is intended that net income from operations will be distributed
to the partners in accordance with the terms of the partnership agreement.
Results of Operations
The Partnership generated net income for the three and nine-month periods ended
September 30, 1995 of $357,741 and $1,002,683, respectively, compared to
$310,050 and $920,141, respectively, for the corresponding periods in 1994.
The increases in net income are primarily attributable to an increase in rental
income, partially offset by increases in ground lease rents and management fees
paid to BKC.
Rental income for the three and nine-month periods ended September 30, 1995 was
$565,175 and $1,632,611, respectively, compared to $532,985 and $1,529,940,
respectively, for the corresponding periods in 1994. The increase in rental
income is primarily a result of an increase in food and beverage sales at the
Properties which resulted in an increase in percentage rental income and, to a
lesser extent, scheduled rent escalations in the Partnership's ground leases.
Ground lease rent escalations are passed on to the franchisees in the form of
higher base rents.
Interest income for the three and nine-month periods ended September 30, 1995
was $8,256 and $19,753, respectively, compared to $3,806 and $11,279,
respectively, for the corresponding periods in 1994. The increase in interest
income is primarily attributable to a rise in interest rates during the 1995
periods.
Ground lease rent expense paid by the Partnership to BKC for the three and
nine-month periods ended September 30, 1995 increased to $70,365 and $209,181,
respectively, compared to $64,396 and $193,188, respectively, for the
corresponding periods in 1994. The increases are attributable to scheduled
rent escalations in the Partnership's ground leases.
Management fees for the three and nine-month periods ended September 30, 1995
were $58,678 and $163,831, respectively, as compared to $53,433 and $148,773,
respectively, for the corresponding periods in 1994. The increases are
primarily attributable to an increase in percentage rent during the second
quarter of 1995. Management fees paid by the Partnership to BKC are equal to
10% of all base rents and 20% of all percentage rents received from the
Properties.
General and administrative expenses for the three and nine-month periods ended
September 30, 1995 totalled $17,817 and $70,040, respectively, compared to
$40,157 and $74,199, respectively, for the corresponding periods in 1994. The
decrease in general and administrative expenses is primarily attributable to
lower environmental consulting costs incurred by the Partnership during the
third quarter of 1995.
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, 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 III
BY: BK III RESTAURANTS INC.
General Partner
Date: November 14, 1995 BY: /s/Rocco F. Andriola
Name: Rocco F. Andriola
Title: Director, President and
Chief Financial Officer<PAGE>
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