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 13or 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 Identification No.
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 $ 4,876,584 $ 5,175,404
Cash and cash equivalents 525,765 1,022,064
Rent and other receivable 61,440 80,880
Due from affiliates 14,239 14,239
Other assets 3,153 _
Total Assets $ 5,481,181 $ 6,292,587
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 69,890 $ 44,811
Distributions payable 408,118 918,562
Total Liabilities 478,008 963,373
Partners' Capital (Deficit):
General Partner (29,120) (24,770)
Limited Partners
(15,000 interests outstanding) 5,032,293 5,353,984
Total Partners' Capital 5,003,173 5,329,214
Total Liabilities and Partners' Capital $ 5,481,181 $ 6,292,587
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1997
General Limited
Partner Partners Total
Balance at December 31, 1996 $ (24,770) $ 5,353,984 $ 5,329,214
Net income 64,392 1,671,064 1,735,456
Distributions to partners (68,742) (1,992,755) (2,061,497)
Balance at September 30, 1997 $ (29,120) $ 5,032,293 $ 5,003,173
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
Income
Rental income $ 477,250 $ 572,218 $ 1,588,466 $ 1,716,981
Interest income 10,139 7,292 27,953 17,560
Other income 1,737 480 5,806 1,795
Total Income 489,126 579,990 1,622,225 1,736,336
Expenses
Depreciation _ 69,410 _ 208,229
Ground lease rent 62,731 73,544 188,194 219,230
Management fee 45,813 59,449 165,358 178,694
General and administrative 32,829 19,564 92,736 58,044
Total Expenses 141,373 221,967 446,288 664,197
Income from operations $ 347,753 $ 358,023 $ 1,175,937 $ 1,072,139
Other Income
Gain on sale of property _ _ 559,519 _
Net Income $ 347,753 $ 358,023 $ 1,735,456 $ 1,072,139
Net Income Allocated:
To the General Partner $ 17,388 $ 21,371 $ 64,392 $ 64,018
To the Limited Partners 330,365 336,652 1,671,064 1,008,121
$ 347,753 $ 358,023 $ 1,735,456 $ 1,072,139
Per limited partnership interest
(15,000 outstanding) $22.02 $22.44 $111.40 $67.21
Statements of Cash Flows
For the nine months ended September 30, 1997 1996
Cash Flows From Operating Activities
Net income $ 1,735,456 $ 1,072,139
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation _ 208,229
Gain on sale of Property (559,519) _
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Rent receivable 19,440 (130,518)
Accounts payable and accrued expenses 25,079 (9,706)
Due from affiliates _ 2,712
Due from Burger King Corporation _ 50,977
Other assets (3,153) _
Net cash provided by operating activities 1,217,303 1,193,833
Cash Flows From Investing Activities
Net proceeds from sale of property 858,339 _
Net cash provided by investing activities 858,339 _
Cash Flows From Financing Activities
Cash distributions to partners (2,571,941) (1,260,159)
Net cash used for financing activities (2,571,941) (1,260,159)
Net decrease in cash and cash equivalents (496,299) (66,326)
Cash and cash equivalents, beginning of period 1,022,064 502,341
Cash and cash equivalents, end of period $ 525,765 $ 436,015
Notes to the Financial Statements
The interim unaudited financial statements should be read in
conjunction with Burger King Limited Partnership III'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 occurred subsequent to fiscal
year 1996 which requires disclosure in this interim report per
Regulation S-X, Rule 10-01, Paragraph (a)(5):
On June 12, 1997, the Partnership sold a property located in
Frankfort, Kentucky to the franchisee operating such property for
net proceeds of $858,339 resulting in a gain of $559,519.
The Partnership has entered into a non-binding letter of intent
("LOI") with a third party for the sale of the Partnership's
remaining 22 properties (the "Properties") for a purchase price
of $16,000,000. 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's cash and cash equivalents
balance was $525,765, compared to $1,022,064 at December 31, 1996.
The decrease is primarily attributable to the distribution of net
proceeds received from the June 12, 1997 sale of a restaurant
property located in Frankfort, Kentucky (see below) and net cash
flow from operations for the first six months of 1997. The
Partnership's cash balance at September 30, 1997 consisted
primarily of the Partnership's working capital and net cash flow
from operations for the third quarter of 1997. At September 30,
1997, the Partnership owned 22 restaurant properties (hereinafter
referred to individually as a "Property" and, collectively, as the
"Properties").
On June 12, 1997, the Partnership sold a property located in
Frankfort, Kentucky (the "Frankfort Property") to the franchisee
operating such property for net proceeds of $858,339 resulting in a
gain of $559,519.
As reported in the Partnership's Quarterly Report on Form 10-Q for the
Three Months Ended June 30, 1997, BK III Restaurants 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 22 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 $16,000,000. 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.
At September 30, 1997, the Partnership had distributions payable of
$408,118, representing third quarter operating cash flow from the
Properties. On November 4, 1997, the Partnership distributed cash
flow from operations for the third quarter of 1997 in the amount of
$25.85 per Unit. Including this distribution, Limited Partners
have received total cash distributions of $1,603.01 per $1,000 Unit
since the inception of the Partnership. This total includes
distributions of cash flow from operations in the amount of
$1,426.44 per Unit and distributions of net proceeds from the sales
of Properties in the amount of $176.57 per Unit. Distributions of
net sales proceeds represent returns of capital which have reduced
the size of each Unit from $1,000 to $823.43.
Results of Operations
The Partnership generated net income for the three- and nine-month
periods ended September 30, 1997 of $347,753 and $1,735,456,
respectively, compared to $358,023 and $1,072,139 for the
corresponding periods in 1996. The decrease for the three-month
period is primarily due to the sale of the Delhi Property in the
fourth quarter of 1996 and the Frankfort Property in June 1997,
resulting in reduced Partnership cash flow. The increase for the
nine-month period is primarily attributable to the $559,519 gain on
the sale of the Frankfort Property.
Rental income for the three- and nine-month periods ended September
30, 1997 was $477,250 and $1,588,466, respectively, compared to
$572,218 and $1,716,981 for the corresponding periods in 1996. The
decreases are primarily attributable to the sale of the Delhi
Property in the fourth quarter of 1996 and the sale of the
Frankfort Property in June 1997.
Ground lease rent for the three- and nine-month periods ended
September 30, 1997 totaled $62,731 and $188,194, respectively,
compared to $73,544 and $219,230 for the corresponding periods in
1996. The decreases are primarily attributable to the sale of the
Delhi Property in the fourth quarter of 1996 and the sale of the
Frankfort Property in June 1997.
No depreciation expense was recorded for the three- or nine-month
periods ended September 30, 1997, compared to $69,410 and $208,229
for the corresponding 1996 periods. 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 Statements of Financial Accounting
Standards No. 121.
General and administrative expenses totaled $32,829 and $92,736 for
the three- and nine- month periods ended September 30, 1997,
compared to $19,564 and $58,044 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 reimbursable 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 III
BY: BK III Restaurants 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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<PERIOD-END> Sept-30-1997
<CASH> 525,765
<SECURITIES> 0
<RECEIVABLES> 61,440
<ALLOWANCES> 0
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<OTHER-SE> 5,003,173
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<EPS-DILUTED> 111.40
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