UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934.
For the 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
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Commission File Number 0-15802
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QSR Income Properties, Ltd., a California Limited Partnership
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(Exact name of registrant as specified in its charter)
California 95-4084042
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
701 Western Avenue, Glendale, California 91201
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(Address of principal executive officer) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
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Indicate by check mark whether the registrant (1) had 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.
X
--- ---
Yes No
<PAGE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Condensed Balance Sheets at June 30, 1996
and December 31, 1995 2
Condensed Statements of Operations for the three
and six month periods ended June 30, 1996 and 1995 3
Condensed Statement of Partners' Equity for the
six months ended June 30, 1996 4
Condensed Statements of Cash Flows for the six
month periods ended June 30, 1996 and 1995 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION 8
<PAGE>
<TABLE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
<CAPTION>
CONDENSED BALANCE SHEETS
June 30, December 31,
1996 1995
------------------ ------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $1,701,000 $1,630,000
Accounts receivable 42,000 10,000
Notes receivable 228,000 234,000
Facilities, net 9,626,000 9,743,000
------------------ ------------------
Total assets $11,597,000 $11,617,000
================== ==================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $147,000 $148,000
Partners' equity:
Limited partners' equity, $500 per
unit, 52,004 units authorized,
issued and outstanding 11,359,000 11,378,000
General partner's equity 91,000 91,000
------------------ ------------------
Total partners' equity 11,450,000 11,469,000
------------------ ------------------
Total liabilities and partners' equity $11,597,000 $11,617,000
================== ==================
</TABLE>
See accompanying notes to Condensed Financial Statements.
2
<PAGE>
<TABLE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------- -----------------------------------
1996 1995 1996 1995
---------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
REVENUE:
Lease income $265,000 $257,000 $553,000 $538,000
Interest income 26,000 22,000 51,000 44,000
---------------- -------------- ----------------- --------------
291,000 279,000 604,000 582,000
---------------- -------------- ----------------- --------------
COSTS AND EXPENSES:
Cost of operations 36,000 38,000 72,000 69,000
Depreciation and amortization 59,000 63,000 117,000 125,000
Idle facility costs 5,000 9,000 13,000 21,000
Partnership administrative expenses 24,000 26,000 50,000 53,000
---------------- -------------- ----------------- --------------
124,000 136,000 252,000 268,000
---------------- -------------- ----------------- --------------
NET INCOME $167,000 $143,000 $352,000 $314,000
================ ============== ================= ==============
Allocation of net income
Limited partners $150,000 $127,000 $319,000 $282,000
General partner 17,000 16,000 33,000 32,000
---------------- -------------- ----------------- --------------
$167,000 $143,000 $352,000 $314,000
================ ============== ================= ==============
Limited partners' allocation per unit $2.88 $2.44 $6.13 $5.42
================ ============== ================= ==============
</TABLE>
See accompanying notes to Condensed Financial Statements.
3
<PAGE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
CONDENSED STATEMENTS OF PARTNERS' EQUITY
(Unaudited)
Limited General
Partners Partners Total
----------- ---------- -----------
Balance at December 31, 1995 $11,378,000 $91,000 $11,469,000
Net income 319,000 33,000 352,000
Distributions (338,000) (33,000) (371,000)
----------- ---------- -----------
Balance at June 30, 1996 $11,359,000 $91,000 $11,450,000
=========== ========== ===========
See accompanying notes to Condensed Financial Statements.
4
<PAGE>
<TABLE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS
For the six month periods ended June 30, 1996 and 1995
(Unaudited)
1996 1995
---------------- ----------------
Cash flows from operating activities:
<S> <C> <C>
Net income $352,000 $314,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 117,000 125,000
(Increase) decrease in accounts receivable (32,000) 12,000
(Decrease) increase in accounts payable (1,000) 9,000
---------------- ----------------
Total adjustments 84,000 146,000
---------------- ----------------
Net cash provided by operating activities 436,000 460,000
---------------- ----------------
Cash flows from financing activities:
Principal payments on notes receivable 6,000 19,000
Distributions paid to partners (371,000) (371,000)
---------------- ----------------
Net cash used in financing activities (365,000) (352,000)
---------------- ----------------
Net increase in cash and cash equivalents 71,000 108,000
Cash and cash equivalents at the beginning of the period 1,630,000 1,115,000
---------------- ----------------
Cash and cash equivalents at the end of the period $1,701,000 $ 1,223,000
================ ================
</TABLE>
See accompanying notes to Condensed Financial Statements.
5
<PAGE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes
that the disclosures contained herein are adequate to make the
information presented not misleading. These unaudited condensed
financial statements should be read in conjunction with the financial
statements and related notes appearing in the Partnership's Form 10-K
for the year ended December 31, 1995.
2. In the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments, consisting of only normal
accruals, necessary to present fairly the Partnership's financial
position at June 30, 1996 and December 31, 1995, the results of its
operations for the three and six months ended June 30, 1996 and 1995
and its cash flows for the six months then ended.
3. The results of operations for the three and six months ended June 30,
1996 are not necessarily indicative of the results expected for the full
year.
6
<PAGE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
June 30, 1996
The Partnership was formed to acquire and operate pizza restaurants. All
twenty-three of the Partnership's restaurants were closed because of
disappointing operating results. Of the twenty-three restaurants closed, four
have been sold, three lease commitments have been terminated and fifteen
facilities have been leased to unaffiliated third parties. The Partnership is
continuing efforts to lease or sell its final closed restaurant (located in Coon
Rapids, Minnesota) that has not yet been redeployed. This property may not be
redeployable in the foreseeable future because of current market conditions.
Results of Operations
- ---------------------
The Partnership's net income for the three and six months ended June 30,
1996 increased $24,000 and $38,000, respectively, over the same periods in 1995.
These increases are primarily attributable to increases in lease income and
interest income, combined with decreases in idle facility costs and depreciation
expense.
Lease income for the three and six months ended June 30, 1996 increased
$8,000 and $15,000, respectively, over the same periods in 1995 as the result of
scheduled escalations in lease income. Included in lease income for the six
month periods ended June 30, 1996 and 1995 is approximately $25,000 and $26,000,
respectively, of additional lease income under a percentage rent feature with
respect to incremental sales above specified levels.
Cost of operations increased $3,000 for the six month period ended June 30,
1996 over the same period in 1995, due primarily to an increase in office
expenses associated in operating the Partnership's leased properties. Cost of
operations for the three month period ended June 30, 1996 decreased $2,000
compared to the same period in 1995.
Idle facility costs decreased $4,000 and $8,000, respectively, for the
three and six month periods ended June 30, 1996 compared to the same periods in
1995. The decreases are primarily attributable to the sale of the Partnership's
Iliff, Colorado property in November 1995.
Depreciation expense decreased $4,000 and $8,000, respectively, for the
three and six month periods ended June 30, 1996 compared to the same periods in
1995. The decreases are primarily attributable to the sale of the Partnership's
Iliff, Colorado property in November 1995.
Liquidity and capital resources
- -------------------------------
For the six month period ended June 30, 1996, the Partnership's activities
generated cash flow of $436,000. This represents a $24,000 decrease compared to
the cash flow of $460,000 generated by the Partnership for the six month period
ended June 30, 1995. Cash flow from the Partnership's operations have been
sufficient to meet all current obligations of the Company.
For the three month period ended June 30, 1996, the Partnership's
distribution paid remained stable at $3.25 per Partnership unit, compared to the
three months ended June 30, 1995.
7
<PAGE>
PART II. OTHER INFORMATION
Items 1 through 5 are not applicable.
Item 6 Exhibits and Reports on Form 8-K
a) Exhibits - the following exhibit is included herein:
(27) Financial Data Schedule
b) Reports on 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: August 12, 1996
QSR Income Properties, Ltd.,
a California Limited Partnership
BY: /s/ B. Wayne Hughes
--------------------
B. Wayne Hughes
General Partner
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000783287
<NAME> QSR Income Properties, Ltd.
<CURRENCY> US
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<EXCHANGE-RATE> 1
<CASH> 1,701,000
<SECURITIES> 0
<RECEIVABLES> 42,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,743,000
<PP&E> 12,941,000
<DEPRECIATION> (3,315,000)
<TOTAL-ASSETS> 11,597,000
<CURRENT-LIABILITIES> 147,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 11,450,000
<TOTAL-LIABILITY-AND-EQUITY> 11,597,000
<SALES> 553,000
<TOTAL-REVENUES> 604,000
<CGS> 72,000
<TOTAL-COSTS> 72,000
<OTHER-EXPENSES> 180,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 352,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 352,000
<EPS-PRIMARY> 6.13
<EPS-DILUTED> 0.000
</TABLE>
