UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q-A
Amendment #1
[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
-------------------------------------------------------------
(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
----------------------------------------------
(Address of principal executive officer) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
--------------
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 7-8
PART II. OTHER INFORMATION 9
<PAGE>
<TABLE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
CONDENSED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1996 1995
------------------- -------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,701,000 $ 1,630,000
Rent and other receivables 42,000 10,000
Notes receivable 228,000 234,000
Facilities, at net realizable value 7,335,000 9,743,000
------------------- --------------------
Total assets $ 9,306,000 $ 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 9,092,000 11,378,000
General partner's equity 67,000 91,000
------------------- --------------------
Total partners' equity 9,159,000 11,469,000
------------------- --------------------
Total liabilities and partners' equity $ 9,306,000 $ 11,617,000
=================== ====================
</TABLE>
See accompanying notes to Condensed Financial Statements.
2
<PAGE>
<TABLE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------------- ---------------------------------------
1996 1995 1996 1995
------------------- ------------------ ------------------ ------------------
REVENUE:
<S> <C> <C> <C> <C>
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 - 63,000 58,000 125,000
Idle facility costs 5,000 9,000 13,000 21,000
Partnership administrative expenses 24,000 26,000 50,000 53,000
------------------- ------------------ ------------------ ------------------
65,000 136,000 193,000 268,000
------------------- ------------------ ------------------ ------------------
Net income before valuation provision 226,000 143,000 411,000 314,000
Valuation provision to record facilities
at net realizable value (2,350,000) - (2,350,000) -
------------------- ------------------ ------------------ ------------------
NET (LOSS) INCOME $ (2,124,000) $ 143,000 $ (1,939,000) $ 314,000
=================== ================== ================== ==================
Allocation of net (loss) income
Limited partners $ (2,118,000) $ 127,000 $ (1,949,000) $ 282,000
General partner (6,000) 16,000 10,000 32,000
------------------- ------------------ ------------------ ------------------
$ (2,124,000) $ 143,000 $ (1,939,000) $ 314,000
=================== ================== ================== ==================
Limited partners' allocation per unit $ (40.73) $ 2.44 $ (37.48) $ 5.42
=================== ================== ================== ==================
Limited partners' allocation per unit
before valuation provision $ 4.02 $ 2.44 $ 7.26 $ 5.42
=================== ================== ================== ==================
</TABLE>
See accompanying notes to Condensed Financial Statements.
3
<PAGE>
<TABLE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
CONDENSED STATEMENTS OF PARTNERS' EQUITY
(Unaudited)
<CAPTION>
Limited General
Partners Partners Total
--------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1995 $11,378,000 $91,000 $11,469,000
Net (loss) income (1,949,000) 10,000 (1,939,000)
Distributions (337,000) (34,000) (371,000)
------------------ ----------------- ----------------
Balance at June 30, 1996 $9,092,000 $67,000 $9,159,000
================== ================= ================
</TABLE>
See accompanying notes to Condensed Financial Statements.
4
<PAGE>
<TABLE>
QSR INCOME PROPERTIES, LTD.,
a California Limited Partnership
CONDENSED STATEMENTS OF CASH FLOWS
For the six month periods ended June 30, 1996 and 1995
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
------------------------------------------
1996 1995
------------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) income $ (1,939,000) $ 314,000
Adjustments to reconcile net (loss) income to net cash
provided by operating activities
Depreciation and amortization 58,000 125,000
Provision to record facilities at net realizable value 2,350,000 -
(Increase) decrease in accounts receivable (32,000) 12,000
(Decrease) increase in accounts payable (1,000) 9,000
------------------- ------------------
Total adjustments 2,375,000 146,000
------------------- ------------------
Net cash provided by operating activities 436,000 460,000
------------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from 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 Statments.
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.
4. In November 1995, the general partner decided to place the facility assets
for sale and hired an investment banker to determine the valuation of the
assets and solicit offers. Based on offers to buy the assets received in
the second quarter of 1996, the general partner determined that the
carrying value of the assets needs to be reduced by $2,350,000 to present
the value of such assets at their net realizable value. Such valuation
assumes costs to be incurred in the ordinary course of sale.
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 loss of $2,124,000 and $1,939,000 for the three and
six months ended June 30, 1996, respectively, represent decreases in income of
$2,267,000 and $2,253,000, respectively, compared to the net income for the
three and six months ended June 30, 1995. Theses decreases are primarily
attributable to a provision made in the second quarter of 1996 to record the
carrying value of the Partnership's facility assets at their net realizable
value. Excluding the valuation adjustment, the Partnership's net income for the
three and six months ended June 30, 1996 increased $83,000 and $97,000,
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 $63,000 and $67,000, respectively, for the
three and six month periods ended June 30, 1996 compared to the same periods in
1995. The decreases are the result of the Partnership's properties being
presented at net realizable value and the discontinuation of provisions for
depreciation.
7
<PAGE>
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.
In November 1995, the general partner decided to place the facility assets
for sale and hired an investment banker to determine the valuation of the assets
and solicit offers. Based on offers to buy the assets received in the second
quarter of 1996, the general partner determined that the carrying value of the
assets needs to be reduced by $2,350,000 to present the value of such assets at
their net realizable value. Such valuation assumes costs to be incurred in the
ordinary course of sale.
8
<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: November 14, 1996
QSR Income Properties, Ltd.,
a California Limited Partnership
BY: /s/ B. Wayne Hughes
-------------------
B. Wayne Hughes
General Partner
9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000783287
<NAME> QSR Income Properties, Ltd.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,701,000
<SECURITIES> 0
<RECEIVABLES> 42,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,743,000
<PP&E> 10,591,000
<DEPRECIATION> (3,256,000)
<TOTAL-ASSETS> 9,306,000
<CURRENT-LIABILITIES> 147,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,159,000
<TOTAL-LIABILITY-AND-EQUITY> 9,306,000
<SALES> 0
<TOTAL-REVENUES> 604,000
<CGS> 0
<TOTAL-COSTS> 72,000
<OTHER-EXPENSES> 121,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,939,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,939,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,939,000)
<EPS-PRIMARY> (37.48)
<EPS-DILUTED> (37.48)
</TABLE>
