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: 33-1624
CERTIFICATES OF PARTICIPATION
BK I REALTY INC.
BK II PROPERTIES INC.
BK III RESTAURANTS INC.
Exact Name of Registrant as Specified in its Charter
13-3100473
13-3143115
New York 13-3178423
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 ____
BK I REALTY INC.
Balance Sheets At June 30, At December 31,
1996 1995
Assets
Investment in Burger King Limited Partnership I $ (66,027) $ (62,210)
Liabilities and Stockholders' Deficit
Liabilities:
Distributions payable 16,040 22,878
Total liabilities 16,040 22,878
Stockholders' Deficit :
Common Stock, $1.00 par value authorized,
1,000 shares issued and outstanding 1,000 1,000
Additional paid-in capital 411,628 409,699
Accumulated deficit (494,695) (495,787)
Total Stockholders' Deficit (82,067) (85,088)
Total Liabilities and Stockholders' Deficit $ (66,027) $ (62,210)
BK I REALTY INC.
Statement of Changes in Stockholders' Deficit
For the six months ended June 30, 1996
Additional
Common Paid-in Accumulated
Total Stock Capital Deficit
Balance at December 31, 1995 $(85,088) $ 1,000 $409,699 $(495,787)
Distributions (17,865) --- --- (17,865)
Capital contributions 1,929 --- 1,929 ---
Net income 18,957 --- --- 18,957
Balance at June 30, 1996 $(82,067) $ 1,000 $411,628 $(494,695)
BK I REALTY INC.
Statements of Operations
Three months Six months
ended June 30, ended June 30,
1996 1995 1996 1995
Income
Equity in earnings of
Burger King Limited Partnership I $11,803 $9,753 $20,886 $32,871
Income taxes 858 (2,992) (1,929) (10,085)
Net Income $12,661 $6,761 $18,957 $22,786
Per COPs unit (3,084 outstanding) $3.28 $1.75 $4.92 $5.91
BK I REALTY INC.
Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net income $18,957 $22,786
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of Burger King Limited Partnership I (20,886) (32,871)
Contributions to capital 1,929 10,085
Net cash provided by operating activities --- ---
Cash Flows From Financing Activities
Distributions from Burger King Limited Partnership I 24,703 73,385
Cash distributions paid (24,703) (73,385)
Net cash provided by financing activities --- ---
Net change in cash --- ---
Cash, beginning of period --- ---
Cash, end of period $ --- $ ---
BK I REALTY INC.
Notes to the Financial Statements
These unaudited financial statements should be read in conjunction with
Certificates of Participation's ("COPs") annual 1995 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 and the results of operations for the three- and
six-month periods ended June 30, 1996 and 1995, the statement of changes in
stockholders' 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 three- and six-month periods ended June
30, 1996 are not necessarily indicative of the results to be expected for the
full year.
No significant events have occurred subsequent to fiscal year 1995 which
require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
BK II PROPERTIES INC.
Balance Sheets At June 30, At December 31,
1996 1995
Assets
Investment in Burger King Limited Partnership II $ 712,876 $ 23,371
Liabilities and Stockholders' Deficit
Liabilities:
Distributions payable 685,635 84,499
Total liabilities 685,635 84,499
Stockholders' Deficit:
Common Stock, $1.00 par value authorized,
1,000 shares issued and outstanding 1,000 1,000
Additional paid-in capital 514,927 443,147
Accumulated deficit (488,686) (505,275)
Total Stockholders' Deficit 27,241 (61,128)
Total Liabilities and Stockholders' deficit $712,876 $23,371
BK II PROPERTIES INC.
Statement of Changes in Stockholders' Deficit
For the six months ended June 30, 1996
Additional
Common Paid-in Accumulated
Total Stock Capital Deficit
Balance at December 31, 1995 $ (61,128) $1,000 $443,147 $(505,275)
Distributions (688,882) --- --- (688,882)
Capital contributions 71,780 --- 71,780 ---
Net income 705,471 --- --- 705,471
Balance at June 30, 1996 $27,241 $1,000 $514,927 $(488,686)
BK II PROPERTIES INC.
Statements of Operations
Three months Six months
ended June 30, ended June 30,
1996 1995 1996 1995
Income
Equity in earnings of
Burger King Limited Partnership II $751,825 $27,485 $777,251 $51,317
Income taxes (63,979) (8,433) (71,780) (15,745)
Net Income $687,846 $19,052 $705,471 $35,572
Per COPs unit (3,084 outstanding) $178.43 $4.94 $183.00 $9.23
BK II PROPERTIES INC.
Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net income $705,471 $35,572
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of Burger King Limited Partnership II (777,251) (51,317)
Contributions to capital 71,780 15,745
Net cash provided by operating activities --- ---
Cash Flows From Financing Activities
Distributions from Burger King Limited Partnership II 87,746 82,576
Cash distributions paid (87,746) (82,576)
Net cash provided by financing activities --- ---
Net change in cash --- ---
Cash, beginning of period --- ---
Cash, end of period $ --- $ ---
BK II PROPERTIES INC.
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction with COPs'
annual 1995 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 and the results of operations for the three- and
six-month periods ended June 30, 1996 and 1995, the statement of changes in
stockholders' 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 three- and six-month periods ended June
30, 1996 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).
Burger King Limited Partnership II ("BK-II") agreed, subject to the
satisfaction of certain conditions, to sell BK-II'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 BK-II's
partnership agreement, a proxy statement (the "Proxy") was mailed to limited
partners of BK-II (the "BK-II Unitholders") on March 25, 1996, describing the
terms of the Proposed Sale and presenting the BK-II Unitholders with the
opportunity to call a meeting to consider whether to disapprove the Sale. In
order to effect a disapproval of the Sale, BK-II Unitholders holding 10% or
more in interest of BK-II's outstanding limited partnership interests ("BK-II
Units") were required to submit written requests by April 30, 1996 to call for
a meeting of BK-II Unitholders to consider whether to disapprove the Sale.
BK-II did not receive written requests aggregating an amount equal to or in
excess of the required 10% in interest of the outstanding BK-II Units required
to call a meeting of the BK-II Unitholders to disapprove the Sale. As a
result, no meeting was convened and BK II Properties Inc., the general partner
of BK-II, completed the Sale on May 10, 1996.
In accordance with the terms of COPs' partnership agreement, a portion of the
net proceeds from the Sale will be used to make a special distribution in the
amount of $171.35 per COPs' Unit to the limited partners of COPs ("COPs
Holders") in August 1996. As a result of the Sale, BK-II Properties Inc., the
general partner of BK-II, is in the process of winding-up the affairs of
BK-II, which should be dissolved by the end of 1996.
BK III RESTAURANTS INC.
Balance Sheets At June 30, At December 31,
1996 1995
Assets
Investment in Burger King Limited Partnership III $ (2,244) $ (2,424)
Liabilities and Stockholders' Deficit
Liabilities:
Distributions payable 20,541 20,205
Total liabilities 20,541 20,205
Stockholders' Deficit:
Common Stock, $1.00 par value authorized,
1,000 shares issued and outstanding 1,000 1,000
Additional paid-in capital 331,697 327,758
Accumulated deficit (355,482) (351,387)
Total Stockholders' Deficit (22,785) (22,629)
Total Liabilities and Stockholders' Deficit $ (2,244) $ (2,424)
BK III RESTAURANTS INC.
Statement of Changes in Stockholders' Deficit
For the six months ended June 30, 1996
Additional
Common Paid-in Accumulated
Total Stock Capital Deficit
Balance at December 31, 1995 $(22,629) $1,000 $327,758 $(351,387)
Distributions (42,803) --- --- (42,803)
Capital contributions 3,939 --- 3,939 ---
Net income 38,708 --- --- 38,708
Balance at June 30, 1996 $(22,785) $1,000 $331,697 $(355,482)
BK III RESTAURANTS INC.
Statements of Operations
Three months Six months
ended June 30, ended June 30,
1996 1995 1996 1995
Income
Equity in earnings of
Burger King Limited Partnership III $22,852 $20,079 $42,647 $39,188
Income taxes 2,134 (6,160) (3,939) (12,023)
Net Income $24,986 $13,919 $38,708 $27,165
Per COPs unit (3,084 outstanding) $6.48 $3.61 $10.04 $7.05
BK III RESTAURANTS INC.
Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net income $38,708 $27,165
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of Burger King Limited Partnership III (42,647) (39,188)
Contributions to capital 3,939 12,023
Net cash provided by operating activities --- ---
Cash Flows From Financing Activities
Distributions from Burger King Limited Partnership III 42,467 20,021
Cash distributions paid (42,467) (20,021)
Net cash provided by financing activities --- ---
Net change in cash --- ---
Cash, beginning of period --- ---
Cash, end of period $ --- $ ---
BK III RESTAURANTS INC.
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction with COPs
annual 1995 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 and the results of operations for the three- and
six-month periods ended June 30, 1996 and 1995, the statement of changes in
stockholders' 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 three- and six-month periods are not
necessarily indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1995 which
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
Certificates of Participation ("COPs") represents an assignment by the issuing
general partners of some, but not all, of the profits, losses, and gains of and
distributions from Burger King Limited Partnership I ("BK-I"), Burger King
Limited Partnership II ("BK-II") and Burger King Limited Partnership III
("BK-III") (collectively, the "Partnerships"). Each of the Partnerships is a
New York limited partnership. The issuing general partners are BK I Realty
Inc. ("GP-I"), which is the general partner of BK-I; BK II Properties Inc.
("GP-II"), which is the general partner of BK-II; and BK III Restaurants Inc.
("GP-III"), which is the general partner of BK-III (collectively, the "General
Partners"). Each of the General Partners is a New York corporation. Each COPs
unit consists of one BK-I COPs unit, one BK-II COPs unit and one BK-III COPs
unit. COPs commenced operations on January 17, 1986 and the COPs units were
assigned as of December 1, 1985.
The Partnerships were formed to acquire and hold Burger King restaurants (the
"Properties"), including the restaurant buildings and, in some cases, the
underlying land. The Properties are net leased on a long-term basis to
franchisees of Burger King Corporation ("BKC").
The General Partners do not engage in the sale of goods or services. Their
only assets are the investments in the Partnerships.
GP-I has been pursuing efforts to market BK-I's remaining 10 Properties for
sale. While GP-I has had discussions with a number of institutions and other
third parties interested in purchasing BK-I's Properties, an environmental
issue at one of the Properties, located in Greenfield, Wisconsin (the
"Greenfield Property"), has delayed efforts to complete a bulk sale of the
remaining Properties. In May 1995, BK-I proposed site-specific clean-up
standards to the Wisconsin Department of Natural Resources ("WDNR"). The WDNR
recently requested additional information which will require BK-I to complete
additional modeling in order to substantiate the standards originally proposed
by BK-I. In June 1996, BK-I submitted a proposal to the WDNR for the
completion of this modeling and is currently awaiting its response. Once the
remediation issue is resolved and costs associated with an approved remediation
plan have been determined, GP-I will be in a better position to attempt to sell
the remaining Properties and distribute the net proceeds from the sale in
accordance with the terms of the BK-I's Partnership Agreement.
BK-II agreed, subject to the satisfaction of certain conditions, to sell
BK-II'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 $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 of BK-II's remaining Properties was
completed (the "Sale"). In accordance with the terms of COPs' partnership
agreement, a portion of the net proceeds of the Sale will be used to make a
special distribution in the amount of $171.35 per COPs' Unit to COPs Holders in
August 1996. As a result of the Sale, GP-II is in the process of winding-up the
affairs of BK-II, which should be dissolved by the end of 1996.
GP-III continues to evaluate market conditions to determine when BK-III's
remaining 24 Properties should be marketed for sale. Until all of the
Properties are sold, BK-III intends to continue operating the Properties and
distributing cash flow from operations to the partners in accordance with the
terms of BK- III's partnership agreement.
At June 30, 1996, GP-I's investment in BK-I was $(66,027) and GP- III's
investment in BK-III was $(2,244), reflecting distributions in excess of equity
in earnings plus the initial investments. GP- II's investment in BK-II was
$712,876 at June 30, 1996, compared to $23,371 at December 31, 1995, reflecting
the allocation of the gain and the distribution of the net proceeds from the
Sale.
Results of Operations
The results of operations for the three- and six-month periods ended June 30,
1996 are primarily attributable to the General Partners' respective investments
in the Partnerships.
For the three- and six-month periods ended June 30, 1996, GP-I generated net
income of $12,661 and $18,957, respectively, compared to $6,761 and $22,786 for
the corresponding periods in 1995. The increase for the three-month period is
primarily attributable to an increase in rental income generated by BK-I's 10
remaining Properties during the 1996 period as a result of an increase in food
and beverage sales at the Properties. The decrease in net income for the
six-month period is primarily attributable to a decrease in rental income as a
result of the sale of three of BK-I's Properties during the first quarter of
1995.
For the three- and six-month periods ended June 30, 1996, GP-II generated net
income of $687,846 and $705,471, respectively, compared to $19,052 and $35,572
for the corresponding periods in 1995. The increase for both periods is
attributable to the gain resulting from the Sale.
For the three- and six-month periods ended June 30, 1996, GP-III generated net
income of $24,986 and $38,708, respectively, compared to $13,919 and $27,165
for the corresponding periods in 1995. The increase for both periods is
primarily attributable to an increase in rental income generated by BK-III's
Properties during the 1996 periods as a result of an increase in food and
beverage sales at the Properties.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27.1) Financial Data Schedule for BK I Realty Inc.
(27.2) Financial Data Schedule for BK II Properties Inc.
(27.3) Financial Data Schedule for BK III Restaurants Inc.
(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.
CERTIFICATES OF PARTICIPATION
BK I REALTY INC.
BK II PROPERTIES INC.
BK III RESTAURANTS INC.
BY: BK I REALTY INC.
BK II PROPERTIES INC.
BK III RESTAURANTS INC.
Registrant
Date: August 14, 1996 BY: /s/ Rocco F. Andriola
Name: Rocco F. Andriola
President, Director and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PERIOD-TYPE> 6-mos
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0
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
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0
0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 705,471
<EPS-PRIMARY> 183.00
<EPS-DILUTED> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
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<PERIOD-END> Jun-30-1996
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