SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1994 Commission File No. N/A
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CRC-I LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-3213553
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(State of Organization) (I.R.S. Employer
Identification No.)
9330 BALBOA AVENUE, SAN DIEGO, CA 92123
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 571-2470
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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 No X
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1
CRC-I LIMITED PARTNERSHIP
UNAUDITED BALANCE SHEETS
ASSETS
June 30, December 31,
1994 1993
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Cash . . . . . . . . . . . . . . . . . . . . $ 100 $ 100
Sinking fund deposits. . . . . . . . . . . . 322,162 --
Long-term notes receivable . . . . . . . . . 28,712,965 --
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TOTAL. . . . . . . . . . . . . . . . . . . . $29,035,227 $ 100
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LIABILITIES AND PARTNERS' CAPITAL
Sinking fund liability . . . . . . . . . . . $ 322,162 $ --
Long-term notes payable. . . . . . . . . . . 28,712,965 --
Partners' Capital:
General Partner. . . . . . . . . . . . . . 1 1
Limited Partner. . . . . . . . . . . . . . 99 99
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Total Partners' Capital. . . . . . . . . 100 100
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TOTAL. . . . . . . . . . . . . . . . . . . . $29,035,227 $ 100
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See accompanying notes to financial statements.
2
CRC-I LIMITED PARTNERSHIP
UNAUDITED STATEMENTS OF OPERATIONS
Three months Six months
ended ended
June 30, 1994 June 30, 1993
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Revenues:
Interest income. . . . . . . . . . . . $ 767,226 $1,526,280
Administrative fee income. . . . . . . 6,250 12,500
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773,476 1,538,780
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Expenses:
Interest expense . . . . . . . . . . . 767,226 1,526,280
Administrative fee expense . . . . . . 6,250 12,500
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773,476 1,538,780
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Net earnings . . . . . . . . . . . . . . $ -- $ --
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See accompanying notes to financial statements.
3
CRC-I LIMITED PARTNERSHIP
UNAUDITED STATEMENTS OF CASH FLOWS
Six months
ended
June 30, 1994
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Cash flows from operations:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ --
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Cash flows provided by operations. . . . . . . . . . . . --
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Cash flows from investing activities:
Long-term notes receivable purchased . . . . . . . . . . . (28,633,100)
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Cash flows used in investing activities. . . . . . . . . (28,633,100)
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Cash flows from financing activities:
Proceeds from issuance of
long-term notes payable. . . . . . . . . . . . . . . . . 28,633,100
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Cash flows provided by
financing activities . . . . . . . . . . . . . . . . . 28,633,100
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Net increase in cash . . . . . . . . . . . . . . . . . . . . --
Cash at beginning of period. . . . . . . . . . . . . . . . . 100
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Cash at end of period. . . . . . . . . . . . . . . . . . . . $ 100
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See accompanying notes to financial statements.
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CRC-I LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments, consisting only of normal recurring
adjustments, considered necessary for a fair presentation have been
included. These financial statements should be read in conjunction with
the audited financial statements for and as of March 31, 1994. The
Company had no operations in the prior year.
2. ORGANIZATION
CRC-I Limited Partnership ("CRC-I") and another similar special purpose
limited partnership, CRC-II Limited Partnership ("CRC-II"),
(collectively, "CRC") were organized December 8, 1993 to (i) acquire, own,
hold and sell or transfer estates for years in various existing and to-be-
constructed Foodmaker, Inc. restaurant properties, (ii) sell mortgage
notes to the FM 1993A Corp. accompanied by a pledge of the foregoing
estates for years, and (iii) lease the restaurant properties to Foodmaker.
CRC-I and CRC-II may not engage in any other activities other than those
required to accomplish the foregoing.
FM 1993A Corp. was incorporated in the State of Delaware on December 22,
1993 for the purpose of: (i) issuing and selling debt obligations
("Notes"), as principal and as agent for CRC-I and CRC-II, Massachusetts
limited partnerships, and (ii) acquiring, owning and holding obligations
of CRC-I and CRC-II as well as accounts, investments and other property to
be pledged as collateral for the Notes. FM 1993A Corp. may not engage in
any other activities other than those required to accomplish the
foregoing.
3. SIGNIFICANT TRANSACTIONS
On January 5, 1994, in a private placement transaction, FM 1993A Corp.
issued and sold $70 million aggregate principal amount of Notes (the
"Notes") for $68.9 million, less offering expenses of $2.5 million, which
proceeds were used to purchase for $66.4 million, notes receivable from
CRC-I and CRC-II with an aggregate principal amount of $70 million
(collectively, the "CRC Notes"). The Notes are due November 1, 2003,
payable interest only at the rate of 9.75% per annum semi-annually on July
1 and January 1 each year, with a mandatory prepayment of 50% of the
original principal on the first business day of January 2003. The CRC
Notes' payment and interest terms are equivalent to and structured to
coincide with the Notes such that funds will be available to make payments
on the Notes. In addition, the CRC Notes require semi-annual sinking fund
payments to a trustee of $747 thousand, which will be utilized to
partially fund the 50% prepayment in January 2003. CRC-I and CRC-II used
the proceeds of the CRC Notes (of which approximately 43% relates to CRC-I
and 57% to CRC-II) to purchase estates for years in various Foodmaker
restaurant properties and, in a transaction accounted for as a financing,
will lease back such properties to Foodmaker on terms which will provide
the funds necessary to make the CRC Notes' payments. The Notes are
secured by, among other things, the CRC Notes, the CRC leases to
Foodmaker, first priority liens on the underlying properties and any
sinking fund or other amounts held in trust.
CRC's only source of liquidity is collection of Foodmaker's payments on
the CRC leases. If Foodmaker were to fail to make payments to CRC on the
financing leases, CRC would be unable to make payments on the CRC Notes.
CRC would then be required to initiate proceedings to gain possession of,
liquidate or obtain tenants for the restaurant properties. Although CRC-I
and CRC-II believed at the time of the transaction that the value of the
restaurant properties and other collateral would be adequate to secure the
CRC leases, there can be no assurance that such collateral will continue
to maintain its value or that, if necessary, it can be liquidated in
sufficient amounts or at times required to satisfy all scheduled principal
and interest payments.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
CRC-I and CRC-II limited partnerships were organized in December 1993
under the laws of the Commonwealth of Massachusetts, and FM 1993A Corp., a
special purpose corporation, was incorporated in the State of Delaware in
December 1993, all for the benefit of Foodmaker in connection with the
financing of certain of its restaurant properties. Operations commenced on
January 4, 1994 with the issuance and sale by FM 1993A Corp., in a private
placement transaction, of $70 million aggregate principal amount of Notes.
The net sales proceeds from the sale of the Notes were approximately $68.9
million, which proceeds were used to purchase the CRC-I Note, issued in the
principal amount of approximately $30.2 million, and the CRC-II Note, issued
in the principal amount of approximately $39.8 million, for approximately
$66.4 million (the total acquisition cost of the estates for years purchased
by CRC-I and CRC-II). The closing costs paid by the FM 1993A Corp. were
approximately $2.5 million. The Notes are due November 1, 2003, payable
interest only at the rate of 9.75% per annum semi-annually on the first
business day of each January and July and continuing through the first
business day of July 2003. A mandatory prepayment of 50% of the original
balance of the Notes is due on the first business day of January 2002. The
CRC Notes' payment and interest terms are equivalent to and structured to
coincide with the Notes such that funds will be available to make payments on
the Notes. In addition, the CRC Notes require semi-annual sinking fund
payments to a trustee of approximately $.7 million, which will be utilized to
partially fund the 50% prepayment due in January 2002. The proceeds of the
CRC Notes (of which approximately 43% relates to CRC-I and 57% to CRC-II)
have been and will be used by CRC-I and CRC-II to purchase estates for years
in various Foodmaker restaurant properties and, in a transaction accounted
for as a financing, CRC-I and CRC-II will lease back such properties to
Foodmaker on terms which will provide the funds required to make the
necessary payments on CRC Notes. The Notes are secured by, among other
things, the CRC Notes, the CRC leases to Foodmaker, first priority liens on
the leased properties and any sinking fund or other amounts held in trust.
CRC-I and CRC-II reflect the financing lease obligations of Foodmaker
as 9.75% notes receivable and have equivalent notes payable to FM 1993A Corp.
(the CRC Notes), with face amounts and net proceeds, respectively, of
approximately $30.2 million and approximately $28.6 million for CRC-I and
approximately $39.8 million and approximately $37.8 million for CRC-II. As a
result, interest income and expense, inclusive of amortization of approximately
$.2 million of original issue discount, will each be approximately $2.9 million
for CRC-I and approximately $3.9 million for CRC-II, respectively. For the
three and six months ended June 30, 1994, slightly less than one-fourth and
one-half, respectively, of the annual amounts are reflected as interest income
and expense, since the notes were issued a few days after the beginning of the
periods.
No provision for income taxes has been made as the liability for such
taxes is that of the partners rather than the partnership.
Liquidity and Capital Resources
The only source of liquidity for CRC-I and CRC-II is collection of
scheduled payments by Foodmaker on the CRC leases. The basic amounts payable
on the CRC leases are equal to, and timed to coincide with, the payments
required to be made on the CRC Notes. The CRC leases and CRC Notes require
sinking fund payments to the Trustee, which, in addition to the value of the
leased properties, should provide an increasing amount of security through
year nine of the Notes. If Foodmaker were to fail to make payments on the
CRC leases, CRC-I and CRC-II would be unable to make payments on the CRC
Notes. FM 1993A Corp. and/or CRC-I and CRC-II would then be required to
initiate proceedings to gain possession of, liquidate or obtain tenants for
the leased properties. Although CRC-I and CRC-II believed at the time of the
transaction that the value of the restaurant properties and other collateral
would be adequate to secure the CRC leases, there can be no assurance that
such collateral will continue to maintain its value or that, if necessary, it
can be liquidated in sufficient amounts or at times required to satisfy all
scheduled principal and interest payments.
PART II - OTHER INFORMATION
There is no information required to be reported for any items under Part II.
6
SIGNATURE
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 and in the capacities indicated.
CRC-I LIMITED PARTNERSHIP
By: CRC-I Corp., General Partner
By: CHARLES W. DUDDLES
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Charles W. Duddles,
President, Treasurer and Clerk
(Duly Authorized Signatory)
Date: August 3, 1994
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