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 March 31, 1995
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 of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor, New York, NY 10285
(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
March 31, December 31,
Assets 1995 1994
Investment in Burger King
Limited Partnership I $ (65,319) $ (15,052)
Liabilities and Stockholder's Deficit
Liabilities:
Distributions payable $ 24,585 $ 73,385
Total Liabilities 24,585 73,385
Stockholder's Equity (Deficit):
Common Stock, $1.00 par value
authorized, issued and
outstanding 1,000 shares 1,000 1,000
Additional paid-in capital 401,660 394,567
Accumulated deficit (492,564) (484,004)
Total Stockholder's Deficit (89,904) (88,437)
Total Liabilities and
Stockholder's Deficit $ (65,319) $ (15,052)
Statement of Changes in Stockholder's Deficit
For the three months ended March 31, 1995
Additional
Common Paid-in Accumulated
Total Stock Capital Deficit
Stockholder's deficit
at December 31, 1994 $ (88,437) $ 1,000 $ 394,567 $ (484,004)
Distributions (24,585) -- -- (24,585)
Capital contribution 7,093 -- 7,093 --
Net income 16,025 -- -- 16,025
Stockholder's deficit
at March 31, 1995 $ (89,904) $ 1,000 $ 401,660 $ (492,564)
Statements of Operations
For the three months ended March 31, 1995 and 1994
Income 1995 1994
Equity in earnings of Burger King
Limited Partnership I $ 23,118 $ 17,234
Income taxes 7,093 5,288
Net Income $ 16,025 $ 11,946
Per COP Unit (3,084 outstanding) $ 4.16 $ 3.10
Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 16,025 $ 11,946
Adjustments to reconcile net income
to net cash provided by operating
activities:
Equity in earnings of Burger
King Limited Partnership I (23,118) (17,234)
Contributions to capital 7,093 5,288
Net cash provided by operating activities -- --
Cash Flows from Financing Activities:
Distributions from Burger King
Limited Partnership I 73,385 61,791
Cash distributions paid (73,385) (61,791)
Net cash provided by financing activities -- --
Net change in cash -- --
Cash at beginning of period -- --
Cash at end of period $ -- $ --
Notes to the Financial Statements
The interim financial statements presented should be read in conjunction with
the annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments consisting of only
normal recurring accruals which are, in the opinion of management, necessary to
present a fair statement of financial position as of March 31, 1995 and the
results of operations, changes in stockholder's equity (deficit), and cash
flows for the three months ended March 31, 1995 and 1994. Results of
operations for the period are not necessarily indicative of the results to be
expected for the full year.
The following significant events have occurred subsequent to fiscal year 1994,
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
A. On September 23, 1994, BK-I notified the Wisconsin Department of
Natural Resources ("WDNR") that petroleum and chlorinated compounds were
discovered at one of BK-I's properties located in Greenfield, Wisconsin. The
WDNR has indicated that under Wisconsin state law, BK-I will be responsible for
remediating the site. BK-I has obtained a preliminary cost estimate to
remediate the site from an environmental consulting firm. Based on this
estimate and in accordance with BK-I's respective Partnership Agreement, BK-I
set aside $300,000 from net cash flow from operations to fund the potential
environmental remediation costs. GP-I believes that the cost of the
environmental remediation will be recovered from the proceeds from the sale of
the restaurant.
BK II PROPERTIES INC.
Balance Sheets
March 31, December 31,
Assets 1995 1994
Investment in Burger King
Limited Partnership II $ (30,440) $ 28,304
Liabilities and Stockholder's Deficit
Liabilities:
Distributions payable $ 24,020 $ 82,576
Total Liabilities 24,020 82,576
Stockholder's Equity (Deficit):
Common Stock, $1.00 par value
authorized, issued and
outstanding 1,000 shares 1,000 1,000
Additional paid-in capital 418,744 411,432
Accumulated deficit (474,204) (466,704)
Total Stockholder's Deficit (54,460) (54,272)
Total Liabilities and
Stockholder's Deficit $ (30,440) $ 28,304
Statement of Changes in Stockholder's Deficit
For the three months ended March 31, 1995
Additional
Common Paid-in Accumulated
Total Stock Capital Deficit
Stockholder's deficit
at December 31, 1994 $ (54,272) $ 1,000 $ 411,432 $ (466,704)
Distributions (24,020) -- -- (24,020)
Capital contribution 7,312 -- 7,312 --
Net income 16,520 -- -- 16,520
Stockholder's deficit
at March 31, 1995 $ (54,460) $ 1,000 $ 418,744 $ (474,204)
Statements of Operations
For the three months ended March 31, 1995 and 1994
Income 1995 1994
Equity in earnings of Burger King
Limited Partnership II $ 23,832 $ 22,723
Income taxes 7,312 6,972
Net Income $ 16,520 $ 15,751
Per COP Unit (3,084 outstanding) $ 4.29 $ 4.09
Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 16,520 $ 15,751
Adjustments to reconcile net income
to net cash provided by operating activities:
Equity in earnings of Burger
King Limited Partnership II (23,832) (22,723)
Contributions to capital 7,312 6,972
Net cash provided by operating activities -- --
Cash Flows from Financing Activities:
Distributions from Burger King
Limited Partnership II 82,576 75,845
Cash distributions paid (82,576) (75,845)
Net cash provided by financing activities -- --
Net change in cash -- --
Cash at beginning of period -- --
Cash at end of period $ -- $ --
Notes to the Financial Statements
The interim financial statements presented should be read in conjunction with
the annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments consisting of only
normal recurring accruals which are, in the opinion of management, necessary to
present a fair statement of financial position as of March 31, 1995 and the
results of operations, changes in stockholder's equity (deficit), and cash
flows for the three months ended March 31, 1995 and 1994. Results of
operations for the period are not necessarily indicative of the results to be
expected for the full year.
No significant events have occurred subsequent to fiscal year 1994, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
BK III RESTAURANTS INC.
Balance Sheets
March 31, December 31,
Assets 1995 1994
Investment in Burger King
Limited Partnership III $ 2,033 $ 2,945
Liabilities and Stockholder's Deficit
Liabilities:
Distributions payable $ 25,624 $ 20,021
Total Liabilities 25,624 20,021
Stockholder's Equity (Deficit):
Common Stock, $1.00 par value
authorized, issued and
outstanding 1,000 shares 1,000 1,000
Additional paid-in capital 307,433 301,570
Accumulated deficit (332,024) (319,646)
Total Stockholder's Deficit (23,591) (17,076)
Total Liabilities and
Stockholder's Deficit $ 2,033 $ 2,945
Statement of Changes in Stockholder's Deficit
For the three months ended March 31, 1995
Additional
Common Paid-in Accumulated
Total Stock Capital Deficit
Stockholder's deficit
at December 31, 1994 $ (17,076) $ 1,000 $ 301,570 $ (319,646)
Distributions (25,624) -- -- (25,624)
Capital contribution 5,863 -- 5,863 --
Net income 13,246 -- -- 13,246
Stockholder's deficit
at March 31, 1995 $ (23,591) $ 1,000 $ 307,433 $ (332,024)
Statements of Operations
For the three months ended March 31, 1995 and 1994
Income 1995 1994
Equity in earnings of Burger King
Limited Partnership III $ 19,109 $ 18,102
Income taxes 5,863 5,554
Net Income $ 13,246 $ 12,548
Per COP Unit (3,084 outstanding) $ 3.44 $ 3.26
Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 13,246 $ 12,548
Adjustments to reconcile net income
to net cash provided by operating activities:
Equity in earnings of Burger King
Limited Partnership III (19,109) (18,102)
Contributions to capital 5,863 5,554
Net cash provided by operating activities -- --
Cash Flows from Financing Activities:
Distributions from Burger King
Limited Partnership III 20,021 18,556
Cash distributions paid (20,021) (18,556)
Net cash provided by financing activities -- --
Net change in cash -- --
Cash at beginning of period -- --
Cash at end of period $ -- $ --
Notes to the Financial Statements
The interim financial statements presented should be read in conjunction with
the annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments consisting of only
normal recurring accruals which are, in the opinion of management, necessary to
present a fair statement of financial position as of March 31, 1995 and the
results of operations, changes in stockholder's equity (deficit), and cash
flows for the three months ended March 31, 1995 and 1994. Results of
operations for the period are not necessarily indicative of the results to be
expected for the full year.
No significant events have occurred subsequent to fiscal year 1994, and no
material contingencies exist which would 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 and their
respective Partnerships 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 leased on a long-term net 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.
The Partnerships' prospectuses specify that BKC had the option to purchase any
or all of the Properties at fair market value, determined by an independent
appraisal at any time during the eighth through tenth years following the date
of completion of the offering of limited partnership interests in each
Partnership. The offering of interests in the Partnerships occurred in 1982,
1983 and 1984, respectively. As of December 31, 1994, BKC's option to purchase
the properties of the respective Partnerships had expired.
On March 10, 1995, BK-I closed on the sale of a property in Washington, North
Carolina for net sales proceeds of $619,944. On March 31, 1995, BK-I closed on
the sale of two additional Properties located in Carlsbad, New Mexico and Big
Spring, Texas for aggregate net proceeds of $1,184,582. BK-I is aggressively
marketing the remaining ten Properties to a number of prospective purchasers.
GP-II is currently marketing BK-II's portfolio of Properties for sale. GP-II
is reviewing bulk-sale possibilities and single property sales to interested
buyers. Until all of BK-II's Properties are sold, BK-II will continue to
operate and intends to make distributions to the partners in accordance with
the terms of BK-II's Partnership Agreement.
BK-III is currently exploring the feasibility of selling its Properties. Until
all of BK-III's Properties are sold, BK-III will continue to operate and
intends to make distributions to the partners in accordance with the terms of
BK-III's Partnership Agreement.
At March 31, 1995, GP-I's investment in BK-I was $(65,319) and GP-II's
investment in BK-II was $(30,440), reflecting distributions in excess of net
income plus the initial investments. GP-III's investment in BK-III was $2,033
at March 31, 1995 compared to $2,945 at December 31, 1994.
On September 23, 1994, BK-I notified the Wisconsin Department of Natural
Resources ("WDNR") that petroleum and chlorinated compounds were discovered at
one of BK-I's properties located in Greenfield, Wisconsin. The WDNR has
indicated that under Wisconsin state law, BK-I will be responsible for
remediating the site. BK-I has obtained a preliminary cost estimate to
remediate the site from an environmental consulting firm. Based on this
estimate and in accordance with BK-I's respective Partnership Agreement, BK-I
set aside $300,000 from net cash flow from operations to fund the potential
environmental remediation costs. GP-I believes that the cost of the
environmental remediation will be recovered from the proceeds from the sale of
the restaurant.
To the best of their knowledge, the General Partners know of no trends,
demands, commitments, events or uncertainties as of the date hereof that will
or are reasonably likely to result in the Partnerships' liquidity being either
increased or decreased in any material way.
Results of Operations
The results of operations for the three months ended March 31, 1995 and 1994,
are primarily attributable to the respective investments in BK-I, BK-II and
BK-III.
For the three months ended March 31, 1995, net income for GP-II and GP-III was
largely unchanged compared to the corresponding period in 1994. The decrease
in GP-I's net income is primarily attributable to lower rental income generated
by BK-I resulting from the sale of Properties during the third and fourth
quarters of 1994 and the first quarter of 1995.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K
were filed during the quarter ended March 31,
1995.
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: May 15, 1995 BY: /s/ Rocco Andriola
Name: Rocco Andriola
Title: Director, President and
Chief Financial Officer