-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N4W4FUOoDcqe5dPBuwC5eq5rK2n1IQplJAt5ce4327NA/CW+PFLn7PiQM27tL2Ay N5GYfbB1CJkW6x7T783B+Q== 0000318380-96-000072.txt : 19961118 0000318380-96-000072.hdr.sgml : 19961118 ACCESSION NUMBER: 0000318380-96-000072 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: QSR INCOME PROPERTIES LTD CENTRAL INDEX KEY: 0000783287 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 954084042 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15802 FILM NUMBER: 96663713 BUSINESS ADDRESS: STREET 1: 701 WESTERN AVE STREET 2: SUITE 200 CITY: GLENDALE STATE: CA ZIP: 91201-2397 BUSINESS PHONE: 8182448080 MAIL ADDRESS: STREET 1: 701 WESTERN AVE STREET 2: SUITE 200 CITY: GLENDALE STATE: CA ZIP: 91201 FORMER COMPANY: FORMER CONFORMED NAME: RR EQUITY PARTNERS LTD DATE OF NAME CHANGE: 19860422 10-Q 1 10-Q 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 September 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 0-15802 ------- 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 QSR INCOME PROPERTIES, LTD., a California Limited Partnership INDEX PART I. FINANCIAL INFORMATION Item 1. Condensed Balance Sheets at September 30, 1996 and December 31, 1995 2 Condensed Statements of Operations for the three and nine month periods ended September 30, 1996 and 1995 3 Condensed Statement of Partners' Equity for the nine months ended September 30, 1996 4 Condensed Statements of Cash Flows for the nine month periods ended September 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 QSR INCOME PROPERTIES, LTD., a California Limited Partnership CONDENSED BALANCE SHEETS
September 30, December 31, 1996 1995 ------------------- -------------------- (Unaudited) ASSETS Cash and cash equivalents $ 1,775,000 $ 1,630,000 Rent and other receivables 13,000 10,000 Notes receivable 212,000 234,000 Facilities, at net realizable value 7,335,000 9,743,000 ------------------- -------------------- Total assets $ 9,335,000 $ 11,617,000 =================== ==================== LIABILITIES AND PARTNERS' EQUITY Accounts payable $ 141,000 $ 148,000 Partners' equity: Limited partners' equity, $500 per unit, 52,004 units authorized, issued and outstanding 9,126,000 11,378,000 General partner's equity 68,000 91,000 ------------------- -------------------- Total partners' equity 9,194,000 11,469,000 ------------------- -------------------- Total liabilities and partners' equity $ 9,335,000 $ 11,617,000 =================== ==================== See accompanying notes to Condensed Financial Statements. 2
QSR INCOME PROPERTIES, LTD., a California Limited Partnership CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ---------------------------------------- --------------------------------------- 1996 1995 1996 1995 ------------------- ------------------ ------------------ ------------------ REVENUE: Lease income $ 267,000 $ 257,000 $ 820,000 $ 795,000 Interest income 26,000 20,000 77,000 64,000 ------------------- ------------------ ------------------ ------------------ 293,000 277,000 897,000 859,000 ------------------- ------------------ ------------------ ------------------ COSTS AND EXPENSES: Cost of operations 34,000 35,000 106,000 104,000 Depreciation and amortization - 62,000 58,000 187,000 Idle facility costs 14,000 10,000 27,000 31,000 Partnership administrative expenses 25,000 18,000 75,000 71,000 ------------------- ------------------ ------------------ ------------------ 73,000 125,000 266,000 393,000 ------------------- ------------------ ------------------ ------------------ Net income before valuation provision 220,000 152,000 631,000 466,000 Valuation provision to record facilities at net realizable value - - (2,350,000) - ------------------- ------------------ ------------------ ------------------ NET INCOME (LOSS) $ 220,000 $ 152,000 $ (1,719,000) $ 466,000 =================== ================== ================== ================== Allocation of net income (loss) Limited partners $ 203,000 $ 135,000 $ (1,746,000) $ 417,000 General partner 17,000 17,000 27,000 49,000 ------------------- ------------------ ------------------ ------------------ $ 220,000 $ 152,000 $ (1,719,000) $ 466,000 =================== ================== ================== ================== Limited partners' allocation per unit $ 3.90 $ 2.60 $ (33.57) $ 8.02 =================== ================== ================== ================== Limited partners' allocation per unit before valuation provision $ 3.90 $ 2.60 $ 11.16 $ 8.02 =================== ================== ================== ==================
See accompanying notes to Condensed Financial Statements. 3 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 (loss) income (1,746,000) 27,000 (1,719,000) Distributions (506,000) (50,000) (556,000) ------------------ ----------------- ---------------- Balance at September 30, 1996 $9,126,000 $68,000 $9,194,000 ================== ================= ================
See accompanying notes to Condensed Financial Statements. 4 QSR INCOME PROPERTIES, LTD., a California Limited Partnership CONDENSED STATEMENTS OF CASH FLOWS For the nine month periods ended September 30, 1996 and 1995 (Unaudited)
Nine Months Ended September 30, ------------------------------------------ 1996 1995 ------------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (1,719,000) $ 466,000 Adjustments to reconcile net (loss) income to net cash provided by operating activities Depreciation and amortization 58,000 187,000 Provision to record facilities at net realizable value 2,350,000 - (Increase) decrease in accounts receivable (3,000) 7,000 (Decrease) increase in accounts payable (7,000) 17,000 ------------------- ------------------ Total adjustments 2,398,000 211,000 ------------------- ------------------ Net cash provided by operating activities 679,000 677,000 ------------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes receivable 22,000 28,000 Distributions paid to partners (556,000) (557,000) ------------------- ------------------ Net cash used in financing activities (534,000) (529,000) ------------------- ------------------ Net increase in cash and cash equivalents 145,000 148,000 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 $ 1,775,000 $ 1,263,000 =================== =================
See accompanying notes to Condensed Financial Statements. 5 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 September 30, 1996 and December 31, 1995, the results of its operations for the three and nine months ended September 30, 1996 and 1995, and its cash flows for the nine months then ended. 3. The results of operations for the three and nine months ended September 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. 5. In September 1996, the general partner entered into an agreement to sell the assets of the Partnership for $7,721,000 to US Restaurants Properties Operating Partnership ("USV"). The transaction, which is subject to adjustment and certain contingencies, including, but not limited to, the approval of the transaction by a majority of the limited partners of the Partnership, is expected to close in the fourth quarter of 1996 or the first quarter of 1997. As consideration for the sale, the limited partners of the Partnership will receive a distribution of the publicly traded partnership units of USV in a liquidating distribution upon close of the transaction. 6 QSR INCOME PROPERTIES, LTD., a California Limited Partnership MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS September 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 $1,719,000 for the nine months ended September 30, 1996 represents a decrease in income of $2,185,000 compared to the net income for the nine months ended September 30, 1995. This decrease is 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 nine months ended September 30, 1996 increased $68,000 and $165,000, respectively, over the same periods in 1995. These increases are primarily attributable to increases in lease income and interest income, combined with a decrease in depreciation expense, partially offset by an increase in administrative expense. Lease income for the three and nine months ended September 30, 1996 increased $10,000 and $25,000, respectively, over the same periods in 1995, as a result of scheduled escalations in lease income. Included in lease income for the nine month periods ended September 30, 1996 and 1995 is approximately $28,000 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 $2,000 for the nine month period ended September 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 September 30, 1996 decreased $1,000 compared to the same period in 1995. Idle facility costs decreased $4,000 for the nine month period ended September 30, 1996 compared to the same period in 1995. The decrease is primarily attributable to the sale of the Partnership's Iliff, Colorado property in November 1995. Idle facility costs increased $4,000 for the three month period ended September 30, 1996 compared to the same period in 1995. This increase is primarily attributable to an increase in repairs and maintenance expense. Depreciation expense decreased $62,000 and $129,000, respectively, for the three and nine month periods ended September 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. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- For the nine month period ended September 30, 1996, the Partnership's activities generated cash flow of $679,000. This represents a $2,000 increase compared to the cash flow of $677,000 generated by the Partnership for the nine 7 month period ended September 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 September 30, 1996, the Partnership's distribution paid remained stable at $3.25 per Partnership unit, compared to the three months ended September 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. In September 1996, the general partner entered into an agreement to sell the assets of the Partnership for $7,721,000 to US Restaurants Properties Operating Partnership ("USV"). The transaction, which is subject to adjustment and certain contingencies, including, but not limited to, the approval of the transaction by a majority of the limited partners of the Partnership, is expected to close in the fourth quarter of 1996 or the first quarter of 1997. As consideration for the sale, the limited partners of the Partnership will receive a distribution of the publicly traded partnership units of USV in a liquidating distribution upon close of the transaction. 8 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 EX-27 2 FDS -- ARTICLE 5
5 0000783287 QSR Income Properties, Ltd. 1 US 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1 1,775,000 0 13,000 0 0 1,788,000 10,591,000 (3,256,000) 9,335,000 141,000 0 0 0 0 9,194,000 9,335,000 0 897,000 0 106,000 160,000 0 0 (1,719,000) 0 (1,719,000) 0 0 0 (1,719,000) (33.57) (33.57)
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