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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
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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 NO. 33-13437
DEL TACO RESTAURANT PROPERTIES IV
A CALIFORNIA LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
CALIFORNIA 33-0241855
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1800 W. KATELLA AVENUE, ORANGE, CALIFORNIA 92667
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(714) 744-4334
(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
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INDEX
DEL TACO INCOME PROPERTIES IV
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NUMBER
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<S> <C>
Item 1. Financial Statements and Supplementary Data
Balance Sheets at September 30, 1995 (Unaudited) and
December 31, 1994 3
Statements of Income for the three and nine months ended
September 30, 1995 and 1994 (Unaudited) 4
Statements of Cash Flows for the nine months ended
September 30, 1995 and 1994 (Unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
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DEL TACO INCOME PROPERTIES IV
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30 December 31
1995 1994
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(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 78,294 $ 74,956
Receivable from General Partner (Note 4) 23,829 22,996
Deposits 400 400
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Total current assets 102,523 98,352
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PROPERTY AND EQUIPMENT, AT COST
Land and improvements 1,236,700 1,236,700
Buildings and improvements 1,289,860 1,289,860
Machinery and equipment 484,789 484,789
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3,011,349 3,011,349
Less--accumulated depreciation 584,099 506,296
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2,427,250 2,505,053
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$ 2,529,773 $ 2,603,405
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LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Payable to Limited Partners $ 1,713 $ 2,236
Accounts Payable 3,353 -
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Total current liabilities 5,066 2,236
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OBLIGATION TO GENERAL PARTNER 137,953 137,953
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PARTNERS' EQUITY
Limited Partners 2,394,022 2,469,723
General Partner-Del Taco, Inc. (7,268) (6,507)
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2,386,754 2,463,216
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$ 2,529,773 $ 2,603,405
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</TABLE>
The accompanying notes are an
integral part of these financial statements
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DEL TACO INCOME PROPERTIES IV
STATEMENTS OF INCOME
(UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
REVENUES:
Rent (Notes 3 and 4) $73,589 $ 74,697 $206,317 $201,903
Interest 283 327 784 1,245
Other - 50 75 200
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73,872 75,074 207,176 203,348
------- -------- -------- --------
EXPENSES:
General and administrative 5,856 5,038 31,997 31,727
Depreciation 25,937 25,935 77,802 77,794
------- -------- -------- --------
31,793 30,973 109,799 109,521
------- -------- -------- --------
Net income $42,079 $ 44,101 $ 97,377 $ 93,827
======= ======== ======== ========
Net income per Limited
Partnership Unit (Note 2) $ .25 $ .26 $ .58 $ .56
======= ======== ======== ========
</TABLE>
The accompanying notes are an
integral part of these financial statements.
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DEL TACO INCOME PROPERTIES IV
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1995 1994
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<S> <C> <C>
SOURCE OF CASH:
From operations:
Net income $ 97,377 $ 93,827
Depreciation 77,802 77,794
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Total cash provided from operations 175,179 171,621
Cash distributions 173,839 267,093
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Excess (deficiency) of cash
generated over distributions 1,340 (95,472)
Increase in accounts payable 3,353 923
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4,693 (94,549)
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USE OF CASH:
Increase in receivable from General Partner 833 1,560
Decrease in payable to Limited Partners 522 4,435
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1,355 5,995
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Increase/(decrease) in cash during period 3,338 (100,544)
Beginning cash balance 74,956 176,725
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Ending cash balance $ 78,294 $ 76,181
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</TABLE>
The accompanying notes are an
integral part of these financial statements.
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DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements, some of which are unaudited, have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements and should therefore be read in conjunction with the
financial statements and notes thereto contained in the Registrant's annual
report on Form 10-K for the year ended December 31, 1994. In the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
to present fairly the partnership's financial position at September 30, 1995,
the results of operations and cash flows for the nine month periods ended
September 30, 1995 and 1994 have been included. Operating results for the three
and nine months ended September 30, 1995 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1995.
NOTE 2 - NET INCOME PER LIMITED PARTNERSHIP UNIT
Net income per Limited Partnership Unit is based upon the weighted average
number of Units outstanding during the periods presented which amounted to
165,415 in 1995 and 1994.
Pursuant to the Partnership Agreement, annual partnership income or loss is
allocated one percent to the General Partner and 99 percent to the Limited
Partners. Partnership gains from any sale or refinancing will be allocated one
percent to the General Partner and 99 percent to the Limited Partners until
allocated gains and profits equal losses, distributions and syndication costs,
and until each class of Limited Partners receive their priority return as
defined in the Partnership Agreement. Additional gains will be allocated 12
percent to the General Partner and 88 percent to the Limited Partners.
NOTE 3 - LEASING ACTIVITIES
The Registrant leases (the "Leases") certain properties (the "Properties") for
operation of restaurants to Del Taco, Inc. ("General Partner") on a triple net
basis. The Leases are for terms of 32 years
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DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS - CONTINUED
SEPTEMBER 30, 1995
commencing with the completion of the restaurant facility located on each
Property and require monthly rentals equal to 12 percent of the gross sales of
the restaurants. There is no minimum rental under any of the Leases. The
Registrant had a total of three Properties leased as of September 30, 1995 and
1994, one of which has been subleased to a Del Taco franchisee.
NOTE 4 - TRANSACTIONS WITH DEL TACO
The receivable from the General Partner consists primarily of rent accrued for
the month of September. The September rent was collected on October 20, 1995.
Del Taco, Inc. serves in the capacity of general partner in other partnerships
which are engaged in the business of operating restaurants, and four
partnerships which were formed for the purpose of acquiring real property in
California for construction of Mexican-American restaurants for lease under
long-term agreements to Del Taco, Inc. for operation under the Del Taco trade
name.
In addition, see Note 5 with respect to certain distributions to the General
Partner.
NOTE 5 - DISTRIBUTIONS
On October 10, 1995, a distribution to the Limited Partners of $68,482, or
approximately $.41 per Limited Partnership Unit, was approved. Such distribution
was paid on October 16, 1995. The General Partner also received a distribution
of $692 with respect to its 1% partnership interest.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
The Registrant commenced offering of Limited Partnership Units on June 5, 1987.
By June 1, 1988, the sale of such Units provided a total capitalization for the
Registrant of $4,135,375 including $1,000 attributable to the Special Limited
Partner. 14.5 percent of the cash received from the sale of Limited Partnership
Units was used to pay commissions to brokers and to reimburse the General
Partner for offering costs incurred. Approximately $3,000,000 of the remaining
funds were expended for the acquisition of sites and construction of three
restaurants. During 1989, the first restaurant opened for business. The two
additional restaurants commenced operation in 1990. In February 1992, the
Registrant distributed to Limited Partners of record on December 31, 1991
$442,270 of net proceeds not utilized as reserves and not invested in
properties.
Since the three restaurants owned by the Registrant opened, cash flow from Lease
payments received from Del Taco, the Registrant's General Partner, which leases
all three restaurants, has provided adequate liquidity for operation of the
Registrant. However, the Registrant's overwhelmingly predominant source of
income to meet its expenses and fund distributions to its Limited Partners is
payments from Del Taco under the Leases, comprising primarily rent calculated on
the basis of the gross sales of the restaurants operated on the Properties, as
to which there are no contractually specified minimum or guaranteed amounts.
Thus, the adequacy of the Registrant's liquidity and capital resources in the
future will depend primarily upon the gross revenues of such restaurants as well
as upon Del Taco's financial condition and results of operations generally.
Results of Operations
The Registrant owns three Properties that are under long-term lease to Del Taco
for restaurant operations (Del Taco, in turn, has sub-leased one of the
restaurants to a Del Taco franchisee). The Registrant receives rental revenues
equal to 12 percent of restaurant sales. The Registrant had rental revenue of
$73,589 for the three months ended September 30, 1995 representing an decrease
from the rental revenues of $74,697 in 1994. The Registrant had rental revenue
of $206,317 for the nine months ended September 30, 1995 representing an
increase from the rental revenues of $201,903 in 1994. Such increase is directly
attributable to increased sales at the restaurants during the nine months ended
September 30,1995.
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The following table sets forth the percentage relationship to total general and
administrative expenses of items included in the Registrant's Statements of
Income:
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<CAPTION>
Percentage of Total
General & Administrative Expense
--------------------------------
Nine Months Ended
September 30
1995 1994
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<S> <C> <C>
Accounting fees 49.77% 52.69%
Distribution of
information to
Limited Partners 47.62 43.48
Other 2.61 3.83
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100.00% 100.00%
====== ======
</TABLE>
Operating expenses include general and administrative expenses which consist
primarily of accounting fees and costs of distribution of information to the
Limited Partners. For the three months ended September 30, general and
administrative expenses increased from $5,038 in 1994 to $5,856 in 1995. For the
nine months ended September 30, general and administrative expenses increased
from $31,727 in 1994 to $31,997 in 1995. The Registrant incurred depreciation
expense in the amount of $25,937 and $25,935 for the three months ended
September 30, 1995 and 1994 respectively. The Registrant incurred depreciation
expense in the amount of $77,802 and $77,794 for the nine months ended September
30, 1995 and 1994 respectively.
As a result of decreased revenues totaling $1,202 for the three months ended
September 30, 1995 and increased expenses totaling $820 for the three months
ended September 30, 1995, the net income of the Registrant decreased from
$44,101 for the three months ended September 30, 1994 to $42,079 for the
corresponding period in 1995. As a result of increased revenues totaling $3,828
for the nine months ended September 30, 1995 and increased expenses totaling
$278 for the nine months ended September 30, 1995, the net income of the
Registrant increased from $93,827 for the nine months ended September 30, 1994
to $97,377 for the corresponding period in 1995.
For the reasons stated under "Liquidity and Capital Resources" above, the
Registrant's results of operations in the future will depend primarily upon the
gross revenues of the restaurants located on the Properties leased to Del Taco
as well as upon Del Taco's financial condition and results of operations
generally.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) No reports on Form 8-K were filed during the nine months ended September
30, 1995.
(c) Exhibit 27 - Financial Data Schedule
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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.
DEL TACO INCOME PROPERTIES IV
(a California limited partnership)
Registrant
Del Taco, Inc.
General Partner
Date: October 24, 1995 /s/ Robert J. Terrano
----------------------------------
Robert J. Terrano
Executive Vice President,
Chief Financial Officer
(duly authorized to sign on
behalf of the Registrant)
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 78,294
<SECURITIES> 0
<RECEIVABLES> 23,829
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 102,523
<PP&E> 3,011,349
<DEPRECIATION> 584,099
<TOTAL-ASSETS> 2,529,773
<CURRENT-LIABILITIES> 5,066
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,386,754
<TOTAL-LIABILITY-AND-EQUITY> 2,529,773
<SALES> 0
<TOTAL-REVENUES> 207,176
<CGS> 0
<TOTAL-COSTS> 109,799
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 97,377
<INCOME-TAX> 0
<INCOME-CONTINUING> 97,377
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97,377
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.58
</TABLE>
