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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 MARCH 31, 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 NO. 2-80930
DEL TACO RESTAURANT PROPERTIES I
A CALIFORNIA LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
CALIFORNIA 95-3852699
(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 RESTAURANT PROPERTIES I
PART I. FINANCIAL INFORMATION PAGE NUMBER
Item 1. Financial Statements and Supplementary Data
Balance Sheets at March 31, 1996 (Unaudited) and
December 31, 1995 3
Statements of Income for the three months ended
March 31, 1996 and 1995 (Unaudited) 4
Statements of Cash Flows for the three months ended
March 31, 1996 and 1995 (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
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
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DEL TACO RESTAURANT PROPERTIES I
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31 December 31
1996 1995
---------- ----------
(UNAUDITED)
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 109,496 $ 115,012
Receivable from General Partner (Note 4) 32,764 36,654
Deposits 600 600
---------- ----------
Total current assets 142,860 152,266
---------- ----------
PROPERTY AND EQUIPMENT, AT COST
Land and improvements 1,852,482 1,852,482
Buildings and improvements 1,013,134 1,013,134
Machinery and equipment 1,136,026 1,136,026
---------- ----------
4,001,642 4,001,642
Less--accumulated depreciation 1,595,712 1,584,768
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2,405,930 2,416,874
---------- ----------
$2,548,790 $2,569,140
========== ==========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
CURRENT LIABILITIES:
Payable to Limited Partners $ 10,094 $ 8,898
Accounts payable 8,925 907
---------- ----------
Total current liabilities 19,019 9,805
---------- ----------
PARTNERS' EQUITY
Limited Partners 2,264,486 2,293,755
General Partner-Del Taco, Inc. 265,285 265,580
---------- ----------
2,529,771 2,559,335
---------- ----------
$2,548,790 $2,569,140
========== ==========
</TABLE>
The accompanying notes are an
integral part of these financial statements
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DEL TACO RESTAURANT PROPERTIES I
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1996 1995
---- ----
<S> <C> <C>
REVENUES:
Rent (Notes 3 and 4) $101,983 $95,397
Interest 629 557
Other 150 150
-------- -------
102,762 96,104
-------- -------
EXPENSES:
General and administrative 20,055 20,367
Depreciation 10,943 39,344
-------- -------
30,998 59,711
-------- -------
Net income $ 71,764 $36,393
======== =======
Net income per Limited
Partnership Unit (Note 2) $ 8.12 $ 4.12
======== =======
</TABLE>
The accompanying notes are an integral
part of these financial statements.
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DEL TACO RESTAURANT PROPERTIES I
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 71,764 $ 36,393
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 10,943 39,344
Increase in payable to Limited Partners 1,196 221
Decrease in receivable from General Partner 3,890 10,039
Increase in accounts payable 8,018 10,621
--------- ---------
Net cash provided by operating activities 95,811 96,618
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners 101,327 103,442
--------- ---------
Net decrease in cash (5,516) (6,824)
Beginning cash balance 115,012 120,720
--------- ---------
Ending cash balance $ 109,496 $ 113,896
========= =========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
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DEL TACO RESTAURANT PROPERTIES I
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
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, 1995. In the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
to present fairly the partnership's financial position at March 31, 1996, the
results of operations and cash flows for the three month periods ended March 31,
1996 and 1995 have been included. Operating results for the three months ended
March 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996.
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
8,751 in 1996 and 1995.
Pursuant to the Partnership Agreement, annual partnership net income is
allocated one percent to the General Partner and 99 percent to the Limited
Partners. A Partnership net loss in any year will be allocated 24 percent to the
General Partner and 76 percent to the Limited Partners until the losses so
allocated equal income previously allocated. Any additional losses will be
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. Additional gains will be allocated 24
percent to the General Partner and 76 percent to the Limited Partners.
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DEL TACO RESTAURANT PROPERTIES I
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 1996
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 35 years 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 six Properties
leased as of March 31, 1996 and 1995, two of which have been subleased to Del
Taco franchisees (one of which is affiliated with Del Taco, Inc.)
The Registrant's property at Baseline and Archibald in Rancho Cucamonga,
California is subleased by Del Taco, Inc. to a franchisee. In November 1995, the
franchise agreement and the sublease expired. In a letter dated November 20,
1995, the franchise agreement and the sublease were extended to May 26, 1996.
Del Taco, Inc. and the franchisee have not reached an agreement regarding the
franchise and sublease terms after May 26, 1996. Management of the General
Partner (Del Taco, Inc.) anticipates that on or before May 26, 1996 one of the
following dispositions will be initiated: 1) the franchise agreement and
sublease will be renewed for a 15 year term; 2) Del Taco, Inc. will operate the
restaurant; 3) Del Taco will sublease the property to a new third party; or 4)
the property will be offered for sale.
NOTE 4 - TRANSACTIONS WITH DEL TACO
The receivable from General Partner consists primarily of rent accrued for the
month of March. The March rent receivable was collected on April 12, 1996.
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.
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NOTE 5 - DISTRIBUTIONS
On April 9, 1996, a distribution to the Limited Partners of $93,489, or
approximately $10.68 per Limited Partnership Unit, was approved. Such
distribution was paid on April 16, 1996. The General Partner also received a
distribution of $945 with respect to its 1% partnership interest.
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 March 21,
1983. By March 20, 1984, the sale of such Units provided a total capitalization
for the Registrant of $4,375,500. Fifteen 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. The remaining funds
were expended for the acquisition of sites and construction of six restaurants.
In 1985, the first four restaurants opened for business and two additional
restaurants were opened in 1986. Approximately $4,002,000 was expended for such
purposes.
Since the six restaurants owned by the Registrant opened, cash flow from Lease
payments received from Del Taco, the Registrant's General Partner, which leases
all six 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 six Mexican-American restaurants that are under long-term
lease to its General Partner for operation under the Del
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<PAGE> 9
Taco trade name. The Registrant receives rental revenues equal to 12 percent of
restaurant sales. For the three months ended March 31, rental revenues increased
from $95,397 in 1995 to $101,983 in 1996. Such increases are directly
attributable to increased sales at the restaurants.
The following table sets forth the percentage relationship to total general and
administrative expenses of items included in the Registrant's Statements of
Income:
<TABLE>
<CAPTION>
Percentage of Total
General & Administrative Expense
--------------------------------
Three Months Ended
March 31
1996 1995
<S> <C> <C>
Accounting fees 77.54% 73.28%
Distribution of
information to
Limited Partners 21.22 23.16
Other 1.24 3.56
------ ------
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 March 31, general and
administrative expenses decreased from $20,367 in 1995 to $20,055 in 1996. For
the three months ended March 31, the Registrant incurred deprecation expense in
the amount of $10,943 in 1996 and $39,344 in 1995. Depreciation expense
decreased because signs and food processing equipment (included as part of
machinery and equipment) became fully depreciated during 1995.
For the three months ended March 31, revenues increased by $6,658 while expenses
decreased by $28,713 resulting in an increase in net income from $36,393 in 1995
to $71,764 in 1996.
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 three months ended March 31,
1996.
(c) Exhibit 27 - Finanical 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 RESTAURANT PROPERTIES I
(a California limited partnership)
Registrant
Del Taco, Inc.
General Partner
Date: April 30, 1996 /s/ Robert J. Terrano
----------------------------
Robert J. Terrano
Executive Vice President,
Chief Financial Officer
Date: April 30, 1996 /s/ C. Douglas Mitchell
----------------------------
C. Douglas Mitchell
Vice President and Corporate
Controller
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 109,496
<SECURITIES> 0
<RECEIVABLES> 32,764
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 142,860
<PP&E> 4,001,642
<DEPRECIATION> 1,595,712
<TOTAL-ASSETS> 2,548,790
<CURRENT-LIABILITIES> 19,019
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,529,771
<TOTAL-LIABILITY-AND-EQUITY> 2,548,790
<SALES> 0
<TOTAL-REVENUES> 102,762
<CGS> 0
<TOTAL-COSTS> 30,998
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 71,764
<INCOME-TAX> 0
<INCOME-CONTINUING> 71,764
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,764
<EPS-PRIMARY> 8.12
<EPS-DILUTED> 8.12
</TABLE>
