<PAGE> 1
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, 1997
----------------------------
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)
CALIFORNIA 95-3852699
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
23041 AVENIDA DE LA CARLOTA, LAGUNA HILLS, CALIFORNIA 92653
(Address of principal executive offices) (Zip Code)
(714) 462-9300
(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 [ ]
<PAGE> 2
INDEX
DEL TACO RESTAURANT PROPERTIES I
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NUMBER
- ------------------------------ -----------
<S> <C> <C>
Item 1. Financial Statements and Supplementary Data
Balance Sheets at March 31, 1997 (Unaudited) and
December 31, 1996 3
Statements of Income for the three months ended
March 31, 1997 and 1996 (Unaudited) 4
Statements of Cash Flows for the three months ended
March 31, 1997 and 1996 (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
</TABLE>
-2-
<PAGE> 3
DEL TACO RESTAURANT PROPERTIES I
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31 December 31
1997 1996
---------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 107,474 $ 130,996
Receivable from General Partner (Note 4) 42,797 38,478
Deposits 600 600
---------- ----------
Total current assets 150,871 170,074
---------- ----------
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 1,639,486 1,628,543
---------- ----------
2,362,156 2,373,099
---------- ----------
$2,513,027 $2,543,173
========== ==========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Payable to Limited Partners $ 11,319 $ 11,319
Accounts payable 4,265 3,000
---------- ----------
Total current liabilities 15,584 14,319
---------- ----------
PARTNERS' EQUITY:
Limited Partners 2,232,482 2,263,579
General Partner-Del Taco, Inc. 264,961 265,275
---------- ----------
2,497,443 2,528,854
---------- ----------
$2,513,027 $2,543,173
========== ==========
</TABLE>
The accompanying notes are an
integral part of these financial statements
-3-
<PAGE> 4
DEL TACO RESTAURANT PROPERTIES I
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
-------- --------
<S> <C> <C>
REVENUES:
Rent (Notes 3 and 4) $110,917 $101,983
Interest 1,024 629
Other 75 150
-------- --------
112,016 102,762
-------- --------
EXPENSES:
General and administrative 20,807 20,055
Depreciation 10,943 10,943
-------- --------
31,750 30,998
-------- --------
Net income $ 80,266 $ 71,764
======== ========
Net income per Limited
Partnership Unit (Note 2) $ 9.08 $ 8.12
======== ========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
-4-
<PAGE> 5
DEL TACO RESTAURANT PROPERTIES I
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 80,266 $ 71,764
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 10,943 10,943
Increase in payable to Limited Partners -- 1,196
(Increase) decrease in receivable from
General Partner (4,319) 3,890
Increase in accounts payable 1,265 8,018
--------- ---------
Net cash provided by operating activities 88,155 95,811
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners 111,677 101,327
--------- ---------
Net decrease in cash (23,522) (5,516)
Beginning cash balance 130,996 115,012
--------- ---------
Ending cash balance $ 107,474 $ 109,496
========= =========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
-5-
<PAGE> 6
DEL TACO RESTAURANT PROPERTIES I
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
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, 1996. In the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
to present fairly the partnership's financial position at March 31, 1997, the
results of operations and cash flows for the three month periods ended March 31,
1997 and 1996 have been included. Operating results for the three months ended
March 31, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997.
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 1997 and 1996.
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.
-6-
<PAGE> 7
DEL TACO RESTAURANT PROPERTIES I
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 1997
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, 1997 and 1996, two of which have been subleased to Del
Taco franchisees (one of which is affiliated with Del Taco, Inc.)
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 11, 1997.
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 April 9, 1997, a distribution to the Limited Partners of $101,450, or
approximately $11.59 per Limited Partnership Unit, was approved. Such
distribution was paid on April 18, 1997. The General Partner also received a
distribution of $1,025 with respect to its 1% partnership interest.
-7-
<PAGE> 8
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 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 $101,983 in 1996
to $110,917 in 1997. Such increases are directly attributable to increased sales
at the restaurants.
-8-
<PAGE> 9
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 1997
------ ------
<S> <C> <C>
Accounting fees 76.39% 77.54%
Distribution of
information to
Limited Partners 23.61 21.22
Other -- 1.24
------ ------
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 increased from $20,055 in 1996 to $20,807 in 1997. For
the three months ended March 31, the Registrant incurred depreciation expense in
the amount of $10,943 in 1997 and 1996.
For the three months ended March 31, revenues increased by $9,254 while expenses
increased by $752 resulting in an increase in net income from $71,764 in 1996 to
$80,266 in 1997.
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.
-9-
<PAGE> 10
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,
1997.
27 Financial Data Schedule
-10-
<PAGE> 11
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, 1997 /s/ Robert J. Terrano
----------------------------------
Robert J. Terrano
Executive Vice President,
Chief Financial Officer
Date: April 30, 1997 /s/ C. Douglas Mitchell
----------------------------------
C. Douglas Mitchell
Vice President and Corporate
Controller
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 107,474
<SECURITIES> 600
<RECEIVABLES> 42,797
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 150,871
<PP&E> 4,001,642
<DEPRECIATION> 1,639,486
<TOTAL-ASSETS> 2,513,027
<CURRENT-LIABILITIES> 15,584
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,497,443
<TOTAL-LIABILITY-AND-EQUITY> 2,513,027
<SALES> 0
<TOTAL-REVENUES> 112,016
<CGS> 0
<TOTAL-COSTS> 31,750
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 80,266
<INCOME-TAX> 0
<INCOME-CONTINUING> 80,266
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,266
<EPS-PRIMARY> 9.08
<EPS-DILUTED> 9.08
</TABLE>
