<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 JUNE 30, 1999
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)
(949) 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>
Item 1. Financial Statements and Supplementary Data
Balance Sheets at June 30, 1999 (Unaudited) and
December 31, 1998 3
Statements of Income for the three and six months ended
June 30, 1999 and 1998 (Unaudited) 4
Statements of Cash Flows for the six months ended
June 30, 1999 and 1998 (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>
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<PAGE> 3
DEL TACO RESTAURANT PROPERTIES I
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, December 31,
1999 1998
---------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 149,074 $ 162,979
Receivable from General Partner (Note 4) 44,599 47,833
Deposits 767 797
---------- ----------
Total current assets 194,440 211,609
---------- ----------
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 1,737,973 1,716,087
---------- ----------
2,263,669 2,285,555
---------- ----------
$2,458,109 $2,497,164
========== ==========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Payable to Limited Partners $ 27,563 $ 24,702
Accounts payable 4,927 5,703
---------- ----------
Total current liabilities 32,490 30,405
---------- ----------
PARTNERS' EQUITY:
Limited Partners 2,161,234 2,201,963
General Partner-Del Taco, Inc. 264,385 264,796
---------- ----------
2,425,619 2,466,759
---------- ----------
$2,458,109 $2,497,164
========== ==========
</TABLE>
The accompanying notes are an
integral part of these financial statements
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<PAGE> 4
DEL TACO RESTAURANT PROPERTIES I
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Rent (Notes 3 and 4) $130,880 $131,156 $256,537 $250,531
Interest 925 573 2,082 1,185
Other 175 175 600 624
-------- -------- -------- --------
131,980 131,904 259,219 252,340
-------- -------- -------- --------
EXPENSES:
General and administrative 9,935 9,977 31,026 30,624
Depreciation 10,943 10,943 21,886 21,886
-------- -------- -------- --------
20,878 20,920 52,912 52,510
-------- -------- -------- --------
Net income $111,102 $110,984 $206,307 $199,830
======== ======== ======== ========
Net income per limited
partnership unit (Note 2) $ 12.57 $ 12.56 $ 23.34 $ 22.61
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
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<PAGE> 5
DEL TACO RESTAURANT PROPERTIES I
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 206,307 $ 199,830
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 21,886 21,886
Decrease (increase) in receivable from
General Partner 3,234 (2,461)
Decrease (increase) in deposits 30 (591)
Increase in accounts payable and
payable to limited partners 2,085 3,972
--------- ---------
Net cash provided by operating activities 233,542 222,636
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (247,447) (221,205)
--------- ---------
Net (decrease) increase in cash (13,905) 1,431
Beginning cash balance 162,979 143,280
--------- ---------
Ending cash balance $ 149,074 $ 144,711
========= =========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
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<PAGE> 6
DEL TACO RESTAURANT PROPERTIES I
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
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, 1998. In the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
to present fairly the partnership's financial position at June 30, 1999, the
results of operations and cash flows for the six month periods ended June 30,
1999 and 1998 have been included. Operating results for the three and six months
ended June 30, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999.
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 1999 and 1998.
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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<PAGE> 7
DEL TACO RESTAURANT PROPERTIES I
NOTES TO FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 1999
NOTE 3 - LEASING ACTIVITIES
The partnership leases certain properties for operation of restaurants to Del
Taco, Inc. 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.
For the three months ended June 30, 1999, the five restaurants operated by Del
Taco, for which the partnership is the lessor, had combined, unaudited sales of
$905,803 and net income of $32,551 as compared to $925,165 and $51,211
respectively, for the corresponding period in 1998. Net income by restaurant
includes charges for general and administrative expenses incurred in connection
with supervision of restaurant operations and interest expense. For the three
months ended June 30, 1999, the one restaurant operated by a Del Taco
franchisee, for which the partnership is the lessor, had unaudited sales of
$184,867 as compared with $167,803 during the same period in 1998.
For the six months ended June 30, 1999, the five restaurants operated by Del
Taco, for which the partnership is the lessor, had combined, unaudited sales of
$1,779,012 and net income of $78,688 as compared to $1,761,425 and $81,911
respectively, for the corresponding period in 1998. For the six months ended
June 30, 1999, the one restaurant operated by a Del Taco franchisee, for which
the partnership is the lessor, had unaudited sales of $358,800 as compared with
$326,333 during the same period in 1998.
For the three months and six months ended June 30, 1999, the Elkhorn Boulevard
restaurant in Sacramento, California reported net losses of $3,176 and $4,941 as
compared to net losses of $4,600 and $8,724 for the corresponding periods in
1998.
NOTE 4 - TRANSACTIONS WITH DEL TACO
The receivable from General Partner consists primarily of rent accrued for the
month of June. The June rent receivable was collected on July 13, 1999.
Del Taco, Inc. serves in the capacity of general partner in other partnerships
which are engaged in the business of operating restaurants, and three other
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 July 13, 1999, a distribution to the limited partners of $115,346, or
approximately $13.18 per limited partnership unit, was approved. Such
distribution was paid on July 24, 1999. The General Partner also received a
distribution of $1,165 with respect to its 1% partnership interest.
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<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
The partnership offered limited partnership units for sale between March 1983
and March 1984. 15% of the $4.375 million raised through sale of limited
partnership units was used to pay commissions to brokers and to reimburse the
General Partner for offering costs incurred. Approximately $4 million of the
remaining funds were used to acquire sites and build six restaurants.
The six restaurants leased to Del Taco make up almost all of the income
producing assets of the partnership. Therefore, the business of the partnership
is almost entirely dependent on the success of the Del Taco trade name
restaurants that lease the properties. The success of the restaurants is
dependent on a large variety of factors, including, but not limited to, consumer
demand and preference for fast food, in general, and for Mexican-American food
in particular.
Results of Operations
The partnership owns six properties that are under long-term lease to Del Taco
for restaurant operations (Del Taco, in turn, has subleased two of the
restaurants to Del Taco franchisees, one of which is affiliated with Del Taco).
The following table sets forth rental revenue earned by restaurant for the year:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
---------------------- ----------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Riverside Avenue, Rialto, CA $ 21,295 $ 21,562 $ 41,452 $ 41,018
Elden Avenue, Moreno Valley, CA 19,695 20,667 38,807 38,615
Foothill Boulevard, La Verne, CA 28,598 28,340 55,461 54,146
Baseline & Archibald, Rancho Cucamonga, CA 22,184 20,136 43,056 39,160
Elkhorn Boulevard, Sacramento, CA 15,070 13,268 28,907 25,283
Haven Avenue, Rancho Cucamonga, CA 24,038 27,183 48,854 52,309
-------- -------- -------- --------
Total $130,880 $131,156 $256,537 $250,531
======== ======== ======== ========
</TABLE>
The partnership receives rental revenues equal to 12 percent of gross sales from
the restaurants. The partnership earned rental revenue of $130,880 during the
three month period ended June 30, 1999, which represents a decrease of $276 from
1998. The partnership earned rental revenue of $256,537 during the six month
period ended June 30, 1999, which represents an increase of $6,006 from 1998.
The changes in rental revenue were caused by a slight decrease in sales at the
restaurants under lease for the three months ended June 30, 1999 and an increase
in sales for the six months ended June 30, 1999.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
The following table breaks down general and administrative expenses by type of
expense:
<TABLE> Percentage of Total
<CAPTION> General & Administrative Expense
Six Months Ended
June 30
-------------------
1999 1998
------ ------
<S> <C> <C>
Accounting fees 67.68% 68.32%
Distribution of information to
Limited Partners 32.32 31.68
------ ------
100.00% 100.00%
====== ======
</TABLE>
General and administrative costs for the six month period ended June 30,
increased from 1998 to 1999 due to increased costs for accounting and income tax
return preparation.
For the three month period ended June 30, 1999, net income increased $118 from
1998 to 1999 due to the increase in revenues of $76 and the $42 decrease in
general and administrative expenses. For the six month period ended June 30,
1999, net income increased by $6,477 from 1998 to 1999 due to the increase in
revenues of $6,879 offset by the $402 increase in general and administrative
expenses.
The General Partner does not believe the operations of the partnership will be
significantly impacted by the year 2000 software issue and does not believe the
year 2000 software issue will materially effect the partnerships operations,
financial position or cash flows.
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<PAGE> 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 -- Financial Data Schedule
(b) No reports on Form 8-K were filed during the six months ended June 30, 1999.
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<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: July 30, 1999 /s/ Robert J. Terrano
----------------------------------------
Robert J. Terrano
Executive Vice President,
Chief Financial Officer
Date: July 30, 1999 /s/ C. Douglas Mitchell
----------------------------------------
C. Douglas Mitchell
Vice President and Corporate Controller
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<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 149,074
<SECURITIES> 767
<RECEIVABLES> 44,599
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 194,440
<PP&E> 4,001,642
<DEPRECIATION> 1,737,973
<TOTAL-ASSETS> 2,458,109
<CURRENT-LIABILITIES> 32,490
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,425,619
<TOTAL-LIABILITY-AND-EQUITY> 2,458,109
<SALES> 0
<TOTAL-REVENUES> 259,219
<CGS> 0
<TOTAL-COSTS> 52,912
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 206,307
<INCOME-TAX> 0
<INCOME-CONTINUING> 206,307
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 206,307
<EPS-BASIC> 23.34
<EPS-DILUTED> 23.34
</TABLE>
