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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, 1999
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. 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.)
23041 AVENIDA DE LA CARLOTA, LAGUNA HILLS, CALIFORNIA 92653
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(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 ___
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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 March 31, 1999 (Unaudited) and
December 31, 1998 3
Statements of Income for the three months ended
March 31, 1999 and 1998 (Unaudited) 4
Statements of Cash Flows for the three months ended
March 31, 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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DEL TACO RESTAURANT PROPERTIES I
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31 December 31
1999 1998
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(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 145,388 $ 162,979
Receivable from General Partner (Note 4) 43,422 47,833
Deposits 767 797
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Total current assets 189,577 211,609
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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
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4,001,642 4,001,642
Less--accumulated depreciation 1,727,030 1,716,087
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2,274,612 2,285,555
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$2,464,189 $2,497,164
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LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Payable to Limited Partners $ 26,218 $ 24,702
Accounts payable 9,284 5,703
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Total current liabilities 35,502 30,405
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PARTNERS' EQUITY:
Limited Partners 2,164,272 2,201,963
General Partner-Del Taco, Inc. 264,415 264,796
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2,428,687 2,466,759
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$2,464,189 $2,497,164
========== ==========
</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
1999 1998
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<S> <C> <C>
REVENUES:
Rent (Notes 3 and 4) $125,657 $119,375
Interest 1,157 612
Other 425 449
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127,239 120,436
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EXPENSES:
General and administrative 21,091 20,647
Depreciation 10,943 10,943
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32,034 31,590
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Net income $ 95,205 $ 88,846
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Net income per limited
partnership unit (Note 2) $ 10.77 $ 10.05
======== ========
</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
1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 95,205 $ 88,846
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 10,943 10,943
Decrease (increase) in receivable from
General Partner 4,411 (745)
Decrease in deposits 30 --
Increase (decrease) in accounts payable and
payable to limited partners 5,097 (3,430)
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Net cash provided by operating activities 115,686 95,614
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (133,277) (125,590)
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Net decrease in cash (17,591) (29,976)
Beginning cash balance 162,979 143,280
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Ending cash balance $ 145,388 $ 113,304
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</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, 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 March 31, 1999, the
results of operations and cash flows for the three month periods ended March 31,
1999 and 1998 have been included. Operating results for the three months ended
March 31, 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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DEL TACO RESTAURANT PROPERTIES I
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 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 March 31, 1999, the five restaurants operated by Del
Taco, for which the partnership is the lessor, had combined, unaudited sales of
$873,209 and net income of $46,137 as compared to $836,260 and $30,700
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 March 31, 1999, the one restaurant operated by a Del Taco
franchisee, for which the partnership is the lessor, had unaudited sales of
$173,933 as compared with $158,530 during the same period in 1998.
For the three months ended March 31, 1999, the Elkhorn Boulevard restaurant in
Sacramento, California reported a net loss of $1,765 as compared to a net loss
of $4,124 for the corresponding period in 1998.
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 10, 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 April 8, 1999, a distribution to the limited partners of $113,028, or
approximately $12.91 per limited partnership unit, was approved. Such
distribution was paid on April 24, 1999. The General Partner also received a
distribution of $1,142 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 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
MARCH 31
1999 1998
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<S> <C> <C>
Riverside Avenue, Rialto, CA $ 20,157 $ 19,456
Elden Avenue, Moreno Valley, CA 19,112 17,948
Foothill Boulevard, La Verne, CA 26,863 25,806
Baseline & Archibald, Rancho Cucamonga, CA 20,872 19,024
Elkhorn Boulevard, Sacramento, CA 13,837 12,014
Haven Avenue, Rancho Cucamonga, CA 24,816 25,127
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Total $125,657 $119,375
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</TABLE>
The partnership receives rental revenues equal to 12 percent of gross sales from
the restaurants. The partnership earned rental revenue of $125,657 during the
three month period ended March 31, 1999, which represents an increase of $6,282
from 1998. The increase in rental revenue was caused by an increase in sales at
the restaurants under lease.
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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>
<CAPTION>
Percentage of Total
General & Administrative Expense
--------------------------------
Three Months Ended
March 31
1999 1998
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<S> <C> <C>
Accounting fees 70.18% 69.26%
Distribution of
information to
Limited Partners 29.82 30.74
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100.00% 100.00%
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</TABLE>
General and administrative costs increased from 1998 to 1999 due to increased
costs for accounting and income tax return preparation.
Net income increased by $6,359 from 1998 to 1999 due to the increase in revenues
of $6,803 offset by the $444 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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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,
1999.
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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, 1999 /s/ Robert J. Terrano
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Robert J. Terrano
Executive Vice President,
Chief Financial Officer
Date: April 30, 1999 /s/ C. Douglas Mitchell
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C. Douglas Mitchell
Vice President and Corporate
Controller
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 145,388
<SECURITIES> 767
<RECEIVABLES> 43,422
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 189,577
<PP&E> 4,001,642
<DEPRECIATION> 1,727,030
<TOTAL-ASSETS> 2,464,189
<CURRENT-LIABILITIES> 35,502
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,428,687
<TOTAL-LIABILITY-AND-EQUITY> 2,464,189
<SALES> 0
<TOTAL-REVENUES> 127,239
<CGS> 0
<TOTAL-COSTS> 32,034
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 95,205
<INCOME-TAX> 0
<INCOME-CONTINUING> 95,205
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 95,205
<EPS-PRIMARY> 10.77
<EPS-DILUTED> 10.77
</TABLE>
