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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, 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)
<TABLE>
<S> <C>
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)
</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
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<S> <C>
Item 1. Financial Statements and Supplementary Data
Balance Sheets at September 30, 1999 (Unaudited) and
December 31, 1998 3
Statements of Income for the three and nine months ended
September 30, 1999 and 1998 (Unaudited) 4
Statements of Cash Flows for the nine months ended
September 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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DEL TACO RESTAURANT PROPERTIES I
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1999 1998
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(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 165,285 $ 162,979
Receivable from General Partner (Note 4) 45,654 47,833
Deposits 684 797
---------- ----------
Total current assets 211,623 211,609
---------- ----------
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 1,748,916 1,716,087
---------- ----------
2,252,726 2,285,555
---------- ----------
$2,464,349 $2,497,164
========== ==========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Payable to Limited Partners $ 26,681 $ 24,702
Accounts payable 3,976 5,703
---------- ----------
Total current liabilities 30,657 30,405
---------- ----------
PARTNERS' EQUITY:
Limited Partners 2,169,227 2,201,963
General Partner-Del Taco, Inc. 264,465 264,796
---------- ----------
2,433,692 2,466,759
---------- ----------
$2,464,349 $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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Rent (Notes 3 and 4) $141,151 $141,492 $397,688 $392,023
Interest 1,222 1,193 3,304 2,378
Other 353 650 953 1,274
-------- -------- -------- --------
142,726 143,335 401,945 395,675
-------- -------- -------- --------
EXPENSES:
General and administrative 7,199 7,498 38,225 38,122
Depreciation 10,943 10,943 32,829 32,829
-------- -------- -------- --------
18,142 18,441 71,054 70,951
-------- -------- -------- --------
Net income $124,584 $124,894 $330,891 $324,724
======== ======== ======== ========
Net income per limited
partnership unit (Note 3) $ 14.09 $ 14.13 $ 37.43 $ 36.74
======== ======== ======== ========
</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>
NINE MONTHS ENDED
SEPTEMBER 30,
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 330,891 $ 324,724
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 32,829 32,829
Decrease (increase) in receivable from General Partner 2,179 (2,832)
Decrease (increase) in deposits 113 (394)
Increase in accounts payable and payable
to limited partners 252 5,035
--------- ---------
Net cash provided by operating activities 366,264 359,362
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (363,958) (339,094)
--------- ---------
Net increase in cash 2,306 20,268
Beginning cash balance 162,979 143,280
--------- ---------
Ending cash balance $ 165,285 $ 163,548
========= =========
</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
SEPTEMBER 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 September 30, 1999,
the results of operations and cash flows for the nine month periods ended
September 30, 1999 and 1998 have been included. Operating results for the three
and nine months ended September 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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DEL TACO RESTAURANT PROPERTIES I
NOTES TO FINANCIAL STATEMENTS - CONTINUED
SEPTEMBER 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 September 30, 1999, the five restaurants operated by
Del Taco, for which the partnership is the lessor, had combined, unaudited sales
of $977,544 and net income of $61,546 as compared to $991,832 and $63,716
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 September 30, 1999, the one restaurant operated by a Del Taco
franchisee, for which the partnership is the lessor, had unaudited sales of
$198,717 as compared with $187,269 during the same period in 1998.
For the nine months ended September 30, 1999, the five restaurants operated by
Del Taco, for which the partnership is the lessor, had combined, unaudited sales
of $2,756,556 and net income of $140,234 as compared to $2,753,257 and $145,627
respectively, for the corresponding period in 1998. For the nine months ended
September 30, 1999, the one restaurant operated by a Del Taco franchisee, for
which the partnership is the lessor, had unaudited sales of $557,517 as compared
with $513,602 during the same period in 1998.
For the three months and nine months ended September 30, 1999, the Elkhorn
Boulevard restaurant in Sacramento, California reported net losses of $1,986 and
$6,927 as compared to net losses of $6,054 and $14,778 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 September. The September rent receivable was collected on October 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 October 12, 1999, a distribution to the limited partners of $132,268, or
approximately $15.11 per limited partnership unit, was approved. Such
distribution was paid on October 19, 1999. The General Partner also received a
distribution of $1,367 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Riverside Avenue, Rialto, CA $ 22,671 $ 22,814 $ 64,123 $ 63,832
Elden Avenue, Moreno Valley, CA 20,736 21,970 59,543 60,585
Foothill Boulevard, La Verne, CA 30,650 30,386 86,111 84,532
Baseline & Archibald, Rancho Cucamonga, CA 23,846 22,472 66,902 61,632
Elkhorn Boulevard, Sacramento, CA 16,233 14,691 45,140 39,974
Haven Avenue, Rancho Cucamonga, CA 27,015 29,159 75,869 81,468
-------- -------- -------- --------
Total $141,151 $141,492 $397,688 $392,023
======== ======== ======== ========
</TABLE>
The partnership receives rental revenues equal to 12 percent of gross sales from
the restaurants. The partnership earned rental revenue of $141,151 during the
three month period ended September 30, 1999, which represents a decrease of $341
from 1998. The partnership earned rental revenue of $397,688 during the nine
month period ended September 30, 1999, which represents an increase of $5,665
from 1998. The changes in rental revenue between 1998 and 1999 are directly
attributable to changes in sales levels 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
--------------------------------
Nine Months Ended
September 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 nine month period ended September 30,
increased from 1998 to 1999 due to increased costs for accounting and income tax
return preparation.
For the three month period ended September 30, 1999, net income decreased $310
from 1998 to 1999 due to the decrease in revenues of $609 which was partially
offset by the $299 decrease in general and administrative expenses. For the nine
month period ended September 30, 1999, net income increased by $6,167 from 1998
to 1999 due to the increase in revenues of $6,270 which was partially offset by
the $103 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 nine months ended September 30,
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: October 29, 1999 /s/ Robert J. Terrano
----------------------------
Robert J. Terrano
Executive Vice President,
Chief Financial Officer
Date: October 29, 1999 /s/ C. Douglas Mitchell
----------------------------
C. Douglas Mitchell
Vice President and Corporate
Controller
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EXHIBIT INDEX
<TABLE>
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 165,285
<SECURITIES> 684
<RECEIVABLES> 45,654
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 211,623
<PP&E> 4,001,642
<DEPRECIATION> 1,748,916
<TOTAL-ASSETS> 2,464,349
<CURRENT-LIABILITIES> 30,657
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,433,692
<TOTAL-LIABILITY-AND-EQUITY> 2,464,349
<SALES> 0
<TOTAL-REVENUES> 401,945
<CGS> 0
<TOTAL-COSTS> 71,054
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 330,891
<INCOME-TAX> 0
<INCOME-CONTINUING> 330,891
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 330,891
<EPS-BASIC> 37.43
<EPS-DILUTED> 37.43
</TABLE>
