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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, 2000 .
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. 2-92121
DEL TACO RESTAURANT PROPERTIES II
A CALIFORNIA LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
CALIFORNIA 33-0064245
(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)
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(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 II
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<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NUMBER
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Item 1. Financial Statements and Supplementary Data
Balance Sheets at September 30, 2000 (Unaudited) and
December 31, 1999 3
Statements of Income for the three and nine months ended
September 30, 2000 and 1999 (Unaudited) 4
Statements of Cash Flows for the nine months ended
September 30, 2000 and 1999 (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 II
BALANCE SHEETS
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<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
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(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 164,231 $ 139,292
Receivable from General Partner 46,034 41,324
Deposits 1,000 1,000
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Total current assets 211,265 181,616
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PROPERTY AND EQUIPMENT, AT COST:
Land and improvements 1,806,006 1,806,006
Buildings and improvements 1,238,879 1,238,879
Machinery and equipment 898,950 898,950
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3,943,835 3,943,835
Less--accumulated depreciation 1,639,266 1,598,631
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2,304,569 2,345,204
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$ 2,515,834 $ 2,526,820
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LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Payable to Limited Partners $ 19,768 $ 15,666
Accounts payable 12,703 8,666
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Total current liabilities 32,471 24,332
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PARTNERS' EQUITY:
Limited Partners 2,507,579 2,526,513
General Partner-Del Taco, Inc. (24,216) (24,025)
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2,483,363 2,502,488
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$ 2,515,834 $ 2,526,820
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The accompanying notes are an
integral part of these financial statements.
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DEL TACO RESTAURANT PROPERTIES II
STATEMENTS OF INCOME
(UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
REVENUES:
Rent $140,179 $128,625 $389,994 $364,337
Interest 1,401 934 2,905 2,570
Other 550 750 1,020 2,200
-------- -------- -------- --------
142,130 130,309 393,919 369,107
-------- -------- -------- --------
EXPENSES:
General and administrative 8,669 8,699 42,465 42,503
Depreciation 13,545 13,545 40,635 40,635
-------- -------- -------- --------
22,214 22,244 83,100 83,138
-------- -------- -------- --------
Net income $119,916 $108,065 $310,819 $285,969
======== ======== ======== ========
Net income per limited
partnership unit $ 4.40 $ 3.96 $ 11.39 $ 10.48
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
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DEL TACO RESTAURANT PROPERTIES II
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 310,819 $ 285,969
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 40,635 40,635
(Increase) decrease in receivable from General Partner (4,710) 1,481
Decrease in deposits -- 360
Increase in accounts payable and payable
to limited partners 8,141 1,452
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Net cash provided by operating activities 354,885 329,897
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (329,946) (324,328)
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Net increase in cash 24,939 5,569
Beginning cash balance 139,292 134,928
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Ending cash balance $ 164,231 $ 140,497
========= =========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
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DEL TACO RESTAURANT PROPERTIES II
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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 partnership's annual
report on Form 10-K for the year ended December 31, 1999. In the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
to present fairly the partnership's financial position at September 30, 2000,
the results of operations and cash flows for the nine month periods ended
September 30, 2000 and 1999 have been included. Operating results for the three
and nine months ended September 30, 2000 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2000.
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
27,006 in 2000 and 1999.
Pursuant to the partnership agreement, annual partnership income or loss is
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, distributions and syndication costs
previously allocated. Additional gains will be allocated 15 percent to the
General Partner and 85 percent to the limited partners.
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DEL TACO RESTAURANT PROPERTIES II
NOTES TO FINANCIAL STATEMENTS - CONTINUED
SEPTEMBER 30, 2000
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, 2000, the five restaurants operated by
Del Taco, for which the partnership is the lessor, had combined, unaudited sales
of $1,168,160 and net income of $73,032 as compared to $1,071,879 and $69,381
respectively, for the corresponding period in 1999. Net income by restaurant
includes charges for general and administrative expenses incurred in connection
with supervision of restaurant operations and interest expense.
For the nine months ended September 30, 2000, the five restaurants operated by
Del Taco, for which the partnership is the lessor, had combined, unaudited sales
of $3,249,951 and net income of $184,709 as compared to $3,036,143 and $169,733
respectively, for the corresponding period in 1999.
NOTE 4 - TRANSACTIONS WITH DEL TACO
The receivable from General Partner consists primarily of rent accrued for the
month of September. The September rent was collected on October 13, 2000.
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 13, 2000, a distribution to the limited partners of $138,069 or
approximately $5.11 per limited partnership unit, was approved. Such
distribution was paid on October 18, 2000. The General Partner also received a
distribution of $1,395 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 September
1984 and December 1985. 15% of the $6.751 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 $5.6 million of the
remaining funds were used to acquire sites and build seven restaurants. Two
restaurants were sold in 1994.
The five 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 owned seven properties that were under long-term lease to Del
Taco for restaurant operations. Two restaurants were sold in 1994 and five are
currently operating.
The following table sets forth rental revenue earned by restaurant for the year:
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Bear Valley Rd., Victorville, CA $ 25,099 $ 25,291 $ 70,585 $ 70,406
West Valley Blvd., Colton, CA 34,294 30,495 93,913 83,195
Palmdale Blvd., Palmdale, CA 22,242 20,820 61,136 60,703
DeAnza Country Shopping Center, Pedley, CA 22,174 18,541 60,402 50,703
Varner Road, Thousand Palms, CA 36,370 33,478 103,958 99,330
-------- -------- -------- --------
Total $140,179 $128,625 $389,994 $364,337
======== ======== ======== ========
</TABLE>
The partnership receives rental revenues equal to 12 percent of gross sales from
the restaurants. The partnership earned rental revenue of $140,179 during the
three month period ended September 30, 2000, which represents an increase of
$11,554 from 1999. The partnership earned rental revenue of $389,994 during the
nine month period ended September 30, 2000, which represents an increase of
$25,657 from 1999. The changes in rental revenue between 2000 and 1999 are
directly attributable to increases 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:
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<CAPTION>
Percentage of Total
General & Administrative Expense
--------------------------------
Nine Months Ended
September 30,
2000 1999
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<S> <C> <C>
Accounting fees 55.32% 53.72%
Distribution of
information to
limited partners 44.68 46.28
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100.00% 100.00%
====== ======
</TABLE>
For the three month period ended September 30, 2000, net income increased by
$11,851 from 1999 to 2000 due to the increase in revenues of $11,821 and the $30
decrease in general and administrative expenses. For the nine month period ended
September 30, 2000, net income increased by $24,850 from 1999 to 2000 due to the
increase in revenues of $24,812 and the $38 decrease in general and
administrative expenses.
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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,
2000.
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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 II
(a California limited partnership)
Registrant
Del Taco, Inc.
General Partner
Date: October 31, 2000 /s/ Robert J. Terrano
---------------------
Robert J. Terrano
Executive Vice President,
Chief Financial Officer
Date: October 31, 2000 /s/ C. Douglas Mitchell
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C. Douglas Mitchell
Vice President and Corporate
Controller
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
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27.1 Financial Data Schedule
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