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UNITED STATES
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, 2002 | . |
OR
o | 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
California | 95-3852699 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
23041 Avenida De La Carlota, Laguna Hills, California | 92653 | |
(Address of principal executive offices) | (Zip Code) |
(949) 462-9300
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 o
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INDEX
DEL TACO RESTAURANT PROPERTIES I
PAGE NUMBER | ||||
PART I. FINANCIAL INFORMATION | ||||
Item 1. Financial Statements and Supplementary Data | ||||
Balance Sheets at March 31, 2002 (Unaudited) and December 31, 2001 | 3 | |||
Statements of Income for the three months ended March 31, 2002 and 2001 (Unaudited) | 4 | |||
Statements of Cash Flows for the three months ended March 31, 2002 and 2001 (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 | |||
SIGNATURE | 11 |
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DEL TACO RESTAURANT PROPERTIES I
BALANCE SHEETS
March 31, | December 31, | |||||||||
2002 | 2001 | |||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash | $ | 185,314 | $ | 210,853 | ||||||
Receivable from General Partner | 57,017 | 56,139 | ||||||||
Deposits | 1,106 | 600 | ||||||||
Total current assets | 243,437 | 267,592 | ||||||||
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 | 1,858,346 | 1,847,403 | ||||||||
2,143,296 | 2,154,239 | |||||||||
$ | 2,386,733 | $ | 2,421,831 | |||||||
LIABILITIES AND PARTNERS’ EQUITY | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Payable to Limited Partners | $ | 48,791 | $ | 46,293 | ||||||
Accounts payable | 4,209 | 9,456 | ||||||||
Total current liabilities | 53,000 | 55,749 | ||||||||
PARTNERS’ EQUITY: | ||||||||||
Limited Partners | 2,070,298 | 2,102,324 | ||||||||
General Partner-Del Taco, Inc. | 263,435 | 263,758 | ||||||||
2,333,733 | 2,366,082 | |||||||||
$ | 2,386,733 | $ | 2,421,831 | |||||||
The accompanying notes are an
integral part of these financial statements.
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DEL TACO RESTAURANT PROPERTIES I
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended | ||||||||||
March 31, | ||||||||||
2002 | 2001 | |||||||||
REVENUES: | ||||||||||
Rent | $ | 160,122 | $ | 147,651 | ||||||
Interest | 729 | 1,915 | ||||||||
Other | 400 | 700 | ||||||||
161,251 | 150,266 | |||||||||
EXPENSES: | ||||||||||
General and administrative | 23,097 | 21,736 | ||||||||
Depreciation | 10,943 | 10,943 | ||||||||
34,040 | 32,679 | |||||||||
Net income | $ | 127,211 | $ | 117,587 | ||||||
Net income per limited partnership unit | $ | 14.39 | $ | 13.30 | ||||||
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)
Three Months Ended | ||||||||||
March 31, | ||||||||||
2002 | 2001 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net income | $ | 127,211 | $ | 117,587 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation | 10,943 | 10,943 | ||||||||
(Increase) decrease in receivable from General Partner | (878 | ) | 436 | |||||||
(Increase) decrease in deposits | (506 | ) | 138 | |||||||
(Decrease) increase in accounts payable and payable to limited partners | (2,749 | ) | 8,598 | |||||||
Net cash provided by operating activities | 134,021 | 137,702 | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Cash distributions to partners | (159,560 | ) | (143,978 | ) | ||||||
Net decrease in cash | (25,539 | ) | (6,276 | ) | ||||||
Beginning cash balance | 210,853 | 190,915 | ||||||||
Ending cash balance | $ | 185,314 | $ | 184,639 | ||||||
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, 2002
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, 2001. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the partnership’s financial position at March 31, 2002, the results of operations and cash flows for the three month periods ended March 31, 2002 and 2001 have been included. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.
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 2002 and 2001.
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, 2002
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, 2002, the five restaurants operated by Del Taco, for which the partnership is the lessor, had combined, unaudited sales of $1,104,552 and net income of $67,005 as compared to $1,014,558 and $56,284, respectively, for the corresponding period in 2001. 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, 2002, the one restaurant operated by a Del Taco franchisee, for which the partnership is the lessor, had unaudited sales of $229,797 as compared with $215,866 during the same period in 2001.
For the three months ended March 31, 2002, the Elkhorn Boulevard restaurant in Sacramento, California reported a net loss of $7,518 as compared to net income of $3,306 for the corresponding period in 2001.
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 12, 2002.
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 18, 2002, a distribution to the limited partners of $130,208, or approximately $14.88 per limited partnership unit, was approved. Such distribution was paid on April 19, 2002. The General Partner also received a distribution of $1,315 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:
Three Months Ended | |||||||||
March 31, | |||||||||
2002 | 2001 | ||||||||
Riverside Avenue, Rialto, CA | $ | 24,166 | $ | 21,478 | |||||
Elden Avenue, Moreno Valley, CA | 28,946 | 24,355 | |||||||
Foothill Boulevard, La Verne, CA | 33,922 | 30,755 | |||||||
Baseline & Archibald, Rancho Cucamonga, CA | 27,576 | 25,905 | |||||||
Elkhorn Boulevard, Sacramento, CA | 17,708 | 18,102 | |||||||
Haven Avenue, Rancho Cucamonga, CA | 27,804 | 27,056 | |||||||
Total | $ | 160,122 | $ | 147,651 | |||||
The partnership receives rental revenues equal to 12 percent of gross sales from the restaurants. The partnership earned rental revenue of $160,122 during the three month period ended March 31, 2002, which represents an increase of $12,471 from 2001. 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:
Percentage of Total | ||||||||
General & Administrative Expense | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2002 | 2001 | |||||||
Accounting fees | 69.06 | % | 71.54 | % | ||||
Distribution of information to Limited Partners | 30.94 | 28.46 | ||||||
100.00 | % | 100.00 | % | |||||
General and administrative costs increased from 2001 to 2002 due to increased costs for the annual audit and income tax preparation and the additional costs incurred in 2002 to lease new software.
Net income increased by $9,624 from 2001 to 2002 due to the increase in revenues of $10,985 which was partially offset by the $1,361 increase 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 three months ended March 31, 2002. |
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SIGNATURE
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: May 1, 2002 | /s/ Robert J. Terrano Robert J. Terrano Executive Vice President, Chief Financial Officer |
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