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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. 33-13437
DEL TACO INCOME PROPERTIES IV
A CALIFORNIA LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 33-0241855
(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 [ ]
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INDEX
DEL TACO INCOME PROPERTIES IV
PAGE NUMBER
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PART I. FINANCIAL INFORMATION
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 INCOME PROPERTIES IV
BALANCE SHEETS
SEPTEMBER 30, December 31,
2000 1999
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(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 117,290 $ 100,224
Receivable from General Partner 29,282 111,622
Deposits 400 400
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Total current assets 146,972 212,246
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PROPERTY AND EQUIPMENT, AT COST:
Land and improvements 1,236,700 1,236,700
Buildings and improvements 1,289,860 1,289,860
Machinery and equipment 484,789 484,789
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3,011,349 3,011,349
Less--accumulated depreciation 1,070,343 1,024,675
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1,941,006 1,986,674
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$ 2,087,978 $ 2,198,920
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LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Payable to Limited Partners $ 23,324 $ 19,309
Accounts payable 10,422 7,362
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Total current liabilities 33,746 26,671
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OBLIGATION TO GENERAL PARTNER 137,953 137,953
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PARTNERS' EQUITY:
Limited Partners 1,928,250 2,045,087
General Partner-Del Taco, Inc. (11,971) (10,791)
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1,916,279 2,034,296
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$ 2,087,978 $ 2,198,920
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The accompanying notes are an
integral part of these financial statements
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DEL TACO INCOME PROPERTIES IV
STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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2000 1999 2000 1999
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REVENUES:
Rent $ 89,620 $ 82,484 $252,336 $235,844
Interest 667 518 2,852 2,512
Other 199 225 775 500
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90,486 83,227 255,963 238,856
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EXPENSES:
General and administrative 7,329 7,075 35,056 35,221
Depreciation 13,817 25,937 45,668 77,811
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21,146 33,012 80,724 113,032
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Net income $ 69,340 $ 50,215 $175,239 $125,824
======== ======== ======== ========
Net income per limited
partnership unit $ 0.42 $ 0.30 $ 1.05 $ 0.75
======== ======== ======== ========
The accompanying notes are an integral part
of these financial statements.
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DEL TACO INCOME PROPERTIES IV
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
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2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 175,239 $ 125,824
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 45,668 77,811
Decrease in receivable from General Partner 82,340 80,149
Decrease in deposits -- 78
Increase (decrease) in accounts payable and
payable to limited partners 7,075 (234)
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Net cash provided by operating activities 310,322 283,628
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (293,256) (285,998)
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Net increase (decrease) in cash 17,066 (2,370)
Beginning cash balance 100,224 101,404
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Ending cash balance $ 117,290 $ 99,034
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The accompanying notes are an integral part
of these financial statements.
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DEL TACO INCOME PROPERTIES IV
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
165,375 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,
and until each class of limited partners receive their priority return as
defined in the partnership agreement. Additional gains will be allocated 12
percent to the General Partner and 88 percent to the limited partners.
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DEL TACO INCOME PROPERTIES IV
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 32 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 two restaurants operated by
Del Taco, for which the partnership is the lessor, had combined, unaudited sales
of $469,260 and net income of $33,696 as compared to $442,290 and $42,179
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 three
months ended September 30, 2000, the one restaurant operated by a Del Taco
franchisee, for which the partnership is the lessor, had unaudited sales of
$277,573 as compared with $245,067 during the same period in 1999.
For the nine months ended September 30, 2000, the two restaurants operated by
Del Taco, for which the partnership is the lessor, had combined, unaudited sales
of $1,327,171 and net income of $87,599 as compared to $1,266,114 and $95,660
respectively, for the corresponding period in 1999. For the nine months ended
September 30, 2000, the one restaurant operated by a Del Taco franchisee, for
which the partnership is the lessor, had unaudited sales of $775,632 as compared
with $699,250 during the same period in 1999.
NOTE 4 - TRANSACTIONS WITH DEL TACO
The receivable from the 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 $88,076 or
approximately $.53 per limited partnership unit, was approved. Such distribution
was paid October 18, 2000. The General Partner also received a distribution of
$890 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 June 1987 and
June 1988. 14.5% of the $4.135 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 $3 million of the
remaining funds were used to acquire sites and build three restaurants. In
February of 1992, approximately $442,000 raised during the offering but not
required to acquire sites and build restaurants was distributed to the limited
partners.
The three 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 three properties that are under long-term lease to Del Taco
for restaurant operations (Del Taco, in turn, has sub-leased one of the
restaurants to a Del Taco franchisee).
The following table sets forth rental revenue earned by restaurant for the year:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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2000 1999 2000 1999
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Orangethorpe Ave., Placentia, CA $ 38,296 $ 35,240 $ 107,448 $102,786
Lakeshore Drive, Lake Elsinore, CA 33,309 29,409 93,076 83,910
Highland Ave., San Bernardino, CA 18,015 17,835 51,812 49,148
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Total $ 89,620 $ 82,484 $ 252,336 $235,844
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The partnership receives rental revenues equal to 12 percent of gross sales from
the restaurants. The partnership earned rental revenue of $89,620 during the
three month period ended September 30, 2000, which represents an increase of
$7,136 from 1999. The partnership earned rental revenue of $252,336 during the
nine month period ended September 30, 2000, which represents an increase of
$16,492 from 1999. The changes in rental revenue between 2000 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:
Percentage of Total
General & Administrative Expense
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Nine Months Ended
September 30,
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2000 1999
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Accounting fees 62.89% 61.63%
Distribution of
information to
limited partners 37.11 38.37
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100.00% 100.00%
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Depreciation decreased in 2000 because certain equipment became fully
depreciated during 1999.
For the three months ended September 30, 2000, net income increased by $19,125
from 1999 to 2000 due to the increase in revenues of $7,259 and the $12,120
decrease in depreciation expense which were partially offset by the $254
increase in general and administrative expenses. For the nine months ended
September 30, 2000, net income increased by $49,415 from 1999 to 2000 due to the
increase in revenues of $17,107, the $32,143 decrease in depreciation expense
and the $165 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 INCOME PROPERTIES IV
(a California limited partnership)
Registrant
Del Taco, Inc.
General Partner
Date: October 31, 2000 /s/ Robert J. Terrano
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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
Exhibit
No. Description
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27 Financial Data Schedule