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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, 2001.
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
PART I. FINANCIAL INFORMATION PAGE NUMBER
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Item 1. Financial Statements and Supplementary Data
Balance Sheets at March 31, 2001 (Unaudited) and
December 31, 2000 3
Statements of Income for the three months ended
March 31, 2001 and 2000 (Unaudited) 4
Statements of Cash Flows for the three months ended
March 31, 2001 and 2000 (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
March 31, December 31,
2001 2000
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 176,115 $ 108,643
Receivable from General Partner 29,032 108,105
Deposits 438 476
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Total current assets 205,585 217,224
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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 1,097,977 1,084,160
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1,913,372 1,927,189
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$ 2,118,957 $ 2,144,413
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LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Payable to Limited Partners $ 25,635 $ 24,200
Accounts payable 13,608 10,080
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Total current liabilities 39,243 34,280
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OBLIGATION TO GENERAL PARTNER 137,953 137,953
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PARTNERS' EQUITY:
Limited Partners 1,953,477 1,983,592
General Partner-Del Taco, Inc. (11,716) (11,412)
----------- -----------
1,941,761 1,972,180
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$ 2,118,957 $ 2,144,413
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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
March 31,
-------------------
2001 2000
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REVENUES:
Rent $81,228 $78,143
Interest 1,642 1,300
Other 200 325
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83,070 79,768
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EXPENSES:
General and administrative 20,229 19,465
Depreciation 13,817 18,034
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34,046 37,499
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Net income $49,024 $42,269
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Net income per limited
partnership unit $ 0.29 $ 0.25
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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 CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
------------------------
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 49,024 $ 42,269
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 13,817 18,034
Decrease in receivable from General Partner 79,073 84,336
Decrease in deposits 38 --
Increase in accounts payable and
payable to limited partners 4,963 3,499
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Net cash provided by operating activities 146,915 148,138
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (79,443) (75,914)
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Net increase in cash 67,472 72,224
Beginning cash balance 108,643 100,224
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Ending cash balance $ 176,115 $ 172,448
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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
MARCH 31, 2001
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, 2000. In the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
to present fairly the partnership's financial position at March 31, 2001, the
results of operations and cash flows for the three month periods ended March 31,
2001 and 2000 have been included. Operating results for the three months ended
March 31, 2001 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2001.
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 2001 and 2000.
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
MARCH 31, 2001
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 March 31, 2001, the two restaurants operated by Del
Taco, for which the partnership is the lessor, had combined, unaudited sales of
$417,812 and net income of $23,850 as compared to $417,104 and $24,203,
respectively, for the corresponding period in 2000. 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, 2001, the one restaurant operated by a Del Taco
franchisee, for which the partnership is the lessor, had unaudited sales of
$259,088 as compared with $234,092 during the same period in 2000.
NOTE 4 - TRANSACTIONS WITH DEL TACO
The receivable from the General Partner consists primarily of rent accrued for
the month of March. The March rent was collected on April 10, 2001.
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 16, 2001, a distribution to the limited partners of $144,025 or
approximately $.87 per limited partnership unit, was approved. Such distribution
was paid April 18, 2001. The General Partner also received a distribution of
$1,455 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:
Three Months Ended
March 31,
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2001 2000
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Orangethorpe Ave., Placentia, CA $33,130 $33,703
Lakeshore Drive, Lake Elsinore, CA 31,091 28,091
Highland Ave., San Bernardino, CA 17,007 16,349
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Total $81,228 $78,143
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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 $81,228 during the
three month period ended March 31, 2001, which represents an increase of $3,085
from 2000. 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,
--------------------
2001 2000
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Accounting fees 76.87% 77.32%
Distribution of
information to
limited partners 23.13 22.68
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100.00% 100.00%
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General and administrative costs increased from 2000 to 2001 due to increased
costs for printing and distribution of information to limited partners.
Depreciation decreased because certain machinery and equipment became fully
depreciated in 2000.
For the three months ended March 31, 2001, net income increased by $6,755 from
2000 to 2001 due to the increase in revenues of $3,302 and a decrease in
depreciation expense of $4,217, which was offset partially by the $764 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,
2001.
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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: May 1, 2001 /s/ Robert J. Terrano
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Robert J. Terrano
Executive Vice President,
Chief Financial Officer
Date: May 1, 2001 /s/ C. Douglas Mitchell
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C. Douglas Mitchell
Vice President and Corporate
Controller
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