-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SW+raAAAhfjhgyY6la+1XuU/Fsns6Ht2JM5TWaSxbN5dUvFG8E/N3FUcIHu774SJ UL90/HFzb3MVN0JjCFve4w== 0000892569-99-000640.txt : 19990311 0000892569-99-000640.hdr.sgml : 19990311 ACCESSION NUMBER: 0000892569-99-000640 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEL TACO RESTAURANT PROPERTIES I CENTRAL INDEX KEY: 0000711213 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953852699 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-16191 FILM NUMBER: 99561830 BUSINESS ADDRESS: STREET 1: 23041 AVENIDA DE LA CARLOTA, SUITE 400 CITY: LAGUNA HILLS STATE: CA ZIP: 92653 BUSINESS PHONE: 714 462-9300 MAIL ADDRESS: STREET 1: 1800 W KATELLA AVENUE CITY: ORANGE STATE: CA ZIP: 92667 10-K 1 FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1998 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 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) 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)
Registrant's telephone number, including area code: (949) 462-9300 Securities registered pursuant to section 12(b) of the Act: None Securities registered pursuant to section 12(g) of the Act: None 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 ___ DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Form S-11 Registration Statement filed December 17, 1982 are incorporated by reference into Part IV of this report. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I ITEM 1. BUSINESS The partnership is a publicly-held limited partnership organized under the California Uniform Limited Partnership Act. The partnership's General Partner is Del Taco, Inc., a California corporation ("General Partner"). The partnership sold 8,751 units totaling $4.375 million through an offering of limited partnership units from March 1983 through March 1984. The term of the partnership agreement is until April 30, 2022 unless terminated earlier by means provided in the partnership agreement. The business of the partnership is ownership and leasing of restaurants in California to Del Taco, Inc. The partnership acquired land and constructed six Mexican-American restaurants for long-term lease to Del Taco, Inc. Each property is leased for 35 years on a triple net basis. Rent is equal to twelve percent of gross sales of the restaurants. As of December 31, 1998, the partnership had a total of six properties leased to Del Taco (Del Taco, in turn, has subleased two of the restaurants). The partnership has no full time employees. The partnership agreement assigns full authority for general management and supervision of the business affairs of the partnership to the General Partner. The General Partner has a one percent interest in the profits or losses and distributions of the partnership. Limited partners have no right to participate in the management or conduct of the partnership's business affairs. 2 3 ITEM 2. PROPERTIES The partnership has acquired six properties with proceeds obtained from the sale of partnership units:
Date of Restaurant Date of Commencement Address City, State Acquisition Constructed of Operation (1) - ------- ----------- ----------- ----------- -------------------- Riverside Avenue Rialto, CA September 28, 1984 60 seat with drive February 12, 1985 through service window Elden Avenue Moreno Valley, CA March 8, 1985 60 seat with drive June 30, 1985 through service window Foothill Boulevard La Verne, CA April 16, 1985 60 seat with drive November 6, 1985 through service window Baseline & Archibald Rancho Cucamonga, CA July 10, 1985 60 seat with drive November 26, 1985 through service window Elkhorn Boulevard Sacramento, CA August 22, 1985 60 seat with drive January 15, 1986 through service window Haven Avenue Rancho Cucamonga, CA September 20, 1985 60 seat with drive February 14, 1986 through service window
- ------------- (1) Commencement of operation is the first date Del Taco, Inc., as lessee, operated the facility on the site as a Del Taco restaurant. 3 4 PART II ITEM 3. LEGAL PROCEEDINGS The partnership is not a party to any material pending legal proceedings. ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS The partnership sold 8,751 ($4,375,500) limited partnership units during the public offering period ended March 20, 1984 and currently has 870 limited partners of record. There is no public market for the trading of the units. Distributions made by the partnership to the limited partners during the past three fiscal years are described in Note 6 to the Notes to the Financial Statements contained under Item 8. 4 5 ITEM 6. SELECTED FINANCIAL DATA
For the Year Ended December 31, ------------------------------------------------------------------------ 1998 1997 1996 1995 1994 -------- -------- -------- -------- -------- Rental revenue $531,608 $487,280 $452,203 $436,262 $420,245 Interest and 4,924 5,109 2,902 2,729 2,729 other income Net income 445,860 403,356 365,387 275,020 222,295 Net income per limited partnership unit (1) 50.44 45.63 41.34 31.11 25.15 Cash distributions per limited partnership unit (2)(3)(4)(5)(6) 53.84 49.28 44.82 45.70 58.70 Total assets 2,497,164 2,515,808 2,543,173 2,569,140 2,700,433 Long-term obligations None None None None None
- -------------- (1) The net income per limited partnership unit was calculated based upon 8,751 weighted average units outstanding for all years presented. (2) Cash distributions for the quarter ended December 31, 1994 amounted to $11.70 per limited partnership unit and were paid January 17, 1995. Five distributions were disbursed during the year ended December 31, 1994. 5 6 ITEM 6. SELECTED FINANCIAL DATA - CONTINUED (3) Cash distributions for the quarter ended December 31, 1995 amounted to $11.46 per limited partnership unit and were paid January 15, 1996. Four distributions were disbursed during the year ended December 31, 1995. (4) Cash distributions for the quarter ended December 31, 1996 amounted to $12.63 per limited partnership unit and were paid January 31, 1997. Four distributions were disbursed during the year ended December 31, 1996. (5) Cash distributions for the quarter ended December 31, 1997 amounted to $14.21 per limited partnership unit and were paid January 31, 1998. Four distributions were disbursed during the year ended December 31, 1997. (6) Cash distributions for the quarter ended December 31, 1998 amounted to $15.08 per limited partnership unit and were paid January 31, 1999. Four distributions were disbursed during the year ended December 31, 1998. ITEM 7. 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. 6 7 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED 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:
YEAR ENDED DECEMBER 31, ------------------------------------ 1998 1997 1996 -------- -------- -------- Riverside Avenue, Rialto, CA $ 85,545 $ 80,255 $ 67,599 Elden Avenue, Moreno Valley, CA 82,084 73,557 72,988 Foothill Boulevard, La Verne, CA 113,886 105,677 100,030 Baseline & Archibald, Rancho Cucamonga, CA 85,069 73,553 64,636 Elkhorn Boulevard, Sacramento, CA 55,132 49,752 45,528 Haven Avenue, Rancho Cucamonga, CA 109,892 104,486 101,422 -------- -------- -------- Total $531,608 $487,280 $452,203 ======== ======== ========
The partnership receives rental revenues equal to 12 percent of gross sales from the restaurants. The partnership earned rental revenue of $531,608 during the year ended December 31, 1998, which represents an increase of $44,328 from 1997. The increase in rental revenue was caused by an increase in sales at the restaurants under lease. The following table breaks down general and administrative expenses by type of expense: PERCENTAGE OF TOTAL GENERAL & ADMIN. EXPENSE
Year Ended December 31, -------------------------------------------- 1998 1997 1996 ------- ------ ------ Accounting fees 35.29% 32.70% 36.02% Distribution of information to limited partners 63.00 65.53 61.43 Other 1.71 1.77 2.55 ------ ------ ------ 100.00% 100.00% 100.00% ====== ====== ======
7 8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED General and administrative costs increased from 1997 to 1998 due to increased costs for printing and distribution of documents. Depreciation expense was the same in both 1997 and 1998. Net income increased by $42,504 from 1997 to 1998 due to the increase in revenues of $44,143 offset by the $1,639 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. 8 9 ITEM 8. FINANCIAL STATEMENTS PART I. INFORMATION INDEX PAGE NUMBER ----- ----------- Report of Independent Public Accountants 10 Balance Sheets at December 31, 1998 and 1997 11 Statement of of Income for the years ended December 31, 1998, 1997 and 1996 12 Statement of Changes in Partners' Equity for the three years ended December 31, 1998 13 Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 14 Notes to Financial Statements 15-19 9 10 ARTHUR ANDERSEN LLP REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Partners of Del Taco Restaurant Properties, I: We have audited the accompanying balance sheets of Del Taco Restaurant Properties I (a California Limited Partnership) as of December 31, 1998 and 1997, and the related statements of income, changes in partners' equity and cash flows for each of the three years in the period ended December 31, 1998. These financial statements and the schedule referred to below are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards required that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Del Taco Restaurant Properties I as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule in the index of the financial statements is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly states in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ ARTHUR ANDERSEN LLP ----------------------------------- ARTHUR ANDERSEN LLP Orange County, California February 12, 1999 10 11 DEL TACO RESTAURANT PROPERTIES I BALANCE SHEETS
DECEMBER 31, -------------------------- 1998 1997 ---------- ----------- ASSETS CURRENT ASSETS: Cash $ 162,979 $ 143,280 Receivable from Del Taco, Inc. (Note 4) 47,833 42,601 Deposits 797 600 ---------- ---------- Total current assets 211,609 186,481 ---------- ---------- PROPERTY AND EQUIPMENT, AT COST (NOTE 1): 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 1,716,087 1,672,315 ---------- ---------- 2,285,555 2,329,327 ---------- ---------- $2,497,164 $2,515,808 ========== ========== LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES: Payable to limited partners $ 24,702 $ 12,690 Accounts payable 5,703 6,531 ---------- ---------- Total current liabilities 30,405 19,221 ---------- ---------- PARTNERS' EQUITY (NOTE 2): Limited partners 2,201,963 2,231,634 General Partner - Del Taco, Inc. 264,796 264,953 ---------- ---------- 2,466,759 2,496,587 ---------- ---------- $2,497,164 $2,515,808 ========== ==========
The accompanying notes are an integral part of these financial statements. 11 12 DEL TACO RESTAURANT PROPERTIES I STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, ------------------------------------ 1998 1997 1996 -------- -------- -------- REVENUES: Rent (Note 3) $531,608 $487,280 $452,203 Interest 3,425 3,359 2,265 Other 1,499 1,750 637 -------- -------- -------- 536,532 492,389 455,105 -------- -------- -------- EXPENSES: General and administrative 46,900 45,261 45,943 Depreciation 43,772 43,772 43,775 -------- -------- -------- 90,672 89,033 89,718 -------- -------- -------- Net income $445,860 $403,356 $365,387 ======== ======== ======== Net income per limited partnership Unit (Note 1) $ 50.44 $ 45.63 $ 41.34 ======== ======== ========
The accompanying notes are an integral part of these financial statements. 12 13 DEL TACO RESTAURANT PROPERTIES I STATEMENT OF CHANGES IN PARTNERS' EQUITY THREE YEARS ENDED DECEMBER 31, 1998
Limited Partners ---------------------------- General Units Amount Partner Total ----------- ----------- ----------- ----------- Balance, December 31, 1995 8,751 $ 2,293,755 $ 265,580 $ 2,559,335 Net income -- 361,733 3,654 365,387 Cash distributions (Note 6) -- (391,909) (3,959) (395,868) ----------- ----------- ----------- ----------- Balance, December 31, 1996 8,751 2,263,579 265,275 2,528,854 Net income -- 399,322 4,034 403,356 Cash distributions (Note 6) -- (431,267) (4,356) (435,623) ----------- ----------- ----------- ----------- Balance, December 31, 1997 8,751 2,231,634 264,953 2,496,587 Net income -- 441,401 4,459 445,860 Cash distributions (Note 6) -- (471,072) (4,616) (475,688) ----------- ----------- ----------- ----------- Balance, December 31, 1998 8,751 $ 2,201,963 $ 264,796 $ 2,466,759 =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 13 14 DEL TACO RESTAURANT PROPERTIES I STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, ----------------------------------------- 1998 1997 1996 ---------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 445,860 $ 403,356 $ 365,387 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 43,772 43,772 43,775 Increase in payable to limited partners 12,012 1,371 2,421 Increase in receivable from General Partner (5,232) (4,123) (1,824) (Decrease) increase in accounts payable (828) 3,531 2,093 Increase in deposits (197) -- -- --------- --------- --------- Net cash provided by operating activities 495,387 447,907 411,852 CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions to partners (475,688) (435,623) (395,868) --------- --------- --------- NET INCREASE IN CASH 19,699 12,284 15,984 BEGINNING CASH BALANCE 143,280 130,996 115,012 --------- --------- --------- ENDING CASH BALANCE $ 162,979 $ 143,280 $ 130,996 ========= ========= =========
The accompanying notes are an integral part of these financial statements. 14 15 DEL TACO RESTAURANT PROPERTIES I NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES THE PARTNERSHIP: Del Taco Restaurant Properties I (a California limited partnership) was formed on November 30, 1982, for the purpose of acquiring real property in California for construction of six Mexican-American restaurants to be leased under long-term agreements to Del Taco, Inc. (General Partner for operation under the Del Taco trade name). BASIS OF ACCOUNTING: The partnership utilizes the accrual method of accounting for transactions relating to the business of the partnership. Distributions are made to the general and limited partners in accordance with the provisions of the partnership agreement (see Note 2). PROPERTY AND EQUIPMENT: Property and equipment is stated at cost. Depreciation is computed using the straight-line method over estimated useful lives which are 20 years for land improvements, 35 years for buildings and improvements, and 10 years for machinery and equipment. In fiscal 1996, the partnership adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed of." SFAS 121 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In evaluating long-lived assets held for use, an impairment loss is recognized if the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying value of the asset. Once a determination has been made that an impairment loss should be recognized for long-lived assets, various assumptions and estimates are used to determine fair value including, among others, estimated costs of construction and development, recent sales of comparable properties and the opinions of fair value prepared by independent real estate appraisers. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. The adoption of SFAS No. 121 did not have a material effect on the partnership's financial statements. 15 16 DEL TACO RESTAURANT PROPERTIES I NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1998 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) INCOME TAXES: No provision has been made for federal or state income taxes on partnership net income, since the partnership is not subject to income tax. Partnership income is includable in the taxable income of the individual partners as required under applicable income tax laws. Certain items, primarily related to depreciation methods, are accounted for differently for income tax reporting purposes (see Note 5). NET INCOME PER LIMITED PARTNERSHIP UNIT: Net income per limited partnership unit is based upon the weighted average number of units outstanding during the period which amounted to 8,751 for all years presented. USE OF ESTIMATES: The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - PARTNERS' EQUITY 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. In 1986, the General Partner contributed additional capital of $280,000 to the partnership in order to provide funds necessary to complete the sixth and final restaurant. 16 17 DEL TACO RESTAURANT PROPERTIES I NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1998 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. The partnership had a total of six properties leased as of December 31, 1998, 1997 and 1996, two of which have been subleased to Del Taco franchisees (one of which is affiliated with Del Taco, Inc.) The five restaurants operated by or affiliated with Del Taco, for which the partnership is the lessor, had combined, unaudited sales of $3,721,166, $3,447,723, and $3,229,726 and unaudited net income of $207,430, $149,010, and $77,336 for the years ended December 31, 1998, 1997 and 1996, respectively. Net income by restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense. The one restaurant operated by a Del Taco franchisee, for which the partnership is the lessor, had unaudited sales of $708,908, $612,943 and $538,632 for the years ended December 31, 1998, 1997 and 1996, respectively. The Elkhorn Boulevard restaurant in Sacramento, California had unaudited net losses of $13,373, $13,302, and $18,566 for the years ended December 31, 1998, 1997 and 1996, respectively. NOTE 4 - RELATED PARTIES The receivable from Del Taco consists of rent accrued for the month of December 1998. The rent receivable was collected on January 17, 1999. The General Partner received $4,616 in distributions relating to its one percent interest in the partnership for the year ended December 31, 1998. 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. 17 18 DEL TACO RESTAURANT PROPERTIES I NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1998 NOTE 5 - INCOME TAXES A reconciliation of financial statement net income to taxable income for each of the periods is as follows:
1998 1997 1996 --------- --------- --------- Net income per financial statements $ 445,860 $ 403,356 $ 365,387 Excess book depreciation (670) (2,265) (4,780) --------- --------- --------- Taxable income $ 445,190 $ 401,091 $ 360,607 ========= ========= =========
A reconciliation of partnership equity per the financial statements to net worth for tax purposes as of December 31, 1998, is as follows: Partners' equity per financial statements $2,466,759 Issue costs of limited partnership units capitalized for tax purposes 637,325 Excess tax depreciation (138,003) Other 235 ---------- Net worth for tax purposes $2,966,316 ========== 18 19 DEL TACO RESTAURANT PROPERTIES I NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1998 NOTE 6 - CASH DISTRIBUTIONS TO LIMITED PARTNERS Cash distributions paid to limited partners for the three years ended December 31, 1998 were as follows:
Cash Weighted Number of Units Distribution per Average Number Outstanding at Limited Partnership of Units the End of Quarter Ended Unit Outstanding Quarter - ------------- ------------------- --------------- --------------- December 31, 1995 $11.46 8,751 8,751 March 31, 1996 10.68 8,751 8,751 June 30, 1996 10.21 8,751 8,751 September 30, 1996 12.47 8,751 8,751 ------ Total paid in 1996 $44.82 ====== December 31, 1996 $12.63 8,751 8,751 March 31, 1997 11.59 8,751 8,751 June 30, 1997 11.19 8,751 8,751 September 30, 1997 13.87 8,751 8,751 ------ Total paid in 1997 $49.28 ====== December 31, 1997 $14.21 8,751 8,751 March 31, 1998 10.82 8,751 8,751 June 30, 1998 13.34 8,751 8,751 September 30, 1998 15.47 8,751 8,751 ------ Total paid in 1998 $53.84 ======
Cash distributions per limited partnership unit were calculated based upon the weighted average number of units outstanding for each quarter and were paid from operations. Cash distributions for the quarter ended December 31, 1998 amounted to $15.08 per limited partnership unit and were paid January 31, 1999. 19 20 PART III ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP'S GENERAL PARTNER (a) & (b) The executive officers and directors of the General Partner and their ages are set forth below:
Name Title Age - ---- ----- --- Kevin K. Moriarty Director, Chairman and Chief Executive Officer 52 C. Ronald Petty President 54 Paul W. Hitzelberger Executive Vice President, Brand Strategy and Franchise Relations/Development 54 Robert Terrano Executive Vice President and Chief Financial Officer 43 James D. Stoops Executive Vice President, Operations 46 Janet D. Simmons Senior Vice President, Purchasing 42 Michael L. Annis Vice President, Secretary and General Counsel 52 C. Douglas Mitchell Vice President and Corporate Controller 48 Annette Shehan Vice President, Marketing 37 Shirlene Lopez Vice President, Corporate Development 34
The above referenced executive officers and directors of the General Partner will hold office until the annual meeting of its shareholders and directors, which is scheduled for the later part of 1999. (c) None (d) No family relationship exists between any such director or executive officer of the General Partner. (e) The following is an account of the business experience during the past five years of each such director and executive officer: 20 21 KEVIN K. MORIARTY, Director, Chairman and Chief Executive Officer of Del Taco, Inc. Mr. Moriarty began his career with Burger King Corporation in 1974 in Operations Unit Management. In 1983, he was promoted to Area Manager in New York, and was subsequently promoted to the Regional Vice President, Chicago Region in 1985. In 1988, he became Executive Vice President and General Manager of the North Central Division. Mr. Moriarty served in that position until 1990 when he joined Del Taco, Inc. as President and Chief Executive Officer on July 31, 1990. Mr. Moriarty has served as a Director of the General Partner since 1990. C. RONALD PETTY, President of Del Taco, Inc. Mr. Petty began his career in the restaurant business in 1973 with McDonald's Corporation. He was employed by McDonald's in a real estate capacity until 1978. For the next 12 years, Mr. Petty was in various officer positions with Burger King. These positions included Vice President of Real Estate, Sr. Vice President of Development, Region Vice President, Sr. Vice President European Operations, President of International and President of U.S. Mr. Petty served as President of Miami Subs from 1990-1992; President and CEO of Denny's 1993-1996; President and CEO of Peter Piper Pizza 1996-1998; President of Del Taco December 1998-present. PAUL W. HITZELBERGER, Executive Vice President, Brand Strategy and Franchise Relations/Development of Del Taco, Inc. He was appointed to his current position in December 1995. Previously, Mr. Hitzelberger was Executive Vice President, Marketing from February 1991 and Vice President, Marketing from 1989 to 1991. Mr. Hitzelberger has responsibility for franchise development, relations and training and will oversee public relations and training for the corporation. From September 1988 through September 1989, Mr. Hitzelberger was Chief Executive Officer of Environmental Marketing Group. Prior to that, Mr. Hitzelberger was a Vice President of Del Taco, Inc. Prior to joining Del Taco, Inc., he served as Vice President - Marketing at the department store division of Lucky Stores, Inc., a major supermarket retailer. Prior to his position with Lucky, Mr. Hitzelberger held various positions in marketing and retailing at Wallpapers to Go, Inc., a division of General Mills, Inc., and Coast to Coast Stores, Inc. a subsidiary of Household Merchandising, Inc. Mr. Hitzelberger received a Master of Business Administration degree from Loyola University in Chicago, Illinois. ROBERT J. TERRANO, Executive Vice President and Chief Financial Officer of Del Taco, Inc. From May 1994 to April 1995, Mr. Terrano served as Chief Financial Officer for Denny's, Inc. in Spartanburg, S.C. From August 1983 to May 1994, he served with Burger King Corporation, Miami Florida, in a variety of positions, most recently as Division Controller. Mr. Terrano joined Del Taco, Inc. in April 1995. JAMES D. STOOPS, Executive Vice President, Operations of Del Taco, Inc. From 1968 to 1991, Mr. Stoops served in a wide variety of Operations positions with Burger King Corporation with increasing levels of responsibility. In 1985, Mr. Stoops was appointed Region Vice President/General Manager for the New York region and served in that position until October of 1990. In January of 1991, he joined Del Taco, Inc. in his current post. JANET D. SIMMONS, Senior Vice President, Purchasing of Del Taco, Inc. From 1979 to 1986, Ms. Simmons was with Denny's Incorporated. She served in the Research and Development department in a variety of positions until 1982 when she was promoted to the position of Purchasing Agent. Ms. Simmons was hired in 1986 as Manager of Contract Purchasing with Carl Karcher Enterprises, a post she held until March 1990 when she became Vice President, Purchasing for Del Taco, Inc. Ms. Simmons has a Bachelor of Science degree in Foods and Nutrition from Cal State Polytechnic University in Pomona, California. 21 22 MICHAEL L. ANNIS, Vice President, Secretary and General Counsel of Del Taco, Inc. From 1981 to 1986 Mr. Annis served as Regional Real Estate Manager and Director of Real Estate Services with Taco Bell, Inc. In 1986 he served as Regional General Manager with Quaker State Minit Lube. In January of 1987 Mr. Annis joined Red Robin International, Inc. as General Counsel and was subsequently promoted to Vice President/Secretary and later Vice President Real Estate Development/Secretary and General Counsel, the position he held until joining Del Taco, Inc. in December of 1993. Mr. Annis received his J.D. Degree from Whittier College. C. DOUGLAS MITCHELL, Vice President and Corporate Controller. Mr. Mitchell joined Del Taco, Inc. in August of 1994 as Controller and was promoted to his current position in January 1996. From 1990 to 1994, Mr. Mitchell was a Senior Audit Manager with Coopers & Lybrand. Prior to 1990, Mr. Mitchell held various positions in finance and accounting with the Geneva Companies (a subsidiary of Chemical Bank), Zaremba Corporation (a real estate developer) and The Dexter Corporation (an international manufacturer of specialty materials). Mr. Mitchell has a Bachelor of Science degree with a major in accounting from the University of Southern California. ANNETTE D. SHEHAN, Vice President, Marketing of Del Taco, Inc. From 1984-1994 Ms. Shehan was with Jack In The Box Restaurants where she held various positions in Research & Development, Product Marketing and Advertising/Media. Ms. Shehan was hired in 1994 as Manager of Broadcast Advertising with HomeBase, Inc. a home improvement retailer, a post she held until 1998 when she became Vice President, Marketing for Del Taco, Inc. Ms. Shehan has a Bachelor of Science Degree in Food Science from California Polytechnic University, San Luis Obispo and a Master of Business Administration from San Diego State University. SHIRLENE LOPEZ, Vice President, Corporate Development & Design of Del Taco, Inc. Ms. Lopez began her career with Del Taco in 1978 as an hourly employee and advanced through the ranks to General Manager in 1984. Ms. Lopez was promoted to the corporate office in 1989 as Human Resource Manager in support of the field and office manager. In 1994, she was promoted to Executive Project Manager of reporting to the CEO and in 1996, to Director of Corporate Development in charge of all interior image and design. Ms. Lopez has held her current position since August 1997. ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS The partnership has no executive officers or directors and pays no direct remuneration to any executive officer or director of its General Partner. The partnership has not issued any options or stock appreciation rights to any executive officer or director of its General Partner, nor does the partnership propose to pay any annuity, pension or retirement benefits to any executive officer or director of its General Partner. The partnership has no plan, nor does the partnership presently propose a plan, which will result in any remuneration being paid to any executive officer or director of the General Partner upon termination of employment. 22 23 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) No person of record currently owns more than five percent of limited partnership units of the partnership, nor was any person known of by the partnership to own of record and beneficially, or beneficially only, more than five percent of such securities. (b) Neither Del Taco, Inc., nor any executive officer or director of Del Taco, Inc. owns any limited partnership units of the partnership. (c) The partnership knows of no contractual arrangements, the operation or the terms of which may at a subsequent date result in a change in control of the partnership , except for provisions in the partnership agreement providing for removal of the General Partner by holders of a majority of the limited partnership units and if a material event of default occurs under the financing agreements of the General Partner. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (a) No transactions have occurred between the partnership and any executive officer or director of its General Partner. During 1998, the following transactions occurred between the partnership and the General Partner pursuant to the terms of the partnership agreement. (1) The General Partner earned $4,459 as its one percent share of the net income of the partnership. (2) The General Partner received $4,616 in distributions relating to its one percent interest in the partnership. (b) During 1998, the partnership had no business relationships with any entity of a type required to be reported under this item. (c) Neither the General Partner, any director or officer of the General Partner or any associate of any such person, was indebted to the partnership at any time during 1998 for any amount in excess of $60,000. (d) Not applicable. 23 24 PART IV ITEM 14(a)(1) AND (2). EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K Financial statement schedules: Schedule III - Real Estate and Accumulated Depreciation Financial statement schedules other than those referred to above have been omitted because they are not applicable or not required. (b) No reports on Form 8-K were filed during the last quarter of 1998. (c) Exhibits required by Item 601 of Regulation S-K: 1. Incorporated herein by reference, Restated Certificate and Agreement of Limited Partnership of Del Taco Restaurant Properties I filed as Exhibit 3.01 to Partnership's Registration Statement on Form S-11 as filed with the Securities and Exchange Commission on December 17, 1982. 2. Incorporated herein by reference, Amendment to Restated Certificate and Agreement of Limited Partnership of Del Taco Restaurant Properties I. 3. Incorporated herein by reference, Form of Standard Lease to be entered into by partnership and Del Taco, Inc., as lessee, filed as Exhibit 10.02 to Partnership's Registration Statement on Form S-11 as filed with the Securities and Exchange Commission on December 17, 1982. 24 25 DEL TACO RESTAURANT PROPERTIES I - SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1998
Cost capitalized Gross amount at Initial cost subsequent to which carried at Description to company acquisition close of period ----------- --------------------------------------------------------------------- Land Building & Land, buildings & land Improve- Carrying & improvements Accumulated (All Restaurants) Encumbrances improvements ments costs Total depreciation - ------------------------------------------------------------------------------------------------------------------------------------ Rialto, CA $-- $ 274,837 $ 150,310 $-- $ 425,147 $ 86,059 Moreno Valley, CA -- 353,557 193,362 -- 546,919 110,708 La Verne, CA -- 452,423 247,433 -- 699,856 141,665 Rancho Cucamonga, CA -- 293,817 160,690 -- 454,507 92,001 Sacramento, CA -- 260,516 142,478 -- 402,994 81,575 Rancho Cucamonga, CA -- 217,332 118,861 -- 336,193 68,053 ----------------------------------------------------------------------------------------- $-- $1,852,482 $1,013,134 $-- $2,865,616 $ 580,061 =========================================================================================
Life on which depreciation in latest Date of Date income statement construction acquired is computed ------------ -------- ---------------------- Rialto, CA 1984 1984 20 (LI), 35 (BI) Moreno Valley, CA 1985 1985 20 (LI), 35 (BI) La Verne, CA 1985 1985 20 (LI), 35 (BI) Rancho Cucamonga, CA 1985 1985 20 (LI), 35 (BI) Sacramento, CA 1985 1985 20 (LI), 35 (BI) Rancho Cucamonga, CA 1985 1985 20 (LI), 35 (BI)
Accumulated Restaurants Depreciation ----------- ------------ Balances at December 31, 1995: $ 2,865,616 $ 448,745 Acquisitions -- 43,772 Sales -- -- ----------- --------- Balances at December 31, 1996: 2,865,616 492,517 Acquisitions -- 43,772 Sales -- -- ----------- --------- Balances at December 31, 1997: 2,865,616 536,289 Acquisitions -- 43,772 Sales -- -- ----------- --------- Balances at December 31, 1998: $ 2,865,616 $ 580,061 =========== =========
25 26 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the partnership 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 Del Taco, Inc. General Partner Date March 07, 1999 Kevin K. Moriarty -------------- ----------------- Kevin K. Moriarty Director, Chairman and Chief Executive Officer Date March 07, 1999 Michael L. Annis -------------- ---------------- Michael L. Annis Vice President, Secretary and General Counsel Date March 07, 1999 Robert J. Terrano -------------- ----------------- Robert J. Terrano Executive Vice President and Chief Financial Officer Date March 07, 1999 C. Douglas Mitchell -------------- ------------------- C. Douglas Mitchell Vice President and Corporate Controller 26 27 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------ ----------- 27.1 Financial Data Schedule EX-27.1 2 FINANCIAL DATA SCHEDULE
5 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 162,979 797 47,833 0 0 211,609 4,001,642 1,716,087 2,497,164 30,405 0 0 0 0 2,466,759 2,497,164 0 536,532 0 90,672 0 0 0 445,860 0 445,860 0 0 0 445,860 50.44 50.44
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