-----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, EVXj/qavlVWVUvvickjXQ70GaDb+kU/ex90fGAmIzmLdsV9ToMSikQHON4a0BGem PhVsRwvjmw0Py9+3bEioxQ== 0000892569-95-000596.txt : 19951031 0000892569-95-000596.hdr.sgml : 19951031 ACCESSION NUMBER: 0000892569-95-000596 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951030 SROS: NONE 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16191 FILM NUMBER: 95585525 BUSINESS ADDRESS: STREET 1: 1800 W KATELLA AVE CITY: ORANGE STATE: CA ZIP: 92667 BUSINESS PHONE: 7147444334 MAIL ADDRESS: STREET 1: 1800 W KATELLA AVENUE CITY: ORANGE STATE: CA ZIP: 92667 10-Q 1 PROPERITIES II 10-Q 1 ================================================================================ 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, 1995 ---------------------------------------- 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) CALIFORNIA 33-0064245 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 1800 W. KATELLA AVENUE, ORANGE, CALIFORNIA 92667 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (714) 744-4334 (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 --- --- ================================================================================ 2 INDEX DEL TACO RESTAURANT PROPERTIES II
PART I. FINANCIAL INFORMATION PAGE NUMBER - ------------------------------ ----------- Item 1. Financial Statements and Supplementary Data Balance Sheets at September 30, 1995 (Unaudited) and December 31, 1994 3 Statements of Income for the three and nine months ended September 30, 1995 and 1994 (Unaudited) 4 Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 (Unaudited) 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13
-2- 3 DEL TACO RESTAURANT PROPERTIES II BALANCE SHEETS
SEPTEMBER 30 December 31 1995 1994 ------------ ----------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 121,527 $ 133,369 Receivable from General Partner (Note 4) 35,992 35,871 Deposits 1,000 1,000 ----------- ----------- Total current assets 158,519 170,240 ----------- ----------- 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 ----------- ----------- 3,943,835 3,943,835 Less--accumulated depreciation 1,220,662 1,112,606 ----------- ----------- 2,723,173 2,831,229 ----------- ----------- $ 2,881,692 $ 3,001,469 =========== =========== LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES: Payable to Limited Partners $ 3,831 $ 17,436 Accounts Payable 4,955 - ----------- ----------- Total current liabilities 8,786 17,436 ----------- ----------- PARTNERS' EQUITY Limited Partners 2,893,227 3,003,242 General Partner-Del Taco, Inc. (20,321) (19,209) ----------- ----------- 2,872,906 2,984,033 ----------- ----------- $ 2,881,692 $ 3,001,469 =========== ===========
The accompanying notes are an integral part of these financial statements -3- 4 DEL TACO RESTAURANT PROPERTIES II STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 -------- -------- -------- -------- REVENUES: Rent (Notes 3 and 4) $114,459 $119,813 $328,795 $351,336 Interest 547 643 1,802 2,774 Other 75 250 450 650 -------- -------- -------- -------- 115,081 120,706 331,047 354,760 -------- -------- -------- -------- EXPENSES: General and administrative 8,867 8,548 39,038 46,146 Depreciation 36,017 36,017 108,055 108,055 Writedown of real estate held for sale (Note 6) - 74,797 - 74,797 -------- -------- -------- -------- 44,884 119,362 147,093 228,998 -------- -------- -------- -------- Net income $ 70,197 $ 1,344 $183,954 $125,762 ======== ======== ======== ======== Net income per Limited Partnership Unit (Note 2) $ 2.57 $ .05 $ 6.74 $ 4.61 ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements. -4- 5 DEL TACO RESTAURANT PROPERTIES II STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30 1995 1994 -------- -------- SOURCE OF CASH: From operations: Net income $183,954 $125,762 Depreciation 108,055 108,055 Writedown of real estate held for sale (Note 6) - 74,797 -------- -------- Total cash provided from operations 292,009 308,614 Cash distributions 295,080 979,789 -------- -------- Excess (deficiency) of cash generated over distributions (3,071) (671,175) Proceeds from sale of land - 497,202 Decrease in receivable from General Partner - 3,865 Increase in payable to Limited Partners - 3,054 Increase in accounts payable 4,955 135 -------- -------- 1,884 (166,919) -------- -------- USE OF CASH: Increase in receivable from General Partner 121 - Decrease in payable to Limited Partners 13,605 - -------- -------- 13,726 - -------- -------- Decrease in cash during period (11,842) (166,919) Beginning cash balance 133,369 307,070 -------- -------- Ending cash balance $121,527 $140,151 ======== ========
The accompanying notes are an integral part of these financial statements. -5- 6 DEL TACO RESTAURANT PROPERTIES II NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 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, 1994. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the partnership's financial position at September 30, 1995, the results of operations and cash flows for the nine month periods ended September 30, 1995 and 1994 have been included. Operating results for the three and nine months ended September 30, 1995 are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. 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 1995 and 1994. 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. -6- 7 DEL TACO RESTAURANT PROPERTIES II NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1995 NOTE 3 - LEASING ACTIVITIES The Registrant leases (the "Leases") certain properties (the "Properties") for operation of restaurants to Del Taco, Inc. ("General Partner") 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 Registrant had a total of six Properties leased as of September 30, 1994 and a total of five as of September 30, 1995. On November 19 and 20, 1990, respectively, the restaurants located on the Properties in South Gate and Fallbrook, California, respectively, (the "Closed Properties") leased to Del Taco ceased operation. Pursuant to a Settlement Agreement dated as of October 26, 1993 approved in connection with Del Taco's voluntary bankruptcy case: (i) Del Taco was required to pay rent to the Registrant in the amount of $2,248.87 per month for the South Gate Property and $2,332.85 per month for the Fallbrook Property; (ii) on January 1 of each calendar year commencing with January 1, 1994, the monthly base rent payable was adjusted for any applicable Consumer Price Index increase; (iii) Del Taco was required to market the Closed Properties and pay the Registrant, upon sale, the difference between the most recent appraised value and the selling price; and (iv) upon such sale, the relevant Leases were terminated. The South Gate and Fallbrook properties were sold on May 18, 1994 and November 30, 1994, respectively. 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 20, 1995. -7- 8 DEL TACO RESTAURANT PROPERTIES II NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1995 Del Taco, Inc. serves in the capacity of general partner in other partnerships which are engaged in the business of operating restaurants and four 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 10, 1995, a distribution to the Limited Partners of $109,817, or approximately $4.07 per Limited Partnership Unit, was approved. Such distribution was paid on October 16, 1995. The General Partner also received a distribution of $1,109 with respect to its 1% partnership interest. NOTE 6 - WRITEDOWN OF REAL ESTATE HELD FOR SALE In September 1994, the Registrant entered an agreement to sell the Fallbrook property for a price which exceeded the appraised value but was less than the net book value. Accordingly, the carrying value of the Fallbrook property was adjusted down to the expected sale price generating a write down of $74,797 in the third quarter of 1994. -8- 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Registrant commenced offering of Limited Partnership Units on September 11, 1984. By December 31, 1985, the sale of such Units provided a total capitalization for the Registrant of $6,751,500. Fifteen percent of the cash received from the sale of Limited Partnership Units was used to pay commissions to brokers and to reimburse the General Partner for offering costs incurred. The remaining funds were expended for the acquisition of sites and construction of seven restaurants. In June 1986, the first two restaurants opened for business. Four additional restaurants opened in 1987, and the seventh restaurant opened in April of 1988. Approximately $5,600,000 was expended for such purposes. As a result of continued lower-than-acceptable sales volumes, the South Gate and Fallbrook restaurants ceased operation on November 19 and 20, 1990. Pursuant to a Settlement Agreement dated as of October 26, 1993 approved in connection with Del Taco's voluntary bankruptcy case: (i) Del Taco was required to pay rent to the Registrant in the amount of $2,248.87 per month for the South Gate property and $2,332.85 per month for the Fallbrook property; (ii) on January 1 of each calendar year commencing with January 1, 1994, the monthly base rent payable was adjusted for any applicable Consumer Price Index increase; (iii) Del Taco was required to market the South Gate and Fallbrook properties and pay the Registrant, upon sale, the difference between the most recent appraised value and the selling price; and (iv) upon such sale, the relevant Leases were terminated. In February 1994, an escrow was opened pursuant to an agreement between the Registrant and the City of South Gate for the sale of the South Gate property to the City of South Gate for an amount which exceeded appraised value. Escrow closed on May 18, 1994. The net proceeds of $497,202 were distributed by the Partnership to Limited Partners of record as of May 31, 1994 and was paid June 1, 1994. In September 1994, the Registrant entered into an agreement to sell the Fallbrook property for a price which exceeded the appraised value but was less than the net book value. Accordingly, the most recent carrying value of the Fallbrook property was adjusted down to the expected sales price generating a write down of $74,797 in the third -9- 10 quarter of 1994. Escrow closed on November 30, 1994. The net proceeds of $357,531 were distributed by the Partnership to Limited Partners of record as of November 30, 1994 and was paid December 12, 1994. Since the restaurants owned by the Registrant commenced operation, cash flow from Lease payments received from Del Taco, the Registrant's General Partner, which leases all five remaining restaurants, has provided adequate liquidity for operation of the Registrant. However, the Registrant's overwhelmingly predominant source of income to meet its expenses and fund distributions to its Limited Partners is payments from Del Taco under the Leases, comprising primarily rent calculated on the basis of the gross sales of the restaurants operated on the Properties, as to which there are no contractually specified minimum or guaranteed amounts. Thus, the adequacy of the Registrant's liquidity and capital resources in the future will depend primarily upon the gross revenues of such restaurants as well as upon Del Taco's financial condition and results of operations generally. Results of Operations The Registrant 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. For the five operating Del Taco restaurants, the Registrant receives rental revenues equal to 12 percent of restaurant sales. For the two restaurants which were sold in 1994, the Registrant received rental revenues of approximately $2,000 per restaurant per month. Rental revenues for the three months ended September 30 decreased from $119,813 in 1994 to $114,459 in 1995. The Registrant had rental revenues of $328,795 for the nine months ended September 30, 1995, representing a decrease from the rental revenues of $351,336 in 1994. Such decrease is directly attributable to lost revenues due to the sale of the South Gate and Fallbrook stores. Rental revenues from the five existing restaurants have increased for the three months ended September 30 from $112,682 in 1994 to $114,459 in 1995 and for the nine months ended September 30 from $320,861 in 1994 to $328,795 in 1995. The following table sets forth the percentage relationship to total general and administrative expenses of items included in the Registrant's Statements of Income: -10- 11
Percentage of Total General & Administrative Expense -------------------------------- Nine Months Ended September 30 1995 1994 ------ ------ Accounting fees 38.23% 38.03% Distribution of information to Limited Partners 59.25 58.98 Other 2.52 2.99 ------ ------ 100.00% 100.00% ====== ======
Operating expenses include general and administrative expenses which consist primarily of accounting fees and costs of distribution of information to the Limited Partners. General and administrative expenses increased for the three months ended September 30 from $8,548 in 1994 to $8,867 in 1995. For the nine months ended September 30, general and administrative expenses decreased from $46,146 in 1994 to $39,038 in 1995. Depreciation expense was $36,017 for the three months ended September 30, 1995 and 1994. The Registrant incurred depreciation expense in the amount of $108,055 for the nine months ended September 30, 1995 and 1994. For the three months ended September 30, 1995 revenues decreased $5,625 and expenses decreased $74,478, creating a increase in net income from $1,344 in 1994 to $70,197 in 1995. The increase in net income was caused principally by the writedown of real estate held for sale which was included in expenses in 1994. As a result of decreased revenues totaling $23,713 for the nine months ended September 30, 1995 and decreased expenses totaling $81,905 for the nine months ended September 30, 1995, the net income of the Registrant increased from $125,762 for the nine months ended September 30, 1994 to $183,954 for the corresponding period in 1995. For the reasons stated under "Liquidity and Capital Resources" above, the Registrant's results of operations in the future will depend primarily upon the gross revenues of the restaurants located on the -11- 12 Properties leased to Del Taco as well as upon Del Taco's financial condition and results of operations generally. 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, 1995. (C) Exhibit 27 - Financial Data Schedule -12- 13 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 24 1995 /s/ Robert J. Terrano ---------------------------------- Robert J. Terrano Executive Vice President, Chief Financial Officer (duly authorized to sign on behalf of the Registrant) -13- EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1994 JAN-01-1995 SEP-30-1995 121,527 0 35,992 0 0 158,519 3,943,835 1,220,662 2,881,692 8,786 0 0 0 0 2,872,906 2,881,692 0 331,047 0 147,093 0 0 0 183,954 0 183,954 0 0 0 183,954 6.74 6.74
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