-----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, Oc1aajuTtYlnvNblATlQSfhqYJRiaSVfhIxfs8Ggto0+XZOWDN2yhYD40j0H/fS8 C8kewITzUVIar2wP7H+6UA== 0000892569-97-001962.txt : 19970801 0000892569-97-001962.hdr.sgml : 19970801 ACCESSION NUMBER: 0000892569-97-001962 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970731 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEL TACO RESTAURANT PROPERTIES II CENTRAL INDEX KEY: 0000749153 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330064245 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16190 FILM NUMBER: 97649178 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-Q 1 FORM 10-Q FOR PERIOD ENDED JUNE 30, 1997 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 JUNE 30, 1997 --------------------------------------------- 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.) 23041 AVENIDA DE LA CARLOTA, LAGUNA HILLS, CALIFORNIA 92653 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(714) 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 ___ ================================================================================ 2 INDEX DEL TACO RESTAURANT PROPERTIES II ---------------------------------
PART I. FINANCIAL INFORMATION PAGE NUMBER - ------------------------------ ----------- Item 1. Financial Statements and Supplementary Data Balance Sheets at June 30, 1997 (Unaudited) and December 31, 1996 3 Statements of Income for the three and six months ended June 30, 1997 and 1996 (Unaudited) 4 Statements of Cash Flows for the six months ended June 30, 1997 and 1996 (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 11 SIGNATURES 12
-2- 3 DEL TACO RESTAURANT PROPERTIES II --------------------------------- BALANCE SHEETS --------------
JUNE 30, December 31, 1997 1996 ----------- ------------ (UNAUDITED) ASSETS ------ CURRENT ASSETS: Cash $ 106,429 $ 117,357 Receivable from General Partner (Note 4) 38,012 37,271 Deposits 1,000 1,000 ---------- ---------- Total current assets 145,441 155,628 ---------- ---------- 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 1,472,797 1,400,759 ---------- ---------- 2,471,038 2,543,076 ---------- ---------- $2,616,479 $2,698,704 ========== ========== LIABILITIES AND PARTNERS' EQUITY -------------------------------- CURRENT LIABILITIES: Payable to Limited Partners 4,938 5,047 Accounts Payable 2,521 3,000 ---------- ---------- Total current liabilities 7,459 8,047 ---------- ---------- PARTNERS' EQUITY Limited Partners 2,631,980 2,712,800 General Partner-Del Taco, Inc. (22,960) (22,143) ---------- ---------- 2,609,020 2,690,657 ---------- ---------- $2,616,479 $2,698,704 ========== ==========
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 SIX MONTHS ENDED JUNE 30 JUNE 30 1997 1996 1997 1996 -------- -------- -------- -------- REVENUES: Rent (Notes 3 and 4) $112,498 $106,780 $216,665 $205,018 Interest 642 377 1,572 973 Other 175 215 250 390 -------- -------- -------- -------- $113,315 $107,372 $218,487 $206,381 -------- -------- -------- -------- EXPENSES: General and administrative 9,523 11,726 31,417 32,008 Depreciation 36,019 36,018 72,038 72,037 -------- -------- -------- -------- 45,542 47,744 103,455 104,045 -------- -------- -------- -------- Net income $ 67,773 $ 59,628 $115,032 $102,336 ======== ======== ======== ======== Net income per Limited Partnership Unit (Note 2) $ 2.48 $ 2.18 $ 4.22 $ 3.75 ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements. -4- 5 DEL TACO RESTAURANT PROPERTIES II --------------------------------- STATEMENTS OF CASH FLOWS ------------------------ (UNAUDITED) -----------
SIX MONTHS ENDED JUNE 30 1997 1996 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 115,032 $ 102,336 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation72,038 72,037 Increase (decrease) in payable to Limited Partner (109) 1,976 Increase in receivable from General Partner (741) (32) Decrease in accounts payable (479) (1,050) --------- --------- Net cash provided by operating activities 185,741 175,267 CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions to partners (196,669) (195,714) --------- --------- Net decrease in cash (10,928) (20,447) Beginning cash balance 117,357 108,954 --------- --------- Ending cash balance $ 106,429 $ 88,507 ========= =========
The accompanying notes are an integral part of these financial statements. -5- 6 DEL TACO RESTAURANT PROPERTIES II --------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- JUNE 30, 1997 ------------- 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, 1996. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the partnership's financial position at June 30, 1997, the results of operations and cash flows for the six month periods ended June 30, 1997 and 1996 have been included. Operating results for the three and six months ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. In fiscal 1996, the Registrant 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 of fair value less cost to sell. The adoption of SFAS No. 121 did not have a material effect on the Registrant's financial statements. 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 1997 and 1996. -6- 7 DEL TACO RESTAURANT PROPERTIES II --------------------------------- NOTES TO FINANCIAL STATEMENTS - CONTINUED ----------------------------------------- JUNE 30, 1997 ------------- NOTE 2 - NET INCOME PER LIMITED PARTNERSHIP UNIT - (CONTINUED) 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. 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 five Properties leased as of June 30, 1997 and 1996. For the three months ended June 30, 1997, the five restaurants operated by Del Taco, for which the Registrant is the lessor, had combined, unaudited sales of $937,483 and net income of $38,972 as compared to $889,833 and $30,519 respectively, for the corresponding period in 1996. Net income by restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense. For the six months ended June 30, 1997, the five restaurants operated by Del Taco, for which the Registrant is the lessor, had combined, unaudited sales of $1,805,542 and net income of $80,473 as compared to $1,708,483 and $50,345 respectively, for the corresponding period in 1996. For the three months and six months ended June 30, 1997, the Clay Street restaurant in Riverside, California reported net income of $743 and net loss $1,282 as compared to net losses of $1,992 and $4,210 respectively, for the corresponding period in 1996. NOTE 4 - TRANSACTIONS WITH DEL TACO The receivable from General Partner consists primarily of rent accrued for the month of June. The June rent was collected on July 10, 1997. -7- 8 DEL TACO RESTAURANT PROPERTIES II --------------------------------- NOTES TO FINANCIAL STATEMENTS - CONTINUED ----------------------------------------- JUNE 30, 1997 ------------- NOTE 4 - TRANSACTIONS WITH DEL TACO - (CONTINUED) 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 July 12, 1997, a distribution to the Limited Partners of $95,526 or approximately $3.54 per Limited Partnership Unit, was approved. Such distribution was paid on July 23, 1997. The General Partner also received a distribution of $965 with respect to its 1% partnership interest. -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. Two restaurants were sold in 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. Rental revenues for the three months ended June 30, increased from $106,780 in 1996 to $112,498 in 1997. The Registrant had rental revenues of $216,665 for the six months ended June 30, 1997, representing an increase from the rental revenues of $205,018 in 1996. The increase in revenues is directly attributable to increased sales at the restaurants. -9- 10 The following table sets forth rental revenue earned by restaurant for the quarter and year to date:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 1997 1996 1997 1996 ---- ---- ---- ---- Bear Valley Rd., Victorville, CA $ 22,556 $ 22,074 $ 42,848 $ 42,426 West Valley Blvd., Colton, CA 23,370 20,705 44,103 39,336 Palmdale Blvd., Palmdale, CA 22,085 24,892 46,207 48,096 DeAnza Country Shopping Center, 14,041 12,352 26,173 23,484 Pedley, CA Varner Road, Thousand Palms, CA 30,446 26,757 57,334 51,676 -------- -------- -------- -------- Total $112,498 $106,780 $216,665 $205,018 ======== ======== ======== ========
The following table sets forth the percentage relationship to total general and administrative expenses of items included in the Registrant's Statements of Income:
Percentage of Total General & Administrative Expense -------------------------------- Six Months Ended June 30 1997 1996 ------- ------- Accounting fees 60.61% 48.58% Distribution of information to Limited Partners 36.84 47.25 Other 2.55 4.17 ------ ------ 100.00% 100.00%
-10- 11 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 decreased for the three months ended June 30 from $11,726 in 1996 to $9,523 in 1997. For the six months ended June 30, general and administrative expenses decreased from $32,008 in 1996 to $31,417 in 1997. Depreciation expense was $36,018 for the three months ended June 30, 1996 and $36,019 for the three months ended June 30, 1997. The Registrant incurred depreciation expense in the amount of $72,037 for the six months ended June 30, 1996 and $72,038 for the six months ended June 30, 1997. For the three months ended June 30, 1997 revenues increased $5,943 and expenses decreased $2,202, creating an increase in net income from $59,628 in 1996 to $67,773 in 1997. As a result of increased revenues totaling $12,106 for the six months ended June 30, 1997 and decreased expenses totaling $590 for the six months ended June 30, 1997, the net income of the Registrant increased from $102,336 for the six months ended June 30, 1996 to $115,032 for the corresponding period in 1997. 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 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 six months ended June 30, 1997. 27 Financial Data Schedule. -11- 12 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: July 30, 1997 /s/ Robert J. Terrano ---------------------------- Robert J. Terrano Executive Vice President, Chief Financial Officer Date: July 30, 1997 /s/ C. Douglas Mitchell ---------------------------- C. Douglas Mitchell Vice President and Corporate Controller -12- EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 106,429 1,000 38,012 0 0 145,441 3,943,835 1,472,797 2,616,479 7,459 0 0 0 0 2,609,020 2,616,479 0 218,487 0 103,455 0 0 0 115,032 0 115,032 0 0 0 115,032 4.22 4.22
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