-----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, ID5L6POohMxv5Z26uDcgmSe1bRHrqGVl1dfGnIRvLV1OyNoNb9pHDSqNO/s6Ze3e xoYurKj1wn8MXbC9F+YARQ== 0000892569-99-002851.txt : 19991103 0000892569-99-002851.hdr.sgml : 19991103 ACCESSION NUMBER: 0000892569-99-002851 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991102 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: SEC FILE NUMBER: 000-16190 FILM NUMBER: 99739048 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 PERIOD END SEPTEMBER 30, 1999 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, 1999 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 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 __ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 1999 (Unaudited) and December 31, 1998 3 Statements of Income for the three and nine months ended September 30, 1999 and 1998 (Unaudited) 4 Statements of Cash Flows for the nine months ended September 30, 1999 and 1998 (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
-2- 3 DEL TACO RESTAURANT PROPERTIES II BALANCE SHEETS
SEPTEMBER 30, December 31, 1999 1998 ------------- ------------ (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 140,497 $ 134,928 Receivable from General Partner (Note 4) 40,934 42,415 Deposits 1,108 1,468 ----------- ----------- Total current assets 182,539 178,811 ----------- ----------- 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 1,585,086 1,544,451 ----------- ----------- 2,358,749 2,399,384 ----------- ----------- $ 2,541,288 $ 2,578,195 =========== =========== LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES: Payable to Limited Partners $ 13,757 $ 12,099 Accounts payable 5,227 5,434 ----------- ----------- Total current liabilities 18,984 17,533 ----------- ----------- PARTNERS' EQUITY: Limited Partners 2,546,132 2,584,106 General Partner-Del Taco, Inc. (23,828) (23,444) ----------- ----------- 2,522,304 2,560,662 ----------- ----------- $ 2,541,288 $ 2,578,195 =========== ===========
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, 1999 1998 1999 1998 -------- -------- -------- -------- REVENUES: Rent (Notes 3 and 4) $128,625 $127,142 $364,337 $357,330 Interest 934 870 2,570 1,658 Other 750 1,225 2,200 2,175 -------- -------- -------- -------- 130,309 129,237 369,107 361,163 -------- -------- -------- -------- EXPENSES: General and administrative 8,699 8,602 42,503 42,093 Depreciation 13,545 13,545 40,635 40,635 -------- -------- -------- -------- 22,244 22,147 83,138 82,728 -------- -------- -------- -------- Net income $108,065 $107,090 $285,969 $278,435 ======== ======== ======== ======== Net income per limited partnership unit (Note 2) $ 3.96 $ 3.93 $ 10.48 $ 10.21 ======== ======== ======== ========
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, 1999 1998 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 285,969 $ 278,435 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 40,635 40,635 Decrease (increase) in receivable from General Partner 1,481 (1,251) Decrease (increase) in deposits 360 (937) Increase in accounts payable and payable to limited partners 1,452 806 --------- --------- Net cash provided by operating activities 329,897 317,688 CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions to partners (324,328) (293,734) --------- --------- Net increase in cash 5,569 23,954 Beginning cash balance 134,928 119,687 --------- --------- Ending cash balance $ 140,497 $ 143,641 ========= =========
The accompanying notes are an integral part of these financial statements. -5- 6 DEL TACO RESTAURANT PROPERTIES II NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 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, 1998. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the partnership's financial position at September 30, 1999, the results of operations and cash flows for the nine month periods ended September 30, 1999 and 1998 have been included. Operating results for the three and nine months ended September 30, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. 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 1999 and 1998. 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, 1999 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. For the three months ended September 30, 1999, the five restaurants operated by Del Taco, for which the partnership is the lessor, had combined, unaudited sales of $1,071,879 and net income of $69,381 as compared to $1,059,512 and $80,355 respectively, for the corresponding period in 1998. Net income by restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense. For the nine months ended September 30, 1999, the five restaurants operated by Del Taco, for which the partnership is the lessor, had combined, unaudited sales of $3,036,143 and net income of $169,733 as compared to $2,977,753 and $186,142 respectively, for the corresponding period in 1998. 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 13, 1999. Del Taco, Inc. serves in the capacity of general partner in other partnerships which are engaged in the business of operating restaurants and three other partnerships which were formed for the purpose of acquiring real property in California for construction of Mexican-American restaurants for lease under long-term agreements to Del Taco, Inc. for operation under the Del Taco trade name. In addition, see Note 5 with respect to certain distributions to the General Partner. NOTE 5 - DISTRIBUTIONS On October 12, 1999, a distribution to the limited partners of $120,523 or approximately $4.46 per limited partnership unit, was approved. Such distribution was paid on October 19, 1999. The General Partner also received a distribution of $1,217 with respect to its 1% partnership interest. -7- 8 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 September 1984 and December 1985. 15% of the $6.751 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 $5.6 million of the remaining funds were used to acquire sites and build seven restaurants. Two restaurants were sold in 1994. The five 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 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. The following table sets forth rental revenue earned by restaurant for the year:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1999 1998 1999 1998 -------- -------- -------- -------- Bear Valley Rd., Victorville, CA $ 25,291 $ 25,471 $ 70,406 $ 70,744 West Valley Blvd., Colton, CA 30,495 28,092 83,195 76,241 Palmdale Blvd., Palmdale, CA 20,820 21,980 60,703 61,210 DeAnza Country Shopping Center, Pedley, CA 18,541 17,047 50,703 47,855 Varner Road, Thousand Palms, CA 33,478 34,552 99,330 101,280 -------- -------- -------- -------- Total $128,625 $127,142 $364,337 $357,330 ======== ======== ======== ========
The partnership receives rental revenues equal to 12 percent of gross sales from the restaurants. The partnership earned rental revenue of $128,625 during the three month period ended September 30, 1999, which represents an increase of $1,483 from 1998. The partnership earned rental revenue of $364,337 during the nine month period ended September 30, 1999, which represents an increase of $7,007 from 1998. The changes in rental revenue between 1998 and 1999 are directly attributable to changes in sales levels at the restaurants under lease. -8- 9 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 -------------------------------- Nine Months Ended September 30, 1999 1998 ------- ------- Accounting fees 53.72% 57.23% Distribution of information to limited partners 46.28 42.77 ------- ------- 100.00% 100.00% ======= =======
General and administrative costs for the nine month period ended September 30, increased from 1998 to 1999 due to increased costs for accounting and income tax return preparation. For the three month period ended September 30, 1999, net income increased by $975 from 1998 to 1999 due to the increase in revenues of $1,072 which was partially offset by the $97 increase in general and administrative expenses. For the nine month period ended September 30, 1999, net income increased by $7,534 from 1998 to 1999 due to the increase in revenues of $7,944 which was partially offset by the $410 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. -9- 10 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, 1999. -10- 11 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 29, 1999 /s/ Robert J. Terrano --------------------------- Robert J. Terrano Executive Vice President, Chief Financial Officer Date: October 29, 1999 /s/ C. Douglas Mitchell --------------------------- C. Douglas Mitchell Vice President and Corporate Controller -11- 12 EXHIBIT INDEX 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 140,497 1,108 40,934 0 0 182,539 3,943,835 1,585,086 2,541,288 18,984 0 0 0 0 2,522,304 2,541,288 0 369,107 0 83,138 0 0 0 285,969 0 285,969 0 0 0 285,969 10.48 10.48
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