-----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, U9oowOgHfZTa3y2LtlCA7jYirzgRuZmw+4cdNjwAmVLJkFIMBTMth7r8GYrarB/Q ve0yetWoO92HjSDGaUnO9Q== 0000892569-96-000503.txt : 19960507 0000892569-96-000503.hdr.sgml : 19960507 ACCESSION NUMBER: 0000892569-96-000503 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960506 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEL TACO RESTAURANT PROPERTIES III CENTRAL INDEX KEY: 0000786360 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330139247 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16851 FILM NUMBER: 96556586 BUSINESS ADDRESS: STREET 1: 1800 W KATELLA AVE CITY: ORANGE STATE: CA ZIP: 92667 BUSINESS PHONE: 7147444334 MAIL ADDRESS: STREET 1: 1800 W KATELLA AVE CITY: ORANGE STATE: CA ZIP: 92667 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 1996 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 MARCH 31, 1996 ------------------------------------------------- OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO ---------------------- ----------------------- COMMISSION FILE NO. 33-2462 DEL TACO RESTAURANT PROPERTIES III A CALIFORNIA LIMITED PARTNERSHIP (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CALIFORNIA 33-0139247 (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 DEL TACO RESTAURANT PROPERTIES III PART I. FINANCIAL INFORMATION PAGE NUMBER Item 1. Financial Statements and Supplementary Data Balance Sheets at March 31, 1996 (Unaudited) and December 31, 1995 3 Statements of Income for the three months ended March 31, 1996 and 1995 (Unaudited) 4 Statements of Cash Flows for the three months ended March 31, 1996 and 1995 (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 III BALANCE SHEETS
MARCH 31 December 31 1996 1995 ----------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 170,739 $ 184,497 Receivable from General Partner (Note 5) 58,527 60,034 Deposits 1,000 1,000 ----------- ----------- Total current assets 230,266 245,531 ----------- ----------- RESTRICTED CASH (NOTE 2) 126,277 126,277 PROPERTY AND EQUIPMENT, AT COST Land and improvements 4,613,613 4,613,613 Buildings and improvements 3,188,900 3,188,900 Machinery and equipment 1,668,310 1,668,310 ----------- ----------- 9,470,823 9,470,823 Less--accumulated depreciation 2,172,377 2,100,693 ----------- ----------- 7,298,446 7,370,130 ----------- ----------- $ 7,654,989 $ 7,741,938 =========== =========== LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES: Payable to Limited Partners $ 2,920 $ 3,248 Accounts Payable 12,795 1,424 ----------- ----------- Total current liabilities 15,715 4,672 ----------- ----------- OBLIGATION TO GENERAL PARTNER 577,510 577,510 ----------- ----------- PARTNERS' EQUITY Limited Partners 7,089,795 7,186,807 General Partner-Del Taco, Inc. (28,031) (27,051) ----------- ----------- 7,061,764 7,159,756 ----------- ----------- $ 7,654,989 $ 7,741,938 =========== ===========
The accompanying notes are an integral part of these financial statements -3- 4 DEL TACO RESTAURANT PROPERTIES III STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31 1996 1995 -------- -------- REVENUES: Rent (Notes 4 and 5) $170,189 $168,867 Interest 2,184 1,983 Other 50 150 -------- -------- 172,423 171,000 -------- -------- EXPENSES: General and administrative 24,315 24,102 Depreciation 71,684 71,688 -------- -------- 95,999 95,790 -------- -------- Net income $ 76,424 $ 75,210 ======== ======== Net income per Limited Partnership Unit (Note 3) $1.59 $1.57 ===== =====
The accompanying notes are an integral part of these financial statements. -4- 5 DEL TACO RESTAURANT PROPERTIES III STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31 1996 1995 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 76,424 $ 75,210 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 71,684 71,688 Decrease in payable to Limited Partners (328) (78) Decrease in receivable from General Partner 1,507 1,563 Increase in accounts payable 11,371 12,751 --------- --------- Net cash provided by operating activities 160,658 161,134 CASH FLOWS FROM FINANCING ACTIVITIES: Cash distribution to partners 174,416 170,926 --------- --------- Net decrease in cash (13,758) (9,792) Beginning cash balance 184,497 181,855 --------- --------- Ending cash balance $ 170,739 $ 172,063 ========= =========
The accompanying notes are an integral part of these financial statements. -5- 6 DEL TACO RESTAURANT PROPERTIES III NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 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, 1995. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the partnership's financial position at March 31, 1996, the results of operations and cash flows for the three month periods ended March 31, 1996 and 1995 have been included. Operating results for the three months ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. NOTE 2 - RESTRICTED CASH At March 31, 1996 the partnership had a restricted cash balance of $126,277. The restricted cash is a death and disability redemption fund. Such fund is maintained in an interest bearing account at a major commercial bank. A Limited Partner has the right, under certain circumstances involving such Limited Partner's death or disability, to tender to the Registrant for redemption all of the Units owned of record by such Limited Partner. The redemption price will be equal to the partners capital account balance as of the redemption date. The death and disability fund was established in 1987. The fund was limited to two percent of the gross proceeds from sale of the limited partnership units. Requests for redemption made after the funds in the death and disability fund are depleted will not be accepted. -6- 7 DEL TACO RESTAURANT PROPERTIES III NOTES TO FINANCIAL STATEMENTS - CONTINUED MARCH 31, 1996 NOTE 3 - 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 47,498 in 1996 and 47,528 in 1995. Pursuant to the Partnership agreement, annual partnership income or loss is allocated one percent to the General Partner and 99 percent to the Limited Partners. Partnership gains from any sale or refinancing will be allocated one percent to the General Partner and 99 percent to the Limited Partners until allocated gains and profits equal losses, distributions and syndication costs, and until each class of Limited Partners receive their priority return as defined in the Partnership Agreement. Additional gains will be allocated 15 percent to the General Partner and 85 percent to the Limited Partners. NOTE 4 - 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 Registrant had a total of ten Properties leased to Del Taco as of March 31, 1996 (Del Taco, in turn, has subleased two of the restaurants). 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, except for the restaurant location in Twentynine Palms, California. In accordance with an agreement entered into November 30, 1993, effective February 1, 1994, the Del Taco restaurant in Twentynine Palms, California ceased operation as a Del Taco and reopened on February 3, 1994 under the trade name of Bobby Lyle's Incredible Edibles. In connection with the agreement, the lease agreement has been amended to reflect a base rent of $3,333.33 per month and overage rent of 12% of sales for annual sales greater than $333,333. In September 1994, the restaurant located in Twentynine Palms, California (Bobby Lyle's Incredible Edibles) ceased operation. The subleasee continues to pay rent of $3,333.33 per month to Del Taco, Inc. which was, in turn, paid to the Registrant. On March 14, 1995, the subleasee re-opened the Twentynine Palms restaurant. -7- 8 DEL TACO RESTAURANT PROPERTIES III NOTES TO FINANCIAL STATEMENTS - CONTINUED MARCH 31, 1996 NOTE 5 - TRANSACTIONS WITH DEL TACO The receivable from General Partner consists primarily of rent accrued for the month of March. The March rent was collected on April 11, 1996. 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 6 with respect to certain distributions to the General Partner. NOTE 6 - DISTRIBUTIONS On April 9, 1996, a distribution to the Limited Partners of $157,316, or approximately $3.31 per Limited Partnership Unit, was approved. Such distribution was paid on April 16, 1996. The General Partner also received a distribution of $1,589 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 February 21, 1986. By June 1, 1987, the sale of such Units provided a total capitalization for the Registrant of $12,001,000 including $1,000 attributable to the Original Limited Partner. 14.7 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. Approximately $9,500,000 of the remaining funds were expended for the acquisition of sites and construction of ten restaurants. During 1987, the first three restaurants opened for business. Four additional restaurants opened in 1988, two additional restaurants opened in 1989, and the tenth restaurant opened in 1990. In February 1992, the Registrant distributed to Limited Partners of record on December 31, 1991 $280,553 of net proceeds not utilized as reserves and not invested in Properties. Since the ten restaurants owned by the Registrant opened, cash flow from Lease payments received from Del Taco, the Registrant's General Partner, which leases all ten restaurants (two of which have been subleased), have 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, except for the restaurant located in Twentynine Palms, 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. The March 31, 1996 restricted cash balance is a death and disability redemption fund totaling $126,227. Such fund is maintained in an interest bearing account at a major commercial bank. A Limited Partner has the right, under certain circumstances involving such Limited Partner's death or disability, to tender to the Registrant for redemption all of the Units owned of record by such Limited Partner. The redemption price will be equal to the partners capital account balance as of the redemption date. The death and disability fund was established in 1987. The fund was limited to two percent of the gross proceeds from sale of the limited partnership units. Requests for redemption made after the funds in the death and disability fund are -9- 10 depleted will not be accepted. All questions regarding the eligibility of a Limited Partner or the estate of a deceased Limited Partner to participate in the redemption fund are determined by the Special Limited Partner. Results of Operations The Registrant owns ten Properties that are under long-term lease to Del Taco for restaurant operations (Del Taco, in turn, has subleased two of the restaurants). In accordance with an agreement entered into November 30, 1993, effective February 1, 1994, the Del Taco restaurant in Twentynine Palms, California ceased operation as a Del Taco franchise and reopened February 3, 1994 under the trade name of Bobby Lyle's Incredible Edibles. In September 1994, the restaurant located in Twentynine Palms, California (Bobby Lyle's Incredible Edibles) ceased operation. The subleasee continues to pay rent of $3,333.33 per month to Del Taco, Inc. which was, in turn, paid to the Registrant. On March 14, 1995 the subleasee re-opened the Twentynine Palms restaurant. The Registrant receives rental revenues equal to 12 percent of restaurant sales. The Registrant had rental revenue of $170,189 for the three months ended March 31, 1996, representing an increase from the rental revenues of $168,867 during the same period in 1995. Such increase is directly attributable to increased sales at the restaurants. 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 -------------------------------- Three Months Ended March 31 1996 1995 ------ ------ Accounting fees 61.91% 64.00% Distribution of information to Limited Partners 33.90 32.64 Other 4.19 3.36 ------ ------ 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. For the three months ended March 31, 1996, general and administrative expenses increased from $24,102 in 1995 to $24,315 in 1996. The Registrant incurred depreciation expense in the amount of $71,684 and $71,688 for the three months ended March 31, 1996 and 1995 respectively. As a result of the increase in revenues totaling $1,423 for the three months ended March 31, 1996 as compared to the corresponding period in 1995, and the increase in general and administrative expenses totaling $213, the Registrant's net income increased from $75,210 for the three months ended March 31, 1995 to $76,424 for the corresponding period in 1996. 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 three months ended March 31, 1996. (c) Exhibit 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 III (a California limited partnership) Registrant Del Taco, Inc. General Partner Date: April 30, 1996 /s/ Robert J. Terrano ------------------------------- Robert J. Terrano Executive Vice President, Chief Financial Officer Date: April 30, 1996 /s/ C. Douglas Mitchell ------------------------------- C. Douglas Mitchell Vice President and Corporate Controller -12- EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 170,739 1,000 58,527 0 0 230,266 9,470,823 2,172,377 7,654,989 15,715 0 0 0 0 7,061,764 7,654,989 0 172,423 0 95,999 0 0 0 76,424 0 76,424 0 0 0 76,424 1.59 1.59
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