-----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, D8rxK53lCZO9dBjXP6OJ5LIB2Jqbznw3cRGgFRv+mCJdCLFvqb9LddUU9YO5UhgU XKMSXv8lFVSdKBrpWtbzxg== 0000892569-99-001260.txt : 19990506 0000892569-99-001260.hdr.sgml : 19990506 ACCESSION NUMBER: 0000892569-99-001260 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990505 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: SEC FILE NUMBER: 000-16851 FILM NUMBER: 99611621 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 AVE CITY: ORANGE STATE: CA ZIP: 92667 10-Q 1 FORM 10-Q PERIOD END MARCH 31, 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, MARCH 31, 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. 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.) 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 III
PART I. FINANCIAL INFORMATION PAGE NUMBER ----------- Item 1. Financial Statements and Supplementary Data Balance Sheets at March 31, 1999 (Unaudited) and December 31, 1998 3 Statements of Income for the three months ended March 31, 1999 and 1998 (Unaudited) 4 Statements of Cash Flows for the three months ended March 31, 1999 and 1998 (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 1999 1998 ----------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 180,475 $ 219,876 Receivable from General Partner (Note 5) 62,809 63,803 Deposits 1,182 1,506 ----------- ----------- Total current assets 244,466 285,185 ----------- ----------- RESTRICTED CASH (NOTE 2) 97,291 99,896 ----------- ----------- PROPERTY AND EQUIPMENT, AT COST: Land and improvements 4,405,966 4,405,966 Buildings and improvements 2,954,959 2,954,959 Machinery and equipment 1,522,922 1,522,922 ----------- ----------- 8,883,847 8,883,847 Less--accumulated depreciation 2,707,565 2,679,255 ----------- ----------- 6,176,282 6,204,592 ----------- ----------- $ 6,518,039 $ 6,589,673 =========== =========== LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES: Payable to Limited Partners $ 19,346 $ 31,604 Accounts Payable 10,490 7,628 ----------- ----------- Total current liabilities 29,836 39,232 ----------- ----------- OBLIGATION TO GENERAL PARTNER 577,510 577,510 ----------- ----------- PARTNERS' EQUITY: Limited Partners 5,947,155 6,008,797 General Partner-Del Taco, Inc. (36,462) (35,866) ----------- ----------- 5,910,693 5,972,931 ----------- ----------- $ 6,518,039 $ 6,589,673 =========== ===========
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 1999 1998 -------- -------- REVENUES: Rent (Notes 4 and 5) $171,876 $166,524 Interest 2,215 2,108 Other 400 1,153 -------- -------- 174,491 169,785 EXPENSES: General and administrative 22,888 22,513 Depreciation 28,310 66,383 -------- -------- 51,198 88,896 -------- -------- Net income $123,293 $ 80,889 ======== ======== Net income per limited partnership unit (Note 3) $ 2.58 $ 1.69 ======== ========
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 1999 1998 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 123,293 $ 80,889 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 28,310 66,383 Decrease (increase) in receivable from General Partner 994 (680) Decrease in deposits 324 -- Decrease in accounts payable and payable to limited partners (9,396) (7,163) --------- --------- Net cash provided by operating activities 143,525 139,429 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in restricted cash 2,605 -- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Redemption of limited partnership units (2,605) -- Cash distribution to partners (182,926) (177,501) --------- --------- Net cash used by financing activities (185,531) (177,501) --------- --------- Net decrease in cash (39,401) (38,072) Beginning cash balance 219,876 189,315 --------- --------- Ending cash balance $ 180,475 $ 151,243 ========= =========
The accompanying notes are an integral part of these financial statements. -5- 6 DEL TACO RESTAURANT PROPERTIES III NOTES TO FINANCIAL STATEMENTS MARCH 31, 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 Registrant'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 March 31, 1999, the results of operations and cash flows for the three month periods ended March 31, 1999 and 1998 have been included. Operating results for the three months ended March 31, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. NOTE 2 - RESTRICTED CASH At March 31, 1999 the partnership had a restricted cash balance of $97,291. 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 partnership 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, 1999 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 47,331 in 1999 and 47,394 in 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, 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 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. On December 29, 1998, the franchise agreement for the West Sepulveda Boulevard restaurant in Los Angeles expired. Del Taco began operation of this restaurant as a company managed facility on December 29, 1998. For the three months ended March 31, 1999, the nine restaurants operated by Del Taco, for which the partnership is the lessor, had combined, unaudited sales of $1,432,300 and net income of $55,380, as compared to $1,288,548 and $47,816 respectively, for the corresponding period in 1998 which included eight restaurants operated by Del Taco. Net income by restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense. For the three months ended March 31, 1998, the one restaurant operated by a Del Taco franchisee, for which the partnership was the lessor, had unaudited sales of $99,152. For the three months ended March 31, 1999, the East Valley Blvd. Restaurant in Walnut, California reported a net loss of $616 as compared to a net loss of $2,602 for the corresponding period in 1998. For the three months ended March 31, 1999, the West Sepulveda Blvd. Restaurant in Los Angeles, California reported a net loss of $7,849. This restaurant was operated by a franchisee during the three months ended March 31, 1998. -7- 8 DEL TACO RESTAURANT PROPERTIES III NOTES TO FINANCIAL STATEMENTS - CONTINUED MARCH 31, 1999 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 10, 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 6 with respect to certain distributions to the General Partner. NOTE 6 - DISTRIBUTIONS On April 8, 1999, a distribution to the limited partners of $151,989, or approximately $3.21 per limited partnership unit, was approved. Such distribution was paid on April 24, 1999. The General Partner also received a distribution of $1,535 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 partnership offered limited partnership units for sale between February 1986 and June 1987. 14.7% of the $12 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 $9.5 million of the remaining funds were used to acquire sites and build ten restaurants. In February of 1992, approximately $281,000 raised during the offering but not required to acquire sites and build restaurants was distributed to the limited partners. The nine 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. As described in note 2 to the Notes to the Financial Statements, the partnership has a death and disability redemption fund totaling $97,291 at March 31, 1999. Investors should contact the General Partner with all questions regarding the eligibility of a limited partner or the estate of a deceased limited partner to participate in the redemption fund. Results of Operations The partnership owns nine properties that are under long-term lease to Del Taco for restaurant operations. The following table sets forth rental revenue earned by restaurant for the year:
THREE MONTHS ENDED MARCH 31 1999 1998 -------- -------- Rancho California Plaza, Rancho California, CA $ 27,138 $ 26,326 East Vista Way, Vista, CA 14,988 13,909 4th Street, Perris, CA 25,986 26,064 Foothill Blvd., Upland, CA 20,156 19,256 Plaza at Puente Hills, Industry, CA 13,126 12,293 East Valley Blvd., Walnut, CA 10,963 10,293 W. Sepulveda Blvd., Los Angeles, CA 12,592 11,898 Lassen Street, Chatsworth, CA 25,201 26,679 Hesperia Road, Victorville, CA 21,726 19,806 -------- -------- Total $171,876 $166,524 ======== ========
-9- 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED The partnership receives rental revenues equal to 12 percent of gross sales from the restaurants. The partnership earned rental revenue of $171,876 during the three month period ended March 31, 1999, which represents an increase of $5,352 from 1998. 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 & Administrative Expense Three Months Ended March 31 1999 1998 ------- ------- Accounting fees 64.66% 63.52% Distribution of information to limited partners 35.34 36.48 ------- ------- 100.00% 100.00% ======= =======
General and administrative costs increased from 1998 to 1999 due to increased costs for accounting and income tax return preparation. Depreciation decreased in 1999 because certain equipment became fully depreciated during 1998. Net income increased by $42,404 from 1998 to 1999 due to the increase in revenues of $4,706 and the decrease in depreciation expense of $38,073 which was partially offset by the $375 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. -10- 11 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, 1999. -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, 1999 /s/ Robert J. Terrano ------------------------------- Robert J. Terrano Executive Vice President, Chief Financial Officer Date: April 30, 1999 /s/ C. Douglas Mitchell ------------------------------- C. Douglas Mitchell Vice President and Corporate Controller -12- 13 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 277,766 1,182 62,809 0 0 341,757 8,883,847 2,707,565 6,518,039 29,836 0 0 0 0 5,910,693 6,518,039 0 174,491 0 51,198 0 0 0 123,293 0 123,293 0 0 0 123,293 2.58 2.58
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