-----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, C+CqAX3qfUNOGoOJdLwzQESVg2cwI6AC10IeR8zlXHNLH7VOQ7FrTebYjfSyFtSg 3n/nGX7a4nUZA3drjDV3rw== 0000892569-97-001964.txt : 19970801 0000892569-97-001964.hdr.sgml : 19970801 ACCESSION NUMBER: 0000892569-97-001964 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 INCOME PROPERTIES IV CENTRAL INDEX KEY: 0000812630 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330241855 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-13437 FILM NUMBER: 97649181 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 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. 33-13437 DEL TACO RESTAURANT PROPERTIES IV A CALIFORNIA LIMITED PARTNERSHIP (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CALIFORNIA 33-0241855 (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 INCOME PROPERTIES IV -----------------------------
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 INCOME PROPERTIES IV ----------------------------- BALANCE SHEETS --------------
JUNE 30 December 31 1997 1996 ----------- ----------- (UNAUDITED) ASSETS ------ CURRENT ASSETS: Cash $ 69,782 $ 79,857 Receivable from General Partner (Note 4) 24,481 51,558 Deposits 400 400 ----------- ----------- Total current assets 94,663 131,815 ----------- ----------- PROPERTY AND EQUIPMENT, AT COST Land and improvements 1,236,700 1,236,700 Buildings and improvements 1,289,860 1,289,860 Machinery and equipment 484,789 484,789 ----------- ----------- 3,011,349 3,011,349 Less--accumulated depreciation 765,672 713,798 ----------- ----------- 2,245,677 2,297,551 ----------- ----------- $ 2,340,340 $ 2,429,366 =========== =========== LIABILITIES AND PARTNERS' EQUITY -------------------------------- CURRENT LIABILITIES: Payable to Limited Partners $ 2,503 $ 3,038 Accounts Payable 3,338 3,000 ----------- ----------- Total current liabilities 5,841 6,038 ----------- ----------- OBLIGATION TO GENERAL PARTNER 137,953 137,953 ----------- ----------- PARTNERS' EQUITY Limited Partners 2,205,715 2,293,656 General Partner-Del Taco, Inc. (9,169) (8,281) ----------- ----------- 2,196,546 2,285,375 ----------- ----------- $ 2,340,340 $ 2,429,366 =========== ===========
The accompanying notes are an integral part of these financial statements -3- 4 DEL TACO INCOME PROPERTIES IV STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 1997 1996 1997 1996 -------- -------- -------- -------- REVENUES: Rent (Notes 3 and 4) $ 72,202 $126,726 $137,750 $191,682 Interest 364 185 1,098 491 Other 25 -- 75 -- -------- -------- -------- -------- 72,591 126,911 138,923 192,173 -------- -------- -------- -------- EXPENSES: General and administrative 5,915 6,851 25,007 26,728 Depreciation 25,937 25,939 51,874 51,876 -------- -------- -------- -------- 31,852 32,790 76,881 78,604 -------- -------- -------- -------- Net income $ 40,739 $ 94,121 $ 62,042 $113,569 ======== ======== ======== ======== Net income per Limited Partnership Unit (Note 2) $ 0.24 $ 0.56 $ 0.37 $ 0.68 ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements. -4- 5 DEL TACO INCOME PROPERTIES IV ----------------------------- STATEMENTS OF CASH FLOWS ------------------------ (UNAUDITED) -----------
SIX MONTHS ENDED JUNE 30 1997 1996 -------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 62,042 $ 113,569 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 51,874 51,876 (Decrease) increase in payable to Limited Partner (535) 822 Decrease (increase) in receivable from General Partner 27,077 (61,310) Increase (decrease) in accounts payable 338 (825) --------- --------- Net cash provided by operating activities 140,796 104,132 CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions to partners (150,871) (119,322) --------- --------- Net decrease in cash (10,075) (15,190) Beginning cash balance 79,857 73,542 --------- --------- Ending cash balance $ 69,782 $ 58,352 ========= =========
The accompanying notes are an integral part of these financial statements. -5- 6 DEL TACO INCOME PROPERTIES IV ----------------------------- 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. -6- 7 DEL TACO INCOME PROPERTIES IV ----------------------------- NOTES TO FINANCIAL STATEMENTS - CONTINUED ----------------------------------------- JUNE 30, 1997 ------------- 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 165,415 in 1997 and 1996. 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 12 percent to the General Partner and 88 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 32 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 three Properties leased as of June 30, 1997 and 1996, one of which has been subleased to a Del Taco franchisee. Rental revenue for the three and six month periods ended June 30, 1996 was higher than the corresponding period in 1997 due to the earning of supplemental rent, as provided for in the lease agreements, based on the operating results of the individual restaurants. Supplemental rent due for 1997 will be based on earnings, as defined in the partnerships agreement for the full year ending December 31, 1997. Supplemental rent earned by the Registrant for 1997, if any, will be determined and recorded in the fourth quarter of 1997. For the three months ended June 30, 1997, the two restaurants operated by Del Taco, for which the Registrant is the lessor, had combined, unaudited sales of $377,174 and net income of $14,444 as compared to $355,623 and $17,399 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 three months -7- 8 DEL TACO INCOME PROPERTIES IV ----------------------------- NOTES TO FINANCIAL STATEMENTS - CONTINUED ----------------------------------------- JUNE 30, 1997 ------------- NOTE 3 - LEASING ACTIVITIES - (CONTINUED) ended June 30, 1997, the one restaurant operated by a Del Taco franchisee, for which the Registrant is the lessor, had unaudited sales of $224,509 as compared with $214,790 during the same period in 1996. For the six months ended June 30, 1997, the two restaurants operated by Del Taco, for which the Registrant is the lessor, had combined, unaudited sales of $722,898 and net income of $25,432 as compared to $698,390 and $33,024 respectively, for the corresponding period in 1996. For the six months ended June 30, 1997, the one restaurant operated by a Del Taco franchisee, for which the Registrant is the lessor, had unaudited sales of $425,019 as compared with $413,323 during the same period in 1996. For the three months and six months ended June 30, 1997, the Highland Avenue restaurant in Highland, California reported net losses of $3,731 and $7,155 as compared to net losses of $5,603 and $9,510 respectively, for the corresponding period in 1996. NOTE 4 - TRANSACTIONS WITH DEL TACO The receivable from the General Partner consists primarily of rent accrued for the month of June. The June rent was collected on July 10, 1997. 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 $61,656, or approximately $.37 per Limited Partnership Unit, was approved. Such distribution was paid July 23, 1997. The General Partner also received a distribution of $623 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 June 5, 1987. By June 1, 1988, the sale of such Units provided a total capitalization for the Registrant of $4,135,375 including $1,000 attributable to the Special Limited Partner. 14.5 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 $3,000,000 of the remaining funds were expended for the acquisition of sites and construction of three restaurants. During 1989, the first restaurant opened for business. The two additional restaurants commenced operation in 1990. In February 1992, the Registrant distributed to Limited Partners of record on December 31, 1991 $442,270 of net proceeds not utilized as reserves and not invested in properties. Since the three restaurants owned by the Registrant opened, cash flow from Lease payments received from Del Taco, the Registrant's General Partner, which leases all three 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 owns three Properties that are under long-term lease to Del Taco for restaurant operations (Del Taco, in turn, has sub-leased one of the restaurants to a Del Taco franchisee). The Registrant receives rental revenues equal to 12 percent of restaurant sales. The Registrant had rental revenue of $72,202 for the three months ended June 30, 1997 representing a decrease from the rental revenues of $126,726 in 1996. The Registrant had rental revenue of $137,750 for the six months ended June 30, 1997 representing a decrease from the rental revenues of $191,682 in 1996. Rental revenue for the three and six month periods ended June 30, 1996 was higher than the corresponding period in 1997 due to the earning of supplemental rent, as provided for in the lease agreements, based on the operating results of the individual restaurants. Supplemental rent due for 1997 will be based on earnings, as defined in the partnerships agreement for the full year ending December 31, 1997. Supplemental rent earned by the Registrant for 1997, if any, will be determined and recorded in the fourth quarter of 1997. -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 ---- ---- ---- ---- Orangethorpe Ave., Placentia, CA $ 31,032 $ 57,430 $ 59,943 $ 87,008 Lakeshore Dr., Lake Elsinore, CA 26,941 45,612 51,002 69,436 Highland Ave., San Bernardino, CA 14,229 23,684 26,805 35,238 -------- -------- -------- -------- Total $ 72,202 $126,726 $137,750 $191,682 ======== ======== ======== ========
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 65.43% 58.18% Distribution of information to Limited Partners 31.38 37.67 Other 3.19 4.15 ------ ------ 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. For the three months ended June 30, general and administrative expenses decreased from $6,851 in 1996 to $5,915 in 1997. For the six months ended June 30, general and administrative expenses decreased from $26,728 in 1996 to $25,007 in 1997. The Registrant incurred depreciation expense in the amount of $25,937 and $25,939 for the three months ended June 30, 1997 and 1996 respectively. The Registrant incurred depreciation expense in the amount of $51,874 and $51,876 for the six months ended June 30, 1997 and 1996, respectively. -10- 11 As a result of decreased revenues totaling $54,320 for the three months ended June 30, 1997 and decreased expenses totaling $938 for the three months ended June 30, 1997, the net income of the Registrant decreased from $94,121 for the three months ended June 30, 1996 to $40,739 for the corresponding period in 1997. As a result of decreased revenues totaling $53,250 for the six months ended June 30, 1997 and decreased expenses totaling $1,723 for the six months ended June 30, 1997, the net income of the Registrant decreased from $113,569 for the six months ended June 30, 1996 to $62,042 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 INCOME PROPERTIES IV (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 69,782 400 24,481 0 0 94,663 3,011,349 765,672 2,340,340 5,841 0 0 0 0 2,196,546 2,340,340 0 138,923 0 76,881 0 0 0 62,042 0 62,042 0 0 0 62,042 0.37 0.37
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