-----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, Eg3GmwRhAhrl+IFd03aTTTlqSDAcuMl05SJAn5MK8/A3+nfk3A6x6ilcpKpXJd1i evBoyi9eMzG53nw9TfBoNw== 0000892569-98-002914.txt : 19981109 0000892569-98-002914.hdr.sgml : 19981109 ACCESSION NUMBER: 0000892569-98-002914 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981106 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: SEC FILE NUMBER: 033-13437 FILM NUMBER: 98739854 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 QUARTER ENDED SEPTEMBER 30, 1998 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, 1998 -------------------------------- 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 INCOME 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 Number) 23041 AVENIDA DE LA CARLOTA, SUITE 400, LAGUNA HILLS, CA 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 [ ] -1- 2 INDEX DEL TACO INCOME PROPERTIES IV
PART I. FINANCIAL INFORMATION PAGE NUMBER - ------------------------------ ----------- Item 1. Financial Statements and Supplementary Data Balance Sheets at September 30, 1998 (Unaudited) and December 31, 1997 3 Statements of Income for the three and nine months ended September 30, 1998 and 1997 (Unaudited) 4 Statements of Cash Flows for the nine months ended September 30, 1998 and 1997 (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
SEPTEMBER 30 December 31 1998 1997 ----------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 104,243 $ 75,411 Receivable from General Partner (Note 4) 27,008 65,132 Deposits 608 400 ----------- ----------- Total current assets 131,859 140,943 ----------- ----------- 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 895,357 817,546 ----------- ----------- 2,115,992 2,193,803 ----------- ----------- $ 2,247,851 $ 2,334,746 =========== =========== LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES: Payable to Limited Partners $ 18,853 $ 2,503 Accounts Payable 2,835 6,130 ----------- ----------- Total current liabilities 21,688 8,633 ----------- ----------- OBLIGATION TO GENERAL PARTNER 137,953 137,953 ----------- ----------- PARTNERS' EQUITY: Limited Partners 2,098,463 2,197,413 General Partner-Del Taco, Inc. (10,253) (9,253) ----------- ----------- 2,088,210 2,188,160 ----------- ----------- $ 2,247,851 $ 2,334,746 =========== ===========
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 NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1998 1997 1998 1997 -------- -------- -------- -------- REVENUES: Rent (Notes 3 and 4) $ 83,729 $ 75,161 $236,540 $212,911 Interest 447 311 1,102 1,409 Other 200 225 825 300 -------- -------- -------- -------- 84,376 75,697 238,467 214,620 -------- -------- -------- -------- EXPENSES: General and administrative 6,923 4,360 34,757 29,367 Depreciation 25,937 25,937 77,811 77,811 -------- -------- -------- -------- 32,860 30,297 112,568 107,178 -------- -------- -------- -------- Net income $ 51,516 $ 45,400 $125,899 $107,442 ======== ======== ======== ======== Net income per Limited Partnership Unit (Note 2) $ 0.31 $ 0.27 $ 0.75 $ 0.64 ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements. -4- 5 DEL TACO INCOME PROPERTIES IV STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30 1998 1997 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 125,899 $ 107,442 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 77,811 77,811 Increase (decrease)in payable to Limited Partners 16,350 (535) Decrease in receivable from General Partner 38,123 27,160 (Decrease) increase in accounts payable (3,295) 566 Increase in deposits (208) -- --------- --------- Net cash provided by operating activities 254,680 212,444 CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions to partners (225,848) (213,150) --------- --------- Net increase (decrease) in cash 28,832 (706) Beginning cash balance 75,411 79,857 --------- --------- Ending cash balance $ 104,243 $ 79,151 ========= =========
The accompanying notes are an integral part of these financial statements. -5- 6 DEL TACO INCOME PROPERTIES IV NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 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, 1997. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the partnership's financial position at September 30, 1998, the results of operations and cash flows for the nine month periods ended September 30, 1998 and 1997 have been included. Operating results for the three and nine months ended September 30, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. 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 1998 and 1997. 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. -6- 7 DEL TACO INCOME PROPERTIES IV NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1998 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 September 30, 1998 and 1997, one of which has been subleased to a Del Taco franchisee. For the three months ended September 30, 1998, the two restaurants operated by Del Taco, for which the Registrant is the lessor, had combined, unaudited sales of $443,637 and net income of $33,419 as compared to $400,106 and $22,772 respectively, for the corresponding period in 1997. Net income by restaurant includes charges for general & administrative expenses incurred in connection with supervision of restaurant operations and interest expense. For the three months ended September 30, 1998, the one restaurant operated by a Del Taco franchisee, for which the Registrant is the lessor, had unaudited sales of $254,096 as compared with $226,231 during the same period in 1997. For the nine months ended September 30, 1998, the two restaurants operated by Del Taco, for which the Registrant is the lessor, had combined, unaudited sales of $1,251,044 and net income of $80,268 as compared to $1,123,008 and $48,204 respectively, for the corresponding period in 1997. For the nine months ended September 30, 1998, the one restaurant operated by a Del Taco franchisee, for which the Registrant is the lessor, had unaudited sales of $720,128 as compared with $651,250 during the same period in 1997. For the three months and nine months ended September 30, 1998, the Highland Avenue restaurant in Highland (San Bernardino), California reported net income of $4,084 and $5,985 as compared to net income of $350 and a net loss of $6,805 respectively, for the corresponding period in 1997. -7- 8 DEL TACO INCOME PROPERTIES IV NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1998 NOTE 4 - TRANSACTIONS WITH DEL TACO The receivable from the General Partner consists primarily of rent accrued for the month of September. The September rent was collected on October 13, 1998. 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 October 12, 1998, a distribution to the Limited Partners of $79,342, or approximately $0.48 per Limited Partnership Unit, was approved. Such distribution was paid October 15, 1998. The General Partner also received a distribution of $801 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 an 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. 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 $83,729 for the three months ended September 30, 1998 representing an increase from the rental revenues of $75,161 in 1997. The Registrant had rental revenue of $236,540 for the nine months ended September 30, 1998 representing a increase from the rental revenues of $212,911 in 1997. Such increase is directly attributable to increased sales at the restaurants during the three and nine months ended September 30, 1998. -9- 10 The following table sets forth rental revenue earned by restaurant for the quarter and year to date:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1998 1997 1998 1997 -------- -------- -------- -------- Orangethorpe Ave., Placentia, CA $ 36,025 $ 32,897 $102,047 $ 92,840 Lakeshore Dr., Lake Elsinore, CA 30,492 27,148 86,415 78,150 Highland Ave., San Bernardino, CA 17,212 15,116 48,078 41,921 -------- -------- -------- -------- Total $ 83,729 $ 75,161 $236,540 $212,911 ======== ======== ======== ========
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
Nine Months Ended September 30 1998 1997 ------- ------- Accounting fees 64.40% 65.55% Distribution of information to Limited Partners 33.30 31.73 Other 2.30 2.72 ------- ------- 100.00% 100.00% ======= =======
Certain reclassifications have been made to the fiscal year 1997 general and administrative expenses to conform to the fiscal year 1998 presentation. 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 September 30, general and administrative expenses increased from $4,360 in 1997 to $6,923 in 1998. For the nine months ended September 30, general and administrative expenses increased from $29,367 in 1997 to $34,757 in 1998. General and administrative expenses increased due to increased costs of printing and distribution. The Registrant incurred depreciation expense in the amount of $25,937 for the three month periods ended September 30, 1998 and 1997, respectively. The Registrant incurred depreciation expense in the amount of $77,811 for the nine months ended September 30, 1998 and 1997, respectively. -10- 11 As a result of increased revenues totaling $8,679 for the three months ended September 30, 1998 and increased expenses totaling $2,563 for the three months ended September 30, 1998, the net income of the Registrant increased from $45,400 for the three months ended September 30, 1997 to $51,516 for the corresponding period in 1998. As a result of increased revenues totaling $23,847 for the nine months ended September 30, 1998 and increased expenses totaling $5,390 for the nine months ended September 30, 1998, the net income of the Registrant increased from $107,442 for the nine months ended September 30, 1997 to $125,899 for the corresponding period in 1998. 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. Management does not believe the operations of the Company will be significantly impacted by the year 2000 software issue and does not believe the year 2000 software issue will materially effect the Company's operations, financial position or cash flows. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 27 - Financial Data Schedule. (b) No reports on Form 8-K were filed during the nine months ended September 30, 1998. -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: October 30, 1998 /s/ Robert J. Terrano ----------------------------------- Robert J. Terrano Executive Vice President, Chief Financial Officer Date: October 30, 1998 /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 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 104,243 808 27,008 0 0 131,859 3,011,349 895,357 2,247,851 21,688 0 0 0 0 2,088,210 2,247,851 0 238,467 0 112,568 0 0 0 125,899 0 125,899 0 0 0 125,899 0.75 0.75
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