UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-K
(Mark One)
[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
For the fiscal year ended December 31, 2001
OR
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
For the transition period from to
Commission file no. 33-13437
DEL TACO INCOME PROPERTIES IV
California (State or other jurisdiction of incorporation or organization) |
33-0241855 (I.R.S. Employer Identification Number) |
|
23041 Avenida de La Carlota Laguna Hills, California (Address of principal executive offices) |
92653 (Zip Code) |
Registrants telephone number, including area code: (949) 462-9300
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: None
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
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrants Form S-11 Registration Statement filed June 5, 1987 are incorporated by reference into Part IV of this report.
PART I
Item 1. Business
The partnership is a publicly-held limited partnership organized under the California Uniform Limited Partnership Act. The partnerships General Partner is Del Taco, Inc., a California corporation (General Partner). The partnership sold 165,415 units totaling $4.135 million through an offering of limited partnership units from June 1987 through June 1988. The term of the partnership agreement is until December 31, 2027 unless terminated earlier by means provided in the partnership agreement.
The business of the partnership is ownership and leasing of restaurants in California to Del Taco, Inc. The partnership acquired land and constructed three Mexican-American restaurants for long-term lease to Del Taco, Inc. Each property is leased for 32 years on a triple net basis. Rent is equal to twelve percent of gross sales of the restaurants plus supplemental rent as required by the partnership agreement. As of December 31, 2001, the partnership had a total of three properties leased to Del Taco (Del Taco, in turn, has sub-leased one of the restaurants to a Del Taco franchisee).
The partnership has no full time employees. The partnership agreement assigns full authority for general management and supervision of the business affairs of the partnership to the General Partner. The General Partner has a one percent interest in the profits or losses and distributions of the partnership. Limited partners have no right to participate in the management or conduct of the partnerships business affairs.
2
Item 2. Properties
The partnership has acquired three properties with proceeds obtained from the sale of limited partnership units:
Date of | ||||||||
Date of | Restaurant | Commencement of | ||||||
Address | City, State | Acquisition | Constructed | Operation (1) | ||||
Orangethorpe Avenue | Placentia, CA | August 5, 1988 | 60 seat with drive through service window |
March 27, 1989 | ||||
Lakeshore Drive | Lake Elsinore, CA | February 1, 1989 | 60 seat with drive through service window |
April 18, 1990 (2) | ||||
Highland Avenue | San Bernardino, CA | December 8, 1989 | 60 seat with drive through service window |
July 13, 1990 |
(1) | Commencement of operation is the first date Del Taco, Inc., as lessee, operated the facility on the site as a Del Taco restaurant. | |
(2) | The restaurant is subleased to a franchisee of Del Taco, Inc. and the restaurant operates as a Del Taco restaurant. |
PART II
Item 3. Legal Proceedings
The partnership is not a party to any material pending legal proceedings.
Item 4. Submissions of Matters to a Vote of Security Holders
None.
Item 5. Market for the Partnerships Common Equity and Related Security Holder Matters
The partnership sold 165,415 ($4,135,375) limited partnership units during the public offering period ended June 3, 1988 and currently has 317 limited partners of record. There is no public market for the trading of the units. Distributions made by the partnership to the limited partners during the past three fiscal years are described in Note 7 to the Notes to the Financial Statements contained under Item 8.
3
Item 6. Selected Financial Data
For the Year Ended December 31, | ||||||||||||||||||||
2001 | 2000 | 1999 | 1998 | 1997 | ||||||||||||||||
Rental revenue |
$ | 434,848 | $ | 417,251 | $ | 401,101 | $ | 398,071 | $ | 327,956 | ||||||||||
Interest and
other income |
4,241 | 4,545 | 3,223 | 2,455 | 2,326 | |||||||||||||||
Net income |
340,628 | 320,106 | 258,596 | 254,610 | 187,583 | |||||||||||||||
Net income
per limited
partnership
unit (1) |
2.04 | 1.92 | 1.55 | 1.52 | 1.12 | |||||||||||||||
Cash distributions
per limited
partnership
unit |
2.32 | 2.29 | 2.16 | 1.83 | 1.70 | |||||||||||||||
Total assets |
2,101,201 | 2,144,413 | 2,198,920 | 2,298,687 | 2,334,746 | |||||||||||||||
Long-term
obligations |
137,953 | 137,953 | 137,953 | 137,953 | 137,953 |
(1) | The net income per limited partnership unit was calculated based upon 165,375 weighted average units outstanding in 2001, 2000 and 1999, and 165,415 weighted average units outstanding in 1998 and 1997. |
4
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources
The partnership offered limited partnership units for sale between June 1987 and June 1988. 14.5% of the $4.135 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 $3 million of the remaining funds were used to acquire sites and build three restaurants. In February of 1992, approximately $442,000 raised during the offering but not required to acquire sites and build restaurants was distributed to the limited partners.
The three 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 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 following table sets forth rental revenue earned by restaurant for the year:
Year Ended December 31, | |||||||||||||
2001 | 2000 | 1999 | |||||||||||
Orangethorpe Ave., Placentia, CA |
$ | 176,284 | $ | 177,310 | $ | 174,429 | |||||||
Lakeshore Drive, Lake Elsinore, CA |
168,305 | 153,993 | 142,724 | ||||||||||
Highland Ave., San Bernardino, CA |
90,259 | 85,948 | 83,948 | ||||||||||
Total |
$ | 434,848 | $ | 417,251 | $ | 401,101 | |||||||
The partnership receives rental revenues equal to 12 percent of gross sales from the restaurants plus supplemental rent as required by the partnership agreement. The partnership earned rental revenue of $434,848 during the year ended December 31, 2001, which represents an increase of $17,597 from 2000. The increase in rental revenue was caused primarily by an increase in sales at the restaurants under lease. Supplemental rent was $81,964, $78,174 and $84,045 for the years ended December 31, 2001, 2002 and 1999, respectively.
5
Item 7. Managements 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 & Admin. Expense
Year Ended December 31, | ||||||||||||
2001 | 2000 | 1999 | ||||||||||
Accounting fees |
65.16 | % | 71.00 | % | 65.78 | % | ||||||
Distribution of information
to limited partners |
32.99 | 27.07 | 32.32 | |||||||||
Other |
1.85 | 1.93 | 1.90 | |||||||||
100.00 | % | 100.00 | % | 100.00 | % | |||||||
General and administrative costs increased by $988 from 2000 to 2001. The increase was caused primarily by additional costs incurred during the fourth quarter of 2001 to lease new software. The new software was needed as a result of U.S. Government regulations which require the partnership to electronically file annual K-1 income tax forms with the Internal Revenue Service. The new software will prepare and electronically file the income tax forms and maintain the underlying partnership database.
Net income increased by $20,522 from 2000 to 2001 due to the increase in revenues of $17,293, the decrease in depreciation expense of $4,217 offset by the $988 increase in general and administrative expenses. Depreciation decreased in 2001 because certain equipment became fully depreciated in 2000.
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 addresses financial accounting and reporting for business combinations and is effective for all business combinations after June 30, 2001. SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and is effective for fiscal years beginning after December 15, 2001.
In August 2001, the FASB issued SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting and reporting for long-lived assets to be held and used or disposed of and is effective for fiscal years beginning after December 15, 2001.
The adoption of these standards is not expected to have a material impact on the Companys financial position or results of operations.
6
Item 8. Financial Statements
PART I. INFORMATION
INDEX | PAGE NUMBER | |||
Report of Independent Public Accountants |
8 | |||
Balance Sheets at December 31, 2001 and 2000 |
9 | |||
Statements of Income for the years ended
December 31, 2001, 2000 and 1999 |
10 | |||
Statement of Changes in Partners Equity for
the three years ended December 31, 2001 |
11 | |||
Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999 |
12 | |||
Notes to Financial Statements |
13-17 |
7
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Del Taco Income Properties, IV:
We have audited the accompanying balance sheets of Del Taco Income Properties IV (a California Limited Partnership) as of December 31, 2001 and 2000, and the related statements of income, partners equity and cash flows for each of the three years in the period ended December 31, 2001. These financial statements and the schedule referred to below are the responsibility of the Partnerships management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Del Taco Income Properties IV as of December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The Real Estate and Accumulated Depreciation Schedule III is presented for purposes of complying with the Securities and Exchange Commissions rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
Orange County, California
February 15, 2002
8
DEL TACO INCOME PROPERTIES IV
BALANCE SHEETS
December 31, | ||||||||||
2001 | 2000 | |||||||||
ASSETS |
||||||||||
CURRENT ASSETS: |
||||||||||
Cash |
$ | 117,445 | $ | 108,643 | ||||||
Receivable from Del Taco, Inc. |
111,435 | 108,105 | ||||||||
Deposits |
400 | 476 | ||||||||
Total current assets |
229,280 | 217,224 | ||||||||
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 |
1,139,428 | 1,084,160 | ||||||||
1,871,921 | 1,927,189 | |||||||||
$ | 2,101,201 | $ | 2,144,413 | |||||||
LIABILITIES AND PARTNERS EQUITY |
||||||||||
CURRENT LIABILITIES: |
||||||||||
Payable to limited partners |
$ | 27,942 | $ | 24,200 | ||||||
Accounts payable |
9,194 | 10,080 | ||||||||
Total current liabilities |
37,136 | 34,280 | ||||||||
OBLIGATION TO GENERAL PARTNER |
137,953 | 137,953 | ||||||||
PARTNERS EQUITY: |
||||||||||
Limited partners |
1,937,985 | 1,983,592 | ||||||||
General Partner-Del Taco, Inc. |
(11,873 | ) | (11,412 | ) | ||||||
1,926,112 | 1,972,180 | |||||||||
$ | 2,101,201 | $ | 2,144,413 | |||||||
The accompanying notes are an integral part of these financial statements.
9
DEL TACO INCOME PROPERTIES IV
STATEMENTS OF INCOME
Year Ended December 31, | ||||||||||||||
2001 | 2000 | 1999 | ||||||||||||
REVENUES: |
||||||||||||||
Rent |
$ | 434,848 | $ | 417,251 | $ | 401,101 | ||||||||
Interest |
3,666 | 3,695 | 2,698 | |||||||||||
Other |
575 | 850 | 525 | |||||||||||
439,089 | 421,796 | 404,324 | ||||||||||||
EXPENSES: |
||||||||||||||
General and administrative |
43,193 | 42,205 | 42,347 | |||||||||||
Depreciation |
55,268 | 59,485 | 103,381 | |||||||||||
98,461 | 101,690 | 145,728 | ||||||||||||
Net income |
$ | 340,628 | $ | 320,106 | $ | 258,596 | ||||||||
Net income per limited
partnership unit |
$ | 2.04 | $ | 1.92 | $ | 1.55 | ||||||||
The accompanying notes are an integral part of these financial statements.
10
DEL TACO INCOME PROPERTIES IV
STATEMENT OF CHANGES IN PARTNERS EQUITY
Three years ended December 31, 2001
Limited Partners | |||||||||||||||||
General | |||||||||||||||||
Units | Amount | Partner | Total | ||||||||||||||
Balance, December 31, 1998 |
165,415 | $ | 2,146,545 | $ | (9,766 | ) | $ | 2,136,779 | |||||||||
Redemption of units |
(40 | ) | | | | ||||||||||||
Net income |
| 256,010 | 2,586 | 258,596 | |||||||||||||
Cash distributions |
| (357,468 | ) | (3,611 | ) | (361,079 | ) | ||||||||||
Balance, December 31, 1999 |
165,375 | 2,045,087 | (10,791 | ) | 2,034,296 | ||||||||||||
Net income |
| 316,905 | 3,201 | 320,106 | |||||||||||||
Cash distributions |
| (378,400 | ) | (3,822 | ) | (382,222 | ) | ||||||||||
Balance, December 31, 2000 |
165,375 | 1,983,592 | (11,412 | ) | 1,972,180 | ||||||||||||
Net income |
| 337,222 | 3,406 | 340,628 | |||||||||||||
Cash distributions |
| (382,829 | ) | (3,867 | ) | (386,696 | ) | ||||||||||
Balance, December 31, 2001 |
165,375 | $ | 1,937,985 | $ | (11,873 | ) | $ | 1,926,112 | |||||||||
The accompanying notes are an integral part of these financial statements.
11
DEL TACO INCOME PROPERTIES IV
STATEMENTS OF CASH FLOWS
Year Ended December 31, | ||||||||||||||
2001 | 2000 | 1999 | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||||
Net income |
$ | 340,628 | $ | 320,106 | $ | 258,596 | ||||||||
Adjustments to reconcile net income to net
cash provided by operating activities: |
||||||||||||||
Depreciation |
55,268 | 59,485 | 103,381 | |||||||||||
(Increase) decrease in receivable from General Partner |
(3,330 | ) | 3,517 | (4,898 | ) | |||||||||
(Increase) decrease in deposits |
76 | (76 | ) | 104 | ||||||||||
Increase in payable to limited partners |
3,742 | 4,891 | 625 | |||||||||||
Increase (decrease) in accounts payable |
(886 | ) | 2,718 | 2,091 | ||||||||||
Net cash provided by operating activities |
395,498 | 390,641 | 359,899 | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||||
Cash distributions to partners |
(386,696 | ) | (382,222 | ) | (361,079 | ) | ||||||||
Net increase (decrease) in cash |
8,802 | 8,419 | (1,180 | ) | ||||||||||
Beginning cash balance |
108,643 | 100,224 | 101,404 | |||||||||||
Ending cash balance |
$ | 117,445 | $ | 108,643 | $ | 100,224 | ||||||||
The accompanying notes are an integral part of these financial statements.
12
DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS
December 31, 2001 and 2000
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Partnership: Del Taco Income Properties IV (a California limited partnership) was formed on March 23, 1987, for the purpose of acquiring real property in California for construction of three Mexican-American restaurants to be leased under long-term agreements to Del Taco, Inc. (General Partner for operation under the Del Taco trade name).
Basis of Accounting: The partnership utilizes the accrual method of accounting for transactions relating to the business of the partnership. Distributions are made to the General and limited partners in accordance with the provisions of the partnership agreement (see Note 2).
Property and Equipment: Property and equipment is stated at cost. Depreciation is computed using the straight-line method over estimated useful lives which are 20 years for land improvements, 35 years for buildings and improvements, and 10 years for machinery and equipment.
The partnership accounts for property and equipment in accordance with 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 or fair value less cost to sell.
Recent Accounting Pronouncements: In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 addresses financial accounting and reporting for business combinations and is effective for all business combinations after June 30, 2001. SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and is effective for fiscal years beginning after December 15, 2001.
In August 2001, the FASB issued SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting and reporting for long-lived assets to be held and used or disposed of and is effective for fiscal years beginning after December 15, 2001.
The adoption of these standards is not expected to have a material impact on the Companys financial position or results of operations.
13
DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS CONTINUED
December 31, 2001 and 2000
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued
Income Taxes: No provision has been made for federal or state income taxes on partnership net income, since the partnership is not subject to income tax. Partnership income is includable in the taxable income of the individual partners as required under applicable income tax laws. Certain items, primarily related to depreciation methods, are accounted for differently for income tax reporting purposes (see Note 6).
Net Income Per Limited Partnership Unit: Net income per limited partnership unit is calculated based upon 165,375 weighted average units outstanding in 2001, 2000 and 1999.
Use of Estimates: The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition: Revenue is recognized based on 12 percent of gross sales of the restaurants which is recorded at the point of sale. Supplemental rent is recognized when earned.
Concentration of Risk: The three restaurants leased to Del Taco make up almost all of the income producing assets of the partnership and contributed all of the partnerships rent revenue for the three years ended December 31, 2001. Therefore, the business of the partnership is almost entirely dependent on the success of the Del Taco trade name restaurants that lease the properties.
NOTE 2 PARTNERS EQUITY
Pursuant to the partnership agreement, annual partnership net 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 OBLIGATION TO GENERAL PARTNER
Under terms of the partnership agreement, the General Partner is entitled to receive a fee in an amount equal to five percent of the gross proceeds of the offering. The fee shall be for services rendered in connection with site selection and the design and supervision of construction of improvements to acquired properties. One percent of the gross proceeds of the offering has been paid to the General Partner. The remaining four percent of this fee shall be earned at the time the services are rendered, but shall not be paid and shall be subordinated to the limited partners interests until all restaurants have opened and the limited partners have received certain minimum returns on their investment, as required by the partnership agreement. It is the policy of the partnership to accrue the site selection and development fee as an obligation to the General Partner. No fees were earned for such services during 2001, 2000 and 1999.
14
DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS CONTINUED
December 31, 2001 and 2000
NOTE 3 OBLIGATION TO GENERAL PARTNER Continued
Effective January 1, 1999, the special limited partners (who resigned on May 19, 1998) 40 limited partnership units were redeemed by the Partnership. Pursuant to the Partnership agreement, the redemption was completed at no cost to the Partnership.
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 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. Supplemental rent (as defined in the partnership agreement) may be earned if certain criteria are met. Supplemental rent was $81,964, $78,174 and $84,045 for the years ended December 31, 2001, 2002 and 1999, respectively. There is no minimum rental under any of the leases. The partnership had a total of three properties leased to Del Taco as of December 31, 2001, 2000 and 1999 (Del Taco, in turn, has subleased one of the restaurants to a Del Taco franchisee).
The two restaurants operated by Del Taco, for which the partnership is the lessor, had combined, unaudited sales of $1,802,525, $1,782,786 and $1,701,670 and unaudited net income of $114,936, $111,954 and $114,916 for the years ended December 31, 2001, 2000 and 1999, respectively. Net income by restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense. The one restaurant operated by a Del Taco franchisee, for which the partnership is the lessor, had unaudited sales of $1,138,178, $1,042,856 and $940,462 for the years ended December 31, 2001, 2000 and 1999, respectively.
NOTE 5 RELATED PARTIES
The receivable from Del Taco consists of rent accrued for the month of December 2001 as well as supplemental rent. These amounts were collected on January 11, 2002.
The General Partner received $3,867 in distributions relating to its one percent interest in the partnership for the year ended December 31, 2001.
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.
15
DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS CONTINUED
December 31, 2001 and 2000
NOTE 6 INCOME TAXES
A reconciliation of financial statement net income to taxable income for each of the periods is as follows:
2001 | 2000 | 1999 | ||||||||||
Net income per financial statements |
$ | 340,628 | $ | 320,106 | $ | 258,596 | ||||||
Excess book depreciation |
14,911 | 19,131 | 63,024 | |||||||||
Taxable income |
$ | 355,539 | $ | 339,237 | $ | 321,620 | ||||||
A reconciliation of partnership equity per the financial statements to net worth for tax purposes as of December 31, 2001, is as follows:
Partners equity per financial statements |
$ | 1,926,112 | ||
Issue costs of limited partnership units
capitalized for tax purposes |
579,259 | |||
Excess book depreciation |
170,176 | |||
Other |
4 | |||
Net worth for tax purposes |
$ | 2,675,551 | ||
16
DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS CONTINUED
December 31, 2001 and 2000
NOTE 7 CASH DISTRIBUTIONS TO LIMITED PARTNERS
Cash distributions paid to limited partners for the three years ended December 31, 2001 were as follows:
Cash | Weighted | Number of Units | |||||||||||
Distributions per | Average Number | Outstanding at | |||||||||||
Limited Partnership | of Units | the End of | |||||||||||
Quarter Ended | Unit | Outstanding | Quarter | ||||||||||
December 31, 1998 |
$ | 0.47 | 165,375 | 165,415 | |||||||||
March 31, 1999 |
0.85 | 165,375 | 165,375 | ||||||||||
June 30, 1999 |
0.39 | 165,375 | 165,375 | ||||||||||
September 30, 1999 |
0.45 | 165,375 | 165,375 | ||||||||||
Total paid in 1999 |
$ | 2.16 | |||||||||||
December 31, 1999 |
$ | 0.45 | 165,375 | 165,375 | |||||||||
March 31, 2000 |
0.90 | 165,375 | 165,375 | ||||||||||
June 30, 2000 |
0.41 | 165,375 | 165,375 | ||||||||||
September 30, 2000 |
0.53 | 165,375 | 165,375 | ||||||||||
Total paid in 2000 |
$ | 2.29 | |||||||||||
December 31, 2000 |
$ | 0.48 | 165,375 | 165,375 | |||||||||
March 31, 2001 |
0.87 | 165,375 | 165,375 | ||||||||||
June 30, 2001 |
0.44 | 165,375 | 165,375 | ||||||||||
September 30, 2001 |
0.53 | 165,375 | 165,375 | ||||||||||
Total paid in 2001 |
$ | 2.32 | |||||||||||
Cash distributions per limited partnership unit were calculated based upon the weighted average number of units outstanding for each quarter and were paid from operations. Cash distributions for the quarter ended December 31, 2001 amounted to $.51 per limited partnership unit and were paid January 30, 2002.
NOTE 8 RESULTS BY QUARTER (UNAUDITED)
First | Second | Third | Fourth | ||||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
Year ended December 31, 2001: |
|||||||||||||||||
Revenues |
$ | 83,070 | $ | 89,737 | $ | 95,744 | $ | 170,538 | |||||||||
Net income |
49,024 | 65,766 | 75,962 | 149,876 | |||||||||||||
Net income per limited partnership
unit |
0.29 | 0.39 | 0.45 | 0.91 | |||||||||||||
Year ended December 31, 2000: |
|||||||||||||||||
Revenues |
$ | 79,768 | $ | 85,709 | $ | 90,486 | $ | 165,833 | |||||||||
Net income |
42,269 | 63,631 | 69,340 | 144,866 | |||||||||||||
Net income per limited partnership
unit |
0.25 | 0.38 | 0.42 | 0.87 |
17
PART III
Item 9. Disagreements on Accounting and Financial Disclosure
None
Item 10. Directors and Executive Officers of the Partnerships General Partner
(a) & (b) The executive officers and directors of the General Partner and their ages are set forth below:
Name | Title | Age | ||||
Kevin K. Moriarty |
Director, Chairman and Chief Executive Officer
|
55 | ||||
C. Ronald Petty |
President
|
57 | ||||
Robert J. Terrano |
Executive Vice President and
Chief Financial Officer
|
46 | ||||
James D. Stoops |
Executive Vice President, Operations
|
49 | ||||
Janet D. Simmons |
Executive Vice President, Purchasing
|
45 | ||||
Michael L. Annis |
Vice President, Secretary and General Counsel
|
55 | ||||
Timothy A. Hackbardt |
Vice President, Marketing
|
38 | ||||
Shirlene Lopez |
Vice President, Corporate Development
|
37 |
The above referenced executive officers and directors of the General Partner will hold office until the annual meeting of its shareholders and directors, which is scheduled for the later part of 2002.
(c) | None | |
(d) | No family relationship exists between any such director or executive officer of the General Partner. | |
(e) | The following is an account of the business experience during the past five years of each such director and executive officer: |
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Kevin K. Moriarty, Director, Chairman and Chief Executive Officer of Del Taco, Inc. Mr. Moriarty began his career with Burger King Corporation in 1974 in Operations Unit Management. In 1983, he was promoted to Area Manager in New York, and was subsequently promoted to the Regional Vice President, Chicago Region in 1985. In 1988, he became Executive Vice President and General Manager of the North Central Division. Mr. Moriarty served in that position until 1990 when he joined Del Taco, Inc. as President and Chief Executive Officer on July 31, 1990. Mr. Moriarty has served as a Director of the General Partner since 1990.
C. Ronald Petty, President of Del Taco, Inc. Mr. Petty began his career in the restaurant business in 1973 with McDonalds Corporation. He was employed by McDonalds in a real estate capacity until 1978. For the next 12 years, Mr. Petty was in various officer positions with Burger King. These positions included Vice President of Real Estate, Sr. Vice President of Development, Region Vice President, Sr. Vice President European Operations, President of International and President of U.S. Mr. Petty served as President of Miami Subs from 1990-1992; President and CEO of Dennys 1993-1996; President and CEO of Peter Piper Pizza 1996-1999; President of Del Taco December 1999-present.
Robert J. Terrano, Executive Vice President and Chief Financial Officer of Del Taco, Inc. From May 1994 to April 1995, Mr. Terrano served as Chief Financial Officer for Dennys, Inc. in Spartanburg, S.C. From August 1983 to May 1994, he served with Burger King Corporation, Miami Florida, in a variety of positions, most recently as Division Controller. Mr. Terrano joined Del Taco, Inc. in April 1995.
James D. Stoops, Executive Vice President, Operations of Del Taco, Inc. From 1968 to 1991, Mr. Stoops served in a wide variety of Operations positions with Burger King Corporation with increasing levels of responsibility. In 1985, Mr. Stoops was appointed Region Vice President/General Manager for the New York region and served in that position until October of 1990. In January of 1991, he joined Del Taco, Inc. in his current post.
Janet D. Simmons, Executive Vice President, Purchasing of Del Taco, Inc. From 1979 to 1986, Ms. Simmons was with Dennys Inc. She served in the Research and Development department in a variety of positions until 1982 when she was promoted to the position of Purchasing Agent. Ms. Simmons was hired in 1986 as Manager of Contract Purchasing with Carl Karcher Enterprises, a post she held until March 1990 when she became Vice President, Purchasing for Del Taco, Inc. Ms. Simmons has a Bachelor of Science degree in Foods and Nutrition from Cal State Polytechnic University in Pomona, California.
Michael L. Annis, Vice President, Secretary and General Counsel of Del Taco, Inc. From 1981 to 1986 Mr. Annis served as Regional Real Estate Manager and Director of Real Estate Services with Taco Bell, Inc. In 1986 he served as Regional General Manager with Quaker State Minit Lube. In January of 1987 Mr. Annis joined Red Robin International, Inc. as General Counsel and was subsequently promoted to Vice President/Secretary and later Vice President Real Estate Development/Secretary and General Counsel, the position he held until joining Del Taco, Inc. in December of 1993. Mr. Annis received his J.D. Degree from Whittier College.
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Timothy A. Hackbardt, Vice President, Marketing of Del Taco, Inc. Mr. Hackbardt joined Del Taco, Inc. in November 2000. From November 1995 to November 2000, he served as Vice President of Marketing of Taco Time International, Inc., Eugene, OR. From September 1994 to November 1995, Mr. Hackbardt was Director of Marketing for Wok Spirit Chinese Delivery restaurants in Newport Beach, CA. From December 1992 to September 1994, Mr. Hackbardt was Director of Marketing for Fosters Freeze International, Inc., San Luis Obispo, CA. Prior to then, Mr. Hackbardt held various positions in the television and radio industry in sales and sales management. Mr. Hackbardt is a graduate of Central Michigan University where he received a Bachelor of Applied Arts, majoring in Broadcast and Cinematic Arts and minoring in Marketing.
Shirlene Lopez, Vice President, Corporate Development & Design of Del Taco, Inc. Ms. Lopez began her career with Del Taco in 1978 as an hourly employee and advanced through the ranks to General Manager in 1984. Ms. Lopez was promoted to the corporate office in 1989 as Human Resource Manager. In 1994, she was promoted to Executive Project Manager reporting to the CEO and in 1996, to Director of Corporate Development in charge of all interior image and design. Ms. Lopez has held her current position since August 1997.
Item 11. Management Remuneration and Transactions
The partnership has no executive officers or directors and pays no direct remuneration to any executive officer or director of its General Partner. The partnership has not issued any options or stock appreciation rights to any executive officer or director of its General Partner, nor does the partnership propose to pay any annuity, pension or retirement benefits to any executive officer or director of its General Partner. The partnership has no plan, nor does the partnership presently propose a plan, which will result in any remuneration being paid to any executive officer or director of the General Partner upon termination of employment.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) | No person of record currently owns more than five percent of limited partnership units of the partnership, nor was any person known of by the partnership to own of record and beneficially, or beneficially only, more than five percent of such securities. | |
(b) | Neither Del Taco, Inc., nor any executive officer or director of Del Taco, Inc. owns any limited partnership units of the partnership. | |
(c) | The partnership knows of no contractual arrangements, the operation or the terms of which may at a subsequent date result in a change in control of the partnership, except for provisions in the partnership agreement providing for removal of the General Partner by holders of a majority of the limited partnership units and if a material event of default occurs under the financing agreements of the General Partner. |
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Item 13. Certain Relationships and Related Transactions
(a) | No transactions have occurred between the partnership and any executive officer or director of its General Partner. | ||
During 2001, the following transactions occurred between the partnership and the General Partner pursuant to the terms of the partnership agreement. | |||
(1)
|
The General Partner earned $3,406 as its one percent share of the net income of the partnership. | ||
(2)
|
The General Partner received $3,867 in distributions relating to its one percent interest in the partnership. | ||
(b) | During 2001, the partnership had no business relationships with any entity of a type required to be reported under this item. | ||
(c) | Neither the General Partner, any director or officer of the General Partner or any associate of any such person, was indebted to the partnership at any time during 2001 for any amount in excess of $60,000. | ||
(d) | Not applicable. |
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PART IV
Item 14(a)(1) and (2). Exhibits, Financial Statements Schedules, and Reports on Form 8-K
Financial statement schedules: | |||
Schedule III Real Estate and Accumulated Depreciation | |||
Financial statement schedules other than those referred to above have been omitted because they are not applicable or not required. | |||
(b) | No reports on Form 8-K were filed during the last quarter of 2001. | ||
(c) | Exhibits required by Item 601 of Regulation S-K: | ||
1. | Incorporated herein by reference, Restated Agreement of Limited Partnership of Del Taco Income Properties IV filed as Exhibit 3.01 to Partnerships Registration Statement on Form S-11 as filed with the Securities and Exchange Commission on June 5, 1987. | ||
2. | Incorporated herein by reference, Amendment to Restated Agreement of Limited Partnership of Del Taco Income Properties IV. | ||
3. | Incorporated herein by reference, Form of Standard Lease to be entered into by Partnership and Del Taco, Inc., as lessee, filed as Exhibit 10.02 to Partnerships Registration Statement on Form S-11 as filed with the Securities and Exchange Commission on June 5, 1987. |
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DEL TACO INCOME PROPERTIES IV SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
Cost capitalized | Gross amount at | |||||||||||||||||||||||||||||||||||
Initial cost | subsequent to | which carried at | ||||||||||||||||||||||||||||||||||
to company | acquisition | close of period | ||||||||||||||||||||||||||||||||||
Life on which | ||||||||||||||||||||||||||||||||||||
Land | Buildings & | Land, buildings & | depreciation in latest | |||||||||||||||||||||||||||||||||
Description | & land | Improve- | Carrying | improvements | Accumulated | Date of | Date | income statement | ||||||||||||||||||||||||||||
(All Restaurants) | Encumbrances | improvements | ments | costs | Total | depreciation | construction | acquired | is computed | |||||||||||||||||||||||||||
Placentia, CA |
$ | | $ | 465,933 | $ | 485,961 | $ | | $ | 951,894 | $ | 246,629 | 1988 | 1988 | 20 (LI), 35 (BI) | |||||||||||||||||||||
Lake Elsinore, CA |
| 449,058 | 468,361 | | 917,419 | 237,698 | 1989 | 1989 | 20 (LI), 35 (BI) | |||||||||||||||||||||||||||
San Bernardino, CA |
| 321,709 | 335,538 | | 657,247 | 170,282 | 1989 | 1989 | 20 (LI), 35 (BI) | |||||||||||||||||||||||||||
$ | | $ | 1,236,700 | $ | 1,289,860 | $ | | $ | 2,526,560 | $ | 654,609 | |||||||||||||||||||||||||
Accumulated | |||||||||
Restaurants | Depreciation | ||||||||
Balances at December 31, 1998: |
$ | 2,526,560 | $ | 488,805 | |||||
Additions |
| 55,268 | |||||||
Retirements |
| | |||||||
Balances at December 31, 1999: |
2,526,560 | 544,073 | |||||||
Additions |
| 55,268 | |||||||
Retirements |
| | |||||||
Balances at December 31, 2000: |
2,526,560 | 599,341 | |||||||
Additions |
| 55,268 | |||||||
Retirements |
| | |||||||
Balances at December 31, 2001: |
$ | 2,526,560 | $ | 654,609 | |||||
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the partnership 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 |
||||
Del Taco, Inc. General Partner |
||||
Date | March 07, 2002 | Kevin K. Moriarty |
||
|
||||
Kevin K. Moriarty Director, Chairman and Chief Executive Officer |
||||
Date | March 07, 2002 | Michael L. Annis |
||
|
||||
Michael L. Annis Vice President, Secretary and General Counsel |
||||
Date | March 07, 2002 | Robert J. Terrano |
||
|
||||
Robert J. Terrano Executive Vice President and Chief Financial Officer |
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