Back to GetFilings.com
1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
23041 AVENIDA DE LA CARLOTA
LAGUNA HILLS, CALIFORNIA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
33-0241855
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
92653
(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 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 registrant's Form S-11 Registration Statement filed June 5,
1987 are incorporated by reference into Part IV of this report.
================================================================================
2
PART I
ITEM 1. BUSINESS
The Registrant is a publicly-held Limited Partnership organized under the
California Uniform Limited Partnership Act. In accordance with the Partnership
Agreement, the Registrant's General Partner is Del Taco, Inc., a California
corporation ("General Partner"). The Registrant sold 165,415 Units aggregating
$4,135,375 through an offering of Limited Partnership Units from June 5, 1987
through June 3, 1988.
The Registrant has engaged in the business of acquiring sites in California for
the construction of three Mexican-American restaurants for long-term lease to
Del Taco, Inc. for operation under the Del Taco trade name. Each Property is
leased for 32 years on a triple-net basis for a rent equal to twelve percent of
gross sales of the restaurant constructed thereon. The activities of the
Registrant relating to acquisition and development of the Properties is
presented under Item 2 below. The term of the Partnership Agreement is until
December 31, 2027 unless terminated earlier by means provided therein.
Because the three Properties owned by the Registrant constitute virtually all of
the Registrant's income producing assets, the business of the Registrant is
almost entirely dependent on the success of the Del Taco trade name restaurants
which lease those Properties. In turn, the success of those restaurants, which
are not operated by the Registrant, 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.
The Registrant has no full time employees. The General Partner is vested with
full authority as to the general management and supervision of the business and
affairs of the Registrant, and has a one percent interest in the profits or
losses and distributions of the Registrant. Limited Partners have no right to
participate in the management or conduct of such business and affairs.
2
3
ITEM 2. PROPERTIES
The Registrant has acquired three Properties with proceeds obtained from the
sale of Limited Partnership Units:
Date of
Date of Restaurant Commencement
Address City, State Acquisition Constructed of Operation (1)
- ------- ----------- ----------- ----------- ----------------
Orangethorpe Placentia, August 5, 1988 60 seat with drive March 27,
Avenue CA through service 1989
window
Lakeshore Lake Elsinore, February 1, 1989 60 seat with drive April 18, (2)
Drive CA through service 1990
window
Highland Avenue San Bernardino, December 8, 1989 60 seat with drive July 13,
CA through service 1990
window
(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 Registrant 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 REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
The Registrant, a publicly-held Limited Partnership, sold 165,415 ($4,135,375)
Limited Partnership Units during the offering period ended June 3, 1988 and
currently has 386 Limited Partners of record. There is no public market for the
trading of the Units. Distributions made by the Registrant 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
4
ITEM 6. SELECTED FINANCIAL DATA
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
Rental Revenue $ 327,956 $ 361,980 $ 275,561 $ 273,076 $ 259,530
Interest and
other income 2,326 1,244 1,193 1,792 2,221
Net income 187,583 219,223 134,697 135,669 127,455
Net income
per Limited
Partnership
Unit (1) 1.12 1.31 .81 .81 .76
Cash Distributions
per Limited
Partnership
Unit (2)(3)(4)(5)(6) 1.70 1.74 1.45 2.00 .61
Total Assets 2,334,746 2,429,366 2,495,331 2,603,405 2,807,793
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
165,415 weighted average Units outstanding for all years presented.
(2) Two quarterly distributions were disbursed during the year ended
December 31, 1993. Cash distributions for the quarters ended September
30, 1993 and December 31, 1993 amounted to $.83 and were paid January
31, 1994 and February 2, 1994, respectively.
(3) Cash distributions for the quarter ended December 31, 1994 amounted to
$.40 per Limited Partnership Unit and were paid January 17, 1995. Five
quarterly distributions were disbursed during the year ended December
31, 1994.
(4) Cash distributions for the quarter ended December 31, 1995 amounted to
$.40 per Limited Partnership Unit and were paid January 17, 1996. Four
distributions were disbursed during the year ended December 31, 1995.
4
5
ITEM 6. SELECTED FINANCIAL DATA - CONTINUED
(5) Cash distributions for the quarter ended December 31, 1996 amounted to
$.41 per Limited Partnership Unit and were paid January 31, 1997. Four
distributions were disbursed during the year ended December 31, 1996.
(6) Cash distributions for the quarter ended December 31, 1997 amounted to
$.41 per Limited Partnership Unit and were paid January 31, 1998. Four
quarterly distributions were disbursed during the year ended December
31, 1997.
ITEM 7. 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 3, 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
$327,956 for the year ended December 31, 1997, representing a decrease from the
rental revenues of $361,980 in 1996. Such decrease is directly attributable to
the earning of supplemental rent in 1996.
5
6
Results of Operations - Continued
The Following table sets forth rental revenue earned by restaurant for the year:
YEAR ENDED
DECEMBER 31,
--------------------------------------
1997 1996 1995
-------- -------- --------
Orangethorpe Ave., Placentia, CA $142,585 $163,697 $126,296
Lakeshore Drive, Lake Elsinore, CA 119,218 130,479 96,555
Highland Ave., San Bernardino, CA 66,153 67,804 52,710
-------- -------- --------
Total $327,956 $361,980 $275,561
======== ======== ========
The following table sets forth, for the periods indicated, the percentage
relationship to total general and administrative expenses of items included in
the Registrant's Statements of Income:
Percentage of Total General & Admin. Expense
Year Ended
December 31,
----------------------------------
1997 1996 1995
------ ------ ------
Accounting fees 38.00% 41.12% 41.57%
Distribution of
information to
Limited Partners 59.95 55.77 55.85
Other 2.05 3.11 2.58
------ ------ ------
100.0% 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 years ended December 31, general and administrative
expenses decreased from $40,251 in 1996 to $38,951 in 1997 reflecting lower
costs for accounting and administration of the partnership. The Registrant
incurred depreciation expense of $103,748, $103,750 and $103,750 for each of the
years ended December 31, 1997, 1996 and 1995.
For the reasons stated under "Liquidity and Capital Resources" above, the
Registrant's result 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.
6
7
ITEM 8. FINANCIAL STATEMENTS
PART I. INFORMATION
INDEX PAGE NUMBER
----- -----------
Report of Independent Public Accountants 8
Balance Sheets at December 31, 1997 and 1996 9
Statements of Income for the years ended
December 31, 1997, 1996 and 1995 10
Statement of Changes in Partners' Equity for
the three years ended December 31, 1997 11
Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 12
Notes to Financial Statements 13-17
7
8
[ARTHUR ANDERSON LLP LETTERHEAD]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Del Taco Restaurant Properties, IV:
We have audited the accompanying balance sheets of DEL TACO RESTAURANT
PROPERTIES IV (a California limited partnership) as of December 31, 1997 and
1996, and the related statements of income, changes in partners' equity and cash
flows for each of three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 Restaurant Properties
IV as of December 31, 1997 and 1996, and the results of its operations and its
cash flows, for each of the three years in the period ended December 31, 1997,
in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule in the index of financial statements
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 the audit 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.
/s/ ARTHUR ANDERSEN LLP
-----------------------
Arthur Andersen LLP
Orange County, California
February 10, 1998
8
9
DEL TACO INCOME PROPERTIES IV
BALANCE SHEETS
DECEMBER 31,
------------------------------
1997 1996
----------- -----------
ASSETS
CURRENT ASSETS:
Cash $ 75,411 $ 79,857
Receivable from Del Taco, Inc. (Note 5) 65,132 51,558
Deposits 400 400
----------- -----------
Total current assets 140,943 131,815
----------- -----------
PROPERTY AND EQUIPMENT, AT COST (NOTE 1)
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 817,546 713,798
----------- -----------
2,193,803 2,297,551
----------- -----------
$ 2,334,746 $ 2,429,366
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Payable to Limited Partners $ 2,503 $ 3,038
Accounts Payable 6,130 3,000
----------- -----------
Total current liabilities 8,633 6,038
----------- -----------
OBLIGATION TO GENERAL PARTNER (NOTE 3) 137,953 137,953
PARTNERS' EQUITY (NOTE 2)
Limited Partners 2,197,413 2,293,656
General Partner - Del Taco, Inc. (9,253) (8,281)
----------- -----------
2,188,160 2,285,375
----------- -----------
$ 2,334,746 $ 2,429,366
=========== ===========
The accompanying notes are an integral
part of these financial statements.
9
10
DEL TACO INCOME PROPERTIES IV
STATEMENTS OF INCOME
YEAR ENDED
DECEMBER 31,
--------------------------------------
1997 1996 1995
-------- -------- --------
REVENUES:
Rent (Note 4) $327,956 $361,980 $275,561
Interest 1,651 1,194 1,068
Other 675 50 125
-------- -------- --------
330,282 363,224 276,754
-------- -------- --------
EXPENSES:
General and administrative 38,951 40,251 38,307
Depreciation 103,748 103,750 103,750
-------- -------- --------
142,699 144,001 142,057
-------- -------- --------
Net Income $187,583 $219,223 $134,697
======== ======== ========
Net Income per Limited
Partnership Unit (Note 1) $ 1.12 $ 1.31 $ .81
======== ======== ========
The accompanying notes are an
integral part of these financial statements.
10
11
DEL TACO INCOME PROPERTIES IV
STATEMENT OF CHANGES IN PARTNERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 1997
Limited Partners
------------------------------ General
Units Amount Partner Total
----------- ----------- ----------- -----------
Balance, December 31, 1994 165,415 $ 2,469,723 $ (6,507) $ 2,463,216
Net income 133,350 1,347 134,697
Cash distributions (Note 7) (240,586) (2,426) (243,012)
----------- ----------- ----------- -----------
Balance, December 31, 1995 165,415 2,362,487 (7,586) 2,354,901
Net income 217,031 2,192 219,223
Cash distributions (Note 7) (285,862) (2,887) (288,749)
----------- ----------- ----------- -----------
Balance, December 31, 1996 165,415 2,293,656 (8,281) 2,285,375
Net income 185,707 1,876 187,583
Cash distributions (Note 7) (281,950) (2,848) (284,798)
----------- ----------- ----------- -----------
Balance, December 31, 1997 165,415 $ 2,197,413 $ (9,253) $ 2,188,160
=========== =========== =========== ===========
The accompanying notes are an integral
part of these financial statements.
11
12
DEL TACO INCOME PROPERTIES IV
STATEMENTS OF CASH FLOWS
YEAR ENDED
DECEMBER 31,
-------------------------------------------
1997 1996 1995
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 187,583 $ 219,223 $ 134,697
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 103,748 103,750 103,750
Increase (decrease) in payable to
Limited Partner (535) 1,387 (583)
(Increase) decrease in receivable
from General Partner (13,574) (31,471) 2,909
Increase in accounts payable 3,130 2,175 825
--------- --------- ---------
Net cash provided by operating
activities 280,352 295,064 241,598
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (284,798) (288,749) (243,012)
--------- --------- ---------
Net increase (decrease) in cash (4,446) 6,315 (1,414)
Beginning cash balance 79,857 73,542 74,956
--------- --------- ---------
Ending cash balance $ 75,411 $ 79,857 $ 73,542
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
12
13
DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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). As of July 13, 1990, all three
restaurants had commenced operation on acquired properties.
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.
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 or fair value less cost to sell.
The adoption of SFAS No. 121 did not have a material effect on the Registrant's
financial statements.
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).
13
14
DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
CONTINUED
NET INCOME PER LIMITED PARTNERSHIP UNIT: Net income per Limited Partnership Unit
is calculated based upon 165,415 weighted average Units outstanding for all
years presented.
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.
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 - SITE SELECTION AND DEVELOPMENT FEE
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 1997, 1996 and
1995.
14
15
DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1997
NOTE 4 - LEASING ACTIVITIES
The Registrant leases certain 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 to Del Taco as of December 31,
1997, 1996 and 1995 (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 Registrant is the
lessor, had combined, unaudited sales of $1,523,099, $1,452,047, $1,491,715 and
unaudited net income of $76,600, $68,556 and $96,253 for the years ended
December 31, 1997, 1996 and 1995, 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 Registrant is the
lessor, had unaudited sales of $874,554, $835,362 and $804,624 for the years
ended December 31, 1997, 1996 and 1995, respectively.
The Highland Avenue restaurant in Highland (San Bernardino), California had
unaudited net losses of $4,311, $14,043 and $10,904 for the years ended December
31, 1997, 1996 and 1995, respectively.
NOTE 5 - RELATED PARTIES
The receivable from Del Taco consists of rent accrued for the month of December
1997 as well as supplemental rent. These amounts were collected on January 17,
1998.
The General Partner received $2,848 in distributions relating to its one percent
interest in the Registrant for the year ended December 31, 1997.
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
16
DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1997
NOTE 5 - RELATED PARTIES - CONTINUED
Partners Network Corp., a California corporation ("PNC"), which is wholly-owned
by the same principals who own the Dealer Manager, who was primarily responsible
for selling Limited Partnership Units, is the Special Limited Partner of the
Partnership, as defined in the Partnership Agreement. PNC will monitor the
Partnership investments and perform services in connection with the disposition
of properties in the future. In return for such services, PNC will be entitled
to receive certain subordinated distributions and payments.
NOTE 6 - INCOME TAXES
A reconciliation of financial statement net income to taxable income for each of
the periods is as follows:
1997 1996 1995
-------- -------- --------
Net income per financial statements $187,582 $219,223 $134,697
Excess book depreciation 48,537 27,151 20,124
-------- -------- --------
Taxable income $236,119 $246,374 $154,821
======== ======== ========
A reconciliation of partnership equity per the financial statements to net worth
for tax purposes as of December 31, 1997, is as follows:
Partners' equity per financial
statements $2,188,159
Issue costs of Limited Partnership
Units capitalized for tax purposes 579,259
Excess tax depreciation 9,967
----------
Net worth for tax purposes $2,777,385
==========
16
17
DEL TACO INCOME PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1997
NOTE 7 - CASH DISTRIBUTIONS TO LIMITED PARTNERS
Cash distributions paid to Limited Partners for the three years ended December
31, 1997 were as follows:
Weighted Number of Units
Distributions per Average Number Outstanding at
Limited Partnership of Units the End of
Quarter Ended Unit Outstanding Quarter
- ------------- ------------------- -------------- ---------------
December 31, 1994 $ .40 165,415 165,415
March 31, 1995 .33 165,415 165,415
June 30, 1995 .31 165,415 165,415
September 30, 1995 .41 165,415 165,415
--------
Total paid in 1995 $ 1.45
========
December 31, 1995 $ .40 165,415 165,415
March 31, 1996 .32 165,415 165,415
June 30, 1996 .65 165,415 165,415
September 30, 1996 .37 165,415 165,415
--------
Total paid in 1996 $ 1.74
========
December 31, 1996 .41 165,415 165,415
March 31, 1997 .49 165,415 165,415
June 30, 1997 .37 165,415 165,415
September 30, 1997 .43 165,415 165,415
--------
Total paid in 1997 $ 1.70
========
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, 1997 amounted
to $.41 per Limited Partnership Unit and were paid January 31, 1998.
17
18
PART III
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT'S 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 51
Paul W. Hitzelberger Executive Vice President, Brand Strategy and
Franchise Relations/Development 53
Robert J. Terrano Executive Vice President and
Chief Financial Officer 42
James D. Stoops Executive Vice President, Operations 45
Janet D. Simmons Senior Vice President, Purchasing 41
Michael L. Annis Vice President, Secretary and General Counsel 51
C. Douglas Mitchell Vice President and Corporate Controller 47
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 1998.
(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:
18
19
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.
Paul W. Hitzelberger, Executive Vice President, Brand Strategy and Franchise
Relations/Development of Del Taco, Inc. He was appointed to his current position
in December 1995. Mr. Hitzelberger has responsibility for franchise development,
relations and training and will oversee public relations and training for the
corporation. From 1991 to 1995, Mr. Hitzelberger was Executive Vice President,
Marketing of Del Taco, Inc. From September 1988 through September 1989, Mr.
Hitzelberger was Chief Executive Officer of Environmental Marketing Group. Prior
to that, Mr. Hitzelberger was a Vice President of Del Taco, Inc. Prior to
joining Del Taco, Inc., he served as Vice President - Marketing at the
department store division of Lucky Stores, Inc., a major supermarket retailer.
Prior to his position with Lucky, Mr. Hitzelberger held various positions in
marketing and retailing at Wallpapers to Go, Inc., a division of General Mills,
Inc., and Coast to Coast Stores, Inc. a subsidiary of Household Merchandising,
Inc. Mr. Hitzelberger received a Master of Business Administration degree from
Loyola University in Chicago, Illinois.
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 Denny's, 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, Senior Vice President, Purchasing of Del Taco, Inc. From 1979
to 1986, Ms. Simmons was with Denny's 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.
19
20
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.
C. Douglas Mitchell, Vice President and Corporate Controller. Mr. Mitchell
joined Del Taco, Inc. in August of 1994 as Controller and was promoted to his
current position in January 1996. From 1990 to 1994, Mr. Mitchell was a Senior
Audit Manager with Coopers & Lybrand. Prior to 1990, Mr. Mitchell held various
positions in finance and accounting with the Geneva Companies (a subsidiary of
Chemical Bank), Zaremba Corporation (a real estate developer) and The Dexter
Corporation (an international manufacturer of specialty materials). Mr. Mitchell
has a Bachelor of Science degree with a major in accounting from the University
of Southern California.
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS
The Registrant has no executive officers or directors and pays no direct
remuneration to any executive officer or director of its General Partner. The
Registrant has not issued any options or stock appreciation rights to any
executive officer or director of its General Partner, nor does the Registrant
propose to pay any annuity, pension or retirement benefits to any executive
officer or director of its General Partner. The Registrant has no plan, nor does
the Registrant 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 Registrant, nor was any person known of by the
Registrant 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 Registrant.
(c) The Registrant 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 Registrant, 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.
20
21
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) No transactions have occurred between the Registrant and any executive
officer or director of its General Partner.
During 1997, the following transactions occurred between the Registrant
and the General Partner pursuant to the terms of the Partnership
Agreement.
(1) The General Partner earned $1,876 as its one percent share of
the net income of the Registrant.
(2) The General Partner received $2,848 in distributions relating
to its one percent interest in the Registrant.
(b) During 1997, the Registrant 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
Registrant at any time during 1997 for any amount in excess of $60,000.
(d) Not applicable.
21
22
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 1997.
(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 Registrant's 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 Registrant and Del Taco, Inc., as lessee,
filed as Exhibit 10.02 to Registrant's Registration Statement
on Form S-11 as filed with the Securities and Exchange
Commission on June 5, 1987.
22
23
DEL TACO IV - SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
Cost capitalized Gross amount at
Initial cost subsequent to which carried at
Description Encumbrances to company acquisition close of period
-------------------------------------------------------- Accumulated
Buildings Buildings & land depreciation
(All Restaurants) & land Improve- Carrying improvements
improvements ments costs Total
---------- ----------- ---------- ----------- ----------- ---------
Placentia, CA $ - $ 465,933 $ 485,961 $ - $ 951,894 $ 163,337
Lake Elsinore, CA - 449,058 468,361 - 917,419 157,422
San Bernardino, CA - 321,709 335,538 - 657,247 112,778
---------- ----------- ---------- ----------- ----------- ---------
-
$ - $ 1,236,700 $1,289,860 $ - $ 2,526,560 $ 433,537
========== =========== ========== =========== =========== =========
Life on which
Description Date of Date depreciation in latest
construction acquired income statement
(All Restaurants) is computed
------------ -------- ----------------------
Placentia, CA 1988 1988 20 (LI), 35 (BI)
Lake Elsinore, CA 1989 1989 20 (LI), 35 (BI)
San Bernardino, CA 1989 1989 20 (LI), 35 (BI)
Accumulated
Restaurants Depreciation
----------- ------------
Balances at December 31, 1994: $ 2,526,560 $ 267,733
Acquisitions - 55,268
Sales - -
----------- ---------
Balances at December 31, 1995: 2,526,560 323,001
Acquisitions - 55,268
Sales - -
----------- ---------
Balances at December 31, 1996: 2,526,560 378,269
Acquisitions - 55,268
Sales - -
----------- ---------
Balances at December 31, 1997: $ 2,526,560 $ 433,537
=========== =========
23
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 March 07, 1998 Kevin K. Moriarty
-------------- -----------------------------------
Kevin K. Moriarty
Director, Chairman and Chief
Executive Officer
Date March 07, 1998 Michael L. Annis
-------------- -----------------------------------
Michael L. Annis
Vice President, Secretary and
General Counsel
Date March 07, 1998 Robert J. Terrano
-------------- -----------------------------------
Robert J. Terrano
Executive Vice President and
Chief Financial Officer
Date March 07, 1998 C. Douglas Mitchell
-------------- -----------------------------------
C. Douglas Mitchell
Vice President and Corporate
Controller
24
25
[ARTICLE] 5
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1997
[PERIOD-START] JAN-01-1997
[PERIOD-END] DEC-31-1997
[CASH] 75,411
[SECURITIES] 400
[RECEIVABLES] 65,132
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 140,943
[PP&E] 3,011,349
[DEPRECIATION] 817,546
[TOTAL-ASSETS] 2,334,746
[CURRENT-LIABILITIES] 8,633
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] 2,188,160
[TOTAL-LIABILITY-AND-EQUITY] 2,334,746
[SALES] 0
[TOTAL-REVENUES] 330,282
[CGS] 0
[TOTAL-COSTS] 142,699
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] 187,583
[INCOME-TAX] 0
[INCOME-CONTINUING] 187,583
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 187,583
[EPS-PRIMARY] 1.12
[EPS-DILUTED] 1.12