Attached files
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EXCEL - IDEA: XBRL DOCUMENT - DEL TACO RESTAURANT PROPERTIES I | Financial_Report.xls |
EX-31.2 - EXHIBIT 31.2 - DEL TACO RESTAURANT PROPERTIES I | d254036dex312.htm |
EX-31.1 - EXHIBIT 31.1 - DEL TACO RESTAURANT PROPERTIES I | d254036dex311.htm |
EX-32.1 - EXHIBIT 32.1 - DEL TACO RESTAURANT PROPERTIES I | d254036dex321.htm |
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
þ |
QUARTERLYREPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
For the quarterly period ended September 30, 2011 |
OR
¨ |
TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
For the transition period from to |
Commission file no. 0-16191
DEL TACO RESTAURANT PROPERTIES I
(A California limited partnership)
(Exact name of registrant as specified in its charter)
California | 95-3852699 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
25521 Commercentre Drive Lake Forest, California |
92630 | |
(Address of principal executive offices) | (Zip Code) |
(949) 462-9300
(Registrants 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 þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer þ | Smaller reporting company ¨ | |||
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrants Form S-11 Registration Statement filed December 17, 1982 are incorporated by reference into Part IV of this report.
Table of Contents
DEL TACO RESTAURANT PROPERTIES I
PAGE NUMBER | ||||
PART I. FINANCIAL INFORMATION |
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Item 1. Financial Statements |
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Condensed Balance Sheets at September 30, 2011 (Unaudited) and December 31, 2010 |
3 | |||
4 | ||||
Condensed Statements of Cash Flows for the nine months ended September 30, 2011 and 2010 (Unaudited) |
5 | |||
6 | ||||
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |
9 | |||
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
11 | |||
11 | ||||
PART II. OTHER INFORMATION |
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12 | ||||
13 |
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Table of Contents
DEL TACO RESTAURANT PROPERTIES I
September, 30 2011 |
December 31, 2010 |
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(Unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: |
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Cash |
$ | 213,737 | $ | 225,302 | ||||
Receivable from Del Taco LLC |
60,545 | 64,881 | ||||||
Other current assets |
987 | 1,366 | ||||||
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Total current assets |
275,269 | 291,549 | ||||||
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PROPERTY AND EQUIPMENT: |
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Land |
1,633,188 | 1,633,188 | ||||||
Land improvements |
296,497 | 296,497 | ||||||
Buildings and improvements |
1,013,134 | 1,013,134 | ||||||
Machinery and equipment |
1,136,026 | 1,136,026 | ||||||
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4,078,845 | 4,078,845 | |||||||
Lessaccumulated depreciation |
2,185,590 | 2,163,879 | ||||||
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1,893,255 | 1,914,966 | |||||||
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$ | 2,168,524 | $ | 2,206,515 | |||||
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LIABILITIES AND PARTNERS EQUITY | ||||||||
CURRENT LIABILITIES: |
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Payable to limited partners |
$ | 40,072 | $ | 44,368 | ||||
Accounts payable |
1,977 | 9,290 | ||||||
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Total current liabilities |
42,049 | 53,658 | ||||||
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PARTNERS EQUITY: |
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Limited partners; 8,751 units outstanding at September 30, 2011 and December 31, 2010 |
1,865,114 | 1,891,231 | ||||||
General partner-Del Taco LLC |
261,361 | 261,626 | ||||||
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2,126,475 | 2,152,857 | |||||||
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$ | 2,168,524 | $ | 2,206,515 | |||||
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See accompanying notes to condensed financial statements.
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Table of Contents
DEL TACO RESTAURANT PROPERTIES I
CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
RENTAL REVENUES |
$ | 185,760 | $ | 193,287 | $ | 551,897 | $ | 559,141 | ||||||||
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EXPENSES: |
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General and administrative |
15,722 | 11,914 | 66,523 | 58,561 | ||||||||||||
Depreciation |
7,237 | 7,237 | 21,711 | 21,711 | ||||||||||||
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22,959 | 19,151 | 88,234 | 80,272 | |||||||||||||
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Operating income |
162,801 | 174,136 | 463,663 | 478,869 | ||||||||||||
OTHER INCOME: |
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Interest |
59 | 67 | 182 | 192 | ||||||||||||
Other |
625 | 125 | 1,700 | 750 | ||||||||||||
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Net income |
$ | 163,485 | $ | 174,328 | $ | 465,545 | $ | 479,811 | ||||||||
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Net income per limited partnership unit (Note 2) |
$ | 18.50 | $ | 19.72 | $ | 52.67 | $ | 54.28 | ||||||||
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Number of units used in computing per unit amounts |
8,751 | 8,751 | 8,751 | 8,751 | ||||||||||||
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See accompanying notes to condensed financial statements.
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Table of Contents
DEL TACO RESTAURANT PROPERTIES I
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30, |
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2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ | 465,545 | $ | 479,811 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
21,711 | 21,711 | ||||||
Changes in operating assets and liabilities: |
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Receivable from Del Taco LLC |
4,336 | 103 | ||||||
Other current assets |
379 | (191 | ) | |||||
Payable to limited partners |
(4,296 | ) | 3,960 | |||||
Accounts payable |
(7,313 | ) | 4,015 | |||||
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Net cash provided by operating activities |
480,362 | 509,409 | ||||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Cash distributions to partners |
(491,927 | ) | (491,523 | ) | ||||
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Net change in cash |
(11,565 | ) | 17,886 | |||||
Beginning cash balance |
225,302 | 218,535 | ||||||
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Ending cash balance |
$ | 213,737 | $ | 236,421 | ||||
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See accompanying notes to condensed financial statements.
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Table of Contents
DEL TACO RESTAURANT PROPERTIES I
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011
UNAUDITED
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America for complete financial statements and should therefore be read in conjunction with the financial statements and notes thereto contained in the annual report on Form 10-K for the year ended December 31, 2010 for Del Taco Restaurant Properties I (the Partnership or the Company). In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the Partnerships financial position at September 30, 2011, the results of operations for the three and nine month periods ended September 30, 2011 and 2010 and cash flows for the nine month periods ended September 30, 2011 and 2010 have been included. Operating results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. Amounts related to disclosure of December 31, 2010 balances within these condensed financial statements were derived from the 2010 audited financial statements.
Management has evaluated events subsequent to September 30, 2011 through the date that the accompanying condensed financial statements were filed with the Securities and Exchange Commission for transactions and other events which may require adjustment of and/or disclosure in such financial statements.
NOTE 2 NET INCOME PER LIMITED PARTNERSHIP UNIT
Net income per limited partnership unit is based on net income attributable to the limited partners (after 1% allocation to the general partner) using the weighted average number of units outstanding during the periods presented, which amounted to 8,751 in 2011 and 2010.
Pursuant to the partnership agreement, annual partnership net income is allocated one percent to Del Taco LLC, formerly known as Del Taco, Inc., (Del Taco or the General Partner) and 99 percent to the limited partners. A partnership net loss in any year will be allocated 24 percent to the General Partner and 76 percent to the limited partners until the losses so allocated equal income previously allocated. Any additional losses will be 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. Additional gains will be allocated 24 percent to the General Partner and 76 percent to the limited partners.
NOTE 3 LEASING ACTIVITIES
The Partnership leases six properties for operation of restaurants to Del Taco on a triple net basis. One property has been subleased to a Del Taco franchisee. The leases are for terms of 35 years commencing with the completion of the restaurant facility located on each property and require monthly rentals equal to 12 percent of the gross sales of the restaurants. The leases expire in the years 2020 to 2021. Pursuant to the
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Table of Contents
DEL TACO RESTAURANT PROPERTIES I
NOTES TO CONDENSED FINANCIAL STATEMENTS CONTINUED
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011
UNAUDITED
NOTE 3 LEASING ACTIVITIES continued
lease agreements, minimum rentals of $3,500 per month are due to the Partnership during the first six months of any non-operating period caused by an insured casualty loss.
For the three months ended September 30, 2011, the five restaurants operated by Del Taco, for which the Partnership is the lessor, had combined, unaudited sales of $1,323,105 and unaudited net losses of $2,302 as compared to unaudited sales of $1,367,465 and unaudited net income of $13,287, respectively, for the corresponding period in 2010. Net income or loss of each restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense and the increase in net loss from the corresponding period of the prior year primarily relates to increases in operating costs. For the three months ended September 30, 2011, the one restaurant operated by a Del Taco franchisee, for which the Partnership is the lessor, had unaudited sales of $224,898 as compared with $243,261 during the same period in 2010.
For the nine months ended September 30, 2011, the five restaurants operated by Del Taco, for which the Partnership is the lessor, had combined, unaudited sales of $3,915,976 and unaudited net losses of $4,535 as compared to $3,951,243 and unaudited net losses of $38,566 for the corresponding period in 2010. Net income or loss of each restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense and the decrease in net loss from the corresponding period of the prior year primarily relates to decreases in operating costs. For the nine months ended September 30, 2011, the one restaurant operated by a Del Taco franchisee, for which the Partnership is the lessor, had unaudited sales of $683,166 as compared with $708,261 during the same period in 2010.
NOTE 4 TRANSACTIONS WITH DEL TACO
The receivable from Del Taco consists primarily of rent accrued for the month of September 2011. The September rent receivable was collected in October 2011.
Del Taco 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 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
Total cash distributions declared and paid in February, May and August 2011 were $175,933, $156,378 and $159,616, respectively. On October 27, 2011, a distribution to the limited partners of $166,979, or approximately $19.08 per limited partnership unit, was approved. Such distribution was paid on November 3, 2011. The General Partner also received a distribution of $1,687 with respect to its 1% partnership interest in November 2011.
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Table of Contents
DEL TACO RESTAURANT PROPERTIES I
NOTES TO CONDENSED FINANCIAL STATEMENTS CONTINUED
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011
UNAUDITED
NOTE 6 PAYABLE TO LIMITED PARTNERS
Payable to limited partners represents a reclassification from cash for distribution checks made to limited partners that have remained outstanding for six months or longer.
NOTE 7 CONCENTRATION OF RISK
The six restaurants leased to Del Taco make up all of the income producing assets of the Partnership and contributed all of the Partnerships rental revenues during the three and nine months ended September 30, 2011 and 2010. Therefore, the business of the Partnership is entirely dependent on the success of the Del Taco trade name restaurants that lease the properties.
The Partnership maintains substantially all of its cash and cash equivalents at one major commercial bank. At various times, the cash balance is in excess of the Federal Depository Insurance Corporations limits. At September 30, 2011 and December 31, 2010, the Partnership had approximately $236,000 and $236,000, respectively, on deposit at one financial institution.
NOTE 8 COMMUNICATION FROM CERTAIN LIMITED PARTNERS
During the third quarter several limited partners communicated to the General Partner their desire to sell all of the properties and then dissolve the Partnership. Pursuant to the Partnership agreement, any decision to sell all of the properties and to dissolve the Partnership would require approval from a majority in interest of limited partners. The General Partner will consider what action is appropriate under the circumstances.
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Table of Contents
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Communication from Certain Limited Partners
During the third quarter several limited partners communicated to the General Partner their desire to sell all of the properties and then dissolve the Partnership. Pursuant to the Partnership agreement, any decision to sell all of the properties and to dissolve the Partnership would require approval from a majority in interest of limited partners. The General Partner will consider what action is appropriate under the circumstances.
Liquidity and Capital Resources
Del Taco Restaurant Properties I (the Partnership or the Company) offered limited partnership units for sale between March 1983 and March 1984. $4.375 million was raised through the sale of limited partnership units and used to acquire sites and build six restaurants and also to pay commissions to brokers and to reimburse Del Taco LLC (the General Partner or Del Taco) for offering costs incurred.
The six restaurants leased to Del Taco make up all of the income producing assets of the Partnership. Therefore, the business of the Partnership is 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, competition, consumer demand and preference for fast food, in general, and for Mexican-American food in particular.
Results of Operations
The Partnership owns six properties that are under long-term lease to Del Taco for restaurant operations (Del Taco, in turn, has subleased one of the restaurants to a Del Taco franchisee).
The following table sets forth rental revenue earned by restaurant (unaudited):
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Riverside Avenue, Rialto, CA |
$ | 29,556 | $ | 31,878 | $ | 88,528 | $ | 90,029 | ||||||||
Elden Avenue, Moreno Valley, CA |
24,440 | 25,644 | 71,976 | 75,702 | ||||||||||||
Foothill Boulevard, La Verne, CA |
42,811 | 43,838 | 125,855 | 126,736 | ||||||||||||
Baseline & Archibald, Rancho Cucamonga, CA |
26,988 | 29,191 | 81,980 | 84,991 | ||||||||||||
Elkhorn Boulevard, Sacramento, CA |
26,935 | 28,011 | 80,217 | 79,526 | ||||||||||||
Haven Avenue, Rancho Cucamonga, CA |
35,030 | 34,725 | 103,341 | 102,157 | ||||||||||||
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Total |
$ | 185,760 | $ | 193,287 | $ | 551,897 | $ | 559,141 | ||||||||
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The Partnership receives rental revenues equal to 12 percent of gross sales from the restaurants. The Partnership earned rental revenue of $185,760 during the three month period ended September 30, 2011, which represents a decrease of $7,527 from the corresponding period in 2010. The Partnership earned rental revenue of $551,897 during the nine month period ended September 30, 2011, which represents a decrease of $7,244 from the corresponding period in 2010. The changes in rental revenues between 2010 and 2011 are directly attributable to changes in sales levels at the restaurants under lease due to local competitive and industry factors.
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Table of Contents
Item 2. | 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:
Percent of Total General & Administrative Expense |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Accounting fees |
33.85 | % | 59.60 | % | 62.89 | % | 71.30 | % | ||||||||
Distribution of information to limited partners |
66.15 | % | 40.40 | % | 37.11 | % | 28.70 | % | ||||||||
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100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | |||||||||
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General and administrative costs increased during the three month and nine month periods from 2010 to 2011 primarily due to increased costs for printing primarily related to a new filing process known as XBRL and the distribution of information to limited partners, partially offset by a reduction in software licensing fees.
For the three month period ended September 30, 2011, net income decreased by $10,843 from 2010 to 2011 due to the decrease in revenues of $7,527 and the increase in general and administrative expenses of $3,808, partially offset by the increase in interest and other income of $492. For the nine month period ended September 30, 2011, net income decreased $14,266 from 2010 to 2011 due to the decrease in revenues of $7,244 and the increase in general and administrative expenses of $7,962, partially offset by the increase in interest and other income of $940.
Significant Recent Accounting Pronouncements
None.
Off-Balance Sheet Arrangements
None
Critical Accounting Policies and Estimates
Managements discussion and analysis of financial condition and results of operations, as well as disclosures included elsewhere in this report on Form 10-Q are based upon the Partnerships financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Partnership believes the critical accounting policies that most impact the financial statements are described below. A summary of the significant accounting policies of the Partnership can be found in Note 1 to the Financial Statements which is included in the Partnerships December 31, 2010 Form 10-K.
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Table of Contents
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations continued |
Revenue Recognition: Rental revenue is recognized based on 12 percent of gross sales of the restaurants for the corresponding period, and is earned at the point of sale.
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 authoritative guidance issued by the Financial Accounting Standards Board that requires 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.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
None.
Item 4. | Controls and Procedures |
(a) | Evaluation of disclosure controls and procedures: |
As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Companys periodic Securities and Exchange Commission filings.
(b) | Changes in internal controls: |
There were no significant changes in the Companys internal controls over financial reporting that occurred during our most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
(c) | Asset-backed issuers: |
Not applicable.
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There is no information required to be reported for any items under Part II, except as follows:
(a) | Exhibits |
31.1 | Paul J. B. Murphy, IIIs Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
31.2 | Steven L. Brakes Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
32.1 | Certification pursuant to subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
101.INS | XBRL Instance Document* | |||
101.SCH | XBRL Taxonomy Extension Schema Document* | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* | |||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document* | |||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document* |
* | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DEL TACO RESTAURANT PROPERTIES I | ||
(a California limited partnership) | ||
Registrant | ||
Del Taco LLC | ||
General Partner |
Date: November 14, 2011 |
/s/ Steven L. Brake | |
Steven L. Brake | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
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