UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001.

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                to                                 .

Commission file no. 2-80930

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)
23041 Avenida De La Carlota, Laguna Hills, California	92653
(Address of principal executive offices)	(Zip Code)

(949) 462-9300

(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  o

TABLE OF CONTENTS

		BALANCE SHEETS
		STATEMENTS OF INCOME
		STATEMENTS OF CASH FLOWS
		NOTES TO FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
PART II. OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES

INDEX
 
DEL TACO RESTAURANT PROPERTIES I

PART I. FINANCIAL INFORMATION	PAGE NUMBER
Item 1. Financial Statements and Supplementary Data
Balance Sheets at September 30, 2001 (Unaudited) and December 31, 2000		3
Statements of Income for the three and nine months ended September 30, 2001 and 2000 (Unaudited)		4
Statements of Cash Flows for the nine months ended September 30, 2001 and 2000 (Unaudited)		5
Notes to Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K		10
SIGNATURES		11

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DEL TACO RESTAURANT PROPERTIES I
 
BALANCE SHEETS

			September 30,		December 31,
			2001		2000
			(Unaudited)
ASSETS
CURRENT ASSETS:
	Cash		$	216,728	$	190,915
	Receivable from General Partner			54,879		53,331
	Deposits			600		876
		Total current assets		272,207		245,122
PROPERTY AND EQUIPMENT, at cost:
	Land and improvements			1,852,482		1,852,482
	Buildings and improvements			1,013,134		1,013,134
	Machinery and equipment			1,136,026		1,136,026
				4,001,642		4,001,642
	Less—accumulated depreciation			1,836,460		1,803,631
				2,165,182		2,198,011
			$	2,437,389	$	2,443,133
LIABILITIES AND PARTNERS’ EQUITY
CURRENT LIABILITIES:
	Payable to Limited Partners		$	53,306	$	41,937
	Accounts payable			6,159		10,153
		Total current liabilities		59,465		52,090
PARTNERS’ EQUITY:
	Limited Partners			2,114,048		2,127,036
	General Partner-Del Taco, Inc.			263,876		264,007
				2,377,924		2,391,043
			$	2,437,389	$	2,443,133

The accompanying notes are an
integral part of these financial statements.

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DEL TACO RESTAURANT PROPERTIES I
 
STATEMENTS OF INCOME
 
(Unaudited)

			Three Months Ended				Nine Months Ended
			September 30,				September 30,
			2001		2000		2001		2000
REVENUES:
	Rent		$	165,621	$	155,809	$	470,810	$	434,944
	Interest			1,262		1,784		4,383		4,151
	Other			300		350		1,275		725
				167,183		157,943		476,468		439,820
EXPENSES:
	General and administrative			5,944		7,311		39,407		38,186
	Depreciation			10,943		10,943		32,829		32,829
				16,887		18,254		72,236		71,015
		Net income	$	150,296	$	139,689	$	404,232	$	368,805
	Net income per limited partnership unit		$	17.00	$	15.80	$	45.73	$	41.72

The accompanying notes are an
integral part of these financial statements.

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DEL TACO RESTAURANT PROPERTIES I
 
STATEMENTS OF CASH FLOWS
 
(Unaudited)

			Nine Months Ended
			September 30,
			2001			2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income			$	404,232		$	368,805
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation			32,829			32,829
	Increase in receivable from General Partner			(1,548	)		(4,514	)
	Decrease in deposits			276			—
	Increase in accounts payable and payable to limited partners			7,375			12,000
		Net cash provided by operating activities		443,164			409,120
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners				(417,351	)		(377,928	)
Net increase in cash				25,813			31,192
Beginning cash balance				190,915			170,290
Ending cash balance			$	216,728		$	201,482

The accompanying notes are an
integral part of these financial statements.

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DEL TACO RESTAURANT PROPERTIES I
 
NOTES TO FINANCIAL STATEMENTS
 
SEPTEMBER 30, 2001

NOTE 1 — BASIS OF PRESENTATION

The accompanying financial statements, some of which are unaudited, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should therefore be read in conjunction with the financial statements and notes thereto contained in the Registrant’s annual report on Form 10-K for the year ended December 31, 2000. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the partnership’s financial position at September 30, 2001, the results of operations and cash flows for the nine month periods ended September 30, 2001 and 2000 have been included. Operating results for the three and nine months ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001.

NOTE 2 — NET INCOME PER LIMITED PARTNERSHIP UNIT

Net income per limited partnership unit is based upon the weighted average number of units outstanding during the periods presented, which amounted to 8,751 in 2001 and 2000.

Pursuant to the partnership agreement, annual partnership net income is allocated one percent to 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 certain properties for operation of restaurants to Del Taco, Inc. on a triple net basis. 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. There is no minimum rental under any of the leases.

For the three months ended September 30, 2001, the five restaurants operated by Del Taco, for which the partnership is the lessor, had combined, unaudited sales of $1,144,128 and net income of $79,727 as compared to $1,079,113 and $68,143 respectively, for the corresponding period in 2000. Net income by restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense. For the three months ended September 30, 2001, the one restaurant operated by a Del Taco franchisee, for which the partnership is the lessor, had unaudited sales of $236,043 as compared with $219,297 during the same period in 2000.

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DEL TACO RESTAURANT PROPERTIES I
 
NOTES TO FINANCIAL STATEMENTS — CONTINUED
 
SEPTEMBER 30, 2001

NOTE 3 — LEASING ACTIVITIES — continued

For the nine months ended September 30, 2001, the five restaurants operated by Del Taco, for which the partnership is the lessor, had combined, unaudited sales of $3,239,605 and net income of $211,059 as compared to $3,013,010 and $173,243 respectively, for the corresponding period in 2000. For the nine months ended September 30, 2001, the one restaurant operated by a Del Taco franchisee, for which the partnership is the lessor, had unaudited sales of $683,813 as compared with $611,520 during the same period in 2000.

NOTE 4 — TRANSACTIONS WITH DEL TACO

The receivable from General Partner consists primarily of rent accrued for the month of September. The September rent receivable was collected on October 12, 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.

In addition, see Note 5 with respect to certain distributions to the General Partner.

NOTE 5 — DISTRIBUTIONS

On October 16, 2001, a distribution to the limited partners of $156,838, or approximately $17.92 per limited partnership unit, was approved. Such distribution was paid on October 23, 2001. The General Partner also received a distribution of $1,584 with respect to its 1% partnership interest.

NOTE 6 — RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board 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 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 Company’s financial position or results of operations.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

The partnership offered limited partnership units for sale between March 1983 and March 1984. 15% of the $4.375 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 $4 million of the remaining funds were used to acquire sites and build six restaurants.

The six 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 six properties that are under long-term lease to Del Taco for restaurant operations (Del Taco, in turn, has subleased two of the restaurants to Del Taco franchisees, one of which is affiliated with Del Taco).

The following table sets forth rental revenue earned by restaurant for the year:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2001		2000		2001		2000
Riverside Avenue, Rialto, CA		$	25,177	$	23,008	$	69,651	$	66,464
Elden Avenue, Moreno Valley, CA			28,457		25,134		78,915		71,304
Foothill Boulevard, La Verne, CA			33,950		33,202		97,741		91,317
Baseline & Archibald, Rancho Cucamonga, CA			28,325		26,316		82,057		73,382
Elkhorn Boulevard, Sacramento, CA			20,001		18,274		57,697		48,496
Haven Avenue, Rancho Cucamonga, CA			29,711		29,875		84,749		83,981
	Total	$	165,621	$	155,809	$	470,810	$	434,944

The partnership receives rental revenues equal to 12 percent of gross sales from the restaurants. The partnership earned rental revenue of $165,621 during the three month period ended September 30, 2001, which represents an increase of $9,812 from 2000. The partnership earned rental revenue of $470,810 during the nine month period ended September 30, 2001, which represents an increase of $35,866 from 2000. The changes in rental revenue between 2000 and 2001 are directly attributable to increases in sales levels at the restaurants under lease.

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Item 2.  Management’s 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 & Administrative Expense
	Nine Months Ended
	September 30,
	2001			2000
Accounting fees		65.79	%		59.90	%
Distribution of information to Limited Partners		34.21			40.10
		100.00	%		100.00	%

For the three month period ended September 30, 2001, net income increased $10,607 from 2000 to 2001 due to the increase in revenues of $ 9,240 and the $1,367 decrease in general and administrative expenses. For the nine month period ended September 30, 2001, net income increased by $35,427 from 2000 to 2001 due to the increase in revenues of $36,648 which was partially offset by the $1,221 increase in general and administrative expenses.

In accordance with recent U.S. Government regulations, the partnership is required to file annual K-1 income tax forms with the Internal Revenue Service electronically beginning in 2002 for the year ending December 31, 2001. In order to comply with this regulation, the partnership will incur additional costs to lease software to 1) prepare the tax forms electronically and 2) maintain the underlying partnership database.

The General Partner and outside consultants evaluated available software and selected a software package in the third calendar quarter of 2001. Current estimates of additional general and administrative costs to lease the software range from $1,000 to $5,000 in 2001 (the conversion year) and range from $5,500 to $6,500 in each subsequent year.

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PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(b)  No reports on Form 8-K were filed during the nine months ended September 30, 2001.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
 
 
 
 
 
 
Date: October 31, 2001  DEL TACO RESTAURANT PROPERTIES I
(a California limited partnership)
Registrant
 
Del Taco, Inc.
General Partner
 
 
/s/ Robert J. Terrano
Robert J. Terrano
Executive Vice President,
Chief Financial Officer

Date: October 31, 2001  /s/ C. Douglas Mitchell
C. Douglas Mitchell
Vice President and Corporate
Controller

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