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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 March 31, 2004.

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. 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

(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

Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange
Act.)  Yes o  No x



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INDEX DEL TACO RESTAURANT PROPERTIES I PART I. FINANCIAL INFORMATION
    
    PAGE NUMBERItem 1. Financial StatementsCondensed Balance Sheets at March 31, 2004 and
December 31, 2003 (Unaudited)
    
    
    3Condensed Statements of Income for the three months ended
March 31, 2004 and 2003 (Unaudited)
    
    
    4Condensed Statements of Cash Flows for the three months ended
March 31, 2004 and 2003 (Unaudited)
    
    
    5Notes to Condensed Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    8Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    10Item 4. Controls and Procedures
    
    
    11PART II. OTHER INFORMATIONItem 6. Exhibits and Reports on Form 8-K
    
    
    12SIGNATURE
    
    
    13EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  -2-




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DEL TACO RESTAURANT PROPERTIES I 
 CONDENSED BALANCE SHEETS (Unaudited) March 31,
    
    December 31,2004
    
    2003ASSETSCURRENT ASSETS:Cash
    
    $
    274,706
    
    
    $
    259,810Receivable from Del Taco, Inc.
    
    
    65,620
    
    
    
    66,193Deposits
    
    
    822
    
    
    
    926Total current assets
    
    
    341,148
    
    
    
    326,929PROPERTY AND EQUIPMENT:Land and improvements
    
    
    1,852,482
    
    
    
    1,852,482Buildings and improvements
    
    
    1,013,134
    
    
    
    1,013,134Machinery and equipment
    
    
    1,136,026
    
    
    
    1,136,0264,001,642
    
    
    
    4,001,642Lessaccumulated depreciation
    
    
    1,945,890
    
    
    
    1,934,9472,055,752
    
    
    
    2,066,695$
    2,396,900
    
    
    $
    2,393,624LIABILITIES AND PARTNERS EQUITYCURRENT LIABILITIES:Payable to limited partners
    
    $
    81,448
    
    
    $
    75,514Accounts payable
    
    
    35,354
    
    
    
    2,207Total current liabilities
    
    
    116,802
    
    
    
    77,721PARTNERS EQUITY:Limited
partners; 8,751 units outstanding at March 31, 2004 and December 31, 2003
    
    
    2,017,200
    
    
    
    2,052,646General partner-Del Taco, Inc.
    
    
    262,898
    
    
    
    263,2572,280,098
    
    
    
    2,315,903$
    2,396,900
    
    
    $
    2,393,624
 See accompanying notes to condensed financial statements. -3-




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DEL TACO RESTAURANT PROPERTIES I 
 CONDENSED STATEMENTS OF INCOME (Unaudited) Three Months EndedMarch 31,2004
    
    2003RENTAL REVENUES
    
    $
    188,747
    
    
    $
    169,874EXPENSES:General and administrative
    
    
    35,258
    
    
    
    32,956Depreciation
    
    
    10,943
    
    
    
    10,94346,201
    
    
    
    43,899Operating income
    
    
    142,546
    
    
    
    125,975OTHER INCOME:Interest
    
    
    544
    
    
    
    640Other
    
    
    400
    
    
    
    450Net income
    
    $
    143,490
    
    
    $
    127,065Net income per limited partnership unit
    
    $
    16.23
    
    
    $
    14.37Number of units used in computing per unit amounts
    
    
    8,751
    
    
    
    8,751
 See accompanying notes to condensed financial statements. -4-




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DEL TACO RESTAURANT PROPERTIES I 
 CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Three Months EndedMarch 31,2004
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    143,490
    
    
    $
    127,065Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation
    
    
    10,943
    
    
    
    10,943Changes in operating assets and liabilities:Decrease (increase) in receivable from Del Taco, Inc.
    
    
    573
    
    
    
    (2,113
    )Decrease (increase) in deposits
    
    
    104
    
    
    
    (489
    )Increase in accounts payable and payable
to limited partners
    
    
    39,081
    
    
    
    6,966Net cash provided by operating activities
    
    
    194,191
    
    
    
    142,372CASH FLOWS FROM FINANCING ACTIVITIES:Cash distributions to partners
    
    
    (179,295
    )
    
    
    (162,242
    )Net increase (decrease) in cash
    
    
    14,896
    
    
    
    (19,870
    )Beginning cash balance
    
    
    259,810
    
    
    
    227,271Ending cash balance
    
    $
    274,706
    
    
    $
    207,401
 See accompanying notes to condensed financial statements. -5-




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DEL TACO RESTAURANT PROPERTIES I 
 NOTES TO CONDENSED FINANCIAL STATEMENTS MARCH 31, 2004 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, 2003 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 Partnerships financial position at
March 31, 2004, the results of operations and cash flows for the three month
periods ended March 31, 2004 and 2003 have been included. Operating results for
the three months ended March 31, 2004 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2004. 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 2004 and 2003. Pursuant to the partnership agreement, annual partnership net income is
allocated one percent to 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. -6-




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DEL TACO RESTAURANT PROPERTIES I NOTES TO CONDENSED FINANCIAL STATEMENTS  CONTINUED MARCH 31, 2004 NOTE 3  LEASING ACTIVITIES The Partnership leases certain properties for operation of restaurants to Del
Taco 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. The leases expire in the years 2019 to 2020. There is no minimum
rental under any of the leases. For the three months ended March 31, 2004, the five restaurants operated by Del
Taco, for which the Partnership is the lessor, had combined, unaudited sales of
$1,296,933 and net income of $100,046 as compared to $1,168,601 and $89,697,
respectively, for the corresponding period in 2003. 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 March 31, 2004, the one restaurant operated by a Del Taco
franchisee, for which the Partnership is the lessor, had unaudited sales of
$275,961 as compared with $247,014 during the same period in 2003. NOTE 4  TRANSACTIONS WITH DEL TACO The receivable from Del Taco consists primarily of rent accrued for the month
of March. The March rent receivable was collected in April 2004. 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 On April 20, 2004, a distribution to the limited partners of $156,674, or
approximately $17.90 per limited partnership unit, was approved. Such
distribution was paid on April 28, 2004. The General Partner also received a
distribution of $1,583 with respect to its 1% partnership interest. Total cash
distributions paid in January 2004 were $179,295. -7-




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations 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. 15% of
the $4.375 million raised through sale of limited partnership units was used to
pay commissions to brokers and to reimburse Del Taco, Inc. (the General Partner
or Del Taco) 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 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: Three Months EndedMarch 31,2004
    
    2003Riverside Avenue, Rialto, CA
    
    $
    29,306
    
    
    $
    27,024Elden Avenue, Moreno Valley, CA
    
    
    32,573
    
    
    
    28,153Foothill Boulevard, La Verne, CA
    
    
    40,002
    
    
    
    34,260Baseline & Archibald, Rancho Cucamonga, CA
    
    
    33,115
    
    
    
    29,642Elkhorn Boulevard, Sacramento, CA
    
    
    19,491
    
    
    
    19,382Haven Avenue, Rancho Cucamonga, CA
    
    
    34,260
    
    
    
    31,413Total
    
    $
    188,747
    
    
    $
    169,874
 The Partnership receives rental revenues equal to 12 percent of gross sales
from the restaurants. The Partnership earned rental revenue of $188,747 during
the three month period ended March 31, 2004, which represents an increase of
$18,873 from 2003. The change in rental revenues between 2003 and 2004 is
directly attributable to increases in sales at the restaurants under lease. -8-




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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 TotalGeneral & Administrative ExpenseThree Months EndedMarch 31,2004
    
    2003Accounting fees
    
    
    76.65
    %
    
    
    76.02
    %Distribution of information
to limited partners
    
    
    23.35
    
    
    
    23.98100.00
    %
    
    
    100.00
    %
 General and administrative costs increased from 2003 to 2004 due to increased
costs for audit and accounting fees and printing costs. Net income increased by $16,425 from 2003 to 2004 due to the increase in
revenues of $18,873 which was partially offset by the $2,302 increase in
expenses and the decrease in interest and other income of $146. Recent Accounting Pronouncements In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities (Interpretation 46), an interpretation of
Accounting Research Bulletin (ARB) No. 51. Interpretation 46, as amended,
addresses consolidation by business enterprises of variable interest entities.
Interpretation 46, as amended, applies immediately to variable interest
entities created after January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest after that date. It applies in the
first year or interim period beginning after December 15, 2003, to variable
interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003. In December 2003, the FASB issued
Interpretation No. 46R which modified certain provisions of Interpretation 46.
Interpretation No. 46R also modified the effective date of Interpretation 46.
Companies must apply Interpretation No. 46R by the end of the first reporting
period after December 15, 2003. The Company believes it has no variable
interest entities to which Interpretation 46 nor Interpretation No. 46R
applies. -9-




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations  continued Critical Accounting Policies and Estimates Managements 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 Partnerships December 31, 2003 Form 10-K. 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. 144, Accounting for the
Impairment or Disposal of Long Lived Assets. SFAS 144 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. 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk. None. -10-




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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 Companys management, including the
Companys Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Companys disclosure
controls and procedures. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company
required to be included in the Companys periodic Securities and
Exchange Commission filings.(b)
    
    Changes in internal controls:There were no significant changes in the Companys 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. -11-




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PART II. OTHER INFORMATION 
 Item 6. Exhibits and Reports on Form 8-K  (a)
    
    Exhibits  31.1
    
    Kevin K. Moriartys Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Robert J. Terranos Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  (b)
    
    ReportsNone. -12-




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SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. DEL TACO RESTAURANT PROPERTIES I
(a California limited partnership)
RegistrantDel Taco, Inc.
General PartnerDate:
    
    May 14, 2004
    
    /s/ Robert J. TerranoRobert J. Terrano
Executive Vice President,
Chief Financial Officer
 -13-




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Exhibit Index  31.1
    
    Kevin K. Moriartys Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Robert J. Terranos Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 -14-