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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 June 30, 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 June 30, 2004 and
December 31, 2003 (Unaudited)
    
    
    3Condensed Statements of Income for the three and six months ended
June 30, 2004 and 2003 (Unaudited)
    
    
    4Condensed Statements of Cash Flows for the six months ended
June 30, 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) June 30,
    
    December 31,2004
    
    2003ASSETSCURRENT ASSETS:Cash
    
    $
    271,530
    
    
    $
    259,810Receivable from Del Taco, Inc.
    
    
    66,018
    
    
    
    66,193Deposits
    
    
    1,078
    
    
    
    926Total current assets
    
    
    338,626
    
    
    
    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
    
    
    1,956,833
    
    
    
    1,934,9472,044,809
    
    
    
    2,066,695$
    2,383,435
    
    
    $
    2,393,624LIABILITIES AND PARTNERS EQUITYCURRENT LIABILITIES:Payable to limited partners
    
    $
    84,935
    
    
    $
    75,514Accounts payable
    
    
    3,895
    
    
    
    2,207Total current liabilities
    
    
    88,830
    
    
    
    77,721PARTNERS EQUITY:Limited partners; 8,751 units outstanding at June 30, 2004
and December 31, 2003
    
    
    2,031,561
    
    
    
    2,052,646General partner-Del Taco, Inc.
    
    
    263,044
    
    
    
    263,2572,294,605
    
    
    
    2,315,903$
    2,383,435
    
    
    $
    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 Ended
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003RENTAL REVENUES
    
    $
    194,675
    
    
    $
    185,229
    
    
    $
    383,422
    
    
    $
    355,103EXPENSES:General and administrative
    
    
    12,028
    
    
    
    15,006
    
    
    
    47,286
    
    
    
    47,962Depreciation
    
    
    10,943
    
    
    
    10,943
    
    
    
    21,886
    
    
    
    21,88622,971
    
    
    
    25,949
    
    
    
    69,172
    
    
    
    69,848Operating income
    
    
    171,704
    
    
    
    159,280
    
    
    
    314,250
    
    
    
    285,255OTHER INCOME:Interest
    
    
    611
    
    
    
    526
    
    
    
    1,155
    
    
    
    1,166Other
    
    
    450
    
    
    
    375
    
    
    
    850
    
    
    
    825Net income
    
    $
    172,765
    
    
    $
    160,181
    
    
    $
    316,255
    
    
    $
    287,246Net income per limited
partnership unit (note 2)
    
    $
    19.54
    
    
    $
    18.12
    
    
    $
    35.78
    
    
    $
    32.50Number of units used in computing
per unit amounts
    
    
    8,751
    
    
    
    8,751
    
    
    
    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) Six Months EndedJune 30,2004
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    316,255
    
    
    $
    287,246Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation
    
    
    21,886
    
    
    
    21,886Changes in operating assets and liabilities:Decrease (increase) in receivable from Del Taco, Inc.
    
    
    175
    
    
    
    (4,496
    )Increase in deposits
    
    
    (152
    )
    
    
    (325
    )Increase in accounts payable and payable to limited partners
    
    
    11,109
    
    
    
    10,027Net cash provided by operating activities
    
    
    349,273
    
    
    
    314,338CASH FLOWS FROM FINANCING ACTIVITIES:Cash distributions to partners
    
    
    (337,553
    )
    
    
    (301,953
    )Net increase in cash
    
    
    11,720
    
    
    
    12,385Beginning cash balance
    
    
    259,810
    
    
    
    227,271Ending cash balance
    
    $
    271,530
    
    
    $
    239,656
 See accompanying notes to condensed financial statements. -5-




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DEL TACO RESTAURANT PROPERTIES I 
 NOTES TO CONDENSED FINANCIAL STATEMENTS JUNE 30, 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
June 30, 2004, the results of operations for the three and six month periods
ended June 30, 2004 and 2003 and cash flows for the six month periods ended
June 30, 2004 and 2003 have been included. Operating results for the three and
six months ended June 30, 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 the periods presented. 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. 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. -6-




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DEL TACO RESTAURANT PROPERTIES I NOTES TO CONDENSED FINANCIAL STATEMENTS  CONTINUED JUNE 30, 2004 NOTE 3  LEASING ACTIVITIES  continued For the three months ended June 30, 2004, the five restaurants operated by Del
Taco, for which the Partnership is the lessor, had combined, unaudited sales of
$1,336,138 and unaudited net income of $98,673 as compared to $1,275,552 and
$104,740, 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 June 30, 2004, the one restaurant operated by a Del Taco
franchisee, for which the Partnership is the lessor, had unaudited sales of
$286,150 as compared with $268,024 during the same period in 2003. For the six months ended June 30, 2004, the five restaurants operated by Del
Taco, for which the Partnership is the lessor, had combined, unaudited sales of
$2,633,072 and unaudited net income of $198,719 as compared to $2,444,154 and
$194,437, 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 six months ended June 30, 2004, the one restaurant operated by a Del Taco
franchisee, for which the Partnership is the lessor, had unaudited sales of
$562,109 as compared with $515,038 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 June. The June rent receivable was collected in July 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 July 21, 2004, a distribution to the limited partners of $179,779, or
approximately $20.54 per limited partnership unit, was approved. Such
distribution was paid on July 28, 2004. The General Partner also received a
distribution of $1,816 with respect to its 1% partnership interest. Total cash
distributions paid in January and April 2004 were $179,295 and $158,258,
respectively. -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 for the
three and six months ended June 30, 2004 and 2003: Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Riverside Avenue, Rialto, CA
    
    $
    30,114
    
    
    $
    28,277
    
    
    $
    59,420
    
    
    $
    55,301Elden Avenue, Moreno Valley, CA
    
    
    33,911
    
    
    
    32,151
    
    
    
    66,484
    
    
    
    60,304Foothill Boulevard, La Verne, CA
    
    
    42,123
    
    
    
    36,729
    
    
    
    82,125
    
    
    
    70,989Baseline & Archibald, Rancho Cucamonga, CA
    
    
    34,338
    
    
    
    32,163
    
    
    
    67,453
    
    
    
    61,805Elkhorn Boulevard, Sacramento, CA
    
    
    19,456
    
    
    
    20,336
    
    
    
    38,947
    
    
    
    39,718Haven Avenue, Rancho Cucamonga, CA
    
    
    34,733
    
    
    
    35,573
    
    
    
    68,993
    
    
    
    66,986Total
    
    $
    194,675
    
    
    $
    185,229
    
    
    $
    383,422
    
    
    $
    355,103
 The Partnership receives rental revenues equal to 12 percent of gross sales
from the restaurants. The Partnership earned rental revenue of $194,675 during
the three month period ended June 30, 2004, which represents an increase of
$9,446 from the corresponding period in 2003. The Partnership earned rental
revenue of $383,422 during the six month period ended June 30, 2004, which
represents an increase of $28,319 from the corresponding period in 2003. The
change in rental revenues between 2004 and 2003 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: Percent of TotalGeneral & Administrative ExpenseThree Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Accounting fees
    
    
    34.44
    %
    
    
    46.43
    %
    
    
    69.69
    %
    
    
    70.40
    %Distribution of information
to Limited Partners
    
    
    65.56
    %
    
    
    53.57
    %
    
    
    30.31
    %
    
    
    29.60
    %100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
 General and administrative costs for the three month period ended June 30, 2004
decreased from the corresponding period in the previous year due to costs
incurred in changing auditors in 2003. General and administrative costs for
the six month period ended June 30, 2004 decreased from the corresponding
period in the previous year due to costs incurred in changing auditors in 2003,
partially offset by increased costs for audit, accounting fees and printing
costs. For the three month period ended June 30, 2004, net income increased $12,584
from 2003 to 2004 due to the increase in revenues of $9,446, the increase in
interest and other income of $160 and the $2,978 decrease in general and
administrative expenses. For the six month period ended June 30, 2004, net
income increased by $29,009 from 2003 to 2004 due to an increase in revenues of
$28,319, the increase in interest and other income of $14 and the decrease in
general and administrative expenses of $676. Recent Accounting Pronouncements In December 2003, the FASB issued FASB Interpretation No. 46 (revised December
2003), Consolidation of Variable Interest Entities, which addresses how a
business enterprise should evaluate whether it has a controlling financial
interest in an entity through means other than voting rights and accordingly
should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46,
Consolidation of Variable Interest Entities, which was issued in January 2003.
The Company is required to apply FIN 46R to variable interests in VIEs created
after December 31, 2003. For variable interests in VIEs created before January
1, 2004, the Interpretation will be applied beginning on January 1, 2005. For
any VIEs that must be consolidated under FIN 46R that were created before
January 1, 2004, the assets, liabilities and noncontrolling interests of the
VIE initially would be measured at their carrying amounts with any difference
between the net amount added to the balance sheet and any previously recognized
interest being recognized as the cumulative effect of an accounting change. If
determining the carrying amounts is not practicable, fair value at the date FIN
46R first applies may be used to measure the assets, liabilities and
noncontrolling interest of the VIE. The Company believes it has no variable
interest entities to which FIN 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 Partnerships 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 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:
    
    August 13, 2004
    
    /s/ Robert J. TerranoRobert J. Terrano
Executive Vice President,
Chief Financial Officer
 -13-




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Exhibit Index  Exhibit 31.1
    
    
    Kevin K. Moriartys Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2
    
    
    Robert J. Terranos Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 32.1
    
    
    Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 -14-