UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13
or 15 (d) of the Securities
Exchange Act of 1934
-----------------------------------
For the Quarter Ended
March 31, 1996 Commission File Number 0-16764
- - ----------------------- -------------------------------
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
----------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 36-3535958
- - --------------------- ----------------------------
State or other IRS Employer Identification
jurisdiction of Number
incorporation or
organization
1300 E. Woodfield Road, Suite 312 Schaumburg, Illinois 60173
- - --------------------------------- ---------------------------
Address of principal City, State, Zip Code
executive offices
Registrant's telephone number: (847) 240-6200
---------------------------
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.
(1) Yes x No
-- --
(2) Yes x No
-- --
<PAGE>
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
----------------------------------------
FORM 10-Q
---------
FOR THE QUARTER ENDED MARCH 31, 1996
------------------------------------
PART I - FINANCIAL INFORMATION
Item 1.
- - -------
Index to Financial Statements
Balance Sheets
March 31, 1996 (unaudited)
December 31, 1995
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1996
For the three months ended March 31, 1995
Statements of Changes in Partners' Equity
For the three months ended March 31, 1996
(unaudited)
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1996
For the three months ended March 31, 1995
Notes to Financial Statements (unaudited)
Item 2.
- - -------
Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Items 1-6.
- - ---------
<PAGE>
<TABLE>
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
----------------------------------------
BALANCE SHEETS
--------------
March 31, 1996 - Unaudited
------------------------------------
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
- - ------
Cash and cash equivalents $1,362,636 $2,468,463 $3,831,099
Net investment in direct
financing leases 82,162 207,270 289,432
Investment in foreclosed
properties, net 745,854 1,204,602 1,950,456
Diverted and Other Assets, net 149,907 242,110 392,017
Restricted Cash 43,130 69,657 112,787
---------- ---------- ----------
$2,383,689 $4,192,102 $6,575,791
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
- - --------------------------------
Accounts payable and
accrued expenses $ 113,170 $ 190,076 $ 303,246
Lessee rental deposits 172,343 298,200 470,543
Due to Management Company 70 89 159
---------- ---------- ----------
Total liabilities 285,583 488,365 773,948
Total Partners' equity 2,098,106 3,703,737 5,801,843
---------- ---------- ----------
$2,383,689 $4,192,102 $6,575,791
========== ========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
----------------------------------------
BALANCE SHEETS
--------------
December 31, 1995
--------------------------------
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ---------- ---------
<S> <C> <C> <C>
ASSETS
- - ------
Cash and cash equivalents $1,348,281 $2,443,281 $3,791,562
Net investment in direct
financing leases 147,213 369,781 516,994
Diverted and Other Assets, net 149,907 242,110 392,017
Investment in foreclosed
properties, net 745,854 1,204,602 1,950,456
Restricted Cash 43,130 69,657 112,787
---------- ---------- -----------
$2,434,385 $4,329,431 $ 6,763,816
========== ========== ===========
LIABILITIES AND PARTNERS' EQUITY
- - --------------------------------
Accounts payable and
accrued expenses $ 133,794 $ 217,322 $ 351,116
Lessee rental deposits 174,492 301,773 476,265
Due to Management Company 67 84 151
---------- ---------- ----------
Total liabilities 308,353 519,179 827,532
Total Partners' equity 2,126,032 3,810,252 5,936,284
---------- ---------- ----------
$2,434,385 $4,329,431 $6,763,816
========== ========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
----------------------------------------
STATEMENTS OF REVENUE AND EXPENSES
----------------------------------
For the three months ended March 31, 1996
-----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
--------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 8,769 $ 19,762 $ 28,531
Interest income 15,889 25,678 41,567
Rental income 31,433 50,767 82,200
-------- -------- --------
56,091 96,207 152,298
-------- -------- --------
Expenses:
Management fees-New Era 70,259 117,175 187,434
General Partner's
expense reimbursement 25,769 41,619 67,388
Professional fees 38,125 61,852 99,977
Other operating expenses 7,224 13,020 20,244
Credit for lease losses (57,360) (92,640) (150,000)
-------- -------- --------
84,017 141,026 225,043
-------- -------- --------
Net loss $(27,926) $(44,819) $ (72,745)
======== ======== =========
Net loss - General Partner $ (279) $ (448) $ (727)
======== ======== =========
Net loss - Limited Partners $(27,647) $(44,371) $ (72,018)
======== ======== =========
Net loss per Limited
Partnership Unit $(0.72) $(0.72)
====== ======
Weighted average number
of Limited Partnership
Units outstanding 38,197 61,696
====== ======
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
----------------------------------------
STATEMENTS OF REVENUE AND EXPENSES
----------------------------------
For the three months ended March 31, 1995
-----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ---------
<S> <C> <C> <C>
Revenue:
Lease income $ 42,329 $ 84,590 $ 126,919
Interest income 11,743 20,076 31,819
-------- -------- --------
54,072 104,666 158,738
-------- -------- --------
Expenses:
Management fees-New Era 84,039 141,173 225,212
General Partner's
expense reimbursement 5,945 9,602 15,547
Professional fees 38,964 64,965 103,929
Other operating expenses 4,158 7,452 11,610
Credit for lease losses (57,360) (92,640) (150,000)
-------- -------- --------
75,746 130,552 206,298
-------- -------- --------
Net loss $(21,674) $ (25,886) $ (47,560)
======== ======== =========
Net loss - General Partner $ (217) $ (259) $ (476)
======== ======== =========
Net loss - Limited Partners $(21,457) $ (25,627) $ (47,084)
======== ======== =========
Net loss per Limited
Partnership Unit $(0.56) $(0.42)
====== ======
Weighted average number
of Limited Partnership Units
outstanding 38,197 61,696
====== ======
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
----------------------------------------
STATEMENT OF CHANGES IN PARTNERS' EQUITY
----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
General Limited Limited Total
Partner's Partners' Partners' Partners'
Equity Equity Equity Equity
---------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 $(113,423)* $2,164,949 $3,884,758 $5,936,284
Distributions to partners
(Note 3) - - (61,696) (61,696)
Net loss (727) (27,647) (44,371) (72,745)
Allocation of General
Partner's Equity 114,150 (39,196) (74,954) -
--------- ---------- ----------- ----------
Balance, March 31, 1996 $ - $2,098,106 $3,703,737 $5,801,843
========= ========== ========== ==========
<FN>
* Balance as previously reported was $0 due to allocation of
$38,917 and $74,506 to Liquidating and Continuing Limited Partners'
Equity, respectively.
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
----------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
For the three months ended March 31, 1996
-----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ -------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (27,926) $ (44,819) $ (72,745)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (57,360) (92,640) (150,000)
Changes in assets and liabilities:
Accounts payable and accrued
expenses (20,624) (27,246) (47,870)
Lessee rental deposits (2,149) (3,573) (5,722)
Due to Management Company 3 5 8
--------- --------- ---------
(108,056) (168,273) (276,329)
--------- --------- ---------
Cash flows from investing activities:
Principal collections on leases 122,411 255,151 377,562
--------- --------- ---------
122,411 255,151 377,562
--------- --------- ---------
Cash flows from financing activities:
Distributions to limited partners (a) - (61,696) (61,696)
--------- --------- ---------
- (61,696) (61,696)
Net increase in cash and
cash equivalents 14,355 25,182 39,537
Cash and cash equivalents:
Beginning of year 1,348,281 2,443,281 3,791,562
---------- ----------- ----------
End of first quarter $1,362,636 $2,468,463 $3,831,099
========== ========== ==========
<FN>
(a) Distributions during the period were $1.00 per unit for
Continuing Limited Partners (see Note 3).
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
----------------------------------------
STATEMENTS OF CASH FLOWS
-------------------------
For the three months ended March 31, 1995
-----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------- ------------ -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (21,674) $ (25,886) $ (47,560)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (57,360) (92,640) (150,000)
Changes in assets and liabilities:
Accounts payable and accrued
expenses (37,480) (58,553) (96,033)
Lessee rental deposits 8,180 18,191 26,371
Due to Management Company 188 150 338
------------ ------------ ------------
(108,146) (158,738) (266,884)
------------ ------------ ------------
Cash flows from investing activities:
Principal collections on leases 286,518 518,737 805,255
Diverted and Other Assets, net 55,448 89,554 145,002
Datronic Assets 10,670 17,234 27,904
Repayments of commercial lease paper 446 721 1,167
Net investment in foreclosed properties 14,315 23,119 37,434
------------ ------------ ------------
367,397 649,365 1,016,762
------------ ------------ ------------
Cash flows from financing activities:
Distributions to limited partners (a) (100,245) (425,359) (525,604)
Distributions to General Partner (3,698) (9,005) (12,703)
------------ ------------ ------------
(103,943) (434,364) (538,307)
------------ ------------ ------------
Net increase in cash and
cash equivalents 155,308 56,263 211,571
Cash and cash equivalents:
Beginning of year 1,015,656 2,136,628 3,152,284
------------ ------------ ------------
End of first quarter $ 1,170,964 $ 2,192,891 $ 3,363,855
============ ============ ============
<FN>
(a) Distributions during the period were $2.62 per unit for
Liquidating Limited Partners and $6.89 per unit for Continuing
Limited Partners (see Note 3).
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
March 31, 1996
--------------
(Unaudited)
NOTE 1 - ORGANIZATION:
- - ----------------------
Datronic Equipment Income Fund XVI, L.P., a Delaware Limited
Partnership (the "Partnership"), was formed on April 21, 1987 for
the purpose of acquiring and leasing both high-and low-technology
equipment. Reference is made to Notes 4, 6, 7 and 8 to the
Partnership's financial statements included in the 1995 Form 10-K
for a discussion of the alleged diversion of Partnership assets in
1991 and 1992 and the subsequent litigation and settlement, change
in general partner, new classes of limited partners established,
and amendments to the Partnership Agreement which occurred.
NOTE 2 - BASIS OF FINANCIAL STATEMENTS:
- - ---------------------------------------
The accompanying financial statements should be read in conjunction
with the Partnership's financial statements included in the 1995
Form 10-K. The financial information furnished herein is unaudited
but in the opinion of Management includes all adjustments necessary
(all of which are normal recurring adjustments) for a fair
presentation of financial condition and results of operations. See
Note 3 to the Partnership's financial statements included in the
1995 Form 10-K.
Effective January 1, 1996 the Partnership adopted SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of." The adoption of SFAS 121 had no
effect on the Partnership's financial position or net loss.
NOTE 3 - LIMITED PARTNERSHIP DISTRIBUTIONS:
- - -------------------------------------------
Distributions to Liquidating Limited Partners were suspended after
payment of the April 1, 1995 distribution. Distributions to
Continuing Limited Partners were suspended after payment of the
January 1, 1996 distribution.
NOTE 4 - SUBSEQUENT EVENT:
- - --------------------------
On April 29, 1996, the United States District Court for the
Northern District of Illinois entered an order removing any claim
that one of the defendants in the class action litigation might
have had against the Partnership's Restricted Cash and Diverted and
Other Assets. See Notes 4, 5 and 6 to the Partnership's financial
statements included in the 1995 Form 10-K for a discussion of this
matter. Pursuant to the terms of the order, approximately $725,000
of Recovered Assets (the Partnership's interest therein is
approximately $35,000 and is included in Diverted and Other Assets)
will be held in escrow for the potential benefit of the defendant
pending the outcome of certain other Partnership litigation. If
the assets are ultimately transferred to the defendant, the impact
on the Partnership's financial position will not be material.
PART I
- - ------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- - ----------------------------------------------------------
The following discussion and analysis of liquidity and capital
resources covers material changes in the Partnership's financial
condition from December 31, 1995 through March 31, 1996. The
discussion and analysis of results of operations is for the three
month period ended March 31, 1996 as compared to the corresponding
period in 1995.
Financial Condition, Liquidity and Capital Resources
- - -----------------------------------------------------
During the three months ended March 31, 1996, Partnership assets
continued to be converted to cash which was used to pay
Partnership operating expenses and the January 1, 1996 distribution
to the Continuing Limited Partners and increase cash balances to
ensure that sufficient cash will be available to pursue pending
litigation and liquidate the Partnership in an orderly manner.
Net investment in direct financing leases decreased $227,562 during
the three months ended March 31, 1996 primarily due
to principal collections of $377,562 partially offset by a credit
for lease losses of $150,000.
Accounts payable and accrued expenses decreased $47,870 during
the three months ended March 31, 1996 primarily due to payment of
accrued legal fees and accrued carrying costs on foreclosed
properties.
In the aggregate, partners' equity decreased $134,441 during the
three months ended March 31, 1996 due to a net loss of $72,745 and
distributions to Continuing Limited Partners of $61,696.
During the three months ended March 31, 1996, the Partnership's
operating activities resulted in a use of $276,329 of cash. This
was due principally to a net loss of $72,745, decreases in accounts
payable and security deposits of $53,592 and $150,000 relating to
a reduction in the allowance for lease losses. During the period,
cash flows from investing activities aggregated $377,562 relating
to principal collections on leases. Cash flows used for financing
activities of $61,696 consisted of distributions to the
Continuing Limited Partners.
The Partnership's principal source of liquidity on a short-term
basis is expected to be cash on hand, cash receipts from lessees
under leases owned by the Partnership as well as proceeds from
rental on foreclosed properties. The Partnership's sources of
liquidity on a long-term basis are expected to include cash on
hand, cash receipts from lessees, proceeds from the sale of other
assets of the Partnership including, without limitation, foreclosed
properties and Diverted and Other Assets. Management believes that
the Partnership's sources of liquidity in the short and long-term
are sufficient to meet operating cash obligations. Distributions
to the Liquidating Limited Partners were suspended after the April
1, 1995 distribution and distributions to the Continuing Limited
Partners were suspended after the January 1, 1996 distribution.
Distributions were suspended to ensure that sufficient cash
will be available to pursue recoveries under pending litigation
with the Partnership's former accountants and to liquidate the
Partnership in an orderly manner.
Management expects sources of future liquidity to include proceeds
from the sale or disposition of other Partnership assets. In this
regard, the Partnership has Diverted and Other Assets (net) of
$392,017 of which, approximately $35,000 may be used to settle the
claims of a defendant of the Class Action Complaint (see Note 4 to
the financial statements included in item 1).
The continued operation and eventual liquidation of the Partnership
involves numerous complex issues which have to be resolved. These
issues relate to the timing and realizability of lease-related
assets, Diverted and Other Assets, Datronic Assets, litigation and
the liquidation of the other Datronic Partnerships (see Notes 4, 6
and 9 to the financial statements included in the 1995 Form 10-K).
These issues make it difficult to predict the time and costs
necessary to operate and liquidate the Partnership in an orderly
manner. As a result of these uncertainties, it is not possible to
predict the timing and availability of cash for future
distributions to Limited Partners. However, it is likely that the
amount of future distributions, if any, to the Limited Partners
will ultimately be significantly less than the amount of Partner's
Equity reflected in the March 31, 1996 Balance Sheets (see
financial statements included in Item 1).
Results of Operations
- - ---------------------
Lease income decreased approximately $98,000 for the three month
period ended March 31, 1996 as compared to the corresponding period
in 1995 primarily due to declining lease portfolios.
Rental income was approximately $82,000 for the three month
period ended March 31, 1996 as compared to zero in the
corresponding period in 1995 due to the recognition of rental
income collected on foreclosed properties beginning in April 1995.
See Note 10 to the Partnership's financial statements included in
the 1995 Form 10-K.
Management fees-New Era represent amounts paid New Era for managing
the Partnership on a day-to-day basis. These fees amounted to
approximately $187,000 for the three months ended March 31, 1996 as
compared to $225,000 for the same period in 1995. See Note 8 to
the Partnership's financial statements included in the 1995 Form
10-K.
The General Partner's expense reimbursement represents the amount
paid to LRC in excess of LRC's 1% share of cash flow available for
distribution. Total amounts paid to LRC are primarily a function
of the amount of time LRC spends on the activities of the
Partnership and the timing of certain LRC expenses. Total amounts
paid to LRC for the three months ended March 31, 1996 were
approximately $67,000 (all of which represents General Partner's
expense reimbursement) as compared to approximately $28,000
($15,000 representing the General Partner's expense reimbursement
and $13,000 representing LRC's 1% of cash flow available for
distribution) for the three months ended March 31, 1995.
The credit for lease losses reflects Management's ongoing
assessment of potential losses inherent in the lease portfolios and
actual lease collections on certain leases in excess of those
anticipated in prior years.
PART II - OTHER INFORMATION
- - ---------------------------
ITEM 1. LEGAL PROCEEDINGS
- - --------------------------
Reference is made to Item 3 - Legal Proceedings in the
Partnership's December 31, 1995 Form 10-K for a discussion of
material legal proceedings involving the Partnership.
Reference is made to Part I, Item 1, Note 4 for a discussion of legal
proceedings involving claims against Restricted Cash and Diverted and
Other Assets.
ITEM 2. CHANGES IN SECURITIES
- - ------------------------------
None.
ITEM 3.
- - -------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - ------------------------------------------------------------
None.
ITEM 5.
- - -------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - -----------------------------------------
(a) Exhibits
- - -------------
See Exhibit Index.
(b) Reports on Form 8-K
- - ------------------------
None.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized, on the 9th day of May
1996.
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
Registrant
By: DONALD D. TORISKY
Donald D. Torisky
Chairman and Chief Executive Officer
Lease Resolution Corporation
General Partner of
Datronic Equipment Income Fund XVI, L.P.
By: DOUGLAS E. VAN SCOY
Douglas E. Van Scoy
Chief Financial Officer and Director
New Era Funding Corp.
Managing Agent of
Datronic Equipment Income Fund XVI, L.P.
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- - ----------- -----------
27 Financial Data Schedule, which
is submitted electronically to
the Securities and Exchange
Commission for Information only
and not filed.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet and the Statements of Revenue and Expenses and is qualifed in its entirety
by reference to such Report on Form 10-Q.
</LEGEND>
<CIK> 0000814323
<NAME> DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,831,099
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,575,791
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,801,843
<TOTAL-LIABILITY-AND-EQUITY> 6,575,791
<SALES> 0
<TOTAL-REVENUES> 152,298
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,244
<LOSS-PROVISION> (150,000)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (72,745)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
