<PAGE> 1
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, 1997 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> 2
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1.
- -------
Index to Financial Statements
Balance Sheets
March 31, 1997 (unaudited) 3
December 31, 1996 4
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1997 5
For the three months ended March 31, 1996 6
Statements of Changes in Partners' Equity
For the three months ended March 31, 1997
(unaudited) 7
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1997 8
For the three months ended March 31, 1996 9
Notes to Financial Statements (unaudited) 10
Item 2.
- -------
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 13
PART II - OTHER INFORMATION
Items 1-6. 14
- ----------
</TABLE>
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ---------- ---------
<S> <C> <C> <C>
ASSETS
- ------
Cash and cash equivalents $1,038,988 $2,068,865 $3,107,853
Net investment in direct
financing leases - 5,988 5,988
Investment in foreclosed
properties, net 738,703 1,193,053 1,931,756
Diverted and other assets, net 140,676 227,201 367,877
Datronic assets, net - - -
---------- ---------- ----------
$1,918,367 $3,495,107 $5,413,474
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and
accrued expenses $ 65,977 $ 111,930 $ 177,907
Lessee rental deposits 34,831 57,311 92,142
---------- --------- ----------
Total liabilities 100,808 169,241 270,049
Total partners' equity 1,817,559 3,325,866 5,143,425
---------- ---------- ----------
$1,918,367 $3,495,107 $5,413,474
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
December 31, 1996
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ---------- ---------
<S> <C> <C> <C>
ASSETS
- ------
Cash and cash equivalents $1,065,965 $2,093,544 $3,159,509
Due from management company 12,826 21,678 34,504
Net investment in direct
financing leases 2,520 38,959 41,479
Diverted and other assets, net 140,676 227,201 367,877
Investment in foreclosed
properties, net 740,883 1,196,573 1,937,456
Datronic assets, net - - -
---------- ---------- ----------
$1,962,870 $3,577,955 $5,540,825
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and
accrued expenses $ 104,052 $ 174,295 $ 278,347
Lessee rental deposits 52,777 96,042 148,819
---------- ---------- ---------
Total liabilities 156,829 270,337 427,166
Total partners' equity 1,806,041 3,307,618 5,113,659
---------- ---------- ----------
$1,962,870 $3,577,955 $5,540,825
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the three months ended March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ---------- ---------
<S> <C> <C> <C>
Revenue:
Lease income $ 1,971 $ 5,949 $ 7,920
Interest income 12,823 21,655 34,478
Rental income 39,653 64,043 103,696
-------- -------- ---------
54,447 91,647 146,094
-------- -------- ---------
Expenses:
General Partner's
expense reimbursement 63,911 106,309 170,220
Professional fees 24,045 39,536 63,581
Other operating expenses 5,271 8,788 14,059
Credit for lease losses (50,298) (81,234) (131,532)
-------- -------- ---------
42,929 73,399 116,328
-------- -------- ---------
Net earnings $ 11,518 $ 18,248 $ 29,766
======== ======== =========
Net earnings
-General Partner $ 115 $ 182 $ 297
======== ======== =========
Net earnings
-Limited Partners $ 11,403 $ 18,066 $ 29,469
======== ======== =========
Net earnings per limited
partnership unit $ 0.30 $ 0.29
====== ======
Weighted average number
of limited partnership
units outstanding 38,197 61,696
====== ======
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the three months ended March 31, 1996
(Unaudited)
<TABLE>
<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
====== ======
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENT OF CHANGES IN PARTNERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
General Limited Limited Total
Partner's Partners' Partners' Partners'
Equity Equity Equity Equity
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 $(121,032)* $1,848,158 $3,386,533 $5,113,659
Net earnings 297 11,403 18,066 29,766
Allocation of General
Partner's Equity 120,735 (42,002) (78,733) -
--------- ---------- ---------- ----------
Balance, March 31, 1997 $ - $1,817,559 $3,325,866 $5,143,425
========= ========== ========== ==========
</TABLE>
* Balance as previously reported was $0 due to allocation of $42,117 and
$78,915 to Liquidating and Continuing Limited Partners' Equity,
respectively.
See accompanying notes to financial statements.
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ---------- ---------
<S> <C> <C> <C>
Cash flows from
operating activities:
Net earnings $ 11,518 $ 18,248 $ 29,766
Adjustments to
reconcile net earnings to
net cash used in
operating activities:
Credit for lease losses (50,298) (81,234) (131,532)
Changes in assets and
liabilities:
Accounts payable and
accrued expenses (38,075) (62,365) (100,440)
Lessee rental deposits (17,946) (38,731) (56,677)
Due to management company 12,826 21,678 34,504
---------- ---------- ---------
(81,975) (142,404) (224,379)
--------- ---------- ---------
Cash flows from investing activities:
Principal collections
on leases 52,818 114,205 167,023
Investment in foreclosed
properties 2,180 3,520 5,700
---------- ---------- ----------
54,998 117,725 172,723
---------- ---------- ----------
Net decrease in cash and
cash equivalents (26,977) (24,679) (51,656)
Cash and cash equivalents:
Beginning of year 1,065,965 2,093,544 3,159,509
---------- ---------- ----------
End of first quarter $1,038,988 $2,068,865 $3,107,853
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1996
(Unaudited)
<TABLE>
<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
---------- ---------- ----------
Cash flows from financing activities:
Distributions to
Limited Partners - (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
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(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 3,
4, 5, and 6 to the Partnership's financial statements included in the 1996 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 1996 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 2 to the Partnership's financial statements included in
the 1996 Form 10-K.
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 - INVESTMENT ON FORECLOSED PROPERTIES:
During 1991 and 1992, the Partnership acquired three real estate properties
through foreclosure on defaulted leases. Two of the properties are subject to
separate lease agreements each containing renewal provisions exercisable by the
lessee under certain conditions. One lease agreement extends to November, 1997
and provides rental payments of $220,000 for 1997. The original term of the
second lease agreement expired in February 1997. The tenant is continuing to
occupy the premises on a month-to-month basis with a monthly rental of $11,248.
10
<PAGE> 11
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,
1996 through March 31, 1997. The discussion and analysis of results of
operations is for the three month period ended March 31, 1997 as compared to
the corresponding period in 1996.
Financial Condition, Liquidity and Capital Resources
During the three months ended March 31, 1997, Partnership assets continued to
be converted to cash which was used to, generally, pay Partnership operating
expenses.
Net investment in direct financing leases decreased approximately $35,000
during the three months ended March 31, 1997 primarily due to principal
collections of approximately $167,000 partially offset by a credit for lease
losses of approximately $132,000.
Accounts payable and accrued expenses decreased approximately $100,000 during
the three months ended March 31, 1997 primarily due to payment of accrued legal
fees.
Lessee rental deposits decreased approximately $57,000 resulting from payments
made to lessees.
In the aggregate, partners' equity increased approximately $30,000 during the
three months ended March 31, 1997 due to earnings.
During the three months ended March 31, 1997, the Partnership's operating
activities resulted in a use of approximately $224,000 of cash. This was due
principally to decreases in accounts payable and rental deposits of
approximately $157,000 and a non-cash credit for lease loss of approximately
$132,000, partially offset by net earnings of approximately $30,000 and a
decrease in due from management company of approximately $35,000. During the
period, cash flows from investing activities aggregated approximately $173,000
relating primarily to principal collections on leases.
The Partnership's sources of liquidity on both a long-term and short-term basis
are expected to come principally from cash-on-hand and the rental of foreclosed
properties. In addition, the Partnership's sources of liquidity on a long-
term basis are expected to include proceeds from the sale of other assets of
the Partnership including, without limitation, Diverted and other assets and
foreclosed properties. Management believes that its sources of liquidity in
the short and long-term are sufficient to meet its operating cash obligations
and provide for the ongoing pursuit of litigation, and an orderly liquidation
of the Partnership. Distributions to Liquidating Limited Partners were
suspended after the April 1, 1995 distribution and distributions to the
Continuing Limited Partners were suspended
11
<PAGE> 12
after the January 1, 1996 distribution. It is unlikely that any additional
distributions will be made until all remaining assets are liquidated and the
pending litigation is resolved.
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 Diverted and other assets, Datronic assets,
litigation and the liquidation of the other Datronic Partnerships (see Notes 3,
5 and 9 to the Partnership's financial statements included in the 1996 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 unlikely that any additional distributions will be
made until all remaining assets are liquidated and the pending litigation is
resolved, and the amount of future distributions, if any, to the Limited
Partners is likely to be significantly less than the amount of partners' equity
reflected in the March 31, 1997 Balance Sheets (see financial statements
included in Item 1).
Results of Operations
Lease income decreased approximately $21,000 for the three month period ended
March 31, 1997 as compared to the corresponding period in 1996 primarily due to
the declining lease portfolio.
Rental income increased approximately $21,000 for the three month period ended
March 31, 1997 as compared to the corresponding period in 1996, primarily due
to rental rate increases.
Management fees-New Era represent amounts paid New Era for managing the
Partnership on a day-to-day basis pursuant to a Management Agreement which was
terminated effective June 30, 1996. Accordingly, fees paid to New Era amounted
to zero for the three months ended March 31, 1997 as compared to approximately
$187,000 for the same period in 1996. Subsequent to June 30, 1996 the General
Partner has assumed responsibility for day-to-day management of the Partnership
and the corresponding costs and expenses are included in General Partner's
expense reimbursement. See Note 8 to the Partnership's financial statements
included in the 1996 Form 10-K.
The General Partner's expense reimbursement represents the amount paid to LRC
in its capacity as general partner. Total amounts paid to LRC for the three
months ended March 31, 1997 were approximately $170,000 as compared to
approximately $67,000 for the three months ended March 31, 1996. The increase
of approximately $103,000 results from expenses of approximately $110,000
incurred in 1997 to manage the day-to-day operations of the Partnership due to
the termination of the Management Agreement with New Era as of June 30, 1996
(see Note 8 to the Partnership's financial statements included in the 1996 Form
10-K), partially offset by an overall decrease in all other expenses of
approximately $7,000.
Professional fees decreased approximately $36,000 for the three month period
ended March 31, 1997 as compared to the corresponding period in 1996, primarily
due to decreased audit fees, consulting fees and
12
<PAGE> 13
legal fees for collections and Partnership claims against former accountants
and others.
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.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 - Legal Proceedings in the Partnership's December
31, 1996 Form 10-K for a discussion of material legal proceedings involving the
Partnership.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Exhibit Index.
(b) Reports on Form 8-K
None.
14
<PAGE> 15
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 12th day of May 1997.
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
Registrant
By: /s/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: /s/ROBERT P. SCHAEN
--------------------------------------
Robert P. Schaen
Vice Chairman and Chief Financial Officer,
Lease Resolution Corporation
General Partner of
Datronic Equipment Income Fund XVI, L.P.
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
27 Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for Information only and not
filed.
</TABLE>
16
<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 qualified in its
entirety by reference to such Report on Form 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,107,853
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,413,474
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,143,425
<TOTAL-LIABILITY-AND-EQUITY> 5,413,474
<SALES> 0
<TOTAL-REVENUES> 146,094
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,059
<LOSS-PROVISION> (131,532)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,766
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
