<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
September 30, 1999 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 SEPTEMBER 30, 1999
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
September 30, 1999 (unaudited) 3
December 31, 1998 4
Statements of Revenue and Expenses (unaudited)
For the three months ended September 30, 1999 5
For the three months ended September 30, 1998 6
For the nine months ended September 30, 1999 7
For the nine months ended September 30, 1998 8
Statements of Changes in Partners' Equity
For the nine months ended September 30, 1999 (unaudited) 9
Statements of Cash Flows (unaudited)
For the nine months ended September 30, 1999 10
For the nine months ended September 30, 1998 11
Notes to Financial Statements (unaudited) 12
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 13 - 14
Item 3.
Quantitative and Qualitative Disclosures About
Market Risk 14
PART II - OTHER INFORMATION
Items 1-6. 15
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 901,381 $1,518,497 $2,419,878
Net investment in direct financing
leases -- -- --
Diverted and other assets, net 79,384 128,210 207,594
Investment in foreclosed
properties, net 282,131 455,660 737,791
Datronic assets, net -- -- --
---------- ---------- ----------
$1,262,896 $2,102,367 $3,365,263
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 5,293 $ 10,079 $ 15,372
Lessee rental deposits -- 320 320
---------- ---------- ----------
Total liabilities 5,293 10,399 15,692
Total partners' equity 1,257,603 2,091,968 3,349,571
---------- ---------- ----------
$1,262,896 $2,102,367 $3,365,263
========== ========== ==========
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
December 31, 1998
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 980,185 $2,030,450 $3,010,635
Judgment receivable, net 25,485 41,161 66,646
Net investment in direct financing
leases -- -- --
Diverted and other assets, net 79,384 128,210 207,594
Investment in foreclosed
properties, net 540,262 872,557 1,412,819
Datronic assets, net -- -- --
---------- ---------- ----------
$1,625,316 $3,072,378 $4,697,694
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 38,544 $ 66,573 $ 105,117
Lessee rental deposits 3,824 6,995 10,819
---------- ---------- ----------
Total liabilities 42,368 73,568 115,936
Total partners' equity 1,582,948 2,998,810 4,581,758
---------- ---------- ----------
$1,625,316 $3,072,378 $4,697,694
========== ========== ==========
</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 September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ -- $ -- $ --
Interest income 10,473 18,330 28,803
--------- --------- ---------
10,473 18,330 28,803
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 44,216 71,450 115,666
Professional fees 7,470 12,065 19,535
Other operating expenses 17,724 28,628 46,352
Credit for lease losses (6,678) (11,318) (17,996)
--------- --------- ---------
62,732 100,825 163,557
--------- --------- ---------
Net loss $ (52,259) $ (82,495) $(134,754)
========= ========= =========
Net loss - General Partner $ (523) $ (825) $ (1,348)
========= ========= =========
Net loss - Limited Partners $ (51,736) $ (81,670) $(133,406)
========= ========= =========
Net loss per limited
partnership unit $ (1.35) $ (1.32)
========= =========
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 September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 604 $ 975 $ 1,579
Interest income 11,026 21,114 32,140
--------- --------- ---------
11,630 22,089 33,719
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 47,563 76,948 124,511
Professional fees 15,453 24,956 40,409
Other operating expenses 1,657 2,677 4,334
Credit for lease losses (3,060) (6,300) (9,360)
--------- --------- ---------
61,613 98,281 159,894
--------- --------- ---------
Net loss $ (49,983) $ (76,192) $(126,175)
========= ========= =========
Net loss - General Partner $ (500) $ (762) $ (1,262)
========= ========= =========
Net loss - Limited Partners $ (49,483) $ (75,430) $(124,913)
========= ========= =========
Net loss per limited
partnership unit $ (1.30) $ (1.22)
========= =========
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.
STATEMENTS OF REVENUE AND EXPENSES
For the nine months ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 1,664 $ 3,177 $ 4,841
Interest income 28,107 52,630 80,737
--------- --------- ---------
29,771 55,807 85,578
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 130,345 210,658 341,003
Professional fees 24,416 39,434 63,850
Other operating expenses 66,887 108,069 174,956
Credit for lease losses (49,739) (85,757) (135,496)
--------- --------- ---------
171,909 272,404 444,313
--------- --------- ---------
Net loss $(142,138) $(216,597) $(358,735)
========= ========= =========
Net loss - General Partner $ (1,421) $ (2,166) $ (3,587)
========= ========= =========
Net loss - Limited Partners $(140,717) $(214,431) $(355,148)
========= ========= =========
Net loss per limited
partnership unit $ (3.68) $ (3.48)
========= =========
Weighted average number of limited
partnership units outstanding 38,197 61,696
========= =========
</TABLE>
See accompanying notes to financial statements
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the nine months ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 8,069 $ 13,978 $ 22,047
Interest income 32,521 62,095 94,616
--------- --------- ---------
40,590 76,073 116,663
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 135,209 218,673 353,882
Professional fees 140,674 227,966 368,640
Other operating expenses 8,909 14,390 23,299
Credit for lease losses (32,617) (66,114) (98,731)
--------- --------- ---------
252,175 394,915 647,090
--------- --------- ---------
Net loss $(211,585) $(318,842) $(530,427)
========= ========= =========
Net loss - General Partner $ (2,116) $ (3,188) $ (5,304)
========= ========= =========
Net loss - Limited Partners $(209,469) $(315,654) $(525,123)
========= ========= =========
Net loss per limited
partnership unit $ (5.48) $ (5.12)
========= =========
Weighted average number of limited
partnership units outstanding 38,197 61,696
========= =========
</TABLE>
See accompanying notes to financial statements
8
<PAGE> 9
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS 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, 1998* $ -- $ 1,582,948 $ 2,998,810 $ 4,581,758
Distributions to partners -- (183,207) (690,245) (873,452)
Net loss (3,587) (140,717) (214,431) (358,735)
Allocation of General
Partner's Equity 3,587 (1,421) (2,166) --
----------- ----------- ----------- -----------
Balance, September 30, 1999 $ -- $ 1,257,603 $ 2,091,968 $ 3,349,571
=========== =========== =========== ===========
</TABLE>
* Balances are net of $44,348 and $82,003 of General Partner's Equity
previously allocated to Liquidating and Continuing Limited Partners' Equity.
See accompanying notes to financial statements
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (142,138) $ (216,597) $ (358,735)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (49,739) (85,757) (135,496)
Changes in assets and liabilities:
Judgment receivable, net 25,485 41,161 66,646
Accounts payable and
accrued expenses (33,251) (56,494) (89,745)
Lessee rental deposits (3,824) (6,675) (10,499)
----------- ----------- -----------
(203,467) (324,362) (527,829)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 49,739 85,757 135,496
Investment in foreclosed properties 258,131 416,897 675,028
----------- ----------- -----------
307,870 502,654 810,524
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (183,207) (690,245) (873,452)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (78,804) (511,953) (590,757)
Cash and cash equivalents:
Beginning of year 980,185 2,030,450 3,010,635
=========== =========== ===========
End of third quarter $ 901,381 $ 1,518,497 $ 2,419,878
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
10
<PAGE> 11
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (211,585) $ (318,842) $ (530,427)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (32,617) (66,114) (98,731)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (7,597) (13,444) (21,041)
Lessee rental deposits (1,081) (1,859) (2,940)
----------- ----------- -----------
(252,880) (400,259) (653,139)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 32,617 66,114 98,731
Investment in foreclosed properties 189,950 306,782 496,732
----------- ----------- -----------
222,567 372,896 595,463
----------- ----------- -----------
Net decrease in cash and
cash equivalents (30,313) (27,363) (57,676)
Cash and cash equivalents:
Beginning of year 903,609 1,882,675 2,786,284
=========== =========== ===========
End of third quarter $ 873,296 $ 1,855,312 $ 2,728,608
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(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. See Notes 5, 8, and 10 to the
Partnership's financial statements included in the 1998 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 1998 Form 10-K. The financial
information furnished as of September 30, 1999 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 1998 Form 10-K.
NOTE 3 - LIMITED PARTNERSHIP DISTRIBUTIONS:
In early April 1999, the Partnership made a cash distribution to Limited
Partners who were owners of record on December 31, 1998. This distribution
consisted of two components: (i) the net proceeds from the Price Waterhouse and
Weiss & Company legal actions ($110,000 and $177,000 for Liquidating and
Continuing Limited Partners, respectively), and (ii) residual cash resulting
from the net cash flows of the Partnership ($73,000 and $513,000 for Liquidating
and Continuing Limited Partners, respectively). The portion of the distribution
attributable to legal action proceeds was allocated to each Limited Partner
based on the number of units held at the rate of $2.87 per unit. See Note 8 to
the Partnership's financial statements included in the 1998 Form 10-K. Pursuant
to the Partnership Agreement, residual cash was allocated to each Limited
Partner based on their proportionate share of total partners' capital
attributable to their Class.
12
<PAGE> 13
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, 1998
through September 30, 1999. The discussion and analysis of results of operations
is for the three and nine month periods ended September 30, 1999 as compared to
the corresponding periods in 1998. Any capitalized term not defined herein has
been defined or discussed in the Partnership's 1998 Form 10-K.
Liquidity and Capital Resources
During the nine months ended September 30, 1999, Partnership assets continued to
be converted to cash in order to pay Partnership operating expenses and to
provide for the ultimate liquidation of the Partnership. During the nine months
ended September 30, 1999, Partnership cash and cash equivalents decreased by
$591,000 to $2,420,000 at September 30, 1999 from $3,010,000 at December 31,
1998. This decrease is primarily due to the distribution paid to Limited
Partners of $873,000 (see below) and by cash used in operations of $528,000,
partially offset by cash collections on leases of $135,000 and net cash flows
from foreclosed properties of $675,000. One of the foreclosed properties was
sold for $800,000, which was partially offset by $125,000 of environmental
cleanup costs associated with the remaining property held for sale.
In early April 1999, the Partnership made a cash distribution to Limited
Partners who were owners of record on December 31, 1998. This distribution
consisted of two components: (i) the net proceeds from the Price Waterhouse and
Weiss & Company legal actions ($110,000 and $177,000 for Liquidating and
Continuing Limited Partners, respectively), and (ii) residual cash resulting
from the net cash flows of the Partnership ($73,000 and $513,000 for Liquidating
and Continuing Limited Partners, respectively). The portion of the distribution
attributable to legal action proceeds was allocated to each Limited Partner
based on the number of units held at the rate of $2.87 per unit. See Note 8 to
the Partnership's financial statements included in the 1998 Form 10-K. Pursuant
to the Partnership Agreement, residual cash was allocated to each Limited
Partner based on their proportionate share of total partners' capital
attributable to their Class.
The Partnership's sources of future liquidity are expected to come from
cash-on-hand and the disposition of the remaining foreclosed properties and
Diverted Assets (consisting primarily of an office building in Schaumburg,
Illinois). The general partner expects that the assets will be sold sometime
during 2000. The proceeds will be included in the next distribution to the
Limited Partners sometime during 2000. After all assets are disposed of and the
proceeds distributed to the Limited Partners, the Partnership will be required
to file final reports with the Securities and Exchange Commission and
13
<PAGE> 14
the Internal Revenue Service. The general partner expects this to occur sometime
during the year 2000 or early 2001.
Results of Operations
The Partnership had net losses of $135,000 and $359,000 for the three and nine
month periods ended September 30, 1999 in the aggregate for all classes of
partners. This compares to net losses of $126,000 and $530,000 for the three and
nine month periods ended September 30, 1998. Differences in operating results
between Liquidating and Continuing Limited Partners are attributable to lease
income and expenses associated with new lease investments made since the March
4, 1993 Settlement. Liquidating Limited Partners do not participate in these
post Settlement activities. Significant factors affecting overall operating
results for the periods ended September 30, 1999 and 1998 include the following:
Lease income:
The Partnership no longer has an active lease portfolio. Any lease collections
are the result of recoveries in excess of reserved balances.
Interest income:
Interest income includes earnings on invested cash balances. Interest income for
1999 was lower than 1998 because of lower average invested cash balances and
interest rates.
General Partner's expense reimbursement:
General Partner's expense reimbursement includes payments to LRC for expenses it
incurred as general partner. These expenses include expenses incurred by LRC in
its management of the day-to-day operations of the Partnership.
Professional fees:
Professional fees for the three and nine months ended September 30, 1999 reflect
a decreasing level of professional services required as a result of the decrease
in the Partnership's lease portfolio and related activities. Included in the
1998 amount are fees paid in connection with the litigation against the
Partnership's former accountants.
Other operating expenses:
The increase in other operating expenses for the three and nine months ended
September 30, 1999 results from expenses incurred to secure and maintain the
foreclosed properties until they are sold.
Credit for lease losses:
This credit reflects recovery of previously reserved balances.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for in this disclosure is not applicable to the
Registrant.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 - Legal Proceedings in the Partnership's
December 31, 1998 Form 10-K for a discussion of material legal proceedings
involving the Partnership.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
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.
15
<PAGE> 16
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 4th day of November 1999.
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.
16
<PAGE> 17
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.
17
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,419,878
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,365,263
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,349,571
<TOTAL-LIABILITY-AND-EQUITY> 3,365,263
<SALES> 0
<TOTAL-REVENUES> 85,578
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 174,956
<LOSS-PROVISION> (135,496)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (358,735)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
