<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
June 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 JUNE 30, 1999
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
June 30, 1999 (unaudited) 3
December 31, 1998 4
Statements of Revenue and Expenses (unaudited)
For the three months ended June 30, 1999 5
For the three months ended June 30, 1998 6
For the six months ended June 30, 1999 7
For the six months ended June 30, 1998 8
Statements of Changes in Partners' Equity
For the six months ended June 30, 1999 (unaudited) 9
Statements of Cash Flows (unaudited)
For the six months ended June 30, 1999 10
For the six months ended June 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
PART II - OTHER INFORMATION
Items 1-6. 15
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
June 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ---------- ----------
ASSETS
Cash and cash equivalents $ 954,953 $1,603,114 $2,558,067
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 - - -
------------ ---------- ----------
$ 1,316,468 $2,186,984 $3,503,452
============ ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 6,606 $ 12,201 $ 18,807
Lessee rental deposits - 320 320
------------ ---------- ----------
Total liabilities 6,606 12,521 19,127
Total partners' equity 1,309,862 2,174,463 3,484,325
------------ ---------- ----------
$ 1,316,468 $2,186,984 $3,503,452
============ ========== ==========
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
December 31, 1998
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ---------- ----------
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
============ ========== ==========
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 June 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ---------- ----------
Revenue:
Lease income $ 832 $ 1,833 $ 2,665
Interest income 7,308 14,771 22,079
---------- ---------- --------
8,140 16,604 24,744
---------- ---------- --------
Expenses:
General Partner's expense
reimbursement 36,314 58,687 95,001
Professional fees 9,580 15,472 25,052
Other operating expenses 23,014 37,168 60,182
Credit for lease losses (34,673) (58,652) (93,325)
---------- ---------- --------
34,235 52,675 86,910
---------- ---------- --------
Net loss $ (26,095) $ (36,071) $(62,166)
========== ========== ========
Net loss - General Partner $ (261) $ (361) $ (622)
========== ========== ========
Net loss - Limited Partners $ (25,834) $ (35,710) $(61,544)
========== ========== ========
Net loss per limited
partnership unit $ (0.68) $ (0.58)
========== ==========
Weighted average number of limited
partnership units outstanding 38,197 61,696
========== ==========
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 June 30, 1998
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ---------- ----------
Revenue:
Lease income $ 4,560 $ 7,876 $ 12,436
Interest income 10,684 20,448 31,132
------------ ---------- ----------
15,244 28,324 43,568
------------ ---------- ----------
Expenses:
General Partner's expense
reimbursement 42,891 69,357 112,248
Professional fees 76,518 124,210 200,728
Other operating expenses 3,610 5,829 9,439
Credit for lease losses (9,574) (21,540) (31,114)
------------ ---------- ----------
113,445 177,856 291,301
------------ ---------- ----------
Net loss $ (98,201) $ (149,532) $(247,733)
============ ========== ==========
Net loss - General Partner $ (982) $ (1,495) $ (2,477)
============ ========== ==========
Net loss - Limited Partners $ (97,219) $ (148,037) $(245,256)
============ ========== ==========
Net loss per limited
partnership unit $ (2.55) $ (2.40)
============ ==========
Weighted average number of limited
partnership units outstanding 38,197 61,696
============ ==========
See accompanying notes to financial statements
6
<PAGE> 7
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the six months ended June 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ----------- ----------
Revenue:
Lease income $ 1,664 $ 3,177 $ 4,841
Interest income 17,634 34,300 51,934
------------ ----------- ----------
19,298 37,477 56,775
------------ ----------- ----------
Expenses:
General Partner's expense
reimbursement 86,129 139,208 225,337
Professional fees 16,946 27,369 44,315
Other operating expenses 49,163 79,441 128,604
Credit for lease losses (43,061) (74,439) (117,500)
------------ ----------- ----------
109,177 171,579 280,756
------------ ----------- ----------
Net loss $ (89,879) $ (134,102) $(223,981)
============ =========== ==========
Net loss - General Partner $ (899) $ (1,341) $ (2,240)
============ =========== ==========
Net loss - Limited Partners $ (88,980) $ (132,761) $(221,741)
============ =========== ==========
Net loss per limited
partnership unit $ (2.33) $ (2.15)
============ ===========
Weighted average number of limited
partnership units outstanding 38,197 61,696
============ ===========
See accompanying notes to financial statements
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the six months ended June 30, 1998
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ----------- ----------
Revenue:
Lease income $ 7,465 $ 13,003 $ 20,468
Interest income 21,495 40,981 62,476
------------ ----------- ----------
28,960 53,984 82,944
------------ ----------- ----------
Expenses:
General Partner's expense
reimbursement 87,646 141,725 229,371
Professional fees 125,221 203,010 328,231
Other operating expenses 7,252 11,713 18,965
Credit for lease losses (29,557) (59,814) (89,371)
------------ ----------- ----------
190,562 296,634 487,196
------------ ----------- ----------
Net loss $ (161,602) $(242,650) $(404,252)
============ =========== ==========
Net loss - General Partner $ (1,616) $ (2,427) $ (4,043)
============ =========== ==========
Net loss - Limited Partners $ (159,986) $(240,223) $(400,209)
============ =========== ==========
Net loss per limited
partnership unit $ (4.19) $ (3.89)
============ ===========
Weighted average number of limited
partnership units outstanding 38,197 61,696
============ ===========
See accompanying notes to financial statements
8
<PAGE> 9
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
(Unaudited)
Liquidating Continuing
General Limited Limited Total
Partner's Partner's Partner's Partner's
Equity Equity Equity Equity
--------- ----------- ----------- -----------
Balance, December 31, 1998* $ - $1,582,948 $2,998,810 $4,581,758
Distributions to partners - (183,207) (690,245) (873,452)
Net loss (2,240) (88,980) (132,761) (223,981)
Allocation of General
Partner's Equity 2,240 (899) (1,341) -
--------- ----------- ----------- -----------
Balance, June 30, 1999 $ - $1,309,862 $2,174,463 $3,484,325
========= =========== =========== ===========
* 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 six months ended June 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ----------- -----------
Cash flows from operating activities:
Net loss $ (89,879) $ (134,102) $ (223,981)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (43,061) (74,439) (117,500)
Changes in assets and liabilities:
Judgment receivable, net 25,485 41,161 66,646
Accounts payable and
accrued expenses (31,938) (54,372) (86,310)
Lessee rental deposits (3,824) (6,675) (10,499)
------------ ----------- -----------
(143,217) (228,427) (371,644)
------------ ----------- -----------
Cash flows from investing activities:
Principal collections on leases 43,061 74,439 117,500
Investment in foreclosed properties 258,131 416,897 675,028
------------ ----------- -----------
301,192 491,336 792,528
------------ ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (183,207) (690,245) (873,452)
------------ ----------- -----------
Net decrease in cash and
cash equivalents (25,232) (427,336) (452,568)
Cash and cash equivalents:
Beginning of year 980,185 2,030,450 3,010,635
------------ ----------- -----------
End of second quarter $ 954,953 $1,603,114 $ 2,558,067
============ =========== ===========
See accompanying notes to financial statements
10
<PAGE> 11
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1998
(Unaudited)
Liquidating Continuing
Limited Limited
Parters Parters Total
------------ ---------- -----------
Cash flows from operating activities:
Net loss $ (161,602) $ (242,650) $ (404,252)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (29,557) (59,814) (89,371)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (1,246) (2,276) (3,522)
Lessee rental deposits (1,523) (2,476) (3,999)
------------ ---------- -----------
(193,928) (307,216) (501,144)
------------ ---------- -----------
Cash flows from investing activities:
Principal collections on leases 29,557 59,814 89,371
Investment in foreclosed properties 164,810 266,178 430,988
------------ ---------- -----------
194,367 325,992 520,359
------------ ---------- -----------
Net increase in cash and
cash equivalents 439 18,776 19,215
Cash and cash equivalents:
Beginning of year 903,609 1,882,675 2,786,284
------------ ---------- -----------
End of second quarter $ 904,048 $1,901,451 $ 2,805,499
============ ========== ===========
See accompanying notes to financial statements
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
NOTES TO FINANCIAL STATEMENTS
June 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 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 ($74,000 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
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 June 30, 1999. The discussion and analysis of results of operations is
for the three and six month periods ended June 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 six months ended June 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 six months ended
June 30, 1999, Partnership cash and cash equivalents decreased by $452,000 to
$2,558,000 at June 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 $372,000, partially offset by cash
collections on leases of $118,000 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 ($74,000 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 during the
second half of 1999 or 2000 and the proceeds 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
13
<PAGE> 14
Exchange Commission and the Internal Revenue Service. The general partner
expects this to occur sometime during the year 2000.
Results of Operations
The Partnership had net losses of $62,000 and $224,000 for the three and six
month periods ended June 30, 1999 in the aggregate for all classes of partners.
This compares to net losses of $248,000 and $404,000 for the three and six month
periods ended June 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 June 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 six months ended June 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 six months ended June
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 August 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,558,067
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,503,452
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,484,325
<TOTAL-LIABILITY-AND-EQUITY> 3,503,452
<SALES> 0
<TOTAL-REVENUES> 56,775
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 128,604
<LOSS-PROVISION> (117,500)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (223,981)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
