<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
<TABLE>
<S> <C>
For the Quarter Ended
March 31, 1999 Commission File Number 0-16764
- ---------------------- --------------------------------
</TABLE>
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, 1999
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
March 31, 1999 (unaudited) 3
December 31, 1998 4
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1999 5
For the three months ended March 31, 1998 6
Statements of Changes in Partners' Equity
For the three months ended March 31, 1999 (unaudited) 7
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1999 8
For the three months ended March 31, 1998 9
Notes to Financial Statements (unaudited) 10
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 12
PART II - OTHER INFORMATION
Items 1-6. 13
</TABLE>
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 922,000 $1,941,315 $2,863,315
Net investment in direct
financing leases -- -- --
Diverted and other assets, net 79,384 128,210 207,594
Investment in foreclosed
properties, net 556,372 898,566 1,454,938
Datronic assets, net -- -- --
---------- ---------- ----------
$1,557,756 $2,968,091 $4,525,847
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 34,768 $ 60,327 $ 95,095
Lessee rental deposits 3,824 6,985 10,809
---------- ---------- ----------
Total liabilities 38,592 67,312 105,904
Total partners' equity 1,519,164 2,900,779 4,419,943
---------- ---------- ----------
$1,557,756 $2,968,091 $4,525,847
========== ========== ==========
</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 March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ----------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 832 $ 1,344 $ 2,176
Interest income 10,326 19,529 29,855
--------- --------- ---------
11,158 20,873 32,031
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement $ 49,815 $ 80,521 $ 130,336
Professional fees 7,366 11,897 19,263
Other operating expenses 26,149 42,273 68,422
Credit for lease losses (8,388) (15,787) (24,175)
--------- --------- ---------
74,942 118,904 193,846
--------- --------- ---------
Net loss $ (63,784) $ (98,031) $(161,815)
========= ========= =========
Net loss - General Partner $ (638) $ (980) $ (1,618)
========= ========= =========
Net loss - Limited Partners $ (63,146) $ (97,051) $(160,197)
========= ========= =========
Net loss per limited
partnership unit $ (1.65) $ (1.57)
========= =========
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, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ----------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 2,905 $ 5,127 $ 8,032
Interest income 10,811 20,533 31,344
--------- --------- ---------
13,716 25,660 39,376
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement $ 44,755 $ 72,368 $ 117,123
Professional fees 48,703 78,800 127,503
Other operating expenses 3,642 5,884 9,526
Credit for lease losses (19,983) (38,274) (58,257)
--------- --------- ---------
77,117 118,778 195,895
--------- --------- ---------
Net loss $ (63,401) $ (93,118) $(156,519)
========= ========= =========
Net loss - General Partner $ (634) $ (931) $ (1,565)
========= ========= =========
Net loss - Limited Partners $ (62,767) $ (92,187) $(154,954)
========= ========= =========
Net loss per limited
partnership unit $ (1.64) $ (1.49)
========= =========
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 CHANGES IN PARTNERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited Limited Total
Partners Partners Partners Partners
Equity Equity Equity Equity
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 * $ -- $ 1,582,948 $ 2,998,810 $ 4,581,758
Net loss (1,618) (63,146) (97,051) (161,815)
Allocation of General
Partner's Equity 1,618 (638) (980) --
----------- ----------- ----------- -----------
Balance, March 31, 1999 $ -- $ 1,519,164 $ 2,900,779 $ 4,419,943
=========== =========== =========== ===========
</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
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (63,784) $ (98,031) $ (161,815)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (8,388) (15,787) (24,175)
Changes in assets and liabilities:
Judgment receivable, net 25,485 41,161 66,646
Accounts payable and
accrued expenses (3,776) (6,246) (10,022)
Lessee rental deposits -- (10) (10)
----------- ----------- -----------
(50,463) (78,913) (129,376)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 8,388 15,787 24,175
Investment in foreclosed properties (16,110) (26,009) (42,119)
----------- ----------- -----------
(7,722) (10,222) (17,944)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (58,185) (89,135) (147,320)
Cash and cash equivalents:
Beginning of year 980,185 2,030,450 3,010,635
----------- ----------- -----------
End of first quarter $ 922,000 $ 1,941,315 $ 2,863,315
=========== =========== ===========
</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, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (63,401) $ (93,118) $ (156,519)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (19,983) (38,274) (58,257)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (847) (1,795) (2,642)
Lessee rental deposits (360) (597) (957)
----------- ----------- -----------
(84,591) (133,784) (218,375)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 19,983 38,274 58,257
Investment in foreclosed properties 46,937 75,807 122,744
----------- ----------- -----------
66,920 114,081 181,001
----------- ----------- -----------
Net decrease in cash and
cash equivalents (17,671) (19,703) (37,374)
Cash and cash equivalents:
Beginning of year 903,609 1,882,675 2,786,284
----------- ----------- -----------
End of first quarter $ 885,938 $ 1,862,972 $ 2,748,910
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 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.
10
<PAGE> 11
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 March 31, 1999. The discussion and analysis of results of
operations is for the three month period ended March 31, 1999 as compared to
the corresponding period 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 three months ended March 31, 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 three
months ended March 31, 1999, Partnership cash and cash equivalents decreased by
$147,000 to $2,863,000 at March 31, 1999 from $3,010,000 at December 31, 1998.
This decrease is primarily due to cash used in operations of $129,000 and
increases in investment in foreclosed properties of $42,000 partially offset by
cash collections on leases of $24,000. The increase in foreclosed properties
results from property improvements pursuant to a sales contract.
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 the
remaining cash-on-hand after the April 1999 distribution, as well as the
disposition of the remaining foreclosed properties and Diverted Assets
(consisting primarily of an office building in Schaumburg, Illinois). The
general partner expects these assets will be converted to cash during 1999
thereby enabling the Partnership to pay an additional distribution in early
2000. After all assets are disposed of and the proceeds are distributed to the
limited partners, the Partnership will be required to file final reports with
the Securities and Exchange Commission and the Internal Revenue Service. The
general partner expects this to occur sometime during the year 2000.
11
<PAGE> 12
Results of Operations
The Partnership had a net loss of $162,000 for the three month period ended
March 31, 1999 in the aggregate for all classes of partners. This compares to a
net loss of $157,000 for the three months ended March 31, 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 March 31, 1999 and 1998 include
the following:
Lease income:
Since August of 1993, the Partnership has been in its Liquidating Phase which
prohibits investing in any new leases. Accordingly, any lease collections are
the result of recoveries against previously reserved balances.
General Partner's expense reimbursement:
General Partner's expense reimbursement includes payments to LRC for expenses
it incurred as general partner in excess of those covered by its partner
distributions. 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 months ended March 31, 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:
The increase in other operating expenses for the three months ended March 31,
1999 results from expenses relative to the security and maintenance of the
foreclosed properties.
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.
12
<PAGE> 13
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
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.
13
<PAGE> 14
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 10th day of May 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.
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule, which is submitted electronically
to the Securities and Exchange Commission for Information
only and not filed.
</TABLE>
<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-K.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,863,315
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,525,847
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,419,943
<TOTAL-LIABILITY-AND-EQUITY> 4,525,847
<SALES> 0
<TOTAL-REVENUES> 32,031
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 68,422
<LOSS-PROVISION> (24,175)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (161,815)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
