<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, 2000 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, 2000
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
September 30, 2000 (unaudited) 3
December 31, 1999 4
Statements of Revenue and Expenses (unaudited)
For the nine months ended September 30, 2000 5
For the nine months ended September 30, 1999 6
For the nine months ended September 30, 2000 7
For the nine months ended September 30, 1999 8
Statements of Changes in Partners' Equity
For the nine months ended September 30, 2000 (unaudited) 9
Statements of Cash Flows (unaudited)
For the nine months ended September 30, 2000 10
For the nine months ended September 30, 1999 11
Notes to Financial Statements (unaudited) 12
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 13 - 15
Item 3.
Quantitative and Qualitative Disclosures About
Market Risk 15
PART II - OTHER INFORMATION
Items 1-6. 16
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
September 30, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
ASSETS
Cash and cash equivalents $ 657,153 $1,040,334 $1,697,487
Net investment in direct financing
leases - - -
Diverted and other assets, net 51,691 83,484 135,175
Datronic assets, net - - -
---------- ---------- ----------
$ 708,844 $1,123,818 $1,832,662
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 2,563 $ 5,685 $ 8,248
---------- ---------- ----------
Total liabilities 2,563 5,685 8,248
Total partners' equity 706,281 1,118,133 1,824,414
---------- ---------- ----------
$ 708,844 $1,123,818 $1,832,662
========== ========== ==========
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
December 31, 1999
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
ASSETS
Cash and cash equivalents $ 837,755 $1,415,385 $2,253,140
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 - - -
---------- ---------- ----------
$1,199,270 $1,999,255 $3,198,525
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 3,438 $ 7,101 $ 10,539
---------- ---------- ----------
Total liabilities 3,438 7,101 10,539
Total partners' equity 1,195,832 1,992,154 3,187,986
---------- ---------- ----------
$1,199,270 $1,999,255 $3,198,525
========== ========== ==========
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, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
Revenue:
Interest income $ 7,836 $ 12,655 $ 20,491
--------- --------- ---------
7,836 12,655 20,491
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 39,203 63,315 102,518
Professional fees 5,777 9,330 15,107
Other operating expenses 1,027 1,652 2,679
Credit for lease losses (494) (797) (1,291)
--------- --------- ---------
45,513 73,500 119,013
--------- --------- ---------
Net loss $ (37,677) $ (60,845) $ (98,522)
========= ========= =========
Net loss - General Partner $ (377) (608) $ (985)
========= ========= =========
Net loss - Limited Partners $ (37,300) $ (60,237) $ (97,537)
========= ========= =========
Net loss per limited
partnership unit $ (0.98) $ (0.98)
========= =========
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 September 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
Revenue:
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
========= =========
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, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
Revenue:
Gain on sale of foreclosed
property $ 131,032 $ 211,625 $ 342,657
Interest income 31,129 50,275 81,404
--------- --------- ---------
162,161 261,900 424,061
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 202,836 327,593 530,429
Professional fees 20,998 33,913 54,911
Other operating expenses 23,258 37,563 60,821
Credit for lease losses (3,151) (5,089) (8,240)
--------- --------- ---------
243,941 393,980 637,921
--------- --------- ---------
Net loss $ (81,780) $(132,080) $(213,860)
========= ========= =========
Net loss - General Partner $ (818) $ (1,321) $ (2,139)
========= ========= =========
Net loss - Limited Partners $ (80,962) $(130,759) $(211,721)
========= ========= =========
Net loss per limited
partnership unit $ (2.12) $ (2.12)
========= =========
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 nine months ended September 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
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
========= =========
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, 1999* $ - $ 1,195,832 $ 1,992,154 $ 3,187,986
Distributions to partners - (407,771) (741,941) (1,149,712)
Net loss (2,139) (80,962) (130,759) (213,860)
Allocation of General
Partner's Equity 2,139 (818) (1,321) -
----------- ----------- ----------- -----------
Balance, September 30, 2000 $ - $ 706,281 $ 1,118,133 $ 1,824,414
=========== =========== =========== ===========
</TABLE>
* Balances are net of $46,387 and $85,167 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, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
Cash flows from operating activities:
Net loss $ (81,780) $ (132,080) $ (213,860)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Gain on sale of foreclosed
property (131,032) (211,625) (342,657)
Credit for lease losses (3,151) (5,089) (8,240)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (875) (1,416) (2,291)
----------- ----------- -----------
(216,838) (350,210) (567,048)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 3,151 5,089 8,240
Distribution of Diverted and other
assets 27,693 44,726 72,419
Investment in foreclosed properties 413,163 667,285 1,080,448
----------- ----------- -----------
444,007 717,100 1,161,107
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (407,771) (741,941) (1,149,712)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (180,602) (375,051) (555,653)
Cash and cash equivalents:
Beginning of year 837,755 1,415,385 2,253,140
----------- ----------- -----------
End of third quarter $ 657,153 $ 1,040,334 $ 1,697,487
=========== =========== ===========
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, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
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
=========== =========== ===========
See accompanying notes to financial statements
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
NOTE 1 - LIMITED PARTNERSHIP DISTRIBUTIONS:
During June 2000, the Partnership made a cash distribution to Limited Partners
who were owners of record on March 31, 2000. This distribution was made from
residual cash, which is cash available for distribution after satisfying current
Partnership liabilities and setting aside reserves against potential future
Partnership liabilities. The total distribution paid to Continuing and
Liquidating Limited Partners was $742,000 and $408,000, respectively. Pursuant
to the Partnership Agreement, these amounts were allocated among the Limited
Partners based on each partner's proportionate share of total partners' capital
attributable to their Class.
NOTE 2 - LITIGATION
In connection with the 1992 Ventre class action, the United States District
Court for the Northern District of Illinois entered an order on September 27,
2000 finding that Edmund J. Lopinski, Jr. had caused the Datronic Partnerships
to sustain losses of $20.0 million. Against this amount, the Court offset $10.9
million that has already been realized on behalf of the Partnerships through the
sale of Diverted and Other Assets and insurance settlements. The Court also
found that Lopinski is entitled to offset the remaining $9.1 million loss with
the proceeds previously received from the other defendants in the Ventre action
and the appraised value of the Schaumburg office building. Proceeds received
from the other defendants totaled $4.9 million, leaving $4.2 million to be
recovered from the building. During the third quarter 2000, the General Partner
received appraisals for the building indicating that its value substantially
exceeds this amount. Accordingly, the losses assessed against Lopinski have been
fully mitigated.
With this ruling, the Ventre, et al v. Datronic Rental Corp., et al class action
is closed.
NOTE 3 - INVESTMENT IN FORECLOSED PROPERTY:
The remaining foreclosed property was sold in April 2000 for $1,150,000
resulting in net proceeds, after payment of commissions and other selling
expenses, of $1,080,000 to the Partnership. This property had a net book value
at the time of sale of $738,000. The gain on sale of $342,000 is included in the
Statement of Revenue and Expenses.
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, 1999
through September 30, 2000. The discussion and analysis of results of operations
is for the three and nine month periods ended September 30, 2000 as compared to
the corresponding periods in 1999. Any capitalized term not defined herein has
been defined or discussed in the Partnership's 1999 Form 10-K.
Liquidity and Capital Resources
During the nine months ended September 30, 2000, the Partnership continued to
liquidate its assets and use its cash to pay Partnership operating expenses, pay
a distribution to Limited Partners and provide for the ultimate liquidation of
the Partnership. During the nine months ended September 30, 2000, Partnership
cash and cash equivalents decreased by $556,000 to $1,697,000 at September 30,
2000 from $2,253,000 at December 31, 1999. This decrease is primarily due to a
distribution paid to Limited Partners of $1,150,000 (see below) and by cash used
in operations of $567,000, partially offset by cash collections on leases of
$8,000, a distribution of Diverted and other assets of $72,000, and net proceeds
from the sale of the final foreclosed property of $1,080,000.
During June 2000, the Partnership made a cash distribution to Limited Partners
who were owners of record on March 31, 2000. This distribution was made from
residual cash, which is cash available for distribution after satisfying current
Partnership liabilities and setting aside reserves against potential future
Partnership liabilities. The total distribution paid to Continuing and
Liquidating Limited Partners was $742,000 and $408,000, respectively. Pursuant
to the Partnership Agreement, these amounts were allocated among the Limited
Partners based on each partner's 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 proceeds from the sale of the remaining Diverted Assets
(consisting of cash and an office building in Schaumburg, Illinois). The general
partner expects that the building will be sold during the first quarter of 2001
and the proceeds included in a subsequent distribution to Limited Partners.
13
<PAGE> 14
The Partnership's interest in the Schaumburg office building is carried on its
books at $135,000 (see Note 5 to the Partnership's financial statements included
in the 1999 Form 10-K). At March 1993, the date LRC was appointed general
partner, the building was approximately 40% occupied. Since then, occupancy has
increased to more than 80% and base rental rates have increased by 75%. An
appraisal received during the third quarter 2000 indicates that the building's
value has increased substantially over its book value.
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 the Internal Revenue Service. The general
partner expects this to occur sometime during 2001.
Results of Operations
The Partnership had net losses of $99,000 and $214,000 for the three and nine
month periods ended September 30, 2000 in the aggregate for all classes of
partners. This compares to a net loss of $135,000 and $359,000 for the three and
nine month periods ended September 30, 1999. Differences in operating results
between Liquidating and Continuing Limited Partners are attributable to lease
income and expenses associated with 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, 2000 and 1999 include the following:
Lease income:
The Partnership no longer has an active lease portfolio. However, it does have
$106,000 of fully reserved lease balances. Occasionally recoveries are made
against these balances and any such amounts in excess of the reserve result in
lease income.
Gain on sale of foreclosed property:
The Partnership sold the remaining foreclosed property in April 2000 for
$1,150,000 resulting in net proceeds, after payment of commissions and other
selling expenses, of $1,080,000. This property had a net book value at the time
of sale of $738,000. The gain on sale of $342,000 is included in the Statement
of Revenue and Expenses for the nine month period ended September 30, 2000.
Interest income:
Interest income includes earnings on invested cash balances. Interest income
decreased for the three month period ended September 30, 2000 and increased
slightly for the nine month period ended September 30, 2000 as compared to the
corresponding periods in 1999.
14
<PAGE> 15
The decrease for the three months resulted from lower average invested cash
balances partially offset by an increase in interest for rates. The slight
increase for the nine months resulted from an increase in 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 represent expenses incurred by LRC
in its management of the day-to-day operations of the Partnership. Included in
the first quarter 2000 expenses are $151,000 of insurance premiums associated
with the final wrap up of Partnership affairs and its ultimate liquidation and
dissolution.
Professional fees:
Professional fees for the nine months ended June 30, 2000 reflect a decreasing
level of professional services required as a result of the decrease in the
Partnership's lease collections and related activities.
Other operating expenses:
Operating expenses reflect expenses incurred to secure and maintain the one
remaining foreclosed property. The property was sold in April 2000. Operating
expenses for 1999 included expenses for two properties.
Credit for lease losses:
This credit reflects recovery of previously reserved amounts.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for in this disclosure is not applicable to the
Registrant.
15
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 - Legal Proceedings in the Partnership's December
31, 1999 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.
16
<PAGE> 17
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 14th day of November 2000.
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/JEFFREY T. MCREYNOLDS
---------------------------------------
Jeffrey T. McReynolds
Vice President and Chief Financial Officer,
Lease Resolution Corporation
General Partner of
Datronic Equipment Income Fund XVI, L.P.
17
<PAGE> 18
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.
18
