<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, 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 jurisdiction of IRS Employer
incorporation or organization Identification Number
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, 2000
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
March 31, 2000 (unaudited) 3
December 31, 1999 4
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 2000 5
For the three months ended March 31, 1999 6
Statements of Changes in Partners' Equity
For the three months ended March 31, 2000 (unaudited) 7
Statements of Cash Flows (unaudited)
For the three months ended March 31, 2000 8
For the three months ended March 31, 1999 9
Notes to Financial Statements (unaudited) 10
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 12
Item 3.
Quantitative and Qualitative Disclosures About
Market Risk 12
PART II - OTHER INFORMATION
Items 1-6. 13
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
March 31, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- -----
ASSETS
Cash and cash equivalents $ 748,652 $1,271,477 $2,020,129
Net investment in direct
financing leases -- -- --
Diverted and other assets, net 51,691 83,484 135,175
Investment in foreclosed
properties, net 282,131 455,660 737,791
Datronic assets, net -- -- --
---------- ---------- ----------
$1,082,474 $1,810,621 $2,893,095
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 4,950 $ 9,547 $ 14,497
---------- ---------- ----------
Total liabilities 4,950 9,547 14,497
Total partners' equity 1,077,524 1,801,074 2,878,598
---------- ---------- ----------
$1,082,474 $1,810,621 $2,893,095
========== ========== ==========
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 March 31, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- -----
Revenue:
Interest income $ 8,814 $ 14,235 $ 23,049
--------- --------- ---------
8,814 14,235 23,049
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement $ 108,713 $ 175,579 $ 284,292
Professional fees 7,228 11,673 18,901
Other operating expenses 13,208 21,337 34,545
Credit for lease losses (2,027) (3,274) (5,301)
--------- --------- ---------
127,122 205,315 332,437
--------- --------- ---------
Net loss $(118,308) $(191,080) $(309,388)
========= ========= =========
Net loss - General Partner $ (1,183) $ (1,911) $ (3,094)
========= ========= =========
Net loss - Limited Partners $(117,125) $(189,169) $(306,294)
========= ========= =========
Net loss per limited
partnership unit $ (3.07) $ (3.07)
========= =========
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 March 31, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- -----
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
========= =========
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
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
Net loss $ (3,094) $ (117,125) $ (189,169) $ (309,388)
Allocation of General
Partner's Equity $ 3,094 $ (1,183) $ (1,911) $ --
----------- ----------- ----------- -----------
Balance, March 31, 2000 $ -- $ 1,077,524 $ 1,801,074 $ 2,878,598
=========== =========== =========== ===========
</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
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- -----
Cash flows from operating activities:
Net loss $(118,308) $ (191,080) $ (309,388)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (2,027) (3,274) (5,301)
Changes in assets and liabilities:
Accounts payable and
accrued expenses 1,512 2,446 3,958
--------- ---------- ----------
(118,823) (191,908) (310,731)
--------- ---------- ----------
Cash flows from investing activities:
Principal collections on leases 2,027 3,274 5,301
Distribution of Diverted and other
assets 27,693 44,726 72,419
--------- ---------- ----------
29,720 48,000 77,720
--------- ---------- ----------
Net decrease in cash and
cash equivalents (89,103) (143,908) (233,011)
Cash and cash equivalents:
Beginning of year 837,755 1,415,385 2,253,140
--------- ---------- ----------
End of first quarter $ 748,652 $1,271,477 $2,020,129
========= ========== ==========
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, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- -----
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:
Judgement 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
======== ========== ==========
See accompanying notes to financial statements
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(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 1999 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 1999 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
1999 Form 10-K.
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, 1999
through March 31, 2000. The discussion and analysis of results of operations is
for the three month period ended March 31, 2000 as compared to the corresponding
period 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 three months ended March 31, 2000, 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, 2000, Partnership cash and cash equivalents decreased by $233,000 to
$2,020,000 at March 31, 2000 from $2,253,000 at December 31, 1999. This decrease
is primarily due to cash used in operations of $296,000, partially offset by
cash collections on leases of $5,000 and a distribution of Diverted and other
assets of $72,000.
The General Partner has declared an additional distribution totaling $1.17
million, payable to Limited Partners who are owners of record on March 31, 2000.
This distribution will be allocated to the Limited Partners based on their
proportionate shares 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 foreclosed property
and Diverted Assets (consisting of cash and an office building in Schaumburg,
Illinois). The foreclosed property was sold in April 2000 for $1,150,000
resulting in net proceeds of $1,080,000 to the Partnership. The general partner
expects that the building will be sold during 2000 and the proceeds included in
a subsequent distribution to Limited Partners.
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%.
Accordingly, the general partner believes that the value of the building has
increased and that this value will be realized when the building is sold. The
amount to be realized from the sale of the building, however, cannot be
determined until it is sold.
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
11
<PAGE> 12
Revenue Service. The general partner expects this to occur sometime during 2001.
Results of Operations
The Partnership had a net loss of $309,000 for the three month period ended
March 31, 2000 in the aggregate for all classes of partners. This compares to a
net loss of $162,000 for the three month period ended March 31, 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 March 31, 2000
and 1999 include the following:
Lease income:
The Partnership no longer has an active lease portfolio. However, it does have
$109,000 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.
Interest income:
Interest income includes earnings on invested cash balances. Interest income for
2000 was lower than 1999 because the $873,000 cash distribution paid to Limited
Partners in April 1999 reduced average invested cash balances.
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.
Other operating expenses:
Operating expenses for the three months ended March 31, 2000 reflect expenses
incurred to secure and maintain the remaining foreclosed property. The property
was sold in April 2000. Operating expenses for the same period in 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.
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, 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.
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 11th day of May 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 Controller,
(principal accounting and financial officer)
Lease Resolution Corporation
General Partner of
Datronic Equipment Income Fund XVI, L.P.
14
<PAGE> 15
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.
15
<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-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,020,129
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,893,095
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,878,598
<TOTAL-LIABILITY-AND-EQUITY> 2,893,095
<SALES> 0
<TOTAL-REVENUES> 23,049
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 34,545
<LOSS-PROVISION> (5,301)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (309,388)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
