<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, 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 JUNE 30, 2000
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
June 30, 2000 (unaudited) 3
December 31, 1999 4
Statements of Revenue and Expenses (unaudited)
For the three months ended June 30, 2000 5
For the three months ended June 30, 1999 6
For the six months ended June 30, 2000 7
For the six months ended June 30, 1999 8
Statements of Changes in Partners' Equity
For the six months ended June 30, 2000 (unaudited) 9
Statements of Cash Flows (unaudited)
For the six months ended June 30, 2000 10
For the six months ended June 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
</TABLE>
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 695,758 $ 1,102,685 $ 1,798,443
Net investment in direct financing
leases -- -- --
Diverted and other assets, net 51,691 83,484 135,175
Datronic assets, net -- -- --
------------- ------------- -------------
$ 747,449 $ 1,186,169 $ 1,933,618
============= ============= =============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 3,491 $ 7,191 $ 10,682
------------- ------------- -------------
Total liabilities 3,491 7,191 10,682
Total partners' equity 743,958 1,178,978 1,922,936
------------- ------------- -------------
$ 747,449 $ 1,186,169 $ 1,933,618
============= ============= =============
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
BALANCE SHEETS
December 31, 1999
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------- ------------- -------------
<S> <C> <C> <C>
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
============= ============= =============
</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 June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------- ------------- -------------
<S> <C> <C> <C>
Revenue:
Gain on sale of foreclosed
property $ 131,032 $ 211,625 $ 342,657
Interest income 14,479 23,385 37,864
------------- ------------- -------------
145,511 235,010 380,521
------------- ------------- -------------
Expenses:
General Partner's expense
reimbursement 54,920 88,699 143,619
Professional fees 7,993 12,910 20,903
Other operating expenses 9,023 14,574 23,597
Credit for lease losses (630) (1,018) (1,648)
------------- ------------- -------------
71,306 115,165 186,471
------------- ------------- -------------
Net income $ 74,205 $ 119,845 $ 194,050
============= ============= =============
Net income - General Partner $ 742 $ 1,198 $ 1,941
============= ============= =============
Net income - Limited Partners $ 73,463 $ 118,647 $ 192,109
============= ============= =============
Net income per limited
partnership unit $ 1.92 $ 1.92
============= =============
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 June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------- ------------- -------------
<S> <C> <C> <C>
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
============= =============
</TABLE>
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, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------- ------------- -------------
<S> <C> <C> <C>
Revenue:
Gain on sale of foreclosed
property $ 131,032 $ 211,625 $ 342,657
Interest income 23,293 37,620 60,913
------------- ------------- -------------
154,325 249,245 403,570
------------- ------------- -------------
Expenses:
General Partner's expense
reimbursement 163,633 264,278 427,911
Professional fees 15,221 24,583 39,804
Other operating expenses 22,231 35,911 58,142
Credit for lease losses (2,657) (4,292) (6,949)
------------- ------------- -------------
198,428 320,480 518,908
------------- ------------- -------------
Net loss $ (44,103) $ (71,235) $ (115,338)
============= ============= =============
Net loss - General Partner $ (441) $ (712) $ (1,153)
============= ============= =============
Net loss - Limited Partners $ (43,662) $ (70,523) $ (114,185)
============= ============= =============
Net loss per limited
partnership unit $ (1.14) $ (1.14)
============= =============
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 six months ended June 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 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
============= =============
</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, 1999* $ -- $ 1,195,832 $ 1,992,154 $ 3,187,986
Distributions to partners -- (407,771) (741,941) (1,149,712)
Net loss (1,153) (43,662) (70,523) (115,338)
Allocation of General
Partner's Equity 1,153 (441) (712) --
------------- ------------- ------------- -------------
Balance, June 30, 2000 $ -- $ 743,958 $ 1,178,978 $ 1,922,936
============= ============= ============= =============
</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 six months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (44,103) $ (71,235) $ (115,338)
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 (2,657) (4,292) (6,949)
Changes in assets and liabilities:
Accounts payable and
accrued expenses 53 90 143
------------- ------------- -------------
(177,739) (287,062) (464,801)
------------- ------------- -------------
Cash flows from investing activities:
Principal collections on leases 2,657 4,292 6,949
Distribution of Diverted and other
assets 27,693 44,726 72,419
Proceeds from sale of foreclosed
property 413,163 667,285 1,080,448
------------- ------------- -------------
443,513 716,303 1,159,816
------------- ------------- -------------
Cash flows from financing activities:
Distributions to Limited Partners (407,771) (741,941) (1,149,712)
------------- ------------- -------------
Net decrease in cash and
cash equivalents (141,997) (312,700) (454,697)
Cash and cash equivalents:
Beginning of year 837,755 1,415,385 2,253,140
------------- ------------- -------------
End of second quarter $ 695,758 $ 1,102,685 $ 1,798,443
============= ============= =============
</TABLE>
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, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------------- -------------- --------------
<S> <C> <C> <C>
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
============== ============== ==============
</TABLE>
See accompanying notes to financial statements
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XVI, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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.
NOTE 3 - 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 4 - 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 June 30, 2000. The discussion and analysis of results of operations is
for the three and six month periods ended June 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 six months ended June 30, 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 six months ended
June 30, 2000, Partnership cash and cash equivalents decreased by $455,000 to
$1,798,000 at June 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 $465,000, partially offset by cash
collections on leases of $7,000, 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 2000 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%.
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 Revenue Service. The general
partner expects this to occur sometime during 2001.
Results of Operations
The Partnership had net income of $194,000 and a net loss of $115,000 for the
three and six month periods ended June 30, 2000 in the aggregate for all classes
of partners. This compares to a net loss of $62,000 and $224,000 for the three
and six month periods ended June 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 June 30, 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.
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 three and six month periods ended June 30, 2000.
Interest income:
Interest income includes earnings on invested cash balances. Interest income for
2000 was greater than 1999 because of increased interest rates partially offset
by lower average invested cash balances.
14
<PAGE> 15
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 six 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 for the six months ended June 30, 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.
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 August 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
<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>
