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, 1996 Commission File Number 0-18650
- --------------------- -------------------------------
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
(Exact name of Registrant as specified in its charter)
--------------------------------------------------
Delaware 36-3639399
- ---------------- ---------------------------
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>
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
------------------------------------------
FORM 10-Q
---------
FOR THE QUARTER ENDED MARCH 31, 1996
-------------------------------------
PART I - FINANCIAL INFORMATION
------------------------------
Item 1.
- -------
Index to Financial Statements
Balance Sheets
March 31, 1996 (unaudited)
December 31, 1995
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1996
For the three months ended March 31, 1995
Statements of Changes in Partners' Equity
For the three months ended March 31, 1996
(unaudited)
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1996
For the three months ended March 31, 1995
Notes to Financial Statements (unaudited)
Item 2.
- -------
Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Items 1-6.
- ----------
<PAGE>
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
------------------------------------------
BALANCE SHEETS
--------------
March 31, 1996 - Unaudited
-------------------------
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- --------- -----
ASSETS
- ------
Cash and cash equivalents $2,004,253 $ 1,019,270 $3,023,523
Installment contracts receivable 182,662 638,658 821,320
Net investment in direct
financing leases 197,012 5,603,951 5,800,963
Diverted and Other Assets, net 332,605 1,162,921 1,495,526
Restricted Cash 20,152 70,460 90,612
---------- ----------- -----------
$2,736,684 $ 8,495,260 $11,231,944
========== =========== ===========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and
accrued expenses $ 43,776 $ 171,134 $ 214,910
Lessee rental deposits 73,201 300,917 374,118
Due to Management Company 167 553 720
---------- ----------- -----------
Total liabilities 117,144 472,604 589,748
---------- ----------- -----------
Total Partners' equity 2,619,540 8,022,656 10,642,196
---------- ----------- -----------
$2,736,684 $ 8,495,260 $11,231,944
========== =========== ===========
See accompanying notes to financial statements.
<PAGE>
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
------------------------------------------
BALANCE SHEETS
--------------
December 31, 1995
-----------------
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- --------
ASSETS
- ------
Cash and cash equivalents $1,977,211 $ 1,432,420 $3,409,631
Installment contracts receivable 215,476 753,390 968,866
Net investment in direct
financing leases 343,356 6,771,767 7,115,123
Diverted and Other Assets, net 332,605 1,162,921 1,495,526
Restricted Cash 20,152 70,460 90,612
---------- ----------- -----------
$2,888,800 $10,190,958 $13,079,758
========== =========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and
accrued expenses $ 62,398 $ 246,147 $ 308,545
Lessee rental deposits 75,612 308,038 383,650
Due to Management Company 62 212 274
---------- ----------- -----------
Total liabilities 138,072 554,397 692,469
---------- ----------- -----------
Total Partners' equity 2,750,728 9,636,561 12,387,289
---------- ----------- -----------
$2,888,800 $10,190,958 $13,079,758
========== =========== ===========
See accompanying notes to financial statements.
<PAGE>
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
------------------------------------------
STATEMENTS OF REVENUE AND EXPENSES
----------------------------------
For the three months ended March 31, 1996
-----------------------------------------
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ---------
Revenue:
Lease income $ 15,695 $ 233,377 $ 249,072
Interest income 13,535 69,268 82,803
-------- --------- ---------
29,230 302,645 331,875
======== ========= =========
Expenses:
Management fees-New Era 71,106 271,228 342,334
General Partner's
expense reimbursement 57,996 202,777 260,773
Professional fees 25,424 90,432 115,856
Other operating expenses 5,892 21,844 27,736
-------- --------- ---------
160,418 586,281 746,699
-------- --------- ---------
Net loss $(131,188) $(283,636) $(414,824)
======== ========= =========
Net loss - General Partner $ (1,312) $ (2,836) $ (4,148)
======== ========= =========
Net loss - Limited Partners $(129,876) $(280,800) $(410,676)
======== ========= =========
Net loss per Limited
Partnership Unit $(2.92) $ (1.81)
====== =======
Weighted average number
of Limited Partnership Units
outstanding 44,468 155,509
====== =======
See accompanying notes to financial statements.
<PAGE>
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
------------------------------------------
STATEMENTS OF REVENUE AND EXPENSES
----------------------------------
For the three months ended March 31, 1995
-----------------------------------------
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ----------- -------
Revenue:
Lease income $ 52,567 $ 447,999 $500,566
Interest income 18,952 73,190 92,142
-------- --------- ---------
71,519 521,189 592,708
======== ========= =========
Expenses:
Amortization of organization
and equipment acquisition
costs 32,329 113,035 145,364
Management fees-New Era 75,568 427,352 502,920
General Partner's
expense reimbursement 42,308 147,926 190,234
Professional fees 26,893 95,328 122,221
Other operating expenses 3,457 16,648 20,105
-------- --------- ---------
180,555 800,289 980,844
-------- --------- ---------
Net loss $(109,036) $(279,100) $(388,136)
======== ========= =========
Net loss -
General Partner $ (1,090) $ (2,791) $ (3,881)
======== ========= =========
Net loss -
Limited Partners $(107,946) $(276,309) $(384,255)
======== ========= =========
Net loss per Limited
Partnership Unit $(2.43) $ (1.78)
====== =======
Weighted average number
of Limited Partnership Units
outstanding 44,468 155,509
====== =======
See accompanying notes to financial statements.
<PAGE>
<TABLE>
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
------------------------------------------
STATEMENT OF CHANGES IN PARTNERS' EQUITY
----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
General Limited Limited Total
Partner's Partners' Partners' Partners'
Equity Equity Equity Equity
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 $(344,238)* $2,806,086 $ 9,925,441 $12,387,289
Distributions to partners
(Note 3) (8,442) - (1,321,827) (1,330,269)
Net loss (4,148) (129,876) (280,800) (414,824)
Allocation of General
Partner's Equity 356,828 (56,670) (300,158) -
-------- ---------- ----------- -----------
Balance, March 31, 1996 $ - $2,619,540 $ 8,022,656 $10,642,196
======== ========== =========== ===========
<FN>
* Balance as previously reported was $0 due to allocation of $55,358 and $288,880
to Liquidating and Continuing Limited Partners' Equity, respectively.
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
For the three months ended March 31, 1996
-----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- --------- ----
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss $ (131,188) $ (283,636) $ (414,824)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Changes in assets and
liabilities:
Accounts payable and
accrued expenses (18,622) (75,013) (93,635)
Lessee rental deposits (2,411) (7,121) (9,532)
Due to Management
Company 105 341 446
---------- ------------ ------------
(152,116) (365,429) (517,545)
---------- ------------ ------------
Cash flows from investing
activities:
Principal collections on leases 146,344 1,167,816 1,314,160
Principal collections on
installment contracts
receivable 32,814 114,732 147,546
---------- ------------ ------------
179,158 1,282,548 1,461,706
---------- ------------ ------------
Cash flows from financing
activities:
Distributions to limited
partners (a) - (1,321,827) (1,321,827)
Distributions to General
Partner - (8,442) (8,442)
---------- ------------- -------------
- (1,330,269) (1,330,269)
---------- ------------- -------------
Net increase (decrease) in cash
and cash equivalents 27,042 (413,150) (386,108)
Cash and cash equivalents:
Beginning of year 1,977,211 1,432,420 3,409,631
---------- ------------- -------------
End of first quarter $2,004,253 $ 1,019,270 $ 3,023,523
========== ============= =============
<FN>
(a)Distributions during the period were $0 per unit for Liquidating Limited Partners and $8.50
per unit for Continuing Limited Partners (see Note 3).
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
For the three months ended March 31, 1995
-----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (109,036) $ (279,100) $ (388,136)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Amortization expense 32,329 113,035 145,364
Changes in assets and liabilities:
Accounts payable and accrued
expenses (12,905) (44,678) (57,583)
Lessee rental deposits 575 4,079 4,654
Due to Management Company 130 35,468 35,598
----------- ----------- -----------
(88,907) (171,196) (260,103)
----------- ----------- -----------
Cash flows from investing activities:
Purchases of lease receivables - (1,839,973) (1,839,973)
Principal collections on leases 428,103 2,040,058 2,468,161
Sale of leases (Note 4) 35,266 1,300,791 1,336,057
Diverted and Other Assets, net 123,011 430,098 553,109
Datronic Assets 19,269 67,370 86,639
Principal collections on
installment contracts receivable 36,704 128,334 165,038
----------- ----------- -----------
642,353 2,126,678 2,769,031
----------- ----------- -----------
Cash flows from financing activities:
Distributions to limited partners (a) (107,168) (2,113,881) (2,221,049)
Distributions to General Partner (5,002) (46,694) (51,696)
----------- ----------- -----------
(112,170) (2,160,575) (2,272,745)
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents 441,276 (205,093) 236,183
Cash and cash equivalents:
Beginning of year 1,118,691 3,002,502 4,121,193
----------- ----------- -----------
End of first quarter $1,559,967 $ 2,797,409 $ 4,357,376
========== =========== ===========
<FN>
(a)Distributions during the period were $2.41 per unit for Liquidating Limited Partners and $13.59
per unit for Continuing Limited Partners.
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
-------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
March 31, 1996
------------------
(Unaudited)
NOTE 1 - ORGANIZATION:
- ----------------------
Datronic Equipment Income Fund XVIII, L.P., a Delaware Limited
Partnership (the "Partnership"), was formed on April 12, 1989
for the purpose of acquiring and leasing both high-and
low-technology equipment. Reference is made to Notes 4, 6, 7 and
8 to the Partnership's financial statements included in the 1995
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
that 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 1995 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 3 to the Partnership's financial statements included in
the 1995 Form 10-K.
Effective January 1, 1996 the Partnership adopted SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of." The adoption of SFAS 121 had no
effect on the Partnership's financial position or net loss.
NOTE 3 - LIMITED PARTNERSHIP DISTRIBUTIONS:
- -------------------------------------------
Distributions to Liquidating Limited Partners were suspended after
payment of the July 1, 1995 distribution. Distributions to the
Continuing Limited Partners were suspended after payment of the
April 1, 1996 distribution.
NOTE 4 - LEASE PORTFOLIO SALES:
- -------------------------------
During the three months ended March 31, 1995, the Partnership,
Datronic Equipment Income Fund XIX, L.P., Datronic Equipment Income
Fund XX, L.P., and Datronic Finance Income Fund I, L.P. each
entered into separate lease purchase agreements with Southern
Pacific Thrift & Loan Association to sell equipment leases at
discount rates ranging from 10.75% to 11% which resulted in
aggregate net proceeds of approximately $2.6 million. The
Partnership's proceeds were approximately $1.3 million. Of
this amount, approximately all of the proceeds were allocable to
Continuing Limited Partners and have been invested in new leases.
NOTE 5 - SUBSEQUENT EVENT:
- --------------------------
On April 29, 1996, the United States District Court for the
Northern District of Illinois entered an order removing any claim
that one of the defendants in the class action litigation might
have had against the Partnership's Restricted Cash and Diverted and
Other Assets. See Notes 4, 5 and 6 to the Partnership's financial
statements included in the 1995 Form 10-K for a discussion of this
matter. Pursuant to the terms of the order, approximately $725,000
of Recovered Assets (the Partnership's interest therein is
approximately $133,000 and is included in Diverted and Other
Assets) will be held in escrow for the potential benefit of the
defendant pending the outcome of certain other Partnership
litigation. If the assets are ultimately transferred to the
defendant, the impact on the Partnership's financial position is
not expected to be material.
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, 1995 through March 31, 1996. The
discussion and analysis of results of operations is for the
three month period ended March 31, 1996 as compared to the
corresponding period in 1995.
Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------
During the three months ended March 31, 1996, Partnership assets
continued to be converted to cash in order to pay Partnership
operating expenses and make distributions to the Continuing Limited
Partners and General Partner.
Installment contracts receivable decreased approximately
$148,000 during the three months ended March 31, 1996 due to
scheduled principal collections.
Net investment in direct financing leases decreased
approximately $1,314,000 during the three months ended March 31,
1996. This decrease is primarily attributable to principal
collections.
Accounts payable and accrued expenses decreased approximately
$94,000 during the three months ended March 31, 1996 primarily
due to payment of accrued legal fees and sales and use taxes.
Partners' equity decreased approximately $1.7 million during the
three months ended March 31, 1996 due to a net loss of
approximately $415,000 and distributions to partners of
approximately $1,330,000.
During the three months ended March 31, 1996, the Partnership's
operating activities resulted in a use of $517,545 of cash.
This was due principally to a net loss of $414,824 and decreases in
accounts payable and security deposits of $103,167. During the
period, cash flows from investing activities aggregated $1,461,706
relating to principal collections on leases of $1,314,160 and
scheduled repayments on an installment contract receivable of
$147,546. Cash flows used from financing activities of $1,330,269,
consisted of distributions to Continuing Limited Partners of
$1,321,827 and the General Partner of $8,442.
The Partnership's sources of liquidity on both a long-term and
short-term basis are receipts from leases owned by the Partnership
and cash on hand. Additional sources of liquidity on a long-term
basis are expected to include proceeds from the sale of Diverted
and Other Assets and portions of the Partnership's lease portfolio
which may be sold in bulk. Management believes that its sources of
liquidity in the short and long-term are sufficient to meet its
operating cash obligations. Distributions to the Liquidating
Limited Partners were suspended after the July 1, 1995 distribution
and distributions to the Continuing Limited Partners were suspended
after the April 1, 1996 distribution. Distributions were suspended
to ensure that sufficient cash will be available to pursue
recoveries under pending litigation with the Partnership's former
accountants and to liquidate the Partnership in an orderly manner.
Management expects sources of future liquidity to include proceeds
from the sale or disposition of other Partnership assets. In this
regard, the Partnership has Diverted and Other Assets (net) of
$1,495,526 of which, approximately $133,000 may be used to settle
the claims of a defendant of the Class Action Complaint (see Note
5 to the financial statements included in item 1).
The continued operation and eventual liquidation of the
Partnership involves numerous complex issues which have to be
resolved. These issues relate to the timing and realizability of
lease-related assets, Diverted and Other Assets, Datronic Assets,
litigation and the liquidation of the other Datronic Partnerships
(see Notes 4, 6 and 9 to the financial statements included in the
1995 Form 10-K). These issues make it difficult to predict the
time and costs necessary to operate and liquidate the Partnership
in an orderly manner. As a result of these uncertainties, it is
not possible to predict the timing and availability of cash for
future distributions to Limited Partners. However, it is likely
that the amount of future distributions, if any, to the Limited
Partners will ultimately be significantly less than the amount of
Partner's Equity reflected in the March 31, 1996 Balance Sheets
(see financial statements included in Item 1).
Results of Operations
- ---------------------
Lease income decreased approximately $252,000 for the three
month period ended March 31, 1996 as compared to the corresponding
period in 1995 due to declining lease portfolios.
Amortization of organization and equipment acquisition costs
decreased approximately $145,000 for the three month period
ended March 31, 1996 as compared to the corresponding period in
1995 due to the completion of the amortization of these costs in
1995.
Management fees-New Era represent amounts paid New Era for managing
the Partnership on a day-to-day basis and for acquiring leases for
the Continuing Limited Partners. These fees amounted to
approximately $342,000 for the three months ended March 31, 1996 as
compared to $503,000 for the same period in 1995. See Note 8 to
the Partnership's financial statements included in the 1995 Form
10-K.
The General Partner's expense reimbursement represents the amount
paid to LRC in excess of LRC's 1% share of cash flow available for
distribution. Total amounts paid to LRC are primarily a function
of the amount of time LRC spends on the activities of the
Partnership and the timing of certain LRC expenses.
Total amounts paid to LRC for the three months ended March 31, 1996
were approximately $269,000 ($261,000 representing the General
Partner's expense reimbursement and $8,000 representing LRC's 1% of
cash flow available for distribution) as compared to approximately
$242,000 ($190,000 representing the General Partner's expense
reimbursement and $52,000 representing LRC's 1% of cash flow
available for distribution) for the three months ended March 31,
1995.
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
Reference is made to Item 3 - Legal Proceedings in the
Partnership's December 31, 1995 Form 10-K, as amended, for a
discussion of material legal proceedings involving the
Partnership.
Reference is made to Part I, Item 1, Note 5 for a discussion of legal
proceedings involving claims against Restricted Cash and Diverted and
Other Assets.
ITEM 2. CHANGES IN SECURITIES
- ------------------------------
None.
ITEM 3.
- ------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
None.
ITEM 5.
- -------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(a) Exhibits
- -------------
See Exhibit Index.
(b) Reports on Form 8-K
- ------------------------
None.
<PAGE>
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 9th
day of May 1996.
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
Registrant
By: DONALD D. TORISKY
Donald D. Torisky
Chairman and Chief Executive Officer
Lease Resolution Corporation
General Partner of
Datronic Equipment Income Fund XVIII, L.P.
By: DOUGLAS E. VAN SCOY
Douglas E. Van Scoy
Chief Financial Officer and Director
New Era Funding Corp.
Managing Agent of
Datronic Equipment Income Fund XVIII, L.P.
<PAGE>
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.
<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 qualifed in its entirety
by reference to such Report on Form 10-Q
</LEGEND>
<CIK> 0000850671
<NAME> DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,020,523
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,231,944
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,642,196
<TOTAL-LIABILITY-AND-EQUITY> 11,231,944
<SALES> 0
<TOTAL-REVENUES> 331,875
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 27,736
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (414,824)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
