<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, 1997 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> 2
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1.
Index to Financial Statements
Balance Sheets
March 31, 1997 (unaudited) 3
December 31, 1996 4
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1997 5
For the three months ended March 31, 1996 6
Statements of Changes in Partners' Equity
For the three months ended March 31, 1997 7
(unaudited)
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1997 8
For the three months ended March 31, 1996 9
Notes to Financial Statements (unaudited) 10
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 13
PART II - OTHER INFORMATION
Items 1-6. 14
</TABLE>
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
BALANCE SHEETS
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- -----------
<S> <C> <C> <C>
ASSETS
------
Cash and cash equivalents $2,323,947 $4,446,107 $ 6,770,054
Net investment in direct
financing leases 2,839 2,401,227 2,404,066
Diverted and other assets, net 312,149 1,091,397 1,403,546
Datronic assets, net - - -
----------- ---------- -----------
$2,638,935 $7,938,731 $10,577,666
=========== ========== ===========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable and
accrued expenses $ 16,088 $ 72,672 $ 88,760
Lessee rental deposits 41,497 184,186 225,683
----------- ---------- -----------
Total liabilities 57,585 256,858 314,443
Total partners' equity 2,581,350 7,681,873 10,263,223
----------- ---------- -----------
$2,638,935 $7,938,731 $10,577,666
=========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
BALANCE SHEETS
December 31, 1996
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- -----------
<S> <C> <C> <C>
ASSETS
------
Cash and cash equivalents $2,357,430 $3,986,042 $ 6,343,472
Due from management company 12,674 47,002 59,676
Net investment in direct
financing leases 4,491 3,011,385 3,015,876
Diverted and other assets, net 312,149 1,091,397 1,403,546
Datronic assets, net - - -
----------- ---------- -----------
$2,686,744 $8,135,826 $10,822,570
=========== ========== ===========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable and
accrued expenses $ 57,989 $ 233,827 $ 291,816
Lessee rental deposits 45,101 200,059 245,160
----------- ---------- -----------
Total liabilities 103,090 433,886 536,976
Total partners' equity 2,583,654 7,701,940 10,285,594
----------- ---------- -----------
$2,686,744 $8,135,826 $10,822,570
=========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the three months ended March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ---------
<S> <C> <C> <C>
Revenue:
Lease income $3,426 $105,741 $109,167
Interest income 13,710 61,193 74,903
----------- ---------- ---------
17,136 166,934 184,070
----------- ---------- ---------
Expenses:
General Partner's
expense reimbursement 99,432 357,110 456,542
Professional fees 16,284 60,652 76,936
Other operating expenses 4,366 16,125 20,491
Credit for lease losses (100,642) (246,886) (347,528)
----------- ---------- ---------
19,440 187,001 206,441
----------- ---------- ---------
Net loss $(2,304) $(20,067) $(22,371)
=========== ========== =========
Net loss - General Partner $(23) $(201) $(224)
=========== ========== =========
Net loss - Limited Partners $(2,281) $(19,866) $(22,147)
=========== ========== =========
Net loss per limited
partnership unit $(.05) $(.13)
===== =====
Weighted average number
of limited partnership units
outstanding 44,468 155,509
====== =======
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the three months ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
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
====== =======
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENT 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, 1996 $(356,167)* $2,640,683 $8,001,078 $10,285,594
Net loss (224) (2,281) (19,866) (22,371)
Allocation of General
Partner's Equity 356,391 (57,052) (299,339) -
----------- ----------- ---------- -----------
Balance, March 31, 1997 $ - $2,581,350 $7,681,873 $10,263,223
=========== =========== ========== ===========
</TABLE>
* Balance as previously reported was $0 due to allocation of $57,029 and
$299,138 to Liquidating and Continuing Limited Partners' Equity, respectively.
See accompanying notes to financial statements.
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss $ (2,304) $ (20,067) $ (22,371)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (100,642) (246,886) (347,528)
Changes in assets and
liabilities:
Accounts payable and
accrued expenses (41,901) (161,155) (203,056)
Lessee rental deposits (3,604) (15,873) (19,477)
Due to management
company 12,674 47,002 59,676
----------- ---------- ----------
(135,777) (396,979) (532,756)
----------- ---------- ----------
Cash flows from investing
activities:
Principal collections on leases 102,294 857,044 959,338
----------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents (33,483) 460,065 426,582
Cash and cash equivalents:
Beginning of year 2,357,430 3,986,042 6,343,472
----------- ---------- ----------
End of first quarter $2,323,947 $4,446,107 $6,770,054
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1996
(Unaudited)
<TABLE>
<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 - (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
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(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 3,
4, 5, and 6 to the Partnership's financial statements included in the 1996 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 1996 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 1996 Form 10-K.
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.
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,
1996 through March 31, 1997. The discussion and analysis of results of
operations is for the three month period ended March 31, 1997 as compared to
the corresponding period in 1996.
Financial Condition, Liquidity and Capital Resources
During the three months ended March 31, 1997, Partnership assets continued to
be converted to cash in order to, generally, pay Partnership operating
expenses.
Net investment in direct financing leases decreased approximately $612,000
during the three months ended March 31, 1997. This decrease is primarily
attributable to principal collections of approximately $959,000, partially
offset by a credit for lease loss of approximately $348,000.
Accounts payable and accrued expenses decreased approximately $203,000 during
the three months ended March 31, 1997 primarily due to payment of accrued legal
fees and sales and use taxes.
Partners' equity decreased approximately $22,000 during the three months ended
March 31, 1997 due to a net loss of approximately $22,000.
During the three months ended March 31, 1997, the Partnership's operating
activities resulted in a use of approximately $533,000 of cash. This was due
principally to a net loss of approximately $22,000, decreases in accounts
payable and lessee rental deposits of approximately $223,000, and a non-cash
credit provision for lease losses of approximately $348,000, partially offset
by a decrease in due from management company of approximately $60,000. During
the period, cash flows from investing activities aggregated approximately
$959,000 relating to principal collections on leases.
The Partnership's sources of liquidity on both a long-term and short-term basis
are expected to come principally from cash-on-hand and cash receipts from
lessees under leases owned by the Partnership. In addition, the Partnership's
sources of liquidity on a long-term basis are expected to include proceeds from
the sale of other assets of the Partnership including, without limitation,
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 and provide for the ongoing pursuit of litigation and an orderly
liquidation of the Partnership. Distributions to the Liquidating Limited
Partners were suspended after the July 1, 1995 distribution and distributions
to the Continuing Limited Partners were
11
<PAGE> 12
suspended after the April 1, 1996 distribution. It is unlikely that any
additional distributions will be made until all remaining assets are liquidated
and the pending litigation is resolved.
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 3, 5 and 9 to the Partnership's financial statements
included in the 1996 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 unlikely that any additional
distributions will be made until all remaining assets are liquidated and the
pending litigation is resolved, and the amount of future distributions, if any,
to the Limited Partners is likely to be significantly less than the amount of
partners' equity reflected in the March 31, 1997 Balance Sheets (see financial
statements included in Item 1).
Results of Operations
Lease income decreased approximately $140,000 for the three month period ended
March 31, 1997 as compared to the corresponding period in 1996 due to the
declining lease portfolio.
Interest income decreased approximately $8,000 for the three month period ended
March 31, 1997 as compared to the corresponding period in 1996, primarily due
to an early payoff of an installment contract receivable in December 1996,
partially offset by additional interest earned as a result of increased cash
balances.
Management fees-New Era represent amounts paid New Era for managing the
Partnership on a day-to-day basis pursuant to a Management Agreement which was
terminated effective June 30, 1996. Accordingly, fees paid to New Era amounted
to zero for the three months ended March 31, 1997 as compared to approximately
$342,000 for the same period in 1996. Subsequent to June 30, 1996 the General
Partner has assumed responsibility for the day-to-day management of the
Partnership and the corresponding costs and expenses are included in General
Partner's expense reimbursement. See Note 8 to the Partnership's financial
statements included in the 1996 Form 10-K.
The General Partner's expense reimbursement represents amounts paid to LRC in
its capacity as general partner in excess of general partner distributions.
Total amounts paid to LRC for the three months ended March 31, 1997 were
approximately $457,000 (consisting of general partner's expense reimbursement
of approximately $457,000 and no general partner distribution). Total amounts
paid to LRC for the three months ended March 31, 1996 were approximately
$269,000 (consisting of general partner's expense reimbursement of $261,000 and
general partner distribution of $8,000). The increase of approximately
$188,000 results from expenses of approximately $209,000 incurred in 1997 to
manage the day-to-day operations of the Partnership due to the termination of
the Management Agreement with New Era as of June
12
<PAGE> 13
30, 1996, (see Note 8 to the Partnership's financial statements included in
the 1996 Form 10-K) partially offset by an overall decrease in all other
expenses of approximately $21,000.
Professional fees decreased approximately $39,000 for the three month period
ended March 31, 1997 as compared to the corresponding period in 1996, primarily
due to decreased legal fees relating to Partnership claims against former
accountants and others, audit fees, and consulting services.
The $348,000 credit for lease losses for the three months ended March 31, 1997
reflects recoveries on the Master Lease with CRCA (see Note 12 to the
Partnership's financial statements included in the 1996 Form 10-K), as well as
the impact from Management's ongoing assessment of potential losses inherent in
the lease portfolio.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 - Legal Proceedings in the Partnership's December
31, 1996 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.
14
<PAGE> 15
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 12th day of May 1997.
DATRONIC EQUIPMENT INCOME FUND XVIII, 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 XVIII, 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 XVIII, L.P.
15
<PAGE> 16
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.
16
<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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,770,054
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,577,666
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,263,223
<TOTAL-LIABILITY-AND-EQUITY> 10,577,666
<SALES> 0
<TOTAL-REVENUES> 184,070
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,491
<LOSS-PROVISION> (347,528)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,371)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
