<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
---------------------------
<TABLE>
<S> <C>
For the Quarter Ended
June 30, 2000 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
</TABLE>
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 JUNE 30, 2000
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
<S> <C>
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 XVIII, 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 $ 289,865 $1,182,526 $1,472,391
Net investment in direct financing
leases -- -- --
Residual interest in CRCA -- -- --
Diverted and other assets, net 114,958 401,940 516,898
Datronic assets, net -- -- --
---------- ---------- ----------
$ 404,823 $1,584,466 $1,989,289
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 8,507 $ 34,414 $ 42,921
Lessee rental deposits -- 393 393
---------- ---------- ----------
Total liabilities 8,507 34,807 43,314
Total partners' equity 396,316 1,549,659 1,945,975
---------- ---------- ----------
$ 404,823 $1,584,466 $1,989,289
========== ========== ==========
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XVIII, 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 $ 570,937 $2,458,123 $3,029,060
Net investment in direct financing
leases -- 49,019 49,019
Residual interest in CRCA -- -- --
Diverted and other assets, net 176,327 616,511 792,838
Datronic assets, net -- -- --
---------- ---------- ----------
$ 747,264 $3,123,653 $3,870,917
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 8,524 $ 36,654 $ 45,178
Lessee rental deposits -- 14,377 14,377
---------- ---------- ----------
Total liabilities 8,524 51,031 59,555
Total partners' equity 738,740 3,072,622 3,811,362
---------- ---------- ----------
$ 747,264 $3,123,653 $3,870,917
========== ========== ==========
</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 June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 358 $ 1,288 $ 1,646
Interest income 4,001 30,242 34,243
--------- --------- ---------
4,359 31,530 35,889
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 43,342 148,800 192,142
Professional fees 5,370 19,500 24,870
Other operating expenses 5,210 18,218 23,428
Provision (credit) for lease
losses (1,693) 19,310 17,617
--------- --------- ---------
52,229 205,828 258,057
--------- --------- ---------
Net loss $ (47,870) $(174,298) $(222,168)
========= ========= =========
Net loss - General Partner $ (479) $ (1,743) $ (2,222)
========= ========= =========
Net loss - Limited Partners $ (47,391) $(172,555) $(219,946)
========= ========= =========
Net loss per limited
partnership unit $ (1.07) $ (1.11)
========= =========
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 June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 757 $ 11,411 $ 12,168
Interest income 7,305 35,501 42,806
--------- --------- ---------
8,062 46,912 54,974
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 49,994 187,583 237,577
Professional fees 6,358 26,742 33,100
Other operating expenses 3,789 13,247 17,036
Credit for lease losses (45,398) (173,729) (219,127)
--------- --------- ---------
14,743 53,843 68,586
--------- --------- ---------
Net loss $ (6,681) $ (6,931) $ (13,612)
========= ========= =========
Net loss - General Partner $ (67) $ (69) $ (136)
========= ========= =========
Net loss - Limited Partners $ (6,614) $ (6,862) $ (13,476)
========= ========= =========
Net loss per limited
partnership unit $ (0.15) $ (0.04)
========= =========
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.
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:
Lease income $ 2,901 $ 11,281 $ 14,182
Interest income 7,929 58,189 66,118
--------- --------- ---------
10,830 69,470 80,300
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 150,655 526,621 677,276
Professional fees 10,540 41,874 52,414
Other operating expenses 7,242 25,888 33,130
Provision (credit) for lease
losses (5,123) 7,316 2,193
--------- --------- ---------
163,314 601,699 765,013
--------- --------- ---------
Net loss $(152,484) $(532,229) $(684,713)
========= ========= =========
Net loss - General Partner $ (1,525) $ (5,322) $ (6,847)
========= ========= =========
Net loss - Limited Partners $(150,959) $(526,907) $(677,866)
========= ========= =========
Net loss per limited
partnership unit $ (3.39) $ (3.39)
========= =========
Weighted average number of limited
partnership units outstanding 44,468 155,509
========= =========
</TABLE>
See accompanying notes to financial statements
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XVIII, 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 $ 2,701 $ 31,077 $ 33,778
Interest income 28,900 119,652 148,552
--------- --------- ---------
31,601 150,729 182,330
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 94,659 360,014 454,673
Professional fees 16,850 68,329 85,179
Other operating expenses 4,794 17,097 21,891
Credit for lease losses (48,751) (200,454) (249,205)
--------- --------- ---------
67,552 244,986 312,538
--------- --------- ---------
Net loss $ (35,951) $ (94,257) $(130,208)
========= ========= =========
Net loss - General Partner $ (360) $ (943) $ (1,303)
========= ========= =========
Net loss - Limited Partners $ (35,591) $ (93,314) $(128,905)
========= ========= =========
Net loss per limited
partnership unit $ (0.80) $ (0.60)
========= =========
Weighted average number of limited
partnership units outstanding 44,468 155,509
========= =========
</TABLE>
See accompanying notes to financial statements
8
<PAGE> 9
DATRONIC EQUIPMENT INCOME FUND XVIII, 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* $ -- $ 738,740 $ 3,072,622 $ 3,811,362
Distributions to partners -- (189,940) (990,734) (1,180,674)
Net loss (6,847) (150,959) (526,907) (684,713)
Allocation of General
Partner's Equity 6,847 (1,525) (5,322) --
----------- ----------- ----------- -----------
Balance, June 30, 2000 $ -- $ 396,316 $ 1,549,659 $ 1,945,975
=========== =========== =========== ===========
</TABLE>
* Balances are net of $57,914 and $299,245 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 XVIII, 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 $ (152,484) $ (532,229) $ (684,713)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Provision (credit) for lease
losses (5,123) 7,316 2,193
Changes in assets and liabilities:
Accounts payable and
accrued expenses (17) (2,240) (2,257)
Lessee rental deposits -- (13,984) (13,984)
----------- ----------- -----------
(157,624) (541,137) (698,761)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 5,123 41,703 46,826
Distribution of Diverted and
other assets 61,369 214,571 275,940
----------- ----------- -----------
66,492 256,274 322,766
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (189,940) (990,734) (1,180,674)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (281,072) (1,275,597) (1,556,669)
Cash and cash equivalents:
Beginning of year 570,937 2,458,123 3,029,060
----------- ----------- -----------
End of second quarter $ 289,865 $ 1,182,526 $ 1,472,391
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
10
<PAGE> 11
DATRONIC EQUIPMENT INCOME FUND XVIII, 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 $ (35,951) $ (94,257) $ (130,208)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (48,751) (200,454) (249,205)
Changes in assets and liabilities:
Judgment receivable, net 29,673 103,747 133,420
Accounts payable and
accrued expenses (8,405) (31,856) (40,261)
Lessee rental deposits (5,099) (22,596) (27,695)
----------- ----------- -----------
(68,533) (245,416) (313,949)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 12,611 222,532 235,143
Residual interest in CRCA 36,140 126,360 162,500
----------- ----------- -----------
48,751 348,892 397,643
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (1,756,395) (4,618,561) (6,374,956)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (1,776,177) (4,515,085) (6,291,262)
Cash and cash equivalents:
Beginning of year 2,417,775 7,094,146 9,511,921
----------- ----------- -----------
End of second quarter $ 641,598 $ 2,579,061 $ 3,220,659
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(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. 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 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 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 $991,000 and $190,000, 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.
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 provide for
the ultimate liquidation of the Partnership. During this period, Partnership
cash and cash equivalents decreased by $1,557,000 to $1,472,000 at June 30, 2000
from $3,029,000 at December 31, 1999. This decrease is primarily due to a
distribution paid to Limited Partners of $1,181,000 (see below) and by cash used
in operations of $699,000, partially offset by cash receipts from collections on
leases of $47,000 and $276,000 from a distribution of Diverted and other assets.
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 $991,000 and $190,000, 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 at
$517,000 (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 losses of $222,000 and $685,000 for the three and six
months ended June 30, 2000 in the aggregate for all classes of partners. This
compares to net losses of $14,000 and $130,000 for the three and six months
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
three and six month periods ended June 30, 2000 and 1999 include the following:
Lease income:
Since April 1995, the Partnership has been in its Liquidating Phase which
prohibits investing in any new leases. Accordingly, the lease portfolio has
continued to decrease as collections are made, resulting in a continued decline
in lease income. As of May 2000 the Partnership no longer has an active lease
portfolio. However, it does have $419,000 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.
14
<PAGE> 15
Interest income:
Interest income includes earnings on invested cash balances. Interest income for
2000 was less than 1999 because of lower average invested cash balances,
partially offset by 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 expense are $303,000 of insurance premiums associated
with the 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 portfolio and related activities.
Provision (credit) for lease losses:
This provision (credit) reflects the assessment of the potential losses inherent
in the lease portfolio and any recoveries of previously reserved balances. The
1999 credit includes the Partnership's share ($162,500) of a $250,000 recovery
against its residual interest in CRCA that resulted from the sale of a note
receivable. See Note 4 to the Partnership's financial statements included in the
1999 Form 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for in this disclosure is not applicable to the
Registrant.
15
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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 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/ JEFFREY T. MCREYNOLDS
------------------------------
Jeffrey T. McReynolds
Vice President and Chief Financial Officer, Lease Resolution
Corporation General Partner of Datronic Equipment Income Fund XVIII,
L.P.
17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
27 Financial Data Schedule, which is
submitted electronically to the
Securities and Exchange Commission
for information only and not filed.
</TABLE>
