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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
September 30, 2000 Commission File Number 0-18650
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 36-3639399
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State or other IRS Employer Identification
jurisdiction of Number
incorporation or
organization
1300 E. Woodfield Road, Suite 312 Schaumburg, Illinois 60173
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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
--- ---
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
September 30, 2000 (unaudited) 3
December 31, 1999 4
Statements of Revenue and Expenses (unaudited)
For the three months ended September 30, 2000 5
For the three months ended September 30, 1999 6
For the nine months ended September 30, 2000 7
For the nine months ended September 30, 1999 8
Statements of Changes in Partners' Equity
For the nine months ended September 30, 2000
(unaudited) 9
Statements of Cash Flows (unaudited)
For the nine months ended September 30, 2000 10
For the nine months ended September 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
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
BALANCE SHEETS
SEPTEMBER 30, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partner Total
----------- ----------- ----------
ASSETS
Cash and cash equivalents $ 258,000 $1,084,445 $1,342,445
Net investment in direct financing
leases -- -- --
Residual interest in CRCA -- -- --
Diverted and other assets, net 114,958 401,940 516,898
Datronic assets, net -- -- --
---------- ---------- ----------
$ 372,958 $1,486,385 $1,859,343
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 6,896 $ 28,501 $ 35,397
---------- ---------- ----------
Total liabilities 6,896 28,501 35,397
Total partners' equity 366,062 1,457,884 1,823,946
---------- ---------- ----------
$ 372,958 $1,486,385 $1,859,343
========== ========== ==========
See accompanying notes to financial statements
3
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
BALANCE SHEETS
DECEMBER 31, 1999
Liquidating Continuing
Limited Limited
Partners Partner Total
----------- ----------- ----------
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
========== ========== ==========
See accompanying notes to financial statements
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the three months ended September 30, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partner Total
----------- ----------- ----------
Revenue:
Lease income $ 579 $ 2,274 $ 2,853
Interest income 337 16,146 16,483
--------- --------- ---------
916 18,420 19,336
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 27,939 97,685 125,624
Professional fees 2,715 10,703 13,418
Other operating expenses 959 3,354 4,313
Credit for lease losses (443) (1,547) (1,990)
--------- --------- ---------
31,170 110,195 141,365
--------- --------- ---------
Net loss $ (30,254) $ (91,775) $(122,029)
========= ========= =========
Net loss - General Partner $ (302) $ (918) $ (1,220)
========= ========= =========
Net loss - Limited Partners $ (29,952) $ (90,857) $(120,809)
========= ========= =========
Net loss per limited
partnership unit $ (0.67) $ (0.58)
========= =========
Weighted average number of limited
partnership units outstanding 44,468 155,509
========= =========
See accompanying notes to financial statements
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the three months ended September 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partner Total
----------- ---------- ----------
Revenue:
Lease income $ 316 $ 5,116 $ 5,432
Interest income 5,081 29,026 34,107
--------- --------- ---------
5,397 34,142 39,539
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 36,662 141,648 178,310
Professional fees 4,203 16,361 20,564
Other operating expenses 1,882 6,584 8,466
Credit for lease losses (1,815) (6,346) (8,161)
--------- --------- ---------
40,932 158,247 199,179
--------- --------- ---------
Net loss $ (35,535) $(124,105) $(159,640)
========= ========= =========
Net loss - General Partner $ (355) $ (1,241) $ (1,596)
========= ========= =========
Net loss - Limited Partners $ (35,180) $(122,864) $(158,044)
========= ========= =========
Net loss per limited
partnership unit $ (0.79) $ (0.79)
========= =========
Weighted average number of
limited partnership units
outstanding 44,468 155,509
========= =========
See accompanying notes to financial statements
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the nine months ended September 30, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partner Total
----------- ----------- ----------
Revenue:
Lease income $ 3,480 $ 13,555 $ 17,035
Interest income 8,266 74,335 82,601
--------- --------- ---------
11,746 87,890 99,636
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 178,594 624,306 802,900
Professional fees 13,255 52,577 65,832
Other operating expenses 8,201 29,242 37,443
Provision (credit) for lease
losses (5,566) 5,769 203
--------- --------- ---------
194,484 711,894 906,378
--------- --------- ---------
Net loss $(182,738) $(624,004) $(806,742)
========= ========= =========
Net loss - General Partner $ (1,827) $ (6,240) $ (8,067)
========= ========= =========
Net loss - Limited Partners $(180,911) $(617,764) $(798,675)
========= ========= =========
Net loss per limited
partnership unit $ (4.07) $ (3.97)
========= =========
Weighted average number of limited
partnership units outstanding 44,468 155,509
========= =========
See accompanying notes to financial statements
7
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the nine months ended September 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partner Total
----------- ----------- ----------
Revenue:
Lease income $ 3,017 $ 36,193 $ 39,210
Interest income 33,981 148,678 182,659
--------- --------- ---------
36,998 184,871 221,869
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 131,321 501,662 632,983
Professional fees 21,053 84,690 105,743
Other operating expenses 6,676 23,681 30,357
Credit for lease losses (50,566) (206,800) (257,366)
--------- --------- ---------
108,484 403,233 511,717
--------- --------- ---------
Net loss $ (71,486) $(218,362) $(289,848)
========= ========= =========
Net loss - General Partner $ (715) $ (2,184) $ (2,899)
========= ========= =========
Net loss - Limited Partners $ (70,771) $(216,178) $(286,949)
========= ========= =========
Net loss per limited
partnership unit $ (1.59) $ (1.39)
========= =========
Weighted average number of limited
partnership units outstanding 44,468 155,509
========= =========
See accompanying notes to financial statements
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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 (8,067) (180,911) (617,764) (806,742)
Allocation of General
Partner's Equity 8,067 (1,827) (6,240) --
----------- ----------- ----------- -----------
Balance, September 30, 2000 $ -- $ 366,062 $ 1,457,884 $ 1,823,946
=========== =========== =========== ===========
</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
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (182,738) $ (624,004) $ (806,742)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Provision (credit) for lease
losses (5,566) 5,769 203
Changes in assets and liabilities:
Accounts payable and
accrued expenses (1,628) (8,153) (9,781)
Lessee rental deposits -- (14,377) (14,377)
----------- ----------- -----------
(189,932) (640,765) (830,697)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 5,566 43,250 48,816
Distribution of Diverted and
other assets 61,369 214,571 275,940
----------- ----------- -----------
66,935 257,821 324,756
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (189,940) (990,734) (1,180,674)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (312,937) (1,373,678) (1,686,615)
Cash and cash equivalents:
Beginning of year 570,937 2,458,123 3,029,060
----------- ----------- -----------
End of third quarter $ 258,000 $ 1,084,445 $ 1,342,445
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (71,486) $ (218,362) $ (289,848)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (50,566) (206,800) (257,366)
Changes in assets and liabilities:
Judgment receivable, net 29,673 103,747 133,420
Accounts payable and
accrued expenses (7,548) (29,598) (37,146)
Lessee rental deposits (6,133) (26,213) (32,346)
----------- ----------- -----------
(106,060) (377,226) (483,286)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 14,426 294,151 308,577
Residual interest in CRCA 36,140 126,360 162,500
----------- ----------- -----------
50,566 420,511 471,077
----------- ----------- -----------
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 (1,811,889) (4,575,276) (6,387,165)
Cash and cash equivalents:
Beginning of year 2,417,775 7,094,146 9,511,921
----------- ----------- -----------
End of third quarter $ 605,886 $ 2,518,870 $ 3,124,756
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
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DATRONIC EQUIPMENT INCOME FUND XVIII, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
NOTE 1 - 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.
NOTE 2 - LITIGATION
In connection with the 1992 Ventre class action, the United States District
Court for the Northern District of Illinois entered an order on September 27,
2000 finding that Edmund J. Lopinski, Jr. had caused the Datronic Partnerships
to sustain losses of $20.0 million. Against this amount, the Court offset $10.9
million that has already been realized on behalf of the Partnerships through the
sale of Diverted and Other Assets and insurance settlements. The Court also
found that Lopinski is entitled to offset the remaining $9.1 million loss with
the proceeds previously received from the other defendants in the Ventre action
and the appraised value of the Schaumburg office building. Proceeds received
from the other defendants totaled $4.9 million, leaving $4.2 million to be
recovered from the building. During the third quarter 2000, the General Partner
received appraisals for the building indicating that its value substantially
exceeds this amount. Accordingly, the losses assessed against Lopinski have been
fully mitigated.
With this ruling, the Ventre, et al v. Datronic Rental Corp., et al class action
is closed.
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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 September 30, 2000. The discussion and analysis of results of operations
is for the three and nine month periods ended September 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 nine months ended September 30, 2000, the Partnership continued to
liquidate its assets and use its cash to pay Partnership operating expenses, pay
a distribution to Limited Partners and provide for the ultimate liquidation of
the Partnership. During this period, Partnership cash and cash equivalents
decreased by $1,687,000 to $1,342,000 at September 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
$831,000, partially offset by cash receipts from collections on leases of
$49,000 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 the first quarter of 2001
and the proceeds included in a subsequent distribution to Limited Partners.
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%
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occupied. Since then, occupancy has increased to more than 80% and base rental
rates have increased by 75%. An appraisal received during the third quarter 2000
indicates that the building's value has increased substantially over its book
value.
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 $122,000 and $807,000 for the three and nine
months ended September 30, 2000 in the aggregate for all classes of partners.
This compares to net losses of $160,000 and $290,000 for the three and nine
months ended September 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 nine month periods ended September 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 $322,000 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 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.
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Professional fees:
Professional fees for the nine months ended September 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.
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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.
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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 November 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
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
----------- -----------
27 Financial Data Schedule, which is
submitted electronically to the
Securities and Exchange Commission
for information only and not filed.
18
